Performance appraisal refers to the process of evaluating the performance of an individual in order to analyze the contribution of the person to the growth and development of the organization. Performance appraisal is mainly done for analyzing the eligibility for promotion, salary increment, leaves and for providing incentives and other rewards (Navaratnam et al. 2019). An effective performance appraisal process in an organization can motivate the employees for performing their tasks efficiently. However, it has been revealed in studies that ineffective performance appraisal process often leads to inappropriate reward distribution and therefore, inappropriate performance appraisal can also lead to employee dissatisfaction. The study tries to analyze the limitations of performance appraisal processes in the banking sector of Australia. The banking sector of Australia has a significant impact on the economy of the country as the banking sector is responsible for generating almost 8% GDP (Memon and Ghani 2023). However, studies reveal that the majority of the banking organizations in Australia face various challenges in managing the performance of the employees and the employee turnover rates in many banking institutions are high enough.
As per the point of view of Sunanda (2017), a major reason behind the high employee turnover rate in the Australian banking sector is the lack of employee motivation and ineffective performance appraisal process. According to TADESSE (2021), in majority of the banking organizations the employees often need to manage heavy work pressures but as the organizations do not use effective techniques of performance appraisal and reward distribution, the employees eventually lose their interests in performing their daily tasks efficiently. Researchers like Memon and Ghani (2023) say that effective performance appraisal becomes possible when an organization can use effective techniques of performance review. However, the managers of many banking organization either do not have the required knowledge of using effective techniques of performance review and performance appraisal or they do not provide enough importance to these aspects of talent management. As a result of it, it becomes difficult for the banking organizations to provide proper rewards to the employees instead of their hard works (GETACHEW, 2016).
Sometimes, the performance data is not stored systematically or there does not have measurable performance indicators that can be used for performance appraisal. As a result of it, the performance appraisal process becomes eventually faulty leading to employee distress and dissatisfaction. Employee dissatisfaction can lead to high employee turnover rate in the banking organizations and high employee turnover can be a major barrier to delivering high quality services to the customers (Navaratnam et al. 2019). From this perspective, it can be said that the banking organizations of Australia need to introduce effective performance appraisal system in order to improve their overall service quality and business performance. In this context, the banking organizations need to have effective systems for storing the performance data of the employees and there also need to have measurable performance indicators against which the performance of the employees can be measured and evaluated. After effective evaluation of employee performance, systematic performance appraisal can be possible. In this process, the performance of the employees can be managed and the highly skilled employees can also be retained for long term.
References
Navaratnam, S., Ngo, T., Gunawardena, T. and Henderson, D., 2019. Performance review of prefabricated building systems and future research in Australia. Buildings, 9(2), p.38.
Sunanda, K., 2017. A STUDY ON PERFORMANCE APPRAISAL OF EMPLOYEE’S—WITH REFERENCE TO BANKING SECTOR. MILLENNIAL WORKFORCE–A CONTEMPLATION, p.79.
TADESSE, Y., 2021. THE EFFECT OF PERFORMANCE APPRAISAL ON EMPLOYEES’CAREER DEVELOPMENT: CASE STUDY ON BUNNA INTERNATIONAL BANK SC (Doctoral dissertation, ST. MARY’S UNIVERSITY).
GETACHEW, F., 2016. ASSESSMENT OF PERFORMANCE APPRAISAL PRACTICE IN UNITED BANK SC (Doctoral dissertation, St. Mary’s University).
Memon, K.R. and Ghani, B., 2023. The relationship between performance appraisal system and employees’ voice behavior through the mediation-moderation mechanism. South Asian Journal of Business Studies, 12(2), pp.220-241.
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