THE ROLE OF PERFORMANCE APPRAISAL ON THE

ACHIEVEMENT OF ORGANIZATIONAL GOAL

(IN CASE OF COMMERCIAL BANK OF ETHIOPIA JIMMA MAIN

BRANCH)

RESEARCH PAPER SUBMITTED TO THE DEPARTMENT OF

MANAGEMENT IN PARTIAL FULFILLMENT FOR THE
REQUIREMENT OF BA DEGREE IN MANAGEMENT

BY: - ESMAIEL AZEZEW

ADVISOR: -ASSEFA GERBI (MSC)

JIMMA UNIVERSITY
COLLAGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF MANAGEMENT

May, 2014

JIMMA, ETHIOPIA
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 Acknowledgement
First and for most I would like to giving my humble and great thank to
“Allah” for everything he has done for me throughout my life.

Next I want to express my heartfelt appreciation to my advisor Ato Assefa

Grebe for his unlimited support advice and insightful comments in
preparation of this research.

And also I would like to extend my deep heart thank for all my families who
assisted me starting from lower grade up to the university level in that they
paying me their uncountable resource.

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 Abstract
This research project was conducted under the title of the role of
performance appraisal on the achievement of organizational goal. The main
objective of the study was to assess the role of performance appraisal on
organizational goal achievement. For this study purpose both primary and
secondary data sources would be used. In the primary data both open and
close ended questions were prepared in the form of self-administered
questionnaires, whereas the secondary data types were taken from written
books regarding performance appraisal and the organizations documented
materials. The study would use census survey since the size of population
under study was small and it was convenient to use census to eliminate
sampling errors; furthermore, data would be analyzed and interpreted by
using some statics tools like percentage and tables. Finally the researcher
would give conclusion and recommendation by considering the collected and
analyzed data.

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III
 Table of content
Title page

Acknowledgement........................................................................................................................................I

Abstract.......................................................................................................................................................II

Table of content............................................................................................................................................I

CHAPTER ONE..........................................................................................................................................1

INTRODUCTION.......................................................................................................................................1

1.1. Back ground of the study..................................................................................................................1

1.2 Background of the organization.........................................................................................................2

1.3 Statement of the problem...................................................................................................................3

1.4. Basic research questions...................................................................................................................3

1.5 Objective of the Study.......................................................................................................................4

1.5.1 General objective........................................................................................................................4

1.5.2 Specific objectives......................................................................................................................4

1.6 Significance of the study...................................................................................................................4

1.7 Scope of the study..............................................................................................................................4

1.8 Limitation of the Study......................................................................................................................5

1.9 Organizations of the Study................................................................................................................5

CHAPTER TWO.........................................................................................................................................6

REVIEW OF RELATED LITERATURE...................................................................................................6

2.1 Meaning and nature of performance appraisal...................................................................................6

2.2 Purpose of performance appraisal......................................................................................................7

2.2.1 for Administrative Purpose.........................................................................................................7

2.2.2 for development purpose............................................................................................................7

2.3 Performance Appraisal Methods........................................................................................................8

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 2.4 Performance appraisal processes.....................................................................................................11

2.5 Uses of performance appraisal.........................................................................................................12

2.6 Problem of performance appraisal...................................................................................................13

2.6.1 System design and operating problem......................................................................................13

2.6.2 Problem with appraises.............................................................................................................13

2.6.3 Problem with appraisers............................................................................................................13

2.7 Goal Achievement...........................................................................................................................14

2.7.1 Meaning and nature of organizational goal...............................................................................14

2.7.2 Uses of goals.............................................................................................................................14

2.8 The relation between performance appraisal and organizational goal achievement.........................15

2.9 Requirements of effective appraisal system.....................................................................................16

CHAPTER THREE...................................................................................................................................17

RESEARCH METHODOLOGY..............................................................................................................17

3.1 Study Area.......................................................................................................................................17

3.2. Research design..............................................................................................................................17

3.3. Source of Data................................................................................................................................17

3.4. Method of Data Collection.............................................................................................................17

3.5. Sample size and sampling technique...............................................................................................18

3.6. Data processing and analysis..........................................................................................................18

3.7. Data presentation............................................................................................................................18

CHAPTER FOUR.....................................................................................................................................19

DATA PRESENTATION AND ANALAYSIS.........................................................................................19

4.1 Analysis on the personal profile of respondents.............................................................................19

4.2 Analysis on the practice of performance appraisal..........................................................................21

4.3 Analysis of problems in practicing performance appraisal and the attitude of employees regarding
the performance appraisal practice in the bank....................................................................................26

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 4.4 Analysis on the role of performance appraisal on the achievement of organizational goal..............28

CHAPTER FIVE.......................................................................................................................................29

CONCLUSION AND RECOMMENDATION.........................................................................................29

5.1 CONCLUSION...................................................................................................................................29

5.2 RECOMMENDATIONS......................................................................................................................31

References.................................................................................................................................................32

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 CHAPTER ONE

INTRODUCTION
1.1. Back ground of the study

The human resource department usually develops performance appraisal for employee in all
departments because without any effective appraisal system; promotion, transfer, demotion and
other employee related decision become subject to trial and error. Career planning and human
resource development suffers because there is no systematic performance feedback. Moreover,
human department lack adequate information to evaluate its performance objective this lack of
feedback can cause the resource department to miss its objective. Sometimes the consequence of
this failure is severing.

