Effects of Balanced Scorecard Implementation on Employee Performance Appraisal Practices, The Case of Ethio Telecom

One of the most challenging components of Human Resource is performance appraisal (Williams, 1998). Organizations that employ BSC as change and strategic management system tend to fail to investigate the effects that it can bring on the efficiency of the employee appraisal practices. Etho telecom is not different in this regard. At first BSC implementation, the objectives were not properly cascaded to individual level, neither were there a mapping of the objectives along the four perspectives to show the value chain, no new template was created that show the different levels of perspectives introduced with the implementation of BSC, it created conflict between employees and their immediate supervisors as the targets were not agreed upon and employees were not made to buy into the new process, the targets were not put in a measurement criteria that is clear for everybody involved. The purpose of this paper is to examine the effect of BSC implementation (second time) on the overall employee performance appraisal, the case of Ethio Telecom. A seven point Likert scale questionnaire and a semi structured interview were used to gather data from 114 employees and managers of the commercial Divisions of Ethio Telecom. The type of research employed was causal research with a regression analysis to examine the relationship between the two variables (BSC implementation and Employee appraisal practices). The study shows that there is a positive relationship between BSC implementation and employee performance appraisal practices. It also confirmed that the link between the organizational strategy and individual goals is a good predictor (73%) of the overall practice of employee performance appraisal. On the other hand, the study did not provide sufficient evidence that the other three elements of BSC; objectivity, documentation and employee-supervisors relationship are good predictors to the overall practice of employee performance appraisal. Keywords: Balanced Scorecard (BSC), Employee Performance Appraisal Practices, Ethio Telecom