ST.

MARY’S UNIVERSITY
SCHOOL OF GRADUATE
STUDIES SCHOOL OF BUSINESS

ASSESSMENT OF PERFORMANCE MANAGEMENT SYSTEM IN

COMMERCIAL BANK OF ETHIOPIA: A CASE OF CITY BRANCHES
IN ADDIS ABABA AND HEAD OFFICE

BY
FIREHIWOT TESFAYE

JANUARY, 2017
ADDIS ABABA, ETHIOPIA
 ASSESSMENT OF PERFORMANCE MANAGEMENT SYSTEM IN
COMMERCIAL BANK OF ETHIOPIA: A CASE OF CITY BRANCHES
IN ADDIS ABABA AND HEAD OFFICE

BY

FIREHIWOT TESFAYE

A THESIS SUBMITTED TO ST. MARY’S UNIVERSITY, SCHOOL OF

GRADUATE STUDIES IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF MASTER OF BUSINESS
ADMINISTRATION IN PROJECT MANAGEMENT

JANUARY, 2017
ADDIS ABABA, ETHIOPIA
 ST. MARY’S UNIVERSITY
SCHOOL OF GRADUATE
STUDIES FACULTY OF BUSINESS

ASSESSMENT OF PERFORMANCE MANAGEMENT SYSTEM IN

COMMERCIAL BANK OF ETHIOPIA: A CASE OF CITY BRANCHES
IN ADDIS ABABA AND HEAD OFFICE

BY
FIREHIWOT TESFAYE

APPROVED BY BOARD OF EXAMINERS

Dean, Graduate studies

Advisor

External Examiner

Internal Examiner
 Table of Contents
DECLARATION..................................................................................................................iii

ENDORSEMENT.................................................................................................................iv

ACKNOWLEDGMENTS......................................................................................................v

ACRONYMS & ABBREVIATIONS...................................................................................vi

LIST OF TABLES..............................................................................................................viii

ABSTRACT..........................................................................................................................ix

CHAPTER ONE: INTRODUCTION....................................................................................1

1.1. Background of the study...........................................................................................1

1.2. Statement of the Problem.........................................................................................3
1.3. Research Questions..................................................................................................5
1.4. Objective of the Study..............................................................................................5
1.4.1. General Objective.................................................................................................5
1.4.2. Specific Objectives...............................................................................................5
1.5. Significance of the Study.........................................................................................6
1.6. Scope and limitation of the Study............................................................................6
1.7. Organization of the Study.........................................................................................6
CHAPTER TWO: REVIEW OF RELATED LITERATURES.............................................7

2.1. Introduction..............................................................................................................7
2.2. Theoretical Studies...................................................................................................7
2.2.1. Definition of Performance................................................................................7
2.2.2. Performance Management................................................................................7
2.2.3. Objectives of Performance Management..........................................................8
2.2.4. Underpinning Theories.....................................................................................9
2.2.4.1. Goal Theory...................................................................................................9
2.2.4.2. Control Theory..............................................................................................9
2.2.4.3. Social Cognitive Theory................................................................................9
2.2.5. Performance Management Process.................................................................10
2.2.6. Principles of Performance Management System............................................20
2.2.7. The Cycle of Performance Management System............................................21

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 2.2.8. Style of Performance Management System....................................................23
2.2.9. Factor affecting Performance Management System.......................................23
2.2.10. PROS and CONS of Performance Management System............................24
2.2.11. Challenges of Performance Management System.......................................29
2.3. Conceptual Framework..........................................................................................31
CHAPTER THREE: RESEARCH DESIGN AND METHODOLOGY.............................33

3.1. Research Design.................................................................................................33

3.2. Research Approach.............................................................................................33
3.3. Source and method of data collection.................................................................34
3.3.1 Source of data collection.................................................................................34
3.3.2 Method of data collection...............................................................................34
3.4. Sampling technique and sample size..................................................................34
3.5. Methods of data analysis....................................................................................37
3.6. Ethical Consideration..........................................................................................37
CHAPTER FOUR: DATA ANALYSIS AND PRESENTATION......................................39

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION..............54

5.1 Summary................................................................................................................54
5.2 Conclusion..............................................................................................................56
5.3 Recommendations..................................................................................................58
REFERENCES.....................................................................................................................61

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 DECLARATION

I, the undersigned, declare that this thesis is my original work, prepared under the guidance
of Worku Mekonnen (PhD). All sources of materials used for the thesis have been duly
acknowledged. I further conform that the thesis has not been submitted either in part or full
to any other higher learning institution for the purpose of earning any degree.

Advisor Signature
St. Mary‟s University College, Addis Ababa January, 2017

iii
 ENDORSEMENT

This thesis has been submitted to St. Mary‟s University, school of Graduate Studies for
examination with my approval as a university advisor.

Name Signature
St. Mary‟s University College, Addis Ababa January, 2017

iv
 ACKNOWLEDGMENTS

First, I am truly indebted to thank the almighty God with his mother Saint Marry, not only
for the successful accomplishment of this paper but also for his bright gifts throughout my
life from the beginning wherever I go.

I am heartily grateful to express my deepest gratitude to my advisor, Dr. Worku Mekonen

for all his expert guidance, valuable suggestions and encouragement from the
commencement to the final write-up of the thesis. I thank you deep in to my heart.

I would like to extend my love and respect to my mother, W/o Habtam Sendekie and my
father Ato Tesfaye Adinew and my sisters Mahlet and Yeabsira for they spent their entire
life living for me. What you owe me is a lot to repay.

My deepest thank goes to my bosses Ato Temesgen Diriba , My class mate and best friend
Lozamariam Mulugeta.

Last, but not by any means least, and yet importantly, I want to extend my sincere thanks to
all CBE Furi staff who was very cooperative to participate in questioner and in-depth
interview by taking time. I also extend my warm gratitude to all CBE staff members who
were very cooperative in providing the necessary data and information for the conduct of
my thesis.

Firehiwot Tesfaye

January, 2017

Addis Ababa

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 ACRONYMS & ABBREVIATIONS

CBE: Commercial bank of Ethiopia

HR: Human resource

PMS: Performance management system

EPM: Employees performance management

SMART: Specific, measurable, achievable, relevant and time framed.

ATM: Automatic teller machine

HSBC: Hong Kong and Shanghai banking corporation

SWIFT: Society for worldwide interbank financial telecommunication

BSC: Balanced scored card

KSA: Knowledge, skills, and attitudes

LCY: Local currency

FCY: Foreign currency

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 LIST OF FIGURES

Figure 2.1 performance management cycle.....................................................................22

Figure 2.2 Conceptual framework...................................................................................32

vii
 LIST OF TABLES

Table 3.1 Sample size determination...............................................................................36

Table 4.1 Respondents profile.........................................................................................38
Table 4.2 Mission, strategic goal and activity.................................................................40
Table 4.3 Performance Planning......................................................................................41
Table 4.4 Performance Agreement..................................................................................44
Table 4.5 provision of feedback......................................................................................46
Table 4.6 Performance evaluation practice.....................................................................49
Table 4.7 Performance Review Practice..........................................................................51

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 ABSTRACT
Performance management is a continuous process of identifying, measuring and developing
the performance of individuals and teams and aligning performance with the strategic goals
of the organization. There is no common understanding or implementation of the system by
performers or supervisors at different branches (CBE, 2015). This project was designed to
assess employees‟ performance management system of commercial bank of Ethiopia in city
Branches and head office. To this end, the study has gone through an assessment of the
practice of performance planning & agreement, provision of ongoing feedback,
performance evaluation and performance review process. Primary data were collected
through questionnaire and interview. 369 questioners were distributed to randomly selected
employees and out of these 313 were properly filled and returned. The data were analyzed
using descriptive method. Interview was held with the district human resource manager and
some branch managers. The finding of the study revealed that some targets were
unattainable, and data tracking system was manual and no usage of formats, lack of proper
documentation of PMS files, inadequate feedback provision, inconvenient office layout to
provide feedback privately for employees, absence of guideline to manage employee‟s
movement from one job to another job during the rating period etc. Based on the findings,
the researcher recommended the bank to allocate attainable targets, automate its data
tracking system, allocate adequate manpower, develop clear guideline to manage the
movement of employees to another job at the end of the rating period, etc.

Key word: Commercial bank of Ethiopia.

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 CHAPTER ONE
INTRODUCTION
1.1. Background of the study
Performance Management is one of the aspects of human resource management. It is a
process of advancing the performance of the organization to the higher expectation by
developing the performance of individuals and teams in a systematic way. It is the process
of cascading the goal of the organization down to teams and individuals with the aim of
getting a better result (Armstrong, 2009).

PMS is an ongoing activity, managing and hopefully improving performance of employee.

It consists of regular meetings where performance is discussed, objectives are set, and
action plans formulated and development needs are identified. (Mc pheat, 2010).

Performance Management is one of the most important functions in human resource

management. It provides the context to link individual objectives with departmental targets,
thus supporting and facilitating the attainment of departmental goals. Performance
management can be a very effective management tool when applied properly. It provides
staff with clarity of aims and focuses on job expectation, motivates staff to perform better,
cultivates the desired culture, helps to focus on the desired results, improves
communication, helps to develop staff and helps to achieve departmental objectives.
(Performance management guide, 2000).

Measuring and managing employee performance is important as it leads to employee

satisfaction by linking benefits with performance accomplishment; it enables the
organizations to achieve higher performances accordingly. It also leads to employee
satisfaction improvement, rise in employee work motivation, creativity and development of
the knowledge and competency levels, as a key competitive advantage (Coens & Jenkins,
2002). Therefore performance management systems have come to play an indispensable
role in helping organizations to reach their goals of productivity (Stevers & Joyce, 2000).

Human resource management practices could influence the behaviors of individual

employees. The impact of Human Resources (HR) practices on employees' commitment
and performance depends on employees' perception and evaluation of these practices
(Guest, 2009).

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Commercial Bank of Ethiopia is the leading and Pioneer bank to introduce modern banking
to the country which was established in 1942. Since its establishment it has made a lot of
developments and currently it has more than 1140 branches stretched across the country. It
is the leading African bank with an asset of 384.6 billion Birr as of June 30th 2016. CBE
plays a significant role in the economic progress & development of the country. It is the
first bank in Ethiopia to introduce ATM service for local users and currently it has more
than 11 million account holders. CBE has strong correspondent relationship with more than
50 renowned foreign banks like: Royal Bank of Canada, City Bank, HSBC Bank, and it has
a SWIFT bilateral arrangement with more than 700 others banks across the world. CBE
combines a wide capital base with more than 28,000 talented and committed employees.
CBE is the Pioneer to introduce Western Union Money Transfer Services in Ethiopia early
1990s and currently working with other 20 money transfer agents like Money Gram,
Atlantic International (Bole), Xpress Money, Western Union Dahabshil and others. It has
opened four branches in South Sudan and has been in the business since June 2009. CBE
has reliable and long-standing relationships with many internationally acclaimed banks
throughout the world. (CBE, 2014). CBE is striving to be outstanding bank and to achieve
its mission and vision statements that is:

To become a world-class commercial bank by the year 2025 (The vision),

And its Mission is: „‟Being committed to best realize stakeholders' needs through enhanced
financial intermediation globally and supporting national development priorities, by
deploying highly motivated, skilled and disciplined employees as well as state-of-the-art
technology. We strongly believe that winning the public confidence is the basis of our
success‟‟. (CBE, 2014/15).

Commercial bank of Ethiopia (CBE), which is striving to become a world class bank, is
rendering state-of-the- art and reliable services to its millions of customers. The bank is
implementing different strategies to improve its organizational efficiency in order to deliver
quality service. And, it is striving to outstand the market competition. Aiming to improve
organizational performance, it has been adopting different business strategies. The
strategies of the bank focus on the interest of public it serves. In order to improve its
service delivery and meet its vision, it is therefore needed to enhance the human power
capacity. As a result it has been integrating its strategic objectives with employees
objectives by implementing performance management system which is intended to deliver

2
successful results in an organizations by improving the performance and developing the
capabilities of teams and individual employees.

Moreover, performance management system is also a way of cascading corporate strategy

dawn to teams and individuals to align individual objectives with the objectives of the
organization. The cascaded strategy on the other hand, can be applied to the department‟s
performance evaluation team by balanced scorecard. Since the Balanced Scorecard was
invented in 1990s, it was received as a wide range of use and promotion in the global
business community, and some of the major international banks have successfully used it,
which makes increase their performance greatly (Armstrong, 2009).

Commercial bank of Ethiopia is learning from successful experience of international large

banks, and establishing a comprehensive performance management system which helps the
bank to improve service delivering process and achieving its strategic objectives (Annual
report 2014/2015). As a result, the process of measuring and managing organizational and
employee performance is currently seen as critical to the development and success of the
bank.

In commercial bank of Ethiopia, performance management system is seen as

management‟s systematic application of processes aimed at fully utilizing human resources
and it carries somewhat connotation when considered from the employee‟s perspective.
Thus to enhance impacts of performance management system, it is important to understand
employees‟ perceived perception toward the performance management system since the
process requires high involvement and commitment from employees. Therefore this study
will be conducted with the aim of assessing performance management system in
commercial bank of Ethiopia.

