CHAPTER ONE

INTRODUCTION
This section of the study comprises background of the study, statement of the problem, basic
research questions, objectives of the study (general and specific), conceptual definition of
terms, significance of the study, scope of the study, and organization of the study.

1.1. Background of the study

In the era of globalization and high competition, it’s a priority of an organization to succeed
the reason for business existence and survive or compete effectively in the global economy.
This can happen only by efficient utilization of available resources. Thus, one of the most
potential resources who have the ability to translate the company’s goal is human resources.
Effective and efficient human resource utilization enables an organization to maintain the
reason for existence, survival also organizational growth. Therefore, in order to grasp this
potential resources and compete in the potential market, employers or organizations must be
in the position to promote and practice employee performance management in the best way.
Taking this in to account, one of the most input for effective and efficient human resource
utilization is performance management.

Many authors define performance management in various ways. According to Armstrong

(2006), Performance management 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.

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 (Stredwick J., 2005). Specifically, performance management is about aligning
individual objectives to organizational objectives and ensuring that individuals uphold
corporate core values. It provides for expectations to be defined and agreed in terms of role
responsibilities and accountabilities (expected to do), skills (expected to have) and behaviors
(expected to be) (Armstrong, 2006). The aim is to develop the capacity of people to meet and
exceed expectations and to achieve their full potential to the benefit of themselves and the
organization. Importantly, performance management is concerned with ensuring that the
support and guidance people need to develop and improve are readily available (Armstrong,
2006).

Briscoe and Claus (2008), also concurred that performance management is the system
through which organizations set work goals, determine performance standards, assign and
evaluate employee’s work, provide feedback to employees, determine training and
development needs and distribute rewards to employees. It is a continuous process of
identifying, measuring and developing the performance of individuals and aligning
performance with the strategic goals of the organization (Aguinis, 2009). Armstrong (1994)
revealed that performance management is a strategic and integrated process that delivers
sustained success to the organization by improving the performance of people who work in
them and developing the capabilities of individual contributors and teams. Laurie (2007)
supported that performance management is essentially an integrated activity that permeates
every facet of the operations of an organization. Rogers (1990) on his part saw performance
management as a system for managing organizational performance.

Different authors and organizations adopt different types of performance management

process but there is no one type of system or set objectives that is best suited for all
organizations. The purpose of a given performance management should be determined by
considering business needs, organizational culture and the systems integration with other
HRM systems (Grote, 2002).

According to Dick Grote (2002) Performance Management is an ongoing process that

comprises four phases: Performance Planning, Performance Execution, Performance
Assessment, and Performance Review.

The research conducted on selected Tanzania private organizations by Janes O., (2018)
revealed that private organizations practice performance management and have effective
performance management system to evaluate/appraise the performance of their employees.
Moreover, the findings reveal that there is a significant relationship between performance
management and employee performance as well as between performance management and
organizational performance.

Likewise, the research conducted in Ethiopia at Gamo Gofa Zone financial sectors by Hika,
Feleke and Alemtsehay (2017) they revealed the practices of performance evaluation in their
organization were high. Also performance evaluation was conducted by top management
whereas self-evaluation and subordinate evaluation was not commonly practiced in the study
area. The study shows check list and goal settings are the commonly used methods of
performance evaluation. Skills and quality were the most commonly used criteria of
evaluation in the study area. Finally, the study shows rater bias, similarity error, and low
evaluator motivation were the factors that affect performance management and evaluation in
Gamo Gofa zone, finance and economic development department.

Bearing in mind the concept and practice of performance management the researcher make
the preliminary review (physical interview, empirical review and observation) on the
employee performance management practice at Commercial Bank of Ethiopia and find out
that CBE practice of performance management processes i.e. performance planning,
assessment, execution and review have some sort of deviations. Also, the bank implement
technology based employee performance management system since November 2010.
Consequently, the researcher tried to see if there is any empirical reviews are available and
found the earlier researches and finding aren’t enough and the researcher also believes the
previous empirical reviews are outdated and more focused on performance management
challenges and performance appraisal practices. Cognizant to this, the study will investigate
how Commercial Bank of Ethiopia performance management practice is carried out with
more concern to Performance Planning, Execution, Assessment, and review finally giving
recommendation for the findings.

