First Draft Thesis (Assefa) 1

ASSESSMENT OF PRACTICE AND PROBLEMS OF STAFF
PERFORMANCE MANAGEMENT: IN CASE OF SELECTED

BRANCHES OF SIDAMA MICRO FINANCING INSTITUTION
A THESIS SUBMITTED TO LEAD STAR COLLEGE OF

MANAGEMENT AND LEADERSHIP FOR PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS OF
BUSINESS ADMINISTRATION (MBA)
BY
ASEFA GENALE
ADVISOR
OBSA TEFERI (ASST.PROFESSOR)
LEAD STAR COLLEGE OF MANAGEMENT AND LEADERSHIP

FACULTY OF BUSINESS AND LEADERSHIP
HAWASSA
JUNE, 2017
ACKNOWLEDGEMENT
Several individuals deserve acknowledgement for their contributions to the study. My

foremost appreciation and thanks goes to my advisor, Obsa Teferi (Asst.Professor) for his
supervision, valuable comments, professional advice and timely response during the
research work.
I would like to express my gratitude to Sidama Micro Finance institution employees for
their cooperation during data collection time.
My special heart-felt thanks are given to all my family for their genuine and successful
advices, moral support, and their valuable encouragement significantly contributed
throughout the study period.
Finally, I would like to acknowledge my friends specially Ato Sato and Ato Mebrate for
their friendly advice and encouragement throughout the study period.
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TABLE OF CONTENTS
CONTENTS PAGES
LIST OF TABLES..................................................................................................................v
LIST OF FIGURES...............................................................................................................vi
ABBREVIATIONS AND ACRONYMS.............................................................................vii
ABSTRACT........................................................................................................................viii
CHAPTER ONE.....................................................................................................................1
INTRODUCTION..................................................................................................................1
1.1. Background of the Study.........................................................................................................1
1.2. Statement of the Problem........................................................................................................4
1.3. Objectives of the Study...........................................................................................................5
1.3.1. General objective..............................................................................................................5
1.3.2. Specific objectives............................................................................................................5
1.4. Research Questions.................................................................................................................5
1.5. Significance of the Study........................................................................................................6
1.6. Scope of the Study..................................................................................................................6
1.7. Definition of Operational Terms.............................................................................................6
1.8. Organization of the Thesis......................................................................................................7
CHAPTER TWO....................................................................................................................8
LITERATURE REVIEW.......................................................................................................8
2.1Theoretical review of literatures................................................................................................8
2.1.1 Concepts and Definitions of Performance Management.......................................................8
2.3. Principles of Performance Management..................................................................................9
2.4. Purposes of Performance Management.................................................................................11
2.5. Performance Measures..........................................................................................................13
iii
2.6. Empirical Literature..............................................................................................................13
CHAPTER THREE..............................................................................................................17
RESEARCH METHODOLOGY..........................................................................................17
3.1. Description of the Study Area...............................................................................................17
3.2. Study Design.........................................................................................................................18
3.3. Data Sources.........................................................................................................................18
3.4. Sampling Technique..............................................................................................................18
3.5. Data Collection Methods.......................................................................................................18
3.6. Method of Data Processing and Analysis..............................................................................19
3.6.1. Descriptive Analysis..........................................................................................................19
3.7. Ethical Consideration............................................................................................................20
CHAPTER FOUR.................................................................................................................21
RESULTS AND DISCUSSIONS.........................................................................................21
4.1. Background Characteristics of Respondents.........................................................................21
4.2. Staff Performance Evaluation and Institution Objectives......................................................23
4.3. Staff Performance Evaluation on the Actual Results of the Staff..........................................27
4.4. MFI Manager’s Ability to Participate Staffs’ in All Activities..............................................29
4.5. Problems Related to Staff Performance Evaluation...............................................................30
CHAPTER FIVE..................................................................................................................32
SUMMARY, CONCLUSION AND RECOMMENDATIONS...........................................32
5.1. Summary of Major Findings.................................................................................................32
5.2. Conclusion............................................................................................................................33
5.3. Recommendations.................................................................................................................34
REFERENCES.....................................................................................................................36
APPENDIX...........................................................................................................................38
iv
Appendix I: Questionnaire.......................................................................................................38
Appendix II: Key informant interview guideline......................................................................42
Appendix III: SPSS Output......................................................................................................43
v
LIST OF TABLES
TABLE: PAGE
Table 3.1: Five-Scaled Likert’s Criterion factors..............................................................................20
Table 4.1: Background Characteristics of Respondents....................................................................21
Table 4.2: Respondents perception on staff performance evaluation and institution objectives.......23
Table 4.3: Respondents believe on shared vision, mission and values among institution and staff. 26
Table 4.4: Perception of respondents’ on staff performance evaluation on the actual results of the
staff....................................................................................................................................................27
Table 4.5: Respondents perception on integration of PMS and MFI managers encourage employees
...........................................................................................................................................................29
Table 4.6: Perception of respondents on Problems Related to Staff Performance Evaluation..........30
vi
LIST OF FIGURES
FIGURE: PAGE
Figure 3.1:Sidama Administrative Map...............................................................................17
Figure 4.1: Work experience of respondents........................................................................22
Figure 4.2 : Have Strategic plan...........................................................................................25
Figure 4.3: Awareness on MFI vision, mission and the objectives of the institution..........26
ABBREVIATIONS AND ACRONYMS
CSRP Civil Service Reform Program
vii
NPM New Public Management
ROPMS Result-Oriented Performance Management System
SNNPRS Southern Nations Nationalities and Peoples Regional State
SPSS Statistical Package for Social Sciences
viii
ABSTRACT
The main purpose of this study was to assess the practice and problems of staff performance
management: in the case of selected branches of Sidama Micro Financing Institution. Primary
sources of data were used. Cluster sampling technique was adopted for sample selection and about
103 employees of Sidama microfinance were included in the final sample. The data gathering
instruments used to collect data were a questionnaire and key informant interview. The findings of
the study showed that the current practices of staff performance evaluation in Sidama Micro
Finance Institutions had both strength and weaknesses. The strength of Sidama Micro Finance
Institutions in practicing staff performance evaluation where employees and all office managers
have good understanding and awareness of the purposes of staff performance evaluation system,
however, there is not well understood by all staff members. Employees and managers have
identified the objectives of staff performance evaluation but for better understanding, it needs more
clarification to clearly identify the primary purposes of staff performance evaluation. Sidama
microfinance institution has its own strategic plan, vision, mission, objectives, and values. As
weakness, the study identified that lack of linkage between criteria of performance evaluation and
vision, mission, values and strategic objectives of the institution, lack of shared/common vision,
mission, objective and values between the office managers and employees, lack of clarification of
performance and behavioral expectations for employees, lack of focus on the actual performance
rather than focus on behavior of employees, lack of participatory approach at any time of
activities, lack of open communication between managers and employees, lack of coordination
among individual, team/group and at institution level, lack of flexibility to consider external and
internal factors that hinder the performance of the employees, lack of preparing and providing
short training programs to the employees, who perform under expected performance, and lack of
professional skills, experiences and competencies to evaluate staff performance were major
problems identified in the study. The study recommended that the criteria of staff performance
management should be linked to the vision, mission values and strategic objectives of the
enterprise.
Key terms: Staff performance management, Sidama Micro Financing Institution, Practice, Problems
ix
CHAPTER ONE
INTRODUCTION
1.1. Background of the Study

According to Zhang Ying, (2012) the organizational performance criteria should include
profitability, productivity, marketing effectiveness, customer satisfaction, but also
employee morale. In this perspective, employee performance is tightly related to
organizational performance, effective and efficient employee performance will positively
influence organizational performance. In order to organize a company effectively,
companies must rethink how they hire, train and reward their employees; therefore the
employees could be encouraged to be competitive. Undoubtedly, there is an important
factor is human in organizations.
One of the main management strategies of the organizations is to invest in employees.

