THE EFFECT OF PERFORMANCE MANAGEMENT SYSTEM ON EMPLOYEE MOTIVATION: A COMPARATIVE STUDY BETWEEN PUBLIC AND PRIVATE COMMERCIAL BANKS OPERATING IN GURAGE ZONE

Abstract

The aim of this study was to examine the effect of the performance management system on employee motivation, specifically through a comparative analysis between public and private commercial banks operating in the Gurage Zone. The study utilized descriptive survey and explanatory research designs, employing both quantitative and qualitative approaches. It applied purposive, simple random, and proportionate stratified sampling techniques to select the branches and employees involved in the research. The target population comprised employees of public and private banks within the branches of the Gurage Zone, with a sample size of 251 participants. Primary data were collected through self-administered questionnaires distributed to clerical employees from the selected branches, as well as through interviews conducted with randomly selected branch managers. Additionally, secondary data sources were utilized by reviewing relevant documents pertaining to the performance management system and employee motivation. Quantitative data analysis was conducted using SPSS version 26 software, with findings presented through descriptive statistics, including frequency tables, percentages, means, and standard deviations. Moreover, multiple linear regression and independent samples t-test were employed to assess the effects and statistical differences between the public and private commercial banks. Qualitative data were collected and narrated systematically using a content analysis approach to support the quantitative data analysis results. The finding of the study revealed significant differences on performance assessment, performance reward practices as well as on intrinsic and extrinsic motivation of employees between the public and private CBs. Therefore, from these results it can be inferred that a statistically significant advantage in the implementation of performance management practices within private commercial banks compared to public institutions. Moreover, public CB employees exhibit higher levels of intrinsic motivation as compared to their counterparts. Conversely, extrinsic motivation is significantly higher among employees of private commercial banks. Therefore, the study recommended that public commercial banks consider adopting best practices from their private counterparts, particularly in the realms of performance assessment and rewards. Implementing mechanisms to enhance their performance management systems can help bridge the gap, allowing them to compete more effectively and improve their overall service quality.