PERFORMANCE ASSESSMENT AND INVESTMENT DECISIONS IN NIGERIA COMMERCIAL BANK
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PERFORMANCE ASSESSMENT AND INVESTMENT DECISIONS IN NIGERIA COMMERCIAL BANK
INTRODUCTION TO CHAPTER ONE OF PERFORMANCE ASSESSMENT AND INVESTMENT DECISIONS IN NIGERIA COMMERCIAL BANK
1.1 BACKGROUND OF THE STUDY
Researchers from all over the world have advocated for managers or consultants to constantly examine and evaluate an employee’s work behaviour and productivity by comparing it to predetermined standards,
document the results of the comparison, and use the results to provide feedback to the employee to show where improvements are needed and why (Miles, 2002). As a result, managers can determine which areas to invest in for maximum performance.
Performance evaluation is used to identify who needs which kind of training and who will be promoted, demoted, retained, or fired. It also indicates which areas of the organisation require upkeep and improvement. The mental process of making a logical choice from the given possibilities is involved in investment decisions.
When making a decision, the decision maker must assess the advantages and disadvantages of each option and analyse all possibilities.
A person must be able to anticipate the outcome of each alternative and evaluate which option is the best for that specific situation in order to make an effective decision. Most importantly, prior performance will be a good guidance in deciding where to invest (Child, 2002).
According to Dean and Sharfman (2006), the following two assumptions must be met in order to establish a link between the investment choice process and performance evaluation.
To begin, it must be assumed that investment decision processes are tied to decisions influenced by previous accomplishments; or, more specifically, that the investment decision process was driven by the pursuit of higher performance and productivity.
Despite the fact that this premise appears to be self-evident, numerous researchers have suggested that the operating environment influences organisational and individual decisions (for example, Aldrich, 2009; Pfeffer and Salancik, 2008).
Others, on the other hand, argue that, despite the presence of these external elements, managers have a significant degree of control over decisions (for example, Miles, 2002; Child, 2002).
Dean and Sharfman (2006) build the case for this position by arguing that some managers make poor decisions with disastrous implications for their companies,
while others in comparable situations make considerably better decisions (for example, Bourgeois, 2004). Such variety, the authors argue, would not be possible if performance evaluation was the primary reason behind such investment decisions.
As a result, Dean and Sharfman (2006) argue that viable outcomes are most likely a result of the choice procedure adopted. Following on from this, the second assumption is that choices have consequences,
and that not all consequences are equally good. There is no question that external forces influence decision efficacy (Hitt and Tyler, 2001; Pfeffer and Salancik, 2008).
However, Dean and Sharfman (2006) argue that the influence of such variables as performance evaluation is unlikely to erase the impact of choice on decision effectiveness since it is difficult to envisage a decision in which all alternative choices are equally successful or unsuccessful.
The researcher wishes to investigate the impact of performance evaluation on investment, with a focus on First Bank of Nigeria Plc.
First Bank of Nigeria Limited (First Bank) is the largest financial services institution in Nigeria in terms of total assets and gross earnings. First Bank has over 750 branches and over 10 million customer accounts, offering a full range of retail and business financial services.
FBN Bank (UK) Limited in London and Paris, FBN Bank DRC, FBN Bank Ghana, FBN Bank Gambia, FBN Bank Guinea, FBN Bank Sierra-Leone, and FBN Bank Senegal, as well as Representative Offices in Johannesburg, Beijing, and Abu Dhabi, have an international presence.
First Bank has continually created relationships with clients by focusing on the foundations of solid corporate governance, strong liquidity, risk management, and leadership since its inception in 1894. Through significant roles in the Federal Government’s privatisation and commercialization programmes,
the Bank has spearheaded the financing of private investment in infrastructure development in the Nigerian economy over the years. With its global reach, First Bank offers prospective investors looking to explore Nigeria’s tremendous commercial opportunities an internationally competitive world-class brand and a reputable financial partner.
