Abstract
Performance management ensures that the contributions of organizational members are directed toward growth and profitability. Although performance objectives are set at the beginning of the financial year, the achievement of such critical objectives rests on robust performance management. This embraces management action toward key FPIs such as gross earnings, ROA, ROE, NIM, among others that help in driving bank profitability. The exploratory research design was used for the study. Data were analyzed through descriptive and regression statistical methods and it was found that performance management has positive correlation with bank profitability. Based on the result of the study, it was recommended that banks should always check performance to ensure profitability.
Highlights
Bank profitability (BP) is the ultimate performance result showing the net effects of bank policies and activities in a financial year
According to van Greuning and Bratanovic (2003), bank BP is usually measured by certain financial performance indicators (FPIs) or ratios
It is strongly believed that a robust performance management (PM) framework brings proactive focus on value addition and profitability that translates to better actual performance of a bank
Summary
Bank profitability (BP) is the ultimate performance result showing the net effects of bank policies and activities in a financial year. According to van Greuning and Bratanovic (2003), bank BP is usually measured by certain financial performance indicators (FPIs) or ratios Such FPIs often include return on asset (ROA), return on investment (ROI) and return on equity (ROE). No matter how profit is measured or defined, profit over the long-term is the clearest indication of a business organization’s ability to satisfy the principal claims and desires of employees, shareholders and other stakeholders To this extent, Pearce II and Robinson (2003), hypothesize that the strategic management process is oriented toward long-term organizational profitability because the growth of any business organization is tied inextricably to its survival and profitability. He emphasizes that when the entire organization embraces PM, it becomes a strategic part of the business. Arora and Jain (2013) Linking employee objectives with organizational objectives provides more accurate representation of the key perspectives and influences and strategic actions that have important implications for management behavior and organizational profitability (Ali, 2018)
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