Performance Appraisal Assessment at Commercial Bank of Ethiopia
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Debre Markos University**We aren't endorsed by this school
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MANAGEMENT HUMAN RESO
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Management
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Dec 10, 2024
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ASSESSMENT OF RESULT ORIENTED PERFORMANCE APPRAISAL ATCOMMERCIAL BANK OF ETHIOPIA, ASSELA BRANCHA RESEARCH PAPER SUBMITTED TO ARSI UNIVERSITY FACULTY OF BUSINESS AND ECONOMICS DEPARTMENT OF MANAGEMENT IN THE PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE BACHELOR OF ART (BA) DEGREE IN MANAGEMENT. PERPARED BY: ID NO1.AMANUEL BULTI ……………………………………. CBE/UR6185/112.ALIMET MAHMUD…………………………………… CBE/UR6183/11 ADVISOR: - ADANECH MENGISTU (MBA)ARSI UNIVERSITYFACULITY OF BUSINESS AND ECONOMICSDEPARTMENT OF MANAGEMENTAUG, 2021ASSELA, ETHIOPIA
TABLE OF CONTENTTABLE OF CONTENT.............................................................................................................................................IABISTRACT.........................................................................................................................................................IIIACKNOWLEDGEMENT........................................................................................................................................IVABBREVIATIONS.................................................................................................................................................VLIST OF TABLE....................................................................................................................................................VICHAPTER ONE.....................................................................................................................................................1INTRODUCTION..................................................................................................................................................11.1. BACKGROUNDOFTHESTUDY...................................................................................................................................12.2. STATEMENTOFTHEPROBLEM..................................................................................................................................22.3. RESEARCHQUESTIONS............................................................................................................................................21.4. OBJECTIVEOFTHESTUDY........................................................................................................................................31.4.1. General objective.........................................................................................................................................31.4.2. Specific objective..........................................................................................................................................31.5. SIGNIFICANCEOFTHESTUDY....................................................................................................................................31.6. SCOPEOFTHESTUDY.............................................................................................................................................31.7 LIMITATIONOFTHESTUDY.......................................................................................................................................31.8. ORGANIZATIONOFTHESTUDY.................................................................................................................................41.9. ORGANIZATIONALDEFINITION..................................................................................................................................4CHAPTER TWO....................................................................................................................................................5REVIEW RELATED LITERATURE.............................................................................................................................52.1. DEFINITION..........................................................................................................................................................52.1.1. Purpose of performance appraisal...............................................................................................................62.1.2. The role of appraisal in managing performance..........................................................................................62.2. PERFORMANCEAPPRAISALMETHOD..........................................................................................................................72.3 POTENTIALPROBLEMSINPERFORMANCEEVALUATION...................................................................................................82.3.1. Opposition to evaluation..............................................................................................................................82.3.2. System Design and operating problems......................................................................................................82.3.3. Rater problem..............................................................................................................................................82.4. ROLEOFSUPERVISIONINAPPRAISINGPERFORMANCE...................................................................................................92.5. ELIMINATINGRATESERRORS..................................................................................................................................102.6. PERFORMANCERELATEDPAY.................................................................................................................................122.7. IDENTIFYINGANDMEASURINGEMPLOYEEPERFORMANCE............................................................................................13CHAPTER THREE................................................................................................................................................14RESEARCH DESIGN AND METHODOLOGY...........................................................................................................143.1. RESEARCHDESIGNANDMETHODOLOGY..................................................................................................................143.2 STUDYAREAANDPOPULATION................................................................................................................................143.3. DATASOURCES...................................................................................................................................................153.4. INSTRUMENTSOFDATACOLLECTION........................................................................................................................15I
3.5. SAMPLINGMETHODSANDSAMPLESIZE....................................................................................................................153.6. DATAPROCESSINGANDANALYSIS...........................................................................................................................15CHAPTER FOUR.................................................................................................................................................16DATA PRESENTATION AND ANALYSIS................................................................................................................16CHAPTER FIVE...................................................................................................................................................24SUMMARY, CONCLUSION AND RECOMMENDATION..........................................................................................245.1. SUMMARYOFFINDINGS........................................................................................................................................245.2. CONCLUSION......................................................................................................................................................245.3. RECOMMENDATIONS............................................................................................................................................25REFERENCE.......................................................................................................................................................27APPENDIX I.......................................................................................................................................................28APPENDIX II......................................................................................................................................................31II
