EFFECT OF PERFORMANCE APPRAISAL ON EMPLOYEE MOTIVATION: THE CASE OF THE NATIONAL HOUSING CORPORATION MARGARET NDEGWA C51/74681/2014 A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE DEGREE OF MASTER OF PUBLIC ADMINISTRATION, DEPARTMENT OF POLITICAL SCIENCE AND PUBLIC ADMINISTRATION, UNIVERSITY OF NAIROBI November, 2018 DECLARATION I declare that this research project is my original work and has not been presented in any other university or institution for academic credit. Signed: Date: Margaret Ndegwa C51/ 74681/2014 This research project has been submitted for examination with my approval as the university supervisor. Signed: Date: Dr. Justine Magutu Department of Political Science and Public Administration University of Nairobi ii TABLE OF CONTENTS DECLARATION................................................................................................................ ii TABLE OF CONTENTS ................................................................................................ iii LIST OF TABLES ............................................................................................................ vi LIST OF FIGURES ......................................................................................................... vii LIST OF APPENDICES ............................................................................................... viii ABBREVIATIONS/ACRONYMS .................................................................................. ix ACKNOWLEDMENTS .................................................................................................... x DEDICATION................................................................................................................... xi ABSTRACT ...................................................................................................................... xii CHAPTER ONE ................................................................................................................ 1 INTRODUCTION AND BACKGROUND ..................................................................... 1 1.1 Background to the Study ......................................................................................... 1 1.2 Statement of the Problem......................................................................................... 4 1.3 Research Questions .................................................................................................. 5 1.4 Objectives of the Study............................................................................................. 5 1.4.1 Specific Objectives ............................................................................................. 5 1.5 Justification of the Study ......................................................................................... 5 1.6 Scope and Limitations of the study ......................................................................... 6 1.7 Definition of Concepts .............................................................................................. 6 CHAPTER TWO ............................................................................................................... 8 LITERATURE REVIEW ................................................................................................. 8 2.1 Introduction .............................................................................................................. 8 2.2 Fairness of performance Appraisal Systems .......................................................... 8 2.3 Performance Appraisal feedback ............................................................................ 9 iii 2.4 Uses of Performance Appraisal Results ............................................................... 10 2.5 Performance Appraisal and Employee Motivation ............................................. 11 2.6 Theoretical Framework ......................................................................................... 12 2.6.1 Equity Theory ................................................................................................... 12 2.6.2 Expectancy theory ............................................................................................ 13 2.7 Conceptual Framework ......................................................................................... 14 2.8 Research Hypothesis .............................................................................................. 15 CHAPTER THREE ......................................................................................................... 16 RESEARCH METHODOLOGY ................................................................................... 16 3.1 Introduction ............................................................................................................ 16 3.2 Research Design ...................................................................................................... 16 3.3 Target Population ................................................................................................... 16 3.4 Size and Sampling Procedure ................................................................................ 16 3.5 Data Collection and Analysis ................................................................................. 17 3.6 Reliability Test ........................................................................................................ 17 CHAPTER FOUR ............................................................................................................ 19 PRESENTATION DISCUSSION AND INTERPRETATION ................................... 19 4.1 Introduction ............................................................................................................ 19 4.2 Response Rate ......................................................................................................... 19 4.3 Demographic Characteristics ................................................................................ 20 4.4 Performance Appraisal Policy ............................................................................... 22 4.5 Fairness of Performance Appraisal System ......................................................... 28 4.6 Feedback on Performance Appraisal ................................................................... 30 4.7 Use of Appraisal Results ........................................................................................ 31 4.8 Effect of Performance Appraisal on Employee Motivation................................ 32 4.9 Regression Analysis ................................................................................................ 34 CHAPTER FIVE ............................................................................................................. 37 SUMMARY, CONCLUSION AND RECOMMENDATIONS ................................... 37 5.1 Introduction ............................................................................................................ 37 5.2 Summary of the Study ............................................................................................ 37 iv 5.3 Conclusions ............................................................................................................. 39 5.4 Recommendations ................................................................................................... 40 5.5 Areas for Further Studies ...................................................................................... 40 REFERENCES ................................................................................................................. 41 APPENDICES .................................................................................................................. 45 Appendix I: Questionnaire .......................................................................................... 45 Appendix II: Introductory letter ................................................................................. 50 Appendix III: NHC Authorization to collect data ..................................................... 51 Appendix IV: Reseach Authorization ......................................................................... 52 v LIST OF TABLES Table 3.1:Target Population and Sample Size Distribution............................................... 16 Table 3.2:Realibility Analysis Results……………………………………………….......18 Table 4.1: Response Rate ................................................................................................... 19 Table 4.2: Age Brackets of the Respondents ..................................................................... 20 Table 4.3: Designation of the Respondents ....................................................................... 21 Table 4.4: Appraisers of the Respondents ......................................................................... 23 Table 4.5: Staff who determine the involvement in setting objectives of Performance Appraisal ............................................................................................................................ 24 Table 4.6: Fairness and motivation of Performance Appraisal.......................................... 30 Table 4.7: Feedback on Performance Appraisal ................................................................ 30 Table 4.8: Effect of Performance Appraisal on Employee Motivation ............................. 33 Table 4.9: Model Summary ..............................................................................................