TABLE OF CONTENTS

ACRONYMS AND ABBREVIATIONS ................................................................................... II

CHAPTER ONE…………………………………………………………………………...1
1. INTRODUCTION .................................................................................................................. 1
1.1. Background of the Study ............................................................................................... 2
1.2. Statement of the Problem .............................................................................................. 3
1.3. Research questions ......................................................................................................... 5
1.4. Objective of the study .................................................................................................... 5
1.4.1. General objectives ..................................................................................................... 5
1.4. 2. Specific objectives .................................................................................................... 5
1.5. Significance of the Study................................................................................................ 6
1.6. Scope of the Study .......................................................................................................... 7
1.7. Limitation of the study................................................................................................... 8
CHAPTER TWO ........................................................................................................................ 9
2. REVIEW OF RELATED LITRATURE ................................................................................ 9
2.1. INTRODUCTION .......................................................................................................... 9
2.2. Definition of Performance appraisal ............................................................................ 9
2.3. History of performance appraisal ............................................................................... 12
CHAPTER THREE .................................................................................................................. 15
3. RESEARCH DESIGN AND METHODOLOGY ................................................................ 15
3.1. INTRODUCTION ........................................................................................................ 15
3.2. Description of the Study Area ..................................................................................... 15
3.3. Research design ............................................................................................................ 15
3.4. Sources of Data ............................................................................................................. 16
3.4.1. Primary Sources of Data .......................................................................................... 16
3.4.2. Secondary Source of Data ....................................................................................... 16
3.4.3. Instruments of Data Collection ................................................................................ 17
3.4.4. Questionnaires ......................................................................................................... 17
3.4.5. Interview .................................................................................................................. 17
3.5. Population and Sampling Techniques ........................................................................ 18
3.6. Data collection procedures........................................................................................................18
 3.7. Data processing and analysis………………………………………………………………….19
CHAPTER FOUR ..................................................................................................................... 20
4. DATA PRESENTATION, ANALYSIS AND INTERPRETATION .................................. 20
4.1. INTRODUCTION ............................................................................................................. 20
4.2. Demographic Characteristics of the Respondents .................................................... 20
4.3. Feedback and Coaching ................................................................................................. 21
5. Budget and schedule .......................................................................................................... 21
P6. REFERENCE……………………………………………………………………………………….22
ACRONYMS AND ABBREVIATIONS
BSC Balanced Score Card
CBE Commercial Bank of Ethiopia
EPM Employee Performance appraisal
FSFM Frankfurt School of Finance and Development
HRD Human Resources Development
HR Human Resource
HRAP Human Resources Appraisal
PM Performance appraisal
PAS Performance appraisal system
BSC Balanced score cared
ROD Result oriented development
EPA Effective performance appraisal
ROPA Result oriented performance appraisal
CHRM Corporate Human Resources Appraisal
PAS Public sector bank
 CHAPTER ONE

