Impact of Effective Performance Appraisal Systems on Employee Motivation and Retention in Private Banking Industry of Bangladesh

Abstract

Aims: Healthy economic development requires properly managing the banking industry of any country. Along with state-owned banks, private banks play a critical role in the country's economy. Managers in all types of banks now confront the same challenge: how to get the utmost output from their employees. Therefore, Performance appraisal appears to be inevitable since it set the standard for comparing actual performance to established objectives and recommending practical solutions that help the organization achieve sustainable growth. Therefore, the purpose of this research is to determine the effect of performance appraisal on employee motivation and retention. Place and Duration of Study: The study was conducted in the private banking industry of Bangladesh between November 01, 2022, to March 30, 2023. The study duration was determined based on the scope of the research project and the availability of time and resources to complete it within the designated timeframe. Methodology: A random sampling method was used to conduct the study through a structured questionnaire among 110 employees from various private banks. Questionnaires were used to collect quantitative data, which was then analyzed using the Statistical Package for Social Sciences (SPSS) 25.0 software. Results: Major findings of the study indicate that performance appraisal is critical for employee motivation and employees perceived performance appraisal as a fair procedure, which increased their motivation and retention. Compensation and reward, and feedback are also perceived positively by the employees, which motivate them to stay in the banks. Conclusion: There is a recommendation that banks should review the appraisal process regularly, improve the feedback policy, introduce an effective reward system, provide the opportunity to employees for career development and empowerment, and maintain a participative environment.