EFFECT OF EMPLOYEE PERFORMANCE MANAGEMENT SYSTEM ON BUSINESS COMPETITIVENESS COMPARATIVE STUDY BETWEEN COMMERCIAL BANK OPERATING IN AYERTENA, ADDIS ABABA

Abstract

Employee performance management systems (EPMS) are essential tools for enhancing individual and organizational performance, yet their direct influence on business competitiveness remains underexplored, particularly in the context of commercial banks in developing countries such as Ethiopia. Most existing Ethiopian studies focus on employee motivation, financial performance, or operational efficiency, leaving a research gap regarding the systematic examination of EPMS components performance appraisal, performance feedback, reward systems, career development, and performance evaluation systems and their effect on business competitiveness. This study addresses this gap by investigating the comparative impact of EPMS on public and private commercial banks operating in Ayertena, Addis Ababa. A quantitative research design was adopted, employing a census sampling technique to include 174 employees across the Commercial Bank of Ethiopia and six private banks. Data were collected through structured questionnaires, tested for validity and reliability, and analyzed using descriptive statistics, Pearson correlation, and multiple linear regression to quantify the relationships and explanatory power of EPMS components on business competitiveness. The findings reveal that performance appraisal and career development programs significantly enhance competitiveness in both public and private banks, while reward systems also contribute positively, especially in private banks. The study underscores the practical implications for bank management: strengthening appraisal systems, career development initiatives, and reward mechanisms can improve employee motivation, organizational performance, and overall competitiveness in the banking sector. This study contributes to localized insights on EPMS competitiveness linkages in Ethiopia’s banking sector.