1. INTRODUCTION
Change is not a choice; organizations continually evolve either positively or negatively. Any
organization that desires to improve or keep up with its competitors requires developing a strategic
plan and executing it accordingly in order to address the continuous changes that occur in the
environment. Every organizations success depends on the development of its human resources in
an increasingly varying environment.
In today’s globalized world, many organizations are faced with various challenges as they
endeavor to gauge and improve employee performance. Organizations overall performance is
affected by individual and group performance of its employees. In any organization one of the
ways to enhance organizational performance is positively influence the labor component of
productivity. Then there are mixed designs which tend to combine the two designs (Creswell
2003). This study combines both quantitative and qualitative methods, popularly called mixed
methods, in order to collect two different types of data. The reason for choosing two types of data
is twofold: In order to map out the PAS in the Ethiopian banking service the researcher needed a
large sample to PAS. Therefore it was natural to use a structured questionnaire to get as many
respondents as possible. This was quantitative in nature. Second, in order to understand the
complex processes of the influence of PA in the sector the researcher will collect qualitative data
the reason is to analyze subtle relationships and intricate processes involved in conducting the
individual appraisals. To understand such processes, in-depth interviews will be necessary. The
study targeted the employees of CBE, Robe branch. Most of the respondents are clerical workers.
The study findings would reveals that though performance appraisal on paper are built on solid
principles, its implementation as relates to the scope of application, highlights of the old
performance appraisal system, implementation of the new system, training as a direct result of
performance appraisal, advantages and shortcomings of appraisal in the sector.
 1.1. Background of the Study
The process of building result-oriented performance appraisal system takes time. To build
performance appraisal, Ethiopia can draw lessons from the experience of other countries that have
gone through the same process, in identifying entry points and building momentum. Performance
Appraisal system (PAS) is a critical component of the overall human resource appraisal function
it is predicated upon the principle of work planning, setting of agreed performance targets,
feedback, reporting and is linked to other human resource appraisal systems and processes
including staff development.
Although every country in the world has a need for performance appraisal and actually carries out
these reforms, their success depends on the context but, Feedback during performance appraisal
reviews in Europe tends to allow the ratee to express dissent. Such behavior is not considered
appropriate to employees in Ethiopia, for face-saving is regarded as more important than learning
from the appraisal review. People are not socialized to interject their ideas in an appraisal review
and to explain and defend their point of view. In addition, they are mostly oriented towards
showing the supervisor respect. One way of expressing respect is to avoid presenting potentially
contradictory views. More importantly, in the previous Ethiopia, the appraised individual never
received feedback on how he or she faired in appraisal. The PA within the bank was open to abuse.
Since it was inaccessible to the objects of the appraisal, it was susceptible to favoritism, corruption
and tribalism. This, the PA argued, would undermine the very essence of the appraisal system.
Not only the bank is striving to win the domestic competition which is derived by the establishment
of new private banks with emerging technologies in the banking service, it is also on its way to
play a cross boundary roles and competitive in the international business arena(CBE‘s next five
years strategy document, June 2015).
However, in spite of the foregoing, not much is encountered in literature regarding empirically
documented works about the effectiveness of performance appraisal on work productivity. This
void in literature needs to be filled in order to increase our understanding of the relative
effectiveness of performance appraisal on work productivity. In honestly speaking, there has not
been much assessment on the effectiveness of performance appraisal regarding their importance
to work productivity, performance appraisals are inconsistent. Each branch has evolved its own
unique legacy procedures and practices over the years. More importantly, there is not a unifying
philosophy in implementing the various processes in the system. In years where merits are not
available, some supervisors do not find the value in providing input or writing a review when the
staff person does not get a raise. This is the mindset that needs to be changed because the yearly
appraisal is only a small part of managing performance, rather than thinking of this process as a
once a year task, performance appraisal system should be thought of as a holistic approach to
optimizing human capital that enables an organization to implement short, and long-term results
by building culture, engagement, capability, and capacity through integrated talent acquisition,
development, and deployment processes that are aligned with the business goals of the bank.
Although a few studies concerning performance appraisals have been published (Gorgy 2004;
McCourt and Foon 2007), research on performance appraisals is generally thin and more studies
are required in order to understand them (Murphy and Cleveland 1995). One of these challenges
is assessment of result-based performance appraisal at CBE, Robe main branch. Moreover,
keeping in to mind the old way of appraisal system that the CBE has been applying for decades to
appraise employees‘ performance which is overly subjective , and did not engage line managers
to coach their subordinates and giving timely feedback; trend of the bank to reward processes and
sub processes based on their score card performance but not individual contribution; and lack of
the practice of attaching performance to the human resource appraisal decisions, visa-a-vise the
change the bank envisages and committed to bring which demands a paradigm shift on peoples‘
attitude as well as work aids, it signals the need to assess the effective implementation of the EPA
as a system in the bank. This research proposal, thus, was initiated with the intention to assess the
CBE‘s level of implementation of the employee performance appraisal system by posing the
following research questions
1.2. Statement of the Problem
CBE, Robe branch‘s grand vision, ―To Become a World Class Commercial Bank by the Year
2025, signifies that the bank is in the process of preparing itself to operate in the highly competitive
business environment which is driven by the local as well as global business dynamism. From the
vision statement, it can also implied that the bank needs to craft a strategy which transcends it to
the status and position of world class commercial banks exhibit as of 2025 which signifies the need
for having qualified professionals who harmonize their efforts towards the bank‘s objectives and
expectations. According to Aguinis (2005), the disadvantages or negative consequences of
ineffective performance appraisal system include: increased employee turnover if the process is
perceived as unfair; false or misleading information may be used due to lack of standardized
system in place; low self esteem due to inappropriate and inaccurate way of providing feedback;
waste of resources in the form of time and money that negatively affects the organization‘s return
on investment; relationships are damaged as a consequence of a deficient system; negatively
affects motivation to perform mainly due to failure to translate good performance in to meaningful
rewards; employees suffer from job burnout and job dissatisfaction for the main reason that if the
system is perceived as it is not fair and performance assessment tool is considered as invalid
;increased risk of litigation filed by employees who feel they have been appraised unfairly;
unjustified demands made up on managers‘ resources due to the consequences of poorly
implemented systems do not provide the benefits of well implemented systems, rather they take
up managers‘ time that leads to resistance and even avoidance of the system; standards and ratings
may vary and unfair across and even within units replaced by personal values, biases and
relationships; and because of poor communication, employees may not know how their ratings are
generated or how the ratings are translated into rewards leads to mystery. It has been argued that
although the performance appraisal system under review is far better than the one it replaced, it is
still wanting in many respects. According to the various studies, this indicates that the raters’ main
challenge was to determine whether to reward an individual, the team or both. Second, raters were
faced with a new situation which disregarded command and control, and promoted commitment
as the latest philosophy in the banking services. Specifically, the command structures of some
departments posed a challenge because subordinates’ involvement and contribution to
performance appraisal is limited.
Additionally, an independent review of the PA reveals that it is still not meeting expectations:’
when the new appraisal was introduced, the relevant parties did not prepare annual performance
plans for individual staff, which is the basis for conducting a results oriented performance appraisal
exercise…’ Moreover, there are still inadequate incentives for filling in the performance appraisal
forms in a timely manner: ‘The results of the performance appraisal are not immediately analyzed
and used to inform individual, department and organization-wide development and capacity
building planning and budgeting processes. Performance appraisal exercises are often conducted
ex-post, when staff is to be confirmed or promoted’ (Tidemand and Sewankambo 2008). It may
therefore be argued that the appraisal system leaves a lot to be desired and has not met its intended
expectations
More importantly, there is not a unifying philosophy in implementing the various processes in the
system. In years where merits are not available, some supervisors do not find the value in providing
input or writing a review when the staff person does not get a raise. This is the mindset that needs
to be changed because the yearly appraisal is only a small part of managing performance. Rather
than thinking of this process as a once a year task, performance appraisal system should be thought
of as a holistic approach to optimizing human capital that enables an organization to implement
short, and long-term results by building culture, engagement, capability, and capacity through
integrated talent acquisition, development, and deployment processes that are aligned with the
business goals of the CBE, Robe banch. The annual appraisal system as being operated currently
in CBE, Robe branch has some problems which need to be tackled.
So the present study was undertaken to provide feedback information regarding the effectiveness
of performance appraisal on work productivity, while at the same time attempting to fill the
identified gap in literature (Donkor, 2010).;
1.3. Research questions
The study seeks to answer the following research questions to achieve a comprehensive objective.
• What is the perception of employees towards result oriented performance appraisal?
• What are the major problems that affect result oriented performance appraisal?
• What has been the significance of the performance appraisal system as far as the development
of staff is concerned

