The Effect of Management by Objectives on Performance Appraisal and Employee Satisfaction in Commercial Banks

Management by Objectives (MBO) is one of the most effective performance appraisal method widely used in the organization. This study deals with the effect of Management by Objectives on performance appraisal and employee satisfaction.  A self-administered questionnaire was used to judge the perception of the employees regarding MBO and its effect on their performance appraisal and employee satisfaction. The number of participants included in the survey was 60 employees from 33 commercial banks at Rajshahi Division in Bangladesh. This study aims to identify the respondent’s demographic profile such as age, education, salary, and banking experience and reveals the importance of MBO on their performance appraisal and employee satisfaction. IBM SPSS v23.0 program has been used to analyze the questionnaire. Descriptive analysis, Pearson correlation analysis, and Regression analysis used to test the hypotheses. Econometric results suggest that MBO should be used as a method of performance appraisal and most of the commercial banks use Management by Objectives as an effective tool. In our correlation analysis we found performance appraisal and employee satisfaction have a significant positive relationship ( r =0.715). Performance appraisal increase employee satisfaction. Employee satisfaction increase productivity and effectiveness in the organization. Proper reward mechanism increase satisfaction level of the employees. Keywords: Commercial Banks, Employee Satisfaction, Management by Objectives, Organizational Effectiveness and Performance Appraisal. DOI: 10.7176/EJBM/12-20-02 Publication date: July 31 st 2020