The Effects of Performance Appraisal Practice on

Organizational Performance and Job Satisfaction in

Ethiopian Civil Aviation Authority:
The case of Air Navigation Department

By:

Dereje Bekele

Advisor:

Abraraw Chane (PhD)

A Thesis Proposal Submitted to Addis Ababa University, School of Commerce in

Partial Fulfillment of the Requirements for the Degree of Master of Human Resource
Management

July, 2020

i
 Addis Ababa University
School of Commerce

The Effects of Performance Appraisal Practice on

Organizational Performance and Job Satisfaction in

Ethiopian Civil Aviation Authority: The case of Air

Navigation Department

By:

Dereje Bekele

Advisor: Abraraw Chane (PhD)

A Thesis Submitted to Addis Ababa University,

School of Commerce in Partial Fulfillment of the
Requirements for the Degree of Master of HRM

July, 2020

ii
 APPROVAL SHEET

This is to certify that this thesis prepared by Dereje Bekele Agajeyeleh, entitled: “The effects
performance appraisal practice on organizational performance and job satisfaction in Ethiopian
Civil Aviation Authority the case of Air Navigation Department” submitted to Addis Ababa
University, School of Commerce in partial fulfillment for the requirements of Masters of Human
Resource Management complies with the regulations of the Addis Ababa University and meet the
accepted standards with respect to originality and quality.

Name of the Advisor: ____________________________ Signature: ___________Date_____

Name of the Internal Examiner:____________________ Signature:___________ Date_____

Name of the External Examiner:____________________ Signature:___________ Date____

iii
DECLARATION

I, Dereje Bekele Agajeyeleh hereby declare that this thesis for Masters of Human Resource
Management (HRM) in Addis Ababa University (AAU), School of Commerce, is my original
work. This work has not been submitted in any form for another degree or diploma at any
university or other institution of higher education. Information derived from the published or
unpublished work of others has been duly acknowledged in the text and a list of references is given
inside.

Name: ________________________________ Signature: _____________Date: ___________

iv
ACKNOWLEDGEMENTS

I would like to thank all the people who contributed in some way to the work described in this
thesis. First and foremost, I thank my academic advisor, Assistant Professor Abraraw Chane
Workinen (Ph.D). for accepting me into his group. During my attempt, he contributed to my work
with his intellectual support.

All output came out in this thesis was accomplished with the help and support of, Eyerusalem J.
Tesema, Bitaniya T. Gutta and all others not mentioned here without whom cooperation’s this
may be difficult to succeed. Fellow colleagues: your timely response for questionnaire & Haile
Muluken Ph.D. your brotherly advice & help was un-measurable,
I would like to extend my acknowledgement to Amare G. Moraga together with your beloved wife
Bethelihem S. Tullu and family: you were the back bone of my success may my God bless you
dear brother.
Finally, many thanks to my God the Almighty: without whom beginning and ending was hardly
possible.

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List of Contents
List of Tables ............................................................................................................................................. viii
List of Figures .............................................................................................................................................. ix
Abstract ......................................................................................................................................................... x
Chapter one: Introduction ............................................................................................................................. 1
1.1Background of the study ...................................................................................................................... 1
1.2 Background of the industry ................................................................................................................. 2
1.3 Statement of the Problem .................................................................................................................... 2
1.4 Basic Research Questions ............................................................................................................. 6
1.5. Objectives of the study ....................................................................................................................... 6
1.5.1 General objectives of the study .................................................................................................... 6
1.5.2 Specific objectives of the study ............................................................................................ 6
1.6 Definition of Terms ....................................................................................................................... 7
1.6.1 Conceptual definition ............................................................................................................ 7
1.7 Significance of the study ............................................................................................................... 7
1.8 Delimitation/scope of the study .................................................................................................... 7
1.9 Organization of the study .............................................................................................................. 8
Chapter Two: Review of Related Literature ................................................................................................. 9
Introduction ............................................................................................................................................... 9
2.1. Performance Appraisal:...................................................................................................................... 9
2.1.1. Concept, Rationale, Application, Merits and Demerits .............................................................. 9
2.1.2. Types of Performance Appraisal and their Application ............................................................ 12
2.1.3. Perception of Employees about Impact of Performance Appraisal .......................................... 16
2.2. Organizational Performance ............................................................................................................ 17
2.2.1. Contested Meanings .................................................................................................................. 17
2.2.2. Parameters of Organizational Performance .............................................................................. 18
2.3. Job Satisfaction ................................................................................................................................ 19
2.3.1. Definition .................................................................................................................................. 19
2.3.2 Determinants of Job Satisfaction ............................................................................................... 20
2.3.3. Job Satisfaction and Organizational Performance .................................................................... 22
2.4. Performance Appraisal and Organizational Performance ................................................................ 24
2.5. Performance Appraisal and Job Satisfaction.................................................................................... 25
2.6 Conceptual Framework ..................................................................................................................... 27

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Chapter Three: Research Design and Methodology ................................................................................... 28
3.1. Introduction ...................................................................................................................................... 28
3.2. Research approach ........................................................................................................................... 28
3.3. Research Design/Type ..................................................................................................................... 28
3.4. Sampling design ............................................................................................................................... 28
3.5. Sources of Data ................................................................................................................................ 29
3.5.1. Primary source .......................................................................................................................... 29
3.6 Data Collection Instrument ............................................................................................................... 29
3.7 Data analysis methods ....................................................................................................................... 30
3.8 Validity and reliability ...................................................................................................................... 30
3.9 Research Ethics ................................................................................................................................. 31
CHAPTER FOUR ....................................................................................................................................... 32
4.1 Discussion, Data analysis and Interpretation .................................................................................... 32
4.1. Socio- Demographic Characteristics of respondents ........................................................................... 32
4.2 Type of performance appraisal practiced .......................................................................................... 34
4.3. Supposed purposes, values, & assumptions, of PA practice ................................................................ 35
4.3 Employee perceptions for performance appraisal practiced ................................................................. 37
4.4. Performance appraisal and organizational performance .................................................................. 38
4.5 Mechanisms of Job Satisfaction ........................................................................................................ 40
4.6. Job Satisfaction .................................................................................................................................... 42
4.6. Performance appraisal and job satisfaction ...................................................................................... 44
4.7. Correlation Analysis ............................................................................................................................ 46
4.8. Regression Analysis ............................................................................................................................. 47
Chapter Five: Conclusion and Recommendation ........................................................................................ 49
5.1. Conclusion ........................................................................................................................................... 49
5.2 Recommendation .................................................................................................................................. 51
Appendix ..................................................................................................................................................... 53
Direction I ............................................................................................................................................... 55
Bibliography ............................................................................................................................................... 58

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List of Tables
Table 4.1 Type(s) of PA practiced during PA practices ............................................................... 34
Table 4.2. Supposed purposes, values, & assumptions, of PA practice ....................................... 35
Table 4.3. Test of Supposed purposes, values, & assumptions, of PA practice ........................... 36
Table 4.4. Employee perceptions for performance appraisal practiced ........................................ 37
Table 4.5. Test of Employee Perception for Performance Appraisal Practiced ........................... 38
Table 4.6. Organizational Performance ........................................................................................ 39
Table 4.7. Test of organizational performance ............................................................................. 40
Table 4.8. Mechanisms of Job satisfaction ................................................................................... 41
Table 4.9. Test of Mechanisms of job satisfaction ....................................................................... 42
Table 4.10 Job satisfaction ............................................................................................................ 43
Table 4.11. Test of job satisfaction ............................................................................................... 43
Table 4.12. Performance Appraisal and job satisfaction .............................................................. 44
Table 4.13. Test of performance appraisal and Job satisfaction ................................................... 45
Table 4.14. Correlation Analysis .................................................................................................. 46
Table 4.15. Model Summery ........................................................................................................ 47
Table 4.16. ANOVA Analysis ...................................................................................................... 47
Table 4.17. Regression Analysis ................................................................................................... 48
Table 4.19. Regression Analysis ................................................................................................... 49
Table 4.18. Model Summery ........................................................................................................ 48

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List of Figures
Figure 2. 1 Relationships between dependent and independent variables ................................................... 27
Figure 4.1. Respondents work area ............................................................................................................. 32
Figure 4. 2. Sex and Educational level of respondents ............................................................................... 33
Figure 4.3 Rate of PA carried out in the organization ................................................................................ 34

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Abstract
Many studies have been conducted on the relationship between performance appraisal practices
and its impacts on employee job satisfaction and organizational performance. The findings differ
as there are different performance appraisal approaches. Besides, indicators of employee job
satisfaction and organizational performance vary from industry to industry. This research was
designed to address the gap of knowledge about performance appraisal and its role on
organizational performance and job satisfaction in the Ethiopian Civil Aviation Authority
Department of Air Navigation. Quantitative and qualitative research method was employed to
address the research questions. The result shows that the most frequently used types of
performance appraisal were forward-looking approach and incident reporting method in
combination as indicated by the respondents. Employees reported that the performance appraisal
practice is biased and that they lack confidence in the process of performance appraisal since it
is unsystematic and irregular. The results of performance appraisal are not only unreliable but
also not communicated to employees timely. The study revealed that organizational performance
is hardly related to the nature of performance appraisal. The activities done to increase job
satisfaction produced poor level of job satisfaction. In short, there is a converse relationship
between performance appraisal practices and organizational performance and job satisfaction.
Therefore, it is concluded that the idea and practice of performance appraisal in the Ethiopian
Civil Aviation Authority deserves serious reconsideration. To that end, the researcher
recommends the Ethiopian Civil Aviation Authority should introduce a multi-source feedback or
360 degree performance appraisal method.

Key words

Performance Appraisal Practice, Organizational Performance, Job Satisfaction, And Air

Navigation Departmet.

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Chapter one: Introduction
1.1Background of the study
The effect of Performance Appraisal Practice on Organizational Performance and Job Satisfaction
is a well-known industrial practice. Performance Appraisal refers to a systematic and periodic
process in which the performance of an employee’s job productivity is assessed against a pre-
established criteria and organizational objectives. Performance Appraisal helps estimate the degree
of achievement or success of employees of an institution with the objective of improving their
performance. While the frequency Performance Appraisal differs from organization to
organization, it is claimed that a typical Performance Appraisal is conducted annually. The result
of Performance Appraisal could contribute for offering feedback to employees, plan counseling,
strategize employees’ development, stratifying compensation schemes or for initiating disciplinary
decisions” Senyah et al (2016).

For some reasons, precisely measuring the performance of workers is a difficult task. As Senyah
et al (2016) noted, the ability to conduct Performance Appraisal relies on the ability to assess an
employee’s performance in a fair, institutional, and accurate manner. For a proper rating of
performance, a supervisor should understand the nature of the job and the sources of information
which must be collected and processed in a systematic way. Besides, employees should be
provided with the feedback on their Performance Appraisal and make it a crucial factor in the
organization’s compensation, job placement, and training decisions Senyah et al (2016).

The main objective of this study is to determine the effects of Performance Appraisal Practice on
Organizational Performance and Job Satisfaction in Ethiopian Civil Aviation Authority
Department of Air Navigation. This is because poor Performance Appraisal can have disastrous
consequences. As the above mentioned researcher noted,
`Appraisal is one of the most important tools in the management of human
resources. However, made in an inappropriate way, it can be harmful rather
than useful. Therefore, one should, from the very beginning, follow a set of
rules thanks to which employees will perceive the system as ethical. The
article is aimed at defining ethical aspects of staff appraisal and regulations

1
 governing the creation of moral or ethical appraisal system in a given firm.
However, the main goal is not to describe and characterize the system,
chosen criteria and methods, but to identify ethical aspects of particular
elements in the entire process (Misiak, 2010)
A robust human resource management in an organization can be achieved through an equally
robust Performance Appraisal instrument. Achieving organizational objectives require individuals
and team work individually and in teams where expected performance of each should be
measurable. Seamless personnel management requires careful Performance Appraisal,
documentation and communication. Performance Appraisal also enables leaders and followers to
cooperate and enhance work result and satisfaction (Khanna and Sharma, 2014). The state of the
art of literature on the subject matter and the gap which this study aims to fill is shown in the
statement of the problem section.