Performance appraisal is the process of determining and accomplishing to an employee how he

or she is performing in the job and ideally establishing a plan of improvement. When properly
conducted, performance appraisal not only let employees know how well they are performed but
also influence their level of effort and task direction. Effort should be enhanced if employee
reinforced.(Rue and Byer,2004)

Thus, one of the most uses of performance appraisal is for making administrative decision
relating to promotion, firing/layoff and merit pay increase. Performance appraisal information
can also provide needed inputs for date remaining both individual and organizational training
and development needs. It can also on coverage performance improvement .The basic
assumptions underlying the emphasis on employee performance appraisal is organizational goal
achievement, appraisal identification ,measurement and management of human resource
performance in an organization.

Accordingly, systematic source of the evaluation is an essential aspects management not only to
make sound personnel decision but also maintain satisfactory level of performance to identify
employees training needs, to facilitate fair and equitable compensation based on performance
and promote two way communication between management and employees(Wendlfrench,2007).

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1.2 Background of the organization

The history of bank in Ethiopia dates back to the establishment of bank of Abyssinia in 1905. It
was the first bank in history of Ethiopia, established under the partnership of Egypt. The bank
continued to operate until 1931. Later on, the bank was wholly purchased by government of
Ethiopia and renamed as “the bank of Ethiopia”. This bank operated until the Italian invention in
1936. (http://www.combanketh.com).

After the victory over the fascist Italy, the state bank of Ethiopia was established by a
proclamation issued in August 1942. Although the intention was to establish it as a full- fledged
commercial bank, a year later in 1943, it was given additional central banking duties, the state
bank of Ethiopia provided central and commercial banking functions until it was divided in 1963
to form the two banks (the national bank and commercial bank of Ethiopia). Accordingly, in line
with the issuance of monitory proclamation in 1963, the national bank of Ethiopia and
commercial bank of Ethiopia to handle the national banking and commercial banking functions
respectively. In 1963, commercial bank of Ethiopia was legally reestablished as a share company
to take over the commercial banking activities business and operation, thorough competing with
other banks. From 1981 to 1993, commercial bank of Ethiopia was in monopoly era dominating
the banking business all over the country. But in period between 1994 and 1998 was
characterized by country shift from a command economy to market oriented economy, due to a
policy redirection, the new banking proclamation enacted in 1994, has created several new
opportunities for the private sector to be involved in the banking sector. This enabled the
commercial bank of Ethiopia to release its monopoly position in the country’s banking industry
(ibid).

Commercial bank of Ethiopia now a day has different branches in different areas. From those,
commercial bank of Ethiopia Jimma main branch is one, it opened in April 4, 1947 G.C at Jimma
town, and it is a huge bank in the city of Jimma that can serve a large number of customers while
compared with other banks in the town. Now it is giving various quality services for customers
by using smart computer program and T-24 program. In the branch, there are about 60 total
number employees. The bank in general has a vision to be an excellent commercial bank and it
has its own mission, values and objectives.

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1.3 Statement of the problem

The role of performance appraisal in organization aims to achieve minimum cost with balanced
benefit. It also aims to reduce inefficiency and inabilities of employee (David Ingram; 2009).

Lack of employee performance appraisal in the organization leads to employees inefficiencies in

their operation. It may also affect training and need assessment for development management,
programmers, transfer, and demotion of employee. The researcher is motivated to study on the
role of performance appraisal on the achievement of organizational goal is that:-To know the role
of performance appraisal for the achievement of organizational goal. To identify the factors that
leads to improper performance of employees.

The researcher would try to sum up by gathering more reliable data, good analysis and finally
come up with its remedial solutions.

1.4. Basic research questions

Generally the study would answer the following basic research questions:-
1. What is the role of performance appraisal on the achievement of organizational goal?
2. What are the major problems of CBE Jimma main branch in the implementation of
Performance appraisal practice?
3. How performance appraisal plan is conducted in CBE Jimma branch).

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1.5 Objective of the Study

1.5.1 General objective

The general objective of this study would be to assess the role of performance appraisal on the
achievement of organizational goal in the case of CBE Jimma main branch.

1.5.2 Specific objectives

The specific objectives of the study would be:-

 To analyze the practice of employee appraisal activities in the bank

 To identify the problems related to performance appraisal practice

 To understand the role of performance appraisal practice on the organizational goal

achievement.

1.6 Significance of the study

The study has many importances among them: -first, the finding would help the company in
order to know the major problems that influence to do good performance appraisal and to take
corrective action on it. Secondly, this study result would be used as reference for performance
appraisal and organizational goal achievement by bringing an initial insight for other researchers
in further study finally the study would help the student to broaden his understanding on the
subject matter.

1.7 Scope of the study

Since it is difficult to cover all management and related practice of the company because of time
and financial problem the researcher want to limit its case study only on the role of performance
appraisal on the achievement of organizational goal in the case of commercial bank of Ethiopia
Jimma main branch.

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1.8 Limitation of the Study

While conducting the research, the researcher faced some constraints, such as unavailability of
sufficient reference materials and information, unavailability of research conducted related topics
and unwillingness of respondents to give full information. In addition to this the detail
investigation was not taken due to financial scarcity to get different materials, photo copies and
the likes which are supportive for the study.

