EFFECT OF PERFORMANCE APPRAISAL ON PRODUCTIVITY OF EMPLOYEES IN MICROFINANCE INSTITUTIONS

This study examined the effect of performance appraisal on employee productivity in microfinance institutions. The specific objectives were to assess the effect of formal appraisal, determine the impact of informal appraisal, and evaluate the influence of 360° feedback on employee productivity. A quantitative research design was adopted, and data were collected using structured questionnaires administered to 164 employees, out of which 160 valid responses were analysed using descriptive statistics and Chi-square tests. The findings revealed that formal appraisal significantly enhanced employee efficiency, motivation, and goal attainment; informal appraisal played a crucial role in improving work adjustment and increasing employees’ sense of value; while 360° feedback contributed substantially to identifying strengths and weaknesses, improving performance, and enhancing teamwork. The Chi-square results further confirmed significant relationships between the different appraisal methods and employee productivity. Based on these findings, the study recommends that microfinance institutions strengthen formal appraisal consistency, integrate effective informal feedback mechanisms, institutionalise comprehensive 360° feedback systems, provide training to supervisors, ensure transparency and fairness in appraisal procedures, and continually review appraisal policies to align with evolving organisational goals.