WOLLO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS DEPARTMENT OF

MANAGEMENT

RESEARCH ASSESSMENT EMPLOYEE PERFORMANCE APPRAISAL

SYSTEM COMMERCIAL BANK OF ETHIOPIA COMBOLCHA MAIN
BRANCH

RESEARCH PAPER FOR THE PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR BA DEGREE IN MANAGEMENT

PREPARED BY :- jemal seid

ID NO:- 071/12

ADVISER :- Mr.AWOKE

SEP 2021 G.C

DESSIE, ETHIOPIA
Abstract
This paper or study had been conducted on the performance appraisal practices and its effects
on employee performance in case of commercial bank of Ethiopia kombolcha 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 kombolcha 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. Due to population number is very small about 60 (Sixty) employee’s census
methods were used because census was reliable and it yields much accurate information to
address all the population of the bank. The data’s are converted to understandable form by
using tables and percentages.
Acknowledgment
Before all, I would like to thank my almighty ALLAH (S.W) that lets me to do everything and
helps me to get a chance I would like to thank all my family members that stand beside me by
finance and ideal for assistance. In addition, my gratitude goes to Mr Awoke T.my adviser, he is
the one helps me heart fully in advising supervising and directing, by giving all of his time and
concentrating on making special on research his advice and great contribution in effectiveness
of this paper. Next, I would like to thank all my family members and friends that help me by
giving me powerful moral and appreciation in my entire road toward doing this all and its
successful completion.
 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
Contents
Abstract............................................................................................................I
Acknowledgment..............................................................................................II
Acronyms........................................................................................................III
1. INTRODUCTION...........................................................................................1
1.1 Back ground of the Study.......................................................................................................1
1.2. Statement of the Problem....................................................................................................2
1.3. OBJECTIVES OF THE STUDY ........................................................................................................3
1.3.1. General objectives..........................................................................................................3
1.3.2. Specific Objective...........................................................................................................3
1.4. Significance of study.............................................................................................................3
1.5. Scope of the Study................................................................................................................4
1.6. Limitation of study................................................................................................................4
2. Review of Related Literature.........................................................................5
2.1 Performance Appraisal...........................................................................................................5
2.2. Nature of Appraisal...............................................................................................................6
2.3. Features of Performance Appraisal......................................................................................6
2.4 Objective of Appraisal............................................................................................................7
2.5 Purpose /Aims of performance appraisal..............................................................................8
2.6 The benefits of performance appraisal..................................................................................9
2.7 The performance Appraisal process......................................................................................9
2.8 Method of Performance appraisals.....................................................................................11
2.9. Problems with performance Appraisal...............................................................................15
2.10. Essential Characteristics of an effective appraisal system................................................16
2.11. The challenges in performance Management..................................................................17
3. RESEARCH METHODOLOGY.....................................................................19
3.1 Research Methodology and Design.....................................................................................19
3.2. Source of Data.....................................................................................................................19
3.3. Method of data Collections.................................................................................................19
3.4. Target Population................................................................................................................19
 3.5. Sampling Techniques and Sample Size...............................................................................20
3.6. Methods of data Analysis....................................................................................................20
4. Data analysis and interpretation................................................................21
4.2.1 Presentation of Findings................................................................................................24
4.2.2 Satisfaction of performance appraisal.........................................................................25
4.2.3 Sated target achieving...................................................................................................26
4.2.4. The types of reward given............................................................................................27
4.2.5 Satisfaction of rewards.............................................................................28
4.2.7. The performance appraisal method.............................................................................28
4.2.8 The communications stage of appraisal system...........................................................29
4.2.9 Method of evolution used by the organization............................................................30
4.2.10 Effectiveness of performance appraisal................................................................30
4.2.11 Mutual Understanding of relationship........................................................................32
4.2.12. Suggestion of employee on the quality improvement need.....................................33
5. SUMMARY, CONAUSILON & RECOMMENDATIONS...................................34
5.1. Summary of Finding............................................................................................................34
5.2. Conclusion...........................................................................................................................35
5.3. Recommendation................................................................................................................36
REFERENCES................................................................................................38
Appendix....................................................................................................................................39
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 Kombolcha 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 kombolcha main branch. The main reason of the study was the fact
that an employee’s 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. 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’s performance appraisal system in
commercial bank of Ethiopia Kombolcha main branch. To this end the study will be raises the
following basic research questions i.e.