1.9 Organizations of the Study

The paper was organized in to five main chapters. The first chapter is an introductory part which
contains back ground of the study, back ground of the organization, statement of the problem,
objectives of the study, significance of the study, research questions, scope of the study,
limitation of the study and organization of the study. The second chapter provides an over view
of the related literature. The third chapter contains study area, research design, and source of
data, method of data collection, sample size and sampling technique, data processing and
analysis, data presentation. The fourth chapter presents analysis and presentations of data and the
fifth chapter provides conclusion and recommendation.

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 CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Meaning and nature of performance appraisal

performance appraisal is the processes by which organizations evaluate employees performance

based on present standard(Monday;1995,p388)performance appraisal is an integral part of
human resource management that needs a need through consideration personnel managers as
improper usage of the appraisal has an adverse effect on productivity and organizational goal
achievement. Organizations must adopt performance appraisal as an important personal function
to obtain important information concerning employee’s performance and behavior and to make
different decisions based on those information obtained to achieve this, personnel department in
collaboration with in manager and operations employee's must design and undertake the
appraisal program. The possible approaches for designing the program are the informal and
formal types.

When supervisor think about how employee are doing they are evaluating them in formally. The
informal (unsystematic) appraisal can be undertaken at any time and lacks precise record of
employee's accomplishment it is often hap hard and the evaluation solely relaying on the
supervisor's opinion. Therefore, inaccurate and biased information can be obtained for
layoff ,promotion and other important decision that affect employee's productivity and
organizational goal achievement(pigors,1961),argued against the informal or unsystematic
appraisal without systematic information regularly gathers and periodically reviewed ,it is hard
for supervisors to be fair employees have no satisfactory basis on which build their expectations.
The formal appraisal is undertaken in a regular and systematic to evaluate employee's
performance. A systematic and periodic appraisal is seemed superior to a causal, intuitive and at
advance of the time when it may be needed thereby avoiding spot judgments when a decision
must be made (Filippo, 1980).

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In addition it provides information in a form that permits the comparison of one employee
performance with other and characterized by documentation of current and past performance for
making objective judgments.

2.2 Purpose of performance appraisal

Organization use performance appraisal indifferent ways for different purpose. But its overall
purpose is to lay a base for making personal related decisions. The plan and method is to be used
are highly depending up on its purpose. The performance appraisal making is used for
administrative and employee development purpose.

2.2.1 for Administrative Purpose

Appraisal is used for administrative purpose, when a manager wants to determine the
performance of employees for salary administration, promotion, transfer, layoff, termination,
demotion and making other administrative human resource planning. The result help to estimate
the quality and number of personnel required to replace poor performances that are expected to
be fired or demoted. It also helps to full fill those positions that are left empty when employees
are promoted or transferred, (Monday, 1990; 199).

2.2.2 for development purpose

Performance appraisal helps to assess performance strength and weakness and its can be used as
basis of determining training needs. Identifying area where training is needed can be facilitated
by acquiring information from the appraisal. It is advantageous to train employees of poor
performance rather than firing or demoting them because acquiring new components employee
to fill the position may be cost and time consuming. It may also take more effort to familiarizing
those new employees to the organization environment. Training required not only improving
poor performance of an employee but also placing to asses employee's potential for higher and
key position. When appraisals are used for developing purpose, the employee's performance is
evaluated against performance standard rather than result works (Monday, 1990).

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2.3 Performance Appraisal Methods

This section looks at how management can actually establish performance standards and devise
instruments that can be used to measure and appraise an employee’s performance. A number of
methods are now available to assess the performance of the employees (Rue and Bayer, 2004).

1) Critical Incident Method

Critical incident appraisal focuses the rater’s attention on those critical or key behaviors that
make the difference between doing a job effectively and doing it ineffectively. What the
appraiser does is write down little stories that describe what the employee did that was especially
effective or ineffective. In this approach to appraisal, specific behaviors are cited, not vaguely
defined personality traits. A behaviorally based appraisal such as this should be more valid than
trait-based appraisals because it is clearly more job related. It is one thing to say that an
employee is “aggressive” or “imaginative or “relaxed,” but that does not tell anything about how
well the job is being done. Critical incidents, with their focus on behaviors, judge performance
rather than personalities. Additionally, a list of critical incidents on a given employees provides a
rich set of examples from which the employee can be shown which of his or her behaviors are
desirable and which ones call for improvement.

2) Checklist

In the checklist, the evaluator uses a bit of behavioral descriptions and checks of those behaviors
that apply to the employee. The evaluator merely goes down the list and gives “yes” or “no”
responses. Once the checklist is complete, it is usually evaluated by the staff of personnel
department, not the rater his self. Therefore the rater does not actually evaluate the employee’s
performance; he/she merely records it. An analyst in the personnel department then scores the
checklist, often weighting the factors in relationship to their importance. The final evaluation can
then be returned to the rating manager for discussion with the subordinate, or someone from the
personnel department can provide the feedback to the subordinate.

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3) Graphic Rating Scale

One of the oldest and most popular methods of appraisal is the graphic rating scale. They are
used to assess factors such as quantity and quality of work, job knowledge, cooperation, loyalty,
dependability, attendance, honesty, integrity, attitudes, and initiative etc. However, this method
is most valid when abstract traits like loyalty or integrity are avoided unless they can be defined
in more specific behavioral terms. In the design of the graphic scale, the challenge is to ensure
that both the factors evaluated and the scale points are clearly understood and unambiguous to
the rater.

