Human Resource Management - Critical Analysis of a Current Hrm Issue - Employees' Perception of Fairness of Performance Appraisal Systems

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Human resource management
Individual Minor Paper (Critical analysis of a current HRM issue)

This thesis aims to identify how employees’ perceived justice (or fairness) of performance appraisals influence their effectiveness and usefulness for an organization’s performance management system by critically evaluating the existing knowledge of appraisal provided by researchers. It contains an analysis of similarities and differences in the points of view presented by researchers and an explanation of why these similarities and differences are influential. Next, it provides a discussion of HRM’s role in the management of this particular issue. This thesis also attempts to move beyond the narrow strictures in which performance appraisal is presently conceptualized, explores gaps in researches and wider issues relating to performance management, and provides important implications for other organizations.

Performance appraisal is a human resource management tool that evaluates the quality of a worker’s performance, and it has received much attention for more than seven decades. Employees’ perceived justice of performance appraisals has been identified as an important criterion in judging the effectiveness of their organization (Kavanagh, Benson, and Brown 2007).

Many researchers have begun undertaking studies on this issue from very early periods such as Jacobs, Kafry, and Zedeck in 1980. However, these researches may seem to be lacking of persuasion because they are old results with limited resources and deficient theoretical basis. This thesis explores the fairness issue of organizations’ performance appraisals based on a series of previous research findings which ranged from 2000 to 2010, but some of them are inevitably established on findings before this period. In addition, not all literatures are Australian studies.

Critical analysis of the literature under review
In recent years, performance appraisal has been transformed from performance-monitoring into performance-development tools with three functions (Erdogan 2002, Froydis 2010): * To provide adequate feedback to support employee development. * To serve as a basis for modifying or changing behaviors to produce more effective work for organizations. * To provide useful information to supervisors.

This transformation has taken place because performance appraisals had been perceived as biased and unfair (Fletcher 2004). Therefore, several researchers suggested that fairness has been identified as the most important aspect of employees’ responses to them (Erodgan 2002, Nurse 2005, Kuvaas 2006). Their examination of a cross-section of workers’ perceptions of the process of performance appraisals was motivated by the need to determine whether they believed that they experienced fair outcomes from performance appraisals, and whether its usage was seen to contribute toward their career advancement.

Another similarity that most research findings have is that they explored larger range of factors which influence perceived justice of employees. It includes system characteristics, rater behaviors, contextual factors such as organizational culture and interpersonal exchanges before the performance appraisals, and performance ratings. The inclusion of different categories of perceptions emphasizes the importance of considering a broad range of factors influencing employees’ perceived justice in performance appraisals. In addition, it has been suggested that employees have higher job motivation and job satisfaction when they perceived performance appraisals as fair and trustworthy (Pettijohn E Pettijohn S & Michael d’Amico 2001, Froydis 2010). It is believed that when appraisals provide clear criteria, the criteria meet with employees’ approval, and the appraisals are perceived as fair and used in determining rewards, employee motivation and job satisfaction increases. Although contents of these studies were covered in various industries...
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