ASSESSMENT OF PERFORMANCE APPRAISAL SYSTEM AND ITS

ROLE ON
EMPLOYEE PERFORMANCE (IN CASE OF COMMERCIAL BANK OF
ETHIOPIA, BELAY ZELEKE BRANCH)

JIGDAN COLLEGE

DEPARTMENT OF MANAGEMENT

A RESEARCH SUBMITTED TO THE DEPARTMENT OF

MANAGEMENT FOR PARTIAL FULFILLMENT OF B.A DEGREE
IN JIGDAN COLLEGE

By:

NAME ID

MIRKAN MISGANEW MANDIE BDMGMT/345/13C

BELAY ZELEKE, ETHIOPIA

APRIL 2017 E.C

DECLARATION
This research project is my original work and has not been presented to any other institution or
university.

Signed by Date ……………….

Name MIRKAN MISGANEW MANDIE

Signature …………………………………………

Advisor name ------------------------- Eexaminer name-------------- Course chair name- -----

.Page |ii
 ACKNOWLEDGMENT
First and for most our deepest gratitude goes to our lord for his support throughout our life. Secondly, I
am grateful to my friends for their dedicated interest, support and unreserved guidance throughout this
work. Thirdly, I would like to thank the staffs of Commercial bank of Ethiopia Belay zeleke branch that
helped me by giving information to conduct this study. Lastly but not least I would like to thank our
families and intimate friends who support and motivate with ideally, monetary and morally to conduct
this study.

ii
 ABSTRACT
The study was conducted to assess performance appraisal system and its role in the case of
commercial bank of Ethiopia in Belay zeleke branch. The purpose of the study is to promote
effective appraisal system for the organization, motivate employees and enhance the overall
performance of the organization. Both primary and secondary source of data are used to collect
the appropriate data related to the study. Data from primary sources are obtained through
Questionnaire of the participants of the study. The secondary sources are obtained from materials
related the topic under investigation. The study was conducted by collecting data from “55”
respondents by using questionnaire and the data were organized by descriptive method. The
reason that behind this is that descriptive research is suitable to reflect the actual problems of
performance appraisal system. It also enables that the researcher to investigate the reality on
grounds as it is. The finding of the study shows that there is lack of formal appraisal system, lack
of fairness, lack of the same criteria for all sorts of Jobs and positions etc. These employees
subjected to the study were employees of commercial bank of Ethiopia in Belay zeleke branch.
Based on the analysis of facts and findings I recommended that the bank should practice formal
performance appraisal system, performance appraisal fairness, use the same criteria for all sort of
jobs and positions and the researchers find that the bank does not give additional rewards for
employees who perform better within the organization.

iii
Table of Contents
Content Page
DECLARATION............................................................................................................................ i
Acknowledgment ........................................................................................................................... ii
Abstract ......................................................................................................................................... iii
CHAPTER ONE ........................................................................................................................... 1
1. INTRODUCTION..................................................................................................................... 1
1.1BACKGROUND OF THE STUDY ...................................................................................... 1
1.2 STATEMENT OF THE PROBLEM .................................................................................... 2
1.3 Research question .................................................................................................................. 3
1.4 Objective of the study ........................................................................................................... 3
1.4.1 General Objective ........................................................................................................... 3
1.4.2 Specific Objective........................................................................................................... 3
1.5 Significance of the study ....................................................................................................... 3
1.6 SCOPE OFTHE STUDY ...................................................................................................... 3
1.7 Limitation of the study .......................................................................................................... 4
1.8 Organization of the study ...................................................................................................... 4
CHAPTER TWO .......................................................................................................................... 5
2 Literature Review ...................................................................................................................... 5
2.1 Performance Appraisal System ............................................................................................ 5
2.2 Purposes of performance appraisal system ........................................................................... 5
2.3 Who should appraisal? .......................................................................................................... 6
2.4. Methods of performance appraisal ....................................................................................... 7
2.5 Potential problems to Performance Appraisal ....................................................................... 8
CHAPTER THREE .................................................................................................................... 11
3. RESEARCH METHODOLOGY AND DESIGN ................................................................ 11
3.1 Research design ................................................................................................................... 11
3.2 Source of data ...................................................................................................................... 11
3.3 Data collection method........................................................................................................ 11
3.4. Target population and sampling techniques ....................................................................... 11
3.5 Data analysis and presentation ............................................................................................ 12

iv
CHAPTER 4 ................................................................................................................................ 13
4, DATA ANALYSIS AND INTERPRETATION ................................................................... 13
4.1 General information of respondents. ................................................................................... 13
4.2. Respondents’ opinion towards the performance appraisal system..................................... 14
4.2.1 Overall process of performance appraisal system ........................................................ 14
4.2.2 Purpose of Performance appraisal System ................................................................... 16
4.2.3 Criteria of performance Appraisal system .................................................................... 17
4.2.4 Problems of performance Appraisal system. ................................................................ 18
Chapter five ................................................................................................................................. 21
5. Summary of finding, Conclusions and Recommendations ................................................. 21
5.1 Summary of finding ............................................................................................................ 21
5.2 Conclusions ......................................................................................................................... 21
5.3 Recommendations ............................................................................................................... 22
Reference ..................................................................................................................................... 24
Appendix I ................................................................................................................................... 25

