KEBRI DEHAR UNIVERSITY

COLLAGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MANAGEMENET
ASSESSEMENT ON PERFORMANCE APPRAISAL PRACTICE AND ITS EFFECTS ON
EMPLOYEE PERFORMANCE

[IN CASE OF STUDY ON COMMERCIAL BANK OF ETHIOPIA KEBRI DEHAR MAIN

BRANCH]

A RESEARCH PAPER ON PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR BA

DEGREE IN MANAGEMENT

PREPARED BY:- ID NO

1) DEGINESH TARIKU…………………. 020

2) ABDIHAKIM MUHUMED………... 002

3) DINKITU GUTATA………………… 022

4) FATHI YUSUF………………………. 027

ADVISOR: - Mr. DESTA FALTASO (MA) AUGUST.2021

KEBRI DEHAR, ETHIOPIA

 Acknowledgment

Before all, we would like to thank our almighty god that lets us to do everything and helps us to
get this chance we would like to thank all our family members that stand beside us by finance
and ideal assistance and our gratitude to. Mr Desta Faltaso our adviser, of essay who helps us
heart fully in advising supervising and directing us. Next, we would like to thank all our friends
that help us by giving us powerful moral and appreciation in our entire road toward doing that
and its successful completion.

Finally, and the last appreciation goes to the employees of commercial bank of Ethiopia kebri
dehar main branch.

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 Acronyms

CBE Commercial bank of Ethiopia

PA Performance Appraisal

EC Ethiopian Calendar

CEO Chief executive officer

PAS Performance Appraisal system

CSM Customer Service Manager

CRO Customer relationship officer

SU Supervisor

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Contents
....................................................................................................................................i

Acknowledgment.............................................................................................................ii

Acronyms.....................................................................................................................iii

Abstract.......................................................................................................................vii

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

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

1.1 Back ground of the Study...................................................................................................................1

1.2 Statement of the Problem.................................................................................................................1
1.3. Objectives of the Study.....................................................................................................................2
1.3.1General objectives.......................................................................................................................2
1.3.2. Specific Objective.......................................................................................................................2
1.4. Research Questions..........................................................................................................................2
1.5. Significance of study.........................................................................................................................3
1.6. Scope of the Study............................................................................................................................3
1.7. Limitation of study............................................................................................................................3
CHAPTER TWO...........................................................................................................6

2. Review of Related Literature....................................................................................6

2.1 Performance Appraisal......................................................................................................................6

2.2 Nature of Appraisal............................................................................................................................7
2.3 Features of Performance Appraisal...................................................................................................7
2.4 Objective of Appraisal........................................................................................................................8
2.5 Purpose /Aims of performance appraisal..........................................................................................9
2.6 The benefits of performance appraisal............................................................................................10

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 2.7 The performance Appraisal process................................................................................................10
2.8 Method of Performance appraisals.................................................................................................12
2.9 Problems with performance Appraisal............................................................................................16
2.10 Essential Characteristics of an effective appraisal system.............................................................17
2.11 The challenges in performance Management...............................................................................18
CHAPTER THREE......................................................................................................20

3. RESEARCH METHODOLOGY................................................................................20

3.1 Study area........................................................................................................................................20

3.2 Study design....................................................................................................................................20
3.3 Target Population............................................................................................................................20
3.4 Sampling method.............................................................................................................................20
3.5 Method of data Collections.............................................................................................................20
3.6 Methods of data Analysis................................................................................................................21
3.7. Ethical Consideration..................................................................................................................21
CHAPTER FOUR........................................................................................................22

4. Data Analysis and Interpretation...........................................................................22

4.2.1 Presentation of Findings...........................................................................................................26

4.2.2 Satisfaction of performance appraisal......................................................................................26
4.2.3 Sated target achieving..............................................................................................................27
4.2.4. The types of reward given.......................................................................................................28
4.2.5 Satisfaction of rewards.............................................................................................................29
4.2.6 The feedback............................................................................................................................30
4.2.7 The performance appraisal method.........................................................................................30
4.2.8 The communications stage of appraisal system.......................................................................30
4.2.9 Method of evolution used by the organization.........................................................................31
4.2.10 Effectiveness of performance appraisal................................................................................32
4.2.12 Suggestion of employee on the quality improvement need...................................................34
5. SUMMARY, CONCLUSION & RECOMMENDATIONS..............................................35