1.2 Background of the industry

The Ethiopian Civil Aviation Authority is both a Regulatory authority and a service rendering
organization located at Bole International Airport and has different branch units, at least one in all
Regions including Addis Ababa and Dire Dawa administration except in Harari and Benishangul
Gumuz National Regional States. The Authority has different functional departments one of which
is Air Navigation department in which there are three directorates: Air Traffic Service Directorate,
Briefing Directorate, and Communication, Navigation, & Surveillance Directorate. This particular
study will be conducted on employees at Bole International Airport and Mekelle Air Navigation
branch office.
1.3 Statement of the Problem
As shown in the background of the study, and as will be shown in the review of related literature,
the effects of Performance Appraisal Practice on Organizational Performance and Job Satisfaction
is a widely discussed topic of academic study and industrial practice. However, the level of
attention given to the subject matter among Ethiopian researchers isn’t as good as the case
elsewhere. Nevertheless, it is imperative to briefly present available works on the same topic in
Ethiopia. As will be shown below, studies on performance appraisal and related issues aren’t
evenly distributed in government and private sector organizations and the share of financial
institutions is quite high.

2
Mehari (2017) studied employee’s job satisfaction in private and public sectors in Woldia district.
The main area of investigation was on the predicative capacity of job satisfaction and job
satisfaction differences of employees in the two sectors. The relevance of this study for
Performance Appraisal and related issues is very limited. However, there are studies that directly
tackled the nature of Performance Appraisal, how it is conducts, its relationship with job
motivation, and its impact on performance and factors that undermined the effects of Performance
Appraisal Practice on Organizational Performance and Job Satisfaction (Haile and Premanandam
2017). Trecha (2019), identified that the compensation scheme of workers in Oromia National
Regional State is linked to the result of performance appraisal. In that way, employers manage to
retain employees through equitable salary and benefits and the necessary policies and practices
needed for that purpose are put in place (Terecha et al 2019).
On his part, Hika (2017) studied the practices and challenges of employee’s performance
management in Gamo Gofa Zone. He rightly asserts that there is very little research on the
challenges and practices of performance management in the public sector of Ethiopia which
justifies undertaking this research (Nigatu et al 2017). On their part, Solomon and Gebre (2016)
explored the relationship between employee performance and Performance Appraisal among
workers in Hawassa University administrative staff. The study showed positive and strong
relationship between dependent and independent variables. This means that the performance of
workers increased because 1) there are established performance standards, 2) the established
standards are communicated, 3) actual performance measurements are compared with the standard,
4) appraisals are discussed and feedbacks provided and, 5) corrective measures are taken in light
of Performance Appraisal results (Solomon and Gebre 2016). There is a wider study on the overall
aspect of Performance Appraisal in the public sector in Adigrat by Balaraman et al (2018). The
research assessed the practices and challenges of Performance Appraisal and the fundamental
factors for the performance of Performance Appraisal. It found out that in spite of differences in
knowledge and skills, and hence in job duties and responsibilities, employees are rated based on
similar criteria. It also found critical problems on listening and responding to employee grievances
about the standard of performance appraisal and evaluation. The study noted the lack employee’s
confidence on the neutrality of supervisors (Balaraman et al 2018).

3
There are dozens of performance appraisal researches on the banking sector. Betre (2017) studied
on the effectiveness of performance appraisal in the Commercial Bank of Ethiopia. The purpose
of her study focused on factors that determine the effectiveness of performance appraisal in the
said bank. The study concluded that the effectives of performance appraisal is affected by richness
of feedback, improved performance of employees, purpose of performance appraisal results, job
motivation etc. (Betre 2017 ). Another study revealed significant difference in effect among raters
and ratees about the personal impact of raters on performance appraisal results. Abdurezak and
Tigist (2019) investigated the Employees Performance Management System (EPMS) as practiced
at the Commercial Bank of Ethiopia based on the experience of Bishoftu district area. The study
found out that the EPMS system suffers from poor awareness and training about the requirements
of performance appraisal and its purpose. Moreover, the study revealed that employees lack trust
in EPMS and that they do not have regular feedback and coaching mechanism to enhance their
performance (Kuhil and Tigist 2019). In the same vein, Beki (2019) investigated the link between
performance appraisal and employee productivity in the Commercial Bank of Ethiopia, taking
South Addis Ababa District as a case study. It concludes that the performance appraisal system is
positively related to employee’s productivity (Beki 2019).
Muluwork (2018) studied the nature of performance appraisal in Dashen Bank Share Company.
Like other researchers, he agrees that the idea and practice of PA isn’t given due attention by
researchers in Ethiopia adding that most performance appraisal practices are ineffective because
of subjective criteria, poor rater understanding, and inadequate training. The performance of
employees is rated by their immediate supervisors though employees need to be rated by others
like peers, customers, subordinates etc. which could make the appraisal more balanced. While the
appraisal format covers many aspects, the dominant weight is given to trait. Employees have
different attitude about the number of appraisal that should be conducted in a year, some supporting
biannual while others call for a more frequent appraisal. Employee’s participation in their appraisal
is low and most of them felt that the rating was a punishment mechanism. The main problems
reported are lack of objectivity since most performance criteria aren’t related to jobs, rater bias,
measurement problems etc. (Muluwork 2018).
A research on another private bank was done by Solomon (2016) who assessed performance
appraisal in Abay Bank S.C. It found that the bank has no formal appraisal process. On the other
hand, the performance standard of the bank includes issues like quality, timeliness, quantity, cost

4
effectiveness, and strategic relevance. However, the performance appraisal is poorly coached to
ensure consistency and stability about individual’s level of performance over time. The most
crucial limitations of the bank’s appraisal system relate to rater’s error and situational influence.
The responsible body for employee’s performance appraisal where supervisors take the lion share
by filling appraisal forms. More importantly, the study noted that the bank lacks discussion on
performance results (M. Solomon 2016).

Among sector specific researches on performance appraisal is the work of Mengistu (2018). The
research sought to investigate performance appraisal practices in the Ethiopian Road Authority
based on the case of Kombolcha branch. The findings show that performance appraisal isn’t
undertaken on regular basis and that employees have no information about the purpose of
performance appraisal Moreover, the study concluded that employees are unsure about their
weakness and strength because of lack of confidence in performance raters (Mengistu 2018). A
similar study on the NGO sector in Ethiopia is conducted by Kebre (2016). He explored the general
practice of performance appraisal in Save the Children International. The study found significant
discrepancy between the standards set for the management of performance appraisal and the actual
practice. It noted that the established standards of performance appraisal were not implemented
for their intended purposes as the main concern was fulfilling the requirements for submission to
the HR department (Kebre 2016).

As can be the preceding discussion, the idea and practice of performance appraisal in public and
government organizations isn’t a new phenomenon. Besides, the number of activities tackling
different aspects of performance appraisal is limited. To the best of the writer’s information, no
performance appraisal research was conducted in the Ethiopian Civil Aviation Authority in general
and some domestic and international airports in Ethiopia. As an important employers and
contributor to economic development, studying the performance appraisal system, practices,
intentions, challenges, and achievements would contribute to the sustainable development of the
company- Ethiopian civil aviation, as well as its employees. Therefore, the main problem
statement of this research is addressing this total lack of performance appraisal study in the
Ethiopian civil aviation industry.

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1.4 Basic Research Questions
a. What types of Performance Appraisal practices used in Ethiopian Civil Aviation Authority
Department of Air Navigation?
b. How does the employs perceive the process of performance appraisal at Ethiopian Civil
Aviation Authority Department of Air Navigation?
c. What is the role of Performance Appraisal on organizational Performance at Ethiopian Civil
Aviation Authority Department of Air Navigation?
d. Is there a relationship between Performance Appraisal and job satisfaction at Ethiopian Civil
Aviation Authority Department of Air Navigation?
1.5. Objectives of the study
1.5.1 General objectives of the study
The general objective of this study is to investigate the type and impacts Performance Appraisal
in Ethiopian Civil Aviation Authority Department of Air Navigation and its impacts on
organizational performance and job satisfaction.
1.5.2 Specific objectives of the study
The specific objectives of this study are:
A. Assessing Performance Appraisal practices in Ethiopian Civil Aviation Authority
Department of Air Navigation.
B. Analyzing how the employs perceive the process of performance appraisal at Ethiopian
Civil Aviation Authority Department of Air Navigation.
C. Examining the role of Performance Appraisal on organizational Performance at Ethiopian
Civil Aviation Authority Department of Air Navigation.
D. Describing the relationship between Performance Appraisal and job satisfaction at
Ethiopian Civil Aviation Authority Department of Air Navigation.

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1.6 Definition of Terms
1.6.1 Conceptual definition
Performance appraisal: Performance Appraisals are a systematic way of evaluating the standard of
a worker’s performance (Armstrong, 2006). Performance management: Performance management
can be defined as a strategic and integrated approach to delivering sustained success to
organizations by improving the performance of the people who work in them and by developing
the capabilities of teams and individual contributors (Armstrong, 2006).
Performance Standards: Performance standards define the expected levels of performance, and are
labeled benchmarks or goals or targets— depending on the approach taken (Mathis and Jackson,
2006).
1.7 Significance of the study
This study will have a practical significance to Ethiopian Civil Aviation Authority as a whole and
to department of Air Navigation in partial in identifying or understanding the effects of
performance appraisal practice on Organizational performance and job satisfaction. The general
finding of the study will reflect the effect on Organizational performance and job satisfaction by
the practices of performance appraisal and it will help the organization identify the effect and
providing possible recommendations to fill the gaps that affect the employees in their day to day
operation. It also will serve as reference for concerned management offices.

For planners, it also will help them to effectively plan and schedule the effective human resource
management practices that intended to enhance employees’ motivation and organizational
performance. The study also would have a significant contribution for both strategic and
operational managers on setting plans and targets by considering such effects. It will also help in
providing information for other organizations in identifying the effects of performance appraisal
practice organizational performance and job satisfaction in provision of vital recommendations.
1.8 Delimitation/scope of the study
This study was about the effects of performance appraisal practice on organizational performance
and job satisfaction in Ethiopian Civil Aviation Authority (ECAA) the case of Air Navigation
department. Hence, it did not consider the cases of other departments in the organization and
similar departments other than Air Navigation department located at Bole International Airport
and Mekelle Air Navigation branch office due to only the difficulty to manage for their location,

7
time required to cover the study, and also the significance of outcome of the remaining employees
is less due to their number is low.

The study was conducted at Ethiopian Civil Aviation Authority Department of Air Navigation
(ECAA-AIRNAV). Located at and near Bole International Airport, and also covers Mekelle Air
Navigation branch office. Furthermore, the study was mainly concerned with the effects of
performance appraisal practice on organizational performance and job satisfaction in Ethiopian
Civil Aviation Authority Department of Air Navigation and related issue as shown in the specific
objectives section of this proposal.
1.9 Organization of the study
The study was contained five chapters. Chapter one was the introduction part which Contains the
back ground, the statement of study, objectives of the study, research questions, significance of
the study, definition of key terms and scope of the study.
Chapter two covered all about the review of related literature that includes the empirical and
conceptual framework reviews.
The third chapter was about the research methodology involving the research design, source of
data and collection method, sampling techniques and size, data analysis method and ethical
consideration.
The fourth chapter was also about the discussion, data analysis and interpretation parts. The last
chapter, chapter five, was about the summary, conclusion and recommendation part.

8
Chapter Two: Review of Related Literature
Introduction
The review of related literature is structured in such a way that the researcher can identify pertinent
units of analysis for the study. The main targets of the study are restricted to the issue identified in
the objectives of the study. Accordingly, the survey of related literature is limited to six basic
aspects of Performance Appraisal practice

The first deals with the Performance Appraisal: it’s meaning, concept, rationale, application,
merits and demerits, types of performance appraisal practices, and its perception by the employees
of the organization under study. The second aspect is concerned with organizational practice:
dealing with its contested meaning, and parameters of organizational performance. The third
aspect deals with job satisfaction: definition, and determinants of job satisfaction. The fourth
aspect has to do with the relationship of Performance Appraisal and organizational performance.
The fives aspect tries to deal with the relationship between performance appraisal practice and job
satisfaction. The six and the last aspect of the literature review deals about the relationship of
organizational performance and job satisfaction. The way the survey of literature is made isn’t
argumentative in the sense that the main interest is depicting what has been so far argued by various
researchers about the six aspects identified. However, how existing claims and counterclaims
stands with the insights of this research will be discussed in the presentation and discussion of data
from the studied organizations.