ABISTRACTThis research was conducted in commercial bank of Ethiopia Assela branch on the assessment ofresult oriented performance appraisal. The main objective of this study was to identify theproblems that being faced by the bank on evaluation system. For the purpose of this studyprimary data was collected through questionnaire and interview and secondary data wascollected from internet, books, and documents of the organization. The researcher also usedcensus survey to collect data from employees. The collected data was processed and organizedin descriptive manner and organized using table and percentage with relevant discussion withthe use of SPSS version 20. At the end of this study the researcher has proven the main problemof result oriented performance appraisal in the bank. Keywords: performance appraisal, Result oriented, performance managementIII
ACKNOWLEDGEMENTFirst and foremost, we would like to give our thanks for the Almighty Godand St. Virgin Marry for the gift of life, continued love and for beingguardians through good and rough times of our life. Next my gratitude goesto our advisor Adanech Mengistu (MBA) for her assistance and support in thePreparation of this study. We are grateful for all our friends, classmates fortheir understanding and Moral support that kept us moving forward. Last butnot least, we would like to express our sincere gratitude and gratefulness toour families, and all those who were beside us with their prayers and supportto accomplish this study. We thank you all.IV
ABBREVIATIONSSPSS -Statistical Package for the Social SciencesV
LIST OF TABLETable 4.1 General characteristics of the respondents...............................................................................16Table 4.2 Educational status and service year of employees in the bank..................................................16Table 4.4 Understanding of employees and officials on result oriented performance appraisal..............17Table 4.5 Employee toward result oriented performance appraisal.........................................................17Table 4.6 feeling of employees towards the evaluation system of the bank.............................................18Table 4.7 the criteria used to evaluate employees in the bank.................................................................18Table 4.8 employee participation and feedback from the bank regarding the appraisal..........................19Table 4.9 shows that what employees expect if there is no evaluation in the bank.................................20Table 4.10 method of performance appraisal system...............................................................................20Table 4.11 the appraisal method that the bank used................................................................................21Table 4.12 what employees get if they carry out their task properly........................................................21Table 4.13 problems of result oriented performance appraisal................................................................22Table 4.14 Reasons for problems identified in table 4.11.........................................................................22Table 4.15 employee’s feedback about problems in the bank..................................................................23VI
CHAPTER ONEINTRODUCTION1.1. Background of the studyPerformance appraisal is the process of determining and communicating to an employee how heor she is performing on the job as establishing a plan of improvement. When properly conductedperformance appraisal not only employees know how well they are performing but also influencetheir future level of effort and task directions (Bayars, 2009). The history of performanceappraisal is quite brief. Its roots in the early 20th c can be traced to Taylors pioneering time andmotion studies. But this is not very helpful. For the same may be said about almost every thing’sin the field of modern human resource management. As a distinct and formal managementprocedure used in the evaluation of work performance, appraisal really dates from the time ofsecond world wars not more than 60 years ago. It begins as simple methods of incomejustification (http// www.perfomance appraisal.com, access date July 2, 2021 @ 12:10). Resultoriented performance appraisal system is method of performance appraisal that used to evaluateemployees based on their task performed. It promotes adverse, high performance work force byimplanting and maintaining effective management. Its main objective is to measure employeesbased on what they achieved (www.apps.gov/human capital/standard, access date July 2, 2021 @12:10). Different organizations used result oriented performance appraisal to evaluateemployees’ performance. But according to some employees suggestion there have been problemsregarding to result oriented performance appraisal. So this study will assess those problems in inthe case of Commercial bank of Ethiopia Assela BranchIn any organization one of the ways to enhance organizational performance is positivelyinfluence the labor component of productivity. Result oriented performance appraisal is one wayof influencing employees to achieve organizational goals. It creates motivation on employeesand increases organizational productivity. Feedback Provides to the employees with aim ofmotivating that person to eliminate performance deficiencies (Desler, 2009). Although resultoriented performance appraisal has the above purpose some employees believed that some publicenterprise have problems regarding the result oriented performance appraisal. Commercial bankof Ethiopia Assela Branch is one of the organization, from the result of the information that theresearcher obtained informally problems, such as unfair evaluation and some evaluation errors1