1.4. Objective of the study

The overall objective of the study is to assess result-oriented performance appraising at
Commercial bank of Ethiopia,Robe branch and the extent to which appraisal has found it
applicable in improving work standards. So in order to make it more clear both general and specific
objectives are prepared.
1.4.1. General objectives
The general objectives of the study are designed to assess result oriented performance appraisal at
CBE, robe branch.
 1.4. 2. Specific objectives
The study tried to achieve the above general objective by perusing the following specific objectives
including
• To explore the various types of performance appraisal methods being used in Commercial bank
of Ethiopia, Robe branch.
• To ascertain the fairness in the appraisal system at Commercial bank of Ethiopia, Robe branch.
• To determine the significance of performance appraisal as far as the development of staff is
concerned.
• To compare and contrast the actual practices of the bank against the theoretical aspects.
1.5. Significance of the Study
Since the CBE has recently designed its EPA system as one strategic aspect of its HRD strategy,
and has started to implement it, from the broader perspective, this study helps the bank to see its
progress in terms of the effective implementation of the EPA system and to depict areas of focus
for the assurance of successful implementation of the PA system .On the other part, the employees
performance appraisal team which is in charge of tracking the progress of the system and
development of working tools (policy, procedure, guidelines, appraisal tools and standards, and
the like) ,and central custody of the employees performance appraisals, can get inputs that will be
useful through the process of revision of the work aids and get the picture from different view.
Furthermore, the findings of the study will also pinpoint the implication for practitioners and will
also serve as spring board for other researches who will be interested to further conduct studies in
the area. All in all, PA still needs a paradigm shift from thinking of performance evaluation as a
discrete event to a continuous process (Latham and Mann, 2006). Specifically, PA encompasses
the entire range of enhancing performance. It includes an approach to creating a shared vision of
the organizational goals and objectives, aiding employees to understand and know their part in
contributing to them and implementing linkage between performance and reward (Fletcher, 1996).
Overall purpose of PA is to (Armstrong, 2006):. First, the finding of this research will help the
bank to overcome the difficulties that it faces in performance appraisal system. Other purpose of
the study includes,
• Empower, motivate and reward employees to do their best
• Focus employees’ tasks on the right things and doing them right; align everyone’s individual
goals to the goals of the organization
• Align personal/individual objectives with team, department and corporate plan.
• Make individuals clear about what they need to achieve and expected standards, and how that
contributes to overall success of the organization
• Provide regular, fair, accurate feedback and coaching to stretch and motivate employees to
achieve their best
• Maximize the potential of individuals and teams to benefit themselves and organizations.
Moreover, most employees expect coaching to be facilitative, supportive, and aimed at their
own goals and needs (Peterson, 2009). Information that is given in the coaching process not
only includes discussions of performance expectation, but also providing feedback and
motivating employees by stating desired consequences if their goals achieved.

1.6. Scope of the Study

Many organizations are faced with various challenges as they endower to engauge and improve
employee performance. The CBE has diverse branch expansion with about 1,233 branches
stretched all over the country, and more than 33,365 employees. Moreover, the CBE has practice
of evaluating process‘s and sub process‘s performance using each process‘s and sub process‘s
score card cascaded from the corporate BSC as can be depicted from the EPM implementation
road map of the Bank , which started from the managerial roles down to the officer role. Its overall
performance is affected by individual and group performance of its employee. The various
valuable factors contributing towards the effectiveness of this organization and highlighting the
organizations ability are the processes of recruitment, placement, training, promotion and
appraisal. Some of them are proved to be effective and remain in the business appraisal while some
of them may be just a business fund. So the study considered only few criteria of understanding
the impact of performance appraisal systems as one of the important factors of organizational
ability which is also the main mark of the study undertaking and the study is basically a case study
by its nature; as such the Commercial Bank of Ethiopia, Robe branch is the case in focus. The
challenges of EPA are common phenomena across all levels of banks in Ethiopia. s. However, it
is practically impossible to cover all levels of PAS problems in this research due to time and other
related constraints. Hence, this research proposal will be limited to CBE,Robe branch. In fact
performance appraisal has vital importance in almost every organization and it is beneficial to
undertake different performance measurement systems in an appropriate way to get true outcomes
in the organization. It is the great tools of measuring the level of performance of employees and is
an important system which helps in providing better scope for employees’ expression on their
development needs.

