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Chapter One

1.0. Introduction
1.1. Back ground of the study
Employee performance Evaluation has been practiced by numerous organizations since centuries. It is one of the most important requirements for successful business and Human Resource policy of the organization. As employees are one of the most valuable assets of the organization that can make things happen, the practice of performance evaluation is an integral and inseparable part of the organizations life. Conducting performance evaluation helps organizations to reward and promote effective performers and identify ineffective performers to developmental programs and training or other personnel actions that are essential to the effectiveness of Human Resource Management. Human resources are among the fundamental resources available to any organization. Successful managers recognize that human resources deserve attention because they are a significant factor in top management strategic decisions that guide the organization's future operations. Three crucial elements are needed for firms to be effective: mission & strategy, organization structure, and human resource management. However, people are the basic resources who do the work and create the ideas that allow the organization to survive (Ivancevich & Glueck, 1989). Human resource management (HRM) is a key ingredient affecting organizational competitiveness and its ability to fulfill its mission. The effectiveness of an organization in providing a product or service that fits customers' needs is critical if it is to survive. That product or service is provided in part (or entirely) by people. If the objectives of HRM are to be accomplished, top managers will have to treat the human resources of the firm as the key to effectiveness. To do this - to accomplish the important objectives of HRM - management must regard the development of superior human resources as an essential competitive requirement that needs careful planning, hard work, and evaluation (Ivancevich & Glueck, 1989) Longenecker and Fink (1999) cited several reasons that formal performance evaluations are: To stay in organizations, According to them, formal evaluations are required to justify a wide range of human resource decisions such as pay raises, promotions, demotions, terminations, etc. It is also required to determine employees training need. The authors cited a study on high performance organizations that the practice of performance appraisal was cited as one of the top 10 vehicles for creating competitive advantage. Moreover, performance measurement allows the organization to tell the employee something about their rates of growth, their competencies, and their potentials. However, regardless of its panacea, Employees are not only among the most important resources a firm has; they also sometimes are among the most problematic (Mathis & Jackson, 1997, pp. 4-5).

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Ineffective appraisal system can bring many problems including low morale, decreased employee productivity, a lessening of an employees enthusiasm and support for the organization (Rafikul Islam and Shuib bin Mohd Rasad, 2005).
Evaluating employee performance is a difficult task because the job demands the immediate supervisors to understand the nature of the job and the sources of information, and information needs to be collected in a systematic way, and it is provided as a feedback, and integrated into organizations performance management process for use in making compensation, job placement, and training decisions and assignments.

The usefulness of performance evaluation as a managerial decision tool depends partly on whether or not the performance appraisal system is able to provide accurate data on employee performance and hence rating accuracy is a critical aspect of the appraisal process. A difficulty of getting accurate appraisals of employee job behavior is most often attributed to: faults in rating format used, deficiencies in appraisal content, rater resistance to judge others, and the implications of the specific purpose of appraisal for the rater and the ratee (Thomas Decotiis and Andre Petit, 1978). Therefore, the problems of performance evaluation arise when the results of the evaluation fail to reflect the actual performance of the employees, which in turn, leads to wrong administrative decisions that can highly affect the life of the employees. Thus, the researcher will attempt to assess the practices and the real problems that exist in Dashen Bank. The report also will try to address the purposes for which performance appraisal is conducted.

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1.2.

Statement of the Problem

People are most valuable assets of the organizations. The market for talented, skilled people is competitive and expensive. Taking on new staff can be disruptive to existing employees. As organizations vary in size, aim, functions, complexity, and the physical nature of their product, so also the contribution of human resource management. Ensure that all times the business is correctly staffed by the right number of people with the skill relevant to business needs, which is neither over staffed nor under staffed. Performance management can be defined as a systematic process for improving organizational performance by developing the performance of individuals and teams. It is a means of getting better results by understanding and managing performance within an agreed framework of planned goals, standards and competency requirements. Processes exist for establishing shared understanding about what is to be achieved, and for managing and developing people in a way that increases the probability that it will be achieved in the short and longer term. It focuses people on doing the right things by clarifying their goals. It is owned and driven by line management (Michael 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 . (Michael Armstrong, 2006). Performance appraisal is a formal system of periodic review and evaluation of an individuals job performance. It occurs constantly in both public and private organizations. When it is properly done, performance appraisal provides feedback to employees that will improve their performance and thus organizations also benefit by ensuring that employees' effort and ability make contribution to organizational success (Mathis and Jackson, 1997). Failure to have a carefully crafted performance appraisal, can probably lead to failure in the business process itself. Problems associated with performance appraisal are: There is less awareness of employees about the appraisal performance. The irrelevance of the criteria used to evaluate the performance of the workers. Lack of skills and knowledge, the subjectivity, favoritism and bias of the raters. There are no documented criteria used to allocate organization rewards. So, based on the above problems the researchers draw the following questions. 1. Does the employee have awareness about the purpose of performance appraisal? 2. Is the performance appraisal criterion creating positive attitude to employees? 3. What are the real problems facing Dashen Bank with regard to the performance evaluation practices? 4. Does the Bank have documented standards for evaluating employees performance and reward?

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1.3. Objective of the study


1.3.1. General objective
The major aim of this study is to assess employees performance appraisal practice a case study of Dashen bank, in selected area banks in Addis Ababa, and recommending solutions for problems related to the subject matter.

1.3.2.

Specific objectives

1. To find out the purpose of performance appraisal 2. To identify the criterion the bank use to evaluate employees performance. 3. To identify raters in the performance appraisal process (supervisor, peers, subordinate, etc.) 4. To identify major hindrances of the banks in evaluating employees performance.

