The Link between Performance Management System and Employee Effectiveness: The Case of Ethiopian Banks

Abstract

The study explores the current performance management system of banks in Ethiopia using a modified conceptual framework that links phases of performance management system with employee effectiveness. The research finds that banks in Ethiopia have in-placed a performance management system targeted to evaluate performance against desired objectives. However, it has a gap with regards to involving employees in planning and objective setting, in using performance management system as a motivation tool and in coaching them towards better performance result in the future. The hypothesis testing has proved that there is a significant relationship between phases of performance management system and employee effectiveness. The study recommends for improvement in building a robust performance management system and in maximizing the practical significance of the system.

Keywords: Performance management system, effectiveness, Ethiopia, banks