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LIST OF TABLES

Table 4.1: Bibliographical profile of respondents....................................................................................... 13

Table 4.2: Process of performance appraisal system .................................................................... 14
Table 4.3: purpose of performance appraisal system.................................................................... 16
Table 4.4: criteria of performance appraisal, system .................................................................... 17
Table 4.5: problems of performance appraisal system ................................................................. 19
Table 4.6: Problems occurring to the appraisal system of your organization. .............................. 20

vi
 CHAPTER ONE

1. INTRODUCTION

1.1BACKGROUND OF THE STUDY

Human resources are the most important asset of the organization. The success and failure of an
organization is largely positive and creative contribution from people, the organization cannot be progress
and prosper. In order to achieve the goal and perform activities of the organization we need to recruit
people with requisite skin, qualification and experience (Wilkinson and T. Redman, 2008)

According to Wendess L. French, (2007) is the process of attracting applicants for the position needed?
The employment process can be seen as the most widely used activity in any business organization. in
order for it to attract, select and maintain and efficient and effective work force.

Each organization requires human resources with necessary qualification, skills, abilities, knowledge,
work effectively and efficiently. Assigning the right person in the right position at the right time is the
most critical issue to organization.

The activity of work performed can be only as right as the capability of the people performing it. The two
initial stages in staffing and process of an organization are recruitment and selection.

Recruitment is the process of finding people and encouraging them to apply for work with the
organization on the other hand, selection is the process of choosing among those who do apply. The study
would focus on the assessment of recruitment and which retails picking out the beat person from the labor
market who till add to the performance level of the corporation the study will also have to try to identify
the activities performed with the practice of recruitment and selection the challenges traced while carrying
out each activity and assessment that consistency of the practice with the environment and its recruitment
(Noe, Hollenbeck, 2008). Commercial Bank of Ethiopia in Belay zeleke branch has its own employee
performances appraisal department to help it to achieve as objectives. Therefore, under this study I the
researcher assessed performance appraisal system and its role on employee performance in commercial
bank of Ethiopia in Belay zeleke branch.

1
1.2 STATEMENT OF THE PROBLEM

Performance appraisal means evaluating an employee current or past performance relative to the person’s
performance standards (Dessler 2004). Organizational performance is the synergetic sum total of

performance of employees in the organizations. This being the fact employee performance has to be
closely planned, couched and appraised to ensure that it is in line with the interest of the organizations.
Performance appraisal can have many problems in the organizations. It requires observations and

evaluation of employees work by someone usually by employee’s managers. The system of performance
appraisal has to be design careful y and systematically. If this is not, it affects not only the organization
but also moral of each employee in the organization. Employees may complain the one who set the
performance standards, interprets the result of performance evaluation, the time of evaluations, Promotion
and bonus. If performance standards of the organization are not settled clearly, employees would not able
to understand it and they can face challenge or problem to meet that the organization requires from them
and final y, organization performance would be affected. If the interpretation of performance evaluation
result of the employee performance within the organization is not clearly defined and biased, the moral of
employees would be low & they would be dissatisfied and finally performance of organization would be

affected. If the organization unable to evaluate its employees on timely base of if organization doesn’t has
fixed time to evaluate its employees, employees would give less concern to perform their tasks in
effective way and this would severely affect the organization’s success. If the organization does not give
promotion and bonus to the employees by evaluating his/her individual strength and weakness to achieve
the organization goal, the employees would not able to satisfy it, by the organization and does not attempt
to initiate to achieve the goals of the organization efficiently and effectively. In addition to the above

problems Commercial Bank of Ethiopia in Belay zeleke branch do not have formal practices of giving
performance feedback to their employees on timely basis, and also do not encourage their managers to
engage in appraisal discussions, which helps to make employee performance related problem explicitly by

enhancing organizational productivity through motivating employees to improve these performance

(employees who work in CBE in Belay zeleke branch, 2025 GC. Consequently, it is not usual that most
employees perceive performance appraisal as evaluative in which ease they consider it as a tool of

punishment organizations, than as one that aims at stimulating better futures through enabling employees
to learn from their past mistakes.

2
1.3 Research question
This research has answered the following questions.

✓ What does performance appraisal process of the bank look like?

✓ Is the performance appraisal system of the bank meeting its intended objectives?

✓ What are the major problems underlying the appraisal system of the bank?

✓ Are the criteria used in the system appropriate?

1.4 Objective of the study

1.4.1 General Objective
The general objective of the study is to assess performance appraisal system and its role on employee
performance in case of commercial bank of Ethiopia in Belay zeleke branch.

1.4.2 Specific Objective

• To investigate what the performance appraisal process of the bank look like.
• To identify what roles performance appraisal system plays

• To identify the potential problems related to performance appraisal system.

• To find out what criteria are available to appraising to performance.

1.5 Significance of the study

The result of this study is significant in various aspects. Firstly, on the basis of study finding,
conclusions and identify the problems of performance evaluations and gives signal to human
resource management of the bank to take remedial action to minimize the subjective of the
evaluations in pretesting employees for salary in pretesting employees for salary increment and
promotion.