1.2. Statement of the Problem

Many corporations view their performance management systems as organizational
wallpaper, meaning that they exist only in the background and are not expected to add
value (Coens & Jenkins, 2002).

The reason for the presence of employee performance management system in an

organization is to improve organizational result, deploy a culture that will attract and
develop employees, create a good relationship between managers and employees, enhance
meaningful work cooperation among employees, generate an opportunity for growth and
development and to make clear on an understanding of work objectives. Effective

3
employee‟s performance management system has a well-articulated process for
accomplishing evaluation activities, with defined roles and timelines for both managers and
employees. Especially in organizations that use EPM as a basis for pay and other HR
decisions, it is important to ensure that all employees are treated in a fair and equitable
manner (Pulakos, 2004).

Creating motivated and proficient employees is one of the strategic goals of CBE by 2025.
In the current competitive market environment among local organizations and the need for
national and international competitiveness calls for improved performance of each
individual and teams working together to achieve organizational goals. Without having a
high performing employee and units it will be difficult for organizations to compete with
national and international market. To ensure market competitiveness EPM system is highly
desired to develop the capacity of the employees and inspired them to put maximum effort
in the realization of organizational goals.

CBE institutionalized the balanced scorecard (BSC) performance management tool since
2010 to formulate and implement its strategy and track its performance. The BSC is
formulated in line with the national scorecard adopted by the government of Ethiopia. To
formulate its strategy, the starting point was the statement of its vision, mission and values
towards which a strategy should be geared. The BSC framework translates strategy
(strategic themes) by organizing the detailed directions of actions under each theme- the
strategic objectives and their corresponding measures under four perspectives: financial,
customer, internal-business-process and learning-growth.

In the year 2014 CBE has implemented EPM system in order to aligning the strategic
objectives of the bank to that of individual level. However, as shown in the EPM system
follow-up report of the bank (2015), the implementation has been encountered different
types of challenges like: unbalanced goals and targets were assigned for employees
assigned at different assignments while they are at the same job grades, non-alignment of
EPM system with benefit packages. While executing the performance management system,
failure in any of the phases of PMS will impact the outcome. For instance, in performance
planning stage if an employee is given unattainable target, conducting ongoing feedback
and performance evaluation is meaningless. To the contrary, if an employee is given
achievable target but ongoing feedback & coaching have problem, the employees
„performance may not be as expected. The same is true for problems regarding
performance data tracking to conduct performance evaluation.

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According to the branch visit report of CBE, (2015), there is varied level of understanding
and implementation of the PMS by performers. This report indicates gaps in execution of
PMS in the company. The study is to be conducted to minimize the unavailability of
empirical study on the study area of commercial bank of Ethiopia performance
management system.

1.3. Research Questions

Considering the importance of performance management system in commercial bank of
Ethiopia, the researcher become interested to assess of performance management system of
the bank in order to answer the following basic questions:

1. Is the CBE‟s mission, strategic goals and tasks are clearly defined for employees?
2. Is the targets given for employees during performance planning and agreement
phase have specific, measurable, achievable, relevant and time framed feature?
3. Is feedback provision being done ongoing, constructive, in private, timely and with
direct manager?
4. How is data tracking system & performance evaluation practice?
5. Is there a performance review in which CBE‟s manager and employee review the
performance assessments for providing feedback in each rating period?
6. Is professional & managerial employees‟ exhibit difference on target attainment,
attitude towards feedback & clarity of job responsibility?

1.4. Objective of the Study

1.4.1. General Objective
The overall objective of this study is to assess EPM system in CBE.

1.4.2. Specific Objectives

The following are the specific objectives that this study addressed.

 To examine how CBE‟s mission, strategic goals and tasks defined for employees?
 To examine the targets given for employees are SMART or not.
 To examine the level and conditions of feedback provision on performance
progress.
 To examine the data tracking system & performance evaluation practice.
 To assess whether performance review conduct in each rating period.

5
  To examine whether difference exists between professional & managerial
employees on target attainment, attitude towards feedback & clarity of job
responsibility

1.5. Significance of the Study

The study is used to assess employee performance management system in commercial bank
of Ethiopia. Furthermore, the study enabled;

1. The commercial bank of Ethiopia to obtain the necessary information and take
corrective measure to ensure the successful implementation of performance
management system.
2. To minimize the study gap observed in the subject matter.
3. It might be an input for similar other organizations who are interested in designing
and implementing a performance management system.
4. The study will help CBE managers to focus on factors determining the success of
performance management system.

1.6. Scope and limitation of the Study

This research is conducted to assess only the execution of the PMS processes such as
performance planning & agreement, feedback provision, performance evaluation &
performance review. It didn‟t deal about other factors that might hinder implementation of
PMS like reward system and others. Some of the most important limitations of this research
were; some staffs are un-willing to fill the questioner properly, lack of time to utilize
maximum effort due to other work pressure, the researcher also faced financial limitation to
conduct comprehensive and detail study of performance management system in all branch
of CBE.

1.7. Organization of the Study

The study is composed of five chapters. The first chapter deals with the introduction part
includes the background of the study, statement of the problem, objectives of the study,
significance of the study, limitation and scope of the study. Chapter two included related
literature review where detail discussion about the topic has been undertaken. The third
chapter is presented the research design and methodology. In the fourth chapter data
presentation, analysis and interpretation is discussed. The last chapter covered the summary
of major findings and conclusions drawn from the findings and also the possible
recommendations is forwarded by the researcher.

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 CHAPTER TWO
REVIEW OF RELATED LITERATURES
2.1. Introduction
Performance management system is an important human resource management process
which used to manage performance of employees in an organization so as to enhance the
productivity and/or profitability of the organization. This chapter discusses about
definition, objective and process of performance management system in depth from
different books, researches and internet sources.

2.2. Theoretical Studies

2.2.1. Definition of Performance
Performance can be defined as an outcome or accomplishment achieved by a person or a
team (Armstrong, 2009). It is the accomplishment or outputs/outcomes of a task undertaken
but also states that performance is about doing the work effectively so as to achieve the
desired goals. Performance can also be perceived as a non-job specific behavior such as
cooperation, dedication, enthusiasm and persistence that develop the effectiveness of the
organization to enhance the working culture and climate of the organization.

2.2.2. Performance Management

Performance management is a continuous process of identifying, measuring and developing
the performance of individuals and teams and aligning performance with the strategic goals
of the organization. Its five elements are agreement, measurement, feedback, positive
reinforcement and dialogue (Aguinis, 2005).

Performance management System is an ongoing process of communication between a

supervisor and an employee that occurs throughout the year, in support of accomplishing
the strategic objectives of the organization. The communication process includes clarifying
expectations, setting objectives, identifying goals, providing feedback, and reviewing
results. (Teshale, 2015).

PMS is a process for establishing an organization system of understanding about what is to

be achieved at an organization level. It is about aligning the organizational objectives with

7
the employees' agreed measures, skills, competency requirements, development plans and
the delivery of results. The emphasis is on improvement, learning and development in order
to achieve the overall business strategy and to create a high performance workforce (Guide
to Managing Human Resources, 2016).

Performance management is the process of identifying, measuring, managing, and

developing the performance of the human resources in an organization. When used
correctly, performance management is a systematic analysis and measurement of worker
performance (including communication of that assessment to the individual) that we use to
improve performance over time.

Performance management system and performance appraisal are interlinked with each
other. However, performance management system is the broader one which identifies
measure, manage and develop performance of the human resource in an organization
whereas performance appraisal is the sub set of performance management system in which
we use it for evaluating the competence of employees. (Robert and John, 2013).

Many factors will impact the effectiveness of an organization‟s performance management

system, but three are most important. First, the system needs to be aligned with and support
the organization‟s direction and critical success factors. Second, well-developed, efficiently
administered tools and processes are needed to make the system user friendly and well
received by organizational members. Third, and most important, is that both managers and
employees must use the system in a manner that brings visible, value-added benefits in the
areas of performance planning, performance development, feedback and achieving results
(Pulakos, 2004).

The bank (commercial bank of Ethiopia) defined performance management system as:

A strategic management tool that enhances successful performance by aligning individual

efforts towards the organization business objectives. It is a means by which a supervisor
and an employee can reach a mutual understanding of expectations, and a process through
which an assessment can be made as to whether the expectations have been met, exceeded,
or remain unmet. (CBE, 2009).

2.2.3. Objectives of Performance Management

The overall objective of performance management is to develop the capacity of people to
meet and exceed expectations and to achieve their full potential to the benefit of themselves

8
and the organization. Performance management provides the basis for self-development but
importantly, it is also about ensuring that the support and guidance people need to develop
and improve is readily available (Armstrong, 2009).

According to (Armstrong, 2006) the overall aim of performance management is to establish

a high performance culture in which individuals and teams take responsibility for the
continuous improvement of business processes and for their own skills and contributions
within a framework provided by effective leadership. Specifically, performance
management is about aligning individual objectives to organizational objectives and
ensuring that individuals uphold corporate core values. It provides for expectations to be
defined and agreed in terms of role responsibilities and accountabilities (expected to do),
skills (expected to have) and behaviors (expected to be).

2.2.4. Underpinning Theories

The following three theories underpinning performance management have been identified
by (Buchner, 2007).

2.2.4.1. Goal Theory

Goal theory, as developed by (Latham and Locke, 1979) highlights four mechanisms that
connect goals to performance outcomes: 1) they direct attention to priorities; 2) they
stimulate effort; 3) they challenge people to bring their knowledge and skills to bear to
increase their chances of success; and 4) the more challenging the goal, the more people
will draw on their full repertoire of skills. This theory underpins the emphasis in
performance management on setting and agreeing objectives against which performance
can be measured and managed (Armstrong, 2009).

2.2.4.2. Control Theory

Control theory focuses attention on feedback as a means of shaping behavior. As people
receive feedback on their behavior they appreciate the discrepancy between what they are
doing and what they are expected to do and take corrective action to overcome the
discrepancy. Feedback is recognized as a crucial part of performance management
processes (Armstrong, 2009).

2.2.4.3. Social Cognitive Theory

Social cognitive theory was developed by (Bandura, 1986). It is based on his central
concept of self-efficacy. This suggests that what people believe they can or cannot do

9
powerfully impacts on their performance. Developing and strengthening positive self-belief
in employees is therefore an important performance management objective (Armstrong,
2009).

2.2.5. Performance Management Process

As noted earlier, performance management is a continuous process. However, when a
system is first implemented, the process follows the following six stages (Aguinis, 2009).

1. Pre – requisites 2.Performance planning 3.Performance execution 4.Performance

assessment, 5.performance review and 6. Performance renewal and re contracting.

Stage 1: Prerequisites
There are two important prerequisites that are needed before a performance management
system is implemented: (1) knowledge of the organization‟s mission and strategic goals
and
(2) knowledge of the job in question. If there is a lack of clarity regarding where the
organization wants to go, or the relationship between the organization ‟ s mission and
strategies and each of its unit ‟ s mission and strategies is not clear, there will be a lack of
clarity regarding what each employee needs to do and achieve to help the organization get
there. An organization ‟ s mission and strategic goals are a result of strategic planning,
which allows an organization to clearly define its purpose or reason for existing, where it
wants to be in the future, the goals it wants to achieve, and the strategies it will use to attain
these goals. Once the goals for the entire organization have been established, similar goals
cascade downward, with departments setting objectives to support the organization‟s
overall mission and objectives. The second important prerequisite before a performance
management system is implemented is to understand the job in question. This is done
through job analysis. Job analysis is a process of determining the key components of a
particular job, including activities, tasks, products, services, and processes. There are
numerous types of job analytic tools, including some that focus on specific personality
traits needed for various positions (Aguinis, et al, 2009). A job analysis is a fundamental
prerequisite of any performance management system. Without a job analysis, it is difficult
to understand what constitutes the required duties for a particular job. If we don‟t know
what an employee is supposed to do on the job, we won‟t know what needs to be evaluated
and how to do so.

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Stage 2: Performance Planning

The performance planning stage has the goal for employees to have a thorough knowledge
of the performance management system. In fact, at the beginning of each performance
cycle, the supervisor and the employee meet to discuss, and agree on, what needs to be
done and how it should be done. This performance planning discussion includes a
consideration of results, behaviors, and development plan.

Results: Results refer to what needs to be done or the outcomes an employee must
produce. A consideration of results needs to include the key accountabilities, or broad areas
of a job for which the employee is responsible for producing results. A discussion of results
also includes specific objectives that the employee will achieve as part of each
accountability.

Objectives are statements of important and measurable outcomes. Finally, discussing

results also means discussing performance standards. A performance standard is a yardstick
used to evaluate how well employees have achieved each objective. Performance standards
provide information about acceptable and unacceptable performance. Like quality, quantity,
cost, and time thus the objective is the desired level of performance, whereas the standard is
usually a minimum acceptable level of performance.

Types of Objectives
• Ongoing role or work objectives – all roles have built-in objectives that may be
expressed as key result areas in a role profile.