like evaluate all subordinate on one dimension, evaluating employees on most recent workperformance, discrimination based on personal characteristics and using high or low rating.According to Workie, (2000) refers general lack of knowledge; experience and skill, ratingemployees based on an overall impression resulting from one or few incident bad or good, ratinginfluenced by the most recent behavior, allowing past performance appraisal ratings to unjustlyinfluence current rating, refers in-effectiveness in observing and documenting performance andvagueness of criteria and standards of performance are some of the problems. Other commonproblems that occur with appraisal include lack of regular feedback instead of taking difficultissues at the right time feedback is stored and given in piece at appraisal time, it is often view astedious routine and inadequately trained appraisal. From the recommendation part of previousresearcher the problem is critical issue, therefore this study will tried to conduct furtherinvestigation toward result oriented performance appraisal in the case of Commercial bank ofEthiopia Assela Branch.2.2. Statement of the problem In any organization one of the ways to enhance organizational performance is positivelyinfluence the labor component of productivity. Result oriented performance appraisal is one wayof influencing employees to achieve organizational goals. It creates motivation on employeesand increases organizational productivity. Although result oriented performance appraisal has the above purpose some employees believedthat some public enterprise have problems regarding the result oriented performance appraisal.Commercial bank of Ethiopia Assela branch is one of the organization, there for it has problems,such as unfair evaluation and some evaluation errors like evaluate all subordinate on onedimension, evaluating employees on most recent work performance, discrimination based onpersonal characteristics and using high or low rating. So the study has tried to fix the problemsrelated to perception of employees towards result oriented performance appraisal, the majorproblems that affect result oriented performance appraisal and methods the organization use toevaluate its employees2.3. Research QuestionsWhat are the criteria used for evaluating result oriented performance appraisal?What is the attitude of employees towards result oriented performance appraisals? 2
What is the major problem that affect result oriented performance appraisal?What to suggest possible solutions to the existing appraisal problems? 1.4. Objective of the study 1.4.1. General objective The general objective of the study is to assess the problem related to result oriented performanceappraisal in commercial bank of Ethiopia Assela branch. 1.4.2. Specific objectiveThe specific objectives of the study are To identify the criteria used for evaluating result oriented performance appraisal. To know the attitude of employees towards result oriented performanceappraisals. To identify the major problem that affect result oriented performance appraisal. To suggest possible solutions to the existing appraisal problems. 1.5. Significance of the study There are no more researches done on result oriented performance appraisal in the given area.Therefore, as the first research it uses as reference for other researchers who intend to furtherinvestigation. In other way it helps mangers of the organization to recognize the factors affectingresult oriented performance appraisal and take corrective measures. The study will again help thestudent to acquire more insight and experience of conducting research. It may serves as a lessonfor other organizations that are practicing similar work. 1.6. Scope of the studyAssessing all about result oriented performance appraisal unmanageable. So the paper was dealswith the criteria of the evaluation, the major problems and employees attitude towards resultoriented performance appraisal at Commercial bank of Ethiopia Assela branch. Due to time andbudget constraints the study conducted in a single organization i.e. commercial Bank of EthiopiaAssela branch and all employees of the bank have been included in the study. 1.7 Limitation of the study This study was limited by the following factors:3
Finance:Scarcity of finance is a great constraint to the research. This forced the researcher tolimit the scope of the study to only to a business portfolios commercial Bank of Ethiopia Asselabranch, even though there are many banks in around Assela townTime: Time also constitute a great constraint in this study, since the researcher is expected tofinish this study within just within the specific months, the range of data for investigation wasscaled down. This therefore limits the extent of applicability of the study findings and results. 1.8. Organization of the studyThe study was organized in to five chapters. The first chapter commences with the introductionpart of the study; the second chapter has discussed the details of related literature of the study;the third chapter focused on research methodology and the fourth chapter discussed datapresentation, analysis and finally chapter five presented summary, conclusion andrecommendations that has forwarded by the researcher based on the investigation.1.9. Organizational definitionResource Management (HRM) -It is utilization of human resources to achieveOrganizational objectives. Human resource management (HRM) is a subset of the studyof management that focuses on how to attract, hire, train, motivate, and maintainemployees. (Mandy et al, 2009). Performance Appraisal (PA) - is a method of evaluating the behavior of employees inthe work spot, normally including both quantitative and qualitative aspects of job-performance (Rao, 2004). Performance Management (PM)- is a continuous process of identifying, measuring,and developing the performance of individuals and teams and aligning performance withthe strategic goals of the organization (Smither W.James, 2009).4
CHAPTER TWOREVIEW RELATED LITERATURE2.1. Definition Performance appraisal is the process of determining and communicating to an employee how heor she is performing on the job and, establishing a plan of improvement when properlyconducted performance appraisals not only let employees know how well they are performingbut also influence their future level of effort and task direction. Effort should be enhanced if theemployee should be classified through the establishment of a plan for improvement (Byars,2009). A more comprehensive definition of performance appraisal is a formal, structured system ofmeasuring and evaluating on employees job related behavior’s and out comes to discover howand why the employee is presently performing on the job and how the employee can performeffectively in the future so that the employee organization and solcers all benefit. Performance appraisal is defined as evaluating an employee’s current or past performancerelative to his/ her performance standards. The appraisal prices therefore involve. Setting work standard Assessing the employee’s actual performance. Providing feedback to the employees with aim of motivating that person to eliminateperformance do ficiencres or to continue to perform above (Desler, 2009). 5
2.1.1. Purpose of performance appraisal Performance appraisal of employees serves useful purposes they are i.A scientifically done appraisal provides vital information which can greatlyhelp in making and enforcing decisions regarding promotions, pay increasestermination and transfers. It permits each individual to be considered on thesame basis as everyone else. It reduces the chances of nepotism, to put in theirbest. A sound performance appraisal system can be of great use to a manpower planner when confronted with the task of preparing a successionplanning scheme. ii.Systematize performance appraisal provides information on whichperformance comparison can be made. iii.A good performance appraisal system helps in employee’s development. Theweakness once identified can be removed either by providing necessarytraining or through proper placement. iv.Appraisal result may be used to counsel with each employee about his futuredevelopment this can be accomplished when the supper visor reports on theevaluation and tells each individual how he is doing and how he can improve.v.Performance appraisal provides a basis for the development guide for eachreason. This guide should include identification of the individual’s positionfor which he seems best qualified, the limitations or training needs derivedform a comparison of appraisal results with position requirements andrecommendations for raining to fill out the person’s competence a scheduleshowing the development program should also be provided. This schedulewill disclose when the candidate can be promoted to the next higher positionwith promise of successfully carrying out his unties (Hendry, 2005). 2.1.2. The role of appraisal in managing performance Many expert feet those traditional appraisals don’t improve performance and may actually backtime. They argue that most performance appraisal systems neither motivate employees nor guidetheir development furthermore, “they cause conflict between supervisor and subordinate and leadto dysfunctional behaviors. The traits measured are often personal in nature, and “who like theidea of being evaluated on his/her/ honesty, integrity team work, compassion cooperation6