2.1. Performance Appraisal:

2.1.1. Concept, Rationale, Application, Merits and Demerits
This section is concerned with the benefits of Performance Appraisal to different interest groups.
Different scholars have articulated the perceived benefits of Performance Appraisal to various
interest groups. The intention of Performance Appraisal is one thing, how it is done and acted up
on eventually is different. Nonetheless, it is worthwhile to cogently summarize reported rationale
for undertaking Performance Appraisal or what advantages were obtained from the practice.
One of the advantages of undertaking Performance Appraisal is said to be utility to generate
primary information for giving feedback and this is valuable input for future development

9
planning. Performance Appraisal enables managers to grasp the weaknesses, strengths, potentials,
and training needs of employees. Besides, supervisors can follow up the progress of employees
and inform them accordingly. Hence, Performance Appraisal enables supervisors to know how to
counsel employees for better performance. This is because employees might not discover their
own weakness unless supervisors are able to make necessary advice based on informed rating. The
counsel of the supervisors has dual aims- correcting deficient performance while reinforcing good
performances for the future development of both the organization and the employees. Therefore,
Performance Appraisal should be coached in such a way that employees consider it as beneficial
to their own development (Armstrong, 2006).

Another issue of how Performance Appraisal is conducted or practiced is concerned with the
frequency of Performance Appraisal practice. Some noted that the efficiency and effectiveness of
organizational performance depends on the ability to undertake continuous Performance Appraisal
and evaluation. As McGregor (1957) noted, Performance Appraisal is important for appropriate
financial and administrative measures. It enables managers to institute salary increment in light of
Performance Appraisal results enables them to identify areas of improvement in their attitude,
knowledge, skills, and attitude to employees. Ultimately, Performance Appraisal is meant to be
instruments to nurture a high-performance culture for higher organizational effectiveness thereby
promoting the needs and wants of individuals. In other words, Performance Appraisal is useful to
nurture continuous progress in skill, commitment, competence, and motivation. As such,
Performance Appraisal and its management should be taken as the continuous responsibility of
managers and team leaders. A reliable Performance Appraisal can’t be done through by conducting
it once in a year (Armstrong, 2006).
Organizational performance and its resultant efficiency and effectiveness can only be achieved
when individuals are continuously appraised and evaluated. The inability of organization to install
an effective performance appraisal culture undermines their competitive advantage (Obisi, 2011).
Other suggest annual or biannual Performance Appraisal. However, what is more important than
the frequency of Performance Appraisal is how it is administered. It is argued that for a
Performance Appraisal to be effective, appraisees should be openly informed that the objective of
Performance Appraisal is to improve their performance (OTHMAN 2014).

10
The other utility of Performance Appraisal is related to its input for informed decision regarding
status promotion and salary increments. The results of Performance Appraisal can also be valuable
for making informed decisions about recruitment, training, and compensation aspects of
organizational sub-divisions. For a manger to make worthy promotion and compensation there
must exist; a reliable, accurate, timely, and objective oriented Performance Appraisal (Burack,
Elmer and Smith, 1977).

Performance Appraisal is valued for ensuring sustainable development. For an organization to

develop, the competence of its workers must develop continuously. Ensuring the continuous
development of workers can’t be achieved without continuous Performance Appraisal strategy.
For this reason, some argued that `performance management` should be called performance and
development management. Besides, ensuring the continuous development of organizations and
their workforce, Performance Appraisal is valued for responding to the expectations and needs of
clients and the public at large. Because employees should be treated as partners in enterprises, their
needs and wants should be met and for that to happen their voices should be considered. Therefore,
it is necessary to make Performance Appraisal culture conversant with the needs of individuals
and teams in an organization. The last but not least rationale for Performance Appraisal is
concerned with communication and involvement. Performance appraisal is valuable to create the
right atmosphere in which managers and followers engage themselves in a continuous dialogue to
shape expectations and share information on organizational missions, values, and objectives.
Without creating high involvement culture, organizations can hardly bring teams and individuals
together to define and redefine their objectives and ways of achieving them. In effect, high
communication and involvement requires that Performance appraisal should be performed within
an agreed framework of planned goals, competence requirements and standards (Armstrong,
2006).

The above discussion about the essence of Performance appraisal can be summarized according to
the triangular stakeholder analysis suggested by Zachary (2010). According to his analysis, the
three main objectives of Performance appraisal are presented as follows.

11
 1. Performance reviews– this is of interest to the organization since Performance appraisal
help managers discuss with employees work situations and progresses so that they can
identify the strong and weak aspects of the status quo to plan for the future.
2. Potential reviews – this if of interest to the employees’ because Performance appraisal
targets opportunities for promotions; Performance appraisal identity the future status
promotion of employees and deliberates on what should done to that end.
3. Reward reviews. The performance appraisal result serves as input to make sound decision
about rewards such as pay, benefits or promotion and provides feedback.

2.1.2. Types of Performance Appraisal and their Application

There are various modalities of Performance Appraisal. One of these is known as Multi-Source
Feedback or 360 Degree Feedback. In this model, the required data for assessing the performance
of an individual is solicited from concerned and involved stakeholders. It is a means of meeting
criteria set previously. It is designed to ensure the development of workers and their organization.
360 Degree Feedback Performance Appraisal differs from traditional (top-down) method in which
the manager has near monopoly of rating the performance of an employee. In contrast to this, 360
Degree Feedback Performance Appraisal incorporates the views of others (who are directly or
indirectly affected by the jobs of an employee) to generate a fuller picture about individual’s
performance. Hence, a worker can be appraised by his peers, subordinates, managers, customers
or suppliers and vendors or the organization. Moreover, the 360 Degree Feedback gives due
attention to the training needs of individuals. To make Performance Appraisal inclusive of the
view of all, the formant of 360 Degree Feedback includes four components: self-appraisal,
subordinate appraisal, supervisor appraisal, and peer appraisal. In the context of academic
institutions, there is a fifth component- student appraisal (Reddy 2012). To mitigate the personal
influence on the Performance appraisal on a worker when filled by a single manager, the 360
degree appraisal uses intersectional evaluation system. Hence, the model allows supervisors,
subordinates, and peers to appraise and be appraised by one another, besides self-appraising
themselves. In the end, the average value of all appraisals will be considered for various decisions.
The model also makes use of a post-appraisal counsel to synchronize the appraisal results with
better performance in the future. All of this is tied up with the dedication of organizations to win
competitive advantage (Obisi 2011)

12
Some have suggested that in recent years the focus of Performance appraisal changed from strict
appraisal of individual performance to that of a forward-looking approach. The target of the new
approach is enhancing performance and building the capacity of appraisees through a well-
prepared, open, and honest discussion. It is a kind of appraisal where supervisors and subordinates
make face-to-face forum to discuss an employees work is discussed, reviewed and apprised by
another based on a framework which is understood and agreed up on by all. The direction of
appraisal is vertical (as supervisors can be appraised by subordinates and vice versa), and
horizontal in the context of peer appraisal. It can be non-hierarchical when outside stakeholders
are involved in appraising a person.

The mutual appraisal discussion forums should focus on behaviors, outcomes issues, and
problems. Discussions should target improving an appraisee’s growth, motivation, and
performance. In other words, appraisal forums shouldn’t places personal attack and subjective
criticism. The forum should be organized both by the appraiser and appraisee. The appraiser needs
to be skillful and tactful to refrain from offensive remarks and be mindful of the fears, doubts, and
anxieties of appraisees. On their part, appraisees should have a clear picture of what is expected of
them and be able to discuss priorities. They should take the occasion to get rid of their confusions
by receiving feedbacks. They should be aware of their right to be heard and respected. They should
positively accept constructive guidance to meet agreed goals as well as their own development
plans. They should readily to assume responsibility for their performance. In the same way, the
forum needs to be seized by appraisers as opportunity to get firsthand information how the worker
handles his job and to get his potential and needs. He should also motivate the worker (Chartered
Management Institute 2005).

There are many formalities of exciting Performance Appraisal. The Past Oriented Techniques of
Performance appraisals Narrative Techniques include global ratings /essays/ free written methods
and critical incidents methods. In the global rating method, the rater is supposed to offer the general
estimation of the performance with no distinction between performance dimensions. The results
of such kind of performance appraisal are presented as ‘outstanding’, ‘satisfactory, and ‘needs
improvement’. Because this method is deemed to be highly subjective, it is acknowledged to be

13
difficult to make quality decisions (Wiese & Buckley, 1998 cited in (Majid 2016). Because
managers have little time to offer detailed exposition of the ratee, this method is highly restricted
to top level managerial positions whose job contents are highly qualitative and there are very few
people to be appraised.

In the case of critical incident report method, managers keep diary to documents the negative and
positive behaviors of ratees for a long period of time (Mondy & Noe, 2008). This is a method
developed by Filanagan (1954) and has three main steps. The first phase is a ratee is rated for his
worthiness as ‘good’ or ‘bad’. The second is giving such instant evaluations to experts to assign
scale values about the level of desirability for a given job. A test of noteworthy (good or bad) on
the job behaviors is prepared. The third is constructing checklist that contains instances by which
workers are defined as ‘good’ or ‘bad’ workers. According to Hayness (1978), the burdensome
rating procedures of the critical incident method is rendered it unpopular. This is because accurate
implementation of the system undermines the ability of managers to tackle their daily work.

The other Performance appraisal method is known as Forced Choice Method which was developed
after concerted research in the area of military service during WW II Mondy & Noe, (2008). In
this case, a rater is provided with a series of statements about an employee where half of the
statements are favorable while the other half is unfavorable. In each set of four statements, two
appear favorable and two and un-favorable. Then only one of the positive statements is used for
computation and the same applies to the negative statements. Since the rater has no clue about the
values of each statement, the task of computing the final result is given to other people. The value
added or withheld to each statement is based on previous experience about successful and
unsuccessful performance. Although the rater has no clue about the value of each statement he is
forced to choose a statement he/she thinks to be the most representative of an employee (Wiese &
Buckley, 1998). This method is believed to be valuable to reduce bias and enhance accuracy. It is
also reputed for its contribution in establishing objective standards to compare two individuals.
The main limitation of this method is that it forces the rater to choose between two negative
statements thereby forcing them to suggest demeaning comments about a worker (Barret, 1967).
Besides being expensive, the method presupposes that a global standard could exist to measure a
specific performance dimension which is highly disputable (Cascio, 1991; Patten, 1977).

14
The other method is called the Graphical Rating Scales (GRS). In this case, a form containing a
number of employee characteristics and qualities are printed and provided to a rater. The rater
indicates his estimation of the personality traits, outcomes, and job behaviors of the ratee where
the main emphasis is on outcome and job behavior since they are more objective than assessment
of personality traits (Basu, 1988). The rater is expected to rate a worker’s evaluation dimensions
by choosing a numerical scale he believes the ratee is best suited to. Since the method forces the
rater to link appropriate personality trait with vague performance dimensions, the rater is bound to
be full of errors (Bernardin & Smith, 1981, Mufeed & Jenifur, 2015). The positive aspect of the
method is the ease with which trait-rating scales can be developed and administered. Because the
results of Performance appraisal are quantifiable and because the measurement dimensions are
standardized, it helps to give clear comparative picture among individuals and work teams (Cascio,
1991). The method is also valued for not being time consuming (Mondy & Noe, 2008). The
relevance of this method declined because raters focused on previous experience of a ratee rather
than future goals and because they were performed by senior people with little input from
employees.

The other method is called ranking which considered being the simplest of all Performance
appraisals. Since this method was developed for the army, the formant uses five scales to rank its
officers based on physical qualities, intelligence, leadership, personal qualities, and the general
value to the service. First officers are ranked by different raters for their standard of judgment from
the highest to the lowest. Then the average of the raters is used to minimize error (Mufeed, 2011,
2012; Mondy & Noe, 2008, Jenifur, 2014).

There is Performance appraisal method called Confidential Reports which considered being the
most traditional appraisal method still in a number of Indian Business House. In this method the
appraisee weaknesses, strengths and opportunities are evaluated by a supervisor against the
character traits of the appraisee. This method assumes that the supervisor has the most intimate
contact and familiarity with his subordinate so that he is the best to rate the worker more than
anyone else. Although the method in use by some organizations, more and more researchers concur
that the assumption of Confidential Report is flawed (Basu, 1988).

15
A rating method gaining popularity in recent years is called Behaviorally Anchored Rating Scales
(BARS). The method is reputed for placing appraisees in possible alternatives and objective
reality. The method is also called Behavioral Observations Scales (BOS), Behavioral Expectation
Scales (BES, or Mixed Standard Rating Scales (MSRS), which were highly regarded as methods
that gave lasting solutions to the problem of Performance appraisal - rater bias, low reliability and
disputable traditional rating techniques. Although variations of leniency and inter-rate agreement
exist in all Performance appraisal measurement scales, it is difficult to conclude on the superiority
of one rating formant from the other. Nevertheless, compared to measurements that focus on
psychometric properties, Performance appraisal according to BARS produced important
qualitative and concrete findings.