5.1 Summary of Finding.........................................................................................................................35

5.2 Conclusion.......................................................................................................................................36
References.................................................................................................................38

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Appendix.....................................................................................................................39

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 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 kebri dehar main branch. The
major objective of this study was to assess the activities of performance appraisal & its effects on
employee performance and to identify the importance performance appraisal system in
commercial bank of Ethiopia kebri dehar branch. The study had been conduct based on both
primary and secondary data more emphasis using primary data. The primary data was collected
through distributing questionnaires, and interviews. Secondary data had been collected from
Books, Documents different written materials in the bank regarding the topic of study and
internet. 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.
The data’s are converted to understandable form by using tables and percentages

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viii
 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 focuses on the purposes (advantages, methods, impacts, effectiveness and practices of
performance appraisals system in commercial bank of Ethiopia kebri dehar 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, 3rd 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.

Commercial bank of Ethiopia had its own performance appraisals department to help it to
achieve its objectives in kebri dehar main branch. The main reason of the study was the fact that
an employee performances appraisal was the most determinant in achieving the objectives of the
bank.

1.2 Statement of the Problem

Performance appraisals could have 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 has to be designed carefully and systematically.

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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
had been evaluated annually and semiannually, where 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 of Ethiopia faces some problems. This
research focuses to assess the employee performance appraisal system in commercial bank of
Ethiopia kebri dehar main branch. What are the main reasons for conducting performance
evaluation in commercial bank of Ethiopia kebri dehar main branch?

1.3. Objectives of the Study

1.3.1General objectives
The general objective of this study was to assess employee performance appraisals system in
commercial bank of Ethiopia kebri dehar main branch.

1.3.2. Specific Objective

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

 To assess the current performance appraisal system in the bank.

 To identity the potential problems related to performance appraisal system and state ways
of overcoming those problems system.

 To identity employees perceptions above performance appraisal system and need to

evaluate its overall achievements.

1.4. Research Questions

1. What are the problems, commercial bank of Ethiopia kebri dehar main branch facing with
regard to the performance evaluation practices?

2. Is the performance appraisals system of the bank meeting its intended objectives and how
employee perceives the system?

3. What is the effect of performance appraisals of employees in commercial bank of Ethiopia

kebri dehar main branch?

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1.5. Significance of study
The result of this study was 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 promotion.

Second, it had 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.

The last but not the least was, it was help to the researcher the opportunity no full stop to gain
deep knowledge in the practice of performance evaluation.

1.6. Scope of the Study

The study 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
kebri dehar town with considerations of performance appraisal effects on employee performance
in the bank.

1.7. 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 color information while collecting data from employees.

 Lack of financial resources.

 Unwillingness of respondents.

1.8. Organization of the Paper

This study is organized in five chapters. The first chapter is discuss the introduction part which
includes background of the study, Background of the study area, statement of the problem,
objectives of the study, research questions, significance of the study, scope of the study and

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organization of the paper, and the second chapter states reviews the different literature related to
the study. The third chapter is about research methodology, research design, source of data and
data collection instrument, type of data, target population, sample size and sampling technique,
data analysis and presentation and finally the last chapter dealing with the finding and
recommendation of the study.

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 CHAPTER TWO

2. Review of Related Literature

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 5th 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 will 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 employees 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 important uses of information generate throng performance appraisals are input to the

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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, 6 th 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,
10th 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

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 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.

 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 goals 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 basis 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 functions 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.

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Generally, performance appraisal has the following objectives and limitation

 Identifies areas for further training needs

 To help determine promotion and transfer

 To reduce grievance

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

2.5 Purpose /Aims of performance appraisal

Why should you appraise your performance?

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.
(DESSLER, 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. (DESSLER, 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

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

 Provide backup data for making decision about employee compensation

 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 purpose is:-

 Compensation Decision

 Promotion Decision

 Training and development programs

 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.

5) Indent at perspective /developmental purpose/

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

 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.
Establishing performance Standards Blackening.

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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 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 appraise set
his/her goals and targets analysis result objectively offer the coaching and guidance to the
appraise when every required and reward good results. The appraise 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 cenzo and Robbins, too many job
have vague performance standards and the problems is compounded when this standards 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 those doing
the evaluation and are not verifiable by other.