objectively. In fact, traditional can be useless or counterproductive. Researchers in Korearecently found that even discussion and goals were clearly set and career issues discussed few ofthe reviews had a positive impact on the employees subsequent job performance. In a study ofalmost 300 managers form mid-western U.S companies 32% rated their performance appraisal as“ very in effective”, while only 4% rated them”, Effective to a large extent. “ Another survey of181 manufacturing and service organizations conducted that 11% had stopped using annualappraisals, while 25% more planned to discontinue them within two years. Some argue for dumping appraisals entirely. For example quality management expert like W.Edwards Deming basically argue as follows: they say the organization is a system of interrelatedparts, and that an employee’s performance is more a function of factors like trainingcommunication tools and supervision than of his or her own motivation. Furthermore, performance appraisal can have unanticipated consequences forced distributionappraisal in particular can undermine team work. These experts were therefore very skepticalabout traditional appraisal methods. ( Dessler, 2004). 2.2. Performance appraisal method This section will discuss each of the following performance appraisal method Goal setting or management by objective (MBO) management by objective (MBO) consists ofestablishing clear and precisely defined statement of objectives for the work to be done by anemployee. Establishing an action plan indicating how those objectives are to be achieved,allowing the employee to implement the action plan, measuring objective and taking correctiveaction. Multi – rater assignment (or 360- degree feedback) One currently popular method of performance appraisal is called multi rather assessment of 360degree feedback. With this method, managers, peers, customers, suppliers or colleagues areasked to complete questionnaire on the employee being assessed the person assessed alsocompletes a questionnaire. Work standard approach Is the method of performance appraisal that, involves setting a standard or an expected level ofoutput and then comparing each employee’s level to the standards. Essay appraisal 7
Method of performance appraisal in which the rather prepares a written statement describing anindividual’s strengths weaknesses, past performance. Critical incident appraisalMethod of performance appraisal in which, the rater keeps a written record of incidents thatillustrates both positive and negative behaviors of the employee. The rater then, uses theseincidents as a basis for evaluating the employee’s performance. Graphic rating scale Method of performance appraisal that requires, the rater to indicate on scale where the employeerates on factors such as quantity of work, dependability, job knowledge, and cooperativeness. Check list method Method of performance appraisal in which, the rather answers with asses or no a series ofquestions about the behaviors of the employee, being rates. Ranking method Methods of performance appraisal in which the performance of an employee is ranked relative tothe performance of others (Byars, 2009). 2.3 Potential problems in performance evaluation 2.3.1. Opposition to evaluation Most employees are worry of performance evaluation perhaps the most common fear is ofsubjectivity on the part of the rather subjective bias and favoritism are real problems that createapposition to most performance evaluation systems these fears are hidden, however, and othermore general arguments are provided (Invancevich, 2008). 2.3.2. System Design and operating problems Performance evaluation systems break down because they are poorly designed. The design canbe blamed if the criteria for evaluation are poor, the technique used is cumber some, or thesystem is more forum than substance. If the criteria used focus solely on activities rather thanoutput (results) or on personality traits rather than performance the evaluation may not bereceived (Invacevich, 2008). 2.3.3. Rater problem Even if the system is well designed problems can arise if the rather one not cooperative and welltrained. Such problems including 8
Standard of evaluation problems with evaluation standards arise because of perceptualdifferences in the meaning of the words used to evaluate employees. Leniency or Harshness error performance evaluations require the rather to objectively reach aconclusion about performance being objective is difficult for everyone some raters are seeeverything as good these are internet raters, other raters see everything as bad these are highrater. Hallo effect it is a problem, which arises in performance evaluation when a supervisors ratings ofsubordinate on one trait bias the ratings of the person on other traits. Hallo error can be eithernegative or positive. Recent behavior bias – Thirsting error occurs when a manager evaluates employees on workperformance most recently, using one or two months prior to evaluation.Contrast effects individual evaluation techniques each employee is supposed to be rated withoutany regard to another employees performance Personal bias error – A person bias rating error is an error related to a personal bias held bysupervisors some can be conscious such as discrimination against someone because ofappraisal’s personal characteristics like age, sex and race (Ivancevich, 2008).2.4. Role of supervision in appraising performance The immediate supervisor’s Supervisor’s rating is the heart of most appraisals. This makes sense. The supervisor should beand usually is in the best position to be and evaluate the subordinate’s performance. And isresponsible for that person’s performance traditionally the persons direct supervisors his or herperformance however other options are critically available and are increasingly use. Peer Appraisal With more firms using self-management teams, peer to team appraisal. The appraisal of anemployee by his or her peers is becoming more popular. For example, an employee chooses anappraisal chairperson each sear. That person then selects one supervisor and there other peers toevaluate the employee work. Rating committee Many employers use rating committees. These committees usually contain the employee’simmediate supervisors and three or four other supervisors. Using multiple others can bebeneficial while there may be discrepancy in ratings by individual supervisors, the composite9
