LABOUR TURNOVER AND EMPLOYEE PERFORMANCE

APPRAISAL.
A STUDY OF AWKA WONDERLAND.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
In all economic activities, human effort is the key. It is the human
knowledge transferred into activity that give utilities or value to all
commodities, and that means who cultivates and whether he uses a hoe or
tractor; it is the same who saws, weeds, processes, store and sells. It is also
man who extracts iron ore, processes it into steel. It postulates that who
invents, designs, makes and operates machines is the man who creates,
transmits, and seeks knowledge etc. thus, every human endeavour here on
earth has mans fingerprint. Thus, without human effort which is
considered vital for production so many managerial efforts would be proved
abortive. This effort is usually called labour.
Labour is the most important resources in any organisation, this is why
labour is defined as human effort both mental and physical assertion
legitimately applied for a reward known as wages and salaries. In this sense,
labour include skilled, semi-skilled and unskilled labour which all gear
towards the production of goods and services to earn a living through wages
and salaries.
Labour turnover is a neglected topic in public administration (Selden and
Moynihan 2000, 74). Over the last two decades of awareness of managerial
issues, the issue of employee turnover still exists in most of the organization
throughout the world. Even in the highly developed industrial nations, the
rate of employee turnover is still very high. Moreover, looking into the gender
perspective, women pay may be less than that of man, requiring parallel
education, training, skills, and responsibility. The level of performance or
the ability of work done by the staff will only be achieved if the employees
satisfied by the internal environment of an organization. Employee turnover
in organization is one of the main issues that extensively affect the overall
performance of an organization. It is often suggested that organization
should be adopt the clear Standard Operation Procedures (SOPs) that
decrease the gap among the top management and the middle management

in order to identify and resolve the issue of employee turnover in the

organization.
Most people hiring for performance agree that the best-qualified candidates
should be hired and promoted. In the long run, hiring the best candidates
makes a tremendous contribution to the firms performance. The
performance of the workforce of any organisation is considered very crucial
to the overall success of that organisation, viz-a-viz, the achievement of sets
of goals, competitive edge, high market share etc. therefore, organisations
place a lot of emphasis on how well employees have performed or discharged
their assigned tasks and responsibilities. Research indicates that above
average employees are worth about 40% of their salary more to the
organization than average employees (Schmidt and Hunter, 1982).
Essentially, the purpose of employee performance evaluation as Nwachukwu
(2001:172) aptly puts it, is to determine how effectively an employee has
done the job for which he was hired. Similarly, Stoner (2007:377),
maintains that the performance appraisal or evaluation compares an
individuals job performance to standards or objectives developed for the
individuals position. In the same vein, Hellreigel et al (1999:441) describes
appraisal as the process of systematically evaluating each employees job
related strengths, development needs and progress towards achieving goals
and then determining ways to improve the employees job performance.
Performance evaluation is important in the sense that it enables
organisations to obtain vital information for promotion, demotion, transfer,
pay increase, training, development discharge, and labour turnover. Thus,
organisations that are conscious of boosting their overall levels of
productivity must ensure that employee performance evaluation is regularly
carried out in their organisations. Thus, with regular performance
evaluation, the feedback from such exercises helps in the assessment of the
employees contributions to the attainment of the goals of the organisation
and also helps ascertain the labour turnover.
In fact, as Hellriegel et al (1999:441) puts it, the feedback functions are
essential if the organisation is to reward fairly the efforts of good
performers, redirect the efforts of struggling performance and know when to
dismiss inadequate performer (labour turnover).
Historically, studies in the area of performance evaluation dates back to the
early 1970s. particularly, the works of Stones et al (1972:303),
Wenzel2007:36) as well as Mines, J. and Miner, M. (1977:78) represents bold

attempts at emphasizing the relevance of performance evaluation to the

overall attainment of organisational goals/objectives.
These authors argue that for organisations to achieve their stated
goals/objectives that emphasis must be placed on performance evaluation.
Significantly, improvements in the recognition of the cardinal role of
performance appraisal or evaluation became increasingly highlighted in the
1980s through the works of Serpa (1984:41), Kelzetal (1986:26) and
Lengnick-Hall, C and Lengnick-Hall, M (1988:454). These authors were
unanimous in affirming that performance appraisal was indeed the key for
re-positioning organisations to meet the challenges of the emerging global
markets where completion is what makes the difference between firms.
In the 1990s and beyond, several management experts have continued to
emphasize the crucial role of employee performance evaluation or appraisal
which determines the labour turnover in the improvement of individual and
organisational performance. Indeed, the works of Hanson and Fagot
(1992:10), Hellriegel et al (1999:411), Nwachukwu (2000:173), Robbins and
Coulter (1995:118) amongst others have increasingly become reference
materials for the understanding of the methods and strategies of effectively
carrying out performance evaluation in organisation Turney (2010); Zola
(2010).
Thus, the research work will attempt to bridge the gap in literature by
closely examining the effect of performance evaluation on employee job
performance and labour turnover.
1.2