Secondly this paper proposes important recommendation and suggestions for in appropriate
methods, if practiced. The study serves as stepping stone for researchers who want to conduct
further research in this area. It initiates other interested researchers to carry out more extensive
studies in the area. Thirdly the researchers get knowledge about the study and experience on
conducting other research.

1.6 SCOPE OFTHE STUDY

The study is delimited to the assessment of performance appraisal system and
Its role on employee performance of Commercial Bank of Ethiopia located in Amhara region Belay

3
zeleke city Administration, regarding time frame, the study focus on the year 2022/23 GC only.

1.7 Limitation of the study

I the researcher faced the following challenges while conducting this study. These are shortage of time to
collect data, lack of Experience's, and financial problems.

1.8 Organization of the study

The study paper is organized in five successive chapters, the first chapter includes the background of the
nd
study, statement of the problem, research question, objectives of the study, the 2 chapter is about
literature review, discuss various literatures on performance appraisal system in a given organization. The
rd
3 chapter includes research methodology: which deals with research design, source of data, target

population, methods of data analysis. The fourth chapter was containing the results or data analysis and
interpretations. Whereas summary of findings, conclusion and recommendation would include in chapter
five at last portion of the paper.

4
 CHAPTER TWO
2 Literature Review
2.1 Performance Appraisal System
The term performance appraisal “refers to the process by which an individual’s work performance is
assessed. Performance appraisal has been defined as the process of identifying, evaluating and developed
the work performance of employees in the organization, so that the organizational goals and objectives
are more effectively achieved, while at the same time benefiting employees in terms of recognition,
receiving feedback, catering for work needs and offering career guidance (Lansbury, 1988). Performance
appraisal (PA) has developed over the course of a century into a complex and costly management support
tool. Although objective appraisal systems provide accurate measures of employee performance, they
require both organizational support and maintenance. When the quality of an individual’s work
performance is examined, PA is the preferred instrument. Ideal y, Performance appraisal is lens that
focuses the decision-making process on the appropriate job-related criteria, it becomes the means for
assuring that a career is opened to talent and that the individual is rewarded meritorious performance
(Daley, 1992).
Various academicians and researchers on human resource management have defined performance
appraisal in different ways. Deanne N. den Hartop, Paual Boselie and Jaap Paauwe (2004) in their article
entitled “performance management: A model and research Agenda” (P.556-569) have cited the following
definitions of performance appraisal.
Performance appraisal is the system whereby an organization assigns some ‘score’ to indicate the level of
performance of a target person or group (Denisi,2000).Robert L. Mathis and John H. Jackson (1997)
defined performance appraisal as the process of evaluating how well employees chatting that information
to those employees. It also has been called employee rating employee evaluating, performance review,
performance evaluation, and results appraisal. Realistic, measurable, clearly under stood performance
standards benefit both the organization and the employees.

2.2 Purposes of performance appraisal system

Performance appraisal serves a number of purposes in organizations. In general Terms performance
appraisal has two roles in organization, which are often seen as potential y conflicting. These are

administrative and developmental roles. Performance appraisals can be sometimes conducted for
personnel research Purpose (Mathis and Jackson, pp.344).those who favor formal performance Evaluation
contained that it serves several proposes, which are essentially Extensions of the above to major roles

(Ivancevich&Glueck, 1989, and Robins, 1996). The following are some of them.
Developmental purpose: PA can determine which employees need more training and helps evaluate the

5
results of training programs. It helps the subordinate supervisor counseling relationship, and encourages
supervisors to observe subordinate behavior to help employees.
Motivational purposes: the presence of an evaluation program has a motivational effect: it encourages
initiative, develops a sense of responsibility, and stimulates effort to perform better.
Reward and compensation purpose: PA helps the organization decide who should receive pay raise and
promotions. It can determine who will be laid off. It reinforces the employee’s motivation to perform
more effectively.

2.3 Who should appraisal?

A rating program should help by ensuring that raters have an opportunity to observe the performance they
rate, have ability to make sound Judgments, and use appraise standards against which to rate (Barret,
1966, pp.99-101).Supervisors is based on the assumption that the immediate supervisors is the person
most qualified to evaluate the employee’s performance realistically, objectively, and fairly the unity
should have only one boss-underlies this approach the advantage to this source of appraisal is that
supervisors are responsible for managing their subordinates and they have the opportunity to observe,
direct and control their subordinates continuously.
Self-appraisal: if individuals understand the objectives they are expected to achieve and the standards by
which they are to be evaluated, they are to a great extent in the best position to appraise their own
performance. It is also appropriate under conditions where an employee is working in isolation or
Possesses a unique skill in which case he/she may be the only one to rate his/her behavior.
Immediate subordinates: the concept of having supervisors and managers rated by employees or group
members is being used in a number of organizations to day in the subordinate evaluation system, it is
believed that employees are in a good position to view their immediate bosses managerial effectiveness in
Academic environment:
- Students appraise the teaching performance of their instructors
- Faculty members evaluated department heads, and deans
0
Multi sources rating (comprehensive or 360 rating): multisource feedback recognizes that the manager is
no longer the sole source of performance information. Instead, feedback from various colleagues and
constituencies is obtained and given to the manager, thus al owing the manager to help shape the feedback
from all sources.

