The Effect of Performance Management System On Employee Motivation in Commercial Banks At Dire Dawa City: A Comparative Study Among Public And Private Commercial Banks

The general objective of the study was to examine the effect of performance management system on employee motivation in DD city commercial banks; A comparative study among public and private commercial banks. The researcher used descriptive and explanatory research design. Descriptive research was used to answer for the first two research question and explanatory research design was used to answer for the last three specific objectives. In this study the researcher used both primary and secondary data. The target population of the study was employees of both public and private commercial banks, with a total of 528 employees from these 228 employees were selected as a sample. The researcher used simple random sampling to select and distribute questionnaire and stratified sampling was used to classify the bank and employee type and used purposive sampling to select the bank from public and private commercial banks. The researcher used descriptive and inferential analysis tool. This study would be used five point linkert scale to measure the PMS and used MSQ to know the level of employee motivation. The researcher used OLS model because OLS has a better diagnostic tool and the goodness fit of the data is improved by hetroscedasticity and analyzed through STATA software. The major finding of the study was the perception of employees of both public and private commercial bank were moderately favorable attitude towards performance management system, the employees of public commercial banks were relatively highly motivated by the extrinsic motivational factors and private commercial bank were relatively highly motivated by intrinsic motivational factors. In DD city commercial banks performance planning, evaluation & review and reward & compensation and career development has appositive and significant impact on employee motivation and employee input has insignificant effect on employee motivation. The researcher forwarded that the bank should give more attention about the current performance management system, the bank should keep and improve the motivational level of employees, public commercial bank should link career development with the current PMS, private commercial bank should give timely, continuous and constructive feedback to employees.