ASSESMENT OF PERFORMANCE APPRAISAL PRACTICE AND

ITS EFFECTS ON EMPLOYEE PERFORMANCE

[In CASE OF COMMERCIAL BANK OF ETHIOPIA WOLKITE

MAIN BRANCH]

A RESEARCH PAPER SUBMITTED TO DEPARTMENT OF

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

WOLKITE UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENT

i
 JUNE, 2019

Wolkite Ethiopia

Abstract

This paper or study had been conducted on the performance appraisal practices and its effects
on employee performance in case of commercial bank of Ethiopia wolkite main branch. The
major objective of this study was to assess the activities of performance appraisal & its affects
on employee performance and to identify the importance performance appraisal system in
commercial bank of Ethiopia wolkite main branch. The study was been conduct based on
primary data. The primary data was collected through distributing questionnaires, and
interviews. The method that had been used in conducting the design was descriptive survey
method because it tries to describe and explain the data from which the solution to the problem
sought. Due to population number is very small about 40 employees census methods was used
because census was reliable and it yields much accurate information to address all the
population of the bank. The data’s are converted to understandable form by using tables and
percentages.

ii
Acronyms
PA -Performance Appraisal

HRM-Human Resources Management

PAS-Performances Appraisal System

CBE-Commercial Bank of Ethiopia

iii
MBO-Management By Objective

Table of Contents
Acknowledgment....................................................................................................................................iii
Acronyms............................................................................................................................................iv
CHAPTER ONE............................................................................................................. 1

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

iv
 1.1 Back ground of the Study..................................................................................................................1
1.2 Statement of the Problem...................................................................................................................3
1.3.1General objectives.......................................................................................................................4
1.3.2. Specific Objective......................................................................................................................4
1.5. Scope of the Study............................................................................................................................5
1.6 Organization of study......................................................................................................................5
CHAPTER TWO............................................................................................................. 8

2 LITERATURE REVIW.................................................................................................. 8

2.1 Performance Appraisal................................................................................................. 8

2.2 Nature of Appraisal...........................................................................................................................9

2.3 Features of Performance Appraisal....................................................................................................9
2.4 Objective of Appraisal.....................................................................................................................10
2.5 Purpose /Aims of performance appraisal.........................................................................................11
2.6 The benefits of performance appraisal.............................................................................................12
2.7 The performance Appraisal process.................................................................................................12
2.8 Method of Performance appraisals..................................................................................................14
2.9 Problems with performance Appraisal.............................................................................................17
2.10 Essential Characteristics of an effective appraisal system.............................................................18
3.2 Population and sampling..................................................................................................................19
3.2.1 Target Population.........................................................................................................................19
3.3.1 Source of Data..............................................................................................................................19
3.4 Method of data Collections..............................................................................................................19
4.2.1 Presentation of Findings...............................................................................................................25
4.2.5 Satisfaction of rewards...................................................................................... 29

4.2.8 The communications stage of appraisal system........................................................................31

4.2.10 Effectiveness of performance appraisal................................................................................32
4.2.11 Mutual Understanding of relationship.........................................................................34

CHAPTER FIVE........................................................................................................... 37

5. SUMMARY, CONCLUSION& RECOMMENDATIONS...............................................................37

5.1 Summary of Finding........................................................................................................................37

v
 5.2 Conclusion.......................................................................................................................................38
5.3 Recommendation.............................................................................................................................39
REFERENCES............................................................................................................. 41

Appendix 1.................................................................................................................. 42

Appendix 2................................................................................................................. 1

vi
 CHAPTER ONE

1. INTRODUCTION
1.1 Back ground of the Study
Any organization whether private or governmental has their own resources such as human,
materials, information and capital to their success or achievements of their goals. Among
these resource, human resources is the most fundamental resources for any organizations.
The study was focus on the purposes (advantages, methods, impacts, effectiveness and
practices of performance appraisals system in commercial bank of Ethiopia wolkite main
branch). Commercial bank of Ethiopia has been operating under different socio-cultural
environment, Geo graphical location and other for the past years. Performance appraisal is
the process by which an employee contribution to the organization during formal specified
period, (Ivancevich 1998). The long term failure and success of any organization depends
highly on qualities of their employees and performance they have in organization. It has its
own impacts on employee’s performance, on production and organization itself. It set out to
inform an employee on their development, command them or goals to be achieve and to
discuss on any area for improvement (Alfred York, 3 rd edition). Performance feedback lets
employees to know how were they have to perform in comparison with standard of the
organization performance appraisals and it can affect the employees towards organization
and themselves. Performance feedback used to promote the two-way communication
between the management and employee and to improve the employee’s level of productivity.

A Performance Appraisal is a review and discussion of an employee’s performance of

assigned duties and responsibilities. The appraisal is based on results obtained by the
employee in his or her job, not on the employee’s personality characteristics. According to

Thomas F. Patterson, (1987) appraisal or performance review is a method by which the job
performance of an employee is evaluated (generally in terms of quality, quantity, cost and
time) typically by the corresponding manager or supervisor.

1
Again, performance appraisal is a part of guiding and managing career development as well
as the process of obtaining, analyzing and recording information about the relative worth of
an employee to the organization. It can also be termed as an analysis of an employee’s recent
successes and failures, personal strengths and weaknesses and suitability for promotion or
further training. The appraisal again measures skills and accomplishments with reasonable
accuracy and uniformity. It provides a way to help identify areas for performance
enhancement and to help promote professional growth. It should not however be considered
the supervisor’s only communication tool.

Furthermore, each employee is entitled to a thoughtful and careful appraisal. The success of
the process depends on the supervisor’s willingness to complete a constructive and objective.
Appraisal and the employee’s willingness to respond the constructive suggestions and to
work with the supervisor to reach future goals.

According to Beer, M. et al, (1978) performance appraisal serves a two-fold purpose

generally, thus, to improve the work performance of employees by helping them realize and
use their full potential in carrying out their firm’s mission and also to provide information to
employees and managers for use in making work-related decisions. More specifically
according to them, appraisals serve some purposes.