1.7. Limitation of the study

The study was intended to assess result oriented performance appraisal at CBE,Robe branch, which
was found in Bale Zone,Robe Town. It would have been better if all banks were studied but in this
study, but only Robe branch is considered due to time and budget constraint and coverage of
population in CBE. While conducting this thesis a number of limitations need to be acknowledged
and addresses concerning the present study. The first limitation concerns the timing of data
collection, Shortage of finance, Lack of up to date available materials and information relevant to
the study, there was also a limited research works to see the consistency of the present findings
and lack of up to date references materials in the study that forced the researcher to refer at old
materials. So the student researcher believes, if this paper has over looked same areas of the
problems, it is due to the problems mention above, there was still a problem of getting sufficient
information from because they were new comers to the bank and the country also under political
tremolos. However, in spite of the difficulties more time and unreserved efforts were made to
collect, interpret the data and report the findings
 CHAPTER TWO
2. REVIEW OF RELATED LITRATURE
2.1. INTRODUCTION
In this chapter, an examination or review of scholarly works that have been conducted on
Performance appraisals, which are directly or indirectly related to the study, will be examined in
detail. It is also discusses the nature of the challenges, analyze challenges that may encounter in
performance appraisal. This section also provides a literature review in managing PA change and
it pays attention to the role of managers in the process.
2.2. Definition of Performance appraisal
A performance appraisal is an instrument used by organizations to evaluate the performance of
their employees in terms of quality, quantity, cost and time. There are numerous definitions of it,
not all of which will be listed here. Presenting a few of them will suffice to show the variety:
Performance appraisal is the process of determining and communicating to an employee how he
or she is performing on the job and, establishing a plan of improvement when properly conducted
performance appraisals not only let employees know how well they are performing but also
influence their future level of effort and task direction. Effort should be enhanced if the employee
should be classified through the establishment of a plan for improvement (Byars, 2009; 289).
According to Bacal (1999), performance appraisal is one component of HRM by which an
individual‘s work performance is assessed with the ultimate purpose of addressing the extent as
such how well has the employee performed during the period under review. Performan
appraisal as a process of assessing the performance and progress of an employee, has also further
elaborated as an evaluation process of judging the worth of demonstrated performance with respect
to the good and bad aspects of the performance exhibited by an employee, which necessitates
observing of employees and establishing of performance standards and criteria (L.Cardy, and
Leonard (2011). The performance appraisal is said to be one of the most problematic components
of human resource appraisal and is at times viewed as a futile bureaucratic exercise (Coutts and
Schneider 2004.), yet it plays an important role in providing the basis for making selection
decisions, determining salary increases, and providing feedback between supervisors and
employees (Mount 1984: Mount 1984).
Performance appraisal is “a formal assessment of how well employees are doing their job”.
Performance refers to the degree of accomplishment of the task that makes an employee’s job. It
reflects how well an employee is fulfilling the requirement of the job. The fundamental goal of
performance appraisal is to promote and improve employee effectiveness. It is a continuous
process where managers and employees work together to plan, monitor and review an employee's
work objectives or goals and his or her overall contribution to the organization. Thus employees’
performance should be evaluated regularly for many reasons. Some of these reasons are;
• It aids in making decisions about pay raises, promotions and training.
• To provide feedback to employees to help them improve their performance and plan future
careers. (Griffin, 1999)
Douglas McGregor in his book, ‘The Human side of Enterprise’ published in 1960 has examined
theories on behavior of individuals at work, and has formulated two models which he calls Theory
X and Theory Y assumptions. Theory X says that the average human being has an inherent dislike
for work and will avoid it if he can. He goes further to say that because of their dislike for work;
most people must be controlled and threatened before they will work hard enough. The Theory
Y, on the other hand assumes that the expenditure of physical and mental effort in work is as
natural as play or rest. It states further that control and punishment are not only ways to make
people work, man will direct himself if he is committed to the aims of the organization. Price
(2004) has defined performance appraisal as “a way of formally assessing the progress of
employees with the objective of improving their performance” To him, the annual performance
appraisal can be a daunting task for both Administrators and Employees, unless you have
procedures in place that are relevant and easy to administer. The secret from the Administrators
point of view to making performance appraisal a meaningful exercise is to prepare well in advance.
The preparation should involve progress meetings, data gathering, observing employee
performance, and talking to employees. Cole (1995) has suggested that “all employees shall be
entitled to at least one formal appraisal from their immediate superior each year during which
meeting the individual employees shall have the opportunity to discuss past performance, present
progress and further prospects.

Nzuve (2007) defines Performance appraisal as a means of evaluating employees work