STATEMENT OF THE PROBLEM

The problem of labour turnover attracts a reasonable percentage of attention

in an organization because labour represents the life wire of any
organisation. The rate at which employees leave an organisation is alarming,
the types and number of works who are terminated or resigning their
various jobs show how effective and efficient is the management in its
operation which also determined the level of stability, growth, and
development of the organisation.
There is no doubt that every organisation aims at not only achieving its
stated goals but also remaining competitive in its own chosen area of
investment. Thus, organisations emphasis on performance evaluation is
very critical to overall success and must be an ongoing exercise to ensure

that effective employees are effectively rewarded while non-performers can

be shown the way out of the organisation Capko (2010).
Nonetheless, performance evaluation exercises in most organisations in
Nigeria have become plagued by a lot of problems such as the inability to
establish clear appraisal criteria, non-objectivity of appraisers
(supervisors/managers), use of central tendency in the rating appraisal of
personnel , the use of poorly trained and inexperience personnel in the
appraisal exercise, the problem of halo-effect in the evaluation of employee
potentials, the application of other subjective criteria on employee evaluation
and labour turnover Nwachukwu (2000).
Thus, this research work will attempt to critically investigate the identified
problems with a view to ensuring that useful strategies are articulated to
address these problems so as to guarantee the credibility of the evaluation
exercise as an instrument for rewarding employee performance and reducing
labour turnover.
1.3

PURPOSE OF THE STUDY

The purpose of this study is to examine the effect of performance evaluation

on job performance and the analysis of labour turnover. A study of Awka
Wonderland in the capital of Anambra state.
Specially, the purpose of this study includes:
To examine the effect of labour turnover on the performance of Awka
Wonderland
(1) To examine the effect of employees performance appraisal in Awka
Wonderland.
(2) To enumerate the problems of labour turnover and how it can be
minimized in Awka Wonderland.
(3) To examine if there exists any relationship between employee
performance appraisal and labour turnover
(4) To examine the major causes of labour turnover in an organisation using
Awka Wonderland as a case study.
1.4

RESEARCH QUESTIONS

The following research questions are considered necessary for this research
work:

(1) How often does your organisation carry out performance evaluation?
(2) What are the effects of labour turnover on the performance of Awka
Wonderland?
(3) To what extent does employee appraisal determine the rate of labour
turnover?
(4) What are the major causes of labour turnover and how can it be
minimized in Awka Wonderland?
1.5

SIGNIFICANCE OF THE STUDY

Several research work has been done in this area of research. The regularity
or frequency with which performance appraisal is carried out from one
organisation to another varies significantly. Cole (2000:300) maintains that
performance evaluation helps organisations to amongst others identify an
individuals current level of job performance, employee strengths and
weaknesses, provide a basis for rewarding employees in relation to their
contribution to organisational goals, motivate individuals, identify training
and development needs, labour turnover etc.
Therefore, it is expected that the findings of the research work will be both of
practical and theoretical relevance. The practical evidence of this study is
expected to be achieved through the articulation of practical guidelines,
techniques as well as strategies for the successful implementation of
performance appraisal/ evaluation programmes and reduction of labour
turnover in organisations.
Finally, it is expected that the findings of this research work will contribute
to the theory of performance evaluation especially since it will assist policymakers, managers, entrepreneurs, investors, researchers etc. in articulating
functional criteria for evaluating the performance of its workforce and rate
the turnover of labour.
1.6

SCOPE OF THE STUDY

The firm to be considered for this study is located in Awka. This study will
involve the use of cluster sampling to select a firm from where the sample
elements for the study will be obtained from the target population.
The extent of this research covers all concept, the causes, problems, effects
and the measures to be taken to tackle the problem of labour turnover that
deserves to be minimized and also the theory involved in this analysis is
performance appraisal as well as theory concerning employee performance

on the job. The literature in this area will be fully explained in the review of
the related literature.
1.7

LIMITATIONS OF THE STUDY

Every research exercise suffers from one reason or the other. The research
therefore is not an exception. Apart from the basic limitation that are
general to almost every research such as inadequate time, cost of material,
mobility, collection and processing of data and restriction related to
difficulties in the interpretations of findings as a result of the nature of the
characteristics of the population etc.
The scarcity of relevant literature on the subject matter is expected to be a
limitation, the reluctance of some of the sampled personnel is expected in
the sense that some of them may not want to complete the questionnaire for
fear that the information provided may be used against them which could
lead to the loss of their jobs.
In spite of these limitations, the researcher will make concerted efforts to
make sure that this work is carried out with the available materials and
financial resources. Finally, the research work will be conducted in the
guidelines set by the Faculty of Art, Management and Social Sciences, Paul
University Awka.
1.8

DEFINITIONS OF TERMS

The key terms used in the opening chapter of this research work are defined
below:
Feedback: it refers to the actual assessment of the employee from a variety of
resources with a view of evaluating the strength/weaknesses of the employee
relative to assigned tasks/responsibilities.
Human Effort:
Labour:
Labour turnover:
Organisational Commitment: It is the degree to which an employee identifies
with goals and values of the organisation and is willing to exert effort to help
it succeed.

