A performance appraisal (PA) is a company’s methodological assessment of an employee’s career-related strengths and weaknesses (Palailagos et al. , 2011). However, the way that a PA is carried out can determine whether an employee believes their company considers fairness within their organisation or not, i. e. heir organisational justice perception (Erdogan 2002; Farndale, Hope-Hailey, & Kelliher, 2010; Gupta & Kumar, 2012; Hartmann & Slapnicar, 2011; Ismail, Sulaiman, Mohamed & Sani, 2011; Linna, Elovainio, Bos, Kivimaki, Pentti, & Vahtera, 2012), which has been associated with their: turnover intentions (Whiting & Kline, 2007), job satisfaction (Brown, Hyatt, & Benson, 2009; Ismail et al. , 2011; Jawahar, 2007), and probably of quitting (Brown et al. , 2009). The purpose of this report is to advise an organisation on how to increase its employees’ acceptance of PAs by making their PA process fairer.
In order to do this the report will evaluate PA fairness literature and present steps that the organisation should consider when redesigning its PA process. PA rhetoric contends that fairness is a multifaceted concept (e. g. Erdogan, 2002; Jawahar, 2007; Palaiologos, Papazekos, & Panayotopoulou, 2011). Therefore the report will account for this by interpreting ‘fairness’ in terms of three previously identified (see Erdogen, 2002), what are called ‘justice types’: procedural, interactive and distributive.
Whereby procedural justice is the fairness of the process, interactional justice is the quality of the communication process between appraiser/s and subordinate (Erdogan, 2002), and distributive justice is the ratio of an employee’s professional input versus the outcome they receive (Erdogan, 2002). Methodological issues in PAs have often led employees to regard them as pointless and irrelevant (Brown et al. , 2010; Linna et al. , 2012). A mistake as simple as not giving the employee enough notice before an appraisal can greatly detriment his/her procedural justice perceptions (Jawahar, 2010). Palailagos et al. 2011) found that, if it was explicitly clear to employees what had to do, they had control over their outcome, and the assessment criteria seemed relevant, then the PA process was regarded as fair. Research by Chory ; Westerman (2009) conveyed that clarity (explicit versus ambiguous) and consistency (between employees) were both important factors of procedural justice. Brown et al. (2010) suggested that a good tactic to improve clarity (which, in their findings was also linked with procedural justice) would be goal setting. It is also widely accepted that goal setting can increase motivation (Roberts, 2003).
Linna et al. (2012) found that goal setting increased perceived usefulness of PAs, which was related to procedural justice, and interactional justice. Therefore, goal setting should form an important part of a PA process. Revisiting Palailagos et al. (2011) finding that control is an important factor to employees: this can be explained by Thibaut ; Walker’s control theory (1975), which asserted that people aspire to manage their own outcomes. In other words, to deny employees control during the PA process will provoke them to regard it as unfair.
This theory is also reinforced by evidence from Kamer ; Annen (2010) who found a positive relationship between the opportunity to be heard during a PA and satisfaction (also see Hartmann ; Slapnicar, 2011). Therefore, a certain amount of ownership of the PA should be given to the employee to increase their fairness perceptions of the process. Allowing the subordinate shared ownership over their PA would also overcome any incongruence between what the employee expected from their PA and what their company choose to deliver, which was found to be detrimental to workers’ attitude of the PA (Whiting ; Kline, 2007).
It is clear that there are many different, intricate factors that effect a worker’s procedural justice perception yet, it is also important to consider which assessment tools a company should use to orchestrate the evaluation. The most common appraisal method is an interview held by the employee’s manager (Erdogan, 2002). However, a subjective interview could squander any chance of a company trying to improve its organisational justice perceptions (Heslin & VandeWalle, 2009). Performance rating scales are a commonly applied method to improve objectivity, validity and reliability (Borman, Buck, Hanson, Motowildo, Stark & Drasgow, 2001).
A performance rating scale provides the ‘rater’ (appraiser) a carefully structured system of behavioural statements from which the rater chooses, best, reflect the behaviour of the subordinate (Borman et al. , 2001). Simsek, Pakdil, Dengiz, & Testik (2012) ran an experiment where they restructured a transportation firm’s PA process which used to rely on the PA interview to incorporate an objective measure, global positioning system (GPS) which monitored driver’s speed, journey time and idling. The data was computed and presented to drivers in a feedback interview.
The authors insisted that the procedural change (moving towards multi-source feedback or 360° feedback) greatly improved the relevance of their PA process, which we know improves one’s perception of procedural justice (Jawahar, 2010; Palailagos et al. , 2011; Linna et al. 2012). Thus, 360° feedback (if the other sources are deemed relevant) and performance rating scales should be considered to increase objectivity, although further research is necessary to tie both in with fairness perceptions. Brett & Atwater (2001) assert that 360° feedback can be damaging to organisational justice if feedback is negative.
Brett & Atwater’s (2001, also see Pichler, 2012) propose that negative feedback must be delivered tastefully otherwise the feedback can detriment the employee’s perception of PA fairness and their motivation. Linna et al. (2012) provided solid proof – with a longitudinal design and large sample size – that the interaction between appraiser and subordinate can greatly influence how fair an employee judges their PA (i. e. interactional justice). Linna et al. (2012) measured interactional justice by the manner in which the employees were treated – the integrity and consideration they were shown.
Their findings have a theoretical grounding from Lind & Tylor’s (1988) group-value model which posits that one values one’s treatment from one’s group (organisation) very highly and mistreatment will make one feel a sense of exclusion and low self-worth. Another critical finding revealed in Linna et al. (2012) research was the importance of ‘voice’ (being allowed to voice one’s opinion) during the feedback process in determining interactional and procedural justice (also see Jawahar, 2010).
Therefore it is paramount for the subordinate’s justice perceptions that the appraiser is friendly, respectful and allows the appraisee to voice their feedback, when they conduct the PA. Erdogan (2002) considers distributive justice to derive from equity theory (Adams, 1965), inferring that an employee judges the fairness of their PA outcome by comparing it against those of their colleagues. In other words, an employee judges the PA unfair if a colleague who they believe works equally as hard as they do receives a better PA review. Thus, in terms of reating a fairer PA system distributive justice is not something that a company can alter directly. However, justifying the overall result by using multiple-source feedback will statistically stand the company in better stead if all sources are deemed relevant i. e. work-related. This report has raised a number of important factors that must be considered in order to ‘better your chances’ at improving the perceptual justice of the PA process. In presenting design flaws of other PA systems by drawing on previous research, it is impossible to ignore the importance of PA reactions to each and every intricate part of the PA process.
Therefore, the most important change a company can make is to constantly improve and customise the way they gather feedback from their employees about their PA justice perceptions. From the research presented it can be concluded that participation (e. g. voice, goal-setting, being polite to the appraisee) during the PA process is crucial to justice perceptions. It is not yet known the true benefits of mulit-source feedback and performance rating scales however, both could be implemented with caution and the feedback gathered will determine whether they stay or not.
The report also highlighted the multiple steps that the PA process can be broken down into: from providing the subordinate (adequate) notice that the PA is going to take place, to the assessment itself, followed by determining the appraisee’s results (rating), to delivering their results and feedback. These steps can be used as a checklist whereby all three justice types must be considered at each point.
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