THE EFFECTS OF PERFORMANCE APPRAISAL SYSTEM ON EMPLOYEE COMMITMENT AMONG COMMERCIAL BANKS IN GURAGE ZONE

Abstract

This research explores the effects of performance appraisal systems on employee commitment within commercial banks situated in the Gurage Zone. In an increasingly competitive financial industry, understanding the drivers of employee commitment is paramount for organizational success and sustainability. The purpose of this study was to investigate how various performance appraisal practices influence employees' perceptions of their roles, job satisfaction, and overall commitment to their banks. Utilizing descriptive survey and explanatory research design along with quantitative and qualitative methods, data were collected from a sample of employees across several commercial banks in the Gurage Zone. Surveys were administered to assess employees' perceptions of the performance appraisal purpose, methods, process, and feedback for professional development. Specific focus was placed on how these factors correlate with affect the levels of employee commitment, measured through dimensions such as affective commitment, normative commitment, and continuance commitment. Preliminary findings suggested that effective performance appraisal systems, characterized by purpose, methods, process, and feedback, significantly enhance employee commitment. Conversely, systems that lack clarity or fail to align with employees’ career aspirations can lead to diminished commitment and increased turnover intentions. The research highlighted the critical role of performance management in fostering a committed workforce and provides actionable insights for bank management. The implications of this study extend beyond commercial banks in the Gurage Zone, offering valuable contributions to the field of human resource management. By describing the relationship between performance appraisal practices and employee commitment, organizations are better equipped to design and implement systems that not only improve performance but also nurture a culture of commitment and loyalty among their workforce.