Organisational Performance: It is defined as the accumulated end result of

all the organisations work processes and activities.
Performance Evaluation: It is the process of systematic, evaluating each
employees job-related strengths, developmental needs and progress towards
achieving goals and then determining ways to improve the employees job
performance.
Semi-skilled Labour:
Skilled Labour:
Unskilled Labour:

CHAPTER TWO
LITERATURE REVIEW
This review of literature will discuss exhaustively the concept of labour
turnover and employee performance evaluation and other related issues to
the subject matter being investigated. Specifically, the review will examine
amongst others, the purpose/reasons for performance appraisal and labour
turnover, requirements for effective performance evaluation, sources of
errors in performance appraisal, etc.

2.1 LABOUR TURNOVER AND PERFORMANCE EVALUATION: MEANING

AND RELEVANCE
High Labour Turnover is like a parasite eating down the entire system of an
organization. The existence of high labour turnover rate is a good indication
of the fact that the organization is sick skilled employee and trained
management staff are not easy to come by in the country at present and to
have exodus of these groups of employees requires a critical examination of
the whole corporate culture.
Labour turnover has always been of great concern to the organization
scholars. It is a general phenomenon in organization due to the importance
of labour towards efficient implementation of organizational objectives.
Performance appraisal or evaluation as it is in most literature is variously
defined by different experts. Each definition tries to highlight the relevance
of the exercise in the promotion of industrial growth and harmony.
Hellriegal et al (1999:411) defines performance evaluation as the process of
systematically evaluating each employees job related strengths,
developmental needs and progress toward achieving goals, and then
determining ways to improve the employees job performance.
Nwachukwu (2001:172) defines performance evaluation as an exercise
carried out to determine how effectively an employee has done the job for
which he/she was hired. Similarly, Stoner et al (2007:377) defines
performance appraisal as the process of systematically evaluating an
individual with respect to his/her past performance on the job and the
systematic appraisal of the employee in order to arrive at a rational
judgement which is not dependent on the whims and caprices of the
appraiser.
Many scholars see cause of labour turnover from different perspectives.
Bulber (2003), define labour turnover as the number of workers who leave
the firm during a specified period (basically one year). Labour turnover
according to Waiye (2001) embraces all types of workers from the most
skilled to the unskilled in as much as workers efforts are directed towards
production of goods and services which employers are willing to range for
movement of labour force coming in and out of the organization and their
replacement. When people leave the organization that has been employing
the, the less can be described as labour turnover. The problem created by

labour turnover is a serious and expensive one that is why effort has been
made to reduce the rate.
In view of effects labour turnover on organizational performance, this
research would achieve this through performance appraisal to know how
well the employee might have performed the job assigned to them. Often
times, they obtain this knowledge through informal means such as coworkers who volunteer their opinion on how well their colleagues have
performed. Sometimes, the appraisal can be done by supervisors or
superiors who occasionally give their subordinates a pat on the back as a
way of accepting their contribution to the organisation.
Therefore, a good performance appraisal system provides a basis for
measuring an employees contribution to the firm. It serves as a platform for
the gathering of information for promotion, demotion, transfer, pay increase,
training and development, labour turnover.
2.2

PURPOSE OF PERFORMANCE APPRAISAL

The purpose of performance appraisal is to obtain vital information for

promotion, demotion, transfer, pay increase, training and development,
discharge, new recruitment, etc.
Similarly, Segal (2000:199) observes that the purpose of evaluation is to
provide information about work performance.
More specifically, however, such information can serve as variety of purpose.
Some of the major ones are: (i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)

To provide a basis for reward allocation, including raises,

promotion, transfers, layoffs, etc.
To identify high potential employees.
To validate the effectiveness of employee selection procedures
To evaluate previous training programs.
To develop ways of overcoming obstacles and performance barriers.
To identify training and development opportunities, and
To establish supervisor-employee agreement on performance
expectations.

Similarly, Robbins and Coulter (2005:118) sums up the purpose of

performance appraisal as thus:

(i)
(ii)
(iii)
(iv)

The
The
The
The

identification of training needs

identification of key skills
identification of employee potentials, and
improvement of employee motivation. Etc.