4) Paired Comparison

The paired comparison method is calculated by taking the total of [n (n-1)]/2 comparisons. A
score is obtained for each employee by simply counting the number of pairs in which the
individual is the preferred member. It ranks each individual in relationship to all others on a one-
on-one basis. If ten people are being evaluated, the first person is compared, with each of the
other nine, and the number of items this person is preferred in any of the nine pairs is tabulated.
Each of the remaining nine persons, in turn, is compared in the same way, and a ranking is
evolved by the greatest number of preferred “victories”. This method ensures that each employee
is compared against every other, but the method can become unwieldy when large numbers of
employees are being compared.

5) Management by Objectives

Management by objectives (MBO) is a process that converts organizational objectives into

individual objectives. It can be thought of as consisting of four steps: goal setting, action
planning, self-control, and periodic reviews:-

a) In goal setting, the organization’s overall objectives are used as guidelines from which
departmental and individual objectives are set. At the individual level, the manager and
subordinate jointly identify those goals that are critical for the subordinate to achieve in order to
fulfill the requirements of the job as determined in job analysis. These goals are agreed upon and
then become the standards by which the employee’s results will be evaluated.

9
b) In action planning, the means are determined for achieving the ends established in goals
setting. That is, realistic plans are developed to attain the objectives.

This step includes identifying the activities necessary to accomplish the objective, establishing
the critical relationships between these activities, estimating the time requirement for each
activity, and determining the resources required to complete each activity.

c) Self-control refers to the systematic monitoring and measuring of performance. The MBO
philosophy is built on the assumptions that individuals can be responsible, can exercise self-
direction, and do not require external controls and threats of punishment.

d) Finally, with periodic progress reviews, corrective action is initiated when behavior deviates
from the standards established in the goal-setting phase. Again, consistent with MBO
philosophy, these manager-subordinate reviews are conducted in a constructive rather than
punitive manner. Reviews are not meant to degrade the individual but to aid in future
performance. These reviews should take place at least two or three times a year.

6) 360 degree appraisal

The 360 degree feedback process involves collecting perceptions about a person’s behavior and
the impact of that behavior from the person’s boss or bosses, direct reports, colleagues, fellow
members of project teams, internal and external customers, and suppliers. Other names for 360
degree feedback are multi-rater feedback, multi- source feedback, full-circle appraisal, and group
performance review. 360 degree feedback is a method and a tool that provides each employee the
opportunity to receive performance feedback from his or her supervisor and four to eight peers,
subordinates and customers. 360 degree feedback allows each individual to understand how his
effectiveness as an employee, co-worker, or staff member is viewed by others. (Rue and Byer,
2004).

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2.4 Performance appraisal processes

Establishing performance appraisal; identification of specific goals is the starting point of

performance appraisal processes. For any appraisal system to serve all its purpose the
management should select performance appraisal goal that believed to be most important and can
be realistically achieved (Monday, 1999)

Communicating the standard to employees; after specific appraisal goal has been
established, workers must understand what are expected from them in their job. One possibility
to foster his understanding is for supervisor’s to review with employees the major duties
determined through job analysis and described in a job distribution (Monday; 1996).

Discussing the appraisal with the employees: this is a very challenging step in appraisal
processes as it involves presenting accurate appraisal to the employees and has the person accept
the appraisal is in the constructive manner(Robbins;1996).

Measuring actual employee performance; as per evaluation method used in organization and
instruction given for appraisal employee’s actual performance is evaluated through observation,
interview and records then compares actual performance with standard set and find out if there is
any deviation. Deviation may be positive and negative. If employee performance is more than
standard there is positive, and vice versa.

Taking the corrective action; this includes guiding counseling and coaching the employee or
making arrangement for training and developing for the employee in order to ensure improved
performance. If the actual performance is very poor and beyond the scope of improvement, it
may be necessary to take steps for demotion or retrenchment or any other suitable measurer. It
also involves making suggestions for some changes to be made on the standard job analysis or
other factors to facilitate effective performance of employee (Monday; 1990)

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2.5 Uses of performance appraisal
According to Monday (1999; 337), for many organizations the primary goal of an appraisal
system is improved performance. However other goals may be sought as well. Potential problem
and possibly primary cause of much dissatisfaction with appraisal may result from expecting too
much from one appraisal plan.

 Human resource planning:-A well designed appraisal system provides profile of the
organizations human resource strength and weakness to support this effort (Monday,
1999; 338).

 Recruitment and selection:-performance evaluation rating maybe help full in

predicting the performance of job applications. The determination of selection tests
validity would depend on accuracy of appraisal results.

 Training and development:-A performance appraisal should pin out an employee's

specific needs for training and development(Monday;1999)

 Career planning and development:-Career planning and development may be viewed

from either individual or organizations view point. In either cases performance appraisal
data are essential in assessing an employee’s strength and weakness and in determining
the person’s potential(Monday;1999,338)

 Compensation programs:-performance appraisal results provide basis for rational

decisions regarding pay judgments to encourage good performance, firm should design
and implement a fair performance appraisal system and then reward the most productive
workers and team accordingly.

 Internal employee relations: -Performance appraisal data are also frequently used for
decision in several areas of internal employee relations including motivation, promotion,
demotion, termination, layoff and transfer.

2.6 Problem of performance appraisal

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Any system can fail or mal functions, performance appraisal are no exception. The system of
performance appraisal may fail for much reason including the problem related to the designed
and the operation of the system, skill and competence of appraisers and perception of employees,
about appraisal. The following are discussions on major appraisal problems.

