THE EFFECT OF PERFORMANCE APPRAISAL SYSTEM ON EMPLOYEES’ MOTIVATION: THE CASE OF ETHIOPIA TOURIST TRADING ENTERPRISE

Abstract

The study aimed to explore the impact of performance appraisal on employees' motivation and performance within Ethiopia Tourist Trading Enterprise (ETTE) in Addis Ababa. Employing explanatory research designs, a sample of 218 staff was selected from a population of 481 using stratified random sampling, with 158 responses ultimately included for analysis. Data were collected through structured questionnaires and analyzed using SPSS Version 22.Findings revealed that respondents perceived their motivation levels as relatively low, with a grand mean score of 2.59, indicating agreement with statements measuring motivation. Correlation analysis demonstrated positive relationships between performance appraisal objectives, standards, and techniques, and employee motivation, with correlation coefficients of 0.682, 0.659, and 0.541, respectively. Regression analysis further indicated a significant effect of performance appraisal on employee motivation, with all three dimensions (standards, techniques, and objectives) serving as significant predictors, accounting for 56.4% of the variation in overall motivation (R² = 0.564).In conclusion, the study suggests that performance appraisal practices within ETTE have the potential to influence employee motivation positively. It recommends that ETTE utilize performance appraisal objectives, methods, and standards to appraise employees effectively, thereby enhancing motivation and ultimately improving performance.