These purposes are briefly explained as thus:

(i)

(ii)

(iii)

(iv)

2.3

Identification of training needs: Performance evaluation helps to

identify the exact training needs of an employee. Performance
evaluation interviews affords managers/supervisors with the
opportunity of matching employee productivity against set
standards.
performance evaluation interviews also assist management in the
identification of areas where the employee has not been properly
taught during orientation either by the trainee as facilitator or lack
of orientation of the employee during the training. Performance
appraisal can assist in detecting these deficiencies and
arrangements can be made for further training.
Identification of key skills: Gives the fact that job skills are not
static, periodic performance evaluation assists the management of
organisation to plan for major skill requirements needed to perform
the job. Thus, where the key skills are lacing, individuals
occupying such positions may be further trained to improve or
enhance their skills content.
Identification of employee potentials: Organisations grow
overtime as they journey through different investment climates.
Therefore, if performance appraisal is regularly done, it brings to
the knowledge of management these potentials in the life of the
employee and helps them fashion out a succession plan for the
organisation.
Improvement of employee motivation: there are various ways of
motivating the employee, employees are always not motivated by
pay increase alone, others can be motivated by words of
encouragement and recognition that can spur an employee into
higher levels of productivity. An employee who performs his job will
need to be encouraged and deserve thanks.
THE FOCUS OF PERFORMANCE EVALUATION

Ivancerich and Matteson (1999:187) notes that effective performance

evaluation is a continuous, on-going process and simply stated, involves

asking two questions: is the work being done effectively? And are employee
skills and abilities being fully utilised.
The first question tends toward judgemental orientation while the second is
more developmental in nature. Generally, evaluations should focus on
translating the position responsibilities with each employees day-to-day
activities. Position responsibilities are determined on the basis of a thorough
job analysis.
Performance evaluations should focus on job performance and not on
individuals.
The focus on performance evaluation should emphasize three aspects:
deficiency, contamination and distortion.

2.3(I) Deficiency: it occurs when the evaluation does not focus on all
aspects of the job. If certain job responsibilities and activities are not
considered, the evaluation becomes deficient.
2.3(ii) Contamination: It is the opposite of deficiency. It occurs when
activities that are not part of the job are included in the evaluation.
2.3(iii) Distortion: This takes place in the evaluation process when an
improper emphasis is given to various elements. If for example, placing the
phones on automatic answering mode at the close of each business day is
only a small elements of a secretarys job. Therefore, making that activity
the major factor in evaluating his performance would be distorting that
particular job element. Well focused performance evaluations avoid
deficiencies, contaminations and distortions.
2.4

FACTORS RATED IN PERFORMANCE EVALUATION

Nwachukwu (2000:173) maintains that before actually outlining the factors

to be rated in performance appraisal or evaluation has to be determined.
Therefore, if it is for reward or penalty, the factors to be rated could be
different from when the purpose is for training and counselling. However, if
the rating is for reward or penalty, the factors to be rated will include the
quality of employees work, influence on the performance and attitude of
others, use of company resources and promise, etc. however, if the rating is
for training and counselling, the factors that could be rated includes: use of
initiative, cooperativeness, creativity and integrity, etc. the factors that are to

be rated also have to agree with the tasks being performed and the kind of
personnel they are intended for.
A performance form for managers must be different from that of blue-collars
employees. Thus, even within the management group, the performance
appraisal form for engineers for instance is expected to be different from that
for sales managers. The factors rated should suit the work being performed.
In an engineering appraisal, factors such as technical skills and judgement,
versatility adaptability and resourcefulness should be included.
Finally, Nwachukwu (2000:174) identifies the following as the most common
human characteristics that are generally included in an appraisal form;
Honesty, personality, dependability, cooperativeness, adaptability,
initiatives, leadership, creativity, judgement, industriousness,
persistence, resourcefulness, imagination, enthusiasm, aggressiveness,
loyalty, attitude, tactfulness, maturity as well as motivation
2.5

REQUIREMENTS FOR EFFECTIVE PERFORMANCE APPRAISAL

Several writers and scholars alike have articulated different approaches for
the effective evaluation of employee performance. It is worth noting that an
efficient performance appraisal generally deals with the selection of factors
that provides the highest possible return.
Massie and Douglas (2007:325) provides seven (7) guidelines in appraising
an employees performance.
(i)

(ii)

Good systems depend on the day-to-day measures of performance

of both good and bad points. For example, if a system involves
semi-annual reviews, the supervisors should not depend on only
the performance at the time of the interview.
Good evaluations encourages the involvement of those being rated;
it is expected that employees that areb being rated should know
clearly the rules of the game and on what basis they are being
rtaed. Indeed, as Koontz et al (1997:68) argues an mployee who
knows that his/her supervisor will appraise his work performance