Organizations are seeking to develop, motivate and increase the performance of their
employees in a variety of human resources applications. Thus, performance management
should be an important step in the organization's HRM system and influences employee
performance and then to organizational performance (Zhang Ying, 2012).
Managing organizations in the last two decades proved to be challenging due to several
variables that accompanied considerable changes. The introduction of reforms was
ultimately seen as necessary because of the perceived inability of governments to address
the day to day problems resulting in the erosion of public confidence. Fiscal and economic
pressures, the serious competition and changing circumstances have been driving
governments to assess their performance and initiate reforms that would transform them
into more credible, effective and efficient entities. The reform wave that has emerged as a
worldwide phenomenon is now widely acknowledged as the “new public management
(NPM)” ( Balogun, 2003).
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Performance management is a goal-oriented process directed toward ensuring that
organizational processes are in place to maximize the productivity of employees, teams,
and ultimately, the organization. It is a major player in accomplishing organizational
strategy in that it involves measuring and improving the value of the workforce. PM
includes incentive goals and the corresponding incentive values so that the relationship can
be clearly understood and communicated. There is a close relationship between incentives
and performance. The New Public Management has led to establishing a common
paradigm, i.e., fostering performance-oriented model in the public institution. Everything
that says what NPM is all about institution based on the standards of economy, efficiency
and effectiveness. Hence measurement of performance has been a critical feature of public
management reform in many countries (Pollitt and Bouckaert, 2004).
It is true that superior performance contributes to the development of institutions where the
ultimate result would be development of a nation. On the other hand, poor performance
results in failure. Richard (1969) as quoted by Armstrong and Baron (2002) stated that in a
healthy organization: “The total organization, the significant sub-parts, and individuals
manage their work against goals and plan for the achievement of these goals”. Therefore,
organizations have to use proper methods to measure their level of performance to prove
that they are within the bounds of their goals and prove their sustainability. Modern
management is a recent phenomenon in Ethiopia.
It was in the nineteenth century that Emperor Menelik (1889-1913), introduced the modern
administrative system. Later, Emperor Haile Selassie (1930-1974) augmented his
predecessor’s initiative both in qualitative and quantitative aspect (Asmelash, 2000). In
1962 the Central Personnel Agency (the present Federal Civil Service Agency) was
established by Order Number 28/1962. All Ethiopian civil servants were centrally
administered until the new federal administrative system was implemented in 1991.The
Agency was established to administer government employees with unified rules and
regulations. The agency has gone through various development stages and got its present
name, duties and responsibilities by regulation No.41/85.
2
However, reports by the Government in 1995 have indicated that civil service institutions
were said to have been managed poorly and operating below capacity. To address these
problems the Government introduced the civil Service Reform Program (CSRP) with
overall aim of enhancing performance of the civil service. In order to realize this objective
the government established five task forces under the supervision of the Office of the
Prime Minster Sub-program. One of these sub-programs Human Resource Management
Sub-program includes employee performance management system as one component of
the reform area. The study conducted by a task force, organized to assess the situation of
the civil service performance management system in 1998/99, revealed among others, the
following weakness.
During the process of implementation major problems such as failure to link individual
performance management with institutional strategy and performance, non-participatory
approach in the development process of the system, taking job descriptions as the bases of
performance evaluation, exclusion of cost as performance measurement etc. were
observed. Then, the implementation manual was reviewed and correction made, training of
trainers organized and conducted for those who were expected to undertake the
implementation program, the name changed into Result-Oriented Plan Performance and the
process of implementation continued nationwide (Result-Oriented Performance Guideline,
2003).
Different workshops were organized and evaluation made on the progress of

implementation but, the evaluation proved that the implementation was not successful to
attain its intended objectives. The major problems identified were: Attitudinal change in
the work culture, lack of adequate skill about the ratings was not based on concrete
evidences, development of the system was not based on strategic plan of the institutions
and it does not include organizational and team performance measurement system: Pre-
conditions like improvement in the working process and other systems the technicality of
the new system and appropriate information system were not in place (FCSC, 2004).
3
Consequently, the government was obliged to establish National Training and
Implementation Taskforce to strengthen the implementation process with the specific task
of providing process oriented consultation in the development and implementation of the
system. Thus this research is an attempt to assess the practice and problems of staff
performance management of the institution.
1.2. Statement of the Problem
The Ethiopia Civil service Reform Program is designed to bring about development to the
country by replacing the old management practice with new and better system that would
improve productivity and service delivery. When the civil service reform program started
one of the issues to be studies and developed was changing the existing performance
management system and replacing it with more objectives, modern, participatory
performance management system. The human resource management sub program was
designed to focus on developing result-based performance management system in the civil
service (Gebre and Melesse, 2014).
Principles are beliefs that govern the development and implementation of any system in an
organization. In any situation principles are taking into account the specific situation and
background of the organization. With this in mind the principles of PM have their roots
depending on the time, and context of development. Whenever organizations want to set or
adapt these principles they have to take into account the specific environment and situation
and try to adapt them to their context (Gebre and Melesse, 2014).
Through time and case study researches and management professionals have developed
certain guiding principles for PMS. Fletcher and Williams (1992) as cited by Armstrong
(1996) came to the conclusion that ‘the real concept of performance management is
associated with an approach to creating a shared vision of the purpose and aims of the
organization, helping individual employees understand and recognize their part in
contributing to them, and in so doing manage and enhance the performance of both
individuals and the organization.
4
Employee performance management has its own principles and rules however, Sidama
microfinance institution practice the employees’ performance management system without
pre-defined principles; it is mainly based on the personal behavior of the employee,
approaches and relationship to the manager. The practice would not go with the line of the
Institution's Vision, Mission, Objectives and Values. In fact, the institution reported that
there is problem of employee performance management in the institution since the staff
turnover rate is around 10% for the last three years and the performances for some staff is
not satisfactory below 75%. Therefore, the researcher initiated to conduct this study to
investigate basic problems on the employees’ performance management system and to
forward the possible strategies or means to overcome the problems.
1.3. Objectives of the Study
1.3.1. General objective
The general objective of this study is to assess the practice and problems of staff
performance management in selected branches of Sidama microfinance, Sidama Zone.
1.3.2. Specific objectives

1. To identify whether or not the objectives of staff performance evaluation based on the
principles and objectives of the institution.
2. To assess the extent of focus of staff performance evaluation on the actual results of the
staff.
3. To identify whether or not the office manager participate staff in all activities.
4. To identify the problems related to staff performance evaluation.
1.4. Research Questions

The study will try to address the following core research questions;
1. Do branch offices evaluate the employees’ performance according to the mission,

objectives and targets of the Institution?
2. Do the objectives of performance management in branch offices focus on future
employees’ growth and development?
5
3. Do branch offices participate employees during planning, implementing, setting
evaluation criteria and evaluation time?
4. What are the major problems that hindering the employees performance management?
1.5. Significance of the Study

The findings of this study may have the following significances:-
 It helps the branch offices to link staffs performance evaluation with the principles of
performance evaluation and the vision, mission and values of the Institution.
 It indicates the areas that the staff performance evaluation should focus on.
 It shows the possible solution/strategies to solve problems related to performance
evaluation.
 It helps the institution to improve its efficiency and effectiveness and serves as the
additional document for further study on issue.
1.6. Scope and Limitation of the Study

Conducting study on the issue of staff performance evaluation may possible in country
wide, region and zone. However, because due to shortage of time, financial and other
important resources, the student researcher limits this study in Sidama Zone, Specifically
five selected branch offices. The major limitation of this study was the business of the
respondents during the data collection time. This is solved by repeatedly go to the office
and waiting for their break time.
1.7. Definition of Operational Terms

Performance: the accomplishment, executions carrying out work, working out anything
ordered and under taken.
Management: A process of working with and through others to effective achieves the
organizational objectives
Performance Management: Is strategic and an integrated approach concerned with
functioning effectively in its environment to achieve long-term goals of
organizations.
6
Performance standards: A statement of conditions that exist when a job is being
performed effectively.
Performance evaluation criteria: Are standards against which to assess employee’s
attributes, motivation, abilities, skills, knowledge, or behaviors (Armstrong and
Baron 2002).
Systematic: Implies the process should not be subjective, it should be based on evidences
accumulated from a variety of sources.
Continuous: Implies performance evaluation should not be merely a one off exercise.
Repeated visits give a principal a better perspective on teachers’ performance.
Integration: Refers to linkage and alignment with business/organization, team, and
individual.
1.8. Organization of the Thesis

The thesis will be organized into five chapters. Chapter one deals with introduction which
includes background of the study, problem statement, objectives, significance and scope of
the study. Chapter two devoted for literature review. Chapter three discussed the
methodology adopted for the study which includes sources and types of data, sampling
technique, tools and method of data collection and method of data analysis. Chapter four
deal with analysis and interpretation of the data and Chapter five present summaries of
major findings, conclusion and recommendations.
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CHAPTER TWO
LITERATURE REVIEW
2.1Theoretical review of literatures