ratings tend to be more reliable, fair and valid such ratings have higher inter after ratability orconsultancy than do rating obtains form several peers Self-rating Should employees apprise themselves the basic problems of course are the employees usuallyrate themselves higher than they are rated by supervisors or pears? In one study, for instance, itwas found that when asked to rate their owner job performances, 40% of employees usually ratethemselves in the top 10% (“one of the best” While virtually all remaining employees ratedthemselves either in the top 25% (well above average”) or at least in the top 50% (“aboveaverage”) usually no more than 1% or 2% will place themselves in below average category. Appraisal by subordinates More firms to day let subordinate an animal’s rate their supervisor’s performance a process,some call upward fed back. The process helps to top managers diagnose management style,identify potential “people” problem and take corrective action with individual managers adrequired (Dessler, 2000).2.5. Eliminating rates errors Behavior based rating scales were originally designed to help eliminate the kinds of rating errorsjust. Described but when such scales didn’t demonstrate more on the rating process. In otherwords more recent efforts to improve performance evaluations in organizations have centered onhelping raters to more accurately observe, recall and report behaviors. Rater training One popular way to improve managers ability to conduct effective performance appraisals isthrough rater training programs many types of programs exist differing in focus, cost anddirection the two most popular types of one training programs designed to eliminate commonrating errors such as hallo error and training programs designed to improve the supervisor’sobservation and recording skills. Programs dealing with errors do see to eliminate many of these from ratings. In addition, evenshort relatively in expensive programs are effective at accomplishing this goal. However, there ismuch loos evidence that this kind of training actually increases the accuracy of appraisalsprograms focused on observation and recording skills may offer greater improvement inaccuracy than those that simply focus on errors. Avoiding problems with employees 10
For the evaluation system to work wall the employees must understanding it and feel that it is afair way to evaluate performance in addition they must believe that the system is used correctlyfor making decision concerning pay increases and promotions.. Thus for a performanceevaluation system to work well, it should be as simple as possible unnecessary complexity inrating forms of other evaluation procedures can lead to dissatisfaction among employees thesystem should also be implement in a way that fully informs employees about how it is going tobe sued (Ivancevich, 2000). The feedback interview An effective performance evaluation system involves two way communications. That is theremust be active communication between the supervisor and the subordinate about performance.Evaluation should not be viewed simply as once a year completion of rating forms on thecontrary. It is a continuing process. To help with the communication the supervisor should hold an evaluation interview with eachsubordinate in order to discuss his or her appraisal and to set objectives for the upcomingappraisal period. In addition experts advise that actions concerning the employee’s developmentsalary should not be discussed during this interview. Thus although most organizations withformal evaluation systems give employees feedback many are not doing in tint eh best waypossible. Normal major describes three generally used approaches to these interview situations tell and selltell and listen and problems solving research on when indicates that tell and sell approach is bestfor new and experienced employees and that the problem solving approach which encouragesemployees participation is useful for ma experienced employees especially these with strongwork ethic although these types of interview differ in terms of the supervisors behavior, effectiveevaluation feedback sessions share a number of characteristics annual discussion s ofperformance should include. i.Review of overall progress ii.Discussions of problems that were encountered iii.Agreement about how performance can be improved iv.Discussion of how current performance fits with long range career goals. v.Specific action plans for the coming year how to reach short and long termobjectives (Ivancevich, 2008). 11
2.6. Performance related pay According to irrigation and biandamer( 2005), performance related pay stands in contrast to thephilosophy which had animated the design of managerial pay system for much of the post warera. This had emphasized service involving the acquiring of experience through steady job natureand incremental pay scales. The scope for continuing pay progression through a typical 5-8 pointincremental scale was an encouragement to continue in past, while a serious of stepped bandspromised further progression band width and overlap fitting jobs within the class, and getting thedifferentiates and increasingly underpinned both managerial and blue collar pay structures as theuse of incentives declined. Such systems however, were essentially in ward looking and tied tostate conceptions of the organization and its environment. This was reelected in the criticsincreasingly made of job evaluation that it promoted bureaucracy was costly rigid and inflexibleand failed to respond to change consequently been rapidly changing nature of jobs in manysectors. Pressures for such change are nicely illustrated in a consultancy report on the banking sectorwhich for so long typified the traditional model with its emphasis in quality, hierarchy, controland defined jobs. i.Traditional salary structured and incremental scales and seen as acting as a brake onchange and inhibition flexibility. They are too strongly related to length of serviceand in habit sideways career development use. ii.There is an ear universal view that performance related pay needs to occupy greeterpart of the total remuneration package; the present systems are felt to discriminate notat all between the excellent and the adequate on performer. iii.There is feeling that the conventionally genius benefits with in the financial sectorneed to be provided a more selected basis. Regional pay various for example wouldsubstantially reduce bank costs. Put simply performance related pay is about making a proportion of pay dependent on someobjectively defined criteria. This may range from company profits to specific individuals out putstargets, varying according to the nature of the job. As suc PRP is more of strategy or approachthan a system it embraces a great variety of schems and different motivations (Hendry, 2005) 12
2.7. Identifying and measuring employee performance Performance is essentially what an employee does or does not do. Employee performance thataffects organizational performance Quantity of out put Quality of output Timelines of out put Presence at work Cooperativeness Linkage between strategy out comes and organizational result organizational strategy. Performance management practice : Identify expected performance levels Measure individual performance then evaluate Provide feedback on individual performance Provide assistance as needed Reward or discipline based on performance Employee performance Performance management out comes are: - Development, Productivity, Advancement, Discipline,Pay raises ,Termination , Organizational results, Goal met or not met obviously other dimensions of performances mightbe appropriate in certain jobs, but those listed are common to most. However they are generaleach jobs has specific job criteria which are jobs performance dimensions that identify theelements most important in a job. (Jacason; 2008)13
CHAPTER THREERESEARCH DESIGN AND METHODOLOGY3.1. Research Design and MethodologyThe type of research conducted in this study was descriptive type of research in order to describethe existed situations 3.2 Study area and population Historical evidence indicates that banking in Ethiopia started since 1905; in the same year bankof Abyssinia started its operation at the time of minilik II and singed contract with the Egyptnational bank. During that period bank of Abyssinia had open various branches in main marketcenters in Ethiopia, for instance Diredawa, Desie, Gambella, Gore and other. The state bank of Ethiopia was found in 1942 with in objectives farming the duties of bothcommercial and central banking. In 1963 the state bank established as Share Company to takeover the commercial banking activities of the state bank of Ethiopia. In 1974 revolutioncommercial bank of Ethiopia got its strength by emerging with privately owned Addis Abababank. Since then it has been playing significant role in the development end over the country. The commercial bank of Ethiopia which is striving to embark in to world class by deliveringreliable service to its millions of customers both locally and abroad is leading the baking industryin Ethiopia. The business strategy of the bank focuses on the stake holders services. At the endof fiscal year 2011/12 the number of branches reached more than 500 and stretched across thecountry with a lot of employees. The state owned commercial bank of Ethiopia still dominants the market in terms of assetdeposit, capital and customer base, branch network and computation from private bank over thelast 20 years. This make it one of the most reliable and strong commercial bank in the country.Its strong capital based above 67 years of rich experience in the market and large branch networkthroughout the country. Commercial bank of Ethiopia Assela branch is one of the branches which found southeastern ofEthiopia, Arsi zone Assela town. It far 175 km from Addis Ababa 14
