THE EFFECT OF PERFORMANCE APPRAISAL ON EMPLOYEE SATISFACTION: THE CASE OF ETHIOPIAN ELECTRIC UTILITY

Abstract

The review of employee performance and the management of its collective contributions to organizational effectiveness have been perceived as a combination of informal and formal techniques which together have the potential to contribute to the motivation & satisfaction of individual employee and their work groups. Therefore; the aim of this study was to examine the effect of performance appraisal on employee job satisfaction in Ethiopian Electric Utility west Addis Ababa district service centers. An explanatory research design, and a quantitative research approaches were used to investigate the relationship between the dependent (employee job satisfaction) and independent variables (performance appraisal feedback, fairness in the performance appraisal process, clarity of performance appraisal process, level of communication between supervisor and employee and trust in supervisors). Both primary and secondary data were collected. For primary data (questionnaire) and secondary data (related literatures and different documents) were used. Statistical Package for the Social Sciences (SPSS) version 23 was used to analyze the data and the study had a 95.1% response rate. The finding of this study shows that fairness of performance appraisal process makes the strongest unique contribution to explaining employee job satisfaction followed by trust in supervisors and level of communication between supervisors’ & employees. Though clarity performance appraisal process and performance appraisal feedback have positive effect on employee job satisfaction in west Addis Ababa district service centers of EEU, it is statistically insignificant. In conclusion, the combination of fairness of performance appraisal process, level of communication between supervisors’ & employees’, and trust in supervisors have a favorable impact on employee job satisfaction. Therefore; the HR department of EEU in general and the HR department of west Addis Ababa district in particular, should increase the level of communication between supervisor and employees. The department should practice fair appraisal process to increase the job satisfaction of its employees. The HR department should also cultivate the culture of trust among employees in the company; this will helps to reinforce the relationship between employees’ perception and job satisfaction and allows the performance appraisal to support organizational goals