1.4. Significance of the study


The result of this study will important in various respects. To serve as a reference material for both academicians and practitioners. identify the problems of performance evaluation and give signal to the Human Resource Management of the bank to take corrective action about performance appraisal It gives the researcher the opportunity to gain deep knowledge in the practice of performance evaluation.

1.5. Scope of the study


This research is conducted on selected areas of Dashen bank in Addis Ababa, which is one of the private financial institutions in Ethiopia, with specific area of performance appraisal. Distinction has been made between managerial appraisal and employee appraisal. But all staff will been sometimes treated under the general heading of employees.

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Chapter four Data analysis and discussion

Table 4.1. Respondents profile items sex Male female Total Ager group Less than 25 25-35 Greater than 45 Total Source: questionnaire 2012 Respondents Number 10 5 15

percentage 66.67 33.33 100

15

100

Table 4.2. Academic background of the respondents

NO.

12th complete certificate diploma 1st degree 2nd degree and above

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Table 4.3. years of experience of employees Years of experience Less than 2 2-4 5-7 Greater than 7 Total respondents NO.

15

100

Table 4.4. about evaluators Who should evaluate respondents employees NO. Immediate supervisor Colleague Subordinates Self evaluation others Total 15 Table 4.5. Purpose of performance appraisal Purpose of performance appraisal NO. Salary increment Bonus Training and development Promotion Do not known Total 15 Table 4.6. about appeal to higher official Do you appeal to higher officials when yes you feel the PA result is unfair Number of respondents percentage respondents %

100

100

No

I dont know total 15 100

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Table 4.7. about fair examination of grievance Do you believe that your yes grievance will be fairly examined? Number of respondents percentage Table 4.8. about the criteria used to evaluate No I dont know total 15 100

Do you think that the criteria used to evaluate your Yes performance appraisal are appropriate? Number of respondents Percentage of respondents Table 4.9. about the weight assigned to the evaluation criteria Do you think that the weight assigned to the Yes evaluation criteria are fair? NO. %

No

total 15 100

No

total 15 100

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Chapter Three
1.6. Research methodology
1.6.1. Research design
The researchers employ both a qualitative and quantitative design. According to Creswell (1994), one of the chief reasons for conducting a qualitative study is that the study is exploratory and the researcher seeks to listen to informants and build a picture based on their ideas. A qualitative study will allow for the in-depth analysis of comments and perceptions that individuals hold regarding the appraisal system. It will create a discussion among the researcher and the respondents which will allow gaining insight and direct understanding from the respondents
According to (Will G Hopkins,

2000) in

quantitative research the major aim is to determine the

relationship between one thing (an independent variable) and another (a dependent or outcome variable) in a population. Quantitative research designs are either descriptive (subjects usually measured once) or experimental (subjects measured before and after a treatment). A descriptive study establishes only associations between variables. An experiment establishes causality.

Quantitative research is the systematic scientific investigation of quantitative properties and phenomena and their relationships. The objective of quantitative research is to develop and use mathematical models, theories and/or hypotheses pertaining to natural phenomena, as Terry OHanlon-Rose said.

3.2. Source of Data


The researchers collect the data from both primary and secondary sources. The primary data are gathered through questionnaires filled by employees of the Bank. The secondary data are collected from relevant documents, organization reports, newspapers, magazines, books, and necessary materials are downloaded from most referred web sites.

3.3. Sampling Method


The researchers used simple random sampling, because It gives all employees have known and equal chance of being selected as respondent. To collect the desired data the researcher took 15 (42%) samples out of the total employees of 36 (which are professional employees) in the selected area banks.

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3.4. Data Analysis


A descriptive method was used to present and interpret the data collected on various dimensions of the appraisal system. Frequency Tables along with percentages are also employed to analyze the responses of employees on those dimensions.

3.5. Limitation of the study


The major impediments that the researcher encountered while conducting this term paper were as follows; Shortage of time Finance Transportation

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Dear respondents
This questionnaire is prepared to employees of Dashen Bank. The objective of the questionnaire is to collect information about to effectiveness of the Bank of Dashen performance appraisal system. The information you provide will be valuable for the successes of the research project. Please be honest and objective while filling the questionnaire. The information you give is used only for academic purpose and will be kept confidential.

Part I Personal Details 1. Sex 2. Age Below 25 Male 25-35 35-45 45-55 Female Above 55

3. Academic qualification Certificate Diploma first degree second degree and above

4. Title of your job _______________ 5. Years of experience ______________ Part II Regarding Performance Appraisal 1. In your opinion who should evaluate employees performance (you may thick more than one) a) Immediate supervisor d) Employee themselves b) Colleague c) Subordinate

e) Others (specify) __________________

2. For what purpose is performance evaluation result used in your company (you may thick more than one. a) Salary increment d) Training and development b) bonus c) promotion e) others (specify) ___________ f) dont known

3. Are you allowed to see your performance appraisal result Yes No I dont know

4. Do you discuss performance appraisal results with the appraiser Yes No

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5. Can you appeal to a higher officer of your organization when you perceive your performance appraisal result is unfair Yes No I dont know

6. If your answer to question no 5 is yes do you think the grievance will be fairly examined Yes No I dont know

7. Do you time the criteria used to evaluate your performance appraisal are appropriate Yes No I dont know

8. If your answer is No answer the following questions. a) Mention any criteria that should be included _____________________________________________________________________________ _____________________________________________________________________________

b) Mention any criteria that must be removed ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________

9. Do you think that the weights assigned to the evaluation criteria are fair? Yes No I dont know

10. Which of the following problems apply to the appraisal system of your organization (Tick) a) No link between same evaluation criteria and employee job b) Lack of ability to evaluate performance c) Bias in evaluating performance d) Non participation is setting performance evaluation criteria e) Others (mention)_______________________________________

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