Assessment of the Effectiveness of Performance Appraisal System: The Case at Dashen Bank Head Office and Five Branches, Ethiopia

Abstract

The purpose of this study was to assess the practice of performance appraisal system in Dashen Bank, one of the private banks in Ethiopia.. Two instruments were used in order to perform this research. First, an interview with the HR and Branch managers of the company and second a questionnaire survey on the employees. Answers to the research questions about the main challenges of performance appraisal practice, employees perception of the performance appraisal system and the relationship between performance appraisal criteria and results were suggested. The researcher chose purposive sampling technique for the selection of branches and managers and simple random sampling method for non-manager participants using a statistical to determine sample size. Accordingly 264 questionnaires were distributed whereas 242(91.6%) were filled and returned. The findings of the study indicated that managers and the employees are not setting goals together .Which is helpful for better performance practice. It is revealed that the process is not transparent, accurate feedback not given and doesn’t improve the relationship with manager. The performance review system should be designed to fit the specific requirements of the organization. The research revealed a major discrepancy in not providing rater training in the Bank to conduct PA. Appraisers who are not adequately trained to carry out performance appraisal can easily make errors in the process of evaluation. It is also revealed by the study that the majority of respondents felt that appraisal is not based on targets, the PA system does not provide continuous feedback and the system is not used for rewards. Although the overall perception of respondents on performance appraisal of Dashen bank is relatively good, there are still more things to do to improve the employee performance. Some of the recommendations are supervisors should set goals with employees, supervisors should provide continuous feedback and the system must be used for rewards among other things.