performance over a given period of time. It is the formal assessment and rating of individuals by
their managers at, usually, an annual review (Armstrong, 1999).In 1996, Cole identified two types
of appraisal as formal and informal. Formal appraisal is the systematic and planned assessment of
employees in a more orderly and rational way as opposed to the informal which is the evaluation
of performance of an appraise by his manager in the normal course of work, is of an adhoc nature
and is as determined by intuitive feelings as by factual evidence of results. It is a natural byproduct
of the day to day relationship between the appraisee and the appraiser.
Dessler (2008) states that it is any procedure that involves setting work standards, assessing
employee`s actual performance relative to standards set, providing feedback with the aim of
motivating, eliminating performance deficits and reinforcing exceptional performance. It is a
crucial activity of the personnel function and appraisal of the human resources and has roots in
three well substantiated psychological principles:-people work, learn and achieve more when they
are given adequate feedback as to how they are performing (the feedback being either negative or
positive thus reinforcing expected behavior and performance), having clear attainable goals which
should be measurable and quantifiable and involvement in the setting of tasks. Performance
appraisal has progressed over the years from the traditional one sided, once a year, top down and
largely discredited bureaucratic system owned by the personnel department to the more modern
participative approach of performance appraisal. The performance appraisal under review in this
study is rooted in Results Oriented appraisal (ROM), and as anappraisal tool, it emphasizes
SMART goals, i.e., Specific (defining the relevant work precisely), Measurable (assess
achievement), Agree (both parties committed), Realistic (an acceptable but stretching challenge),
and Time bound (specify the deadline and review date). Goal setting theory (Locke and Latham,
2002), states that a goal drives performance. It affects direction, effort and persistence of
employees. Specifically, a goal directs an employee’s attention toward actions which bring goal
accomplishment, leads an employee to adjust and persists their effort, and stimulates the
development of task strategies to attain it. However, to enhance effectiveness, goals should be
specific and difficult (Seijts and Latham 2005). In the other words, a specific and challenging goal
leads to higher performance than general goals such as “do your best”. In fact, it has much stronger
effect on performance than any other factors, including participation. It may be presumed that
participating in goal setting enhance its effectiveness; goal setting is likely to be more effective
when people participate in setting goals than when goals are assigned to them. However, Locke
and Latham (2002) state that when goal difficult is held constant, the performance of those who
participate in setting goals does not differ significantly from those who were assigned goals.
Rewarding performance needs the shared understanding and ownership of all employees of the
organization as employees’ involvement and contribution towards their self development is
valuable to enhance its effectiveness, for which Nyemberzi(2009) as cited in Zhang(2012) has
elaborated it ensuring procedural justice concerns are critical to ensure that employees perceive
the performance appraisal process and its linkage to pay to be fair. Personnel development and
linking performance to pay as an outcome of identifying the results or performance are the key
activities involved in this step (Schneier,Beatty and Baird, 1987, as cited in Zhang, 2012
The process of designing an appraisal system should be all inclusive involving all managers,
employees, human resource professionals, internal customers as well as external customers in
making decisions about measurement content (what can be measured is work content in such
generic dimensions as quality, quantity, timeliness of work either in terms of developing one`s
competencies or the achievement of one`s goals based on actual work duties), measurement of the
appraisal process (containing three steps: defining the job, appraising performance and giving
feedback) and defining the rate, rater and administrative characteristics(Dessler,2008).The starting
point should be the strategic plan and objectives of the organization as the appraisal system should
be consistent with the overall goals of the organization
2.3. History of performance appraisal
The history of performance appraisal could be traced from the third century AD when the Chinese
philosopher Sin Yu criticized a biased rater hired by the Wei dynasty for making assessments
based on likes and dislikes rather than on merit. Other claims postulate that performance appraisals
are rooted in Frederick Winslow Taylor’s time and motion study, just as do many other human
resource appraisal tools dating from the beginning of the twentieth century (Price 2000:184).
Appraisal on a merit scale is used in an industrial context perhaps first at the cotton mills in New
Lanark, Scotland in the early 1800s. As a distinct and formal appraisal procedure used to evaluate
work performance, it is said to date from the time of the Second World War when Walter Dill
Scott convinced the American army to adopt it in evaluating its officers and enlisted men. The
practice is thereafter entrenched and used by companies in connection with layoffs. Eventually, by
the 1950s, it became an established and accepted practice in many organizations (Murphy and
Cleveland 1995:3). Performance appraisal is a universal issue because there is always a
predisposition for people to judge the work performance of others. Some others also claimed that
performance appraisals have been conducted since the times of Aristotle (Landy, Zedeck,
Cleveland, 1983). The measurement of an employee’s performance allows for rational
administrative decisions at the individual employee level. It also provides for the raw data for the
evaluation of the effectiveness of such personnel- system components and processes as recruiting
policies, training programs, selection rules, promotional strategies, and reward allocations (Landy,
Zedeck, Cleveland, 1983). In addition, it provides the foundation for behaviorally based employee
counseling. In the counseling setting, performance information provides the vehicle for increasing
satisfaction, commitment, and motivation of the employee. Performance appraisals allow the
organization to tell the employee something about their rates of growth, their competencies, and
their potentials. There is little disagreement that if well done, performance appraisal and feedback
can play a valuable role in effecting the grand compromise between the needs of the individual
and the needs of the organization (Landy, Zedeck, Cleveland, 1983).
At the beginning of the performance appraisal system, the main interest is to have a basis for
justifying wage levels. It is the basic document on which salary related decisions are based. The
process is firmly linked to material outcomes. If an employee's performance is found to be less
than ideal, a cut in pay will follow. On the other hand, if someone’s performance is better than the
supervisor expected, a pay raise is in order (Lovrich et al. 1980). The main logic at work here is
derived from the principal-agent theory, which is concerned with the problem of motivating one
party to act on behalf of the other (Lane 2000). According to this theory, an employee should be
compensated for performing particular tasks that are beneficial to the employer or supervisor. The
agent (employee) and the principal (employer/supervisor) have different interests and both parties
will maximize their interests. If need be, the employee and the supervisor will enter into a binding
agreement that protects each other’s interests. As far as the performance appraisal is concerned,
employees may be interested in either promotions, salary increments or other benefits that come
with a positive appraisal, but the main focus is to align the interest of the agent to that of the
principal, and ensure that the agent is accountable to the principal.
In the previously mentioned instances of appraisal systems, little consideration, if any, is given to
how the tool might develop. It is felt that a cut in pay, or a raise, should provide the only required
impetus for an employee to either improve or continue to perform well. Sometimes this basic
system succeeded in getting the results that are intended; but more often than not, it failed.
Besides , an effective performance appraisal system is: job specific covering a broad range of jobs
in the organization ; aligned with the organization‘s strategic direction and culture; practical and
easy to understand and use; provide an accurate picture of each employee‘s performance; include
a collaborative process for setting goals and reviewing performance based on two-way
communication between the employee and manager ; monitor and measure results (what) and
behaviors (how); include both positive feedback for a job well done and constructive feedback
when improvement is needed; provide training and development opportunities for improving
performance; ensure that employee work plans support the strategic direction of the organization
; identify and recognize employee accomplishments; support staff in achieving their work and
career goals by identifying training needs and development opportunities; support administrative
decision-making about promotions, terminations, compensation and rewards; and provide legal
documentation to demonstrate due diligence for legal challenges related to dismissal or vicarious
liability(hrcouncil.ca, 2008;http://hrcouncil.ca/hr-toolkit/resourcesresources.cfm). Performance
evaluation usually takes place in a yearly or semi-yearly session. An effective performance
evaluation should accurately outline employees’ responsibilities and contributions to organizations
(Clausen, Jones, and Rich, 2008) and be free from errors such as leniency, halo effect, and range
restriction. Not surprisingly, research on the topics of rater accuracy and measurement are in the
mainstream of organizational psychology. However, DeNisi and Pritchard (2006) believe that
performance evaluation research were too interested in measurement issues and not interested
enough in ways to improve performance. To so do, research on employee reactions is very
important because what employees perceive can affect their behavior and performance. There are
two main purposes of performance evaluation, namely for human resource appraisal and for human
resource development. For human resource appraisal, performance evaluation can serve as a
valuable input to make administrative decisions relating to promotions, firing, and merit pay
increases (Byars and Rue, 2004). In the other words, results of performance evaluation will link
to reward of individual to motivate and stimulate employees to perform better and show how much
employers recognize their performance:
 CHAPTER THREE
3. RESEARCH DESIGN AND METHODOLOGY
3.1. INTRODUCTION
In this chapter, the researcher seeks to discuss the methodology followed to collect and analyses
data for the purposes of testing the assumptions mentioned in chapter one of the study. A brief and
concise description of conditions under which the study is carry out and the materials, the
procedures, techniques are described in general terms.
3.2. Description of the Study Area
The present study is basically a case study by its nature; as such the Commercial Bank of Ethiopia,
Robe branch is the case in focus, which is found in Bale Zone, Oromia Regional state, Robe Town
in the south eastern part of Ethiopia. The distance of this bank branch from Addis Ababa is 417
Km and it is 15 Km . The bank is equipping with line managers and employees with basic skills
in their own profession. It is located at 7.8oN and 40.0oE and having an altitude of 2492 meters
above sea level with an average maximum and minimum temperature of 22.1oc and 9.5oc
respectively. The average annual rain fall of the area is 850mm. As a branch of CBE, when crafting
its five year strategy; it has identified two strategic themes: Operational Excellence and Business
Growth. The Bank‘s strategic direction strives towards these two themes which recognize
instituting modern HR practices as critical aspect of strategy implementation tools. To this end,
the bank with the consultation of international consultant from Frankfurt School of Finance and
Appraisal has revised its HR practices instituting an employee performance appraisal system with
its latest context was one among the other HRD strategic initiatives.
3.3. Research design
The main purpose of this study was to explore the overall effectiveness of the result oriented
performance appraisal practices of principals in CBE, Robe branch of Bale zone, Oromia Regional
state. As stated in different studies the nature of a research problem is crucially important in
choosing an approach to a study. During the design phase of descriptive research, the researcher
must use the designated data gathering tools systematically and properly in collecting the evidence
on the basis of review of related literature and basic research questions. The method is particularly
preferred for the study, because it allows an investigation of the concerned studies with specific
predictions, narration, of facts and characteristics of the situations as it exist at present. This
research method also involves collecting data to test hypothesis or to answer questions concerning
the current status of the subjects of study. Moreover, it is economical, rapid and turns around the
data collection and identification attributes of a large population from a small group of individuals
(Creswell, 2003). This study combines both quantitative and qualitative methods, popularly called
mixed methods, in order to collect two different types of data. Mixed methods research has been
variously defined, however, in this study, it is taken to mean ‘the type of research in which a
researcher or a team of researchers combine elements of qualitative and quantitative research
approaches (e.g., use of qualitative and quantitative view points, data collection, analysis,
inference and techniques) for the broad purposes of breadth and depth of understanding and
corroboration’ (Johnson et al. 2007:123).
The study is carried out with a view towards understanding social phenomena (Creswell 2003:2).
In particular, it involves the choices a researcher makes about cases of study, and methods of data
collection and analysis (Silverman 2004:4). In essence, the method was the ‘How should the
researcher go about the research?’ problem. Hence in order to carry out a study, there must be a
research design which stipulates whether the study intends to test a theory or hypothesis, or build
theory, or both. Creswell has categorized research design into three distinct groups: quantitative
designs, which focus on testing theories and hypotheses, qualitative designs, which employ
different knowledge claims, strategies of inquiry, methods of data collection and analysis. With
the quantitative research method, in order to develop knowledge, the researcher would use the
logic of cause and effect. Concepts are reduced to specific variables, hypotheses and question.
Qualitative research takes place in a natural setting (Creswell 2003:181), and for this reason the
respondents were interviewed mostly at their work places. Throughout the design phase,
researchers must ensure that the study is well constructed to ensure construct validity, internal
validity, external validity, and reliability. The researcher strives to establish a chain of evidence
forward and backward.