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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 appraise. Any appraisal based on subjective
criteria is likely to be questioned by appraise 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 seeks 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

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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 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 incidents 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
workers 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 have 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 is 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 possess a particular listed trait , he checks the item , and otherwise
he levels item blank. A more recent variation of the check list method a weighted list. The
rating scores from the check list help the manager in evaluation of the performance of the
employee.

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The checklist method has a serious limitation .i.e.

 The rater may be biased in distinguishing the positive and negative questions

 He may assign biased weights to the questions.

 It is expensive and time consuming

 It becomes difficult for the manager to assemble, analyze and weight a number of statements
about the employee’s characteristics, contributions and behaviors.

4. 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.
The rating scale is the most common method of evaluation of an employee’s performance
today. One positive point in favor of rating scale is that it’s easy to understand, to use and
permits a statistical tabulation of score of employee. When ratings are objective in nature,
they can be effectively used as evaluation. The graphic rating scale may however suffer from
long standing disadvantages, i.e. it may be arbitrary and the rating may be subjective.
Another pitfall is that each characteristic is equally important in evaluation of employee’s
performance and so on.

5. 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. It is thus a kind of goal setting
and appraisal program involving six steps:

6) Set the organization’s goals

7) Set departmental goals

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8) Discuss departmental goals

9) Define expected results

10) Performance review

11) Provide feedback

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, where
us the subordinate may which to have it a comfortable level. At times, the short form goals may
take precedence over long term goals. The only way to overcome thus problems is thus to allow
the manager at all levels to explain, coordinate and guide the program is a persuasive democratic
way. The jointly set retarget target must be fair and attainable. Both the superiors and the
subordinates must be thought how to set realistic goals and be familiarized with the results for
which they are finally held responsible

2. Multiple person evaluation techniques

The above discussed methods are used to evaluate employee at a time. This section evaluates one
employee in comparison to another. Three techniques are used frequently in organization are:-

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 over all 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.

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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 rater is asked to appraise the employee
according to a predetermined distribution scale. The rater’s 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 subordinates 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 profess might hesitate to tail a candidate when all
other student, have cleared the examination. The leniency error can render an appraisal system in
effective if everyone is to be rated high, the system has not done anything to differentiate among
the employees.

IV. Central Tendency: It’s an alternative to the leniency effect. If occurs when the appraiser rate
all employees as average performers

V. Stereotyping: Is a mental picture that an individual holds about a person because of that
person’s sex age religion, etc.

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VI. Regency Effect: - In this case the rater gives weight age to recent occur acnes than earlier
performance.

B. 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.

C. 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 numbers of crucial decisions are 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

E. Open Communication Most employees want to know how well they are performing the job.
A good appraisal. The appraisal system provides the needed feedback on continuo witty basis

17
 interview should permit both parties to learn about the gaps and prepare themselves for the
future.

F. Employee access to results: employee should know the rules of the game. They should
receive adequate feedback on their performance.

G. Due Process: it follows then that formal procedures should be developed to enable employees
who disagree with appraisal results (which are considered to be in accurate or unfair).
Performance appraisal should be used primarily to develop employees as valuable resources.
Only then it would show primary results.

2.11 The challenges in performance Management

In present day organizations, the return process of motivating employees is 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

 Provide new challenges to rejuvenate flattening corners

 Employer employees to take decisions without fear of failing

 Encourage team work and team spirit and open communication

Empirical Review

Manly literatures studied extensively on performance evocation and it in various terms such as
performance appraisal performance review, personal rating, and merit rating employee
evaluation

The history of performance appraisal is quite brief. Its roots in the early 20th

18
Century can be traced to Taylors pioneering , time and motion studies There is says “a basic
human tendency to make judgments about those one is working a basic human tendency with as
well as about one self-appraisal, it seems , is both inevitably and universal . In the absence of
carefully structured system of performance, appraisal people will tend to judge the work
performances of others inducing subordinates, naturally informally and arbitrary. DULC wicz
(1989).

Research (Bannister and Barking, 1990) has reported that appraises seem to have great or
acceptance of the appraisal process and feed more satisfied with it when the process is directly
linked to remands. Boyce and killer report those effective performance appraisal systems help to
create a motivated and committed work force. To be effective they require the support of top
management to show their commitment and to translate the organization goals and objectives
into personalized employee specific objectives.

