THE EFFECTIVENESS OF EMPLOYEE PERFORMANCE APPRAISAL SYSTEM: THE CASE OF ETHIOPIAN ROADS AUTHORITY

Abstract

The major objective of this study was to investigate the effectiveness of the current employee performance appraisal system. As result, its effectiveness has been determined by selecting seven major effectiveness variables and other related concepts. This research has a descriptive nature which describes the existing phenomenon as it exists. Furthermore, four work units/strata have been selected based on their population size out of 996 permanent employees 278 employees were taken as a sample by using stratified systematic sampling technique and questionnaires were distributed proportionally. The findings indicate that the organization’s performance appraisal system is miss-formulated and also based on the selected effectiveness variables; it is observed that the performance appraisal system is less effective across all the divisions. Furthermore, problems which hinder effectiveness of the appraisal system were identified and comparison on their occurrence was also made. As a result, lack of participation of employees in the appraisal process was identified as one of the big problems while lack of well-tailored measurement system and lack of well-designed procedures and process were also identified as the critical problems. Finally, it is observed that there is no significant perception difference among employees towards the current performance appraisal system. Hence, it was recommended that the organization should revisit its employee performance appraisal system and take corrective actions. For instance, alignment of the appraisal system with organization’s objective, reward policy and development objectives should be maintained. Moreover, the organization should also work a lot on the identified effectiveness variables;(objective setting, performance standard, communication, measuring performance, compare actual performance against standard, feedback and action) to enhance effectiveness of the current performance appraisal system. Likewise, the organization should give emphasis for employees’ participation in appraisal related matters.