The reason for choosing two types of data was two fold: In order to map out Performance Appraisal
practice and to understand its impact within the bank. The reason is to analyze subtle relationships
and intricate processes involved in conducting the individual appraisals. To understand such
processes, in-depth interviews are necessary.
This gives the researcher an opportunity to observe how they work, behave and relate to one
another. Although observation was not the researchers’ main data source, it revealed other
dynamics relevant to the study by validating information gathered from the main sources. For
instance, while visiting one of the potential respondents, the researcher noticed at least three
performance appraisal forms lying by the side of the desk. It prompted the researcher to initiate a
conversation with the research itself, and he admitted that he had just been reminded that for the
last three years, he has not been filling out the appraisal form, and he needed them to be on file
because he was being considered for a new post.
3.4. Sources of Data
3.4.1. Primary Sources of Data
For the purpose the proposed study primary source of data was collected through questionnaire
and interview. The primary sources of data considered in this study are employees and managers
at CBE, Robe branch 2018/2019. The necessity of considering clerical workers as source of data
for this study was that of their long time involvement in the work of activities and their
expectations and their understandings about client’s attitude towards PA and what challenge them
to the system. The researcher would use self-administered questionnaires that are both open and
closed ended questionnaires to gather data from employees and immediate supervisors. The
respondent was asked questions on their demographic interest opinion. This is because the research
sought to solicit the views and opinions of a cross section of members of staff on the performance
appraisal system as existed in commercial bank of Ethiopia, Robe branch. The collected data was
processed and organized in descriptive manner and organized using table and percentage with
relevant discussion. In this study, interview would be taken in the form of person to person
encounters using un-structured questions enabling respondents to address matters in their own
terms and words. An interview is an inter change of views between two unique persons conversing
about a theme of mutual interest, through careful questioning and performance appraisal with the
purpose of obtaining thoroughly tested knowledge (Kvale 2005).
3.4.2. Secondary Source of Data
The task of studying performance appraisal and its impact on performance is broad and deep,
calling for the review of various documents. Lincoln and Guba (cited in (Güney 2004) argue that
documents and manuals represent the local knowledge and are a rich source of contextually
relevant information. The secondary sources was collected from published materials, manuals and
different books, articles, publications, as well as office documents, progress reports, materials
developed during the preparation period. The researcher needed to anticipate key problems and
events, identify key people, establish rules for confidentiality, and actively seek opportunities to
revisit and revise the research design in order to address and add to the original set of research
3.4.3. Instruments of Data Collection
The researcher must collect and store multiple sources of evidence comprehensively and
systematically, in formats that can be referenced and sorted so that converging lines of inquiry and
patterns can be uncovered. The two instruments used to collect primary source of data from the
employees and supervisors or branch managers include interview, questionnaires. Renegotiation
of arrangements with the objects of the study or addition of questions to interviews was also
necessary as the study progresses.
3.4.4. Questionnaires
For data collection the researcher was employed questionnaire as major tool. According to
Ransburg (1988: 504) the questionnaire is a set of items dealing with topic correlated group of
topics given to a selected group of individuals for the purpose of gathering data on a problem under
consideration. Two types of questionnaires were developed and distribute pertaining to the two
employee groups, that is, those at supervisory or managerial level, and non-supervisory level
employees since their roles and duties are different concerning the EPM system In drawing up
questionnaires, the researcher was considered the features for good questionnaires. Next the
researcher personally will delivered questionnaires to the selected employees and the questionnaire
comprised of different parts: biographical information, opinion at five point rating scale,
expressing ideas based on open-ended questions. (Catherine, H.2000). The scaling procedure
adopted was ranging from Strongly Agree to Strongly Disagree. Investigators need to be flexible
in real-life situations and not feel threatened by unexpected change, missed appointments, or lack
of office space. Investigators need to understand the purpose of the study and grasp the issues and
must be open to contrary findings. Investigators must also be aware that they are going into the
world of real human beings who may be threatened or unsure of what the study will bring.