1.2. Statement of the problem

Performance management plays a vital role within the organization to assure employees are
working according to the organization's mission and objectives. Performance management
sets expectations for employee performance and motivates employees to work hard in a way
that is expected by the organization. Moreover, performance management system provides a
completed and professional management process for organizations to assess the performance
results of organizations and employees. Employee performance could be expected, assessed
and encouraged.

Performance management system exist within the organization is to improve organizational

result, deploy a culture that will attract and develop employees, create a good relationship
between leaders and employees, enhance meaningful work cooperation among employees,
generate an opportunity for growth and development and to make clear on an understanding
of work objectives. Effective performance management systems have a well-articulated
process for accomplishing evaluation activities, with defined roles and timelines for both
managers and employees. Especially in organizations that use performance management as a
basis for pay and other HR decisions, it is important to ensure that all employees are treated
in a fair and equitable manner (Pulakos, 2004).

Commercial bank of Ethiopia has a vision to become a world class commercial bank by the
year 2025. This vision can be achieved by motivated and satisfied employees. In order to
create this motivation and satisfaction the bank is expected to have effective employee
performance management system because effective performance management is also a means
to create an industry peace if the implementation process is done appropriately.
In case of Commercial Bank of Ethiopia evidences are showing the bank didn’t give
appropriate attention to performance management implementation. This might lead the bank
to crisis rather than achieving the vision to become a world class commercial bank. Since,
November 2010 commercial bank of Ethiopia implement performance management system
manually and starting from August 2017 the bank use technology based performance
management system to eliminate subjectivity (CBE Employee Performance Management
follow-up document).

According to Abdurezak and Tigist, (2019) study on Employee Performance Management

System (EPMS) they identify that the EPMS of the CBE has limited awareness and trainings
concerning on the purpose, requirements and implications of PM (performance management)
among employees; lack of trust and continuity of the system; lack of regular feedback and
coaching to improve performance, subjective supervisor assessment.
According to Fanuel, (2017) study finding there is a lack of alignment between employee
benefit package and Performance Management System (PMS), the questionability of the
capacity of the raters to rate and lack of software for automating the PMS are his major
findings.

Both researchers reveal different findings but they didn’t show the practice of employee
performance management process (performance planning, performance execution,
performance assessment and performance review), employee role on EPMS, the purpose of
PM and challenges faced during PM implementation. Thus the researcher is interested to
investigate and fill the gap which is not discovered by other researchers by conducting
assessment of employee performance management system practice in Commercial Bank of
Ethiopia.
1.3. Research questions

Generally, the basic research question will be to what extent does the employee performance
management system implement in commercial bank of Ethiopia?

Specific Questions:
• How is employee performance planning practiced in Commercial Bank of Ethiopia?

• How is performance execution performed within the bank?

• How is employee performance assessment carried out in the bank?

• How is performance review practiced in CBE?

• How is the performance renewal and reconstruction performed with in the bank?

1.4. Objective of the study

1.4.1. Main objective of the study

The main objective of the study will be to assess employee performance management
practice in Commercial Bank of Ethiopia and to forward possible recommendations for the
possible findings.

1.4.2. Specific objective of the study

Specifically, the researcher will address the following specific objectives;

• To investigate Commercial Bank of Ethiopia performance planning practice

• To investigate the performance execution process with in the bank

• To inspect the performance assessment practice of the bank

• To assess the performance review of the bank

• To identify how the bank operate the performance renewal and reconstruction process.

1.5. Conceptual definition of terms

Performance: is the level of output or result accomplished against a given targets and the
way how it accomplished.