 What are the main reasons for conducting performance evaluation in

commercial bank of Ethiopia kombolcha main branch?
 What are the problems, commercial bank of Ethiopia kombolcha main branch
facing with regard to the performance evaluation practices?
 Is the performance appraisals system of the bank meeting its intended objectives
and how employee perceives the system?
 What is the effect of performance appraisals of employees in commercial bank
of Ethiopia kombolcha main branch?

1.3. OBJECTIVES OF THE STUDY

1.3.1. General objectives

The main objective of this study has been assessing employee performance appraisals system in
commercial bank of Ethiopia kombolcha main branch.

1.3.2. Specific Objective

The study is tried 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 appraise system and state ways
of overcoming those problems system.
 To identity employees perceptions above performance appraisal system and need to
evaluate its overall achievements.
 To provide policy recommendation based on finding.
1.4. Significance of study
The result of this study is significant in various aspects. Firstly, on the basis of the study finding,
it would 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 has been 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 would help to the researcher the opportunity no full stop to
gain deep knowledge in the practice of performance evaluation.

1.5. Scope of the Study

The study of this research paper has been to assessing the performance appraisals practices
and its effects on employee performance. The study has been conducted in commercial bank of
Ethiopia kombolcha town with considerations of performance appraisal effects on employee
performance in the bank

1.6. Limitation of study

The following limitation has been be face the researcher to finalize the 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.
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 5 th edition)
performance appraisal let employees not only how well they are perforating but also influence
their future level effort and tasks direction.

Performance evaluations are an integral part of most organization properly developed and
implemented; the performance appraisal process can help an organization achieve its goals by
developing productive employees. One of the most common use of performance appraisal is
for making administrative decisions relating to promotion, layoff and pay increases the present
job performance of an employee is often the most significant consideration of determining
whether to promote the person or not. While successful performance in the present job does
not necessarily mean an employee 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 employee’s 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 validation of selection procedures and input to human resource planning. Although
there are many types of performance evolution systems, each with its own advantage and
disadvantages, we must aware of the legal implication that arise (john Wiley and Jonson, 1997,
6th edition). Once employees have been selected, trained motivated and placed on their
respective job , it becomes essential for the management to conduct performance appraisal to
see we there the employees are effective on their jobs or not. By this, management can also
know how it has been effective job. Performance appraisal is also known as$ a merit training$
or employee appraisal. Some other terms of which are less commonly employed to mean
performance appraisal are the progress report , staff assessment , service rating , personal
review ,employee evaluation and behavioral assessment (HRM, Ivanceich 1998)

2.2. Nature of Appraisal

An appraisal of employee is undoubtedly necessary at the time of employment. Actually
evaluation is constantly being done at an unconscious level. Employees evaluate superior’s
fellow colleges and subordinates what is needed to generate proper control is a formal
procedure for evaluation of personnel within the organizations. The personal department,
where it exists can help materially in fixing the qualities and characteristics be rated, in
determining the person who should make such appraisal as well as by prescribing the
appropriate procedures. (Rsdavar, 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
a) 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 function itself. This chapter is thus developed to the aspect of
performance appraisal of employee which is so essentials from the view point of employee
development and promotion.

Generally, performance appraisal has the following objectives and limitation

 Identifies areas for further training needs

 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 lists it in different ways?