In discussing the how of Performance Appraisal, scholars pointed out five key elements of
Performance Appraisal. The first is measurement which requires evaluating performance in light
of agreed objectives, targets, attitudes, and behaviors. The second is feedback which is concerned
with giving information to employees on their performance rating and suggestions to improve their
future performance. The third is positive reinforcement in which emphasis is made on the strengths
of individuals while making constructive criticism about the way forward. The fourth is exchange
of views where all make frank discussions regarding how things happened the way they did and
how they can support one another in their future career. The fifth is reaching agreement- creating
a common understanding as to what all parties need to do to improve and sustain performance (HR
Solutions (South) Ltd.).

2.1.3. Perception of Employees about Impact of Performance Appraisal

Different studies have been conducted about the attitude of employees on the motive and
mechanism of conducting Performance Appraisal. Some noted that Performance Appraisal is
poorly institutionalized so much so that the result would be disputable. Among the many factors
that undermined the ‘institutional’ nature of Performance Appraisal the most important is said to
be lack of political accountability. For the development ideal or professional public service, there
has to be enabling legal provision, training, and valuable reward system. Since such prerequisites
do not exist, the right atmosphere couldn’t be created to institutionalize Performance Appraisal
16
(Faizal 2005, 1). Faizel’s finding based on a research in Moldova is supported by the findings of a
research in Nigeria. According to a study, in most organizations of Nigeria Performance Appraisal
is conducted in ways characterized by bias. Although employees have good perception about the
scientific merits of Performance Appraisal, they strongly suspect Performance Appraisal because
of the way it is done. Another source of lack of confidence in Performance Appraisal has to do
with the monopoly of Performance Appraisal by high management without the participation of
appraisees or other stakeholders (Kolawole, et al, 2013). Therefore, this is indicative of the same
limitation- poor institutionalization of Performance Appraisal.

Poor institutionalization of Performance Appraisal breeds subjective evaluation results and hence
disputable reward decisions. That being the case, employees are feel uncertainty about their own
performance and doubt the ability of their manager to appraise them. This uncertainty affects
employee’s future performance since the result of Performance Appraisal depends on the
employee’s perception of the manager’s capability to appraise them objectively or preciously
(Khan 2013). The objectivity of Performance Appraisal is disputable since it is not systematic and
regular undertaking. Besides, its subjectivity stems from the personal influences as the confidential
nature of appraisal undermines objectivity and fairness. More often than not, organizations ignore
management by objectives in rating the competence of workers and become victims of personal
prejudices. The result of this kind Performance Appraisal erodes the overall performance of an
individual (Obisi 2011).
2.2. Organizational Performance
2.2.1. Contested Meanings
Measuring organizational performance is impossible without first having a clear understanding of
what it is all about. However, a glance look at the existing literature reveals that the concept of
organizational performance is an extremely disputed one so much so that different scholars have
not reached at a single definition that agreeable to all. That being the case some argued that
organizational performance is a subjective reading of a reality. Hence, it is clear that the parameters
used to measure organizational performance vary according to differing perspectives and
conditions. In most cases, the study of organizational performance is common among commercial
companies though within the same category the concept lacks precise definition (Armstrong.
2006).

17
2.2.2. Parameters of Organizational Performance
In spite of confusions about the real meaning of organizational performance, literature on
organizational performance focus on productivity, efficiency, effectiveness, economy, earning
capacity, profitability, competitiveness etc. This is because such variables can be measured against
organizational objectives. The more an objective is achieved the better is organizational
performance. Measuring organizational performance in terms of set objectives by itself is not
precise since organizations can hardly determine their objectives precisely. In the final analysis,
any discussion about organizational performance is understood to be a relative assessment of
success or failure (Armstrong, 2006).
According to Debore, (2013) organizational performance is nothing other than a comparison of
outcome with that of objectives. However, measuring performance in that way is vague since
objectives and outcomes could vary from one sector to another. On the other hand, Michel Lebas
(1995) holds that organizational performance is something that is future-oriented in which
organizations link components and products in a particular way. In this regard, an organization is
deemed to have successful performance if it realizes the goals determined by the management
body. Viewed in that way, successful performance is attributable to capability and future.

While some argued that organizational performance can be measured as ‘positive’ or ‘negative’,
others insist that performance is not a concrete thing that can be assessed or measured. This
argument stems from the perspective that organizational performance is something that is socially
constructed reality which exists in the minds of people. In spite of such contentions, it seems
widely accepted that organizational performance is rooted in measuring seven performance criteria
that must be followed: effectiveness, efficiency, quality, productivity quality of work, innovation,
and profitability components. Even then, however, organizational performance is a subjective and
interpretive engagement (Lebas, 1995; Whooley, 1996). Since organizational performance is a
matter of complex computing of achievements in those seven areas, having precise measurement
of organizational performance is a daunting task. According to Folan’s theory, the outcome of
performance measurement is affected by environment, the objectives to be achieved and the
relevant and recognizable features. For him, the concept of organizational performance should be
analyzed from different perspectives both qualitatively and quantitatively. This implies that
organizational performance can’t be computed without measuring the performance level of each
individual within the organization or at organization level. Even more, Bernadin (1995) noted that

18
performance is sum of the effects of work on corporate strategic objectives, customer satisfaction,
and economic contributions. In other words, organizational performance is appraising products in
light of inputs and outputs.

Successful performance can’t be achieved unless all efforts are geared towards meeting set
objectives, including customer satisfaction. However, measuring the realization of objectives and
the meeting of customer satisfaction in precise manner is difficult. Nevertheless, in measuring
business performance, Folan (2007) attached primacy to three core considerations. First,
organizational performance should be analyzed by each component of the organizations in its own
respective context of operation. This means that the market performance of an organization should
be analyzed excluding market areas the organization isn’t involved in. Secondly, performance
should be understood as the sum result of different objectives set by the organization rather than
achieving objectives set by other organizations. Thirdly, performance analysis should be restricted
to relevant and recognizable features.

2.3. Job Satisfaction

2.3.1. Definition
Unlike organizational performance, job satisfaction isn’t that much disputed concept. However,
there are slight variations in rendering the meaning of job satisfaction and its indicators. In general
terms, job satisfaction is concerned with employees’ tendency to continue performing their job
with motivation, including the readiness to assume new tasks (Vroom, 1964). According to Vroom
(1964), job satisfaction deals with the effective orientation of workers in their workplace and their
work roles. Job satisfaction can also be understood as a reference to the feeling and attitude of
workers about their work. It is also a reference about the feelings of workers about their work
conditions. Viewed in this way, the job satisfaction of workers could be characterized as positive
or negative (Armstrong, 2006).
The nature of people’s job satisfaction can be surmised from their behaviors such as organizational
citizenship, absenteeism and employee turnover. Hence, if a company seeks to avoid or minimize
absenteeism or staff turnover, it should engage in activities that enhance job satisfaction (Cohen
et al., 2007).

19
2.3.2 Determinants of Job Satisfaction
There are factors that improve job satisfaction. One has to do with the ability of a company to
properly appraise the performance of an employee and offer corresponding recognition and
encouragement (Kithuku, 2012). Job satisfaction can be affected by the reward system of an
organization. A persons job satisfaction can also be influenced by the pleasurable emotional state
he/she cherishes for tackling his/her responsibility very well. On the other hand, employees’ job
satisfaction is a measure of their understanding of the degree to which their workplace endeavors
to realize their values. Hence, it becomes evident that job satisfaction has intrinsic, extrinsic, or
total dimensions. The other determinant of job satisfaction is the complexity of their tasks; the
more complex a tasks the greater job satisfaction and vice versa (Abuhashesh, Al-Dmour, &
Masa’deh, 2019).

According to Abuhashesh et al (2019), there are six basic determinants of job satisfaction. The
first is the level of wages (remuneration). Studies have found a positive relationship between
employee job satisfaction and the level of their income. Others contest that salary increment by
itself has temporary effect on job satisfaction. On the other hand, cutting wages has the effect of
undermining the moral of employees thereby negatively affecting their work performance. This
explains why companies fire people during recession instead of cutting wages Heneman (1992).

The second determinant of job satisfaction is organizational culture. Organizational culture refers
to aspects that make a company unique from other companies, the nature of employee-employer
interaction, how things are done, shared organizational values etc. Depending on the nature of
organizational culture, the job satisfaction and commitment of employees could have positive or a
negative impact on organizational performance. A successful organizational culture motivates
workers to deliver their tasks with zeal and enthusiasm. Good organizational culture makes its
employees feel valued and crucial to their company. An organizational culture that overtly
appreciates and rewards good performance of employees increases their job satisfaction. Job
satisfaction blossoms where organizational culture promotes innovative culture and ideal work
relationship that yields high quality service and product. Good organizational culture not only
induces job satisfaction but also attracts talented workers, besides undermining staff turnover
(Abuhashesh et al, 2019).

20
Job satisfaction is inhibited where organizational culture fails to empower workers which build
distrust and anxiety. In this environment, job satisfaction declines because workers don’t feel
engaged in company planning and operation. Poor estimation of their values to the success of their
company further cripples their job satisfaction. Job satisfaction is poor where organizational
cultures don’t foster team work, unity, and cooperation. On the other hand, in a culture where
managers fail to empower their employees, anxiety and distrust become the norm. Employees
don’t feel involved in the overall company operation, don’t perceive their role as important to the
company, and thus tend to have low interest and satisfaction which negatively affects their
performance (Abuhashesh et al, 2019).

The third determinant is the emotional and behavioral climate of workplace. Job satisfaction is a
matter of an individual’s subjective attitude about his/her job and the employer organization. If
there is pleasurable emotional state in a working environment, job satisfaction increases
concomitantly. Job satisfaction dwindles where the emotional climate of workplace breeds anxiety
and boredom. The emotional/behavioral aspects of job satisfaction or dissatisfaction can be
reflected in terms of happiness, anxiety, boredom, and excitement, early arrival, tardiness, working
late, or faking illness (Kithuku, 2012)

The fourth determinant of job satisfaction has to do with Training and Development. Thanks to
globalization and dynamic competition in international business, companies are forced to change
their leadership and technology. They are forced to compete for talented workers and retain them.
Consequently, employees are expected to assume distinct duties and tackle them very well. This
can’t be realized without robust training and development facility for employees to increase
employee’s accuracy role, reduce conflicts among employees, and enhance the on-going learning
process. Ultimately, Training and development enhance the confidence of employees thereby
improving their job satisfaction (Abuhashesh et al, 2019).

The fifth determinant of job satisfaction relates to opportunities of Promotion. Job satisfaction
increase to the extent a company offers vertical internal job mobility entitling employees for higher
positions and remunerations. Job satisfaction declines the more people stay in the same position

21
holding the same responsibility for many years. Promotion, besides offering higher income and
higher positions, makes people enthusiastic because it gives them tangible evidence that their hard
work and loyalty are recognized and rewarded. This high self-esteem in turn induces workers to
deliver their responsibilities more efficiently and confidently. Conversely, high employee trust and
loyalty would enable a company to realize its objectives and long-term market success. In short,
the logic of promotion lies in upholding the principle of merit which encourages workers to work
harder and remain loyal to their company (Abuhashesh et al, 2019).
The six important factor of job satisfaction is Job Security which refers to employees’ sense of a
more secure tenure in their job over years. More often than not, workers prefer a job which they
can occupy for a long time. Workers value job security because it is directly related to their social
safety. However, the relationship between job security and performance is disputed. While some
noted that a short term job security motivates people to work hard to sustain their high social status,
others posit that short term job security reduces employee commitment, satisfaction, and
performance (Ashford et al. 1989). Others (Rosow & Zager 1985), found no relationship between
job insecurity and job performance.

2.3.3. Job Satisfaction and Organizational Performance

Available literature on the relationship between job satisfaction and organizational performance
has different claims. Some researchers are of the view that job satisfaction is a cardinal factor of
organizational success since the efficiency and effectiveness of organizations can’t be conceived
outside of a workforce that happy about its job. This paradigm posits that human beings can’t be
considered as mechanical operators devoid of their own personal needs, wants, and desires. Hence,
so long as the people’s job harnesses their personal needs and wants their job satisfaction increases
accordingly. On the other hand, people’s job satisfaction is the result of success in performing a
given task (Locke and Latham, 1990). In both cases, however, job satisfaction is vital for
organizational performance by promoting productivity and loyalty while undermining absenteeism
(Bakotić, 2016).

