The Effect of Performance Appraisal on Employee Motivation in East African Pharmaceutical PLC (EAP PLC)

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Addis Ababa University


The purpose of the research was evaluating the effect of performance appraisal system on employee motivation in East African Pharmaceuticals PLC. Questions raised during the study were,what looks like the existing performance appraisal, level of motivation and how effective PA is in motivating employeein this particular organization. A descriptive research design with survey method was applied. Employee’sreaction towards performance appraisal was evaluated using components of performance Appraisal such as method, process and purpose.Data was obtained through a questionnaire of eighty employees from a representative of ninety twonon managerial staffs from all departments selected using stratified sampling methodsand also secondary data was obtained from administration manual of the organization regarding the issue of performance appraisal system. The collected data were analyzed using SPSS version 20 software. The research findings established that employees were relatively satisfied with the existing PA system (process and Method) but in relation to purposes of performance appraisal systememployees perceived that PA result was used fordevelopmental purposes but it was unjust in relation to promotion, rewarding and pay scheme. The level of motivation of employee in EAP was fair in which employees witnessed theywere motivated. The finding also showed there is a positive correlation between PA and employee motivation. The result from the regression Analysis showed around 20.8 % of employee motivation was caused by PA. As a conclusion the performance appraisal system of the corporation has an effect on employees’ motivation. The purpose of performance appraisal only partiallyimplemented it was unjust in relation to promotion, rewarding and pay scheme. In light of the findings, the following recommendations were forwarded. The organization need to enhance motivation, throughproper implementation and regular follow up of Appraisal system. Preparing learning and development plan, fair compensation, promotion and salary payment scheme based on the results of performance appraisal.Other researchers in the area of pharmaceuticals manufacturing should conduct using similar factors of Performance Appraisal which were covered by this work or other Factors of PA to get a betterresult.



promotion, motivation