Firstly, they support personal decisions to promote outstanding performers in order to weed
out marginal or low performers and train, transfer or discipline others as well as to justify
merit increases. In short, appraisal serves as a key input for administering a formal
organizational reward and punishment system.

Secondly, appraisals provide feedback to employees and thereby serve as vehicle for
personal and career development. Again once the development needs of employees are
identified, appraisals can help establish objectives for training programmers.

Also, as a result of the specification of performance levels, appraisals can help diagnose
organizational problems. They do so by identifying training needs and the knowledge,
abilities, skills and other characteristics to consider in hiring as well as provide a basis for
distinguishing between effective and ineffective performers. Appraisal therefore represents
the beginning of a process, rather than an end product.

2
1.2 Statement of the Problem
A performance appraisal has many problems in the organizations. It requires observations
and then evaluation of employees work by someone, usually by institutions manager. It is
difficult tasks for many managers because it exposed to some problems if it is not properly
managed. The system of performance appraisals was to be designed carefully 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 evaluate the
performance standards, the interpretation of performance evaluation results and the time of
evaluation. Because, employees was be evaluated annually and semiannually, was be this
could not cover the performance evaluation of the employees who works a contract of less
time. The existing has faced system of performance appraisal system in commercial bank
Ethiopia wolkite main branch of faces some problems.

Performance appraisal (PA) has over the years become a very crucial part of the Human
Resource Management (HRM) in organizations and its benefits to these organizations around
the world cannot be overemphasized. Its enormous contributions to the development of
organizations the world over, PA usage has not as yet gone down well with a number of
organizations most often government institutions. In the light of this, a number of
discrepancies was found in the PA processes being followed in government organizations
specifically the commercial bank of Ethiopia. To begin with, due to the lack of accountability
and job security in our country, most employees have a laissez faire attitude towards their
work.

. It is therefore difficult to measure the average perform productivity and efficiency of the
service. Again, there are a lot of work errors on the part of employees because they assume
no measurement of performance is applied hence they work at their own pace. Therefore, the
purpose of the study is to evaluate the performance appraisal system and employee
performance of the commercial bank of Ethiopia specifically wolkite main branch

To this end the study was raises the following basic research questions i.e.

 What are the main reasons for conducting performance evaluation in commercial bank of
Ethiopia wolkite main branch?

3
 What are the problems, commercial bank of Ethiopia wolkite main branch facing with
regard to the performance evaluation practices?

 What is the performance appraisals system of the bank meeting its intended objectives
and how employee perceives the system?

 What is the effect of performance appraisals on employee’s performance in commercial

bank of Ethiopia wolkite main branch?

1.3. Objectives of the Study

1.3.1General objectives
The main objective of this study was to assess employee performance appraisals system
and employee performance in commercial bank of Ethiopia wolkite main branch and to
recommend the suggestions for the problems related to the subject matter.

1.3.2. Specific Objective

The study was tried to address a number of specific objectives. Some of these are: -

 To assess the purpose conducting performance evaluation in Commercial bank of

Ethiopia wolkite main branch.

 To identity the problems of commercial bank of Ethiopia wolkite main branch facing
with regard to the performance evaluation practice.

 To Assess performance appraisals system of the bank meeting its intended objectives
and how employees perceive system

 To identify the effect of employees performance appraisal in commercial bank of

Ethiopia in wolkite main branch.

1.4. Significance of study

The result of this study was be significant in various aspects. Firstly, on the basis of the study
finding, it was draw some conclusions and identify the problems of performance evaluation
and give signal to human resources management of the bank to take remedial action to
minimize the subjectivity of the evaluation in protesting employees for salary increment and

4
promotion. Second, it was a piece of contribution to the current knowledge in the practice of
performance evaluation in an enterprise working in Ethiopia and it invites the further
research to bring behavioral change in the areas of performance evaluation both in the mind
of raters, rates and those parties responsible in the design of the instruments of performance
evaluation form that are used to judge the performance of employees.

1.5. Scope of the Study

The aim of this research paper was to assessing the performance appraisals practices and its
effects on employee performance. The study was conducted in commercial bank of Ethiopia
wolkite main branch with considerations of performance appraisal effects on employee
performance in the bank. Performance appraisal plays significant role for the development of
employee performance and work satisfaction of the organization. Performance appraisal
makes the organization goal oriented and smooth working environment among the bank
industry.

1.6 Limitation of study

 Lack of cooperation of the respondents and their commitment to fill the questionnaires.

 Lack of sufficient time that limit the outcome of the researcher.

 Lack of clear information while collecting data from employees.

 Lack of financial resources

Ethical consideration

The data was collect carefully and keep confidential in reporting this study any form of
information gather is only used for study purpose making sure it did not damage anyone.

1.6 Organization of study

The study was organized five chapters’. The first Chapter contains back ground of the study,
statements of the problem, Objectives of the study, significance of the study, scope of the
study and limitation of the study, organization of the paper. The second Chapter shows
review literature. The third chapter concern research design and methodology such as

5
research design and approach target population, sample size, sample techniques, and source
of Data collection, data presentation method and data analysis and interpretation. The fourth
chapter deals with data presentation, analysis and interpretation. Finally, at the last chapter
five summaries of major finding, s conclusion and recommendation held.

6
7
 CHAPTER TWO

2 LITERATURE REVIW

2.1 Performance Appraisal

Performance appraisal is method evaluating the behavior of employees in the work spot,
normally it including both the qualitative and quantitative as pact job performance. It is a
systematic and objective way of evaluating both work related and potentials of employees.
It’s a process that involves deterring and communicating to an employee how he or she is
performing the job and ideally, establishing a plan improvement. (Bayer’s 5 th edition)
performance appraisal let employees not only how well they are perforating but also
influence their future level effort and tasks direction.