3.4.5. Interview
Lankshear and knobbe (2004) affirm that interview is useful tool to generate comprehensive
information about the phenomena being under study. It can be inferred that more than any other
data collection tool, an interview gives the interviewer a unique opportunity for clarification and
in depth information on the topic of interest. Interview was undertaken in the form of person to
person encounter using un-structured and open ended questions, enabling respondents to address
matters in their own terms and words. The researcher will offer opportunities to respondents to
express their opinions freely and openly.
3.5. Population and Sampling Techniques
The key reason for being concerned with sampling is that of validity—the extent to which the
interpretations of the results of the study follow from the study itself and the extent to which results
may be generalized to other situations with other people. To obtain reliable data about a given
population, it is obvious that using the whole population is better. But due to financial and time
constraints, a complete coverage of the population is not an easy task. The study targeted the staff
of CBE, Robe branch. The population is about 60 employees. The breakdown is as follows, forty
(40) are clerical workers while the remaining twenty (20) are non-clerical. In order to assess result-
based appraisal the researcher will prepare 40 questionnaires for clerical workers only.
According to Bless and Smith (2000) research participants are the units of analysis as they are the
source from which research data are being collected. Therefore, data analysis should reflect an
accurate picture of the research participants
3.6. Data collection procedures
In social research is concerned with the extent to which findings are consistent with what the
researcher intends to study. In essence, it refers to the correctness or credibility of a description,
conclusion, explanation, interpretation or some other kind of account. A useful step in the selection
process is to repeatedly refer back to the purpose of the study in order to focus attention on where
to look for cases and evidence that would satisfy the purpose of the study and answer the research
questions posed. The researcher determines in advance what evidence to gather and what analysis
techniques to use with the data to answer the research questions. Data gathered is largely
qualitative, but it may also be quantitative. Tools to collect data can include surveys, interviews,
and questioner. Questions will prepare in English and next, the questionnaires will have been
distributed to the employees at CBE, Robe branch office to all clerical workers. Inform consent
respondents were given a clear explanation of what the research is about so they are well inform
about what they are participating in. The questionnaire contains 2 separate sections; first section
deals with the personal profile of employees and questions related to the research topic, the
remaining deals with the personal profiles of line-managers and questions related to the research
proposal topic. In this study the sources of evidence also include a survey, in-depth interviews and
documents. After the interview has been completed, the researcher would collect the questionnaire
paper from the respondent.
3.7. Data processing and analysis
In any scientific study it is appropriate to convert large quantities of data into condensed forms
that will facilitate easy interpretation and understanding by other readers. The researcher examines
raw data using many interpretations in order to find linkages between the research object and the
outcomes with reference to the original research questions. Throughout the evaluation and analysis
process, the researcher remains open to new opportunities and insights. Advance preparation
assists in handling large amounts of data in a documented and systematic fashion. The researchers
use the quantitative data that has been collected to corroborate and support the qualitative data
which is most useful for understanding the rationale or theory underlying relationships. Bogdan
and Biklen (1998) have shown that data analyses in qualitative studies involve word argumentation
than numerical explanations. In this way, the data collected from interviews and open-ended
questionnaires will be analyzed qualitatively using the direct and summarized words of the subjects
of the study. Percentage and frequency will use to analyze various characteristics of sample
population such as sex, age, qualification, service years and also to analyze questions on
respondents view on availability of directives and perception.
 CHAPTER FOUR
DATAPRESENTATION, ANALYSIS AND INTERPRETATION
4.1. INTRODUCTION
Under this chapter, the presentation, analysis, discussion and interpretation of the data gathered
from the respondents through questionnaires and interviews will analyzed and interpreted by using
both quantitative and qualitative methods. After analysis attempts were made to provide answers
for the basic research questions raised in chapter one. In assessing the implementation of the
employee performance appraisal system of the, the analysis goes through different variables that
addresses the frame work used in the study one by one keeping the chorological order set in and
the solution to the problem was discussed in detailed and reflect respondents level of acceptance
or adequacy which supports the interpretation and posing conclusions with the view of drawing
practical and constructive recommendations. The inputs collected from the open ended questions
that address the challenge part under each construct are summarized.
4.2. Demographic Characteristics of the Respondents
The main purpose of the study is to analyses the challenges that encounter in performance appraisal
system so study is guided by objective of assessment of performance appraisal using secondary
and primary data collected from all clerical staff of the organization. To start the basic part of the
study therefore, it is appropriate to understood back ground information of employees. After
analysis attempts were made to provide answers for the basic research questions raised in chapter
one. The study comprised of background of information of the respondents, standard set of
controlling function, actual performance, comparing the two , problem in implementation of
controlling function and the solution to the problem was discussed in detailed. The groups of
respondents were indicated in their background information. Individual demographic and
background variables are significant for organizational performance appraisal because bureaucrats
can influence institutional values by infusing their values into the organization they work for. In
light of this the researcher carried out a pilot survey. The following criteria were used to
purposively to include respondents in order to increase representativeness and enhance validity of
the findings: age, job title, education and tenure of service. These criteria were supported by the
knowledge of the research assistants who were staff of the bank from within these staff, the
researcher asked immediate contacts, usually personnel officers, to identify participants, then got
the quantitative interviews, taking noted of the level of education, type of education, gender, age,
tenure, studies abroad, and where the interviewee grew up.

