MEDIATING ROLE OF PERFORMANCE APPRAISAL ON THE RELATIONSHIP BETWEEN EMPLOYEE ENGAGEMENT STRATEGY AND SUSTAINABLE FIRM PERFORMANCE OF COMMERCIAL BANKS

Abstract

Employee engagement strategy deals with what an organisation has to do to get the best from its employees. Employees are a very important part of any organisation and in today’s competitive business; world organisations should always pursue an employee engagement strategy if they are interested in retaining their employees. The purpose of this study was to determine the mediating role of performance appraisal on the relationship between employee engagement strategy and sustainable firm performance. The objectives of the study were to determine the effect of goal setting, motivation, leadership, and training and performance appraisal on sustainable firm performance. This study was based on Social exchange theory, competitive theory, and Goal theory. The study adopted an explanatory survey design with the target population being 1150 employees. The sample size was obtained using slovin’s formula and a sample size of 297 was used. A structured questionnaire was administered to the respondents and administered by the researcher herself. A pilot test was carried out in Nakuru and experts analyzed the results for validity. Cronbach’s alpha was used to test reliability. Data was analyzed using descriptive and inferential statistics. This study could benefit organizations as they could get a clear view on the drivers of employee engagement strategy. Descriptive statistics includes frequencies, percentages and means while inferential statistics was correlation and multiple regressions. Analysed data were presented in form of tables. The linear regression results indicated that R2 =0.624, this showed that employee engagement strategies predict 62.4% of the variation in sustainable firm performance. The goal setting (β1=0.336, p<0.05), motivation (β2=0.219, p<0.05), leadership (β3=0.197, p<0.05) and training (β4= 0.156, p<0.05) had significant effect on sustainable firm performance. On indirect effect the model results [β = 0.327, t (153) = 8.98, p = <.000] indicated that performance appraisal controlling for employee engagement strategy predicted 69.3% of sustainable firm performance. The effect of employee engagement strategy on sustainable firm performance controlling for performance appraisal was significant, [β = 0.634, t (153) = 13.696, p = <.000]. Effect of employee engagement strategy on performance appraisal, was significant, β = 0.301, t (154) = 3.03, p = <.000. Performance appraisal partially mediated the relationship between employee engagement strategy and sustainable firm performance. The study recommended that employees should be given clear and specific goals, Employees should be able to satisfy both their organizational and personal goals in line with organizational goals. Leaders should demonstrate strong leadership skills, employees should be trained in order for them to do well in their job and finally performance appraisal should be optimised for effective decision making. The study suggests that a similar study should be done on other government parastatals.