 Targets – these define the quantifiable results to be attained as measured in

such terms as output, throughput, income, sales, levels of service delivery and
cost reduction.
 Tasks/projects – objectives can be set for the completion of tasks or projects by
a specified date or to achieve an interim result.

Criteria for objectives

Many organizations use the following SMART (specific, measurable, achievable, and
relevant and time framed) mnemonic to summarize the criteria for objectives:

S = Specific/stretching – clear, unambiguous, straightforward and understandable.

1
M = Measurable – quantity, quality, time, money.

A = Achievable – challenging but within the reach of a competent and committed person.

R = Relevant – relevant to the objectives of the organization so that the goal of the
individual is Aligned to corporate goals.

T = Time framed – to be completed within an agreed timescale.

Behaviors: Although it is important to measure results, an exclusive emphasis on results

can give an incomplete picture of employee performance. A consideration of behaviors
includes discussing competencies, which are measurable clusters of knowledge, skills, and
attitudes (KSAs) that are critical in determining how results will be achieved (Shippmann,
2000). Examples of competencies are customer service, written or oral communication,
creative thinking, and dependability.

Development plan: An important step before the review cycle begins is for the supervisor
and employee to agree on a development plan. At a minimum, this plan should include
identifying areas that need improvement and setting goals to be achieved in each area.
Development plans usually include both results and behaviors. Achieving the goals stated
in the development plan allows employees to keep abreast of changes in their field or
profession. Information to be used in designing development plans comes from the
appraisal form. Specifically, a development plan can be designed based on each of the
performance dimensions evaluated. In addition, however, development plans focus on the
knowledge and skills needed for more long - term career aspirations. In addition to
improved performance, the inclusion of development plans and, in more general terms, the
identification of employee strengths and weaknesses as part of the performance
management system have another important benefit employees are more likely to be
satisfied with the system (Boswell &Boudreau, 2000). The direct supervisor or line
manager has an important role in the creation and completion of the employee‟s
development plan. This active role will help the supervisor understand the process from the
employee‟s perspective, anticipate potential roadblocks and defensive attitudes, and create
a plan in a collaborative fashion (Dunning, 2004). First, the supervisor needs to explain
what would be required for the employee to achieve the desired performance level,
including the steps that an employee must take to improve performance. This information
needs to be provided together with information on the probability of success if the
employee completes the suggested steps. Second, the supervisor has a primary role in

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referring the employee to appropriate development activities that can assist the employee in
achieving her goals. This includes helping the employee select a mentor, appropriate
reading resources, courses, and so forth. Third, the supervisor reviews and makes
suggestions about the development objectives. Specifically, the supervisor helps assure the
goals are achievable, specific c, and doable. Fourth, the supervisor has primary
responsibility for checking on the employee‟s progress toward achieving the development
goals.

Stage 3: Performance Execution

Once the review cycle begins, the employee strives to produce the results and display the
behaviors agreed on earlier as well as to work on development needs. The employee has
primary responsibility and ownership of this process. Employee participation does not
begin at the performance execution stage, however. As noted earlier, employees need to
have active input in the development of the job descriptions, performance standards, and
the creation of the rating form. In addition, at later stages, employees are active participants
in the evaluation process in that they provide a self - assessment and the performance
review interview is a two - way communication process. Although the employee has
primary responsibilities for performance execution, the supervisor also needs to do his or
her share of the work. Supervisors have primary responsibility over the following issues:

Observation and documentation: Supervisors must observe and document performance

on a daily basis. It is important to keep track of examples of both good and poor
performance.

Updates: As the organization‟s goals may change, it is important to update and revise
initial objectives, standards, and key accountabilities (in the case of results) and
competency areas (in the case of behaviors).

Feedback: Feedback on progression toward goals and coaching to improve performance

should be provided on a regular basis, and certainly before the review cycle is over.

Resources: Supervisors should provide employees with resources and opportunities to

participate in development activities. Thus, they should encourage (and sponsor)
participation in training, classes, and special assignments. Overall, supervisors have a
responsibility to ensure that the employee has the necessary supplies and funding to
perform the job properly.

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Reinforcement: Supervisors must let employees know that their outstanding performance
is noticed by reinforcing effective behaviors and progress toward goals. Also, supervisors
should provide feedback regarding negative performance and how to remedy the observed
problem. Observation and communication are not sufficient. Performance problems must
be diagnosed early and appropriate steps must be taken as soon as the problem is
discovered.

Stage 4: Performance Assessment

In the assessment phase, both the employee and the manager are responsible for evaluating
the extent to which the desired behaviors have been displayed, and whether the desired
results have been achieved. Although many sources can be used to collect performance
information (for example, peers or subordinates), in most cases the direct supervisor
provides the information. This also includes an evaluation of the extent to which the goals
stated in the development plan have been achieved. It is important that both the employee
and the manager take ownership of the assessment process. The manager fills out his or her
appraisal form, and the employee should also fill out his or her form. The fact that both
parties are involved in the assessment process provides better information to be used during
the review phase (Smither and London, 2009).

When both the employee and the supervisor are active participants in the evaluation
process, there is a greater likelihood that the information will be used productively in the
future. Specifically, the inclusion of self - ratings helps emphasize possible discrepancies
between self-views and the views that important others (that is, supervisors) have. It is the
discrepancy between these two views that is most likely to trigger development efforts,
particularly when feedback from the supervisor is more negative than are employee self -
evaluations (Smither, et al, 2009). The benefit of self-appraisal is to reduce an employee‟s
defensiveness during the assessment meeting and also in increase employee‟s satisfaction
and trust in the performance management system. The time for the formal performance
appraisal nears, the manager reflects on how well the subordinate has performed over the
course of the year, assembles the various forms and paperwork that the organization
provides to make this assessment, and fills them out. The manager may also recommend a
change in the individual‟s compensation based on the quality of the individual‟s work
(Grote, 2002). Habitually, people think that performance appraisal is an event required by
the personnel department in which the manager fills out the form and then uses it to give
feedback which is totally wrong. Rather performance assessment is one of the most

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important processes in performance management system in which supervisors are assessing
their subordinates regarding their performance in the past which lays a ground for keeping
the strength and improving on the weaknesses and working on the development plan for the
future. Managers often complain that evaluating someone‟s performance is difficult. The
reason that they find it difficult is usually that they have not done a good job of
performance planning at the beginning of the year. If a manager has not held a planning
discussion at that time, it‟s difficult to evaluate performance at the end of the year.

Methods of Assessment

According to (Armstrong, 2006) there are seven ways of assessing performance:

1. Overall analysis of performance

An overall analysis is a form of assessment, as it will reveal strengths and, possibly,

weaknesses, which indicate where development can usefully take place.

2. Narrative Assessment

A narrative assessment is simply a written summary of views about the level of

performance achieved. This at least ensures that managers have to collect their thoughts
together and put them down on paper.

3. Rating

A rating scale is supposed to assist in making judgments and it enables those judgments to
be categorized to inform performance or contribution pay decisions or simply to produce an
instant summary for the record of how well or not so well someone is doing. Rating scales
can be defined alphabetically (a,b,c etc) or numerically (1,2,3 etc). Initials (ex for excellent
etc) are sometimes used in an attempt to disguise the hierarchical nature of the scale. The
alphabetical or numerical scale points may be described adjectivally, for example a =
excellent, b = good, c = satisfactory and d = unsatisfactory.

Alternatively, scale levels may be described verbally as in the following example:

Exceptional performance: exceeds expectations and consistently makes an outstanding

contribution that significantly extends the impact and influence of the role.

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Well-balanced performance: meets objectives and requirements of the role; consistently
performs in a thoroughly proficient manner.

Barely effective performance: does not meet all objectives or role requirements of the
role; significant performance improvements are needed.

Unacceptable performance: fails to meet most objectives or requirements of the role;

shows a lack of commitment to performance improvement, or a lack of ability, which has
been discussed prior to the performance review. The number of rating levels can be three,
four, five or even six levels.

4. Forced distribution

Forced distribution means that managers have to conform to a laid-down distribution of

ratings between different levels.

5. Forced ranking

Forced ranking is a development of forced distribution. Rankings can be generated directly

from the assignment of employees to categories (e.g. A, B and C) or indirectly through the
transformation of

Quota systems lay performance ratings into groups of employees.

6. Quota systems

Down what the distribution of ratings should be and adjust the ratings of managers after the
event to ensure that the quota in each level is met.

7. Visual methods of assessment

An alternative approach to rating is to use a visual method of assessment. This takes the
form of an agreement between the manager and the individual on where the latter should be
placed on a matrix or grid; in the performance assessment stage supervisors have the
following major responsibility which helps them to evaluate their subordinate effectively
and fairly (Armstrong, 2006).

1. Review the original list of competencies, goals, objectives, and key position
responsibilities: -since performance assessment is made based on the goals,

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 objective and competencies listed in the performance planning stage, supervisors
should review them so as to cascade the assessment from them.
2. Prepare a preliminary assessment of the employee’s performance over the
entire year: - it helps to have a clear picture on the performance of the employee
while accomplishing their planned objective as well as achieving organizational
goal.
3. Review the individual’s list of accomplishments and the self-appraisal: -
assessing the accomplishment made by the employee and referring to self-appraisal
will help supervisors to remind every accomplishments and failure so as to make an
accurate evaluation accordingly.
4. Prepare final assessment of the employee’s performance: - after reviewing the
data gathered through self-appraisal, peer appraisal and self-evaluation made by
supervisors, the final assessment should be prepared with fair judgment.
5. Write the official performance appraisal using the appraisal form
6. Review the appraisal with the manager and obtain concurrence: - the
assessment filled on the appraisal form should be reviewed by the higher
supervisors in order to cross check the fairness of the evaluation.
7. Determine any revisions needed to the employee’s key position responsibilities,
goals, objectives, competencies, and development plans for the next appraisal
period: - based on the past performance point out the areas which needs revision on
the responsibilities, objectives, goals, competencies and development plans. This is
highly appreciated when performance gap is identified.
8. Prepare for the performance review meeting: - employees and supervisors
should have a meeting to talk about the assessment as well as performance review
for the next period.

Likewise supervisors‟ individuals have also the above stated responsibilities in the
performance assessment phase of the process.

Rating errors which is encountered during performance evaluation process rating errors are
faults or factors that influence supervisors to have a wrong judgment in evaluating
employees‟ result and behavior and making a wrong decision on the quality of someone‟s
job performance. According to Armstrong there are different types of errors while rating
employee‟s performance. Among them; attractiveness effect, attribution bias, central

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tendency, first impression error, halo/horns effect, high potential error, negative and
positive skew, past performance error, similar-to-me effect and stereotyping.

Stage 5: Performance Review

The performance review stage involves the meeting between the employee and the manager
to review their assessments. This meeting is usually called the appraisal meeting or
discussion. The appraisal meeting is important because it provides a formal setting in which
the employee receives feedback on his or her performance. In spite of its importance in
performance management, the appraisal meeting is often regarded as the most difficult of
the entire process because many managers are uncomfortable providing performance
feedback, particularly when performance is deficient. This high level of discomfort, which
often translates into anxiety and the avoidance of the appraisal interview, can be mitigated
through training those responsible for providing feedback (Smither and London, 2009).

Providing feedback in an effective manner is extremely important because it leads not only
to performance improvement but also to employee satisfaction with the system. At this
point, however, let‟s emphasize that people are apprehensive about both receiving and
giving performance information, and this apprehension reinforces the importance of a
formal performance review as part of any performance management system. The
performance review meeting is the basis for assessing the three key elements of
performance (the three Cs), namely contribution, capability and continuous development.
Such meetings are also the means through which the five primary performance
management elements measurement, feedback, positive reinforcement, exchange of views,
and agreement can be put to good use. A performance review should be rooted in the reality
of the employee‟s performance. The latter is concrete, not abstract, and it allows managers
and individuals to take a positive look together at how performance can become even better
in the future and how any problems in meeting performance standards and achieving
objectives can be resolved. Individuals should be encouraged to assess their own
performance and become active agents for change in improving their results. Managers
should be encouraged to adopt their proper enabling role (Armstrong, 2000).

There should be no surprises in a formal review if performance issues have been dealt with
as they should have been, namely as they arise during the year. In one sense the review is a
stocktaking exercise, but this is no more than an analysis of where those involved are now,
and where they have come from. This static and historical process is not what performance

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management is about. The true role of performance management is to look forward to what
needs to be done by people to achieve the overall purpose of the job, to meet new
challenges, to make even better use of their knowledge, skills and abilities, and to help
them to develop their capabilities and improve their performance. This process also helps
managers to improve their ability to lead, guide and develop both individuals and teams for
whom they are responsible (Armstrong, 2000).

Objectives of performance review

Among different objective of performance review the followings are some of them which
can be mentioned as the most important one (Smither and London, 2009).

