Effect of Performance Appraisal on Organizational Performance

The performance of employees is pivotal in organizational performance. Performance appraisal is an important human resource function in the measurement of employee performance. The purpose of this study was to find out the impact of performance appraisal on organizational performance and to find out the moderating effect of organizational commitment on the relationship between performance appraisal and organizational performance. This study was carried out in three companies listed in the stock exchange. These are Kenya Power, KenGen and Mumias Sugar Company. The study adopted descriptive survey design. The study population comprised 5866 employees in the three companies. It was found that performance appraisal had a significant effect on organizational performance. The study further showed that affective commitment, continuance commitment and normative commitment moderated the relationship between performance appraisal and organizational performance.