3.3. Data sources The researcher used both primary and secondary data for the accomplishment of the study.Primary sources were employees of the bank and secondary sources will be written documentsinternet and different books 3.4. Instruments of data collection The primary data was collected using mailed questionnaire form employees and unstructuredinterview from the manager in order to achieve the study. Secondary data was collected afterverifying their accuracy before using them. 3.5. Sampling methods and sample size The researcher used census survey to collect data from employees. The reason for this is to coverall employees. There was small number of employees’ i.e. 40 employees in the bank. To increasethe accuracy the researcher used this type of method. 3.6. Data processing and analysis After the desired data was carefully gathered the quantitative data was processed and analyzedprecisely using spss version 20 and settle by table and percentage. Secondary data and interviewswill described by word without any numerical measures.15
CHAPTER FOURDATA PRESENTATION AND ANALYSISThis chapter summarizes the data collected from commercial bank of Ethiopia Assela branchthrough questionnaire and interview. 40 questionnaires are distributed to employees, amongthese 32 were collected and the remaining were uncollectable due to different reasons. Table 4.1 General characteristics of the respondents Table 4.1 sex and age structure of respondents Item No Per cent 1Sex Male 2062.5Female 1237.5Total 321002Age <25515.625-35165036-45618.8>45515.6Total 32100Item 1 table 4.1.1. Represent the sex composition of the respondent in commercial bank ofEthiopia assela branch. Out of 32 respondents 20 (62.5%) were males and the remaining12(37.5%) were females. Item 2 table 4.1 of describes the age composition of the respondents. Out of the total respondents15.6% are less than 25 years, 50% were found the age group of 25-35, 18.8% were found 36-45and the remaining 15.6% were greater than 45 years. The upper table implies that relatively males are more dominant than females due to eithereducational gap or some other factors and the age structure of most employees are young. Table 4.2 Educational status and service year of employees in the bank Item No Per cent 3Educational status High school412.5Diploma 928Degree 165016
Other 39.5Total 321004Service year in the bank 1-2 years 10313-5 year 15476-10 year 722Total 32100Item 3 of table 4.3 describes the level of educational status of the respondents out of 32employees the majority i.e. 50% were educational level of degree, 12.5% were high school, 28%were diploma and the rest 9.5% were others. Item 4 of table 4.3 shows, how long respondents staid in the bank. Out of the total 32respondents, 47% of respondents staid in the bank for 3-5 years, 31% of the respondents staid inthe bank for 1-3 year and the rest 22% staid 5-10 years. The upper table implies educational status of the employees have good performance but most ofthe employees staid for short period of time because the establishment of the bank had no longlife. Table 4.4 Understanding of employees and officials on result oriented performance appraisalItem Number of respondents Per cent High 2371.9Low 928.1Total 32100Table 4.4 understands of employees and officials on result oriented performance appraisal.Among 32 respondents 23(71.9%) have high understanding about result oriented performanceappraisal which encompasses the majority of employees. The remaining 9 (28.1%) ofrespondents were low understating from the total respondents From these we conclude that the majority of the employees have good understanding about resultoriented performance appraisal Table 4.5 Employee toward result oriented performance appraisal 17
Item Number of respondents Per centGood 1959.4Bad 515.6Neither good nor bad 825Total 32100The above table indicates the attitude of employees toward result oriented performance appraisal.19(59.4%) of the respondents replied they have good attitude toward the evaluation 8(25%) ofthe total responders replied that, they have neither good nor bad attitudes towards the evaluationsystem. Every small number of the employees have negative attitude which accounts 5(15.6\%)of the respondents The above information implies that most employees have good attitudes toward result orientedperformance appraisal. But not all employees have good attitude because some of them have badattitude and some other respondents were unable to express their feeling toward the evaluationsystem. Table 4.6 feeling of employees towards the evaluation system of the bank Item Number of respondents Per centGood 2165.7Poor 618.7I don’t know 515.6Total 32100From the above table we can understand that form the total respondents 21(65.7%) of therespondents indicated that they have good attitude toward the evaluation system. 6(18.7%) ofrespondents have poor feeling towards the evaluation system and the remaining 5(15.6%)haven’t any feeling toward the evaluation system of the bank. From the above analysis we conclude that most of the employees have good feeling toward theevaluation system Table 4.7 the criteria used to evaluate employees in the bank Item Number of respondents Per centQuality of work 39.6Quantity of work 721.818
Experience in work 721.8Knowledge and skill825All721.8Total 32100The above table shows that what criteria the bank used to evaluate employees. According to thesurvey out of 32 employees who said the criteria that the bank used to evaluate the performanceof employees is knowledge and skill of work which accounts 25% of the total employees. Someother employees replied that the bank used quality of work and experience in work each of thisaccounts 21% of the total respondents. 21.8% of the respondents replied that all are the criteria’swhich used to evaluate employees in their bank. Very small number of respondents said that theorganization uses quality of work which accounts 9% of the total respondents. According to theabove data the bank uses the criteria of knowledge and skill experience in work, quality of workand quantity of work. But the bank mostly depends on knowledge and skill, to evaluateemployees. Table 4.8 employee participation and feedback from the bank regarding the appraisal Item Numberofrespondents Per centDo you participate in the appraisal Yes 1753.0No1547.0Total 32100Had you obtained information of your evaluation on timeYes 1650.0No1650.0Total 32100Item 1 of table 4.8 shows employees’ participation in the appraisal process. Among the totalrespondents 17(53%) of the respondents participated in the appraisal process, whereas 15 (47%)didn’t participate in the appraisal process. This implies that the bank didn’t give equalparticipation to all employees even if it relatively incorporated the majority of the employee. 19