6
2.4. Methods of performance appraisal
In order to for performance appraisal to achieve its purposes, a variety of methods have been developed.

The choice of a method depends on organizational ethos, its objectives in making the appraisal its size,
product, technology, etc. the most prevalent methods fall under four major groups, namely category rating
methods, comparative methods, narrative methods and Special methods.

A. Category rating methods

These are the simplest methods for appraising performance which require a manager (supervisor) to mark
an employee’s level of performance on a specific form. The graphic rating scales, checklist and the forced
choice method fall under this classification.
Graphic rating scale: this is the oldest and most widely used performance evaluation technique also

known as linear rating scale or simple rating scale. It measures the degree of characteristics required for
adequate performance of the job and consists of a number of characteristics and qualities which are
judged on a point scale.
Checklist: the checklist is a simple rating technique in which the supervisor is given a list of statements
or words and asked to check statements representing the characteristics and performance of each
employee.
Forced choice: in its simplest form, the method consists of providing a list of behavior related statements.
The supervisor is asked to indicate one least and most descriptive statement for a particular subordinate.
These statements are usually grouped in clusters of five based on a broad theme covered by these
Statement. Each statement carries some weight which is not known to the supervisor.
Comparative method
Comparative methods include ranking, paired comparison and forced distribution.
Ranking: the ranking method consists of listing all employees from highest to lowest in performance. It
is difficult to do if the group of employees being compared number over 20. It is also easier to rank the
nd
best 2 worst employees than it is to evaluate the average ones. Simple ranking can be improved by
alternative ranking. In this approach the evaluators pick the top and bottom employees first, then select
the next highest and next lowest and move toward the middle (Ivancevih & Glueck, 1989, PP.353-355).
Pairs Comparisons: this method requires the rater to compare each employee with every other employee
working under him/her on the overall efficiency aspect (Saiyadain, 1999, pp. 196-197). The paired
.comparison method gives more information about individual employees than the straight ranking method
does.

7
Forced Distribution: this method is developed to prevent from rating too high or too low. Under the
forced distribution method, the rater assigning the points to the performance of each employee has to
distribute his/her ratings in a pattern to conform to normal frequency distribution (Rao & Rao, 2004, 228-
229)
Narrative Method; Written appraisal information is sometimes required some managers and human
resource specialists. These methods are used when documentation and description of an employee’s
actions are sought rather than an actual rating. The most widely used techniques that fall under this
classification are the essay and critical incident methods.
Essay or Free from appraisal: this method requires the rater to write a short essay describing each
employee’s performance during the rating period. It emphasizes evaluation of overall performance, based
on strengths and weakness of employee performance, rather than specific job dimension. Its raters may be
required to enumerate specific examples of employee’s behavior; the essay technique minimizes rater bias
and hallo effect (Rao & Rao, 2004, pp.234-235).
Critical incidents: critical incidents focus the evaluators’ attention on the behaviors that are key in
making the difference between executing a job effectively and executing it ineffectively. That is, the
appraiser writes down anecdotes describing what the employee did that was especially effective and in
Effective, the key here is that only specific behaviors, not vaguely defined personality traits, are cited
(Robbins, 1996, pp. 653-654).
Special Methods
These methods comprise behavioral ratings and management by objectives (MBO). Behavioral rating
approaches: these approaches attempted to assess an employee’s behaviors instead of measuring or
qualifying out puts. Behavior-based performance appraisal formats which concentrate on the rate’s
behaviors are most appropriate assumes that the desired output will result. In other words they are most
appropriate when the transformation process is understood or when there is a high degree of linkage
between means and ends (Lee, 1985, PP. 322-331).

Management by Objectives (MBO): for organization to be effective, employees must clearly understand
the objective of his/her organization. Management must provide opportunities for every employee to
make contribution in the attainment of objectives.

2.5 Potential problems to Performance Appraisal

Problems related to performance appraisal can be of three general types. These are: human errors,
problems of criteria, and problems of confidential y (Saiyadain, 1999).

Human errors are called rating biases so because they just happen and supervisors may neither know

8
about them nor have much control over them. To the degree that the following human factors are
prevalent, an employee’s evaluation is likely to be distorted.

Single criterion: A typical employee’s job is made up of a number of tasks where employees are
evaluated on a single job criterion, and where successful. Performance on the job requires good
performance on a number of criteria; employees will emphasize the single criterion to the exclusion of
other job-relevant factors.