2.6.1 System design and operating problem

The performance appraisal system breakdown because if they are poorly designed. The can be
blamed if the creation for evaluation one poor, the technique used is cumber so I or the system is
more from than substance. If the criteria used focused solely on activity rather than output results
or on personality traits rather than performance the evaluation may not be well received and if its
process fail to operate efficiently (Ivancceuich,1989).

2.6.2 Problem with appraises

For the appraisal system to work well the employee must understand it, tell it is fair, and be work
oriented enough to care about the result. One way foster understanding is for the employee to
participate in system design and be trained to some extent in the process performance evaluation.
If performance evaluator is in competent or unfair the employee may resist, sabotage or ignore
them. Performance evaluation may also be less effective than desired it the employee is not work
oriented and sees work only as a means to an end sough of the job. Generally employees do not
understand the system or its purpose employees are not work oriented and appraisal may be
below the expectation.

2.6.3 Problem with appraisers

An evaluation system can hampered or destroyed often because raters are not been adequately
trained. It should be clear therefore that even if the system is well designed little knowledge and
skill on the side of raters can lead to a serious of problem and error in competing appraisal
(Ivancevich;1998).

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2.7 Goal Achievement
2.7.1 Meaning and nature of organizational goal
A goal is a future expectation, some designer future state. It is something the organization is
starting to accomplish. The goal of an organization is the reason for attainment of job goals. The
goal of an organization will determine the nature of its inputs and out puts, the serious of activity
through which the output are achieved and interaction with its external environment. The extent
to which an organization is successfully in attaining its goal is a base for the evaluation of
organizational performance and effectiveness organization are tools for the achievement of
common objective through co-operative effort. One of the basic functions of the management is
therefore to identify the objective of the business. It provides the bases for performance of all
other management function. Goals are not only specific statement of the desired result but also
have relatively short time dimension. To summarize, organizational goal achievement is reaching
at the end for the pre-determined plan or destination through the variety vehicles such as
technological development performing responsible employee evaluation, training and
development and selection.

2.7.2 Uses of goals

Goals provide basic for performance of all management functions; provides unique identify for
the enterprise: provide direction for organizational effort: help in un lifting the employee morale
and motivation serve as critical for evaluating decision and provide basic for control.

According to (Monday, 1990) goals are important; first goals give meaning to scores on the
measures you are tracking. Goals serve as bench marks or reference point which performance is
measure can be compared. Secondly; the existence of goals has a significant relationship to the
improvement of individual and goals.

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2.7.3 Requirements for meaningful goal

There are several requirements that must be met it resulting goals are to be meaningful and
motivational.

1. Goal should be perceived as attainable.

2. Although participating in and of it will not guarantee that performance will improve or
goal will be attained.

3. The level of difficulty of particular goal should correspond to its relative importance in
meeting compelling business need.

4. Multiple goal should be set for each measure to establish arrange with in which
performance on a given measurement can be expected to vary.

2.8 The relation between performance appraisal and organizational goal

achievement
Performance appraisal is a formal system of periodic review and evaluation of an individual job
performance for the hope of improving employee, and thus organizations. So it is a system its
design should not blamed if the criteria for evaluation are poor so the effective use of
performance evaluation system and it criteria the technique of appraising selected well the
organizations symbols will be achieved. Effective shame of employee performance appraisals are
carefully and systematically worked out with meaningful participation and commitment of
appraisers, this leads to the organization goal achievement.

Generally employees performance evaluation and organizational goal achievement has a direct
relationship means that if the evaluation system is well designed and operated correctly all
employees are strive for the achievement of the goal of the organization (koontz; 1988).

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2.9 Requirements of effective appraisal system
The key requirements of any appraisal system are relevancy, sensitivity, reliability, acceptability
and practicality. Here under we will look all the above listed in deep.

1. Relevancy:-This implies that there are clean links between the performance standards for
a particular job and organizational goal and between the critical job element identity
through a job analysis and the dimension for rated on appraisal form.

2. Sensitivity:-This also implies that a performance appraisal system is capable of

distinguishing effective from ineffective performance. It is not and the best employee are
rated differently from the worse employees that the appraisal system cannot be used for
an administrative purpose, it certainly will not help employees to develop and it will
undermine the motivation of both supervisors and subordinates.

3. Reliability:-A third requirement of sound appraisal system is reliability in this context it

refers to consistency of judgments for any given employee appraisal made by a rates
working independently of one on other should agree closely. In practice risings made by
supervisors tend to be more reliable than those made by peers.

4. Acceptability:-In practice acceptability is the most important of all HR programs must

have the support of those who will use them or else human will be used to the worth
them. Unfortunately many organizations have not put much effort in to garnering the
truant end support and participation of those who will use the appraisal system.

5. Practicality:-Implies that the appraisal instruments are easy for man power and employee
to understand and use. Those that are not or that impose in coordinate time demands on
all parties simply are not practical and managers will resist using them.

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 CHAPTER THREE

RESEARCH METHODOLOGY
3.1 Study Area
The study would be conducted in Oromia region in Jimma zone particularly at commercial bank
of Ethiopian Jimma main branch. The bank is located in Jimma town which Fars 365km from
capita city Addis Ababa. The commercial bank of Ethiopia is recognized as the largest bank in
the country. Commercial bank of Ethiopia Jimma main branch was one of the service rendering
company that facilitate by providing money to those who want loan, deposit, domestic transfer of
money and foreign exchange . CBE Jimma branch was established on April 4/04/1947 GC (from
organization’s manual).