Performance evaluations are an integral part of most organization properly developed and
implemented; the performance appraisal process can help an organization achieve its goals
by developing productive employees. One of the most common use of performance appraisal
is for making administrative decisions relating to promotion, layoff and pay increases the
present job performance of an employee is often the most significant consideration of
determining whether to promote the person or not. While successful performance in the
present job does not necessarily mean an employee was be an effective for former in a high
level job. Performance appraisals do provide some productive information about the actual
performance of the employee. It can also provide the desired input for determining both the
individual and the organizational training and development needs. This information can be
used to identify individual employee strength and weakness. This information used help to
determine the organizations over all training and department needs for an individual
employee, a computed performance appraisal should include plan out lining specific training
and development needs. Another important use of performance appraisal is to encourage
performance improvement by communicating to employees how they are doing, suggesting
desired change in behaviors, attitudes, skills or knowledge. This feedback most clarifies the
employee job expectations help by manager. Sometimes this feedback must be followed by
coaching and training by the manager to guide employee work efforts. Finally, two, others

8
important uses of information generate throng performance appraisals are input to the
validation of selection procedures and input to human resource planning. Although there are
many types of performance evolution systems, each with its own advantage and
disadvantages, we must aware of the legal implication that arise (john Wiley and Jonson,
1997, 6th edition). Once employees have been selected, trained motivated and placed on their
respective job, it becomes essential for the management to conduct performance appraisal to
see we there the employees are effective on their jobs or not. By this, management can also
know how it has been effective job. Performance appraisal is also known as$ a merit
training$ or employee appraisal. Some other terms of which are less commonly employed to
mean performance appraisal are the progress report, staff assessment, service rating, personal
review, employee evaluation and behavioral assessment (HRM, Ivanceich 1998).

2.2 Nature of Appraisal

An appraisal of employee is undoubtedly necessary at the time of employment. Actually
evaluation is constantly being done at an unconscious level. Employees evaluate superior’s
fellow colleges and subordinates what is needed to generate proper control is a formal
procedure for evaluation of personnel within the organizations. The personal department,
where it exists can help materially in fixing the qualities and characteristics be rated, in
determining the person who should make such appraisal as well as by prescribing the
appropriate procedures. (Rsdavar, 10t h edition).

2.3 Features of Performance Appraisal

The main characteristics of performance appraisal may be listed. Thus are

 The appraisal is a systematic process involving three steps.

a. Setting work standards

b. Assessing employees’ actual performance relative to these standards

c. Offering feedback to the employees so that he can eliminate deficiencies and improve
performance in course of time.

 It tries to find out how well the employee is performing the job and tries to establish a
plan for further improvement.

9
 The appraisal is carried out periodically, according to definite plan.

 Performance appraisal is future oriented activity shearing employees where things have
gone wrong, how to set everything in order and deliver results

 Performance appraisal is not job evaluation. It refers to how well someone is doing an
assigned Job. Evaluation, on the other hand determines how much a job is worth to the
organization and therefore, what rang of pay should be assigned to the job

 Performance appraisal is not limited to calling the fouls Its focus is on employee
development. It forces managements to become coachers rather than their judges. The
appraisals processes provide an opportunity to identify issues for discussion, eliminate
any potential problems and set new goal for achieving high performance (VSPRAO,
2005).

 Performance appraisal may formal or informal. The informal evaluation is more likely to
be subjective and influenced by personal factors. The formal system like to be more fair
and objective since it is carried in a systematic manner, using printed appraisal forms

2.4 Objective of Appraisal

Performance appraisal could be taken either for evaluating the performance of the employees
or for developing them. The evaluation is two types telling the employees where he stands
and using the data for personal decisions concerning pay, promotion etc. The job of manager
can be functionally divided into four bases namely; planning, Organization, motivating and
controlling. Thus in the final analysis it becomes necessary to evaluate how effectively the
human resources has been utilized within the organization. This type of evaluation is of two
types namely; (1) Appraisal of personnel or individual employee’s performance and (2)
appraisal or audit of personnel function itself. This chapter is thus developed to the aspect of
performance appraisal of employee which is so essentials from the view point of employee
development and promotion.

Generally, performance appraisal has the following objectives and limitation

 Identifies areas for further training needs

10
  To help determine promotion and transfer

 To reduce grievance

 To improve job performance (Bayer’s 5th edition)

2.5 Purpose /Aims of performance appraisal

In order to develop a performance appraisal system /process it is important to understand
what purpose appraisal serve. Even so often, the senior management of company come
together and outlines the goal and for the company over a specified time frame. The
performance appraisal helps employers and employees understand how well those goals are
being met. The employer already knows whether a goal has been achieved. But, may not
understand how or why the results are the way they are, just as important individual
employees need to understand how they have performed in regard to the company’s goal,
and the goals set for them personally. Dressler, 2008).

The appraisal process also gives the employees and superior an opportunity to work on
carrier planning. Once supervisor understands the employee’s personal long term goals,
he/she can help design a plan to help further the employee’s goals. Dressler, 2008). This
may induce recommending training options or even letting the employees in functional area
outside their normal responsibilities. There are several reasons to appraise performance. An
accurately conducted performance appraisal produces data useful for a variety of
organization and individual purpose. Many authors list it in different ways?

 Provides information for human resource planning by identifying individual

contributions and mangers with potentials for assuming additional responsibility.

 Reduce favoritism in main managerial decision about personnel

 Motivates employees by providing feedback on performance

 Assist manager to observe their subordinate more closely do a better of job coaching

 Provide backup data for making decision about employee compensation

11
 Achieve better operation results and improved work performance (James C Gibson, John
N. Gary, Dressler 6th edition, N.C Jain, saksh:2001)

Shortly the very use full purposes are: -

1. Compensation Decision

2. Promotion Decision

3. Training and development programs

4. Feedback

2.6 The benefits of performance appraisal

 Employer perspectives /Administrative use)

 Despite imperfect measurement techniques, individual differences in performance can

make a difference to company performance.

 Documentation of performance appraisal and feedback may be required for legal defense

 Appraisals dimensions and standards can help to implement strategic goals and clarity
performance expectations.