Leniency error: every evaluator has his or her own system that acts as a standard against which
appraisals are made. Relative to the true or actual performance an individual exhibits, some raters have a
tendency to be liberal in their rating by assigning higher rates consistently. Such ratings do not serve any
purpose. Equally damage one is assigning consistently low rates.
Hallo error: this is the tendency for an evaluator to let assessment of an individual on one trait influence
his or her evaluation of that person on other traits. A person may be good in one trait but is general y
rated as over all good. Halo effect takes place when traits are not clearly defined and are unfamiliar.
Central tendency error: some raters follow play safe policy rating employees around the middle point of
the rating scale and they avoid rating at both the extremes of the scale they follow play safe policy
because of answer ability to management of lack of knowledge about the job and/or the employer’s lack
of interest in their job (Rao & Rao, 2004).
Similarity error: this occurs when appraisers rate other people giving special Consideration to those
qualities they perceive in themselves. The similarity between the rater and rate may take one or more of
the following forms. Demographic similarity, affective similarity, perceives similarity and mutual liking
(schraeder and simpson. 2006).
B; Problems of criteria
Appraisal has to be against certain criteria. If a discrepancy between expected and actual performance is
pointed out, the question is whether the expected was fully defined and communicated to the employee. In
the absence of such an attempt, the appraisal reports can be questioned. The issue basically refers to job
description. It is true that jobs can be clearly defined at the lower levels in the organizational hierarchy.
However, as one goes up, it becomes more and more difficult to clearly specify the tasks one is supposed
to perform.
C; problem of confidentiality
One important issue in performance appraisal has to do with sharing or keeping secret the ratings on
various items of appraisal report. While many organizations have a system of selective feedback to the
employee, the general policy is not to share the total report with the employee expects rewards if the

9
report is better than average, which may not be administratively possible, secondly, very often supervisors
pass the challenge to top management by saying that while they did give good ratings to the employee;

top management did not take that in to consideration. Thirdly, giving rewards is not the only objective of
appraising employees. Given these reasons, it is emphasized that supervisory ratings of employees should
be kept confidential.

10
 CHAPTER THREE
3. RESEARCH METHODOLOGY AND DESIGN
3.1 Research design
In this study the researches were use a descriptive method through census in order to undertake the study
in predetermined time periods the periods of employing this method is to describe the performance
appraisal system and its role on employee performance of CBE in Belay zeleke branch. The researchers
undertaken to use these kinds of research considering desire to obtain first hand data from the respondents
and to give sound conclusion and recommendation for the study.

3.2 Source of data

In this study both primarily and secondary data were used to achieve the expectations of this paper.
Primarily source of data (a document that is being reported first hand or original sources, not
interpretations made by someone else) were collected from an employee of CBE who are working in
Belay zeleke branch through questionnaire that contains both open and closed questions developed by me.
Secondary source of data were collected through related literature such as different human resource
books and records, internet, document, different written materials in a bank regarding the topic of the
study.

3.3 Data collection method

The data for this study were collected through by distributing a questionnaire both open ended and closed
ended (open ended means questions give your audience an opportunity to express their opinions in a free
following manner and closed ended questions means prepared multiple choice questions where
respondents are restricted to the choice among any of the given multiple-choice answers) to the
respondent.

3.4. Target population and sampling techniques

The target population of this particular study were comprised al employees of CBE in Belay zeleke
branch because the overall members of employees of CBE in Belay zeleke branch is “55”; so, there is no
need of taking sampling size. The method of the researcher interested to use for conducting the study was
census method. The reason that initiates the researcher to use census method is highly reliable and yields
much information. In general data derived through census are accurate because it addresses al the entire
available employees in the bank.

11
3.5 Data analysis and presentation
The researchers used descriptive analysis method in order to analyze the data collected through
questionnaires because descriptive data analysis method helps to reduce the collected data in to summary
format and raw data into a form that makes in to them easy to understand and interpret. So, this method
the raw data were converted in to understandable form by using tables, percentages and frequencies.

12
 CHAPTER 4
4, DATA ANALYSIS AND INTERPRETATION
This section is concerned with analysis and interpretation of data that were gathered using primary source.
These data mainly analyzed and interpreted item in the form of table computation and summary
formatted. The questionnaires were distributed for 55 employees who are the total numbers of employees
in the organization. Even though the questionnaire was distributed for 55 employees only 51 of them were
responded on an appropriate manner. So, data analysis and interpretation depend on 51 employees.

4.1 General information of respondents.

This section is designed to indicate the background of the respondent’s regard to sex, age, educational
back ground and experiences in Commercial Bank of Ethiopia in Belay zeleke branch.

Table 4.1: Bibliographical profile of respondents

Source: researcher, census, 2023

As it is indicated in the table 4.1, 35(69%) of respondents are male and the remaining 16(31%) of them
are females. This shows that there is male dominance in the organization and it is possible to conclude

13
that the organization’s concern to female is low.
Regarding the age, 33(64.7%) of respondents are between “25-35”, 9(17.6%) of them are between “35-
45”, 6(11.7%) of them are below 25, and the remaining 3(5.9%) of them are above 45 age. This implies
that the organization has young age working force and it is opportunity to organization to use this force
utmost.
Regarding educational background, 41(80%) of respondents are first degree holders, 6(12%) of them are
master and above and the remaining 4(8%) of them are diploma holders. This shows that the organization
has the well-educated man power and it can contribute to the organization’s success more and more.
Regarding the year of service, 30(59%) of respondents have been serving organization from 1-3 years,
16(31) of them have below a year service, 3(6%) of them are serving more than 6 years and the remaining
2(4%) of them have below a year service. This shows that the bank has less experienced employees.

4.2. Respondents’ opinion towards the performance appraisal system.

4.2.1 Overall process of performance appraisal system

The researchers distributed questionnaires to the employees of commercial bank of Ethiopia in Belay
zeleke branch to get appropriate information regarding to performance Appraisal system. At first
employees were asked about look like the overall appraisal system of commercial bank of Ethiopia in
Belay zeleke branch.