Employee performance management system: a mechanism designed to align

organizational objective with individual objective so that the individual will be tracked
against to the target and goal accordingly.
Challenges: refers to limitations, that restrict the implementation of performance
management system in the organization

1.6. Significance of the study

The study at its completion will benefit the overall bank stakeholders. It is also anticipated
that the findings of the study will pave way for the authorities of the organization to accept
the variables that affect the employee’s performance management practice within the
organization. The relevance of the study on the part of managers of the organization is hoped
to help them to work on their relationship with subordinates and also address issues affecting
the employee’s performance. Likewise, the research at the end will also help employee’s air
out their grievances to the organization and managers. It will also serve as a background
information and as a blueprint for future research working on the same topics.

1.7. Scope of the study

For the ease of administration Commercial Bank of Ethiopia employee are categorized in 15
(Fifteen) districts all over Ethiopia. To manage the study well, the researcher will study only
employee who are currently working in four districts (North Addis Ababa District, South
Addis Ababa District, West Addis Ababa District and East Addis Ababa District), and Head
office which found at Addis Ababa. In addition, to study all activities of employee
performance management system are impossible, therefore the researcher will be delimited to
study on employee performance management practice.

Moreover, the study will use both managers and permanent clerical employees as participants
and precludes the contractual clerical and non-clerical employees of the bank. Although,
there are many factors or variables which can play a role for studying the practice of EPMS,
in this study only few dominant variables will be analyzed such as performance planning,
performance execution, performance assessment, performance review and reconstruction.

1.8. Organization of the study

This research proposal has three chapters, the first chapter includes background of the study,
problem statement, research questions, objectives of the study, conceptual definition of terms,
significance of the study, scope of the study and organization of the study. Chapter two
covers Conceptual definition and empirical literature review then end up with conceptual
framework. Chapter three of this proposal include research methodology such as research
design, research approach, population of the study, sample size and sampling technique,
sources of data collection, instrument of data collection, data collection procedure, data
analysis procedure, validity and reliability and ethical consideration of the study. The last
chapter of this proposal is work and budget plan.
 CHAPTER TWO
RELATED LITERATURE REVIEW

2.1. Theoretical Literature Review

2.2. Empirical Review

2.3. Conceptual framework

 CHAPTER THREE
RESEARCH METHODOLOGY
This part of the study consists research design and approach, population, sample size, and
sampling techniques, source of data, data collection tools and data analysis method that the
study will use.

3.1. Research Design

Research design is blueprint for fulfilling research objectives and answering research
questions. It is the general plan of how the research questions would be answered and it is the
conceptual structure with which research is conducted (Saunders et al., 2007). In other
words, it is a master plan specifying the methods and procedures for collecting and analyzing
the needed information. It ensures that the study is relevant to the problem and that it uses
economical procedures.

A descriptive type of research design will be employed assuming that it will help to gather
different data related to the problem. This type of research will help to portray accurately the
characteristics of a particular individual, situation or a group. The descriptive survey research
design is appropriate choice, because the study is aimed at assessing CBE employees level of
satisfaction.

3.2. Research Approach

This study will apply both qualitative and quantitative approach (mixed method approach).
The core argument for a mixed methods approach is that the combination of both forms of
data provides a better understanding of a research problem than either quantitative or
qualitative data by itself. Mixed methods designs are procedures for collecting, analyzing,
and mixing both quantitative and qualitative data in a single study or in a multiphase series of
studies (Creswell, 2012). Hence, by applying the mixed method the researcher will try to
ensure the strength of the findings towards being more objective and generalizable to the
entire population.

3.3. Population, Sample Size, and Sampling Technique

3.3.1. Population of the study
The term population refers to the entire group of individuals, objects or event having
common observable characteristics in which the research is interested in studying. According
to Doku (2011), population of a study constitutes all individual items or organization whose
contribution is primarily providing relevant information to the research.
According to Frankel and Wallen (2000) a population refers to the group to which the results
of the research are intended to apply. They stated that a population is usually the individuals
who possess certain characteristics or a set of features a study seeks to examine and analyze.
Population can be defined as the total group of people or entities from which research
information will intend to be obtained.

