The Effect of Performance Appraisal Practice on Employee Motivation: The Commercial Bank of Ethiopia (CBE)

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Addis Ababa University


The main purpose of this study is to investigate the effect of performance appraisal practice on employee motivation in Commercial Bank of Ethiopia. Explanatory research design was used and quantitative data were collected from a sample of 172 employees using proportionate stratified sampling technique, and the data were analyzed using descriptive and inferential analysis. A Structured questionnaires developed in form of a five point likert scale was used for data collection. Data was collected and analyzed by package for social sciences (SPSS).Pearson’s correlation coefficient was used to determine the relationships between performance appraisal practice and employee motivation. A regression model was used to determine the co-efficient of the effect of performance appraisal on employee motivation. The study shows that there is a positive significant correlation between performance appraisal and employee motivation and it was concluded that performance appraisal system has a significant effect on the employee motivation at the CBE. The study also found that 48% of the changes in the employee motivation variables could be attributed to the combined effect of performance appraisal practice predictor variables. In general this research revealed that performance appraisal was associated with higher level of employee motivation. This is attributed to ongoing feedback, open communication between employees and their supervisors, trained appraisers, fairness of appraisal practice, rewarding performance and employees’ participation on the planning of appraisal. The level of employee’s motivation as related to the current performance appraisal system and employees perceive about the performance appraisal is low in commercial bank of Ethiopia. The recommends that effective feedback and communication; giving training opportunities to employees to acquire skills; and encouraging employees’ participation in performance appraisal practice are all essential for effective performance appraisal practice in an organization.



Performance Appraisal practice, Employee motivation, ongoing feedback