Evaluating the Role of Performance Management Practises in Driving Employee Performance in Addis Ababa’s Four-Star Hotels

Abstract

This study examines how Performance Management System (PMS) practises affect employee performance in four-star hotels in Addis Ababa, Ethiopia. It investigates direct roles of performance planning, performance appraisal, ongoing feedback, and corrective action, and tests whether ongoing feedback and corrective action mediate these relationships. Survey data from employees were analysed using regression and parallel mediation analysis. The findings reveal that all four practises significantly predict employee performance, with corrective action and ongoing feedback emerging as the strongest unique predictors. Planning improves performance both directly and indirectly by enabling effective feedback and corrective action. In contrast, while the appraisal process has a direct effect on performance, its indirect influence occurs predominantly through the feedback it generates, with no significant pathway via corrective action. Overall, the study concludes that PMS functions most effectively as an integrated cycle in which participatory planning sets clear expectations for ongoing coaching and supportive corrective steps, rather than as set of isolated administrative events. Practical implications emphasise need for managers to prioritise collaborative goal-setting, institutionalise regular feedback, and ensure that appraisal discussions lead to concrete, developmental actions.