National Values, Performance Appraisal Practices, and Organizational Performance: a Study Across 21 Countries Hilla Peretz

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NATIONAL VALUES, PERFORMANCE APPRAISAL PRACTICES, AND ORGANIZATIONAL PERFORMANCE: A STUDY ACROSS 21 COUNTRIES HILLA PERETZ Department of Industrial Engineering and Management Ort Braude College, Israel Snunit 5 St., P.O.Box 78, Karmiel 21982, Israel

Whitman School of Management, Syracuse University

This study was funded by a grant from the SHRM Foundation. However, the interpretations, conclusions and recommendations are those of the authors and do not necessarily represent the view of the SHRM Foundation. Best Paper Proceedings, Academy of Management, August 2008 ABSTRACT Using two independent databases, this study explored: (a) the influence of national values on performance appraisal (PA) practices adopted by organizations; and (b) the interactive effects of national values and PA practices on organizational performance indicators. Data from 5,991 organizations in 21 countries were obtained for this study. Results showed that national values explained PA strategies, confirming the study hypotheses. In addition, our hypothesized interaction effects between national values and PA programs on organizational outcomes were supported. The results have strong implications for organizations operating in different societies concerning how to maximize the fit between particular cultures and PA practices in order to enhance organizational performance. INTRODUCTION Performance appraisal (PA) has long been a key human resource practice in the US and as such has been extensively analyzed and investigated (e.g., Fried, Levi, Ben-David, Tiegs, & Avital, 2000; Mero, Guidice, & Anna, 2006; Murphy & Cleveland, 1995). However, relatively little research has been conducted on the role of PA in the global economy (e.g., Aycan, 2005). The purpose of the present study is twofold: to investigate (a) the influence of national values on PA practices; and (b) the interactive effects of national values and PA practices on organizational performance indicators (i.e., absenteeism, turnover, levels of productivity and innovation, service quality). In analyzing these two issues we will control for the effects of key organizational characteristics (size, technological level, sector, service, and globalization level). The importance of understanding the contribution of culture to PA has increased with the trend toward globalization. Global organizations benefit from employees who come from different backgrounds.. At the same time, a diverse workforce requires more emphasis on strategies that establish employees' common ground on key issues, and assist them in dealing with the diversity of backgrounds. Values at a national level are the means by which behaviors and beliefs of members of the larger society can be coherently interpreted. Researchers have made several attempts to define and classify national values (e.g., Hofstede, 1980; Schwartz, 1999). Common themes in most of these definitions and classifications are that cultural values are typically shared by members of society, are passed from older to younger members, and shape a collective perception of the world (Adler,

2 2002). Applying this characterization to organizational theory, researchers have proposed that managerial practices can be predicted by various national values (Aycan, 2005; Fischer, Ferreira, Assmar, Redford & Harb, 2005). Performance Appraisal Individual-based performance appraisal (PA) has been used extensively in the US for a variety of purposes, including employee feedback and development and administrative decisions such as merit raises, promotion, and termination. A primary purpose of PA has been to provide meaningful feedback to employees so that they can improve their performance. PA is thus consistent with the equity principle, under which individuals are rewarded according to their job performance. However, increased globalization and multinational operations have raised timely and interesting questions about the degree to which companies located...
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