Project Topics

PERFORMANCE ASSESSMENT AND INVESTMENT DECISIONS IN NIGERIA COMMERCIAL BANK: A CASE STUDY OF FIRST BANK

PERFORMANCE
ASSESSMENT AND INVESTMENT DECISIONS IN NIGERIA COMMERCIAL BANK: A CASE STUDY OF
FIRST BANK

 

CHAPTER
ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY

        Researchers all over the world has
advocated the need for manager or consultant to constantly examines and
evaluates an employee’s work behavior and productivity by comparing it with
preset 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). This therefore enables managers to know the areas to invest in
for optimal performance.

Performance
assessment is employed to determine who needs what training, and who will be
promoted, demoted, retained, or fired. It also determines which section of the
organization needs maintenance and upgrading. Investment decisions involve the
thought process of selecting a logical choice from the available options. When
trying to make a good decision, the decision maker must weigh the positives and
negatives of each option, and consider all the alternatives. For effective
decision making, a person must be able to forecast the outcome of each option
as well, and based on all these items, determine which option is the best for
that particular situation most importantly the previous performance will be a
proper guide in the choice of where to invest (Child, 2002).

 Dean and Sharfman (2006) observe, the
following two assumptions must hold to prove a link between investment decision
process and performance assessment. 
Firstly, it must be assumed that investment decision processes are
related to choices determine by previous achievements; or, more specifically,
that the investment decision process was influenced by the quest for better
performance and productivity.  Although
this assumption appears intuitively obvious, many academics have argued that
the operating environment shapes organizational and individual choices (for
example, Aldrich, 2009; Pfeffer and Salancik, 2008).  Others, however, claim that despite the
existence of these external factors, managers retain a substantial degree of
control over choices (for example, Miles, 2002; Child, 2002).  One argument made in favour of this position
by Dean and Sharfman (2006) is that some managers make very poor choices with
devastating consequences for their firms, while others in very similar
circumstances make much better choices (for example, Bourgeois, 2004).  Such variation, the authors assert, could not
exist if performance assessment has been the driving force for such investment
decisions.  Hence, Dean and Sharfman (2006)
conclude that it appears likely that viable outcomes are a product of the
decision process used.  Leading on from
this, the second assumption is that choices relate to outcomes, and that all
outcomes are not equally good.  Once
again there can be very little doubt that external forces also influence
decision effectiveness (Hitt and Tyler, 2001; Pfeffer and Salancik, 2008).  However, Dean and Sharfman (2006) note that
it is unlikely that the influence of such forces as performance assessment eliminates
the impact of choice on decision effectiveness as it is hard to imagine a
decision in which all potential choices will be equally successful or
unsuccessful. The researcher seeks to examine the influence of performance
assessment on investment focusing on First bank of Nigeria Plc.

        First Bank of Nigeria Limited (First Bank)
is Nigeria’s largest financial services institution by total assets and gross
earnings. With more than 10 million customer accounts, First Bank has over 750
branches providing a comprehensive range of retail and corporate financial
services. The Bank has international presence through its subsidiaries, 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
its Representative Offices in Johannesburg, Beijing and Abu Dhabi.

Since
its establishment in 1894, First Bank has consistently built relationships with
customers focusing on the fundamentals of good corporate governance, strong
liquidity, risk management and leadership. Over the years, the Bank has led the
financing of private investment in infrastructure development in the Nigerian
economy by playing key roles in the Federal Government’s privatization and commercialization
schemes. With its global reach, First Bank provides prospective investors
wishing to explore the vast business opportunities that are available in
Nigeria, an internationally competitive world-class brand and a credible
financial partner.

The
Bank has been named “The Best Bank Brand in Nigeria” four times in a row –
2011, 2012, 2013, 2014 – by the globally renowned “The Banker Magazine” of the
Financial Times Group; and “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 heart of its business, even as
it is poised to standardize customer experience and excellence in financial
solutions across Sub Saharan Africa, in consonance with its brand vision “To be
the partner of first choice in building your future”.

1.2   STATEMENT OF THE PROBLEM

Many
empirical studies have investigated the existence of a relationship between the
performance evaluation or assessment and investment decision.  None have concentrated on the use of decision
analysis in the investment decision-making processes of organisations.  However, several have explored the effects of
comprehensiveness, rationality, formality and consensus in the decision-making
process on organisational performance. 