 Indent at perspective /developmental purpose/

1. Individual’s feedback helps people to rectify their mistakes and get ahead, focusing more
on their unique strengths.

2. Assessment and reorganization of performance levels can motivate the employees to

improve their performance (VSPRAO, HRM, 2nd edition, 2005)

2.7 The performance Appraisal process

Performance appraisal is planned, developed and developed through a series of steps: -

A. establishes performance Standards Blackening.

12
Appraisal systems require performance standards, which serve as benchmarks against which
performance is measured. To be useful, standards should relate to the desired results of each
job that about those appraisals which are carried out without any clear cut criteria.

To avoid embarrassments of this kind, performance standard, must be clear to both the
appraisal and the appraise. The performance standards organ must be developed after a
thorough analysis of the job. Goals must be write down. Just taking about them is not
enough. They must be measurable within certain time and cost cons consideration.

B. Communicate the standards correctly.

Performance appraisal involves at least two parties i.e. appraiser and appraise. Both are
expected to do certain things. The appraiser should prepare job description clearly help the
appraiser set his/her goals and targets analysis result objectively offer the coaching and
guidance to the appraiser whenever required and reward good results. The appraiser should
be very clear about what he is doing and why he is doing it. For this purpose, performance
standards must be communicated appraises and their reaction should be noted down right
way. If necessary, this standard must be released or modified. As pointed out by De censor
and Robbins, too many job have vague performance standards and the problems is
compounded when this standard are set in isolation and don’t involve in the employee.

C. Measure actual performance

After the performance standards are set in the accepted, next actual performance is to be
measured. This requires the dependable performance measures, ratings used to evaluate the
performance. Four common sources of information which are generally used by the
managers regarding how to measure actual performance are: personal observations, statistical
reports, Oral reports and written repos. Performance measured may be objective or
subjective. Objective performance measures are indications of job performance that can be
verified by others and usually quantitative. Objective criteria include quality of production,
degree of training needed and accidents in a given period, absenteeism, length of service, etc.
Subjective performance appraisals measures are ratings that are based on the personal
standards or options of doing the evaluation and are not verifiable by other.

13
Subjective criteria include ratings by superiors (knowledge about) overall goals, and
contribution to socio cultural values of the environment. It should be noted here that
objectives criteria can be laid down while evaluating lower level jobs which are specific and
defined clearly. This is not the case with middle level positions that are complex and vague.

D. Compare actual performance with standards and discuss the appraisal

Actual performance may be better than expected and sometimes it may go off the truck.
Whatever be the consequences; there is a way to communicate and discuss the final outcome.
The assessment of another person contribution and ability is not an easy task. It has serious
emotional overtones as it affects the self-esteem of the appraiser. Any appraisal based on
subjective criteria is likely to be questioned by the appraiser and leave him quite defected and
unhappy when an appraisal turns out to be negative.

E. Taking corrective action if necessary

Corrective action is of two types: one puts out the fire immediately, while the other destroys,
the roots of the problem permanently. Immediate action sets thing, rights things and get
things back on truck whereas the basic corrective action get to the source of deviations and
seeks to adjust the difference permanently. Basic corrective steps seek to find out how any
why performance deviates.

2.8 Method of Performance appraisals

The performance appraisal methods classified into their categories, such as: -

1. Individuals evaluation method

2. Militiaperson evaluation method

3. Other methods

1. Individual evaluation Method

Under this evaluation method of merit rating, employees are evaluated one at a time without
comparing them with other employees in the organization. There are many evaluation
methods under this category evaluation method, let we see some of them

14
1. Confidential report: It is mostly used in government organization. It is a descriptive
report prepared, generally at the end of every year by the employee immediate superior.
The report highlights the strength and weakness of the subordinates. The report is not
data based. The impressions of the superior about the subordinate are merely recorded
there. It does not offer any feedback to the appraise. The appraise is not very sure about
why his rating have fallen despite his efforts, why others are rated high when compared
to him, low to rectify his mistakes, if any, on what basis he is going to be evaluated next
year etc. since the report is generally not made public and hence no feedback is available,
the subjective analysis of the superior is likely to be hotly contested.

2. Critical incident techniques: Under this method, the manager prepared list of treatments
of every effective and in effective behavior of the employee. This critical incident or
events the outstanding or poor behavior of employees on the job. The manager maintains
log on each employee which by the periodically records critic incidents of the worker
behavior. At the end of the rating period, these recorded critical incidents are used in the
calculation of the worker’s performance. This method provides an objective basis for
conducting thorough discussion of an employee’s performance. This method suffers from
the following literatures.

 Negative incidents may be more noticeable than positive incidents

 The superior has a tendency to unload a series of complaints about incidents during an
annual performance review session.

 It results in very close supervision which may not be like by the employee

 Most frequently, the critical incidents methods are applied to evaluate the performance of
superiors.

3. Checklists and weighted checklist: Checklist represents, in its simple forms, a set of an
objectives or descriptive statements about the employee and his behavior. If the rate
believes strongly that the employee possesses a particular listed trait, he checks the item,
and otherwise he levels item blank. A more recent variation of the check list method a

15
 weighted list. The rating scores from the check list helped the manager in evaluation of
the performance of the employee.

.Graphical rating scale: - under this method a printed form is used to evaluate the
performance of an employee. A variety of traits may be used to in thus types of rating
devices, the most common being the quantity and quality of work. The rating scales can be
also adopted by including traits that the company considers impotent for effectiveness on the
job. From the graphic rating scales excerpt can be obtained about the performance standards
of employees.

Management by Objectives (MBO)

MBO requires the management to set specific, measurable, goals with each employee and
then periodically discuss the latter’s progress towards thus goals. This technique emphasizes
participative goals that are tangible, verifiable and measurable. MBO focuses on what must
be accomplished (goals) rather than how it is to be accomplished.

MBO demands a great deal time to set verifiable goals at all levels of an organization. In the
race to define everything rigidly, some of the qualitative as pacts might be ignored (such as
employee attitude, job satisfaction, etc.). Often the superior may set goals at frustratingly
high level, whereas the subordinate may which to have it a comfortable level. At times, the
short form goals may take precedence over long term goals.