 Provides information for human resource planning by identifying individual contributions

and mangers with potentials for assuming additional responsibility.
 Reduce favoritism in main managerial decision about personnel
 Motivates employees by providing feedback on performance
 Assist manager to observe their subordinate more closely do a better of job coaching
 Provide backup data for making decision about employee compensation
 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 are:-

 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.
 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, 2ndedition , 2005)

2.7 The performance Appraisal process

Performance appraisal is planned, developed and developed through a series of steps:- A.
Establishing performance Standards Blackening.

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

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

B. Communicate the standards correctly.

Performance appraisal involves at least two parties i.e. appraiser and appraise. Both are
expected to do certain things. The appraiser should prepare job description clearly help the
appraise set his/her goals and targets analysis result objectively offer the coaching and
guidance to the appraise whenever 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.

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

D. Compare actual performance with standards and discuss the appraisal

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

1. Confidential report: It is mostly used in government organization. It is a descriptive report

prepared, generally at the end of every year by the employee immediate superior. The
report highlights the strength and weakness of the subordinates. The report is not data
based. The impressions of the superior about the subordinate are merely recorded there. It
does not offer any feedback to the appraise. The appraise is not very sure about why his
rating have fallen despite his efforts, why others are rated high when compared to him, low
to rectify his mistakes, if any, on what basis he is going to be evaluated next year etc. since
the report is generally not made public and hence no feedback is available, the subjective
analysis of the superior is likely to be hotly contested.
2. Critical incident techniques: Under this method, the manager prepared list of treatments of
every effective and in effective behavior of the employee. This critical 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 helps the manager in evaluation of the
performance of the employee.

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 pitfalls 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 techniques 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:

 Set the organization’s goals

 Set departmental goals
 Discuss departmental goals
 Define expected results
 Performance review
 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, whereas 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 ranced according to their
relative level of performance while using this method , the evaluator is asced to rate
employees from the highest to lowest towards some overall criteria , Though it is relatively
easier to rank the best & the worst employees, it is very difficult to rank the average
employees. Generally evaluators pick the top & bottom employees first then select the next
highest & the next lowest & above towards the average/ middle employees.
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 raters 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

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

A. Reliability and validity: appraisal system should provide consistent, reliable and valid
information in a job related activities / areas of the organization.
B. Job relatedness: The appraisal technique should measure the performance and provide
information in a job related areas.
C. Standardization: appraisal forms, procedures , administration of techniques , rating etc
should standardized as appraisal decision affects all employees of the group
D. Practical viability :The technique should be practically viable to administer possible to
implement and economical to undertake continuously
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 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 20 th 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.
CHAPTER THREE

3. RESEARCH METHODOLOGY

3.1 Research Methodology and Design

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

3.2. Source of Data

So as to extract the data to achieve the study objective both primary and secondary data will be
used. The researcher personally has to be strive to include the respondent’s correct opinion in
the analysis.

3.3. Method of data Collections

Primarily sources of data

Questionnaires: - that contains both open close ended questions developed by the researcher.
Direct observation the researcher try to serve the real practice exercise in performance of the
employee and its activities. Interviewing which enable the researcher to gather information
that was relevant to the service provision in the office, employees, manager

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 from web site.

3.4. Target Population

The Area of this study has been the employees of commercial bank of kombolcha main branch,
Ethiopia. The methods the researcher interested to use for conducting the study will.
Implement census method. The reasons that initiates the researcher has been 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. Sampling Techniques and Sample Size

According to the bank’s report following to the end of first quarter (2020/2021) the total
permanent employees of Commercial bank of Ethiopia Kombolcha main branch are 150 (i.e.
20managerial and internal Auditors80 clerical and50 non clerical). For this study the researcher
use sample from the total population due to time, resource and proper organization of data.