19
 CHAPTER THREE

3. RESEARCH METHODOLOGY
3.1 Study area
Kebri dehar is located in the eastern part of Ethiopia korahe zone known as the Somalia region.

This town has a latitude and longitude of 6 ͦ 44’N,44 ͦ16’E and elevation of 493 meters above sea level.

The town has located at the distance of 1035 km from the capital city of Ethiopia Addis Ababa.

3.2 Study design

The research design (method) selected for the study was descriptive survey 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.

3.3 Target Population

The target population is defined to be the population for which the result is required for the select that are
expects the population to be the study, means that the employees of commercial bank of Ethiopia
kebri dehar main branch.

3.4 Sampling method

The methods the researcher interested to use for conducting the study was 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 the bank.

3.5 Method of data Collections

 Primarily sources of data

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

2. Direct observation the researcher try 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

20
 Secondary Sources of data

Related literature regarding performance appraisal practices and its effect on employee
performance could be used as a source of the information the researcher used different materials
like

 Books

 Documents

 Different written material in the bank regarding the topic of the study

 Internet

3.6 Methods of data Analysis

The researcher was use 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 summery format and row data into a form that makes them
easy to understand and interpret. Through this method the row data were converted to
understandable form by using table and parentages.

3.7. Ethical Consideration

To make the study ethical in the first place, the researcher submitted the research proposal to the
departments to be approved. Then, local procedures were followed in every stage of data
collection processes. Accordingly, the respondents were introduced about the purpose of study
then informed permission from the respondents and responsible officials covered by the study to
discuss. Therefore on the basis of these ethical principles, efforts were made and confidentiality
was assured and reserved throughout the process of the study.

21
 CHAPTER FOUR

4. Data Analysis and Interpretation

These chapters deals with the presentation analysis and the interpretation of data collected
through questionnaires and secondary data from commercial bank of Ethiopia kebri dehar main
branch concerning employee’s performance appraisal system were from the total employee of
the bank questionnaire were distributed for 20.

NO. Gender Reconciling No employee Parentage of Respondents

in percent
1 Employee Respondents in %
Male 14 70%
Female 6 30%
Total 20 100%
2 Age group
18-25 7 35%
26-35 10 50%
>36 3 15%
Total 20 100%
3 Education level
12 complete 2 10%
Diploma 7 35%
First Degree 11 55%
Above BA 0 0%
Total 20 100%
4 Work experience in bank
< 5 year 7 35%
5-10 year 13 65%
>10year 0 0%
Total 20 100%
5 Position in bank
Junior officer 3 15%
Cleric 10 50%
Cleric and Junior officer 1 5%
Customer service officer 6 30%

22
 Total 20 100%
Table 4.1.1 Gender of respondents

From the above table majority of employee’s respondents i.e. 14(70%) are male and about 6
(30%) are female

Figure 4.1.2 Ages of respondent’s employee

50%
35%

15%

26-35 years 18-26 years above 36

years

The graph depicts about the age distribution as about 10 (50%) of employees are in age of (26-36
year), 7 (35%) of employees are between 18-26 year and 3 (15%) of them are in the age of above
36 years. This shows that the majority of the employees of the bank are adult.

Figure 4.3 Educational status of respondent

23
 55%

Series1

35%

10%

First Degree Diploma 12 complete

According to the bar graph figure 4.3, 11(55%) of respondents have BA degree, 7 (35%) of them
have diploma and about 2(10%) of the respondents are 12 complete of educational back ground.
Thus, majority of the respondents are first degree level qualification

Figure 4.4 Employee respondent work experience in bank

35%

< 5 years
6-10 years

65%

Concerning with employees work experience in the bank, 7(35%) of respondents have an
experience which is less than 5 years and 13(65%) of them have an experience with the range of
5-10 years

Thus the majority of the respondents are experienced and they are at their high stage of work
experience which is 5-10 years.