3.2. Research design

The study would use descriptive type of research design because it describes how performance
appraisal plays a role on the achievement of organizational goal.

3.3. Source of Data

Both primary and secondary data would be used for this study. Hence, necessary data could be
gathered from primary source such as questionnaires from employees And magazines,
newspapers, and brochures of the organization would be used as a secondary source.

3.4. Method of Data Collection

In this study both primary and secondary data collection method were used. Principally self-
administered questionnaires were proposed tools for primary data collection method. Because of
time given to conduct this study was short, the researcher would use these techniques to get more
data within short period. And secondary data would be collected through the review of the
documents of the bank.

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3.5. Sample size and sampling technique
Due to the manageability or smaller number of employees existing in the organization, the
student researcher would involve all target population in the study with the use of census
method. This is because, primarily if the total population is small(less than 200) it is better to use
census survey and hence the population in the study area is small I prefer to employee this
survey. In addition to this, census survey would eliminate sampling errors.

3.6. Data processing and analysis

After the data had been collected, the data would be processed on the activity, which involve
editing, coding and classifying data to make it suitable for further analysis. Descriptive analysis
would employ to examine the finding of the study. Since it refer to procedure for organizing,
summarizing and describing qualitative and quantitative data about the sample of the study.

3.7. Data presentation

After the data had been processed and analyzed well, it would be presented by using table and
graph with their figure and interpreted in convenient manner accordingly

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 CHAPTER FOUR

DATA PRESENTATION AND ANALAYSIS

In this section, the data gathered from employees of commercial bank of Ethiopia Jimma main
branch were presented and analyzed. To get necessary data questionnaires were distributed to the
whole (60) employees of the bank.

4.1 Analysis on the personal profile of respondents

Table 4.1 personal profile of respondents

No Item Alternatives No of respondents Percentage

1 Sex Male 40 66.67
Female 20 33.33
Total 60 100

2 Age below 25 years 12 20

26_35 years 33 55
36_45 years 12 20
46_55 years 0 0
Above 56 years 3 5

Total 60 100
3 Academic Ma\MSc 3 5
qualifications BA\BSC 36 60

Diploma 12 20

certificate 0 0
12complete and above 9 15
Total 60 100
Source; questioner, 2006

19
As shown above on the table the characteristics of respondents were examined interns of age, sex
and academic qualification.

The sex parameter accounted about 66.67% of male and 33.33% of females.

As regard to the age, one can easily understand that the age group between 26and 35 years have
the lion share of the distribution by controlling the555 of the total population and those below the
age of 25 years accounted only 20% of the total population and the age ranged between 36and45
years accounted the same 20% of the total population. Whereas the ages range above 56 years
accounted only 5%. As shown above the age between 46 and 55 years has no share.

In terms of item 3 majority of respondents’ possess the quality of BA\BSc degree with a total
share of 60%. The rest 5%, 20%and 15% of respondents were accounted for Ma\MSc, diploma,
and 12complete and above respectively. As the data shows there is no employee in the bank who
possesses the quality of certificate academically.

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4.2 Analysis on the practice of performance appraisal
Table 4.2 the degree of validation of performance appraisal criteria’s and employee’s
satisfaction with the criteria

NO. ITEM Alternatives No of percentage

respondents
1 Is there any performance Yes 51 85
appraisal practice in the
No 9 15
organization?
Total 60 100
2 If your answer for item 1 is yes Paired comparison
what type of system is your performance evaluation 0 0
organization use? Measuring performance
with the standard set in 57 95
the organization
Measuring actual 3 5
employee performance

Others 0 0
Total 60 100
3 Do you think that the criteria of YES 48 80
employee evaluation in your bank NO
valid and reliable? 12 20
Total 60 100
4 Are you satisfied by the criteria Yes 51 85
listed in the evaluation system?
No 9 15

Total 60 100

Source; questionnaire, 2006

21
Performance appraisal is intended to evaluate the performance and potential of employees. The
greater reliance the criteria is, the greater validity of evaluation. When subjection criteria are
used the evaluation becomes less valid for decision making and carrier planning. Moreover,
employer or appraisers are more effective if they measure an employee’s performance item of
how well specific job standard are met.

So according to the table above shows 85% of employees approve the existence of performance
appraisal system in the bank. But the rest15% of them denies its existence.

According to item 2 of the above table, the performance appraisal system the bank mostly used is
measuring performance evaluation with the standard set in the organization which accounted for
95% of the respondents. Rarely, the organization tries to measure actual employee performance
as the respondent’s response. But there is no paired comparison performance evaluation in the
organization.

As Item 3 of table 4.2 shows that, 80% of respondents think the performance evaluation criteria’s
are valid and reliable. But the rest 20% responds negatively.

Furthermore most employees of CBE Jimma main branch (85%) are satisfied by the performance
evaluation criteria listed in the organization even though some (15%) are dissatisfied.

In addition, the respondents were asked the reason of satisfaction by the criteria of performance
appraisal, accordingly to the job description of each employee of each employee. Some of the
others respond that since the criteria can evaluate our performance and because of they are valid
and reliable. Some others also said they are satisfied because the criteria well evaluate the
employees and they are not biased.