Advocates of performance assessments
maintain that every task must have performance criteria for at least two
reasons:

1.  The criteria define for performance and
others the type of behavior or attributes of a product which are expected, and

2.  A well-defined scoring system allows the managers,
the employees, and others to evaluate a performance or product as objectively
as possible. If performance criteria are well defined, another person acting
independently will award an employee essentially the same score.

Furthermore, well-written performance
criteria will allow the managers to be consistent in scoring over time which
will definitely reshape the decision making process of the management. However,
the researcher is examining the relationship between performance assessment and
decision making in First bank of Nigeria Limited
1.3   OBJECTIVES OF THE STUDY

The
general objective of this study is to analyze the relationship between
performance assessment and investment decision in First bank of Nigeria Limited
and the following the specific objectives:

1.  To
examine the relationship between performance assessment and investment decision
in First bank of Nigeria Limited.

2.  To
investigate strategies that can be adopted in conducting an effective
performance assessment.

3.  To
find out the factors that can influence investment decisions.

1.4   RESEARCH QUESTIONS

1.  What
is the relationship between performance assessment and investment decision in
First bank of Nigeria Limited?

2.  What
are the strategies that can be adopted in conducting an effective performance
assessment?

3.  What
are the factors that can influence investment decisions?

1.5   HYPOTHESIS

HO:
There is no significant relationship between performance assessment and
investment decision in First bank of Nigeria Limited

HA:
There is significant relationship between performance assessment and investment
decision in First bank of Nigeria Limited

1.6   SIGNIFICANCE OF THE STUDY

The
following are the significance of this study:

1.  This
study will educate the stakeholders and management of banks in Nigeria on the
need for performance assessment as a guide to investment related decision
making.

2.  This
research will be a contribution to the body of literature in the area of the
relationship between performance assessment and investment decision, thereby
constituting the empirical literature for future research in the subject area.

1.7   SCOPE/LIMITATIONS OF THE STUDY

This study on the
relationship between performance assessment and investment decision will cover
all the banks and corporate organization in Nigeria by carefully examining the
influence of  performance assessment on
investment decision in an organization with a view to attain the organizational
goal. The study will also cover an overview of the strategies that can be
adopted in conducting an effective performance assessment.

LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the
researcher in sourcing for the relevant materials, literature or information
and in the process of data collection (internet, questionnaire and interview).

 Time constraint– The researcher will
simultaneously engage in this study with other academic work. This consequently
will cut down on the time devoted for the research work.

1.8   DEFINITION OF TERMS

Performance:
The accomplishment of a given task measured against preset known standards of
accuracy, completeness, cost, and speed. In a contract, performance is deemed
to be the fulfillment of an obligation, in a manner that releases the performer
from all liabilities under the contract.

Organization:
A social unit of people that is structured and managed to meet a need or to
pursue collective goals. All organizations have a management structure that
determines relationships between the different activities and the members, and
subdivides and assigns roles, responsibilities, and authority to carry out
different tasks. Organizations are open systems–they affect and are affected
by their environment.

Investment:
Money committed or property acquired for future income.

Decision:
A
choice made between alternative courses of action in a situation of
uncertainty.

REFERENCES

Aldrich,
H.E., 2009, Organisations and
environments
, Englewood Cliffs, Prentice Hall, New Jersey

Bourgeois,
L.J., III, 2004, Strategic management and determinism, Academy of Management Review, 9, pp586-596

Child,
J., 2002, Organisational structure, environment, and performance: the role of
strategic choice, Sociology, 6,
pp2-21

Dean,
J.W. and Sharfman, M.P., 2006, Does decision process matter? A study of
strategic decision-making effectiveness, Academy
of Management Journal
, April, volume 39, number 2, pp368-97

Hitt,
M.A. and Tyler, B.B., 2001, Strategic decision models: Integrating different
perspectives, Strategic Management
Journal
, 6, pp171-180

Miles,
R.H., 2002, Coffin nails and corporate
strategies,
Englewood Cliffs, New Jersey, Prentice Hall

Pfeffer,
J., and Salancik, G.R., 2008, The
external control of organisations: A resource dependence perspective
,
Harper and Row, New York