As per Glenn (1992) there are several approaches to determining the sample size. These include
using a census for small populations, imitating a sample size of similar studies, using published
tables, and applying formulas to calculate a sample size. A third way to determine sample size is
to rely on published tables, which provide the sample size for given set of criteria. The first and
second approaches for determining the sample size are not appropriate for this study. Since the
population of the study are many in number it was difficult to use census, and also imitating the
sample size of similar studies was not possible because it was difficult to gate this kind of
research that is done in the Abay bank or other banks. Therefore the researcher has used table
for determining sample size, because it is easy and developed by experienced scholars like
Krejcie and Morgan (1970).

Therefore from the table Krejcie and Morgan (1970) the sample size for population size of 150
is 47. 47 respondents were used as sample size for this study.

3.6. Methods of data Analysis

The researcher will be 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 will be
converted to understand able form by using table and parentage
CHAPTER FOUR

4. Data analysis and interpretation

NO. Demographic Info. Employee respondents in no. Respondents in percent

1 Gender
Male 35 74.47%
Female 12 25.53%
Total 47 100%
2 Age group
18-25 21 44.68%
26-35 22 46.81%
>36 4 8.51%
Total 47 100%
3 Education level
12 complete 3 6.38%
Diploma 9 19.15%
First Degree 35 74.47%
Above BA 0 0%
Total 47 100%
4 Work experience in
< 5 years 40 85.11%
5-10 year 7 14.89%
>10yera 0 0%
Total 47 100%
5 Position in bank
Junior officer 10 21.28%
Cleric 19 40.43%
Cleric and Junior officer 7 14.89%
Customer service officer 11 23.40
Total 47 100%

These chapters deals with the presentation analysis and the interpretation of data collected
through questionnaires and secondary data from commercial bank Ethiopia kombolcha main
branch concerning employee’s performance appraisal system were from the total employee of
the bank questionnaire were distributed for 60 employees and out this 47 was returned this
miscued return is because of carelessness of the respondents but the researcher attempt to
collect them.

Tablr4.1 Demographic respondents

Figure:- Gender of the respondents

From the above graph majority of employee’s respondents i.e. 35(74.47%) are male and about
12 (25 .53%) are female

Figure 4.2 Ages of respondent’s employee

Object 1

The graph depicts about the age distribution as about 22 (46.81%) of employees are in age of
(18-25 year), 21 (44.68%) of employees are between 26-35 year and 4 (8.51%) of them are in
the age of above 36 years. This show that the majority of the employees of the bank are adult

Figure 4.3 Educational status of respondent

 Object 3

According to the bar graph figure 4.3, 35(74.47%) of respondents have BA degree, 9 (19.15%) of
them have diploma and about 3(6.38%) 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

Object 5

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

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

Figure 4.5 Respondents work position

 Object 7

The graph above shows about the position of the respondents in the bank concerning their job
so, about 19(40.43%) of respondents are cleric 11(23.40%) are customer service officer, 10
(21.28%) are junior officer and about 7 (14.89%) 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 47 100%

No 0 0%

Total 47 100%

Figure 4.6 announcing the performance appraisal

 Object 9

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

4.2.2 Satisfaction of performance appraisal

2. Are you satisfied with the performance No respondents Percentage
of
Appraisal system of this organization?
respondents

Yes 40 85.12%

No 7 14.88%

Total 47 100%

Figure 4.7 satisfactions of performances Appraisal

 Object 11

As it can be observed from the above table the majority replied that, they are satisfied with
performance appraisal system of the organization. However, 7 (14.88%) 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 38 80.85%

No 9 19.15%

Total 47 100%

As we can see from the table 38(80.85%) of respondent achieve the sated target in
organization. About, 9 (19.15%) respondents are not able to achieve this sated target so, mostly
employees achieve their target.