24
Figure 4.5 Respondents work position

50%

30%
15% Series1 The graph above shows
5%
about the position of the
respondents in the bank
concerning their job so,
cleric Csutmer Junior of- cleric and
sevice of- ficer junior of- about 10(50%) of
ficer ficer
respondents are cleric
6(30%) are customer
service officer, 3 (15%) are junior officer and about 1 (5%) 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 20 100%

No 0 0%

Total 20 100%

Figure 4.6 announcing the performance appraisal

25
 yes

100%

From the above table 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 15 75%

No 5 25%

Total 20 100%

Figure 4.7 satisfactions of performances Appraisal

26
 25%

No
Yes

75%

As it can be observed from the above table the majority replied that, they are satisfied with
performance appraisal system of the organization. However, 5(25%) 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?

Yes 16 80%

No 4 20%

Total 20 100%

As we can see from the table 16(80%) of respondent achieve the sated target in organization.
About, 4 (20%) respondents are not able to achieve this sated target so; most of employees
achieve their target

27
4.2.4. The types of reward given
4. Which kind of reward did you Number of Percentage of
get form superior of your respondent respondent
performance?

Salary increment 2 10%

Promotion 3 15%

Appreciation 5 25%

Bonus pays 10 50%

Total 20 100%

Figure 4.8 the types of reward given

28
 50%

25%

Series1
15%

10%

Salary incremnet Bonus pays Appreciation Promotion

From the above graph, 10 (50%) of respondents reply as they get bonus payment, 5(25%) of
respondents replies appreciation, 3(15%) of respondents reply as they get promotion and about
2(10%) of 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 bonus pays and in addition
Appreciation for their performance. Therefore Bonus 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 13 65%

No 7 35%

Total 20 100%

The table show about employee’s satisfaction with the reward system of their company so,
13(65%) employees /respondents respond that they are satisfied with the reward system of the
bank Nevertheless, about 7(35%) of the respondents reply as they are not satisfied with reward

29
 system. Thus we can observe that reward system of the organization somewhat settable for
workers.

4.2.6 The feedback

6. Do you get any feedback from your Number of percentage of
superiors about your work performance respondents respondents

Yes 16 80%

No 4 20%

Total 20 100%

As it can be seen from the table, 16(80%) of respondents had replied that they get feedback from
their superiors but in contrast of these about 4 (20%) 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?

A. Rating scale 9 45%

B. Check list 2 10%

C. 360 degree 6 30%

D.MBO 3 15%

Total 20 100%

As we see from the above table 9(45%) of respondents responded that they prefer rating scale,
2 (10%) of respondents prefer check list, 6(30%) of respondents replied that 360 degree method
and about 3(15%) of respondent 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

30
Employee regard to PAS?

A. Goal setting 12 60%

B. Data gathering 2 10%

C. Midterm reviews 6 30%

Total 20 100%

The above table shows, 12 (60%) of the respondents have given their option as appraisal should
communicate at Goal setting stage 2 (10%) of respondents have an idea that appraisal should
communicate at the data gathering stage and about, 6 (30%) 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 employee?
Respondents Respondents

A. Confidential report 10 50%

B. Critical Method 3 15%

C. Grading Method 6 30%

D. Others Method 1 5%

Total 20 100%

As we can see from the above table , 10 (50%) of respondents replied that the organization use
confidential report , 3(15%) of respondents are responded that the organization use critical
method , 6(30%) of respondents replied that the organization use grading method and about
1(5%) 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.
31
4.2.10 Effectiveness of performance appraisal
10. Is the performance Appraisal effective? Number of Respondents percentage of respondents

Agree 11 55%
Disagree 3 15%
Strongly agree 6 30%
Strongly disagree 0 0%
Total 20 100%

Figure 4.9 the effectiveness of performance appraisal

55%

30%
15%

Agree Discpree Stronglyagree

The graph shows that, 11(55%) of employees responded that the performance appraisal is highly
effective, 3(15%) of respondents responded that they are not agree with performance appraisal
effectiveness and about 6 (30%) 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.