1. It gives motivation to provide positive feedback, recognition, praise and

opportunities for growth; to clarify expectations; to empower people by
encouraging them to take control over their own performance and development.
2. It encourages development by providing a basis for developing and broadening
capabilities relevant both to the current role and any future role that the employee
may have the potential to carry out. Note that development can be focused on the
current role, enabling people to enlarge and enrich the range of their responsibilities
and the skills they require, and to be rewarded accordingly. This aspect of role
development is even more important in flatter organizations, where career ladders
have shortened and where lateral progression is likely to be the best route forward.
3. It gives a chance for communication to serve as a two-way channel for talking about
roles, expectations (objectives and capability requirements), relationships, work,
problems and aspirations.

Stage 6: Performance Renewal and Re contracting

The final stage in the performance process is renewal and re contracting. Essentially, this is
identical to the performance planning component. The main difference is that the renewal
and re contracting stage uses the insights and information gained from the other phases. For
example, some of the goals may have been set unrealistically high given an unexpected
economic downturn. This would lead to setting less ambitious goals for the upcoming
review period. The performance management process includes a cycle that starts with
prerequisites and ends with performance renewal and re contracting. The cycle is not over
after the renewal and re contracting stage. In fact, the process starts all over again: there

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needs to be a discussion of prerequisites, including the organization‟s mission and strategic
goals and the job‟s KSAs. Because markets change, customers‟ preferences and needs
change, and products change, there is a need to continuously monitor the prerequisites so
that performance planning, and all the subsequent stages, are consistent with the
organization‟s strategic objectives. Recall that, in the end, one of the main goals of any
performance management system is to promote the achievement of organization - wide
goals. Obviously, if managers and employees are not aware of these strategic goals, it is
unlikely that the performance management system will be instrumental in accomplishing
the strategic goals.

2.2.6. Principles of Performance Management System

Performance management is primarily concerned with performance improvement in order
to achieve organizational, team and individual effectiveness. Secondly, performance
management is concerned with employee development. Performance improvement is not
achievable unless there are effective processes of continuous development. This addresses
the core capabilities of the organization and the specific capabilities of individuals and
teams. Performance management should really be called performance and development
management. Thirdly, performance management is concerned with satisfying the needs and
expectations of all of an organization‟s stakeholder owners, management, employees,
customers, suppliers and the general public. In particular, employees are treated as partners
in the enterprise whose interests are respected, who have a voice on matters that concern
them, and whose opinions are sought and listened to (Armstrong, 2006). Performance
management should respect the needs of individuals and teams as well as those of the
organization, recognizing that they will not always coincide. Finally, performance
management is concerned with communication and involvement. It creates a climate in
which a continuing dialogue between managers and the members of their teams takes place
in order to define expectations and share information on the organization‟s mission, values
and objectives. This establishes mutual understanding of what is to be achieved and a
framework for managing and developing people to ensure that it will be achieved.
Performance management can contribute to the development of a high-involvement
organization by getting teams and individuals to participate in defining their objectives and
the means to achieve them. Just like any other profession performance management have
principles which governs the entire system. The following are some of them identified by
(Armstrong, 2000).

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 1. It translates corporate goals into individual, team, department and divisional goals;
2. It helps to clarify corporate goals;
3. It is a continuous and evolutionary process, in which performance improves over
time;
4. It relies on consensus and co-operation rather than control or coercion;
5. It creates a shared understanding of what is required to improve performance and
how this will be achieved;
6. It encourages self-management of individual performance;
7. It requires a management style that is open and honest and encourages two-way
communication between superiors and subordinates;
8. It requires continuous feedback; Feedback loops enable the experiences and
knowledge gained on the job by individuals to modify corporate objectives;
9. It measures and assesses all performance against jointly agreed goals;
10. It should apply to all staff; and it is not primarily concerned with linking
performance to financial reward.
11. It is owned and driven by line management and not by the HR department;
performance management is not a packaged solution but something that has to be
developed specifically and individually for each particular organization.

2.2.7. The Cycle of Performance Management System

Overseeing performance and providing feedback is not an isolated event, focused in an
annual performance review. It is an ongoing process that takes place throughout the year.
The Performance Management process is a cycle, with discussions varying year-to-year
based on changing objectives.
Year-end Performance
Review
3
DEC

JAN
Objective Setting
1
SEPT

Provide ongoing feedback FEB

AUG And coaching on
performance
MAR

JULY Development Planning

2 JUNE

2
Mid-Year Performance
Review

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Fig 2.1 Performance management system cycle (Guest, 2009)

The cycle includes Planning, Checking-In, and Review.

 To begin the planning process, you and your employee review overall expectations,
which include collaborating on the development of performance objectives.
Individual development goals are also updated. You then develop a performance
plan that directs the employee's efforts toward achieving specific results to support
organizational excellence and employee success.
 Goals and objectives are discussed throughout the year, during check-in meetings.
This provides a framework to ensure employees achieve results through coaching
and mutual feedback.
 At the end of the performance period, you review the employee's performance
against expected objectives, as well as the means used and behaviors demonstrated
in achieving those objectives. Together, you establish new objectives for the next
performance period.

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2.2.8. Style of Performance Management System
In the views of Joseph R. Grima (2000), performance management should be:

Participative: Performance management is a two way process and must encourage the
participation of both supervisor and employee. This participation should be there for
establishing objectives at the very start of the assessment period and at the end, evaluating
results.

Task-oriented: Performance should be measured on the basis of business objectives and

the outcomes, personal traits and pre-defined areas and targets.

Developmental: The process should be implemented not only to evaluate and rate
employees but also to help the employees to advance their future career paths by way of
personal growth and development. It should also identify the areas where employee needs
further training (Grima, 2000).

It is essential for performance management system to be participative, task-oriented as well

as developmental. If the performance management system of an organization doesn't
provides the employees' opportunities to learn and develop when deficiencies from the
results are identified, than such system is of no use. The main focus of performance
management is to identify and to address vital people issues that exist in an organization. It
leads towards building relationship with the people employed by the organization. It creates
an environment or work setting that enables the employed people to best perform the
abilities that they possess (Heathfield, 2012).

2.2.9. Factor affecting Performance Management System

For performance management system to be implemented, there are a number of conditions
that must exist prior to its execution. These factors include:

Ability of manager to mobilize the organization

Effectively communicating the roles, duties and responsibilities of all such individuals who
are the participants in the process of bringing about change

For effective implementation of performance management, it is important to consider three

appropriate factors that exist in the larger organizational perspective and affects
performance organization wide. These factors include:

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Business Strategy: It includes internal and external environment within which the
company operates. It also includes all those policies, procedures, plans, objectives,
environment that enables an organization to compete in the most successful manner and the
focus that organization has on effective performance of its employees.

Workplace Technology: Workplace technology has a huge impact on performance of

individuals and groups. It depends upon whether the technology is high or low in
interdependence. In case technology is highly interdependent, work structures are
preferably designed for work groups rather than individuals and performance management
in such a case is aimed at work group behavior (Thomas and Cummings, 2005).

Employee Involvement: Level of involvement depends upon the control that exists in an
organization varying from bureaucratic to flexible. Organizations rigid controls discourage
participation and the setting of goals, appraisal of performance are formalized and
inflexibly administered by management. On the other hand, when organizations are
supportive and flexible, participation from employees is encouraged, sense of ownership
increases and performance management becomes a two way process for employees as well
as for the employer (Thomas and Cummings, 2005).

2.2.10. PROS and CONS of Performance Management System

According to Buchner (2007), the following is some of the advantages of implementing a
Performance Management process within a company:

1. Increased Performance of individuals and department/organization

The main goal of performance management is to improve the performance of individuals to

eventually improve the performance of the organization as a whole. The correct application
of performance management will identify development areas of each individual as well as
good performance areas. By planning specific outputs linked to specific standards and
measuring the success of the individual against this on a continuous basis will have a direct
impact on the performance of the individual and indirectly the organization as a whole.
Utilizing the results of the performance management discussions to identify focused
development programs for employees will further assist in attaining the
department/organization goals. Existing and future problems can be identified and

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addressed and eliminated before becoming major obstacles in realizing organizational goals
and strategies.

2. Better Communication

Performance Management focuses on the improvement of communication between the

manager and his subordinates. The feedback and planning interview create opportunity for
the creation and development of communication channels as well alignment between the
manager and his subordinate.

It creates an opportunity for the manager to communicate organizational / departmental

goals, policies, strategies and information to the subordinate and to ensure that the output of
the subordinate is in line with policies and strategies. It also creates an opportunity for the
manager to give recognition for good performance.

It creates an opportunity for subordinates to express their views and opinions as well as
suggestions for improvement of performance and identification of obstacles. The
subordinate gets the opportunity to discuss personal and company goals ant together with
the manager fins a balance between them.

3. Performance Standards and indicators

Performance Management focuses on specific valuable outputs that the individual must
deliver which is linked to specific goals and standards that must be achieved during the
evaluation period. By clearly defining the outputs, performance standards and performance
indicators the subordinate can understand exactly what is expected from him. The impact of
the subordinate‟s outputs on the department and organization can be explained much easier
during the planning phase.

4. Succession and Career planning

The Performance Management process provides valuable information that can be used
during succession and career planning. Employee aspirations can be clarified and where
possible incorporated into overall planning of the employee's goals and outputs as well as
his development plan. Clarification of the manager‟s goals and direction regarding the
employee and his role within the department, Compilation of formal training and
development plans per employee to ensure the development of the employee based on the
results of the performance evaluation phase of the process.

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5. Training and development

The Performance Management process, when applied correctly, will supply valuable
information regarding developmental areas of a subordinate. The information is used
during the compilation of the subordinate's development and training plan after evaluating
the individual's performance. This will also provide a "check point" to determine whether
the past training had any positive effect on the employee's performance.

6. Remuneration

Performance Management simplifies the linkage of salaries, bonus and allowances because
it is comparable and explainable.

7. Recruitment and selection

The latest requirements and specifications of a specific job and the readiness for promotion
of the subordinate are supplied by the Performance Management system. It is a tool that
can be used for the selection of the most appropriate candidate for a specific job.

These are just a few examples of the advantage that performance management has for the
individual and the company and the manager.

As stated in Pulakos (2004), the following is some of the disadvantages or problems of

implementing a Performance Management process within a company:

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1. Decreased Performance of individuals and department/organization

It is possible that by implementing performance management within the company could

have a negative impact on the immediate performance of individuals and indirectly the
organization. This could be because of the following reasons:

 Lack of training of the individuals and managers

 Lack of a formal change management process
 Lack of addressing the change in the culture of the organization
 Subjectivity level to high during evaluations
 Performance reviews used as a stick to get back at employees
 Lack of addressing the fears of employees and clarification of the whole process
and advantages to the employees
 Lack of conformity regarding Performance Management in the various departments
 Lack of management commitment

2. Degrading of Communication

Performance Management is a two-way communication process and should managers

neglect this and turn the performance review into a one-way disciplinary interview it will
have a negative impact on the employee. Should the employee feel that this interview is
just to be reminded of things that went wrong; it will have a negative impact on the
employee's performance. There need to be a balance between providing negative as well as
positive feedback. Negative feedback should be given in such a way that the focus is on
improving the employee's performance the next time the task has to be performed and not
on another parent-to-child session telling the employee he hasn't done his job. The focus
should either be on giving guidance as to how to prevent this issue occurring again or even
clarify the requirements should it appear that this was not understood by the employee.

3. Lack of Management commitment

Even though you may spend lots of time and effort in designing and implementing a
performance management process for your organization it may have a negative impact on
performance due to the level of management commitment. The most important factor to
successfully implement this process is the commitment and support of Top Management as
well as Line Management. Employees must "feel" that management is committed to the

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process and it is to their own benefit to improve their performance, as there are some
rewards in the pipeline should they improve their performance.

4. Subjectivity

Subjectivity during the performance management process with specific reference to the
manager, is one the most fatal elements that can negatively impact on an employee‟s
performance. I have noticed many times how subjective evaluations of managers can
negatively impact on the employee's performance. Therefore it is extremely important to
eliminate subjectivity of performance evaluation by utilizing specific measurable
performance indicators i.e. financial statistics to prove whether the employee has done his
job or not. Usually the "gut feel" evaluations are very subjective and can be influenced by
the current emotional state of the manager. To further eliminate subjectivity of performance
evaluations is to implement a 360 Performance management process. Various people
provide their inputs regarding the performance of the employee to provide a more objective
and fair reflection thereof.

5. Lack of Rewards

Should there be a total lack of rewarding the employee for his performance (either
negatively or positively), the performance management process will not be very effective in
improving employee performance. There is always a "what's-in-it-for-me" element that you
will have to address. Employee must see the benefits of the process. Whether financially or
by "soft" rewards like being nominated as Employee of the Month).

6. Negative Attitudes

Negative attitudes of managers:

1. Conflicting goals with regard to performance evaluation.

2. Lack of knowledge regarding the setting of objective performance standards.
3. Incompetence to distinguish between responsibilities that the subordinate has
control over and responsibilities the subordinate does not have control over.
4. Fear of communicating performance evaluation results to the subordinate.
5. It de-motivates employees.
6. Performance evaluation is used for reprimanding poor performance.