2.1.1 Concepts and Definitions of Performance Management
Performance management is a strategic and integrated process that delivers sustained
success to organization by improving the performance of people who work in them and
developing the capabilities of individual contributors and teams (Armstrong, 1994).
Performance management is a ubiquitous term in today’s business environment, being
embedded in the body of knowledge of various disciplines and being used it at all
organizational levels (Brudan, 2010).
Performance management is a system by which an organization evaluates and develops its

employee’s skills, behavior and individual employee performance in order to improve
organizational performance in this competitive World. Performance management is the
system through which organization set work goals, determine performance standards,
assign and evaluate employee’s work, provide performance feedback to employees,
determine training and development needs and distribute rewards to employees (Briscoe &
Claus, 2008.)
Many authors, in the field of Performance Management, define performance management

in different ways. To see and understand performance management from different
perspectives some of the definitions are presented. Fletcher(1993) defines performance
management as an approach to creating a shared vision of the purpose and aims of the
organization, helping each employee understand and recognize their part in contributing to
them, and in so doing, manage and enhance the performance of both individuals and the
organization
This definition emphasizes that the enhancement of organization and individual

performance will be realized if there is a common understanding between the organization
and employees regarding what is expected of them.
8
Another definition is by Armstrong and Baron (2002), as: Strategic and integrated
approach to deliver 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.
This definition gives performance management a strategic view and development of team
and individual capabilities to improve performance. Performance management is also
viewed as "a means of getting better results from the organization, teams and individuals
within agreed framework of planned goals, objectives and standards" (Armstrong and
Murlis (1994). This view emphasizes that there has to be organization, team and individual
agreement on goals. Lockett’s (1992) definition gives much attention to the developmental
aspect of performance management, specifically individual development as:
The essence of performance management is the development of individuals with

competence and commitment, working towards the achievement of shared meaningful
objectives within an organization that supports and encourages their achievement" The US
Office of Personnel Management (2001) defines employees' performance management as:
"A systematic process of planning work and setting expectations, continually monitoring
performance, developing the capacity to perform in a summary fashion and rewarding
good performance". Performance Management is also viewed as: not a mere routine
activity, but a dynamic, momentum-geared, troubleshooting, and impact-oriented process.
In essence, therefore, PM has to do with focusing the attention of an organization and its
constituent parts on the attainment of specified objectives (corporate strategy) and on the
application of constantly changing processes, techniques and technologies (Balgun 2003).
2.3. Principles of Performance Management

Principles are beliefs that govern the development and implementation of any system in an
organization. In any situation principles are taking into account the specific situation and
background of the organization. With this in mind the principles of PM have their roots
depending on the time, and context of development. Whenever organizations want to set or
9
adapt these principles they have to take into account the specific environment and situation
and try to adapt them to their context.
Generally the two theories about PM are goal setting and expectancy theories (Clark,
1998).The objective setting theory emphasis on assigning tasks to employees specific,
demanding but attainable to achieve greater performance. On the other hand expectancy
theory states that satisfying important goals causes individuals to adjust their behavior
leading/helping them to achieve the set goals. Thus the two theories could be taken as the
basis of PM.
Through time and case study researches and management professionals have developed
certain guiding principles for PMS. Fletcher and Williams (1992) as cited by Armstrong
(1996) came to the conclusion that ‘the real concept of performance management is
associated with an approach to creating a shared vision of the purpose and aims of the
organization, helping individual employees understand and recognize their part in
contributing to them, and in so doing manage and enhance the performance of both
individuals and the organization.’
Thus, four underlying principles of effective performance management suggested are:
 PM should be owned and driven by line management,
 PM should emphasis on shared corporate goals and values;
 PM has to be developed specifically and individually for the particular
organization; and
 It should be applied to all staff, not just part of the managerial group.
 On the other hand the UK Civil Service considers the following as principles, these
are:-
 Regular appraisal is a key element in the delivery of result and improving the
performance;
 PMS should be appropriate to particular management and operational needs and
 It should be reviewed regularly;
 Staff should know in advance what is expected of them, how their performance will
be assessed, and should get effective feedback;
10
 Appraisers should be competent enough to do the appraisal and have received
training and development needs of staff should be identified and action be taken;
 There should be arrangement for recording and handling any dispute out of
implementing the PMS (Common wealth Secretariat, 1996).
In addition to the above principles, the following principles have been identified with
regard to performance management.
 It should translate corporate goals into individual, team and department.
 It should be consensus and cooperation rather than control or coercion.
 It should encourage self-management of individual performance.
 The management style should be open and honest, and encourages two way
communications between supervisors and subordinates.
 It should require continues feedback system.
 It should measure and assess all performances against jointly agreed goals.
 In addition to the above principles, there are some key guiding principles of
effective/successful teachers’ performance evaluation. (Dull; 1987, 315)
2.4. Purposes of Performance Management

The purpose of PM differs from organization to organization depending on the objective to
be achieved. However, most authors do agree that it can serve two main purposes in an
organization, i.e., developmental and administrative.
The developmental purpose includes
Identifying readiness of the employee to undertake the job, Career planning, Training,
Discussion and clarification (facilitate two-way communication), Identifying needs in
management changes (style, system, strategy, structural etc.) Motivational and goal
directing activities
On the other hand the Administrative purpose includes:-
Pay based on performance, For promotion decisions, Motivating employees, Making
transfer decisions, Making layoff or termination decisions etc
(Milkovich and Boudreau, 1991) Armstrong and Baron (2002) explained the main aims of
performance management include:-
11
Achieve sustainable improvements in organizational performance, Act as a leverage for
change in developing a more performance oriented culture, Increase the motivation and
commitment of employees, Enable individuals to develop their abilities, Enhance the
development of team work and better performance, Develop constructive, contentious and
open relationships between individuals and their managers, Provide opportunities for
employees to express their aspirations and expectations about their work.
They have explained that the benefits of performance management can also be viewed
from: organizational benefits, managerial benefits and individual employee benefits.
1. Organizational Benefits includes:- Align corporate, individual and team objectives;
Improve performance, Motivate employees, Increase commitment underpin core values,
Improve training and development processes, Help to develop a learning organization,
Provide the basis for career planning, Help to retain skilled employees, Support total
quality and customer service initiatives and Support culture change programs etc.
2. Managerial Benefits includes:- Provide the basis for clarifying performance and
behavior expectations, Afford a framework for reviewing performance and competence
levels, Improve team and individual performance, Support leadership, motivating and team
building process, Provide the basis for helping under performers etc.
3. Individual employee Benefits includes:-
Greater clarity of roles and objectives, Encouragement and support to perform well,
Provides opportunities to contribute to the formulation of objectives and plans enhance
improvements in the way work is managed and carried out, an objective Fair basis for
assessing performance.
Armstrong and Baron (2002) summarized the reasons/purposes of Performance

Management as follows:
To bring about cultural change, to link pay to performance, to improve customer
satisfaction through providing quality service, to improve performance and identify
training needs, feedback from supervisors to staff, to devolve control to line managers to
Improve competence, efficiency, reduce costs and embrace government initiative, and
achieve better performance, and increase effectiveness in meeting organization’s
objectives.
12
2.5. Performance Measures
Performance measures as tools help one to know how well one is performing; If one is
meeting the set goals (output, outcome, impact);If customers are satisfied; If processes do
have adequate data for evaluation; and shows if and where improvements are necessary to
make rational decisions (A Handbook of Techniques and Tools 1995).
L. Cardy (2004) uses two approaches to define performance: Behavioral approach and
Outcome approach
Behavioral approach:-which describes job performance in terms of behaviors that the
worker ought andought not do;
Outcome approach:-defines it in terms of outcomes attained for example amount of sales,
number of new clients etc.
Measuring performance is cardinal to performance management. If there is no
measurement there will be no improvement, because defining objectives or performance
standards without understanding and agreement on how performance is achieving these
objectives serves no purpose. It is performance measure that shows whether or not the
expected result has been achieved by the jobholder. It is a chain that generates feedback to
both managers and individuals to monitor and evaluate own accomplishments.
Armstrong (1996) considers the following as guidelines to define performance measures:
 Measures should be related to results not efforts;
 The results must be within the job holder’s control;
 Measures should be objective and observable;
 Data must be available for measurement; and
 Existing measures should be used or adapted wherever possible.
2.6. Empirical Literature