22
Table 4.3 respondent view regarding to pre-appraisal meeting, participation the purpose
of the evaluation and the tie of the appraisal takes place

NO ITEM Alternatives No of Percentage

. respondents
1 To which major purpose the For administrative 0
purpose 0
organization evaluate the
performance of employees? For motivational purpose 13 22

For employee 47 78
development purpose

Total 60 100

2 Do the organization arrange pre- Yes 6 10

appraisal meeting for appraisers No 54 90
about evaluation system? Total 60 100

3 If your answer for item2 is yes Once 24 40

how many times pre-appraisal Twice 36 60
meeting conducted? Three time 0 0
Four time 0 0
Total 60 100

4 Do you have participation in Yes 39 65

appraisal processes? No 21 35
Total 60 100
5 If your answer for item 4 is yes Strongly agree 57 95
do you believe that your Agree 3 5
participation contributes for the Disagree 0 0
achievement of organizational Strongly disagree 0 0
goal? Total 60 100

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 6 How often performance Once a year 12 20
appraisal takes place in CBE Twice a year 48 80
Jimma main branch? Three times a year 0 0
Others 0 0
Total 60 100
Source: questionnaire, 2006

According to item 1 of the table above the respondents that constitute 78% and 22% are claimed
that the bank evaluate its employees for employee development and motivation purpose
respectively.

As observed on the table above, 90% of employees replied that almost no pre-appraisal meeting
was held in the bank. In this case it could be conclude that performance of work in CBE Jimma
main branch have taken place in un co-ordinate and un planned manner and without ensuring
mutual understanding and agreement between appraisers and appraises about crucial problem
which would affect performance. As item 4 of the above table shows 65% of respondents have
vote to participate in appraisal processes. Although in terms of item 5, most (95%) of
respondents strongly agree the contribution of their participation for achievement of
organization’s goal.

Furthermore, in light of item 6 of table 4.3 majorities of respondents (80%) respond that
employee’s performance evaluation takes place twice a year. In this regard current system of
performance evaluation in the bank would be very difficult to secure compressive data on
employee’s performance with only two sessions.

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Table 4.4 Respondent’s opinion towards post appraisal situation and focused area

NO. ITEM Alternatives No of Percentage

respondents
1 On what evaluation criteria On weakness of
does your organization employees 9 15
focus?
On strength of employees 6 10
Both on strength and
weakness of employees 45 75

Others 0 0
TOTAL 60 100

Source: questioner, 2006

Post appraisal discussion is an essential component of appraisal system to provide employees

feedback information to be used for improvement of future performance. Informing appraisal
results is helpful to employees because it is not only developing strength but also make action on
their weakness (Monday, 1990).

So as reveal in table 4.4 above the discussion point on which appraiser often focused in post
appraisal conference were both performance weakness and strength employees. It was confirmed
by the 75% of respondent the existence of such practice in CBE Jimma main branch.

25
4.3 Analysis of problems in practicing performance appraisal and the attitude
of employees regarding the performance appraisal practice in the bank
Table 4.5 Attitude of employee’s on the practice of performance appraisal.

NO. ITEM Alternatives No of respondents percentage

1 What is your attitude Use full 45 75
regarding performance Not use full 15 25
Total 60 100
appraisal?
Source: questioner, 2006

Now a day, performance evaluation is one of the major responsibilities of managers involved in a
system of human resource management. For organization’s member to perform well. Their
performance should assess their weakness and strength and they should get feedback to know
where they stand in their performance. Performance evaluation also useful for performance
improvements, compensation adjustment, placement decision, training and development, needs
development and equal employment opportunity (Monday, 1990).

As indicated in table 4.5 respondents were provided response about the usefulness of the
evaluation of performance, accordingly 75% of respondents were responded that performance
appraisal is useful for the main human resource practice. But the remaining few respondents or
25% of them said that performance appraisal practice is not useful. This help for possible
conclusion that appraisal is indispensable and crucial section of human resource management in
order to achieve per-specified mission or goals.

Table 4.6 existence of performance appraisal problems

NO. ITEM Alternatives No of respondents Percentage

1 Is there any major Yes 42 70
problem of the bank to
implement performance No 18 30
appraisal practice?
Total 60 100

Source: questioner, 2006

26
The primary goal of many organizations is to improve a potential problem and possibly a
primary cause of much dissatisfaction may result from expecting too much from appraisal plan.
If a performance appraisal practice is properly designed and communicated it can help to achieve
organization’s objective and enhance employee’s performance. Performance appraisal uses to
achieve other parameters like promotion, demotion, reward and transfer (Ivancceuich, 1989).

In terms of table 4.6 70% of the respondents responds to there is a problem of implementation
the appraisal practice in the bank. But the rest 30% of respondents revealed that there is no
problem in the practice to implement in the bank.

Furthermore the system of performance appraisal may fail for many reasons including the
problem related to the designed and operation of the system, skill and competence of appraiser,
implementation problem and perception of employee about appraisal.

When respondents were asked about what were the problems in the form of open ended question
most of them answered that problems related with the system including not up to date,
incomplete, not implemented on time and problems related with the appraisers including bias and
unaware evaluation and problem related with those of the apprises with lack of preparation and
lack of awareness about the purpose of the evaluation.

Finally respondents were asked about the measures that are taking on by the bank to avoid
appraisal problems. Accordingly some respondents’ replay that make the system complete and
up to date, train employees both appraisers and apprises about how to conduct the performance
appraisal practice in a best way, communicating and discussing the standards of evaluating
criteria with the employees is important to know the effectiveness of that criteria to evaluate
performance of employees. Others say that taking corrective action is essential to take lesson
from past mistakes when evaluating employees and draw lesson to propose best criteria to
evaluate individual’s performance.

