Commercia Bank of Ethiopia’s Performance Management Systems and Their Preparedness for Global Competitiveness: The Case of Mekelle Branches

Abstract

The rapid globalization of the financial sector demands that banks in emerging markets develop strong performance management systems (PMS) aligned with international best practices. This study assesses the effectiveness of the Commercial Bank of Ethiopia’s(CBE) PMS and its readiness global competitiveness, focusing on the Mekelle, Agazi, and Adi-Hawsi branches in Mekelle Tigray Ethiopia. Using a mixed-methods approach, the research integrates primary and secondary data to provide a comprehensive evaluation. Primary data were gathered through structured questionnaires administered to 169 participants (131 general employees, 23 managers, and 15 HR staff) selected via stratified random sampling to ensure proportional representation. A total of 169 valid responses were analyzed to capture insights across organizational levels about PMS effectiveness, strategic alignment, and talent development capacity. The study found that perceptions of the PMS vary significantly between different levels of the organization; 69.6% of managers perceive the PMS as effective in driving performance, compared to 53.3% of HR staff and 52.3% of employees. Feedback is predominantly provided quarterly, with 77.9% of employees reporting this frequency, yet only 22.1% of employees engage in regular performance discussions with supervisors. While 65.2% of managers are satisfied with training programs, 40.0% of HR professionals and 16% of Employees express dissatisfaction and call for more targeted development initiatives. A comparative analysis with The Hongkong and Shanghai Banking Corporation (HSBC UK) highlights significant gaps in CBE’s PMS, especially regarding technological integration, continuous feedback, and alignment with strategic goals. HSBC UK leverages cloud-based platforms and real-time feedback mechanisms that tie performance directly to compensation and career growth, whereas CBE’s system remains less automated and agile. The data indicates risks to talent retention and overall competitiveness, with 35.1% of employees reporting dissatisfaction with the PMS. Although the CBE Mekelle branches benefit from an experienced workforce and moderate employee trust in the PMS, the study underscores the urgent need to enhance communication, feedback culture, training, and technology adoption. Implementing digital HR solutions, enhancing training programs, and fostering a more inclusive, continuous feedback environment are recommended to position CBE for sustainable competitiveness in the evolving global banking landscape.