DETERMINANTS OF THE EFFECTIVENESS OF PERFORMANCE MANAGEMENT SYSTEMS IN ABAY INSURANCE

Abstract

The main aim of this study is to investigate whether the Performance Management System in AISCO is effective from the elements of employee involvement, management commitment, performance appraisal and reward system. In this study, research would identify if these factors management commitment, performance appraisal, employee involvement and reward system have a significant relationship between the effectiveness of Performance Management System in AISCO. The study used descriptive methodology and used both qualitative and quantitative research methods. Percentages and frequencies were used to analyze the data and interpretations are made on them. Out of the target population (235), the sample size was determined by using a standard size determination table. Based on this, 80 questionnaires were distributed to the head office and all branches located in Addis Ababa. AS per, the findings indicated that the performance management practice is implemented with some gaps like: Very low employees’ involvement in the implementation of performance management systems, employees considered the systems as control tools of the employees, performance appraisal system was developed with less inputs from employees, there is very low discussion in the performance appraisal. In addition to this, challenges like absence alignment between performance appraisal systems and objective of the organization. Inappropriate employee perception towards the system and inadequate commitment from the Human Resource department and the management was pointed out. Raising staff awareness on Performance Management System (PMS) and its practices, monitoring of the Performance Management activities and focusing on employee development are the recommended actions to the organization.