According Zhang Ying (2012) staff performance management aims at developing potential
capabilities of human resource. The performance management must be in line with the
company's long-term policies. Performance management involves managing employee
efforts, based on measured performance outcomes. Therefore, determining what constitutes
good performance and how the different aspects of high performance can be measured is
13
critical to the design of an effective performance management process. And performance
management effectiveness increases when there is ongoing feedback, behavior-based
measures are used and preset goals and trained raters are employed.
Performance management system

According to Muhammad S. (2013) there are various models of performance management.
Each model has its importance as a system for managing organizational performance,
managing employee performance, and for integrating the management of organizational
and employee performance. Performance management involves multiple levels of analysis,
and is clearly linked to the topics studied in strategic human resource management as well
as performance appraisal. Different terms refer to performance management initiatives in
organizations, for example, performance-based budgeting, pay-for-performance, planning,
programming and budgeting, and management by objectives.
A performance management system is increasingly seen as a means of integrating human

resource management activities with the business objectives of the organization, where
management and human resource activities are working together to influence individual
and collective behavior to support the organization's strategy. Besides, he also stressed that
the performance management system must fit with the organization's culture. Performance
management system is a kind of completed and integrated cycle for performance
management. The emphasis of performance management systems is on continuously
improving organizational performance, and this is achieved through improved individual
employee performance. The objectives often include motivating performance, helping
individuals develop their skills, building a performance culture, determining who should be
promoted, eliminating individuals who are poor performers, and helping implement
business strategies.
Employee performance and Organizational benefits
It is a big important factor when employees in the organization understand how their work
contributes to the success of the company, morale and productivity usually improve. It
provides them higher motivation and self-esteem, how they are important for organization
14
and how they are playing important role in organizational goals success. A company can
have all of its parts aimed at the same bulls’ eye. Employee’s performance management is
the key to making these links clear to everyone. These links between employee and
organization provide very clear competitive edge on other organizations. Employees
always make organization more and more effective with their high performance
Muhammad S. (2013).
Employee and organizational commitment relationship

It is very clear and there is no doubt about it that employees enjoy and keen to learning. It
is an important touch between employees and organizational commitment relationship. The
value of continuous ongoing training and development in creating a virtuous spiral.
Learning process provide satisfying and rewarding experience. There are most of
employees enjoy opportunities to develop, learn and try to gain new things to enhance their
performance. The process of learning boosts and shines the careers. It allows to employees
to develop new skills and new knowledge that raise their ability to perform Muhammad S.
(2013).
Employee commitment to the organization
Employee commitment is the level of connection between employee and organization.
Employee commitment allows an organization to gain and grow in competitiveness and is
thus a key variable determining the employee performance. Committed employees
contribute added value to the organization because they are more determined, more
supportive and give more energy and attention to quality Muhammad S. (2013).
What determines commitment of employee?

As Muhammad S. (2013) noted there are various factors that can positively are negatively
influence the employees’ commitment. Employers find it difficult to feel they fit in it with
the organization if they don’t know what it stands for, so that they have no clear idea how
they contribute to the organization as a whole. Several employees’ surveys will show
whether employees are committed or not and whether these employees are intending to
leave. Are uncommitted employees are looking for other job s around, if so that is a good
news but on other hand if committed employees are looking for other jobs than
organization have to do something about it. Because these are the employees it needs to be
15
retained. It is very important for an organization to pro-vide clarity as to its identity and
vision and make it clear what the employees are contributing.
The causes of performance
Muhammad S. (2013) stated it is a fundamental truth that performance depends on two

factors. Employees need both motivation and ability. Highly motivated will not achieve
results if they do not have proper skills, expertise, knowledge and the personality the
organization needs and on other hand it is also same, employees with high skills and
knowledge they cannot achieve organizational goal if they are unmotivated. It means
organization produce great results of performance if employees are motivated and able to
do their tasks.
Monitoring Performance
Mwendandu daniel (2013) mentioned that Ongoing monitoring provides the opportunity to
check how well employees are meeting pre-determined standards and take corrective
action. By monitoring continually, performance can be identified at any time during the
appraised period and assistance provided to address such performance rather than wait until
the end of the period. The employee Performance management system is designed to get
two people to talk, it provides informal and formal methods of ensuring that line managers
and employees talk constructively about performance planning and development.
Communication is a consistent part of the day to day work of both supervisor and
employees. The task of implementing and using an employer Performance management
system is far from complete at the end of the design stage and that specifically the factors
determining the successful implementation of the system is a problem which has hardly
been researched, and for which few technique are currently available.
16
CHAPTER THREE
RESEARCH METHODOLOGY
The chapter deals with the research methodology that was used for this study. It covers
description of the study area, data sources, sample size determination and sampling
technique, data collection methods and data analysis.
3.1. Description of the Study Area

The study will be conducted at Sidama is a zone. The zone has a total population of
2,954,136, of whom 1,491,248 (50.48%) are men and 1,462,888 (49.52%) women. It has a
total area of 6,538.17 square kilometers. Of the above total population 5 .51% are urban
dwellers while 0.18% pastoralist and the remaining 94.31% are rural inhabitant whose life
is attached to agriculture. On average the zone has 4.99 persons per household and a total
of 592,539 households resulting in a population density of 451.83/km sq. Sidama is
currently divided in to 19 districts and on average each district has a population of 100,000
(SZFEDD, 2016).
Figure 3.1:Sidama Administrative Map

Source: Sidama Zone Bureau of Finance and Economic Development (2017)
17
3.2. Study Design
To attain the objectives of the study, the researcher employed cross-sectional survey
research design with both quantitative and qualitative research approach. Because mixed
types of research design help to collect both quantitative and qualitative data. The
qualitative method involves subjective assessment of attitudes, opinions and behavior
whereas the quantitative method is concerned with the generation of data in numeral form.
The qualitative data were helpful to triangulate the findings from the quantitative data. This
is because it is believed that the weakness of one method is supplemented by the strength
of the other (Kothari, 2012).
3.3. Data Sources
The study employed primary sources of data. The primary sources were collected from
branch managers, staff and human resource development and training officers. The data
were also collected through questionnaire and key informant interview.
3.4. Sampling Technique
Cluster sampling technique was adopted for sample selection. Because each branch
constitutes different types of staff (heterogeneous) but, similar (homogeneous) branches
among. Therefore, out of 24 branches (clusters) in Sidama micro finance working in
Sidama Zone, the researcher selected eight branches (clusters) randomly and includes all of
their staffs in the sample. Accordingly, there are 16 employees from Hawassa, 12
employees from Menaharia, 11 employees from Malga, 14 employees from Shebedino, 15
employees from Dalle, 11 employees from Boricha, 12 employees from Aleta Wondo and
12 employees from Bensa branch offices. Thus, about 103 employees of Sidama
microfinance were included in the final sample.
3.5. Data Collection Methods

Primary data were collected from branch managers and the staffs/employees through
questionnaire and key informant interview.
18
3.5.1. Questionnaire
To collect relevant and reliable data from the selected sample respondents, both open and
closed ended questionnaire will be prepared and administered. To collect the quantitative
data a five point Likert-type scale will be used. The five points on the scale will be
weighted according to the degree of relevance. The following scaling procedure will be
adopted: Strongly agree=5; agree=4; undecided=3, disagree=2 and strongly disagree=1.
The pretest will be conducted with other branches of the micro-finance before main data
collection to test the validity and reliability of the instrument.
3.5.2. Key informant interview
Semi structured interview were applied to collect qualitative data. Because of their
experience and position in the institution eight key informants were selected purposively
and include in the study.
3.6. Method of Data Processing and Analysis
The data collected through questionnaire were edited, coded and entered into a computer
software using SPSS for window version 20. The analysis techniques were performed
descriptive statistics using frequencies, percentages, mean and standard deviation. The
results of the data were presented by tables and graphs. Qualitative data collected through
interview was analyzed qualitatively using narrative for triangulation.
3.6.1. Descriptive Analysis
In addition to frequency and percentages, mean was used to see the average perception of
respondents included in the study. Furthermore, the level of agreement in each item were
compared using mean score ranges proposed by Al-Sayaad et al. (2006) in table 3. Some of
the data were collected with five point Likert Scale. In analyzing the five point likert scale
questions, descriptive analysis is made by using techniques of mean based on the mean
score ranges proposed as follows:
19
Table 3.1: Five-Scaled Likert’s Criterion factors
No. Mean Range Response Options