4.2.11 Mutual Understanding of relationship

32
11. How do you rate the mutual Understanding and relationship
between the Management & employees in managing Performance Number of Percent of respondents
of workers? respondents

Good 12 60%

Medium 6 30%

Poor 2 10%

Total 20 100%

Figure 4.10 mutual understanding and relationship

10%

Good
30% Poor
Medium

60%

As we can observe from the figure, 12 (60%) of responds that the mutual understanding and
relationship is good, 6(30%) of respondents responded that mutual understanding and

33
relationship is medium and about, 2 (10%) of respondents responded that the mutual
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

4.2.12 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 was given for poor performer

 Performance evolution should be true

 Value was

CHAPTER FIVE

34
 5. SUMMARY, CONCLUSION & RECOMMENDATIONS
5.1 Summary of Finding
 For this research majority of respondents are male about 70%

 Majority of the respondents are within age group of 26-35 that cover about 50% of the
respondents

 Since, educated employees are the bases for the development of any organization, majority of
them have first degree, it’s about 55% of the total respondents

 Even though, the workers who have <5 year experience with the organization are very small.
The organization has a majority of 5-10 years experiences that account for about 13(65%)

 Majority of respondents hold the position of cleric

 Its arising from the research conducted that the majority of employees aware about
performance appraisal system in the organization

 As the research indicates most of the employees (respondents) 15(75%) are satisfied by the
performance appraisal system of the organization

 The study indicate that majority of the employees 16 (80%) are capable of achieving the
target sated by performance appraisal system

 As a research indicates the reward that is received from the organization is satisfied that is
about 13 (65%) employees feedback

 Feedback 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 16 (80%) of them agreed on it.

 As the research indicate more of them 9(45%) of respondents responded that they prefer
rating scale of performance appraisal method

35
 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 12(60%) or
midterm review 6 (30%)

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

research the organization use confidential report 10 (50%)

 Employees agree that the performance appraisal is effective about 11(55%) of the
respondents are agreed with the idea

 As it is good /basic to maintain and reduce employee turnover from the organization research
indicates that there is good relationship between management and employees in managing
the employee’s performance it’s about 12(60%)

 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 or 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, kebri dehar give bonus payment and
appreciation as a reward for its employee those have performed well mostly which is
satisfied.

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

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

36
 The commercial bank of Ethiopia kebri dehar 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 kebri dehar 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 kebri dehar is forwarded:-

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

standardized method of performance appraisal.

 There should 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 will highly increase the competition among the employees and this will
increase their performance in the organization.

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

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

37
  The bank should have to encourages mutual understanding and relationship between the
management &employee in managing performance of workers

References
1. Ivancevich J. M (1998), HUMAN RESOURCE MANAGEMNT. New year MC Graw Hill.

2. Shuan Tyson and Alford you (3rdedition), HUMAN RESOURCE MANAGEMENT.

3. Bayers Rue and leslic W. Rue, HUMAN RESOURCE MANAGEMENT (5th edition).

4. Richard D. Irwin, HUMAN RESOURCE MANAGEMENT (1995).

38
 Appendix
Kebri dehar University

College of Business and Economics

Department of Management

Questionnaires for Employee

We are the students of kebridehar University. We are 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 kebridehar main branch.”

Objective of the research

The objective of the study is to identity the main employee performance that should be addressed
to improve organization performance with the need and requirement. And also identify strength
and weakness of the bank to take corrective action on the entire system.

39
Your honest response for each question has great value for success of the study.

Thank you for your cooperation!

Instruction

Note that

1. No need to write your name

2. Please fill the answer by Marking “” marks

3. Please give more attention and complete as fast as possible

1. Sex : A. Male  B. Female 

2. Age : A. 18-26  26-35  C. Above 36 

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

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

5. Position in the bank A. Junior officer  B. Cleric 

C. Junior & citric officer  D. Customer service officer 

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

A. Yes  B. No 

7. Are you satisfied with the performance appraisal system of this organization?

A. Yes  B. No 

8. Are you able to achieve your target set by performance appraisal system of the organization?

A. Yes  B. No 

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

A. Salary increment  C. Appreciation

40
 B. Promotion  D. Bonus Pays

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

A. Yes  B. No

11. Did you get any feedback from your superiors about your work performance?

A. Yes  B. No

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

A. Rating scales  C. 360 

B. Check list  D. Management by objective (MBO)

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

A. Goal setting stage  C. Midterm reviews 

B. Data pothering stage  D. Others 

14. Which method is the organization using to evaluate the performance of an employee?

A. Confidential report  C. Grading methods 

B. Critical method  D. Others 

15. is the performance appraisal effective?

A. Agree  C. Strongly agree 

B. Disagree  D. Strongly disagree 

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

41
A. Good  B. Medium  C. Poor 

42