Table 4.2: Process of performance appraisal system

14
Source: researcher, census, 2023

As it is shown in the above table 4.2, 27(53%) of respondents said that there is no formal Performance
appraisal system in the organization and the remaining, 24(47%) of them said that there is formal
performance appraisal system in the organization. So as the majority of employees replied that there was
no formal performance appraisal system in the organization and it is possible to conclude that
organization has poor performance appraisal system and this can affect the moral of employees and
organizational level of achievement. So, it is better for the organization to use formal performance
appraisal system in order to enhance productivity.

Interims of performance appraisal fairness, 28(55%) of the respondents said that there no fair
performance process in their organization and the remaining, 23(45%) of the respondents said there is fair
performance process in their organization. So, the organization is better to use the assessment and
improvement of the fairness and formal practice of performance appraisal systems in the bank in order to
get higher acceptance by employees and others and to maintain motivation towards employees in order to
enhance productivity in the bank.

According to the above table, the I asked this question to the respondents to know whether the
organization make decision based on appraisal result of employee or not. After the appraiser were
completed the appraisal, it should be communicated to the employees. Feedback helps employees realize
their potentials. In addition, providing feedback is believed to be the subordinates’ rights to know. Even
though employees of the organization they are allowed of look in to their performance appraisal result. As
shows the above table 4.2 the respondents from the questionnaire shows that 45(88%) of the respondents
answered that they are allowed to see their performance appraisal result and the remaining 6(12%) of
them said there is no allowed to see their performance appraisal system in the organization. This shows
the organization and employees does decide on compensation adjustment, performance improvement
training, development needs career planning and development, feedback to human resource and other
necessary measure after once the appraisal conduct.

In terms of the evaluated system that indicate your strength and weakness, the response from the
questionnaires shows that 38(74.5%) of the respondents answered the evaluated system is not indicate

15
their strength and weakness in the organization and 13(24.5%) of them replied that there were the
evaluated system is indicate there strength and weakness within the organization.

In terms of periodically employee performance evaluation system, among the total respondents 27(53%)
said that the evaluation system of employee performance in the organization is not measured periodical y
while, the remaining of the respondents 24(47%) were said that there is periodical y evaluation system of
employee performance in the organization. So the organization is better to use employee performance
evaluation method periodically.

4.2.2 Purpose of Performance appraisal System

Performance evaluation result has been used for many human resource management activities, as it is
explained in the literature reviews organizations may use performance appraisal result for different
purpose. Regarding commercial bank of Ethiopia the questionnaire request employees for what purpose
performance appraisal’ result is used in their organization the response is given below.

Table 4.3: purpose of performance appraisal system

Source: researcher, census 2023

As shown by the above table 4.3, among the total respondents 28(54.9%) describe that performance
evaluation result is used for training and development ,9(17.7%) for salary increment , 7(13.7%) for
promotion, and also 7(13.7%) used for bonus .The results shows that the majority of the respondents
28(54.9%) response that performance appraisal system is used for training and development purpose and

16
the organization is less concern to give promotion and bonus to its employee who are performing very
well .

Different employees have different attitudes as to who has to evaluate employee performance. For the
above table employees are given four choices: immediate supervisor, pears (teams), Subordinates and
employee him/herself. The results from the respondents are as follows in table 4.3.

Majority of employees 37(72.5%) agree that performance appraisal evaluation should be conducted by
immediate supervisor, 12(23.5%) of them agree that performance appraisal evaluation should be
conducted by pears or Teams, 2(4%) of them said that employee performance appraisal evaluation should
be conducted by subordinates. No respondents replied performance appraisal evaluation should conduct
by employee themselves. The results shows that employee appraisal by immediate supervisor has got the
highest preference among the given alternatives by respondents. No respondents give a response on
employee performance appraisal system of the bank and how to improve its effectiveness.

4.2.3 Criteria of performance Appraisal system

The other question employees were asked about the criteria of performance appraisal format. It says do
you think that the criteria used to evaluate your performance appraisal are appropriate

Table 4.4: criteria of performance appraisal, system

Source: researcher, census, 2023

In terms of the criteria used to evaluate your performance appraisal system, the response from the
questionnaire shows 31(61%) of the respondents answered that the criteria used are appropriate to
measure employee performance in the organization and 20(39%) of them replied that it is not appropriate

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to measure their performance in the organization. Those respondents who disagree about the
appropriateness of the evaluation criteria are asked to describe those criteria that should be included and
that requires to be adjusted or removed from the format of the evaluation. Regarding the weights assigned
to measurement criteria employees propose their ideas. So, the organization is good in the criteria used to
evaluate performance appraisal system in appropriate manner.

As it is shown in the above table 4.3 in terms of the same criteria for all sorts of jobs and positions in the
organizations 41(80%) of them said that there is lack of the same criteria for all sorts of jobs and positions
and the remaining 10(20%) were of the opinions said that assigning equal Weights to al the criteria would
be appropriate. So that the majority of the respondents who objected the appropriateness of the weights
have proposed that it would the organization is not use directly related to job performance such as
attitude, personality etc is higher weight than those of job-related criteria such as knowledge of the job,
quality of work etc. so that the organization is better to use the same criteria for all sorts of jobs and
positions in the organization.