1 [1.00, 1.80) Strongly Disagree
2 [1.80, 2.60) Disagree
3 [2.60, 3.40) Neutral
4 [3.40, 4.20) Agree
5 [4.20, 5.00] Strongly Agree
Source: Al-Sayaad et al. (2006)
3.7. Ethical Consideration
In ethical consideration the researcher informed the participants about the aim of the study
and they were participated based on their own willingness. Accordingly, privacy and
confidentiality were maintained. In the beginning, all legal permissions were secured. As
per the work plan and schedule, procedures were followed by effectively undertaking the
research process. In this way the researcher secured the consent of the respondents.
20
CHAPTER FOUR
RESULTS AND DISCUSSIONS
This chapter presents the results and discussions arrived from the data collected to address
the objectives. The results are presented in the form of tables and diagrams followed by
interpretation and the inferences.
4.1. Background Characteristics of Respondents
Analyzing background characteristics of the respondents is important to understand the

profile of the respondents included in this study. Accordingly, under this section,
respondents’ sex, age, educational level and service year have been assessed and the results
are presented in Table 4.1 and Figure 4.1.
Table 4.2: Background Characteristics of Respondents
Variables Category Frequency Percent

Sex Male 67 65.0
Female 36 35.0
Total 103 100
Age 18-25 32 31.1
26-30 46 44.7
31-35 15 14.6
36-40 10 9.7
Total 103 100
Education level Certificate 26 25.2
Diploma 62 60.2
1st Degree 15 14.6
Total 103 100
Source: Own survey data, 2017
According to the above table, most of the staffs 67(65%) were males and the rest 36(35%)
of the staffs were females. From the above data, most of the participants were males and
some of them were females.
21
Regarding to their age group, 46(44.7%) of the staffs were in between 25-30 age group,
32(31.1%) of staffs were in the age group of 18-25, 14.6% were in the age group of 31-35
and the rest 10(9.7%) of them found in the age category of 36-40.
Concerning to their educational level, 15(14.6%) of employees were 1 st degree holders,

26(25.2%) of employees had certificate. and the rest 62 (60.2%) of them were diploma
holders. The above information showed that the qualification level of the respondents were
diploma followed by certificate.
60%
52%
50%
40%
30%
24%
20% 18%
10% 6%
0%
0-2 3-5 6-8 9-11
Work Experience
Figure 4.2: Work experience of respondents

Concerning working experience of respondents about 52% of employees served for 3-5
years, 24% of employees served for 0-2 years, 18% of employees served for 6-8 years.
According to the above information, the majority of respondents have served for 3-5 years.
This indicated that, the majority of the respondents have good experiences and
understanding on the job.
22
4.2. Staff Performance Evaluation and Institution Objectives
The following Table (Table 4.2) presented the perception of respondents about the staff
performance evaluation and institution objectives.
Table 4.3: Respondents perception on staff performance evaluation and institution

objectives
Variables n % Mea SD
n
Committed to the institution vision, mission, strategic 3.07 0.93
goals and objectives 1
Strongly disagree 7 6.8
Disagree 11 10.7
Neutral 62 60.2
Agree 14 13.6
Strongly agree 9 8.7
Total 103 100
Development of the performance management was 1.98 0.89
based on strategic plan of the MFI 6
Disagree 46 44.7
Neutral 19 18.4
Agree 3 2.9
Total 103 100
Believe that the criteria of performance management 2.11 1.06
5
Disagree 47 45.6
Neutral 13 12.6
Agree 7 6.8
Total 103 100
The primary purpose of performance management 3.90 1.06
2
Disagree 8 7.8
Neutral 15 14.6
Agree 43 41.7
Total 103 100
The implementation of performance management system 3.99 1.05
3
Disagree 6 5.8
Neutral 15 14.6
23
Agree 40 38.8
Total 103 100
As Table 4.2 presents, the majority (60.2%) of respondents undecided whether they
committed to the institution vision, mission, strategic goals and objectives or not. On the
other hand, 22.3% of respondents reported that they committed to the institution vision,
mission, strategic goals and objectives, whereas 17.5% of them did not commit.
Furthermore, the average perception of respondents (Mean =3.07) revealed that the
majority of respondents had neutral response. The result of key informant interview
informed that all the office managers’ attempts to accomplish the institution’s vision,
mission, strategic goals and objectives very well. However, the level of the commitment in
the institution was not enough to accomplish the goals and the objectives of the institution.
Respondents were requested whether development of the performance management was

based on strategic plan of the MFI or not. Accordingly, the majority (76.7%) of
respondents tended to the idea of disagreement, while 4.8% of them disagreed. In addition
to this, the average response (Mean= 1.98) revealed that development of the performance
management was based on strategic plan of the MFI but, it did not include offices,
individual and team performance. In corresponding to this, key informants also added that
even if, the system is based on the strategic plan of the institution and include team and
individual performance; in the cluster the staff performance management system
adequately didn’t include offices, individual and team performance..
Respondents believed the criteria of performance management system directly related with
objective of MFI. With respect to this idea, 11.7% of them show their agreement, whereas
75.7% of them reported that they did not believe the criteria of performance management
system directly related with objective of MFI. The average response (Mean = 2.11) of
respondents also revealed that in the institution the criteria of performance management
system were not directly linked to the objectives of the institution.
The primary purpose of performance management is human resource development. In line

with this idea, the majority (73.7%) of respondents tended to the idea of agreement, in
24
contrarily 11.7% of them disagreed on the issue. Additionally, the average (Mean = 3.90)
inferred that the primary purpose of performance management is human resource
development. Key informants also added that there is a gap of understanding the purposes
of performance management among some employees in the institution. Therefore, in the in
the institution the office managers have to work hard in order to increase the understanding
of purposes of SPM among the employees.
Regarding the implementation of performance management system, 9.7% of respondents

disagreed, while 75.7% of respondents agreed that the implementation of performance
management system is need o the improvement of staff and MFI. Furthermore, the mean
value (Mean = 3.99) also implies that the majority of respondents agreement on the
implementation of performance management system is need o the improvement of staff
and MFI
Figure 4.3 : Have Strategic plan

As figure 4.2 illustrates, respondents were asked whether MFI had strategic plan of not.
Accordingly, the majority (79%) of respondents responded that the Institution had strategic
plan. On the other hand, less number (21%) of respondents reported that the institution had
no strategic plan. In addition to this, the micro finance institution developed their strategic
plan.
25
Table 4.4: Respondents believe on shared vision, mission and values among institution
and staff
Variables Category Frequency Percent

Believe that there are shared vision, Yes 25 24.3
mission and values among No 78 75.7
institution and staff Total 103 100
As can be seen in Table 4.2, about75.7% of respondents did not believe that in MFI there
are shared vision, mission and values among institution and staff. But 24.3% of
respondents believe that in MFI there are shared vision, mission and values among
institution and staff. This indicates that the majority of respondents didn’t believe that
there are shared vision, mission and values among the institution and staff .
Yes,
28%
No,
72%
Figure 4.4: Awareness on MFI vision, mission and the objectives of the institution
As the figure result shows the majority (72%) of respondent had no awareness on MFI
vision, mission and the objectives of the institution. Below half (28%) of respondents had
26
awareness of MFI vision, mission and the objectives of the institution. This implies that the
majority of respondents in the institution have no enough understanding to the vision,
mission and objectives of the institution.
4.3. Staff Performance Evaluation on the Actual Results of the Staff
In this topic, variables related to staff performance evaluation on the actual results of the
staff were presented and analyzed. The following Table (Table 4.4) presented the
perception of respondents about the staff performance evaluation on the actual results of
the staff.
Table 4.5: Perception of respondents’ on staff performance evaluation on the actual