Other researchers reported that there is no strong relationship between job satisfaction and
organizational productivity. The reason for this argument holds that satisfied workers aren’t
necessarily the best performers. This view also assumes that more than job satisfaction reward

22
mechanisms make people more productive because reward increases their self-esteem and sense
of acceptance. However, whether satisfaction leads to performance or the other way around is still
a debatable issue (Luthans, 1998).
Job satisfaction is also considered as a critical factor of organizational performance from the
perspective that job satisfaction enhances employee loyalty and there are three types of loyalty.
The first is affection loyalty which refers to employee’s emotional attachment to their company.
The second is normative loyalty which refers to workers conviction that they owe something to
their organization. The third is continuity loyalty which refers to a situation that worker must be
loyal to their company because they can’t get employment opportunity elsewhere (Agyare, 2016).

The role of job satisfaction to organizational performance is seen in terms of the impact of the
former on work absenteeism. Here the argument is that absenteeism can be tackled by increasing
employees’ job satisfaction. While high job satisfaction doesn’t guarantee low absenteeism it is
believed that low job satisfaction surely triggers high absenteeism (Agyare, 2016).

Studies on the link between job satisfaction and organizational performance make a distinction on
the role of the former on individual performance and organizational performance. This is because
organizational performance isn’t necessarily the cumulative result of individual performance.
While assessing the role of individuals job satisfaction on organizational performance is difficulty
to figure out, many researchers concur that there is a positive correlation between job satisfaction
and individual performance (Judge et al, 2001). The relationship between individual job
satisfaction and organizational performance is complex because the latter is the outcome of all
conditions, circumstances, and factors internal and external to an organization (Wright &
Cropanzano, 2000). Therefore, it is futile to think that the impact of job satisfaction on
organizational culture and hence organizational performance can be measured in empirical terms.
However, some noted that job satisfaction as a dependent variable is positively related to
independent variables like promotion, fairness, feedback, and clarity of roles (Agyare, 2016). In
any case, it is claimed that there is notable relationship between job satisfaction and organizational
performance rather than between organizational performance and job satisfaction. This implies
that organizational performance might not increase job satisfaction and this could be the result of
organizations disinterested in the personal needs and wants of employees (Bakotić, 2016).

23
It is true that job satisfaction could induce desirable work behaviors that can boost organizational
performance. For instance satisfied workers feel that their work gives them variety, challenge,
autonomy, good pay, pleasant colleagues etc. under this work environment, satisfied works devote
more private time to their work, they tend to be committed and creative, they are determined to
overcome challenges, and would be ready to help their superiors and colleagues. However, in the
final analysis, there is no doubt that job satisfaction and valuable factor for organizational behavior
though the relationship between job satisfaction and organizational performance isn’t direct and
simple (Bakotić, 2016).

2.4. Performance Appraisal and Organizational Performance

Unlike the relationship between organizational performance and job satisfaction, scholars seem to
have reached consensus on the role of Performance Appraisal and organizational performance.
Some argued that Performance Appraisal has strong influence on organizational performance.
However, the relationship between the two isn’t simple and direct as it is influenced by the three
types of employees’ loyalty to their company: affective, continuance and normative, as discussed
above (Butali & Njoroge, 2018).

According to Butali & Njoroge,(2018) Performance Appraisal determines organizational behavior

and hence organizational performance because the success of organizations can’t be imagined
outside of capable workforce and the creation of such a capable workforce depends on sound
Performance Appraisal system. Organizations that failed to institute rigorous Performance
Appraisal strategy failed to achieve competitive advantage. What is valuable about the relationship
between Performance Appraisal and organizational performance is the conduct of the Performance
Appraisal itself. Organizational success can’t be achieved in a Performance Appraisal system that
is prone to personal influences which deters objectivity and fairness.

One factor for poor Performance Appraisal system is that organizations implement it ignoring
management by objective thereby opening room for personal prejudices. This kind of Performance
Appraisal erodes the productivity of appraises instead of building their capacity. Moreover,
Performance Appraisal might not lead to organizational success where the appraisal system allows
24
top down rating. Organizations that implement 360 degrees appraisal method permit rating
between and among superiors and subordinates, besides self-appraisal so that only the average
result can be used for administrative decision. Besides, this appraisal system gives due attention
to post appraisal dialogue and counseling on identified strengths and weaknesses to chart the
future. By inducing managers to value the opinions of employees, the 360 appraisal system helps
managers devise an informed way of securing competitive advantage (Obisi, 2011).

2.5. Performance Appraisal and Job Satisfaction

Scholars are less divided on the relationship between Performance Appraisal and job satisfaction.
While the causal link between the two is hardly contested, the focus isn’t on Performance Appraisal
itself but its quality. Since factors that undermine the objectivity of Performance Appraisal systems
are discussed in section 2.1., the focus here is how a sound Performance Appraisal system nurtures
job satisfaction (Iqbal, Ahmad et al, 2013).
Some noted that a good performance appraisal enhances job satisfaction and work performance,
besides reducing absenteeism and turnover rates. Benefits of well managed Performance Appraisal
include high work motivation, generation of new insight about staff and supervisors, objective
distribution of rewards, better familiarization about the self and the other etc. A good Performance
Appraisal system also provides clear training needs and leadership development directions.
Empirical studies also revealed a positive relationship between performance appraisal and
employee’s performance (Iqbal, Ahmad et al, 2013 cited in (Butali & Njoroge, 2018)). From this,
we can surmise that high employee performance was the result of job satisfaction cultivated
through effective Performance Appraisal system.
Performance Appraisal also indirectly builds job satisfaction in a sense that the outcomes of
training based on Performance Appraisal can make workers more conversant with their duties and
hence more satisfied. On the other hand, employees’ job satisfaction or performance can be
affected by the level of rating (Butali & Njoroge, 2018). Besides, as a dependent variable, job
satisfaction has different relationship about different items of Performance Appraisal. A study
found that 1% increase in the fairness of the appraisal increases employees’ job satisfaction by
about 60%. In the same way, 1% increase in promotion increases job satisfaction by 48%.

25
Likewise, the clarity of roles, employees’ commitment, and feedback have their contribution to
job satisfaction (Agyare, 2016).

Researches on organizational culture have noted the relationship between Performance Appraisal
and job satisfaction. According to a research in Cognitive Psychology, assigning challenging but
measurable goals increases job satisfaction and organizational performance as it help both align
their respective goals. Moreover, a goal-setting theory holds that a goal achievement level is
dependent on employees’ job satisfaction. This explains why companies capitalize on the
remuneration system for achieving their goals and the remuneration system is directly tied with
Performance Appraisal results. Performance based pay increment increases overall job satisfaction
(Heywood & Wei, 2006; Green & Heywood, 2008 cited in Kampkötter, 2014).
According to a study, employees who received formal Performance Appraisal got ‘…a positive
and both economically and statistically highly significant effect on job satisfaction’. Performance
Appraisal has positive relationship with job satisfaction when it has financial consequences while
it has no statistically significant relationship when Performance Appraisal has no monetary
outcomes. A Performance Appraisal with monetary outcomes on average increases income
satisfaction by 2.4% which is statistically and economically highly significant (Kampkötter, 2014).

26
2.6 Conceptual Framework
The conceptual frame work was depicted the relationship between independent variable
(performance appraisal practice) on the dependent variables (organizational performance and job
satisfaction) as bellow. Dependent variables

Organizational performance
Independent variable
• Quality of work
• Productivity
• Efficiency
• Effectiveness
Performance appraisal • Contribution to the
practice economy
• Profitability

Job satisfaction

• Mechanisms of
job satisfaction
• Performance
appraisal & job
satisfaction
perception

Figure 2. 1 Conceptual framework

27
Chapter Three: Research Design and Methodology
3.1. Introduction
This study had been conducted using both the qualitative and quantitative research methodology
by designing specific questionnaires to test the effects of performance appraisal practice on
organizational performance and job satisfaction at the Ethiopian Civil Aviation Authority the case
of Air Navigation Department.
3.2. Research approach
This study was used mixed research method using a questionnaire to collect a primary data form
the target sample of the employee chosen. The study was tried to cover the total number of
employee under the department of Air Navigation (171 employees from Bole International Airport
and 25 employees from Mekelle branch office), due to the number of the total employee under
study was low and if possible covering the total population guaranty the probability of the outcome,
it is good to use the whole population for study. Due to the current outbreak of Corona disease
(COVID-19), the collection of data was not smooth to cover the total target population though it
was covered by using different method both direct contact and using different social media and
covered all 196 targets was successfully reacted.
3.3. Research Design/Type
The study was intended to explore the relationship between the independent variables’
performance appraisal practice and dependent variables organizational performance and job
satisfaction. The study was used descriptive research design to examine the relationship among
the variables. This study was both a quantitative & qualitative research, since this research study
was conducted to investigate the effects of performance appraisal practice on organizational
performance and job satisfaction in Ethiopian Civil Aviation Authority the case of Air Navigation
Department.
3.4. Sampling design
Ethiopian Civil Aviation Authority has a total of 588 employees. And the sample under study was
all the employees of the three Directorates under the Air Navigation Department both at Bole
International Airport and Mekelle branch office: Employees of ATS Directorate had
101employees at Bole International Airport and 9 employees at Mekelle branch office,
Communication and Surveillance Directorate had 51 employees at Bole International Airport and

28
9 employees at Mekelle branch office, and Briefing Directorate had 23 employees at Bole
International Airport and 3 employees at Mekelle branch office. The sample under study was
101+51+23=175 employees at Bole International Airport, and 9+9+3= 21 employees at Mekelle
branch office which summed up 175+21= 196 employees. This study was used all 196 employees,
since the numbers of employees are not large and, it was a census sampling technique (HRM
department of Ethiopian Civil Aviation Authority, 2020).
3.5. Sources of Data
The data which helped to find the important information for the case under study was collected
from 196 employees of Ethiopian Civil Aviation Authority Department of Air Navigation under
which three functional directorates are operating and the employees selected for this study was
employees of the mentioned department which was 171 employees working at Bole International
Airport and 25 employees working at Mekelle branch office as of the target. All 196 target
population from both Mekelle & Addis Ababa international Airport was covered through different
social media like internet, messenger, & Telegram.

3.5.1. Primary source

Data was collected from employees of Ethiopian Civil Aviation Authority Air Navigation
Department under which three Directorates namely ATS Directorate, Communication &
Surveillance Directorate, and Briefing Directorate are functional.
Quantitative data was used for this particular research since it allows a more empirical observation
of a phenomenon. It can refer to research about person’s lives, lived experiences, behaviors,
emotions, and feelings as well as about functioning organization, societal movements, phenomena
of culture, and interactions between nations (Wallman, 2011).
3.6 Data Collection Instrument
The data used in this study was a primary data which had been collected from sample members
through closed questionnaires with 1-5 Likert Scale (1= Strongly Disagree, 2= Disagree, 3=
Moderately Agree, 4= Agree and 5= Strongly Agree). The structured questionnaire was circulated
by the researcher through Social media communication of the selected employees of the Ethiopian
Civil Aviation Authority Air Navigation Department. The questionnaire was in the English
language since all the employee under study was a minimum of first degree graduate, there was
no suspected gap of understanding to create problem that may occur to fill the questionnaire & it
was carried out perfectly.
29
For this study, the researcher was used questionnaire as data collection instrument. The
questionnaire had two parts: part one was for to include personal data without mentioning name
of the respondent filling the questionnaire, and part two the specified questions that designed to
find the right important information for the case under study.
3.7 Data analysis methods
After collecting the distributed questionnaire, data was properly organized and codified. Following
this, the coded data was fed to SPSS Version 20 software program. The data was analyzed using
descriptive statistics (such as mean, median, and standard deviation) and inferential statistics
(correlation and regression). Correlation analysis statistical tools were employed to examine the
relationship between employee performance appraisal and employee perception. Pearson moment
correlation, with 1 - tail was used to determine the direction and strength of the relationship
between the variables. It is mostly used method for investigating relationship among variables
Khan et al., (2014).
3.8 Validity and reliability
As stated by Hair et al., (2007) reliability implies the extents to which some variables or set of
variables is consistent in what it is intended to measure”. Reliability analysis used to measuring
questionnaire’s consistency. Validity and reliability of the measures need to be assessed before
using the instrument of data collection (Hair et al., 2003). Validity concerns whether an instrument
can accurately measure, while reliability pertains to the consistency in measurement.
This study was used consistent questionnaire. To test the validity is conducted receiving feedback
from potential respondents. Reliability test is conducted by distributing 10 questionnaire to
respondents and tested by using cronbach’s alpha.
Table 3.1. Reliability Statistics

Reliability Statistics
Cronbach's Alpha N of Items
Performance Appraisal Practice .892 10
Organizational Performance .958 6
Job Satisfaction .701 6

Table 3.1 showed that reliability statistics. To test the reliability statistics Cronbach’s Alpha was
employed. Cronbach’s alpha ranges between 0 and 1. If Performance appraisal practice is reliable

30
at .892 with 10 items, organizational performance is reliable at .958 with 6 items and job
satisfaction is reliable at .701.
3.9 Research Ethics
In this study, issues relating to the ethical conduct of research such as informed consent, privacy
anonymity & confidentiality were upheld. The six important ethical issues according to Arifin
(2018): Anonymity and confidentiality, Informed consent and voluntary participation, the secrets
of data, Language and traditional gap, Handling and Managing stress and Ethical behavior and
access to participants, during Interview was conducted. Therefor target employees were given full
information on the purpose and objectives of the study in order for them to make informed
decisions as to whether to partake or not. Furthermore, all information concerning the identity and
personality of respondents was treated with very confidentiality. In addition, all information
gathered was used only for the sole purpose of this study.