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4.4 Analysis on the role of performance appraisal on the achievement of
organizational goal

Table 4.7 the role of performance appraisal on the achievement of organizational goal

NO. ITEM Alternatives No of respondents percentage

1 Is there any role that Yes 51 85
the performance
appraisal plays on the No 9 15
achievement of
Total 60 100
organizational goal?

Source: questioner, 2006

According to the table above most (85%) of the respondents respond that there is a role that a
performance appraisal plays on the achievement of organizational goal. But the remaining 15%
respond to no role that performance appraisal plays for the achievement of organizational goal.

When respondents were asked to list the roles that performance appraisal plays on the
achievement of organizational goal they respond in such a way for employee development,
resource allocation, technological expansion, those employees who evaluated well strive for the
achievement of their organizational goal, have the role of evaluating and know about their
strengths and weakness of the employees, good evaluation can motivate employees and those
motivated employees run to achieve their organizational goals, for job satisfaction. Lastly when
the employees were asked about how their organization conduct or implement the performance
appraisal plan in the bank they respond that first the administrative bodies develop the plan
through posting on the board in the form of announcement then through conducting a formal
meeting the evaluation will be accomplished finally the results will be either posted on board or
come to offices in the form of mail.

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 CHAPTER FIVE

CONCLUSION AND RECOMMENDATION

5.1 CONCLUSION

To achieve the objective of the study, the structure review part contribute a lot to generate
knowledge about employees performance evaluation, organizational goal achievement and the
role of performance on the achievement of those organizational goals. It also used to analyze and
interpret the available data

The followings are the main findings of the study:-

 Most of the surveyed population regarding the validation of performance appraisal and
their satisfactions assure that the criteria the bank used to evaluate the performance
employees are valid and as well as satisfactory. Mainly the bank uses the system of
measuring the performance with the standard set in the organization.

 Regarding pre-appraisal meeting , participation and time of performance appraisal most

of the respondents assure that almost the nonexistence of pre-appraisal meeting even if as
they respond pre-appraisal meeting is conducted once to arrange and facilitate for
conducting appraisal meeting. This implies that respondents assume conducting meeting
once before appraisal is not enough to pave the way for a mentioned meeting. In addition
most of the employees strongly agree on the role of their participation for the
achievement of the bank’s goal. However, even if they think o, their note to participate in
appraisal processes is minimal as understood from the data. The last but not the least
point from the data related to time of performance the bank takes place performance
appraisal twice a year

 Related to focus area for performance appraisal CBE Jimma main branch mostly focused
on both the strength and weakness of employees to evaluate performance.

 Majority of respondents believe that performance appraisal is useful for organizational

goal achievement.

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 The major problems of performance appraisal on the bank include

 Problem related with the system

 Problem related with the appraiser and

 Problem related with the apprise

 To solve the problems the bank is taking some measures including make the system
complete and up to date, train employees both appraisers and apprises about how to
conduct the performance appraisal practice in a best way, communicating and discussing
the standards of evaluating criteria with the employees and taking some corrective
actions.

 Regarding the role of performance appraisal majority of respondents that there is a role
that performance appraisal plays on the achievement of organizational goal like;
evaluating and know about their strengths and weakness of the employees, good
evaluation can motivate employees and those motivated employees run to achieve their
organizational goals, for job satisfaction.

 Lastly the plan of performance appraisal in the bank is conducted through; first the
administrative bodies develop the plan through posting on the board in the form of
announcement then through conducting a formal meeting the evaluation will be
accomplished finally the results will be either posted on board or come to offices
in the form of mail.

30
5.2 RECOMMENDATIONS

Based on the results of analysis of data and conclusion the following recommendations
are forwarded:-

 The existing performance evaluation criteria is accepted by the employees of the

bank and it satisfies them, so the bank is advisable to continue to use such criteria
in addition other criteria that support and develops the existing criteria

 The bank is advised to adjust additional pre-appraisal meeting to create awareness

on the part of employees of the bank about rule of performance appraisal on
performance evaluation time. In addition the bank should try to improve the
participation and time of performance appraisal to improve the involvement of
employees and to actively follow their capacity in their performance respectively.

 The bank is better to focus to eliminate the problem related with implementation
since it is the dual effects of both apprise and appraiser and can affect the bank
hardly.

 The bank also recommended to took additional measures to totally erase those
problems

 Since performance appraisal plays a great role to the achievement of

organizational goal, the bank is advised to make the evaluation in a best manner
i.e. not depend on the purpose of employee development only and need to
continue look on other purposes like employee motivation.

31
 References

Denney, Gibson Ivancevich, (1998), human resource management.

David Ingram, (2009), small business performance appraisal, Walsh University, houson printing
company

Edwin.B.flipoo, 1984), personnel management, 6th edition.

Harold, Koonth, (1988), management 9th edition.

Wendell, French (2007), Human resource management, 6th edition.

Pigors, M (1981), Personal administration, 9th edition.

Stephen, robins (2013), organizational behavior, 15th edition.

Woyne Monday (1999), human resource management 7th edition.

Subbara, P.c (1990), human resource management, 7th edition.

Rue and Bayer, (2004), human resource management 7th edition.

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