The Bank has been voted “The Best Bank Brand in Nigeria” four years in a row – 2011, 2012, 2013, and 2014 – by the worldwide famous “The Banker Magazine” of the Financial Times Group, as well as “Most Innovative Bank in Africa” in the EMEA Finance African Banking Awards 2014.
First Bank’s brand purpose is to always put its customers, partners, and all stakeholders at the centre of its business, even as it prepares to standardise customer experience and excellence in financial solutions across Sub Saharan Africa, in line with its brand vision “To be your first choice in building your future.”
1.2 STATEMENT OF THE PROBLEM
Many empirical research have been conducted to evaluate the presence of a link between performance evaluation or assessment and investment choice. None have focused on the use of decision analysis in organisational investment decision-making processes.
Several studies, however, have looked into the impacts of comprehensiveness, rationality, formality, and consensus in decision-making on organisational effectiveness.
Performance assessment supporters argue that every activity must have performance criteria for at least two reasons:
1. The criteria outline the type of behaviour or features of a product that are required for performance and others, and
2. A clear scoring system enables managers, employees, and others to assess a performance or product as objectively as feasible. If the performance criteria are well stated, another individual working independently will give an employee the same score.
Furthermore, well-written performance criteria will help managers to be consistent in scoring across time, which will undoubtedly transform management’s decision-making process.
The researcher, on the other hand, is looking into the relationship between performance evaluation and decision making at First Bank of Nigeria Limited.
1.3 OBJECTIVES OF THE STUDY
The overall goal of this research is to examine the relationship between performance evaluation and investment decisions in First Bank of Nigeria Limited, with the following specific goals in mind:
1. To investigate the relationship between performance evaluation and investment decision-making in First Bank of Nigeria Limited.
2. To look at techniques for conducting an effective performance evaluation.
3. Determine the factors that influence investing decisions.
1.4 RESEARCH QUESTIONS
1. What is the connection between performance evaluation and investment decisions at First Bank of Nigeria Limited?
2. What are the tactics that can be used to conduct a successful performance evaluation?
3. What elements can have an impact on investing decisions?
1.5 HYPOTHESIS
In First Bank of Nigeria Limited, there is no substantial relationship between performance evaluation and investment choice.
In First Bank of Nigeria Limited, there is a considerable relationship between performance evaluation and investment choice.
1.6 SIGNIFICANCE OF THE STUDY
The following are the study’s implications:
1. The purpose of this study is to educate stakeholders and bank management in Nigeria about the importance of performance evaluation as a guide to investment decision making.
2. This research will contribute to the body of literature on the relationship between performance assessment and investment choice, forming the empirical literature for future research in the field.
1.7 SCOPE AND LIMITATIONS OF STUDY
This study on the relationship between performance evaluation and investment decision will cover all banks and corporate organisations in Nigeria by carefully examining the influence of performance evaluation on investment decision in an organisation with the goal of achieving the organisational goal. The research will also provide an outline of the tactics that can be used to conduct an effective performance evaluation.
STUDY LIMITATIONS
Financial constraint- A lack of funds tends to restrict the researcher’s efficiency in locating relevant materials, literature, or information, as well as in the data collection procedure (internet, questionnaire, and interview).
Time constraint- The researcher will conduct this investigation alongside other academic activities. As a result, the amount of time spent on research will be reduced.
1.8 TERMS
Performance: The completion of a given work as judged against known predefined standards of correctness, completeness, cost, and speed. In a contract, performance is defined as the fulfilment of an obligation in such a way that the performer is released from all liabilities under the contract.
Organisation: A social unit of individuals that is established and managed in order to meet a need or achieve common goals. Every organisation has a management structure that establishes linkages between various activities and individuals,
as well as subdivides and distributes roles, responsibilities, and authority to carry out various tasks. Organisations are open systems that influence and are influenced by their surroundings.
Investment: The commitment of money or the acquisition of property for the purpose of earning future income.
In an uncertain circumstance, a decision is a choice made between different courses of action.
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