Item 2 of table 3.8 indicates whether employees got feedback about their evaluation result ontime. Among the total respondents 1(50%) stated that the responsible body informed them abouttheir result on time, whereas 16(50%) replied that the responsible body didn’t inform their resulton time. Table 4.9 shows that what employees expect if there is no evaluation in the bank Item Number of respondents Per centLackofcommitmenttoward job 412.5Reduce productivity 412.5Incompetence with others 1341All 1134Total 32100Table 4.9 indicates that from the total respondents who were asked 13(41%) responded thatabsence of performance appraisal results incompetence with others, 4(12.5%) replied each andemployees who responded lack of commitment toward a job and reduce productivity. Theremaining respondents relied all of the above mentioned problems are existed in their bank.Which accounts 11(34%) of the total respondents. From this we conclude that all of the respondents are aware of the problems that could exist ifthere is no performance appraisal especially incompetence with others, so there should be a goodperformance appraisal system. Table 4.10 method of performance appraisal system Item Number of respondents Per centMan to man comparison 515.6Grading method on a givenlevel of out put825.0Evaluatebasedonperforming different tasks 1959.4Total 32100Table 4.8 shows that from the total respondents who were asked 5(15.6) responded that man toman comparison method (25%) responded that grading method, whereas 19 (59.4%) repliedappraisal by the task performed (MBO) 20
From those we conclude that most of respondents replied that the method of appraisal the bankdepend is by the task performed based on the rules and regulations of the bank Table 4.11 the appraisal method that the bank used Item Number of respondents Per centQuestionnaire to mangers,customers or colleagues 1031.3Based on employees outputor achievement 1134.4Evaluating committee 515.6Subordinates 618.7Total 32100From the above table that the bank depends mainly on work standard (Based on employeesoutput or achievement) which accounts 11(34.4%) of the total respondents. In addition of this thebank also depends on questionnaire i.e. distributes questionnaires to managers, customers orpeers and put their opinion suggestion and dissatisfaction in the given questionnaires namewhich accounts 10(31.3%) of the total responds, 6(18.7%) of respondents said that theirevaluation is based on subordinates and only 5(15.6%) of respondents replied their evaluation isaccording to evaluating committee. According to the above data the bank used work standard and questionnaire to evaluateemployees Table 4.12 what employees get if they carry out their task properlyItem Number of respondents Per cent Salary increment 721.8Promotion 1031.3Moral incentive 1443.7All 13.2Total 32100Table 4.12 shows what employees get if they carry out their task properly. From the totalrespondents 7(21.8%) replied if they carry out their job properly, they will get salary incrementwhile 10 (31.3%) replied that they will get promotion from their bank. But most of therespondents responded that they will get moral incentive which accounts 14(44%) and theremaining stated all one applicable in our bank which accounts 1(3.2%) of the total respondents. 21
Based on the above data when the employees carried out their task properly the bank gave to theemployees a moral incentive, promotion and salary increment. But the majority gains moralincentives. Table 4.13 problems of result oriented performance appraisal Item Number of respondents Per centDiscrimination 1443.7Evaluate based on mostrecent performance 1237.5All 618.8Total 32100Table 4.13 indicates what problem is existed in the bank. From the total respondents 14(43.7%)replied there were discrimination in the bank, 12(37.5%) side the bank evaluate its employeesbased on most recent performance and 6(18.8%) replied all the above problems have beenexisted in their bank. From the above data we conclude that in the bank there have been some problems such as un fairevaluation and evaluate based on most recent performance. But the main problem of the bank isunfair evaluation or discrimination.Table 4.14 Reasons for problems identified in table 4.11Item Number of respondents Per centSystem design problem 721.9Rators problem 2166Problem from employees 39.4All 13.2Total 32100Table 4.14 shows the reason for the problems in the bank. According to the respondents opinion7(21.9%) said the reason for the problem are system design problems 21(66%) of respondentsreplied raters problem 3(9.4%) of respondents replied problem form employees and only 1(3.2%)said all of the above are reason for retting problems. 22
From the above data we conclude that in the bank raters problems are intensified and the mostreason for evaluation problems. In addition to this system design problems and problems fromemployees are the major source of evaluation problems Table 4.15 employee’s feedback about problems in the bank Item NoPer cent Is there any problem at thetime of implementing resultYes1959.4orientedperformanceappraisalNO1340.6Total 32100From the above table researcher conclude that the majority (59.4%) of the respondents answeredthere have been problems in the bank at the time of implementing result oriented performanceappraisal. But, 40.6% answered there is not any problem in the bank.The problems which the majority mentioned are, disagreement, failed to consider all tasks ofemployees, performed, careless evaluation and rater’s biasness are among the problems. 23
CHAPTER FIVESUMMARY, CONCLUSION AND RECOMMENDATION 5.1. Summary of findings The following are short summary of data presentation and analysis 1.Majority (72%) of employees have good understanding on result oriented performanceappraisal. 2.Majority (59%) of the respondents have good attitude towards result orientedperformance appraisal. 3.Majority (25%) of the respondents replied the bank depends on knowledge and skill ofeach employee to evaluate them. 4.Relatively most (53%) of the employees participate in the appraisal process. 5.Most (60%) of the employees are evaluated based on achieving or performing differenttasks according to the given standard. 6.Majority (44%) of the respondents get moral incentive rather than financial incentive ifthey carry out their task properly.7.Most (44%) of the employees have discrimination based on some factor like sex, age,race etc. 8.majority (66%) of the cause of the appraisals problems are raters problems 5.2. Conclusion Based on the findings of the data the following conclusion are analyzed 1.Understanding of employees and officials on result oriented performance appraisal arerelatively good. 2.In the bank most employees have good attitude towards result oriented performanceappraisal. 3.In the bank various criteria that used to evaluate result oriented performance appraise arequality of work, Quantity of work experience with work and knowledge and skill of work.But according to the data analyzed, the bank mostly depends on knowledge and skill of work.4.The absence of performance appraisal causes lack of commitment toward a job, witch reduceproductivity of employees and incompetence with others. So the existence of performanceappraisal helps employees to understand problem existed areas. 24
