Abstract:
The mediating role of feedback, employee participation and perceived fairness in the relationship between performance appraisal system and employee satisfaction has been established using Commercial Bank of Ethiopia North Addis Ababa District, yet theories and empirical studies have demonstrate that feedback, employee participation and perceived fairness mediate in the performance appraisal system-employee satisfaction relationship. The study used a mixed research approach. A systematic random sampling was used to sample 280 respondents from Commercial Bank of Ethiopia, North Addis Ababa district. The study used questionnaires and interview as for data collection instrument. Descriptive statistics, regression analysis and correlations were used to analyze the data collected. The result of the study shows a statistically significant relationship between performance appraisal system and employee satisfaction. The Baron and Kenny approach was used to test the mediation. The study revealed that feedback, employee participation and perceived fairness partially mediate between performance appraisal system and employee satisfaction. Key challenges identified include low feedback rate, appraisal is conducted annual base and manager is the only source that appraise employee's performance. The study recommends that participation style should be encouraged in order to appreciate employees in the performance appraisal process. Further, top management should consider giving performance feedback and coaching on time.
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