31
 CHAPTER FOUR
4.1 Discussion, Data analysis and Interpretation
The main purpose of this study was to examine the effect of performance appraisal on
organizational performance and job satisfaction in Ethiopian Civil Aviation Authority the case of
Air Navigation Department. The study targeted all 196 respondents from Bole international
Airport and Mekelle Air Navigation branch office and all employees reacted to the questionnaire.
Respondents from different age group, educational background, and years of service participated
in the data collected. The Result from the field survey summarized as follows.

4.1. Socio- Demographic Characteristics of respondents

Under this section the researcher tried to include the following variables work area, sex, age,
educational level, work experience, rate of PA carried out in the organization. The result from the
field survey given as follows.

Figure 4.1. Respondents work area

200

150

100

50

0
Mekelle Addis Ababa Total
Frequency 18 178 196
Percent 9.2 90.8 100.0

Source: Field survey, 2020

32
Figure 4. 2. Sex and Educational level of respondents

200
180
160
140
120
100
80
60
40
20
0
Male Fmale Total Bachilor Masters Total
Degree Degree
Frequency 189 7 196 152 44 196
Percent 96.4 3.6 100.0 77.6 22.4 100

Source: Field survey, 2020

Figure 4.2 illustrated that sex and educational background of respondents. In this regards
189(96.4%) of the respondents were in the male sex category while 7(3.6%) of the respondents
were female sex Category. Moreover, 152(77.6%) of the respondents were bachelor degree holders
whereas 44(22.4%) of the respondents were Master’s degree holders .From the above information
it is possible to conclude that the majority of respondents were male sex category and Bachelor
degree holders in their educational background.

33
Figure 4.3 Rate of PA carried out in the organization

Total

Biannually

Once a year

0 50 100 150 200

Once a year Biannually Total

Percent 6.2 93.8 100
Frequency 12 183 195

Source: Field survey, 2020

Figure 4.3 showed that how often PA carried out in the organization. In this regards, 183(93.8%)
of the respondents said PA is carried out in the organization biannually whereas 12(6.2%) of the
respondents said PA is carried out in the organization once in a year. From the above information
it is possible to say that PA is carried out biannually in the organization

4.2 Type of performance appraisal practiced

To answer the first research question ‘what types of Performance Appraisal practices used in
Ethiopian Civil Aviation Authority Department of Air Navigation?’ and to fulfill the first research
objective ‘Assessing Performance Appraisal practices in Ethiopian Civil Aviation Authority
Department of Air Navigation’ as of the 196 respondent’s answer the analyzed descriptive
statistics table depicted below. From the table all 196 targets are responded to the particular
question and most of them selected two options out of the seven types of Performance.

Table 4.1 Type(s) of PA practiced during PA practices

Frequency Percent
Multi-Source Feedback or 360 Degree
11 5.6
Type(s) of PA practiced Feedback
during PA practices Forward-looking approach 9 4.6
Narrative Techniques 7 3.6

34
 Incident report method 15 7.7
Forward-looking approach & Incident
154 78.6
report method
Total 196 100.0
Source: Field survey, 2020

Table 4.1 showed that types of performance appraisal. In this regards, 154(78.6%) of the
respondents reported that Forward-looking approach and incident report method is the types of PA
whereas 15(7.7%) of the respondents said incident report method is types of PA practiced.
Moreover, 11(5.6%) of the respondents said Multi-Source Feedback or 360 Degree Feedback is
the types of PA practiced in the organization. From this we can conclude that Forward-looking
approach & incident report method was a type of performance appraisal practiced.

4.3. Supposed purposes, values, & assumptions, of PA practice

This section deals with supposed purposes, values assumptions of PA practice. To describe
statements were designed and the result presented as follows.

Table 4.2. Supposed purposes, values, & assumptions, of PA practice

Descriptive Statistics
N Ran Mini Max Mean Std. Vari
ge mum imu Devi ance
m ation
Statis Stati Stati Stati Statis Std. Stati Stati
tic stic stic stic tic Error stic stic
To generate primary information for 1.19 1.43
196 4 1 5 2.78 .086
giving feedback 9 7
It valuable input for future 1.13 1.29
196 4 1 5 2.64 .081
development planning. 9 7
PA is important for appropriate 1.33 1.78
196 4 1 5 2.56 .095
financial and administrative measures 6 6

35
PA is used to institute salary increment 1.32 1.74
196 4 1 5 2.29 .094
in light of PA results. 1 6
PA is according to on organizational 1.07 1.16
196 4 1 5 2.47 .077
missions, values, and objectives 8 3
Appraises are openly informed that the
196 4 1 5 2.00 .064 .894 .800
objective of Performance Appraisal
Valid N (listwise) 196

Source: Field survey, 2020

Table 4.2 showed that Supposed purposes, values, & assumptions, of PA practice. The highest
mean was 2.78 which explained that to generate primary information for giving feedback. The
second highest mean was 2.64 which expresses that it valuable input for future development
planning. The third highest mean was 2.56 explains that PA is important for appropriate financial
and administrative measures. From the above information it is possible to conclude that the
purpose of PA practice is generating primary information for giving feedback.

Table 4.3. Test of Supposed purposes, values, & assumptions, of PA practice

N Skewness Kurtosis
Statisti Statisti Std. Statisti Std.
c c Error c Error
To generate primary information for giving
196 -.064 .174 -1.156 .346
feedback
It valuable input for future development planning. 196 .147 .174 -.869 .346
PA is important for appropriate financial and
196 .896 .174 -.571 .346
administrative measures
PA is used to institute salary increment in light of
196 .488 .174 -1.065 .346
PA results.
PA is according to on organizational missions,
196 .439 .174 -.651 .346
values, and objectives

36
Appraises are openly informed that the objective
196 .825 .174 .920 .346
of Performance Appraisal
Valid N (listwise) 196
Source: Field survey, 2020

Table 4.3 showed that Test of Supposed purposes, values, & assumptions of PA practice. Most of
Skewness result is positive and near to 1. This implies that the statement designed has the positive
effect. Moreover, kurtosis result is negative and has negative effect.

4.3 Employee perceptions for performance appraisal practiced

As the second research question ‘How does the employs perceive the process of performance
appraisal at Ethiopian Civil Aviation Authority Department of Air Navigation?’ and research
objectives ‘Analyzing how the employs perceive the process of performance appraisal at Ethiopian
Civil Aviation Authority Department of Air Navigation’, questions that can help assessing the
employees perception toward the performance appraisal was analyzed by SPSS and the output was
depicted in below tables.

Table 4.4. Employee perceptions for performance appraisal practiced

Statements N Range Minimu Maxi Sum Mean Std. Varian
m mum Deviat ce
ion
Statistic Statistic Statistic Statist Statist Statist Std. Statist Statist
ic ic ic Error ic ic
Employees are given reliable, accurate, timely,
and objective information about the purpose of 196 4 1 5 483 2.46 .084 1.174 1.378
Performance Appraisal data
Performance Appraisal is conducted in ways
196 3 2 5 806 4.11 .071 .991 .982
characterized by bias.
Employees lack confidence in the process of PA 196 3 2 5 841 4.29 .059 .830 .689
The objectivity of PA undermined because it
196 3 2 5 807 4.12 .056 .779 .607
isn’t a systematic and regular

Valid N (listwise) 196

Source: Field survey, 2020

Table 4.4 showed that employee perceptions for performance appraisal practiced. The calculated
mean was 4.29 explained that Employees lack confidence in the process of PA whereas the second

37
highest mean was 4.12 which explains that the objectivity of PA undermined because it isn’t a
systematic and regular. The third highest mean was 4. 11 explain that Performance Appraisal is
conducted in ways characterized by bias. From the above information it is possible to conclude
that Employees lack confidence in the process of PA.

Table 4.5. Test of Employee Perception for Performance Appraisal Practiced

Statements N Skewness Kurtosis

Statistic Statistic Std. Statistic Std.
Error Error
Employees are given reliable, accurate, timely, and objective
196 .336 .174 -1.044 .346
information about the purpose of Performance Appraisal data
Performance Appraisal is conducted in ways characterized by
196 -1.122 .174 .298 .346
bias.
Employees lack confidence in the process of PA 196 -.644 .174 -1.087 .346
The objectivity of PA undermined because it isn’t a systematic
196 -.339 .174 -.895 .346
and regular

Valid N (listwise) 196

Source: Field survey, 2020

Table 4.5 showed that test of employee perception for performance appraisal practiced. Employees
under target responded that the performance appraisal conducted characterized by bias, employee
lack confidence in the process, objective undermined for it is not systematic and irregular, and
employees do not believe that they are given reliable, accurate, timely, and objective information
about the purpose of Performance Appraisal data. The Skewness and kurtosis indicates closer to -
1 for its negative effect

4.4. Performance appraisal and organizational performance

The third research question and research objectives for doing this research was’ what is the role of
Performance Appraisal on organizational Performance, and ‘assessing the role of performance
appraisal practices’. To do this this research did two analyses; supposed purposes of performance
appraisal and organizational performance: the descriptive statistical analysis shown in the tables
presented below.
One of the advantages of undertaking Performance Appraisal is said to be utility to generate
primary information for giving feedback and this is valuable input for future development
planning. Performance Appraisal enables managers to grasp the weaknesses, strengths, potentials,

38
and training needs of employees. Besides, supervisors can follow up the progress of employees
and inform them accordingly. Hence, Performance Appraisal enables supervisors to know how to
counsel employees for better performance. This is because employees might not discover their
own weakness unless supervisors are able to make necessary advice based on informed rating
(Armstrong, 2006).

Table 4.6. Organizational Performance

N Ran Mini Max Sum Mean Std. Varia
Statements ge mu imu Devia nce
m m tion
Stati Stati Stati Stati Statis Statis Std. Statis Statis
stic stic stic stic tic tic Error tic tic
Organizational performance is good in
196 4 1 5 576 2.94 .070 .985 .971
Quality of work
Organizational performance is good in
196 4 1 5 548 2.80 .077 1.071 1.148
Productivity
Organizational performance is good in
196 4 1 5 564 2.88 .070 .985 .970
Efficiency
Organizational performance is good in
196 4 1 5 527 2.69 .077 1.077 1.159
Effectiveness
Organizational performance is good in
196 4 1 5 616 3.14 .089 1.253 1.569
Contribution to the economy
Organizational performance is good in
196 4 1 5 652 3.33 .086 1.201 1.442
Profitability
Valid N (listwise) 196
Source: Field survey, 2020

Table 4.6. Depicted that organizational performance in this regards, the highest mean value was
3.33 which is noted that organizational performance is good in Profitability. The second highest
mean value was 3.14. The next highest mean value was 2.94 which are pointed out that
organizational performance is good in quality of work. Therefore, from the above information it is
possible to conclude that organizational performance is good in profitability.