5.The method of performance appraisal system that the bank used to evaluate employees, areman to man comparison, grading method and appraisal by the task performed. But the bankwas mostly depends on appraisal by the task performed i.e. the bank sets an objective or givea task to the employees and measures those tasks how the employees preformed. 6.The employees are evaluated by using questionnaire, work standard, evaluating committeeand subordinates. Work standard and questionnaire are the main tools of evaluating. Beforemeasuring the employee directly the evaluator distributes the questionnaire his employeesand after getting the questionnaire every employee put his or her opinion, suggestion and hisdissatisfaction on the given questionnaire and he or she summit the form to the supervisor orthe manager. At the end the mangers reads the suggestion and the comment given on theformat carefully and also measure his or her task performed at the same time and comparetheir task relative to the objective. 7.In the bank the rewards for employees were accomplishing their task in good manner andsalary increment promotion and moral incentives, but most employees get moral incentivefor the accomplishment of their task in good manner. 8.There have been many problems in the bank among those problems some are unfairevaluation, discrimination based on some factor, failed to consider all task of employeespreformed, elevate all in one direction and failed to give employees feedback on time aresome of the problems. Among these problems discrimination is the most one. There was alsopoor reward system unwillingness of employees and biasness. The causes of the aboveproblems are: system design problems, rater’s problem and problem from employees. Rater’sproblems are the most significance one in the commercial bank of Ethiopia Assela branch. 5.3. Recommendations 1. What researcher wants to recommend to here is that the management should give greatemphasis and attentions for performance appraisal. Because, performance appraisal has manybenefits for the employees and the bank. Among such benefits it increase productivity increasemotivation on employees, and it provides better rewards for employees who perform his/her jobeffectively and efficiently. 2. To change the employee’s attitude towards result oriented performance appraisal the bankshould create awareness to employees, give enough reward that perform their task effectivelyand give a chance to express their feeling and opinion about the evolution. The management25
should also needs effective implementation of result oriented performance appraisal. Becauseonly effective implementation of appraisals leads employees to improve their performanceotherwise instead of being a base for productivity, it would be a case of grievance with inemployees 3. The human resource department should provide effective training program to the supervisor inorder to improve the result appraisal skills. The training used to reduce rating errors such as bias,discrimination, error in interpretation etc. the training also used the rater to have good relationwith subordinates. Generally training helps the rater to display a sense of fairness and justicewhen dealing employees performance appraisal. 4. Making employees active participating is the homework of the bank; the parallelcommunication which creates mutual understanding between supervisors and subordinates. Therater must encourage subordinates to express their ideas and opinions and keep him wellinformed about his subordinate’s accomplishment.5. The bank should develop objective oriented training needs assessment to have a continuoustraining for better out results based management. The performance appraisal should be used as asource of such information that would selectively identify the unique training needs and matchthem with the specific employees to be training. Rewards are the human resource element thatshould be regarded to the employees to heighten their market which is function of the highexpected output. 6. As conclusion to the objective that was analyzing the main purpose of performance appraisalsystem in Assela commercial bank it is important to know that employees must be totallyinvolved in the development of the system to decrease the source problems.26
ReferenceEdwin B.Flippo (2000) Personnel management, 6thedu, fong and sons printers pte Singapor Edwn B.(2003). Personnel management 9thed Singapore John. M. Ivace Vich, (2009), Human Resource Management. 7thed.K. Aswathappa (2006) Human Resource and Personnel Management, third edition. Tata McGraw-Hill publishing co.Ltd, India Lioyd.L. Bayars and Leslie W.Rle: (2010) Human Resource ManagementMargaret Att wood and stuaredim Mock: 2002), Personnel Management,Margaret foot caroline Hook: (2005), Introduction Human resource ManagementMathis, R.L and Jackson J.M: (2008), Human resource management 12 ed.Shanun Tyson and Alford York, (2001 An introduction to Human resource management 1sted.Wendell L. French: (2004), Human resource management, 10(www.performaceaprisal.com)27
Appendix IQUESTIONNAIRE TO BE FILLED BY EMPLOYEESARSI UNIVERSITYCOLLEGE OF BUSINESS AND ECONOMICDEPARTMENT OF MANAGEMENTThe purpose of this questionnaire is about result oriented performance appraisal in commercialbank of Ethiopia Assela branch as fulfillment of the requirement for the completion of bachelordegree in management. So, I kindly request your sincere cooperation, because your cooperationis very important to accomplish the study. Your information will keep confidentially.Instructions1.No need of writing name 2.Put “” mark in the given box provided and write in the spaces given.3.you can choose more than one I, Personal information 1. Sex: Male Female 2. Age: <25 25-35 35-45>453. Educational status: -High school Diploma Degree Above degree Other ___________________________4. Service year in the bank: - < 3 years 3-5 years 5-10 year II, questions 5. What is the level of your understanding of result oriented performance appraisal?High very high Lowþvery lowGood BadNeither goodnor bad 6. What is your attitude towards result oriented? Fair Good Very good 28
7. How do you feel about performance system of the bank?A, very good B, GoodC, I don’t know8. What are the criteria used to evaluate employees in your bank?Quality of workQuantity of work Experience in work Knowledge and skill of work9.Do you participate appraisal process? (You can choose more than one) A, Yes B, NO 10. what problems exist, if there is absence of performance appraisal A, Lack of commitment towards Job B, Reduce productivity of employees C, Incompetence with other D, others specify please ___________11. Had you obtained information of your evaluation result on time?A, Yes B, NO 12. Which method of performance appraisal system in practiced in your bank?A, Man to man comparison B, Grinding method on a given level of out put C, Evaluate based on performing different tasks D, Others specify_____________________13. What type of appraisal method your bank use to evaluate employees? (you can give morethan one answer)A, questionnaire B, Work standard C. Evaluating committee D. Subordinates Is other specify please_________________________________14. What is the return for you in your organization, if you have carried out your task in a goodmanner?29
A, Salary increment B, promotion C, Moral incentive If any other specify please____________________________15. what problems are there toward result oriented performance appraisal in your bankA, Evaluate based on most recent performance B, Discrimination C, Evaluate all in one direction Other specify_____________________16. What is the reason for the problem arises on question No “15”A, System Design problem B, Raters problem C, Problem from employees If other specify please_______________________17. Is there any problem of implementation of result oriented performance appraisal Yes NO 18. If your answer for Question No “17” is “yes” mention the problems __________________________________________________________________________________________________________________________________________19. What is your suggested solutions for the problems identified for question No 1830
Appendix IIARSI UNIVERSITYCOLLEGE OF BUSINESS AND ECONOMICDEPARTMENT OF MANAGEMENTInterview to management 1.What look like your bank background?2.What method used to evaluate employees in your bank?3.How feel employees towards the evaluation method?4.What problems are faced at the time of implementing performance appraisal?5.How the management was solved the problems faced in your organization? 31