1. Ranking Method: is relatively easy method of performance evaluation. Under this

method, the ranking act of employee in working group is done against that of another
employee. The relative position of each employee is expressed in terms of his numerical
rank. It may also be done by ranking a personal job performance against another member
of a competitive group. The implication of this methods is that employee are ranked
according to their relative level of performance while using this method, the evaluator is
asked to rate employees from the highest to lowest towards some overall criteria, though
it is relatively easier to rank the best & the worst employees, it is very difficult to rank the
average employees. Generally, evaluators pick the top & bottom employees first then
select the next highest & the next lowest & above towards the average/ middle
employees.

16
2. Paired comparison method: - Ranking becomes more reliable & easier under the paired
comparison method. Each worker is compared with all other employees in the group for
every trait the worker is compared with all other employees.

3. Forced distribution method: - Under this method, the rate is asked to appraise the
employee according to a predetermined distribution scale. The rate bias is sought to be
eliminated here because workers are not placed at higher or lower end of the scale.

2.9 Problems with performance Appraisal

The problems inherent in performance appraisal may be thus: -

A. Judgmental errors People commit mistakes which evaluating people and their
performance. Biases and judgment errors of various kinds may spoil the show. Bias here
refers to distortion of a measurement. These are as follows types.

I. First impression /primacy effect / the appraiser first impression of a candidate may color
his evaluation of all subsequent behavior. In the case of negative primary effects the
employees seem to do nothing right. In the case negative primary effect, the employees can
do no wrong (Herr’s p. 1992)

II. Halo error: The halo error occurs when one as pests of subordinate’s performance rater’s
evaluation of other performance dimension

III. Leniency: Depending on raters own mental makeup at the time of appraisal, raters may
be rate very strictly very leniently. Appraisers generally find evaluating others difficult,
especially where negative ratings have to be green. A professes might hesitate to tail a Poor
appraisal forms: The appraisal process might also be influenced by the following factors
relating to the forms that are used by raters.

 The rating seals may be quite vague and under

 The rating form may ignore important aspects of job performance

 The rating form may be contagion additional irrelevant for performance dimension

 The form may be too long and complex.

17
B. Lack of rater preparedness: The raters may not be adequately trained to carry out
performance management activities.

2.10 Essential Characteristics of an effective appraisal system

Performance appraisal system should be effective as number of crucial decisions is made on
the basis of score or rating given by the appraiser, which in turn is highly biased on the
appraisal system. It possesses the following characteristics.

A. Reliability and validity: appraisal system should provide consistent, reliable and valid
information in a job related activities / areas of the organization.

B. Job relatedness: The appraisal technique should measure the performance and provide
information in a job related areas.

C. Standardization: appraisal forms, procedures, administration of techniques, rating etc.

should standardized as appraisal decision affects all employees of the group

D. Practical viability: The technique should be practically viable to administer possible to

implement and economical to undertake continuously

.2.11 The challenges in performance Management

In present day organizations, the return processes of motivating employees are common to all
levels. Acknowledge unique contributions and alleviate personal concerns that impact
profession performance. To get the best out of people the chief executive offices should.

 Create a culture of excellence that motivates employees at all levels

 Match organizational objectives with individual aspirations

 Equip people with requisites skills to discharge their duties well

 Clear growth paths for talented employees

18
 CHAPTER THREE

3.1 Research Methodology and Design

The research design (method) selected for the study was descriptive method. Because it tries
to describe and explain the data for the purpose of describing the nature of existing
conditions such as performance activates of employees.

3.2 Population and sampling

3.2.1 Target Population

The Area of this study was be the employees of commercial bank of Ethiopia wolkite main
branch, the total population is 40, The methods the researcher interested to use for
conducting the study is census method. The reasons that initiate the researcher to use census
methods are the data derived through census are highly reliable and also censes data yields
much information. In general sense, data derived through census are accurate because, it
addresses all the population employees of commercial bank of Ethiopia wolkite main branch.

3.3.1 Source of Data

So as to extract the data to achieve the study objective primary data was be used. The
researcher personally strives to include the respondent’s correct opinion in the analysis.

3.4 Method of data Collections

 Primarily sources of data: This means the data is original and collected for the first time
by the research.

1. Questionnaires: - that contains both open close ended questions developed by the
researcher.

2. Direct observation the researcher tries to serve the real practice exercise in performance
of the employee and its activities

3. Interviewing which enable the researcher to gather information that was relevant to the
service provision in the office, employees, manager

19
 3.6 Methods of data Analysis

The researcher used descriptive analysis methods in order to analyze the data that had been
collected through interview and questionnaires. Because the disruptive data analysis method
helps to reduce the collected data into summary format and raw data into a form that makes
them easy to understand and interpret. Through this method the raw data were converted to
understand able form by using table and parentages .Descriptive analysis is used to describe
qualitative and quantitative data. The quantitative data is summarized by using percentage,
table and qualitative summarized by using statement

20
 CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND

INTERPRETATION

These chapters deals with the presentation analysis and the interpretation of data collected
through questionnaires and secondary data from commercial bank Ethiopia wolkite main
branch concerning employee’s performance appraisal system were from the total employee
of the bank questionnaire were distributed for 40 employees and out of this 35 was returned
and the other 5 were not returned, because of a certain problem of the respondents but the
researcher attempt to collect them.