39
Table 4.7. Test of organizational performance
Statements N Skewness Kurtosis
Statistic Statistic Std. Statist Std.
Error ic Error
Organizational performance is good in Quality of work 196 .579 .174 -.510 .346
Organizational performance is good in Productivity 196 .391 .174 -.256 .346
Organizational performance is good in Efficiency 196 .151 .174 .377 .346
Organizational performance is good in Effectiveness 196 .573 .174 -.277 .346
Organizational performance is good in Contribution to the
196 .075 .174 -1.105 .346
economy
Organizational performance is good in Profitability 196 -.132 .174 -.732 .346
Valid N (listwise) 196
Source: Field survey, 2020

Table 4. 17 showed that test of organizational performance. From the analysis of descriptive
statistics supposed purposes of the performance appraisal practice calculated mean 2.46 falling in
poor category closer to average. On the Skewness and Kurtosis, it also shows average of negative
1: having negative effect of on organizational performance. By the same token with slight
differences the organizational performance calculated with the average output 2.96 closer to 3:
interpreted that the organizational performances tend to be average regardless of in Quality of work,
Productivity, Efficiency, Effectiveness, Contribution to the economy, and Profitability.

4.5 Mechanisms of Job Satisfaction

The last research question and objectives of this research was to find out the relationships between
performance appraisal and job satisfaction by coiling research question and objectives: ‘Is there a
relationship between Performance Appraisal and job satisfaction,’ and ‘describing the relationship
between Performance Appraisal and job satisfaction’, respectively. As of Agyare, (2016), Job
satisfaction is considered as a critical factor of organizational performance from the perspective
that job satisfaction enhances employee loyalty.

40
Table 4.8. Mechanisms of Job satisfaction
Statements N Rang Mini Maxi Sum Mean Std. Varia
e mum mum Devia nce
tion
Statis Statis Statis Statis Statis Statis Std. Statis Statis
tic tic tic tic tic tic Error tic tic
Employer does and offers corresponding
196 4 1 5 521 2.66 .114 1.601 2.565
recognition and encouragement
Employer attempts to increase job
196 4 1 5 497 2.54 .106 1.483 2.199
satisfaction by attractive reward system
The employer empowers workers thereby
196 4 1 5 434 2.21 .071 .995 .990
undermining distrust and anxiety.
The employer involves workers in
196 4 1 5 516 2.63 .102 1.428 2.039
company planning and operation.
The employer fosters team work, unity,
196 4 1 5 572 2.92 .101 1.412 1.993
and cooperation.
You offered high job security to retain
196 4 1 5 513 2.62 .106 1.482 2.196
your job over years
Valid N (listwise) 196
Source: Field survey, 2020

Table 4.8 revealed that mechanisms of job satisfaction. In this regards, the highest mean was 2.92
which was explained that the employer fosters team work, unity, and cooperation. The second
highest mean was 2.66 which are expressed as employer does and offers corresponding recognition
and encouragement. The third highest mean was 2.63 which are noted as the employer involves
workers in company planning and operation. From the above information it is possible to say
employees foster team work, unity, and cooperation.

41
Table 4.9. Test of Mechanisms of job satisfaction

Statements N Skewness Kurtosis

Statistic Statistic Std. Statistic Std.
Error Error
Employer does offer corresponding recognition and
196 .542 .174 -1.376 .346
encouragement
Employer attempts to increase job satisfaction by
196 .712 .174 -.991 .346
attractive reward system
The employer empowers workers thereby
196 .442 .174 -.561 .346
undermining distrust and anxiety.
The employer involves workers in company planning
196 .327 .174 -1.265 .346
and operation.
The employer fosters team work, unity, and
196 .411 .174 -1.333 .346
cooperation.
You offered high job security to retain your job over
196 .614 .174 -1.092 .346
years
Valid N (listwise) 196
Source: Field survey, 2020

Table 4.9. Showed that test mechanisms of job satisfaction. The Kurtosis average was -1.286:
indicating that it has the negative effect. Finally the relationship of performance appraisal and job
satisfaction calculated and showed that 2.73 which under the category of poor slightly closer to
neutral but within poor range. Both the Kurtosis and Skewness determine that it has the negative
effect.

4.6. Job Satisfaction

Job satisfaction is a pre-requisite for employee performance in any organization. It is important
for both the employee and the employer. For the employee, job satisfaction gives them a sense of
security and fulfillment. In return, it leads to employee commitment, decreased absenteeism and
reduced employee turnover. For the employer, employee job satisfaction ensures committed staff
and stable workforce which reduce cost of recruitment and training. According to Stogdill (1965),

42
successful organizations consider worker morale and job satisfaction an output just as important
as productivity.
Locke (1996) defines job satisfaction as a pleasurable or positive emotional state resulting from
the appraisal of one’s job or job experiences. Schneider and Snyder (1975) on the other hand
defined job satisfaction as a personal evaluation of conditions present in the job, or outcomes that
arise as a result of having a job. Job satisfaction thus, has to do with an individual’s perception and
evaluation of his job, and this perception is influenced by the person’s unique circumstances like
needs, values and expectations. People will therefore evaluate their jobs on the basis of factors,
which they regard as being important to them.

Table 4.10 Job satisfaction

Statements N Ran Mini Max Sum Mean Std. Variance
ge mum imu Deviati
m on
Statis Stati Statis Stati Stati Statis Std. Statistic Statistic
tic stic tic stic stic tic Erro
r
You have positive feeling or attitude towards
196 4 1 5 705 3.60 .111 1.548 2.396
your work
You have positive feeling or attitude towards
196 4 1 5 473 2.41 .108 1.518 2.305
your work condition
You feel that you have long term job security 196 4 1 5 504 2.57 .091 1.269 1.610
Your absenteeism is low 196 3 2 5 794 4.05 .069 .959 .920
The level of employees’ turnover low 196 4 1 5 489 2.49 .098 1.368 1.872
The level of workers anxiety and boredom is low 196 4 1 5 459 2.34 .097 1.351 1.826
Valid N (listwise) 196
Source: Field survey, 2020

Table 4.10 showed that job satisfaction. In this regards, the highest mean value was 4.05 which is
noted that respondents are absenteeism is low. The second highest mean value was 3.60 which are
provided as respondents have positive feeling or attitude towards the work. Thus, from the above
information it is possible to say that respondents’ absenteeism is low. It implies that the workers
are satisfied and never absent form their job.

Table 4.11. Test of job satisfaction

43
Statements N Skewness Kurtosis
Statist Statist Std. Statisti Std.
ic ic Error c Error
You have positive feeling or attitude towards your work 196 -.468 .174 -1.397 .346
You have positive feeling or attitude towards your work
196 .669 .174 -1.015 .346
condition
You feel that you have long term job security 196 .591 .174 -.744 .346
Your absenteeism is low 196 -.279 .174 -1.506 .346
The level of employees’ turnover low 196 .120 .174 -1.544 .346
The level of workers anxiety and boredom is low 196 .428 .174 -1.366 .346
Averages 196 0.176 -1.262:
Source: Field survey, 2020

Table 4.11 showed Test of job satisfaction. The Kurtosis average was -1.262: indicating that it
has the negative effect. The average Skewness was 0.176. Both the Kurtosis has negative effect
whereas Skewness determines that it has the negative effect.

4.6. Performance appraisal and job satisfaction

Performance Appraisal indirectly builds job satisfaction in a sense that the outcomes of training
based on Performance Appraisal can make workers more conversant with their duties and hence
more satisfied. On the other hand, employees’ job satisfaction or performance can be affected by
the level of rating (Butali & Njoroge, 2018).

Table 4.12. Performance Appraisal and job satisfaction

Statements N Range Mini Maxi Sum Mean Std. Varia
mum mum Devi nce
ation
Statist Statist Statis Statis Statis Statist Std. Statis Statist
ic ic tic tic tic ic Error tic ic
PA provides clear training needs and
196 4 1 5 536 2.73 .072 1.008 1.016
leadership development.
PA generates new insight & better
196 4 1 5 507 2.59 .089 1.252 1.567
familiarization on the self & the other
Outcome of PA leads to objective
196 4 1 5 541 2.76 .075 1.052 1.106
distribution of rewards

44
The process of PA done in a fairness
196 4 1 5 529 2.70 .093 1.303 1.699
way.
The result of PA used for promotion. 196 4 1 5 654 3.34 .089 1.244 1.548
PA was done for Performance based
196 4 1 5 462 2.36 .093 1.307 1.708
pay increment.
Valid N (listwise) 196
Source: Field survey, 2020

Table 4.12 depicted performance appraisal and job satisfaction. The highest mean value was 3.34
which are given as the result of PA used for promotion. The second highest mean was 2.73. Which was
explained that outcome of PA leads to objective distribution of rewards. From the above information it is
possible to conclude that PA result is used for promotion.

Table 4.13. Test of performance appraisal and Job satisfaction

Statements N Skewness Kurtosis

Statisti Statisti Std. Statist Std.
c c Error ic Error
PA provides clear training needs and leadership
196 -.205 .174 -.834 .346
development.
PA generates new insight & better familiarization on the self
196 .142 .174 -1.184 .346
& the other
Outcome of PA leads to objective distribution of rewards 196 -.254 .174 -.553 .346
The process of PA done in a fairness way. 196 .420 .174 -1.090 .346
The result of PA used for promotion. 196 .048 .174 -1.253 .346
PA was done for Performance based pay increment. 196 .442 .174 -1.160 .346
Valid N (listwise) 196
Source: Field survey, 2020

Table 4.13 showed that test of performance appraisal and Job satisfaction From the descriptive
statistics done the mean of 2.75 obtained and it is to mean that relationships between performance
appraisal and job satisfaction is poor closer to average. The kurtoses indicate closer to negative 1
for its negative effect.

45
4.7. Correlation Analysis
The study sought to establish the relationship between independent variables and dependent
variables. Pearson Correlation analysis was used to achieve this end at 95% confidence level (α =
0.05). Correlation analysis is one of the most widely used in research, it is often used to determine
a relationship between two different variables, if so how significant or how strong is the association
between variables. And also a very useful means to summarize these relationships between the
variables with a single number that falls between -1 and +1. A correlation analysis with Pearson´s
correlation coefficient (r) was conducted on all variables in this study to explore the relationships
between them. The correlation coefficient r is statistics used to measure the degree or strength of
this type of relationship. To interpret the strengths of relationships between variables in the
classification of the correlation efficient (r) is as follows: ≤ 0.35 is considered to represent low or
weak correlation; 0.36 – 0.67 is modest or moderate correlation; 0.68 - 0.89 is strong or high
correlation and a correlation with r coefficient ≥ 0.90 is very high correlation. Again if the
correlation result lies between -1 and 0, the two variables are negatively related. However, the
result is interpreted and discussed using this criterion in each dependent and independent variables.
The result presented as follows.

Table 4.14. Correlation Analysis

Correlations
Practice of Organizational Job
Performance performance satisfaction
Appraisal
Pearson
1
Practice of Performance Correlation
Appraisal Sig. (2-tailed)
N 196
Pearson
.514** 1
Organizational Correlation
performance Sig. (2-tailed) .000
N 196 196
Pearson
.589** .704** 1
Correlation
Job satisfaction
Sig. (2-tailed) .000 .000
N 196 196 196

46
 **. Correlation is significant at the 0.01 level (2-tailed).
Source: Field survey, 2020

According to table 4.14 organizational performances is positively correlated with a dependent

variable performance appraisal practice and the relationship between variables is modest or
moderate with a value of .514. Organizational performance is significant with a value of 0.00
which is less than 0.05. Hence, organizational performance is found to have positive and
statistically significant relationship with performance appraisal practices. Likewise, job
satisfaction is positively correlated with the performance appraisal and the relationship between
variables is modest or moderate with a value .589. Job satisfaction is significant with a value of
0.000 which is less than 0.05. Hence, Job satisfaction is found to have positive and statistically
significant relationship with performance appraisal practices.

4.8. Regression Analysis

The study sought to establish how dependent variables and would influence independent variables
using multiple linear regression analysis. The regression model was:

Y= β0 + β1 X1 + β2 X2 + ε

Whereby Y is Performance Appraisal Practices, β0 is regression constant, β1 – β2 regression

coefficients, X1 is organizational performance, X2 is Job satisfaction and ε model’s error term.

Table 1.15. Model Summery

Model Summary
Model R R Square Adjusted R Square Std. Error of the
Estimate
1 .589a .347 .343 .69599
a. Predictors: (Constant), Practice of Performance Appraisal
Source: Field survey, 2020

Table 4.7 illustrated that model summery of regression statistics. The R2 is .347 which is 34. 7%.
Thus, the dependent variable is explained by independent variable at 34.7%. The remaining need
further study.

