Improving the Fairness of Performance Appraisals

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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. their 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...
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