Personal information

No Gender Reconciling No Percentage of

employees respondents in
percent

1 Male 21 60%

Female 14 40%

Total 35 100%

2 Age group

18-25 19 54.3%

26-35 12 34.3%

Above 36 4 11.4%

Total 35 100%

3 Education level

21
 12 complete 3 8.5%

Diploma 6 17.14%

First degree 20 57.15%

Above BA 6 17.15%

Total 35 100%

4 Work experience in
bank

<5 year 25 71.42%

5-10 year 10 28.58%

>10 year 0 0%

Total 35 100%

5 Position in bank

Junior officer 15 42.86%

Cleric 7 20%

Cleric and junior 8 22.86%

officer

Customer service 5 14.28%

officer

Total 35 100%

(Source; own survey2019)

From the above graph majority of employee’s respondents i.e. 21(60%) are male and about
14 (40%) are female

Figure 4.2 Ages of respondent’s employee

22
 Series1, 26-35
years , Series1, 18-25
54.29% years ,
34.29%

Series1
Series1,
above 36
years ,
11.42.%

The graph depicts about the age distribution as about 19 (54.29%) of employees are in age of
(18-25 year), 12 (34.28%) of employees are between 26-35 year and 4 (11.42%) of them are
in the age of above 36 years. This show that the majority of the employees of the bank are
adult

Figure 4.3 Educational status of respondent

Series1, First
Degree ,
74.28%

Series1

Series1, Dip-
loma , 17.14% Series1, 12
complete ,
8.58%

According to the bar graph figure 4.3, 20(57.14%) of respondents have BA

degree,6( 17.14)of the respondents have above degree holders , 6 (17.14%) of them have
diploma and about 3(8.58%) of the respondents are 12 complete of educational bank ground.
Thus, majority of the respondents are first degree level qualification

23
Figure 4.4 Employee respondent work experience in bank

< 5 years ; Series1;

0.1489000000000
01; 15%

< 5 years
6-10 years

6-10 years ;
Series1;
0.8511000000000
01; 85%

Concerning with employees work experience in the bank, 40 (85.11%) of respondents have
an experience which is less than 5 years and 7(14.89%) of them have an experience with the
range of 5-10 years

Thus the majority of the respondents have a young experience age or they are at their early
stage of work experience which is less than 5 years

Figure 4.5 Respondents work position

Series1, cleric,
20 %
Series1,
Csutmer
Series1, Junior
sevice officer ,
officer ,42.86
14.28 % Series1, cleric
%
and junior of- Series1
ficer ,22.86%

24
The graph above shows about the position of the respondents in the bank concerning their job
so, about 7(20%) of respondents are cleric 5(14.28%) are customer service officer,
15(42.86%) are junior officer and about 8 (22.86%) of respondents are cleric and junior
officer

4.2.1 Presentation of Findings

Number of percentage of

1. Are you aware of performance Respondents Respondents

appraisal System in the organization?

Yes 35 100%

No 0 0%

Total 35 100%

(Source; own survey 2019)

Figure 4.6 announcing the performance appraisal

25
 yes

1; yes; 1; 100%

Source Questionnaires’ 2019

From the table above 100% or all employees of the bank are aware of performance appraise
system of the organizations

4.2.2 Satisfaction of performance appraisal

2. Are you satisfied with the performance No respondents Percentage of

respondents
Appraisal system of this organization?

Yes 29 82.86%

No 6 17.14%

Total 35 100%

(Source; own survey 2019)

26
Figure 4.7 satisfactions of performances Appraisal

17.14%
No
Yes
82.86%

Source questionnaire 2019

As it can be observed from the above table the majority replied that, they are satisfied with
performance appraisal system of the organization. However, 29 (82.86%) of respondents are
replied as they are not satisfied by the of appraisal system of organization

4.2.3 Sated target achieving

3. Are you achieve your target

set by performance appraisal
Number of Respondents percentage of Respondents
system?

A Yes 26 74.29%

B No 9 25.71%

Total 35 100%

(Source; own survey 2019)

27
As we can see from the table 26(74.29%) of respondent achieve the sated target in
organization. About, 9 (25.71%) respondents are not able to achieve this sated target so,
mostly employees achieve their target

4.2.4. The types of reward given

4. Which kind of reward did you get form Number of respondent Percentage of respondent
superior of your performance?

4. Salary increment 5 14.28%

5. Promotion 8 22.86%

6. Appreciation 12 34.29%

7. Bonus pays 10 28.57%

(Source; own survey 2019)

Figure 4.8 the types of reward given

28
 Series1, Bonus
pays ,28.57 %

Series1, Appre-
ciation, 34.29%

Series1, Promo- Series1

Series1, Salary tion, 22.86%
incremnet ,
14.28%

From the above graph, 10 (28.57%) of respondents reply as they get bonus payment,
12(34.29%) of respondents replies appreciation, 8(22.86%) of respondents reply as they get
promotion and about 5(14.28%) them also have an opinion towards salary increment is a
reward given to them for their performance. From this the majority of the respondents get
appreciation pays and in addition bonus for their performance. Therefore appreciation pay is
the pay for the good performance.

4.2.5 Satisfaction of rewards

5. Are you satisfied with reward Number of Respondents Percentage of respondents

system of this organization?

Yes 28 80%

29
 No 7 20%

Total 35 100%

(Source; own survey 2019)

The table show about employee’s satisfaction with the reward system of their company so,
28(80%) employees /respondents respond that they are satisfied with the reward system of
the bank Nevertheless, about 7(20%) of the respondents reply as they are not satisfied with
reward system. Thus we can observe that reward system of the organization some the
suitable for workers.

4.2.6 The feedback

1. Do you get any feedback from your Number of percentage of

superiors about your work performance respondents respondents

Yes 30 85.71%

No 5 14.29%

Total 35 100%

(Source; own survey 2019)

As it can be seen from the table, 30(85.71%) of respondents had replied that they get
feedback from their superiors but in contrast of these about 5(14.29%) of the respondents had
replied as they are not get any feedback from superiors about their work performance.
However, generally we can see that the majority of the employees had the feedback about
their work performance.

4.2.7 The performance appraisal method

7. Which of performance appraisal Method Number of Respondents Parentage of Respondent

do you get prefer the most?

30
 A Rating scale 13 37.14%

B Check list 12 34.29%

C MBO 10 28.57%

Total 35 100%

(Source; own survey 2019)

As we see from the above table 13(37.14) of respondents responded that they prefer rating scale, 12 (34.29)
of respondents prefer check list about 10(28.57%) of respondents prefer management by objectives (MBO)
as the method of performance appraisal. This implies that almost approach to half of the employee
respondents have performed rating scale method for performance appraisal method.