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Negative attitudes of subordinates:

1. Lack of understanding why performance is evaluated.

2. Lack of objectivity and fairness.
3. Subjective measuring used for performance evaluation.
4. Personality evaluation and not evaluation of outputs.
5. Manager‟s attitude that the subordinate is in full control of his performance.
6. Nothing is done after the performance evaluation.
7. Performance evaluation is just a tool to discipline the subordinate and has no
advantages for the subordinate.

These are just a few examples of the disadvantages / problems that performance
management has for the individual, the manager and the company. However there may still
be more items to add to the list, it is important that when you implement Performance
Management that these disadvantages / problems and attitudes are identified and specific
features or actions are built into the process to counter the effects of these disadvantages /
problems / attitudes.

2.2.11. Challenges of Performance Management System

The performance management challenge in organizations has many dimensions in today‟s
business environment and creating focused initiatives to overcome these challenges is not a
silver bullet approach. In many cases remuneration schemes are driving the performance
system, which creates a number on long term consequences in organizational behavior and
culture. In other cases senior management are so focused on scorecard management to hold
people accountable that the creation of the scorecard is not aligned with business focus
areas, but rather a number of deliverable projects and tasks (Pulakos, 2004).

As adapted from Dr Marko Saravanja (2010) the following is challenges of PMS.

1. Lack of Alignment The first challenge is the lack of alignment due to various
organizational processes being created in isolation. The link between Strategy
development, budgeting and operational planning is developed by different groups of
people with different frameworks being used. The performance management system
lacks alignment between individual performance, departmental performance and
organizational delivery and so all systems default back to financial measurements.

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2. Lack of Measurements the second challenge happens at various levels of the
organization in that poor measures are developed, in many cases targets are set but no
relevant measure is put in place. In other cases no data can be collected or is kept as
evidence to track performance.
3. Leadership and Management commitment the leadership and management challenge
has a huge impact on integrating and aligning a management system to deliver a
comprehensive performance management system. The commitment and understanding
of leadership and management of the requirements for achieving a workable
performance system is critical to performance success.
4. Managing of the performance system managing a performance system in an
organization requires a disciplined framework; it requires the organization to work off
one master plan broken down into relevant parts and areas of responsibility. The
management responsibility at various levels needs to understand the contracting,
measurement development and appraisal process very well and apply it consistently.
Secondly management needs to appreciate that performance management is not an
event but something that is managed daily but recorded and reported at certain times
through reviews and appraisals. Managing poor performance the management of poor
performance is normally a reactive action, but in many cases it is delayed and therefore
turns into a discussion that is difficult to make relevant. Another reason poor
performance is not managed on time is the lack of valid measurements and the
collection of required evidence and measurement data.

2.3 Empirical Literature Review

In this section empirical evidence supporting the performance management system has
been presented. However, only few studies are undertaken, of which most of them are not
on the banking industry.

According to Munzhedzi (2011), performance management system in the organization has

a valuable impact if the system is well established and common understanding is created
between employees and managers and if objective of the organization cascaded
accordingly. He has tried to find out that, performance management has a great role on
organizational productivity even if it was on government offices other than banks.
According to Matlala (2011) employees at the organization have a negative perception of
the fairness of their organization‟s performance management system. How ever since this
study has made on in South Africa the context might differ and the researcher has to be

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 investigate the study. According to (Boipono, Tsomele & Mogadime, 2014) a study made
on implementation of performance management system (PMS) in Schools states that,
though PMS is faced with implementation challenges, participants interviewed appreciated
the need for a system like PMS that could be used to measure their performance. However,
the feeling is that the system should be redesigned to suit the context of environment and
not the current one size fit all approach. Effective communication and timely feedback are
also important success factors for a performance management system like PMS as they are
formative and help employees to continuously improve their processes towards achieved
their set objectives. According to (Mughal and Akram, 2014), their study has explored the
issues (weaknesses) related with performance management in banking sector. This research
shows that the performance management of Alfalah bank lacks motivation and proper
reward system. Performance management system is properly implemented in Alfalah but
employees should be involved in setting standards of performance management to evaluate
the performance of each employee.

2.3. Conceptual Framework

Designing and Performance

Organizational Application Planning
Commitment: Of Appropriate  Target setting
to Performance PM system:  Agreeing on
Improvement creating shared performance
understanding review and
assessment
criteria

Performance
Accountability: Performance
Attaching assessment:
performance Performance Performance execution:
result with Evaluation
reward and  feedback, and
recognition
 inputs/resources
program

Fig 2.2 conceptual framework : Source: Kebede (2015).

3
From the conceptual frame work we can understand that, the first thing that we have for
implementing EPM'S in the organization is organizational commitment to improve
performance. Then after, the appropriate PMS application will developed. And, then
performance planning will take place to reach an agreement regarding review and assessment
criteria. Provision of continuous support through couching, mentoring and providing resources
to execute their jobs will follow. Then periodic performance review and performance
evaluation will be executed. Finally, performance accountability where best performers will be
rewarded and underperformers will receive actions will be done. Efficiently doing all these
processes has its own contribution for performance improvement.

Conclusion
Performance management system is a current issue for all types of organization. Both the
theoretical and empirical review has been reviewed. The empirical studies that have been
reviewed in the preceding section focused most prior studies on performance management
system regarding, effects the system on achievements of organizational as well as individual
goal, the role of PMS in increasing organizational result and implementation challenges.
Based on the literature reviewed above in this chapter the researcher has got a clear insight
about the concept and overview of employee performance management system. The
researcher has reviewed a number of performance management literature and almost all the
literatures agree that performance management is concerned with identification of
organizational visions, missions and objectives, bringing managers and employees on the
same direction towards the achievement of organizational strategic objectives/alignment,
creating shared understanding, provision of coaching and periodic performance review,
final performance evaluation, attaching results with reward system depending on the nature
of result and creating a felt fair atmosphere in the mind of all employees.

Therefore the researcher is interested to see practice of employee performance management

system in commercial bank of Ethiopia.

3
 CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
In this chapter the methods used, data sources, sampling techniques, data collection
instruments and procedures, and data analysis methods while undertaking the study is
discussed briefly as follow.

3.1. Research Design

For this study, the researcher applied descriptive research design using the fact that a
descriptive research design helps us to understand and summarize the data. The summary
statistics can either be represented by tabular form or graphically. Descriptive analysis
enables to obtain the current information, it is also used in fact finding studies and helps to
formulate certain principles and give solutions to the problems concerning local or national
issues.

“The function of a research design is to ensure that the evidence obtained enables us to
answer the initial question as unambiguously as possible.” (David de Vaus, 2001).

Descriptive research design is used to collect numerical data from large population. In
addition to this by using descriptive research method it is easy to use various forms of data
as well as incorporating human experience which enabled the researcher to look the study
in so many various aspects and can provide bigger overview about the subject matter.
(Cohen, Anion & Morrison, 2005).

3.2. Research Approach

Research approach is the general framework for the study that links, knowledge claims,
strategies of enquiry and specific methods. The research approach implicitly reflects the
researcher attitude as to how knowledge is constructed and also commands what method
will be employed in the study. A research can be undertaken by adopting one of three
research approaches – quantitative, qualitative or mixed. The main characteristic of
quantitative study is its objectivity, whilst qualitative study is attitudinal. These approaches
are different in terms of their philosophical assumptions as well as techniques used in data
collection, analysis and interpretation (Creswell, 2009).

3
To sum up, in order to achieve the research questions stated in the previous section, the
researcher used both qualitative and quantitative approach (mixed approach) in collecting
and analyzing data as will be discussed in the following section the core argument for a
mixed methods approach is that the combination of both forms of data provides a better
understanding of a research problem than either quantitative or qualitative data by itself.
The selection of one over the other approach for the conduct of the study is based on the
research problem or issue or concern that needs to be addressed, the researcher‟s own
personal experience and the will and support of the audiences (Creswell, 2009). The
following section will presents the methods to be adopted in the study.

3.3. Source and method of data collection

3.3.1 Source of data collection
To address the research objectives both primary and secondary source of data was utilized.
To organize the primary data, the researcher used adapted questioners with some
modification and interview techniques. Whereas, secondary data are obtained by
investigation of related document in order to understand the subject matter, different
published and unpublished documents were reviewed by the researcher i.e. website, annual
and quarterly report of the bank and other material found in the library.

3.3.2 Method of data collection

Research methods are the techniques used to collect data. To address the research
objectives the main data collection method that was employed in this study are mainly
focused on the primary source of data. Basically, the data was collected by using
questionnaires and interview. The questionnaires was included closed-ended questions that
was measured by a five-point Likert scale (from strongly Agree to strongly disagree) and
some open ended questions to elicit the respondents feeling. Semi structured interview will
also scheduled to gather information on the subject from the district human resource of the
bank.

3.4. Sampling method and sample size

The target population of the study was all 8905 clerical employees who are working in
CBE four districts in Addis Ababa and Head office.

According to (Sekaran, 2003) sampling is “the process of selecting a sufficient number of

elements from the population, so that a study of the sample and an understanding of its
properties or characteristics would make it possible for us to generalize such properties or

3
characteristics to the population elements.” Or Sampling is the process of choosing smaller
and more manageable number of study units from a defined study population. Commercial
Bank of Ethiopia is the biggest organization to the country which was established in 1942.
Since its establishment it has made a lot of developments and currently it has more than
1140 branches stretched across the country. The samples are drawn from the total collection
of all members or population about which this study wishes to draw conclusions.

Probability Sampling: when probability sampling is used, each member of the population
has an equal likelihood of being selected to be part of the sample. From the types of
probability sampling, this study finds stratified random sampling appropriate for selecting
samples from the population. A stratified random sampling allows to take into account
the different subgroups of people in the population and helps guarantee that the sample
accurately represents the population on specific characteristics. It starts by dividing the
population into subsamples or strata. Then samples can be randomly selected from each
stratum.

For this study employees of CBE will categorize in to two strata i.e., Managerial and Non-
Managerial. Moreover, as Israel(1992) 369 employees are decided to be the size of the
samples from a total of 8905 employees by using sample size calculator as shown in the
calculation below. To take such amount of samples from the above two strata simple
random sampling technique particularly lottery method was used.

Where,

P = sample proportion,

q = 1-p;

Z = the value of the standard variant at a given confidence level and to be worked
out

From table showing area under Normal

Curve; N = size of total population;

n = size of sample.

Given: At 95% confidence level the value of Z = 1.96

P = the population proportion= 0.5

3
 N = 8,905 which is population size

e = 0.05 which is acceptable sample error

𝑍2. 𝑝. 𝑞. 𝑁
n= 2
𝑒 (𝑁 − 1) + 𝑍2. 𝑝. 𝑞

1.962 (0.5) (0.5) (8,905)

𝑛 =368.31234
0.052 (8,905−1) + 1.962 (0.5) (0.5

n = 369
Therefore, by using the above formula a sample of 369 employees was the sample size and
was allocated to the two strata proportional to their population size as presented in the
following table.

According to the result revealed through the website, the total sample size for this study is
369 of which 330 are non-managers and only 39 are Managers of CBE. Unlike the method
of selecting 330 sample employees through randomization, non-probability sampling
particularly purposive was employed to select direct human resource related manager.

Purposive sampling helps to use his\her judgment to select cases that are best enabling the
study to address the research questions and to meet the objective of the research (Sekaran,
2003).

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Table 3.1 Sample size determination
No of Proportional
Department Employees category Employees Rate Sample

Non- Managerial 2202 0.25 92

Head office Managerial 183 0.02 7

Non- Managerial 1,315 0.15 55

North District Managerial 159 0.02 7

Non- Managerial 1,591 0.18 66

South District Managerial 219 0.02 7

Non- Managerial 1,473 0.17 62

West District Managerial 260 0.03 11

Non- Managerial 1.326 0.15 55

East District Managerial 177 0.02 7

Total 8,905 1.00 369

3.5. Methods of data analysis

The data gathered from questionnaire were summarized and analyzed by using descriptive
statistics like frequency, percentage mode and median. Then the data was described by
using tables for more clarification and the data was coded using scientific statistical data
analysis software such as SPSS. The data gained from interview, and document review was
analyzed contextually as per the research basic questions.

3.6. Ethical Consideration

The researcher has obtained the consent of the organization for the study. Employees who
have been completed the questionnaire were informed about the purpose of data collection,
analysis and the covenant to maintain privacy of their responses. Participants have been
informed about the purpose of the study and their privacy and dignity also maintained.
Confidential information of the bank had not disclosed and the collected data have used for
the purposes of the study only. Regarding published and unpublished materials used in the

3
literature review and throughout all part of the study, all citations from copy right holder
has been made properly.

3
 CHAPTER FOUR
DATA ANALYSIS AND PRESENTATION
This chapter presents the data collected from both primary and secondary sources.
Secondary sources are Human resource manuals and reports issued by the bank and other
related documents. Primary sources are data that have been collected by undertaking
questioners from employees of the bank. Moreover; an interview is made with the some
branch managers and human resource development officer of the bank. The questionnaire is
distributed to 369 employees and out of these employees only 313 (i.e. 85%) employees are
returned. Therefore the analysis is made based on the 313 respondents‟ data only. The data
collected through questionnaire, interview and secondary data sources is analyzed using
descriptive analysis method. The output of the data is presented using tables in order to
make the topic more understandable.