4.2.4. The types of reward given

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

A. Salary increment 5 10.64%

B. Promotion 8 17.02%
 C. Appreciation 12 25.53%

D. Bonus pays 22 46.81%

Figure 4.8 the types of reward given

Object 13

From the above graph, 22 (46.81%) of respondents reply as they get bonus payment,
12(25.53%) of respondents replies appreciation, 8(17.02%) of respondents reply as they get
promotion and about 5(10.64%) 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 31 65.96%

No 16 34.04%
 Total 47 100%

The table show about employee’s satisfaction with the reward system of their company so,
31(65.96%) employees /respondents respond that they are satisfied with the reward system of
the bank Nevertheless, about 16(34.04%) of the respondents reply as they are not sati sited
with reward 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

superiors about your work performance respondents of
respondents

Yes 38 80.85%

No 9 19.15%

Total 47 100%

As it can be seen from the table38 (80.85%) of respondents had replied that they get feedback
from their superiors but in contrast of these about 9 (19.15%) 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 Number of Respondents Parentage of Respondent
Method do you get prefer the most?

A. Rating sale 17 36.17%

B. Check list 7 14.89%

C. 360 degree 14 29.79%

D. MBO 9 19.15%

Total 47 100%

As we see from the above table 17(36.17%) of respondents responded that they prefer rating
scale, 7 (14.89%) of respondents prefer check list, 14(29.79%) of respondents replied that 360
 method and about 9(19.15%) of respondents prefer management by objectives (MBO) as the
method of performance appraisal. This implies that almost approach to half of the employee
respondents have performed rating scale method for performance appraisal method.

4.2.8 The communications stage of appraisal system

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

Appraisal should communicate with

Employee regard to PAS?

A. Goal seeing 33 70.21%

B. Data gathering 4 8.51%

C. Midterm reviews 10 21.28%

Total 47 100%

The above table shows, 33 (70.21%) of the respondents have given their option as appraisal
should communicate at Goal setting stage 4 (8.51%) of respondents have an idea that appraisal
should communicate at the data gathering stage and about,10 (21.28%) 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 24 51.06%

B. Critical Method 6 12.77%

C. Others Method 16 34.04

D. Others 1 2.18%

Total 47 100%
Source Questionnaire April 2005

As we can see from the above table , 24 (51.06%) of respondents replied that the organization
use continental report , 6(12 77%) of respondents are responded that the organization use
critical method , 16(34.04%) of respondents replied that the organization use grading method
and about 1(2 .13%) of respondent replied that the organization use others method to calculate
the performance of the employees thus study show that the organization even though it used
different methods about half percent it used confidential report as the employees of
organization responded.

4.2.10 Effectiveness of performance appraisal

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

A. Agree 32 68.09%

B. Disagree 6 12.77%

C. Strongly agree 9 19.14%

D. Strongly disagree 0 0%

Total 47 100%

Source Questionnaire April 2005

Figure 4.9 the effectiveness of performance appraisal

 D

Object 15

The graph shows that, 32(68.09%) of employees responded that the performance appraisal is
highly effective, 6(12.77) of respondents responded that they are not agree with performance
appraisal effectiveness and about 9 (19.14%) 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

Number of Percent of respondents

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

A. Good 30 63.83%
B. Medium 11 23.40%

C. Poor 6 12.77%

Total 47 100%

Source Questionnaire April 2005

Figure 4.10 mutual understanding and relationship

 Object 17

As we can observe from the figure, 30 (63.83%) of responds that the mutual understanding and
relationship is good, 11(23.40%) of respondents responded that mutual understanding and
relationship is medium and about, 6 (12.77%) 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 should be given for poor performer

 Performance evolution should be true

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

CHAPTER FIVE

5. SUMMARY, CONCLUSION & RECOMMENDATIONS

5.1. Summary of Finding

 For this research majority of respondents are male about 74.47%
 Majority of the respondents are within age group of 25-35 that cover about 46.81% of the
respondents

 Since, educated employees are the bases for the development of any organization, majority
of them have first degree, its about 74.47% of the total respondents

 Even though, the workers who have longer experience with the organization are very
equitable in such way they had a general understanding about the organization as well as
 the job they assigned to do. The organization has a majority of less than 5 years’ experience
that account for about 85.11%

 Majority of respondents hold the position of customer service office

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

 As the research indicates most of the employees (respondents) (65.96%) are satisfied by the
performance appraisal system of the organization

 The study indicate that majority of the employees (80.85%) are capable of achieving the
target sated by performance appraisal system

 As a research in dictates the reward that is received from the organization is satisfiable that
is about 65.96%

 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 80.85% of them
agreed on it.