4.2.8 The communications stage of appraisal system

8.In which stage do you think the Number of Respondent Percentage of respondent

Appraisal should communicate with

Employee regard to PAS?

A. Goal seeing 24 68.57%

B. Data gathering stage 6 17.14%

C. Middle term reviews 5 14.29%

Total 35 100%

(Source; own survey 2019)

The above table shows, 24 (68.57%) of the respondents have given their option as appraisal
should communicate at Goal setting stage 6 (17.14%) of respondents have an idea that

31
appraisal should communicate at the data gathering stage and about.5 (14.29%) of
respondents had responded that the appraisal should communicate with regard to the
performance appraisal system at midterm review stage thus we can conclude that most the
respondents suggestion is Goal setting stages.

4.2.9 Method of evolution used by the organization

9. Which method is the organization Using to Number of percentage of

evaluate performance of an employee?
Respondents Respondents

A. Confidential report 22 62.86%

B. Critical Method 6 17.14%

C. Grading Method 6 17.14%

D. Others 1 2.86%

Total 35 100%

(Source; own survey 2019)

As we can see from the above table , 22 (62.86%) of respondents replied that the
organization use confidential report , 6(17.14%) of respondents are responded that the
organization use critical method , 6(17.14%) of respondents replied that the organization use
grading method and about 1(2.86%) of respondent replied that the organization use others
method to calculate the performance of the employees thus study show that the organization
even though it used different methods about half percent it used confidential report as the
employees of organization responded.

4.2.10 Effectiveness of performance appraisal

10. Is the performance Appraisal Number of Respondents percentage of respondents

effective?

32
  Agree 28 80%

 Disagree 4 11.43%

 Strongly agree 3 8.57%

 Strongly disagree 0 0%

Total 35 100%

(Source; own survey 2019)

Figure 4.9 the effectiveness of performance appraisal

Series1, Agree,
80%

Series1,
Stronglyagree,
8.57%
Series1, Diagree,
11.43%

The graph shows that, 28(80%) of employees responded that the performance appraisal is
highly effective, 4(11.43) of respondents responded that they are not agree with performance
appraisal effectiveness and about 3 (8.57%) of respondents their option that they strongly
agree with the effectiveness of performance appraisal of the organization so, above half
percent of employees are agreed with the effectiveness of the performance appraisal.

33
 4.2.11 Mutual Understanding of relationship

11. How do you rate the mutual Understanding and Number of Percent of respondents
respondents
relationship between the Management & employees in
managing Performance of workers?

 Good 24 68.57%
 Medium 8 22.86%

 Poor 3 8.57%

Total 35 100%

(Source; own survey 2019)

Figure 4.10 mutual understanding and relationship

Series1, Me-
dium22.86,

Good
Poor
Series1, Medium
Poor,8.57% Series1, Good ,
68.57%

As we can observe from the figure, 24 (68.57%) of responds that the mutual understanding
and relationship is good, 8(22.86%) of respondents responded that mutual understanding and
relationship is medium and about 3(8.57%) of respondents responded that the mutual

34
understanding and relationship between management and employees in managing
performance of workers is poor condition. Thus it shows us that mostly the mutual
understanding and relationship between management and employees in management the
performance of workers is good. Therefore there is good relationship b/n management and
employee

12. Suggestion of employee on the quality improvement need:-

Many of the employees are not volunteered to reply these questions. How every some of
them suggest us:-

 Training should be given for poor performer

 Performance evaluation should be true

 Value should be given for result of the performance appraisal system

ANALAYSIS FOR INTERVEIW QUSITION

The response of open ended questioner only for managers of CBE

 Mention any possible challenge for the successful implementation of performance

appraisal practice at Commercial Bank of Ethiopia

The respondents mention the basic challenge for the implementation of performance
appraisal practice.

1. Employee turn over

2. Unskilled man power
3. Lack of motivation for their job among employees
4. Shortage of motivational tools

-Mention the effect of performance appraisal practice on employee performance

The respondent mentions the following effects of performance appraisal practice on
employee job satisfaction.
 For support employees perspective/administrative use

35
 Improve job satisfaction
 For excellent customer service
 For customer satisfaction
 For development of modernization
 For create loyal customer

36
CHAPTER FIVE
5. SUMMARY, CONCLUSION& RECOMMENDATIONS

5.1 Summary of Finding

For this research majority of respondents are male about 60%

Majority of the respondents are within age group of 18-25 that cover about 54.3% of the
respondents

Since, educated employees are the bases for the development of any organization,
majority of them have first degree, about 57.14% of the total respondents

Even though, the workers who have longer experience with the organization are very
equitable in such way they had a general understanding about the organization as well as
the job they assigned to do. The organization has a majority of less than 5 years
experience that account for about 71.42%

Majority of respondents hold the position of junior officer.

Its arising from the research conducted that the majority of employees awarded about
performance system in the organization

As the research indicates most of the employees (respondents) (82.86%) are satisfied by
the performance appraisal system of the organization

The study indicate that majority of the employees (74.29%) are capable of achieving the
target sated by performance appraisal system

As a research in dictates the reward that is received from the organization is satisfied that
is about 80%

Feed back is a very vital and important tool in any organizations operation. It helps the
employees to come out of their previous deficiencies. Research indicates that the
employees get feedback from their superior concerning their work about 85.71% of them
agreed on it.

37
 From the study it’s indicated that the communication of appraisal with the employees
regarded to performance appraisal system should be given at Goal setting stage (68.57%)
or middle term review (14.29%)

Performance evaluation has its own method to evaluate employees. As it indicated by

research the organization use confidential report (62.86%)

Employees agree that the performance appraisal is effective about( 80% )of the
respondents are agreed with the idea

As it is good /basic to maintain and reduce employee turnover from the organization
research (68.57%) of the respondents indicates that there is good relationship between
management and employees in managing the employee’s performance

Many of the employees recommend that the qualities of performance as it should be

based on the work training should be given for the poor performer. The value should be
given for the result of performance appraisal and likes.