Therefore, as per CBE data base half year report as of December 31, 2019, CBE has 37,847
employees who are working in 1456 branches which are managed by 15 districts all over
Ethiopia. So, the target population for the study consisted of 16273 employees, who work at
Head Office and Four Addis Ababa area districts (North Addis Ababa District, South Addis
Ababa District, West Addis Ababa District and East Addis Ababa District).

3.3.2. Sample Size Determination

The researcher has tried to calculate the sample size after determining the target population.
In addition to population, purpose of the research, population size, the level of precision or
sampling error, the level of confidence or risk level and the degree of variability or the
distribution of attributes in the population determine the appropriateness of the sample size
(Miaoulis & Michener, 1976).

Therefore, the sample size is determined by using Yamane (1967), sample size determination
formula, because he is a famous Japanese statistician who has had great contribution in
developing sampling methods and this Yamane sample size calculation is one of his
achievements. The sample size determination will be applied when the population is finite
and the population size is known. Recognized that if the target population is large sampling
method with an error of 5% in which the true value of the population estimated and
confidence coefficient of 95% in which 95 out of 100 sample will have the true population
value within the range of precision. As the result, the researcher has determined the total
sample size as follows.

n=390
Where;

• n is the sample size,

• N is the target population size, and

 • e is 5% the level of precision.

• 95% confidence level

Table 1. Proportion of sample allocation

Total target Total target Sample
Description District population/district population/bank population
NAAD 3279 77
EAAD 3161 76
Head office and
District staff WAAD 3029 16273 73
SAAD 3069 74
HO 3765 90
Total 390

Source: commercial bank of Ethiopia HR data base as of December 31, 2019

According to Kothari, (1990), proportional allocation under which the sizes of the samples
from the different district are kept proportional to the sizes of the district. That is, if Pi
represents the proportion of population included in stratum i, and n represents the total
sample size, the number of elements selected from stratum i is n X Pi. Therefore, the total
sample for this study is 390 employees.

3.3.3. Sampling Technique

Sampling is the process of selecting a sufficient number of elements from the target
population so that by studying the sample, and understanding the properties or the
characteristics of the subjects, the researcher is to generalize the properties or characteristics
to the population elements. Therefore, the researcher will use purposive sampling technique.
This is because, Addis Ababa area districts and Head offices are relatively having the
potential to represent the rest of other district in all nature like banking service rendered,
nature of customer, high level of budget and profit accumulation etc. Also the researcher
purposively select commercial bank of Ethiopia is because of it’s the profit seeking
governmental organization and pioneer to implement the system based performance
management system than other banks.
3.4. Source of Data Collection
Both primary and secondary data will be used as sources of data. The primary data sources
will be collected through questionnaires and interview from the employee and the
management respectively while the secondary data’s will be collected and analyzed to
support the primary data’s.

3.5. Data Collection Instrument

In order to obtain relevant information, the researcher will collect data from both primary
and secondary sources. Primary data has to be collected using questionnaires based on the
mentioned research questions. The major advantages of questionnaires are that they can be
administered to groups of people simultaneously, and they are less costly and less time-
consuming than other measuring instruments. The structured questionnaire comprised both
close and open ended questions and interview will be the other method of gathering the
relevant data in this study. The design of close ended question comprised of 5 point likert
scale ranging from (1=strongly disagree to (5=strongly agree) questions and open ended
questionnaires will be also included.

In order to answer the basic question the secondary data sources will be collected and
analyzed from different published and unpublished materials such as reviewing different
files, company manuals, brushers, reference books, company reports, annual reports, National
Bank report and especially from journal article that help to fill the knowledge gap and
understand the concepts, definitions, theories and empirical results through reviewing various
relevant journals articles from internet access will also be used as a secondary data sources.

3.6. Data Collection Procedure

Since this study utilize questionnaires as a tool of data collection, these questionnaires are to
be adopted from different literatures and previous works related to performance management
practices. Then the questionnaires will be distributed to the sample employee who are
working in head office and four district employees located in Addis Ababa area to fill up and
later will be tested of the result after collecting the questioners. The approved questionnaire
will distribute and collected via email address and physically. Also for interviews the
researcher will present physically.