As shows the above table 4.4, the researcher asked their opinion on whether the performance rating are
based on individual task outcome in the present appraisal form are representative enough to truly reflect
their his/her work unit or to the organizations, 39(76%) answered no while the remaining 12(24%) of
them had the opinion that the criteria have no problems in the bank. So in this regard the majority
respondents of the bank expressed their opinion by which the organization performance rating are not
based on individual task outcome while other respondents are expressed their opinion through which
performance rating are based on individuals task outcome. As a result, the bank is better to use
performance rating practice based on individual task outcomes to motivate and initiate employees
individual y as well as to enhance productivity more effectively and effectively in the bank.

4.2.4 Problems of performance Appraisal system.

The question forwarded to the employees was to express their view regarding with problem that applies to
the appraisal system of the organization.

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Table 4.5: problems of performance appraisal system

Source: researcher, census, 2023

As it is shown in the above table 4.5, out of the total respondents 31(61%) said Agree that there
organization is lack of the same criteria to evaluate the job in the organization, 14(27%) of them strongly
agree about the lack of the same criteria to evaluate the job within the organization,6(12%)of them dis-
agree that their organization is lack of the Same criteria to evaluate the job and no employees who said
neutral and strongly disagree about lack of the same criteria to evaluate the job in the organization. So as
majorities of employees’ response is lack of the same criteria to evaluate the job within the organization.
So it is better for the organization to practice the same criteria to evaluate the job.

In terms of lack of ability to evaluate employee performance within the organization the response from
the questionnaire shows that 27(53%) of the respondents agree that their organization is lack of ability to
evaluate employee performance in effective manner,17(33%) of them said that strongly agree that
indicates there were almost no ability to evaluate employee performance in effective manner,7(14%)of
the m disagree that there organization is lack of ability to evaluate employee performance periodical y in
effective manner and no employees who said strongly disagree and neutral about lack of ability to
evaluate employee performance in effective manner in the organization. So as a majority of employee’s
response said their organization is poor in terms of ability to evaluate employee performance periodical y
in effective manner. So it is better for the organization to assess and examine the ability of the
organization carefully to evaluate the employee performance in effectively and timely manner.

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Table 4.6: Problems occurring to the appraisal system of your organization.

Source: researcher, census, 2023

According to the above table, 4.6 this information is collected from employees who suggest that there is a
problem in their organization with performance appraisal. The problem they believe it is apparent to their
organization. The majority of the respondents 21(41%) answered that there is no link between the same
evaluation criteria and employees tasks in the organization, 17(33%)of them said that there is lack of
ability to evaluate performance, 8(16%) of them respondents agree that there is bias in evaluating
performance within the organization whereas the remaining 5(10%) of them answered that the
performance appraisal system does not allow participation of employees is setting performance evaluation
criteria. This indicates that despite their degree of prevalence, al problems listed above were found to
characterize the appraisal system of the bank. However, while no link between the same evaluation
criteria and employee job and lack of ability to evaluate performance were given the highest regard by the
respondents. Problems are always prevalent in any appraisal system. It is often said that addressing the
problem currently is halfway to solving the problem. So it is better for the organization once the problems
are addressed in this way the bank used appropriate solutions which inherently are implied in the
problems.

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 CHAPTER FIVE

5. Summary of finding, Conclusions and Recommendations

5.1 Summary of finding

As the research indicated most employees 27(53%) in the organization said there is no formal
performance appraisal system. It arising from the research conducted that the majority of employees
replied that lack of fairness, the evaluated system is not indicating your strength and weakness, lack of
periodical employee performance evaluation system within the organization.

The majority of the respondents 28(55%) of the respondents favored that performance evaluation result is
used in training and development. As the research indicates majority of the respondents 37(64.7%)
favored that appraisal is conducted only by immediate supervisor. As the research indicates no good
opportunities for promotion and bonus for who perform better. Majority of employees within the
organization is agreeing with the lack of ability to evaluate employee performance in effective manner.
Majority of employees 39(76%) within the organization is favored that performance rating system is not
based on individual task outcome. Problems related absence of employee participation in setting
performance evaluation result, lack of rater ability to evaluate performance, rater bias in evaluating
performance, weak linkage by same evaluation criteria and employees are occur to the appraisal system of
the organization.

5.2 Conclusions

Individual performance is the foundation of organizational performance. Improving individual

performance therefore is critical for the success of every organization. Failure to have a proper employee
performance appraisal system may lead to failure of the business organization itself.

The aim of performance appraisal system is to evaluate the job performance of employees so as to
improve their performance and consequently the organizations performance. In order to do so
performance appraisal system should use job related criteria, appropriate method of appraisal for each
purpose, qualified and well trained appraiser and participation of employees in one way or the other.