Table 4.1 Respondents profile

Item Frequency Percent Valid Cumulative
Percent Percent
Male 192 61.3 61.3 61.3
Female 121 38.7 38.7 100.0
Sex
Total 313 100.0 100.0
20-29 210 67.1 67.1 67.1
30-39 86 27.5 27.5 94.6
Age 40-49 7 2.2 2.2 96.8
>50 10 3.2 3.2 100.0
Total 313 100.0 100.0
Diploma 14 4.5 4.5 4.5
Degree 260 83.1 83.1 87.5
Educational Masters 39 12.5 12.5 100.0
Status
Total 313 100.0 100.0
<2 58 18.5 18.5 18.5
2-5 162 51.8 51.8 70.3
Years of 5-10 71 22.7 22.7 93.0
service >10 22 7.0 7.0 100.0
Total 313 100.0 100.0
Managerial 28 8.9 8.9 8.9
Professionals 257 82.1 82.1 91.1
Other support staff 26 8.3 8.3 99.4
Category of 4 2 .6 .6 100.0
Position
Total 313 100.0 100.0
North Addis Ababa 56 17.9 17.9 17.9
South Addis Ababa 56 17.9 17.9 35.8
East Addis Ababa 48 15.3 15.3 51.1
West Addis Ababa 67 21.4 21.4 72.5
District office Head Office 86 27.5 27.5 100.0
Total 313 100.0 100.0

4
The above table 4.1 indicates respondent‟s profile that properly filled and returned the
questionnaire. As depicted on the table the distribution of respondents based on sex is 121
(38.7%) of the total respondents are females working in the bank. The percentage of male
respondents constitutes the largest part 192 (61.3%) of the total sample. Indeed, the number
of female respondents‟ participated in the study is almost proportional, given the total
number of female employees in commercial bank of Ethiopia.

The distribution of respondents based age category revealed that majority (67.1%) of the
respondents fall within the age range of 20-29 years. The remaining respondents, 27.5%,
2.2% & 3.2% fall with the age of 30-39, 40-49 & >=50 years respectively. This indicates
that the bank consists young generation that have a capacity of doing things effectively.

Respondents profile regarding their educational background revealed that majority (83.1%)
of respondents were BA degree holders and the remaining (12.5%) & (4.5%) were Post
graduates and diploma holders respectively. This is because of that, in recent years the bank
is hiring fresh degree graduates directly from universities and colleges.

Distribution of respondents with regard to years of service in the bank shown us that
majority of the respondents (%51.8) served the bank for 2-5 years and the remaining
18.5%, 22.7%, & 7% have a service year of < 2, 5-10 & >=10 years respectively.

As can be seen from table 4.1 above 82.1% of the total respondents were under professional
category followed by 8.9% managerial, 8.3% support staff of the bank like IT, Secretary
and others. Therefore, the many of the total employees are professionals.

With regard to distribution of participant in their district office 15.3%, 17.9%, 17.9%,
21.4% and 27.5% from east Addis Ababa district, north Addis Ababa district, south Addis
Ababa, west Addis Ababa district and head office respectively. All respondents participated
were almost based on the proportion of their sample frame.

4
Table 4.2 Understanding of mission, strategic goal and activities

Item Frequency Percent Cumulative

Valid Percent
Percent
Mission and strategic goal.
Strongly Disagree 5 1.6 1.6 1.6
Disagree 14 4.5 4.5 6.1
Neutral 14 4.5 4.5 10.5
Agree 120 38.3 38.3 48.9
Strongly Agree 160 51.1 51.1 100.0
Total 313 100.0 100.0
Activities, tasks, products, services and process
Strongly Disagree 4 1.3 1.3 1.3
Disagree 9 2.9 2.9 4.2
Neutral 16 5.1 5.1 9.3
Agree 146 46.6 46.6 55.9
Strongly Agree 138 44.1 44.1 100.0
Total 313 100.0 100.0

Participants of the study were asked whether they have a clear understanding about the
organization mission and strategic goals as can be seen from the above table 4.2 majority of
respondents or 89.4% answered that agreed or strongly agreed so that we can say that the
CBE mission and strategic goals are understood by almost all of employees with some
exceptions. Understanding mission and strategic goals of the organization is one of
Prerequisites that are needed before performance management system is implemented.
According to Joseph.R (2000), If there is a lack of clarity regarding where the organization
wants to go, or the relationship between the organization‟s mission and strategies and each
of its unit‟s mission and strategies is not clear, there will be a lack of clarity regarding what
each employee needs to do and achieve to help the organization get there. An
organization‟s mission and strategic goals are a result of strategic planning, which allows
an organization to clearly define its purpose or reason for existing, where it wants to be in
the future, the goals it wants to achieve, and the strategies it will use to attain these goals.

As can be seen from the above table, respondents were asked whether they are clear with
components of their job, including activities, tasks, products services and process. They
provided their answer as 44.1% strongly agree, 46.6% agree, 5.1% neutral, 2.9% disagree
and 1.3% respondent replied as strongly disagree. This indicates that most of CBE workers
know their job including activities, tasks, products services and process.

4
Table 4.3 Performance planning

The table below shows the performance planning practice of CBE. It examined the targets
given for employees were specific, measurable, attainable, and relevant.

Item Frequency Percent Valid Percent Cumulative

Percent
Specific Objective
Strongly Disagree 15 4.8 4.8 4.8
Disagree 27 8.6 8.6 13.4
Neutral 57 18.2 18.2 31.6
Agree 140 44.7 44.7 76.4
Strongly Agree 74 23.6 23.6 100.0
Total 313 100.0 100.0
Measurable objectives
Strongly Disagree 13 4.2 4.2 4.2
Disagree 51 16.3 16.3 20.4
Neutral 24 7.7 7.7 28.1
Agree 156 49.8 49.8 78.0
Strongly Agree 69 22.0 22.0 100.0
Total 313 100.0 100.0
Achievable objectives
Strongly Disagree 68 21.7 21.7 21.7
Disagree 105 33.5 33.5 55.3
Neutral 12 3.8 3.8 59.1
Agree 90 28.8 28.8 87.9
Strongly Agree 38 12.1 12.1 100.0
Total 313 100.0 100.0
Relevant objectives
Strongly Disagree 12 3.8 3.8 3.8
Disagree 15 4.8 4.8 8.6
Neutral 22 7.0 7.0 15.7
Agree 193 61.7 61.7 77.3
Strongly Agree 71 22.7 22.7 100.0
Total 313 100.0 100.0
Time bounded Objectives
Strongly Disagree 21 6.7 6.7 6.7
Disagree 26 8.3 8.3 15.0
Neutral 25 8.0 8.0 23.0
Agree 147 47.0 47.0 70.0
Strongly Agree 94 30.0 30.0 100.0
Total 313 100.0 100.0

As can be seen from the table 4.3 above, respondents were asked whether their objectives
were specific or not. Accordingly, from the total respondents 68.3% have agreed or

4
strongly agreed that their objectives are specific. For better achievement of organizational
goal, employees‟ objective should be clear, unambiguous, straightforward &
understandable. Besides, the specific target given for an employee shall be kept done
during the rating period. Any additional assignment of job other than the specified target
will negatively impact the performance measurement and evaluation.

Though the data gathered using questionnaire revealed that the objectives given for
employees are specific, exceptions were indicated from the interview and document
analysis that Employees‟ objectives which were agreed and signed with their supervisor on
performance agreement contract are specific but on the course of implementation employee
will work what was not specified in the performance agreement contract whenever shortage
of man power arises. This condition usually happened due to shortage of man power.
Managers used to rotate employees in a single rating period from their assigned job to
another job which is out of the targets given in PMS contract and for which the employee
will not be evaluated. Usually, this happened when employees are transferred to another
branch due to transfer, promotion or demotion in the middle of the rating period. The bank
has no guideline as to when to manage employees‟ movement from on job to another job
during the rating period.

The second item that respondents were asked was whether their objectives are measurable
or not. Accordingly, majority of the respondent or 71.8% answered that they are agreed or
strongly agreed that their objectives given to employees are measurable. Setting measurable
target is an important part of performance management process in performance evaluation
phase.

From the same table item 3, respondents were asked whether their objectives were
achievable or not. Accordingly, 55.2% of respondents answered they are disagreed and
strongly disagreed, so that it can be said employees‟ objectives are not achievable. This
result shows that the targets given for employees are unachievable and by far challenging.
(Pulakos, 2004) advocates that, “very difficult but attainable goals lead to more effective
performance outcomes than moderately difficult goals”.

Interview participants revealed that, though there are a lot of unattainable targets like that
of financial targets but we accept and strive our maximum effort to achieve our target by
taking in to account the bank‟s vision of “becoming a world class commercial bank”.

4
The data gathered from interview participants revealed that there are a lot of targets which
are not achievable, like internet banking, proper utilization of controllable expense, LCY
and FCY mobilization. There were more participants who didn‟t achieve those targets even
once from the start of PMS implemented till now. Their common justification about un-
achievability of electronic banking, managing controllable expense and local and foreign
currency mobilization was the non-functionality of the system, inadequate budget and
stretched target which doesn‟t consider the environment‟s potential respectively.

Respondents were also asked whether their objectives were relevant or not, i.e. its
alignment with the strategic objective of their business process/work unit as well as the
organization.

As depicted from the above table 4.3, 84.4% of the total respondents agreed and strongly
agreed that the existence of alignment of employee‟s objective with the organizational
objective. Data found from the interview revealed the same result that each employees
target is aligned to their business unit target which is derived from the corporate strategic
objective.

As indicated in table 4.3, 77% of the total respondents agreed or strongly agreed with the
statement say my objectives are time bounded. In contrary 15% of respondents answered
that their objectives are not time bounded.

Due to the fact that unaccomplished targets of one quarter targets will be carried forward to
the next quarters up to the end of the fiscal year. There were also respondents that argue for
the timeliness of the targets. Their justification was, the target is time bounded for a one
fiscal year not for a quarter.

The logic behind cascading the yearly target and carrying forward the arrears of the
previous quarter target to the next quarter/s is for the sake of monitoring achievements and
ensuring the accomplishment of the annual target. This issue can be reconciled while
annual performance evaluation is done.

After goal setting process has been done, performance contract agreement will be signed by
the manager and employees in the beginning of the rating period. The table below shows
the performance agreement practice of CBE.

4
Table 4.4 Performance agreement

Cumulative
Item Frequency Percent Valid Percent
Percent
Clarity of Job Responsibility & Expectation
Strongly Disagree 2 .6 .6 .6
Disagree 20 6.4 6.4 7.0
Neutral 7 2.2 2.2 9.3
Agree 141 45.0 45.0 54.3
Strongly Agree 143 45.7 45.7 100.0
Total 313 100.0 100.0
Discussion & Agreement in Goal Setting
Strongly Disagree 120 38.3 38.3 38.3
Disagree 106 33.9 33.9 72.2
Neutral 14 4.5 4.5 76.7
Agree 60 19.2 19.2 95.8
Strongly Agree 13 4.2 4.2 100.0
Total 313 100.0 100.0
Clear Explanation of Performance Expectation
Strongly Disagree 31 9.9 9.9 9.9
Disagree 46 14.7 14.7 24.6
43.1
Neutral 58 18.5 18.5

Agree 126 40.3 40.3 83.4

Strongly Agree 52 16.6 16.6 100.0
Total 313 100.0 100.0
Personal Development Plan
Strongly Disagree 15 4.8 4.8 4.8
Disagree 54 17.3 17.3 22.0
Neutral 55 17.6 17.6 39.6
Agree 137 43.8 43.8 83.4
Strongly Agree 52 16.6 16.6 100.0
Total 313 100.0 100.0

As can be seen from the above table 4.4, respondents were asked whether they are clear
about their responsibilities and what is expected from them both behaviorally & result.
Accordingly, their 90.7% of their response is placed on agreed and strongly agreed. Since
the answer is positive, it is likely to be said that employees are well aware of their
responsibilities and what is expected from them. On the contrary (0.6%) and (6.4%)
respondents are not clear about why they are employed in CBE which reveals there should
be done more to make them to know the expected output from their responsibility for the
successful realization of CBE‟s mission and value as well as for their personal

4
development and growth. And the data gathered from managerial interview and document
analysis show that there is high level of awareness on the understanding of Job
Responsibility & Expectation.

At the beginning of each rating period, employees are expected to sign a performance
agreement both result and behavioral expectations. The data found from document analysis
shown that behavioral expectation is evaluated annually and result expectation is evaluated
quarterly.
As indicated in the same table item 2, respondents were asked whether goal setting is
carried out with the discussion between employees & supervisors after an agreement has
been reached. Accordingly, 72.2% of respondents disagreed and strongly disagreed that
goal setting is carried out with an agreement between employees and managers. During the
interview this was also revealed that they did not set goals jointly with their supervisor.
According Aguinis, (2009) performance planning is a process by which the manager and
the employee get together for a discussion to set a goal which will be performed by the
employee with a specific period of time. It is the first cycles where employees will be
enable to have a clear knowledge about the system. It is a stage where supervisors and
employees meet to discuss and agree on what is to be done and how it is to be done by
combining the result, behavior and development plan. If goal setting is not part of a
performance management process, employee will end up on spending time on activities that
does not contribute a lot for the organization and also the employee. Hence, making
employees to participate in performance planning and setting goal will increase their
performance because they will develop a sense of ownership for the work they have agreed
on.