results of the staff
n
Performance expectation is clearly indicated to employees 2.08 0.78
0
Disagree 57 55.3
Neutral 21 20.4
Agree 3 2.9
Total 103 100
Employees work in team 2.23 1.00
2
Disagree 41 39.8
Neutral 24 23.3
Agree 10 9.7
Total 103 100
The head manager and supervisor in MFI is task oriented 2.16 1.08
5
Disagree 37 35.9
Neutral 19 18.4
Agree 11 10.7
Total 103 100
In MFI hard work is not recognized 3.83 1.02
4
27
Disagree 9 8.7
Neutral 19 18.4
Agree 44 42.7
Total 103 100
As Table 4.4 presents, the majority (75.7%) of respondents reported that the performance
expectation was not clearly indicated to employees by the head manager/supervisor. In
contrarily, 3.9% of respondents replied that the performance expectation was clearly
indicated to employees by the head manager/supervisor. Furthermore, the average response
(Mean = 2.08) also revealed that the performance expectation was not clearly indicated to
employees by the head manager/supervisor.
Regarding team work, the majority (65%) of respondents reported that they did not work in
team, while 11.6% of them agreed that they worked in team. Furthermore, the average
perception (2.23) revealed that the majority of respondents did not work in group/team.
Respondents requested whether the manager and supervisor in MFI were task oriented or
not. Accordingly 67.9% of respondents replied that the manager and supervisor in MFI
were not task oriented, whereas 13.6% of them agreed that the manager and supervisor in
MFI were task oriented. In addition to this, their average response (Mean = 2.16) also
revealed that the manager and supervisor in MFI were not task oriented.
In MFI hard work is not recognized. In relation to this idea, out of the total sample
respondents about 11.6% of respondents replied that in MFI hard work is recognized,
whereas 69.9% of respondents showed their agreement that in MFI hard work is not
recognized. Furthermore, the average response (Mean= 3.83) inferred that in MFI hard work is not
recognized.
28
4.4. MFI Manager’s Ability to Participate Staffs’ in All Activities
Under this topic, variables related to MFI manager’s ability to participate staffs’ in all
activities were presented and analyzed. Table 4.4 presented the perception of respondents
about MFI manager’s ability to participate staffs’ in all activities.
Table 4.6: Respondents perception on integration of PMS and MFI managers encourage
employees
n
There is integration of PMS at MFI, team and individual level 2.21 1.00
6
Disagree 37 35.9
Neutral 29 28.2
Agree 6 5.8
Total 103 100
The MFI managers encourage employees 2.51 1.25
1
Disagree 34 33.0
Neutral 18 17.5
Agree 18 17.5
Total 103 100
As depicted in Table 4.5, the majority (63.1%) of respondents reported that there was no
integration of staff performance management system at MFI, team and individual level. In
contrarily, 8.7% of respondents revealed that there was integration of performance
management system at MFI. Furthermore, the average perception of respondents showed
that the staff management system is not enough integrated at MFI, team and individual
level.
29
Respondents were requested whether the MFI managers encourage employees towards the
accomplishment of the objectives of the office. Accordingly, 57.3% of respondents
disagreed, while 25.3% of them positively perceived their agreement. In addition to this,
the average perception (Mean = 2.51) revealed that the MFI managers did not encourage
employees towards the accomplishment of the objectives of the office. Key informants also
informed that in the institution, the office managers began practice to support employees
toward the shared objectives but it is not sufficient enough to motivate/ encourage/ all
employees toward the accomplishment of shared objectives.
4.5. Problems Related to Staff Performance Evaluation
Table 4.7: Perception of respondents on Problems Related to Staff Performance

Evaluation
n
It was found difficult to discuss work problems with head 3.81 1.02
manager/supervisor 9
Disagree 5 4.9
Neutral 27 26.2
Agree 38 36.9
Total 103 100
Have got the training opportunity 2.41 1.29
4
Disagree 32 31.1
Neutral 16 15.5
Agree 15 14.6
Total 103 100
The head manager have professional knowledge 2.25 1.03
6
Disagree 40 38.8
Neutral 26 25.2
Agree 7 6.8
Total 103 100
30
It was found difficult to discuss work problems with head manager/supervisor. Concerning
this idea, about 7.8% of respondents disagreed while the majority (65.1%) of them agreed
that in the institution, discussing work related problems with office managers is difficult.
Their average response (3.81) also inferred that the majority of respondents’ agreement on
the idea that discussing work related problems with office managers is difficult. This
indicated that in the institution the office managers were not flexible enough to discuss any
work related problems.
Regarding training opportunity, the analysis result revealed that about 61.2% of
respondents did not get training opportunity, while 25.3% of them got the chance.
Furthermore, respondents average perception (Mean = 2.41) revealed in the institution,
there was no provision of training program even if the performance gap occurred.
In line with head manager have professional knowledge, the majority (64%) of respondents
responded that the head managers have no professional knowledge, skills, experience and
competence to evaluate teachers’ performance, while less number ( 10.7%) of respondents
responded disagree. On the other hand, the mean value (Mean = 2.25) inferred that the
majority of respondents responded that in the institution the office managers have no
enough professional knowledge, skills, experience and competence to conduct employees’
performance evaluation program. Similarly, the information obtained from interview also
revealed that in the institution, the office managers have no professional knowledge, skills,
experience and competence to conduct performance evaluation.
31
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1. Summary of Major Findings
The study wants to assess the practice and problems of staff performance management: in
case of selected branches of Sidama Micro Financing Institution. In order to meet this
purpose, the study was attempted to answer the following research basic questions:
 Do branch offices evaluate the employees’ performance according to the mission,

objectives and targets of the Institution?
 Do the objectives of performance management in branch offices focus on future
employees’ growth and development?
 Do office managers allow employees to participate during planning, implementing,
setting evaluation criteria and evaluation time?
 What are the major problems that hindering the employees performance
management?
Therefore, based on the results of the analysis and interpretation of the result, the following
major findings were drawn as follows:
 In the institution, some of the employees in Sidama Micro finance institution have
less understanding and awareness to the vision, mission and objectives of the
institution.
32
 In the institution, half of the employees perceived that there are shared vision,
mission and values among the office managers and employees.
 In the institution, the Staff Performance Management System didn’t properly
include the institution, team and individual performance.
 In the institution, office managers and employees discus on the importance of Staff
Performance Management at the beginning of the year.
 The criteria of Staff Performance Management system were not directly linked to
the vision, mission, values and strategic objectives of the institution.
 About half of the respondents replied that there is gap of understanding on the
purposes of Staff Performance Management with in the institution.
 Even if there was a base to practice working in team, it was not satisfactory/widely
reached to all employees in the institution.
 Criteria of Staff Performance Management system focuses on the behavior of the
employees rather than focus on actual and agreed performance of the employees.
 According to the participants’ response, the major identified problems of the
implementation of Staff Performance Management System in the institution were
lack of skills to perform, lack of Management commitment, lack of staff
commitment, lack of adequate information and others.
 In the institution, the office managers were less flexible to discuss any work related
problems.
 The office managers have less professional knowledge, skills, experience and
competence to conduct staff performance evaluation program.
5.2. Conclusion
The current practices of staff performance evaluation in Sidama Micro Finance Institutions
had both strength and weaknesses. The strength of Sidama Micro Finance Institutions in
practicing staff performance evaluation where employees and all office managers have
good understanding and awareness on the purposes of staff performance evaluation system
however, there is not well understood by all staff members. Employees and managers have
identified the objectives of staff performance evaluation but for better understanding, it
33
needs more clarification to clearly identify the primary purposes of staff performance
evaluation. Sidama microfinance institution has its own strategic plan, vision, mission,
objectives and values.
As weakness, the study identified that lack of linkage between criteria of performance
evaluation and vision, mission, values and strategic objectives of the institution, lack of
shared/common vision, mission, objective and values between the office managers and
employees, lack of clarification of performance and behavioral expectations for employees,
lack of focus on the actual performance rather than focus on behavior of employees, lack of
participatory approach at any time of activities, lack of open communication between
managers and employees, lack of coordination among individual, team/group and at
institution level, lack of flexibility to consider external and internal factors that hinder the
performance of the employees, lack of preparing and providing short training programs to
the employees, who perform under expected performance, and lack of professional skills,
experiences and competences to evaluate staff performance were major problems
identified in the study.
5.3. Recommendations
Based on the findings, the student researcher has recommended the following points:
 The criteria of staff performance management should be linked to the vision,

mission values and strategic goals/objectives of the enterprises.
 Create shared vision, mission, objective and values between the managers and
employees.
 The managers should clearly indicate/identify the performance expectations of
employees and should measure all performances against jointly agreed goals.
 Staff performance evaluation system should be based on the actual performance.
 Enterprise managers should participate employees at any time of activities.
 The evaluation system should coordinate and translate the institution performance
into individual, team and department level.
34
 Evaluation system should be flexible and consider both external and internal factors
that affect the staffs’ performance.
 Managers should prepare and provide short training programs to the employees,
who perform under expected performance/if there is performance gap.
 The evaluators should be competent enough to conduct performance evaluation and