The objective of the study is to asses’ performance appraisal system and its role in commercial bank of
Ethiopia in Belay zeleke branch. In doing so the study tries to analyze data have been gathered through
primary source. In investigating the performance appraisal system of commercial bank of Ethiopia, it has

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been found that rating scale method is used by the immediate supervisor. From the analysis made in the
preceding chapter, the following conclusions are drawn:

✓ Most of the respondents agreed about the absence of formal performance appraisal system, lack
of fairness, lack of periodically performance evaluation system, the evaluated system is not
indicate their strength and weakness and allowed to see results for the performance appraisal
system in the organization.
✓ There is no good opportunities for promotion and bonus for whose performance is better
✓ The majority of the respondents favored that performance evaluation result in used in training and
development, one of which took the biggest share among the given alternatives.
✓ The majority of the respondents favored that appraisal is conducted only by immediate
supervisors.
✓ The bank currently makes use of rating scale method of appraisal where by employees
performance is rated against predetermined set of criteria. But each is considered to be lack of
same criteria for all sorts of jobs and positions.
✓ Majority of the respondents 39(76%) within the organization favored that the performance rating
system is not based on individual task outcome.
✓ Managers of the organizations are not giving timely feed back to the employees regarding their p
Most of employees within the organization are agree with the lack of ability to evaluate employee
performance in effective manner.
✓ Problems related to absents of employee participation in setting performance evaluation result,
lack of rater ability (training) to evaluate performance, rater bias in evaluating performance, weak
linkage between same evaluation criteria and employee job were found to characterize the
appraisal system. Although their degree of prevalence as higher in no link between same
evaluation criteria and employee job and lack ability to evaluate employee performances.

5.3 Recommendations

If employees are expected to exert their maximum efforts towards realization of organizational goals, it is
essential that sound performance appraisal practice be put in practice. In situations where employees are
not well informed of what they are expected to perform and the consequences that their performance
would bring to them it is difficult to imagine getting their firm commitments. Thus the need for a properly
designed appraisal system that is well aligned with the organizations strategic plans and objectives and
has got the acceptance of all concerned is not to be compromised. If the appraisal system is require to be
effective, if should be used as an instrument of motivation rather than of punishment. Thus, the

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administrative and developmental purposes of appraisal need to be given concern, based on the analysis
of facts and finding the following recommendations are forwarded to help improve the weaknesses
identified in the existing appraisal system in commercial bank of Ethiopia in Belay zeleke branch.

➢ Criteria in the existing appraisal format need to be revised so as for effect change in the
operational environment. The more the criteria become job related, transparent and clearly
defined, the better their measurability and objectivity in assessing employees’ efforts and the
higher will be employee’s motivation and commitment to exert their maximum efforts and see as
to few their efforts are valued by the organization.
➢ Due to the fact that promoted employees have good commitment to the Organization and perform
their accordingly, the organization should give the chance of promotion to employees.
➢ Employees should participate in the designing of the appraisal system and criteria and make link
between same evaluation criteria and employee job.
➢ Managers of the organization should give timely feed back to the employees regarding their
performance.
➢ It is better to the organization to use formal performance appraisal system.
➢ It is better if the organization’s performance appraisal system is based on fairness.
➢ The evaluation system within the organization should indicate their strength and weakness of
employee’s performance in timely manner.
➢ Organization should give performance rating system based on individual task outcome.
➢ Since the organization were good in a system of allowed to see your performance appraisal
results. They should continue in a good manner for future use.

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Reference
❖ Baird, lioyd S., et.al., management: function and responsibilities, (New York:
Harper & Row publishers Icc., 1990).
❖ Cook,J. and Crossmen, A. (2004). Satisfaction with performance appraisal Systems. Jurnal of
Managerial Psychology, 19,5,526-536
❖ Daley, D.M(1992). “Pay for performance appraisal, and Total quality management” public
productivity & management Review, 16(1). Row publishers Inc., 1990).
❖ Deanne N. Denhartop, Paualboselie and Jaap Paauwe, (2004) performance management, model
and research agenda, 13ed., Tata McGraw-hill publishing co.ltd., new Delhi
❖ Ivancevich, J. M. &Glueck, W.F. (1989), foundations of personnel/ human resource management,
IRWIN INC., Homewood/Boston.
❖ Lee, C. (1985). “Increasing performance Appraisal Effectiveness: Matching Task Types,
Appraisal process, and rater Training;” Academy of management Review, 10(2).
❖ Mathis, Robert L. & Jackson, John H. (1997), human resource management, 4th ed., west
publishing Co., Minneapolis/ St. Paul
❖ . Roa, V.S.P. &Rao,P. Subba (2004), personnel/ human resource management- Text, Cases and
Games, 8th ed., Konark publishers Pvt.Ltd.Co. New Delhi
❖ Robbins, S.P. (1996), organizational behavior: Concepts-Controversies- Applications, 7th ed.,
prentice hall Inc., New Jersey.
❖ Saiyadain, M.S. (1999), human resource management, 10th ed., Tata McGraw-hill Publishing
Co.Ltd., New Delhi

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Appendix I
BLUE MARK COLLEGE
Department of management
Questionnaire to be filled by employees of Commercial Bank of Ethiopia Belay zeleke
branch
Dear respondents
We would like to appreciate your willingness to participate in the current study.
The main objective of the research is to assess performance in case of commercial bank of
Ethiopia in Belay zeleke branch. Hence, you are very kindly requested to replay all questions
faithfully with full Information as accurate as possible. You are not expected to write your name.
General instruction: indicate your response by ticking the mark in a box corresponding to each
choice and write your own on the space provided for same questions.

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Thank you again!!!

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