 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 (70.21%) or
midterm review (21.28%)

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

research the organization, use confidential report (51.06%)

 Employees agree that the performance appraisal is effective about 68.09% 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

 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, kombolcha give promotion and
appreciation as a reward for its employee those have performed well mostly, which is
satisfiable.

 The bank (CBE) kombolcha 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

 The commercial bank of Ethiopia kombolcha 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 kombolcha 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 kombolcha main branch 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 (kombolcha) 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.

 The bank should have to encourages mutual understanding and relationship between the
management &employee in managing performance of workers
REFERENCES
 Ivancevich J. M (1998), HUMAN RESOURCE MANAGEMNT. New year MC Graw Hill.
 Shuan Tyson and Alford you (3rdedition), HUMAN RESOURCE MANAGEMENT.
 Bayers Rue and leslic W. Rue, HUMAN RESOURCE MANAGEMENT (5 th edition).
 Richard D. Irwin, HUMAN RESOURCE MANAGEMENT (1995).
 John M. Ivancevich Human Resource Management (Edition 7 )
 The Irwin/McGraw-Hill series in human resource management (1998)
 Personnel Management and Industrial Relations, 10th Edition Paperback – 2018 by R.S.
Davar (author
 Krejcie, R.V., & Morgan, D.W., (1970). Determining Sample Size for Research
Activities. Educational and Psychological Measurement.
 Glenn D. (1992). “Article on determining sampling size” university of Florida
 Appendix
Wollo University

College of Business and Economics

Department of Management

A. Questioners for Employee

I am the student of Wollo University. I am doing research paper on the topic of study on
Assessment of performance appraisal system in commercial bank of Ethiopia kombilcha main
branch.

Objective of the research 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.

Instruction

 No need to write your name

Please fill the answer by Marking “(” marks

Please give more attention and the completed as fast as possible

If you face difficultly contact me by phone No” 0912075774

1. Sex: A. Male ( B. Female (

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

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(

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?

Goal setting stage ( C. Midterm reviews (

Data pothering sage ( 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?
 A. Good

B. Medium

C. Poor

17. Is the appraiser appropriate person to measure your performance in terms of qualification,
closeness, etc.? Very appropriate  appropriate Average  less appropriate  not appropriate
18. Do you have fear on your appraiser? Yes  NoIfyes,
why:__________________________________________________________________________
________________________________19. Are you satisfied with the current general
performance appraisal process? Very satisfied  Satisfied  Average  less satisfied  not
satisfied at all 20... Do you think high performers are distinguished from low performers? Yes 
not at all21.. Does the management reward high performers? Yes  NoIf yes, why:

______________________________________________________________________________
______________________________________________________________________________
____________________

B. Interview [English Version] Survey on the Assessment of Performance Appraisal systems:

The Cae of Commercial bank. Of Ethiopia, kombolcha main branch.

Dessie,

July, 2021.

For Manager and Auditors Use only

Background Characteristics Sex: Male  Female Age: 15- 19  20-24 25-29  30-34  above 35
Year of service: below 3  3 – 5 6-10  11-20  above 20 Educational Background: Below
12th grade  12th grade complete Certificate  Diploma BA Degree  MA and above 

Interview questions

1. How and what are the basis of performance evaluation system of employees?2. For what
purpose mainly do you use the result of appraisal?3. Do you agree the current performance
measurement criteria are related to the nature of the various job types in your Center?4. Do
you give information about the meaning and purposes of performance appraisal before
appraising employees and how?