Table 4.16. ANOVA Analysis

ANOVAa

47
Model Sum of df Mean F Sig.
Squares Square
Regression 49.878 1 49.878 102.967 .000b
1 Residual 93.975 194 .484
Total 143.852 195
a. Dependent Variable: Job satisfaction
b. Predictors: (Constant), Practice of Performance Appraisal
Source: Field survey,2020

Table 4.8 showed that ANOVA Analysis, in this regards the F-significant value was 102.967 at
degree of freedom (1,194) which was greater than 0.05. The p-value was .000 which was less than
0.05. This implies that the model is significant.

Table 4.17. Regression Analysis

Coefficientsa
Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
(Constant) 1.397 .158 8.819 .000
1 Performance Appraisal
.587 .058 .589 10.147 .000
practice
a. Dependent Variable: Job satisfaction
Source: Field survey, 2020

From the findings in Table 4.17 the multiple linear regression equation becomes:

Y= 1.397 + 0.587X2

From the model, when other independent variable (performance appraisal practice) becomes .745.
Holding other independent variables (performance appraisal practice) is constant; a unit increase
in performance appraisal would lead to 1.397 increases in the performance appraisal practices. A
unit increase of performance appraisal practice would lead to .587 increases on job satisfaction.

Table 4.18. Model Summery

Model Summary
Model R R Square Adjusted R Square Std. Error of the
Estimate

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1 .514a .264 .260 .93447
a. Predictors: (Constant), Performance Appraisal practice
Source: Field survey, 2020

Table 4.7 illustrated that model summery of regression statistics. The R2 is .264 which is 26.4%.
Thus, the dependent variable is explained by independent variable at 26. 4%. The remaining need
further study.

Table 4.19. Regression Analysis

Coefficientsa
Model Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
(Constant) 1.249 .213 5.874 .000
1 Performance Appraisal
.647 .078 .514 8.339 .000
Practice
a. Dependent Variable: Organizational performance
Source: Field survey, 2020

From the findings in Table 4.19 the multiple linear regression equation becomes:

Y= 1.249 + 0.647X1

From the model, when other independent variable (performance appraisal practice) becomes

1.249. Holding other independent variables ( performance appraisal practice) is constant, a unit

increase in performance appraisal practices would lead to 1.249 increases on organizational

performance. A unit increase of performance appraisal practices would lead to 0.647 increases on

organizational performance.

Chapter Five: Conclusion and Recommendation

5.1. Conclusion
The main purpose of this study was to examine the effect of performance appraisal on
organizational performance and job satisfaction in Ethiopian Civil Aviation Authority the case of

49
Air Navigation Department. The study targeted all 196 respondents from Bole international
Airport and Mekelle Air Navigation branch office and all employees participated to the
questionnaire. Respondents were from different age group, educational back ground, and years of
service are participated in the data collected.

The output of descriptive statistic show that the majority of the respondent were neither satisfied
nor dis-satisfied of the performance appraisal practice, believe that performance appraisal
conducted in a biased way, have poor perception to the performance appraisal, the organization’s
mechanism for job satisfaction was poor, the performance appraisal practiced had poor relationship
with job satisfaction, and the organization performance was nearly average. Consequently, there
is a negative relationship between the performance appraisal practice and organizational
performance, and job satisfaction in Ethiopian Civil Aviation Authority in the case of Air
Navigation Department. The study attempted to answer the following research questions

• What types of Performance Appraisal practices used in Ethiopian Civil Aviation Authority
Department of Air Navigation?
• How does the employs perceive the process of performance appraisal at Ethiopian Civil
Aviation Authority Department of Air Navigation?
• What is the role of Performance Appraisal on organizational Performance at Ethiopian Civil
Aviation Authority Department of Air Navigation?
• Is there a relationship between Performance Appraisal and job satisfaction at Ethiopian Civil
Aviation Authority Department of Air Navigation?

50
The finding of the study provided as follows. Types of PA practiced in the organization are
Forward-looking approach and incident report method. The purpose of PA practice is generating
primary information for giving feedback. Employees lack confidence in the process of PA.
Organizational performance is good in profitability. The relationships between performance
appraisal and job satisfaction by coiling research question and objectives: ‘Is there a relationship
between Performance Appraisal and job satisfaction,’ and ‘describing the relationship between
Performance Appraisal and job satisfaction’, respectively. As of Agyare, (2016), Job satisfaction
is considered as a critical factor of organizational performance from the perspective that job
satisfaction enhances employee loyalty. Employees foster team work, unity, and cooperation.
Job satisfaction is a pre-requisite for employee performance in any organization. It is important
for both the employee and the employer. For the employee, job satisfaction gives them a sense of
security and fulfillment. In return, it leads to employee commitment, decreased absenteeism and
reduced employee turnover. For the employer, employee job satisfaction ensures committed staff
and stable workforce which reduce cost of recruitment and training. The successes of organizations
consider worker morale and job satisfaction an output just as important as productivity.
Job satisfaction is as a pleasurable or positive emotional state resulting from the appraisal of one’s
job or job experiences. Moreover, job satisfaction as a personal evaluation of conditions present
in the job, or outcomes that arise as a result of having a job. Job satisfaction thus, has to do with
an individual’s perception and evaluation of his job, and this perception is influenced by the
person’s unique circumstances like needs, values and expectations. People will therefore evaluate
their jobs on the basis of factors, which they regard as being important to them.
The finding of the study pointed out that absenteeism is low. It implies that the workers are satisfied
and never absent form their job. Performance Appraisal indirectly builds job satisfaction in a sense
that the outcomes of training based on Performance Appraisal can make workers more conversant
with their duties and hence more satisfied. On the other hand, employees’ job satisfaction or
performance can be affected by the level of rating. Hence, PA result is used for promotion.

5.2 Recommendation
Based on the output from the conducted research, the following recommendations had been drawn.

51
❖ The organization to use a multi-source feedback or 360 degree feedback performance
appraisal system, to brief employee the objective of the performance appraisal practice,
discuss with the employee to clear the bias happened, participate employee on planning,
and perform performance appraisal practice according to the organizations mission, vision,
and objectives, and also according to criteria set before. Hence, the organization should
work on employee performance appraisal system to promote organizational performance
and to brig job satisfaction.
❖ Job satisfaction is the main means of good organizational performance. Hence the
organization should prepare fertile ground for its employees as mechanisms of job
satisfaction in return it reduces employee absentism and turnover.
❖ The organization should practice performance appraisal in such a way that the stakeholder
has a part to contribute on the progresses and weaknesses of the organization for the
fulfillment of common objective.
❖ The organization should practice peer and vertical appraisal for interwoven success of the
common objective.
❖ The organization after completing the practices of performance appraisal to act according
to the output of the appraisal: Rewards for good performer so that it will be continued and
others will be motivated. Training and consultation for low performer so that improvement
will come accordingly. Discussion on the matter for better communication and
improvement.
❖ The organization should made a continuous performance appraisal practice for it will
reduce bias both from appraise and rater.
❖ Lastly the organization should benefit from practicing: performance appraisal has in
addition to appraise what has been accomplished, has to plan for future development, keep
to continue existing strengths, indicate skill deficiencies, and training need assessment for
both supervisor and appraisee for the practices of performance appraisal to be effective.

52
5.3 Further study
The issue under study should investigated further study as follow:

➢ Job satisfaction and its impact on organizational performance

➢ Determinants of job satisfaction in the organization
➢ Determinants of organizational performance
➢ Investigation of job satisfaction and organizational performance a relationship
➢ Practice and challenge of employee performance appraisal
➢ Determinants of employee performance appraisal practice
➢ Performance appraisal practice and its impacts on employee job satisfaction
➢ Factors that affect performance appraisal practice

53
Appendix

Questionnaire

Addis Ababa University

School of Commerce

Dear respondents, this questionnaire is prepared to collect data for a research undertaking at AAU,
School of Commerce. The title of the research is ‘The Effects of Performance Appraisal Practice
on Organizational Performance and Job Satisfaction in Ethiopian Civil Aviation Authority: The
case of Air Navigation Department ’.
The main objective of the study is assessing the types of Performance Appraisal and its impact on
1) the perception of employees, 2) job satisfaction, and 3) organizational performance. The result
of the study will have academic contribution to the idea and practice of organizational performance
and Performance Appraisal. The success of the study depends on your willingness to provide
reliable responses to each question. You are thus kindly requested to provide informed responses
to each question.
Your anonymity shall be respected during and after the research process according to principles of
ethnical research.
For any clarification, please use the following contact mobile phone numbers and corresponding
email addresses:
Cell Phone: 0932103144
Email: [email protected]

Please be informed that ‘PA’ stands for Performance Appraisal

If you have additional data or data source, please use the back side of papers for description.

Thank you!

54
General Respondent Information

I. Gender: A) Male __________ B) Female __________

II. Age: A) 20-30 _____ B) 31-40 ______ C) 41-50 _____ D) above 50 ____
III. Employer organization ___________________________________________
IV. Level of education:
A) Diploma __________ C) Master’s degree __________
B) Bachelor’s degree __________ D). PhD and above __________
V. Work position: A) expert __________ B) Management __________
C) Other ______________________
VI. Work experience: __________ Years
VII. How often is PA carried out in your organization?
1. Once in a year __________ 3. Quarterly __________
2. Biannually __________ 4. Monthly _________
Please indicate by X for type(s) of PA practiced during PA practices.

a) Multi-Source Feedback or 360 d) Incident report method

Degree Feedback e) Forced Choice Method
b) Forward-looking approach f) Graphical Rating Scales
c) Narrative Techniques
g) Or any other, please specify if any
Direction I
Different variables are presented to assess the effects of PA practice on organizational Performance
and job satisfaction. The numbers assigned for your rating from 1 to 5 stands for:

1. Very poor
2. Poor
3. Neutral
4. Strong
5. Very strong

55
Supposed purposes, values, & assumptions, of PA practice

Description 1 2 3 4 5
To generate primary information for giving feedback
It valuable input for future development planning.
PA is important for appropriate financial and administrative measures

PA is used to institute salary increment in light of PA results.

PA is according to on organizational missions, values, and objectives

Appraisees are openly informed that the objective of Performance Appraisal
Practice of Performance Appraisal

Description 1 2 3 4 5
Data for the PA is solicited from concerned and involved stakeholders.
It is a means of meeting criteria set previously.
A worker is appraised by his peers, subordinates, managers, & customers
The direction of appraisal is vertical
Appraisees have a clear picture of PA and be able to discuss priorities.
Appraises take a chance to get rid of their confusions by receiving feedbacks.
PA practiced using essays/free written methods and critical incidents methods.
PA results presented as ‘outstanding’, ‘satisfactory, and ‘needs improvement’.
PA conducted on form containing employee characteristics & qualities
The rater indicates personality traits, outcomes, and job behaviors of the ratee
Perception of employees about Performance Appraisal

Employees are given reliable, accurate, timely, and objective information about the
purpose of Performance Appraisal data
Performance Appraisal is conducted in ways characterized by bias.
Employees lack confidence in the process of PA

The objectivity of PA undermined because it isn’t a systematic and regular

Organizational performance

Description 1 2 3 4 5
Organizational performance is good in Quality of work
Organizational performance is good in Productivity

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 Organizational performance is good in Efficiency
Organizational performance is good in Effectiveness
Organizational performance is good in Contribution to the economy
Organizational performance is good in Profitability
Job satisfaction

You have positive feeling or attitude towards your work

You have positive feeling or attitude towards your work condition
You feel that you have long term job security
Your absenteeism is low
The level of employees’ turnover low

The level of workers anxiety and boredom is low

Mechanisms to increase job satisfaction
Description 1 2 3 4 5
Employer does and offers corresponding recognition and encouragement
Employer attempts to increase job satisfaction by attractive reward system
The employer empowers workers thereby undermining distrust and anxiety.
The employer involves workers in company planning and operation.
The employer fosters team work, unity, and cooperation.
You offered high job security to retain your job over years
Performance Appraisal & job satisfaction

PA provides clear training needs and leadership development.

PA generates new insight & better familiarization on the self & the other
Outcome of PA leads to objective distribution of rewards
The process of PA done in a fairness way.
The result of PA used for promotion.
PA was done for Performance based pay increment.

Thank you!

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