have received training and development needs of employees should be identified
and action be taken.
35
REFERENCES
Al-Sayaad, J., Rabea, A., and Samrah, A. (2006). Statistics for Economics and
Administration Studies. Dar Hafez, Jeddah: Kingdom of Saudi Arabia.
Armstrong and Baron (2002). PERFORMANCE: The new realities. London: U.K.
Armstrong, M. 1994. Performance Management: Key Strategies and Practical Guidelines:
London, UK.
Armstrong. (1996). A Handbook of Personnel Management Practice. London: Macmillan.
Brudan, A. 2010. Rediscovering performance management: systems, learning and
integration, Measuring Business Excellence, Vol.14, No.1, 109.
Briscoe, DB. & Claus, LM. 2008. Employee performance management: policies and
practices in multinational corporations, Performance Management Systems: A Global
Perspective, (Ed) PW Budwah and DeNisi, Routledge, Abingdon.
Creswell, J.W. (2009). Research Design: Qualitative, Quantitative, and Mixed Methods
Approaches, 3rd Ed.,India: SAGE Publications.
Kothari, C.R. (2012). Research Methodology- Methods and Techniques, New Delhi, Wiley
Eastern Limited.
Malhotra, N.K., and Birks, D.F. (2003). Marketing Research: An Applied Approach, (2nd
European Edition), Prentice Hall Inc.
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Muhammad S. (2013) Key factors in performance management Employee point of view.
Pollit and Bouckaert. (2004). Public Management Reform: A Comparative Analysis. New
York: U.S.A.
SZFEDD. (2016). Sidama Zone Finance and Economic Development Department report.
Yamane, T. (1967). Statistics, an Introductory Analysis, 2nd Ed., New York: Harper and
Row.
Zhang Ying (2012).The Impact of Performance Management System on Employee
performance.
Mwendandu Daniel (2013). Challenges of implementing performance management system
at the Kenya electricity generating company (kengen) limited.
Asmelash, 2000 Result-Oriented Performance Guideline, 2003
Asfaw, G. M. (2014). TheImplementation of Civil Service Reforms in Ethiopia: The
Promise for Civil Service De-Politicization of Tigray National Regional State.
Developing Country Studies, 4(7), 91-106.
Web sites
http://www.Valuebasedmanagement.net/methods-result-orientedmanagement.htn/
http://www.opm.gov/perform/wppdf/2002/handbook.pdf
http://www.ethiopianteachers.org/index.php.
http://accounting.smartpros.com/x3669.xml.
http://www.llnl.gov/PBM/ (How to Measure Performance)
37
APPENDIX
Appendix I: Questionnaire
Dear respondents,
My name is Assefa Genale MBA student at Lead Star College of management and
leadership. I am conducting a research in partial fulfillment of the requirement for the
MBA degree in Finance. The major objective of this questionnaire is to collect the data that
are necessary to conduct a research entitled “Practice and Problems of Staff Performance
Management: In case of Selected Branches of Sidama Micro Finance Institution”. The
success of this study depends on your honest and sincere responses to the question items.
The data you provide will be used for the research only and kept confidential. You are,
therefore, kindly requested to provide the required information. Please, do not write your
name on the questionnaire.
Thank you very much for your time and cooperation!
Instructions፡
Please indicate your choice by circling where you think is appropriate in the number
provided to each preference, and comment where necessary.
PART I- General Information of the Respondents
1 Sex 1. Male 2. Female

.
2 Age ______________
38
.
3 Educational level 1. Certificate 2. Diploma
. 3. First degree (BA) 4. Second degree (MA)
4 Work experience _______________
.
5 Your responsibility at the SMFI 1. Head manager 2. Deputy manager
. 3. Worker
PART II- The Consistency Staff Performance Evaluation to Objectives of the

Institution
Disagree
Disagree
Strongly
Strongly
Neutral
Agree
Agree
S.N Statements
I am committed to the organizations vision, mission,

6.
strategic goals and objectives
7. Development of the performance management system was
based on strategic plan of the micro finance institution and it
does include office, individual and team performance
8. I believe that the criteria of performance management system
directly related with objective of the Micro Finance
Institution.
9. The primary purpose of performance management is human
resource development
10. The implementation of performance management system is
needed to the improvement of staff and Micro Finance
Institution.
11. Does your office have its strategic plan? 1. Yes 2. No

12. Do you believe that there is a shared 1. Yes 2. No
vision, mission and values among staff?
13. Do you know the vision, mission and 1. Yes 2. No
39
objectives of the office?
14. In your opinion the objectives of 1. Future staff growth and development
2. Improve the effectiveness of the MFI
performance management focus on:
3. All
15. In your opinion the purposes of 1. To determine training and development
need of staff 2. for salary increment
performance management are:
3. To reward good performance
4. For promotion 5. for punishment
6. All 7. Other Specify_________________
PART III- The Extent of Focus of Staff Performance Evaluation on the Actual
Results of the Staff
Disagree
Disagree
Strongly
Strongly
Neutral
Agree
Agree
S.N Statements
16. Performance expectation is clearly indicated to employees

by the head manager/ supervisor.
17. My work colleagues and I work in team.
18. The head manager and supervisor in Micro Finance

Institution is task oriented.
19. Hard work is not recognized in Micro Finance Institution.
20. During performance evaluation, 1. Employee’s behavior

the evaluation criteria focus on:- 2. Actual result oriented performance
3. Both ‘A’ and ‘B’ 4. Neither of them
21. In your institutions who did set the 1. Head manger
criteria of employee’s performance 2. Head manager and representative workers
evaluation? 3. Senior workers and Head manager
22. Which of the following sources of 1.Worker’s portfolio
information is used during 2. Annual Performance plan
performance evaluation of 3. Worker’s portfolio & annual performance plan
employees? 4. Other sources
40
PART IV- MFI Manager’s offer to Participate Staff in All Activities
Disagree
Disagree
Strongly
Strongly
Neutral
Agree
Agree
S.N Statements
23. There is integration of PMS at MFI, team and individual

level.
24. The MFI managers encourage employees toward the
accomplishment of the objectives of the office.
25. When the head manager participate 1. During planning 3. During evaluation
employees for the MFI affair? 2. During implementation 4. at any time
26. Do employees communicate on the 1. Yes 2. No
importance of performance management
system?
27. How frequently do employees and MFI 1. At the beginning of the year
managers discuss on the importance of 2. At the end of the semester
performance management system? 3. At the end of the year
4. Always as deemed necessary
PART V- Problems Related to Staff Performance Evaluation
Disagree
Disagree
Strongly
Strongly
Neutral
Agree
Agree
S.N Statements
28. I find it is difficult to discuss work problems with my

head manager/ supervisor
29. I have got the training opportunity if there is a gap of
performance management
30. The head managers have professional knowledge, skills,
experience and competence to evaluate teachers’
performance
31. Which of the following can be 1. Lack of skill 2. Lack of management

problem in the implementation 3. Lack of commitment 4. Lack of resources
of PMS? (it is possible to select 5. Lack of information 6. Others
41
more than one answer).
32. Did the head manager prepare 1. Yes 2. No
performance plan for you?
33. How has your manager 1. By giving feedback
influenced your effectiveness 2. Doing cooperatively
and job satisfaction? 3. Guiding positively
4. Other (specify)___________________
Thank you again for your cooperation!
Appendix II: Key informant interview guideline
1. Do you believe that the objectives of performance evaluation directly linked to the
objectives of the office? If your answer is yes, how ? If no why?
2. Did employees participate during planning, implementing and setting the criteria of
performance evaluation? If yes, how they participate?
3. Were there any grievances during performance evaluation of the workers? If your
answer is yes, what were the causes? And how you resolved it?
4. Do you believe that all employees have satisfied by performance evaluation
system? If your answer is No, what were the reasons for dissatisfaction?
5. Do you believe that all employees work toward the objectives of the office? If your
answer is yes, how do you explain it? If your answer is no, how do you encourage
them to work toward the objectives of the office?
6. Do you believe that office use the tangible and organized evidences or information
while to evaluate employee’s performance? If your answer is yes, what areas your
evidences focus on? And if no, what do you think about the reality of performance?
7. List down factors that affect the evaluation of employees’ performance according to
the degree of their difficulty
8. What will be the possible solutions of the problems listed above? Put the solutions
according to their importance.
42
Appendix III: SPSS Output
Frequency Table
Sex
Frequency Percent Valid Percent Cumulative