Another question which was forwarded to respondents was about their awareness on the
expectation from their performance. As a result 56.9% of respondents agreed and strongly
agreed that supervisors informed expectation from them, 18.5% remain neutral and 24.6%
replied they did not know about the expectation of their supervisor from their performance.
From the responses a large number of respondents have positive agreement. However,
performance expectation of the organization from each individual should be communicated
well and should be understood equally by all level of employees from the higher to the
lower.

4
The last item respondents were asked whether they reached to an agreement with their
supervisors about their personal development plan to enhance their performance.
Accordingly, 60.4% answered that they are agreed and strongly agreed on the statement.
And 22.1% disagree and strongly disagree on the subject matter. Having an agreed
development plan used to enhance the knowledge, skill and attitude of an employee to
enhance his/her performance to execute the day to day activities effectively and efficiently
as per the desired goal. However, when we see the data above it shows that CBE did not
work enough to work on individual‟s development plan and help them accordingly.

Table 4.5 Provision of Feedback

According to Control theory, feedback serves as a means of shaping behavior. As

employees receive feedback on their behavior or performance they appreciate the
discrepancy between what they are doing and what they are expected to do and take
corrective action to overcome the discrepancy. This theory recognizes feedback as a crucial
part of performance management processes (Armstrong, 2009). In line with this, for
feedback to work well, it should be given on time, in private, positively without destructing
the personality of the employee. Moreover, managers shall be skilled enough to deliver
feedback fruitfully and employees should receive feedback positively. The table below
shows about the practice of provision of feedback in CBE.

Cumulative
Item Frequency Percent Valid Percent
Percent
Positive Feedback
Strongly Disagree 19 6.1 6.1 6.1
Disagree 44 14.1 14.1 20.1
Neutral 50 16.0 16.0 36.1
Agree 165 52.7 52.7 88.8
Strongly Agree 35 11.2 11.2 100.0
Total 313 100.0 100.0
Timely Feedback
Strongly Disagree 65 20.8 20.8 20.8
Disagree 118 37.7 37.7 58.5
Neutral 6 1.9 1.9 60.4
Agree 99 31.6 31.6 92.0
Strongly Agree 25 8.0 8.0 100.0
Total 313 100.0 100.0
Feedback in Private
Strongly Disagree 29 9.3 9.3 9.3

4
 Cumulative
Item Frequency Percent Valid Percent
Percent
Disagree 48 15.3 15.3 24.6
Neutral 60 19.2 19.2 43.8
Agree 122 39.0 39.0 82.7
Strongly Agree 54 17.3 17.3 100.0
Total 313 100.0 100.0
Supervisors Feedback for Employees’ Performance Progress
Strongly Disagree 20 6.4 6.4 6.4
Disagree 78 24.9 24.9 31.3
Neutral 35 11.2 11.2 42.5
Agree 124 39.6 39.6 82.1
Strongly Agree 56 17.9 17.9 100.0
Total 313 100.0 100.0
Skill of Supervisors in Feedback Provision
Strongly Disagree 33 10.5 10.5 10.5
Disagree 55 17.6 17.6 28.1
Neutral 30 9.6 9.6 37.7
Agree 146 46.6 46.6 84.3
Strongly Agree 49 15.7 15.7 100.0
Total 313 100.0 100.0
Attitude of Employees towards Feedback
Strongly Disagree 13 4.2 4.2 4.2
Disagree 45 14.4 14.4 18.5
Neutral 17 5.4 5.4 24.0
Agree 132 42.2 42.2 66.1
Strongly Agree 106 33.9 33.9 100.0
Total 313 100.0 100.0

As can be seen from the above table 4.5, respondents were asked whether their supervisor
provides them positive feedback about their performance progress. Accordingly, the 63.9%
answered that they are agreed and strongly agreed on the subject matter. So we can say that
managers are providing their subordinates positive & developmental feedback about their
performance progress.

In the same table item 2, respondents were asked whether their supervisor provides them
timely feedback, in close proximity to the event. Accordingly, 58.5% of respondents
disagreed and strongly disagreed on the statement where as that of 39.6 % are agreed. In
addition to the questionnaire the question was also raised on the interview. The result
gained from the interview shows that there is a meeting weekly, monthly, quarterly and
annually basis to assess the performance of an employee which includes a feedback from

4
supervisor and peers in a team. However, the data gathered from questionnaire and
interview is different.

As most authors agreed providing feedback is the most common justification for an
organization because employees will learn how well they did the task over the period and
then use the information to improve their performance in the future. Therefore from the
above data the researcher believes that there is a significant gap between the management
and employees on the way they think giving feedback regarding employee‟s performance
regularly.

As can be seen from the above table, respondents were asked whether their supervisor gives
them feedback in private. Accordingly, 56.3% of respondents answered that their
supervisors provide feedback in private. In contrary 24.6% says feedback is not conducted
in private manner.

Data found from interview and questioner participants indicated that the office layout is not
conducive for providing private feedback especially in grade I & II branches. In such grade
level branches, the office layout is an open hall. Managers have no separated or private
office which is convenient to provide employees feedback in private.

Respondents were also asked whether their supervisor‟s feedback helped them to improve
their performance. Accordingly, majority of respondents or 57.5% answered they are
agreed and strongly agreed that supervisor‟s feedback helped them to improve their
performance. But that of 31.3% disagreed and strongly disagreed on the statement.

In order to improve employees performance managers shall be skilled enough to deliver

feedback fruitfully to be used as an input to enhance their or employees performance and
employees should receive feedback positively.

As can be seen from table above, respondents were asked whether their supervisor is skilled
in providing constructive feedback. Accordingly 62.3% agreed and strongly agreed and
28.1% were disagreed on the statement. As majority of respondents answered positively we
can say that CBE managers are skilled in providing constructive feedback. According to
(Pulakos, 2004), managers frequently avoid providing feedback because they do not know
how to deliver it productively in ways that will minimize employee defensiveness. In
contrary to this author‟s argument, it is true in this research that managers of CBE are
skilled in delivering constructive feedback.

5
Managers were interviewed whether they are providing sufficient and constructive
feedback for their subordinates. And they believe that they are providing constructive
feedback for their subordinates but they have doubt about its sufficiency and frequency due
to micro management of routine tasks and absence in office for training and marketing
activities. An assessment of the level of provision of feedback at branches was conducted
by the district human resource department in October 2015 find out that the level of
feedback provision is inadequate, as found from the interview.

The last item here respondents were asked is whether they have positive attitude for
feedback about its importance to their performance improvement. Accordingly, 76.1% are
agreed and strongly agreed that they have positive attitude. Or we can say that employees
usually reached to an agreement with their supervisors about their development plan to
enhance their performance. Similar question was asked for managers whether employees
have positive attitude for feedback or not. Since employees usually shown performance
progress after they received feedback, they concluded that employees have positive attitude
for feedback.

Table 4.6 Performance evaluation practice

On this phase of performance management process, employees‟ actual performance data

will be gathered and appraisal will be done against the targets given in the performance
planning phase. The table below presents the practice performance evaluation practice of
CBE.

Cumulative
Item Frequency Percent Valid Percent
Percent
Data Tracking Formats
Strongly Disagree 63 20.1 20.1 20.1
Disagree 96 30.7 30.7 50.8
Neutral 20 6.4 6.4 57.2
Agree 111 35.5 35.5 92.7
Strongly Agree 23 7.3 7.3 100.0
Total 313 100.0 100.0
Usage of Data Tracking Formats
Strongly Disagree 73 23.3 23.3 23.3
Disagree 102 32.6 32.6 55.9
Neutral 11 3.5 3.5 59.4
Agree 106 33.9 33.9 93.3
Strongly Agree 21 6.7 6.7 100.0

5
 Cumulative
Item Frequency Percent Valid Percent
Percent
Total 313 100.0 100.0
Discussion with supervisors to Review Performance
Strongly Disagree 36 11.5 11.5 11.5
Disagree 95 30.4 30.4 41.9
Neutral 74 23.6 23.6 65.5
Agree 93 29.7 29.7 95.2
Strongly Agree 15 4.8 4.8 100.0
Total 313 100.0 100.0

The above table 4.6 reviled that respondents were asked whether their supervisor uses those
formats to track their daily performance so that he/she uses it for performance evaluation.
Accordingly, 50.8% answered they are disagreed and strongly disagreed and 6.4%
answered neutral. This indicates Managers don‟t use those data tracking formats to track
their subordinates‟ daily performance data in order to use it for performance evaluation.
Similarly an interview held with HR manager assured that there are around 14 data tracking
formats which are appropriate to track the employees‟ performance data. Though the bank
has proper formats, the data tracking system is manual. Hence, it is tiresome, time taking
and prone to error & bias. In addition to this, there is filing problem of employees
performance related data.

As shown in the same table 4.6, respondents were asked whether their supervisor uses those
formats to track their daily performance so that he/she uses it for performance evaluation.
Accordingly, 55.9% of the answer laid on disagree and strongly disagree. Since the answer
is negative, we can say that managers don‟t use those data tracking formats to track their
subordinates‟ daily performance data so that they use it for performance evaluation.

Related to usage of data tracking formats, managers were asked about the efficiency of the
data tracking system. They indicated that the data tracking system is not efficient, prone to
error & bias since it is manual. Sometimes, missing to record performance of employees is
common and negatively affects the performance evaluation process.

With regard to performance evaluation, interview held with HR manager revealed that
transfers and promotions made in the middle of the rating period hamper the evaluation
process. Rating becomes difficult when release of an employee is made to new assignment
for another branch. The bank has no guideline to manage the movement of employees from
one job to the other in the rating period.

5
The last item in the above table 4.6, respondents were asked whether they have a discussion
meeting with their supervisor to review their performance during evaluation. As a result, a
large portion of respondents which is 65.5% answered disagree, strongly disagree and
neutral. The remaining 34.5% of them agreed that after assessment has been made they
have a discussion with their supervisors on the exhibited performance to be base for the
next performance. From this we can understand that still CBE has done little in creating a
culture of giving feedback in a continual basis and also after the completion of the
performance appraisal period. Feedback toward goals and coaching to improve
performance should be provided on a regular basis, and certainly before the review cycle is
over. Most importantly giving feedback allows employees to be informed about how well
they are doing, to receive information on specific areas that may need improvement, and to
learn about the organization‟s and the supervisor‟s expectations and what aspects of work
the supervisor believes are most important. Getting feedback will let employee‟s to know
how they are performing and they also can clearly know what they all are trying to attain
the strategic objectives that satisfy the vision and mission statement.

Table 4.7 Performance review

Cumulative
Item Frequency Percent Valid Percent
Percent
Conducting Performance Review Meeting in each Rating Period
Strongly Disagree 18 5.8 5.8 5.8
Disagree 79 25.2 25.2 31.0
Neutral 58 18.5 18.5 49.5
Agree 121 38.7 38.7 88.2
Strongly Agree 37 11.8 11.8 100.0
Total 313 100.0 100.0
Discussion of the Rating & Rationale for the Evaluation
Strongly Disagree 19 6.1 6.1 6.1
Disagree 62 19.8 19.8 25.9
Neutral 64 20.4 20.4 46.3
Agree 124 39.6 39.6 85.9
Strongly Agree 44 14.1 14.1 100.0
Total 313 100.0 100.0

This is the last phase of performance management process by which managers undertake
performance review meeting with the whole employees about employees and
organizational performance. The table above presents employees response about the
performance review practice of CBE. As can be seen from the table above respondents

5
were asked whether performance review meeting is being held regarding the overall
performance of employees and the organization in each rating periods. Accordingly, from
table 4.7 majority of respondents or 50.5% answered that they are agreed and strongly
agreed. So we can say that there is performance review meeting regarding the overall
performance of employees and the organization in each rating periods.

As can be seen from the above table 4.7, respondents were asked whether managers arrange
discussions with employees about their ratings, narratives and rationale for the evaluation
given during performance review meeting. Accordingly, the large portion of respondents
i.e. 53.7% answered, they are agreed and strongly agreed on the statement. So we can say
that managers discuss with employees about their ratings, narratives and rationale for the
evaluation given during performance review meeting.

5
 CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
In the previous chapter the researcher has attempted to present findings of the data
collected through questionnaire completed by randomly selected respondents with
complementation of data gathered through interview and document reviews. The
questionnaire and the interview were designed in line with the research questions and
performance management system frameworks.

This section deals with the summary of the findings, conclusion and recommendations by
putting the research topic and research questions into the account.

5.1 Summary
The main objective of this study was to assess the performance management system in
Commercial Bank of Ethiopia by having the following basic questions to be addressed.