4.3. Feedback and Coaching

The feedback and coaching process involves activities that line managers exhibit that can able
them to provide support aimed at helping employees become aware of how well they are
performing, their improvement areas, and what do they need to learn; and delegating people to
handle new tasks or enlarged areas of work with appropriate guidance and monitor performance
accordingly supported by the supervisor‘s continuous observation and documentation pertaining
to how well the employee is meeting his or her established performance objectives. Overall PA
aims to provide regular, fair, accurate feedback and coaching to stretch and motivate employees
to achieve their best.
5 Budgeting and scheduling
It is one of the most important thing which states by what we perform and when we perform
the diffent activities of the research paper respectively.this shown by table

Budgeting:is allocation of resource whin respect to activities going to do.this shown as below

S Types of material/activities unit Unit Quantity Total price

no price
1 Pen no 7 5 35
2 pencil no 2 5 10
3 Paper pac 170 1 170
4 Transport cost birr 15 30*4 1800
6 Food cost birr 6000

Scheduling :is activities of listing activities going to perform within respect to time of doing
this puts by table as below.

s/no Lists of activities Time of performing

Janu feb march app may June
1 Selecting and •
submitting of tittle
2 Proposal writing •
3 Data collection •
4 1st draft submitting •
5 2nd draft submitting •
6 Final research Up to 30
submitting
7 Research presentation •
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