3.7. Data Analysis Method

Once the raw data was on hand, quantitative and qualitative methods of data analysis will be
used. Particularly with the quantitative data collected via the questionnaire, a descriptive
statistical analysis method and SPSS will use to tabulate the data and present it in tables.
Particularly statistical tools like frequencies, percentage method, mean and standard deviation
will be used to analyze data Furthermore, to analyze the data obtained through interview
qualitative method of data analysis will be employed.

3.8. Validity and Reliability

The analysis of data would be sufficiently adequate to reveal its significance and the methods
of analysis used should be appropriate. The validity and reliability of the data will be checked
carefully. Validity and reliability of scores on instruments, additional standards for making
knowledge claims, lead to meaningful interpretations of data.

3.8.1. Validity
Validity refers to the extent to which the measurement instrument actually measures what it
intended to measure. It is used to suggest determining whether the findings are accurate from
the standpoint of the researcher, the participant, or the readers an account (JOHN W.
CRESWELL, 2014). In order to ensure the quality of this research design content validity of
the research instrument will be checked. The content validity will be verified by the advisor
of this research, who looks into the appropriateness of questions and the scales of
measurement. Peer discussion with other researchers will also be conducted since it is another
way of checking the appropriateness of questions.

3.8.2. Reliability
Reliability has to do with the accuracy and precision of a measurement procedure. Cronbach
alpha is a coefficient of reliability. It is commonly used as a measure of the internal
consistency or reliability of the instrument. As a result, copies of the questionnaire will be
distributed to twenty respondents as a pilot test who will not participate in the main research.
This is done to find out whether the developed instrument measures what it is meant to
measure and also to check the clarity, length, structure and wording of the questions. This test
will help the researcher to get valuable comments to modify some questions

According to statistical interpretation, the closer the reading of Cronbach‘s Alpha to digit 1,
the higher the reliability is. In internal consistency, over 0.80 are good, those in the 0.70
range are acceptable, reliabilities, less than 0.60 are considered to be poor. Hence Cronbach’s
Alpha will be utilized and calculated to test the accuracy or dependability or, as we usually
call it, reliability of the research instrument (Lee Cronbach, 1951).
3.9. Ethical considerations
With regard to ethical issues, the researcher will be governed and strictly bound by the
research code of ethics. Hence, respondents’ privacy be maintained, their personal values also
be kept confidential. Respondents will not be asked to write their names, their telephone
numbers and their specific address so that their private secrets never been disclosed.
Also the researcher will obey by the law not to take someone’s work without appropriate
citation and all the data’s will collect with the consent of the organization as well as only for
academic consumption not to harm the organization goodwill.
 ANNEX – I
WORK PLAN AND BUDGET
Time Schedule
Table 2. Time Schedule

S. No Activities Accomplishment Date

1 Submitting final research proposal to the advisor January 21-23, 2020
2 Refining proposal, and developing data collection January 24 – Feb 07, 2020
instruments
3 Submitting data collection instruments to Advisors February 08 -14, 2020
and refining the instruments based on feedback
4 Primary data collection February 21- March 19, 2020
5 Analysis & interpretation of collected data March 20 – April 16, 2020
6 Submitting first draft document to advisor April 17 – 23, 2020
7 Writing up the final research report April 24 – May 14, 2020
8 Prepare for defense June 2020

Budget Plan
Table 3. Budget plan

Unit Cost Total Cost

Category Item Amount Remark
(ETB) (ETB)

Honorarium fee Advisor honorarium fee 2,000 2, 000.00

Paper (pack) 2 320.00 640.00
Note book, 1 90.00 90.00
Binder with clip 4 140.00 560.00
Stationaries
Stapler & stapler wire 2 140.00 280.00
Paper bag (big Posta) 157 6.00 942.00
Lease jet Cartilage 1 1500 1,500.00
Services Internet, mobile card, 3000 3,000.00
Transportation 2500 2,500.00
Sub Total 11,512.00
Contingency 10% 1151.20
 Total 12,663.00

REFERENCE
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ANNEX – II
QUESTIONNAIRE