1. Does the CBE‟s mission, strategic goals and tasks are clearly defined for
employees?
2. Does the targets given for employees during performance planning and agreement
phase have specific, measurable, achievable, relevant and time framed feature?
3. Is feedback provision being done ongoing, constructive, in private, timely and with
direct manager?
4. How is data tracking system & performance evaluation practice?
5. Is there a performance review in which CBE‟s manager and employee review the
performance assessments for providing feedback in each rating period?
6. Is professional & managerial employee exhibit difference on target attainment,
attitude towards feedback & clarity of job responsibility?

In order to address the above basic questions, descriptive research design was employed by
using mixed research approach which comprises both quantitative and qualitative methods
of data gathering. Data was gathered through questionnaire, interviews, and document
review was made to increase the validity of the data obtained. To collect representative
data, 369 questionnaires were distributed. Out of which, 313 of the questionnaires were
collected.

The data collected from target respondents through questionnaire was compiled and
summarized by using SPSS statistical software. The variables were analyzed by using

5
frequency counts, percentages, median and mode values. Finally, information obtained
through open ended questionnaire, interview and document review were descriptively
analyzed and interpreted.

Major Findings

According to the data analysis presented in previous chapter, there were both positive and
negative findings concerning the implementation of the performance management system
by Commercial Bank of Ethiopia. The strong points of CBE include; awareness on mission
and strategic objectives of the organization, create understanding on job activities products
and process, aligning the strategic objective of one‟s business process with the
organization, create understanding on behavioral and result expectations, developing
positive attitude on feedback, conducting performance review meeting in the rating periods,
explaining narratives ratings and rational for evaluation and so on.

On the other hand the adverse findings obtained from respondents that need the attention of
CBE‟S management are discussed as follows.

 From the study it was identified that more than half of the respondents (55.2%) did
not agree on the achievability of targets.
 Employees (72.2%) replied that there is limited participation of employees in goal
setting which leads to negative attitude for the settled plan.

 More than half of the respondents (58.5%) affirmed that there is a gap on providing
timely feedback in close proximity to events.
 Majority of the respondents (57.5%) declared that they did not get a chance to
discuss with supervisor to review their performance.
 Respondents (50.8%) especially from professional staff claimed that there is no
proper data-tracking format to record performance of them.
 Majority of the respondents (55.9%) agreed that their supervisor didn‟t use formats
to track employee‟s daily performance for performance evaluation purpose.
 From interview respondents and in the open ended question most of respondents
complained that performance management system doesn‟t attached with reward and
recognition system and this adversely affect employees motivation.

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5.2 Conclusion

Performance management is a process for setting up a shared understanding of what is to be

achieved at an organization level. It involves the alignment of organizational objectives
with the individuals agreed measures, skills, competency requirements, development plans
and the delivery of results. The focus is on performance improvement through learning and
development in order to achieve the overall business strategy of the organization.
Holistically, performance management integrates a multitude of elements that contribute to
effective management of the human resource.

Performance management is a systematic process which a manager can use to get the team
members to achieve the team‟s objectives and targets, improve overall team effectiveness,
develop performance capabilities, review and assess team and individual performance, and
reward and motivate. Effective performance management requires the identification of
tasks and accountabilities, definition of competencies necessary to be successful in a
position, ensuring that team members have the required competencies, having in place a
system to develop competencies, providing timely feedback on how effectively the team
members are applying their respective competencies to accomplish their tasks and achieve
the goals and rewarding and motivating effective performance. In the event that
performance does not meet established requirements, the manager must understand the
corrective processes and methods that can help improve employee performance.

From this study, it has been noted that Commercial Bank of Ethiopia has neglected the
importance of the involvement of employees in the goal setting process of Performance
Management System. Based on the evidences obtained from the analysis, employees
claimed that they are not participating in performance planning. In addition all respondents
did not have chance to jointly agree on the standards of performance measures with their
supervisors and in setting an individual development plan the response of participants is not
that much enough or there is high level of response that indicate employees didn‟t reached
an agreement about their development plan to enhance their performance with their
supervisor. That is why employees are not aware of the performance evaluation objectives
and performance standards as well as the importance of having an agreed individual
development plan.

5
There is also no fair job rotation among employees, no sufficient resource allocation to
execute their job properly, no clear mechanism in the bank to address the issue of
underperformance, findings from respondent of questioner indicates no similar rating
mechanism among branches and individuals and the employee performance management
system lacks uniformity even though raters are believed to be competent enough. They are
not feeling fairly treated in processes of employee performance management system, and
performance evaluation is not attached with reward and recognition schemes.

Concerning the practice of performance evaluation in CBE problems like absence of data
tracking format and not using the existing formats to record individuals result, the more
manual work that may not help to get accurate data about each individual performer, lack of
consistent data tracking and lack of proper documentation challenge the performance
management system from providing needed result.

Regarding provision of feedback and performance review the data shows that there is no
timely feedback and absence of review of individual performances this hinders the PMS
system from providing the expected output.

Regardless of the above cited weak points on planning, feedback, evaluation and review the
remaining areas such as well-defined mission and strategic goal, role clarity among
employees and makes them goal oriented, enables to differentiate good and poor
performers. Furthermore, it has created a constructive competition among staff; it has
contributed to improve both individual and the bank‟s overall performance.

As a result, considering the fact that regardless of the type, size and objective of an
organization, performance management system is a globally contemporary practice all over
the world which helps the organization, team and individual to be more effective in their
day to day activities to bring about the desired objective and for the successful growth and
development of each, one can conclude that even though Commercial Bank of Ethiopia has
some good qualities in implementing performance management system but a lot should be
made in making the performance management system to be more useful for the
organization.

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 +

5.3 Recommendations

On the basis of the findings and conclusions drawn from the study, the following points
were recommended for Commercial Bank of Ethiopia to take in to account for effective
implementation of PMS.

1. Though specific target is given to employees, due to shortage of man power managers
assign a job for employees for which the employee will not be measured. Hence, the
bank should work on immediate replacement of vacant posts by allocate adequate staff.
As there are few targets which are not attainable for many branches like foreign
currency mobilization, recruitment of internet banking users and managing controllable
expenses, the bank should note the following points.

 The bank shall in depth look at the potential of the environment in which the
branches are working during the performance planning process.
 The internet banking system is not functioning well to be delivered for customers.
The bank shall fix its problem to operate well before setting this target as
performance measurement criteria.
 Controllable expense budget shall be adequate enough which considers the
transaction volume of branches that could cover their operational expenditures.

2. The organization should create a room for the practice of setting goals and standards of
performance measures on the basis of mutual agreement between employees and
supervisor and let employees to agree on the goals they are expected to achieve and the
standards which they will be evaluated. The act of jointly setting goals and standards
will provide a clear direction in the form of increasing effort, persistence towards goal
accomplishment and have some motivational benefits.

5
3. The bank should give trainings for the supervisors on feedback issues and control them
whether they give it timely or not, if not take a corrective action in order to come up
with the needed result.

4. In grade I & II branches providing feedback in private is difficult due to the office
layout. Manager‟s office is in an open hall with employees, so that it is difficult to
openly & freely discuss with employees in private. Thus, the bank shall build a separate
office to branch managers in all grade level branches. Customer service managers
should be trained and coached in providing feedback to employees in addition to branch
managers. So that sufficient feedback will be given for employees ongoing basis and
that will bring performance progress.

5. The bank should automate the data tracking system. The existing manual system is very
time taking, tiresome, prone to error and bias. The automation will solve also the
problem of documentation of files related to employees‟ performance.

Performance evaluation process negatively affected when employees transferred,

promoted, demoted or rotated to another job in the middle of the rating period. There is
no clear guideline to manage such incident. Thus, the bank shall develop clear guideline
as to how managers can deal with such occurrence. Moreover, the bank shall manage
the movement of employees from one job to another job at the end of the rating period
only. And the bank has to be maintaining proper documentation and records as to
respond questions or claims raised from employees.

6. Performance review meeting should be done after conducting evaluation in order to

inform employees about their achievements and to look forward to what needs to be
done by people to achieve the overall purpose of the job, to meet new challenges, to
make even better use of their knowledge, skills and abilities, and to help them to
develop their capabilities and improve their performance.

7. Performance result should attach with reward and recognition system to increase
employees‟ motivation and to prevailing performance accountability in the bank.

8. Performance assessment should be standard across raters and branch offices through
training of supervisors on assessment and quality assurance should be scaled up.

6
9. CBE have to create an opportunity for employees to set their individual plan with the
agreement of their supervisor as they are directly responsible to execute a realistic and
attainable development plan to achieve the desired goal. Establishing individual
development plan will also help employees to capacitate their skill and knowledge
before or during execution of performance to minimize the information and knowledge
gaps which will be exhibited during performance assessment.

10. The bank has to be implement fair job rotation and provision of equal resources for all
employees and units in order to creating similar rating mechanism among branches and
employees to the system will have uniformity.

In general, it is advisable for bank to sustain all its current strengths, and improve its
limitations mentioned above to achieve better performance so that the bank can realize its
vision to become a world class commercial bank by the year 2025.

6
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Appendix

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6
 Appendix 1
St. Mary’s University
Department of MBA in Project Management
Questionnaire to be filled by: Employees of CBE
Dear respondents

The purpose of this questionnaire is to collect primary data for conducting a study on
“Assessment of Performance Management Practice in CBE.” in partial fulfillment of the
award of MBA in Project Management at St.Mary‟s University. In this regard, I kindly
request your time to provide me with reliable information, so that the findings of this study
would meet the intended outcome. I strongly assure you for the confidential treatment of
your answers. I would like to thank your voluntary participation for the success of my
research study.

Directions

• No need to write your name,

• If you have any question, please contact me on 0913-00-75-83.

Part I – General Information

1. Gender:

A) Male B) Female

2. Age:

A) 21-29 B) 30-39 C) 40-49 D) 50 and

above

3. Educational status:

A) Diploma B) Degree C) Masters D) PhD

4. Years of service in CBE:

A) Less than 2 years B) 2 to 5 years C) 5 to 10 years D) More 10

years

6
5. To which category does your position falls?

A) Managerial B) Professionals C) Other support staff

6. In which district office / division of the bank you are currently working?

Part II Performance Planning and Execution

Note: 1= Strongly Disagree, 2= Disagree, 3= Neutral, 4= Agree and 5= Strongly Agree

SN List of questions 1 2 3 4 5

1 Performance pre requisite

1.1 I have a clear understanding about the organization mission and
strategic goals.
1.2 I am clear with components of my job, including activities, tasks,
products services and process.
2 Performance Agreement/planning
2.1 My objectives are specific.
2.2 My objectives are measurable.
2.3 My objectives are Achievable.
2.4 My objectives are relevant. (It is aligned with the strategic
objective of my business process/work unit as well as the
organization.)
2.5 My objectives are time bounded.
2.6 I am clear about what my job responsibilities are and what is
expected from me i.e. both behavioral and result expectations.
2.7 In CBE goal setting is carried out with the discussion between the
employee and the supervisor, after an agreement has been reached.
2.8 While setting a goal, my supervisor clearly tells me the expectation
he/she has from my performance.
SN List of questions 1 2 3 4 5
2.9 My supervisor and I reached to an agreement about my
development plan to enhance my performance
3 Provision of feedback
3.1 My supervisor provides me positive & developmental feedback
about my performance progress.
3.2 My supervisor provides me timely feedback, in close proximity to

6
 the event.
3.3 My supervisor provides me feedback in private.
3.4 My supervisor‟s feedback helped me to improve my performance.
3.5 My supervisor is skilled in providing constructive feedback.
3.6 I have positive attitude for feedback. It is important for my
performance improvement.
4 Performance evaluation
4.1 There is a proper data-tracking format to record employee‟s
performance in CBE.
4.2 My supervisor uses those formats to track my daily performance so
that he/she uses it for performance evaluation.
4.3 After evaluation has been done, I always had a discussion meeting
with my supervisor to review my performance.

5 Performance review
5.1 Performance review meeting is being held regarding the overall
performance of employees and the organization at the end of each
rating period
5.2 During performance review meeting, managers discuss with
employees their ratings, narratives and rationale for the evaluation
given

6. What are the major benefits gained for the bank and yourself from
employee performance management system implementation?

7. What are the major challenges you faced as a result of Employee

Performance Management System implementation in the bank?

8. Please, write other points that are not addressed in the questionnaire, if any.

6
….Thank you for cooperation….

7
 Appendix 2
St. Mary’s University

Department of MBA in Project Management.

Interview Questions

Researcher Name: Firehiwot Tesfaye

The researcher is currently conducting research thesis for the purpose of fulfilling
requirements of Master of Art Degree in project Management at St.Mary's University. The
following questions will ask about Employee Performance Management practice in
commercial bank of Ethiopia and you are selected because of your role and closeness to
the subject. Your responses will be kept Confidential and used for academic purpose only.

Thank you for participating in this interview!!

1. Does the specific job performed by an individual is linked with the strategic objective
of the organization?

2. How the performance planning practice looks like? Discuss with the SMART elements
of the objectives.

3. Have you ever assess the performance of PMS implementation in branches? What
were the gaps you observed?

4. Is the bank‟s data tracking tool manual or automated?

5. Do you think the bank‟s data tracking system is efficient enough to handle the
intended evaluation?