5.2 Conclusion
Based on the analysis conducted the following conclusion are drawn.

 Employees know they are aware of about the performance appraisal system that is
conducted in the bank.

 While conducting the performance appraisal there is a target settled to be achieved by

the employees Accordingly most of the employees have achieved the target settled by
the bank

 It has been indicated that commercial bank of Ethiopia, wolkite give promotion and
appreciation as a reward for its employee those have performed well mostly which is
satisfiable.

 The bank (CBE) wolkite main branch employees prefer rating scale from the
performance appraisal method.

38
 It was found that the employee receive feedback from the superior (manager ) about
their work performance

 The commercial bank of Ethiopia wolkite main branch uses the confidential report
mostly to evaluate performance of employee as it was indicated by most of the
employees

 Most of the employees agreed that the performance appraisal conducted is effective in
its measurement

 The reward system given to the employees is not the same for all employees concerning
their performance. As the analysis table depicts it, reward is given Bonus pays,
Appreciation Promotion & salary increment

 CBE wolkite do not aware performance appraisal all of the employees some of them are
appraised suddenly

 The target settled for performance appraisal did not achieved fully by all employees.

5.3 Recommendation
Based on the above conclusion the following possible solution for the problem of
performance appraisal system of CBE wolkite is forwarded:-

 The performance appraisal system in CBE employee need to be evaluated by one

standardized method of performance appraisal.

 There might be a clear-cut stage at which the communication is conducted to the

employees about appraisal regarding to performance appraisal.

 The reward given to employees should depend on the scale of their performance
appraisal results. Thus it was highly increase the competition among the employees and
this was increasing their performance in the organization.

 CBE (wolkite) need to conduct employee performance appraisal system in a way that
satisfies all of their employees.

39
 Performance appraisal practice of the bank should motivate employee at work place.

 The bank might have to encourages mutual understanding and relationship between the
management &employee in managing performance of workers

40
 REFERENCES
Bernardino, H. J. and Betty, R. W. (1984). Performance Appraisal: assessing human
behavior

Campbell, D. and Lee, C. (1988). Self-Appraisal in Performance Appraisal Evaluation: at

work. Boston: Kent. Development versus Evaluation. Academy of Management Review, pp.
13.Carlyle, J. J. and Ellison, T. F. (1984).Developing Performance standards. Appendix B.
in H. J. Bernardino and R. W. Beatty, Performance appraisal: Assessing human behavior at
work. Boston: PWS-Kent.

Cassia, W. F.(1987). Applied Psychology in Personnel Management. New Jersey: Prentice

Hall.

Cleveland, J. N., Murphy, K. R., andWasiams R. E. (1989). Multiple uses of performance

appraisal: Prevalence and correlates. Journal of Applied Psychology, 74, pp. 130-135

Deborah, K. and Kimchee, D. (2004). Managing Human

Fletcher, C. and Wassails, R. (1996). Performance Management, Job Satisfaction and

Organizational Commitment, British Journal of Management, vol.7, issue 2, pp. 169-179.

DeVry’s, D. L., Morrison, A.M., Shulman, S.L. and Girlish, M. L. (1981).

Performance appraisal on the line. New York: Wile

Gerhart, B .and Malkovich, G. T. (1990). Organizational differences in managerial

compensation and financial performance, Academy of Management Journal, vol. 33, issue 4,
pp. 663-691

Ghana Education Service (1995). Ghana Education Service Act (1995), Act 506. Accra:
Assembly Pres

Goodge, P. (2005). 'How to link 360 degrees’ feedback and appraisal', people management,
vol.1, no.2; pp.46-47.

Greenburg, J. (1986). Determinants of perceived fairness of performance evaluation,

Journal of Applied Psychology, 71, (2) 340-342.

41
Appendix 1

Wolkite University

College of Business and Economics

Department of Management

Questioners for Employee

I am the student of Wolkite University. I am doing research paper on the

topic of study on performance appraisal system and its effects on
employee performance “in case of commercial bank of Ethiopia Wolkite
branch.”To collect information I have prepared questioner. To succeed in
obtaining the necessary and accurate information your honest
cooperation is highly appreciated the question and the researcher will
assure you that your information will not disclosed to other parties.

Instruction

Note that

1. No need to write your name

 Please fill the answer by Marking marks

 Please give more attention and the completed as fast as possible

 If you face difficultly contact me by phone No” 09 49 32 35 47"

1. Sex : A. Male B. Female

2. Age : A. 18-25 B. 25-35 C. Above 35

3. Education level A. Diploma B. First degree C. Above degree

42
4. Work experience in the bank A. <5 years B. 5-10 years C. Above10
years

5. Are you aware of performance appraisal system in the organization?

A. Yes B. No

6. Are you satisfied with the performance appraisal system of this

organization?

A. Yes B. No

7. Are you able to achieve your target set by performance appraisal

system of the organization?

A. Yes B. No

8. Which kind of reward did you get from the superior for your
performance?

A. Salary increment C. Appreciation

B. Promotion D. Bonus Pays

9. Are you satisfied with reward system of this organization?

A. Yes B. No

10. Did you get any feedback from your superiors about your work
performance? A. Yes B. No

11. Which of the performance appraisal method do you prefer the most?

A. Rating scales

B. Check list C. Management by objective (MBO)

12. In which stage do you think the appraisal should communicate with
the employee regard to performance appraisal system?

43
 A. Goal setting stage C. Middle term reviews

B. Data gathering stage D. Others

13. Which method is the organization using to evaluate the performance

of an employee?

A. Confidential report C. Grading methods

B. Critical method D. Others

14. is the performance appraisal effective?

A. Agree C. Strongly agree

B. Disagree D. Strongly disagree

15. How do you rate the mutual understanding and relationship between
management and employee in managing performance of workers?

A. Good

B. Medium

C. Poor

44
Appendix 2
INRERVIWE QUESTTION

1. Mention any possible challenge for the successful implementation of performance

appraisal practice at Commercial Bank of Ethiopia.

2. Mention the effect of performance appraisal practice on employee performance