Percent
Male 67 65.0 65.0 65.0
Valid Female 36 35.0 35.0 100.0
Total 103 100.0 100.0
Age

Percent
18-25 32 31.1 31.1 31.1
26-30 46 44.7 44.7 75.7
Valid 31-35 15 14.6 14.6 90.3
36-40 10 9.7 9.7 100.0
Total 103 100.0 100.0
Education
43
Percent
Certificate 26 25.2 25.2 25.2
Diploma 62 60.2 60.2 85.4

Valid
1st Degree 15 14.6 14.6 100.0
Total 103 100.0 100.0
Committed to the organization vision, mission, strategic goals and objectives

Percent
strongly disagree 7 6.8 6.8 6.8
disagree 11 10.7 10.7 17.5
neutral 62 60.2 60.2 77.7
Valid
agree 14 13.6 13.6 91.3
strongly agree 9 8.7 8.7 100.0
Total 103 100.0 100.0
Development of the performance management was based on strategic plan of the MFI

Percent
Valid strongly disagree 33 32.0 32.0 32.0
disagree 46 44.7 44.7 76.7
neutral 19 18.4 18.4 95.1
agree 3 2.9 2.9 98.1
44
Total 103 100.0 100.0
Believe that the criteria of performance management system directly related with
objective of MFI

Percent
disagree 47 45.6 45.6 75.7
neutral 13 12.6 12.6 88.3

Valid
agree 7 6.8 6.8 95.1
Total 103 100.0 100.0
The primary purpose of performance management is human resource development

Percent
disagree 8 7.8 7.8 11.7
neutral 15 14.6 14.6 26.2

Valid
agree 43 41.7 41.7 68.0
strongly agree 33 32.0 32.0 100.0
Total 103 100.0 100.0
45
The implementation of performance management system

Percent
disagree 6 5.8 5.8 9.7
neutral 15 14.6 14.6 24.3

Valid
agree 40 38.8 38.8 63.1
strongly agree 38 36.9 36.9 100.0
Total 103 100.0 100.0
Have strategic plsn

Percent
Yes 81 78.6 78.6 78.6
Valid No 22 21.4 21.4 100.0
Total 103 100.0 100.0
believe that there are shared vision, mission and values among sector and
staff

Percent
Yes 25 24.3 24.3 24.3
Valid No 78 75.7 75.7 100.0
Total 103 100.0 100.0
know the vision, mission and the objectives of the sector

Percent
46
Yes 29 28.2 28.2 28.2
Valid No 74 71.8 71.8 100.0
Total 103 100.0 100.0
Performance expectation is clearly indicated to employees

Percent
disagree 57 55.3 55.3 75.7
Valid neutral 21 20.4 20.4 96.1
agree 3 2.9 2.9 99.0
Total 103 100.0 100.0
Employees work in team

Percent
disagree 41 39.8 39.8 65.0
neutral 24 23.3 23.3 88.3

Valid
agree 10 9.7 9.7 98.1
Total 103 100.0 100.0
The head manager and supervisor in MFI is task oriented

Percent
disagree 37 35.9 35.9 68.0
neutral 19 18.4 18.4 86.4
47
agree 11 10.7 10.7 97.1
Total 103 100.0 100.0
In MFI hard work is not recognized

Percent
disagree 9 8.7 8.7 11.7
neutral 19 18.4 18.4 30.1

Valid
agree 44 42.7 42.7 72.8
strongly agree 28 27.2 27.2 100.0
Total 103 100.0 100.0
There is integration of PMS at MFI, team and individual level

Percent
disagree 37 35.9 35.9 63.1
neutral 29 28.2 28.2 91.3

Valid
agree 6 5.8 5.8 97.1
Total 103 100.0 100.0
The MFI managers encourage employees

Percent
disagree 34 33.0 33.0 57.3
neutral 18 17.5 17.5 74.8
48
agree 18 17.5 17.5 92.2
Total 103 100.0 100.0
Descriptive Statistics
N Minimum Maximum Mean Std. Deviation
Committed to the organization 103 1 5 3.07 .932

vision, mission, strategic goals
and objectives
Development of the performance 103 1 5 1.98 .896

management was based on
strategic plan of the MFI
Believe that the criteria of 103 1 5 2.11 1.066

performance management system
directly related with objective of
MFI
The primary purpose of 103 1 5 3.90 1.062

performance management is
human resource development
The implementation of 103 1 5 3.99 1.052

performance management system
Performance expectation is clearly 103 1 5 2.09 .781

indicated to employees
Employees work in team 103 1 5 2.23 1.002
49
The head manager and supervisor 103 1 5 2.17 1.086
in MFI is task oriented
In MFI hard work is not 103 1 5 3.83 1.024

recognized
There is integration of PMS at 103 1 5 2.21 1.006

MFI, team and individual level
The MFI managers encourage 103 1 5 2.51 1.251

employees
It was found difficult to discuss 103 1 5 3.81 1.030

work problems with head
manager/supervisor
Have got the training opportunity 103 1 5 2.41 1.294
The head manager have 103 1 5 2.25 1.036

professional knowledge
Valid N (listwise) 103
50
51

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ASSESSMENT OF PRACTICE AND PROBLEMS OF STAFF

PERFORMANCE MANAGEMENT: IN CASE OF SELECTED

A THESIS SUBMITTED TO LEAD STAR COLLEGE OF

OBSA TEFERI (ASST.PROFESSOR)

LEAD STAR COLLEGE OF MANAGEMENT AND LEADERSHIP

Several individuals deserve acknowledgement for their contributions to the study. My

ABBREVIATIONS AND ACRONYMS.............................................................................vii

1.1. Background of the Study.........................................................................................................1

1.2. Statement of the Problem........................................................................................................4

1.3. Objectives of the Study...........................................................................................................5

1.3.1. General objective..............................................................................................................5

1.3.2. Specific objectives............................................................................................................5

1.4. Research Questions.................................................................................................................5

1.5. Significance of the Study........................................................................................................6

1.6. Scope of the Study..................................................................................................................6

1.7. Definition of Operational Terms.............................................................................................6

1.8. Organization of the Thesis......................................................................................................7

2.1Theoretical review of literatures................................................................................................8

2.1.1 Concepts and Definitions of Performance Management.......................................................8

2.3. Principles of Performance Management..................................................................................9

2.4. Purposes of Performance Management.................................................................................11

2.5. Performance Measures..........................................................................................................13

3.1. Description of the Study Area...............................................................................................17

3.2. Study Design.........................................................................................................................18

3.3. Data Sources.........................................................................................................................18

3.4. Sampling Technique..............................................................................................................18

3.5. Data Collection Methods.......................................................................................................18

3.6. Method of Data Processing and Analysis..............................................................................19

3.6.1. Descriptive Analysis..........................................................................................................19

3.7. Ethical Consideration............................................................................................................20

RESULTS AND DISCUSSIONS.........................................................................................21

4.1. Background Characteristics of Respondents.........................................................................21

4.2. Staff Performance Evaluation and Institution Objectives......................................................23

4.3. Staff Performance Evaluation on the Actual Results of the Staff..........................................27

4.4. MFI Manager’s Ability to Participate Staffs’ in All Activities..............................................29

4.5. Problems Related to Staff Performance Evaluation...............................................................30

SUMMARY, CONCLUSION AND RECOMMENDATIONS...........................................32

5.1. Summary of Major Findings.................................................................................................32

Appendix II: Key informant interview guideline......................................................................42

Appendix III: SPSS Output......................................................................................................43

ABBREVIATIONS AND ACRONYMS

CSRP Civil Service Reform Program

ROPMS Result-Oriented Performance Management System

SNNPRS Southern Nations Nationalities and Peoples Regional State

SPSS Statistical Package for Social Sciences

1.1. Background of the Study

One of the main management strategies of the organizations is to invest in employees.

Different workshops were organized and evaluation made on the progress of

1.2. Statement of the Problem

1.3. Objectives of the Study

1.3.1. General objective

performance management in selected branches of Sidama microfinance, Sidama Zone.

1.3.2. Specific objectives

1.4. Research Questions

1. Do branch offices evaluate the employees’ performance according to the mission,

1.5. Significance of the Study

1.6. Scope and Limitation of the Study

1.7. Definition of Operational Terms

1.8. Organization of the Thesis