REVIEW OF PERFORMANCE APPRAISAL LITERATURE

This chapter provides the basis for the development of this study. It will give a general overview of the relevant literature and research on performance appraisal and organizational commitment in general but with a lot of emphasis on appraisal session, supervisory behaviours during appraisal and employees’ satisfaction with performance appraisal and affective commitment.

A brief outline of performance management, performance appraisal and organizational commitment will first be discussed as a sort of general foundation followed by some relevant aspects of performance appraisal, affective commitment and ending with a summary of the chapter.

The justification is that it will facilitate the conceptualization of the variables that will be examined in this study, indicate their envisaged relationships and further provide the basis for their empirical evaluation.

Although the performance appraisal session is a component of the whole performance appraisal system (Giles & Mossholder, 1990) however, it is still a major part of the appraisal system since it is the only avenue for gathering employees’ opinions and other information (Roberts, 2002). Similarly, supervisory behaviours during an appraisal session has been indicated to be a major aspect which contributes to the effectiveness of performance appraisal session (Martin & Bartol, 1986) hence some key concepts of performance appraisal session and supervisory behaviours will be applied and used to formulate the argument that there should be a positive relationship between performance appraisal satisfaction and certain supervisory behaviours during a performance appraisal session.

Similarly, extant literature and research (Dessler, 1999; Paul & Anantharaman, 2004) has indicated that using performance appraisals to develop employees may increase their affinity to the organization hence this review will elucidate the logic for attempting to establish a positive link between performance appraisal satisfaction and affective organizational commitment and the significance of such a relationship to organizations.

2.2 A BRIEF OVERVIEW OF PERFORMANCE MANAGEMENT

In the late 1980s and 1990s, organizations started implementing combined practices aimed at building a culture of performance which involved using strategies that were believed to enhance employees’ input towards the overall success of the organization referred to as ‘performance management’ (IPM, 1992). However the majority of these practices (e.g. goal setting, assessment and review) were already being used by organization but as individual practices (Armstrong & Baron, 2005).

Armstrong (1998) sees performance management as a combined and well planned method used to further improve the success of an organization by increasing employees’ performance and developing the abilities of teams and individual employees however Fletcher (1993a cited in Armstrong & Baron, 1998) sees it as a method used by organizations to invent and share their vision with the employees by enabling them appreciate their own part towards achieving the organizations vision and in so doing help to manage and improve the performance of both the employees and organization whereas Hendry, Bradley & Perkins (1997) believe it is an efficient method used to enhance the performance of individuals and teams to realize the goals of the organization. The definitions above indicate that performance management is a tool used by organizations to achieve organizational aims by effectively managing the performance of employees and the organization as a whole.

Some features of performance management include: different forms of appraisals (e.g. 360- degree appraisal, peer appraisal, self appraisal); reward strategies (e.g. performance related pay, competence related, contribution related pay); coaching and mentoring; career management/ succession planning and personal development plans.

2.3 OBJECTIVES OF PERFORMANCE MANAGEMENT

According to Armstrong & Baron (2005), the aim of performance management is to enhance the performance of employees and the organization by further improving good performance, having an idea of the visions of the organization, supporting individuals to achieve these aims and generally ensuring a conducive atmosphere for individual growth which will ultimately impact on the organization.

Armstrong & Baron, (1998) believe that the objectives of performance management could further be broken down to the following:

A process which helps organizations to accomplish prolonged enhanced performance.

It can act as a pillar of change towards building a more performance centred tradition.

Improving employees’ motivation and commitment.

Facilitating employee development, improving their work satisfaction and attaining their desired goals in a way that profits both employees’ and the organization.

Strengthening team work and performance.

Facilitating improved communication in the workplace amongst superiors and subordinates all year round due to continuous discussions.

Affording the opportunity for employees to communicate their job desires and needs.

Organizations assess the outcome of performance management by using opinions or attitude surveys of their employees, some factors used are: changes in employee attitude, motivation, productivity, achievement of financial target, changes in employees’ attitude, achievement of objectives, improved customer service, development of new skills and improved quality (Armstrong & Baron, 2005).

2.4 DEFINITION OF PERFORMANCE APPRAISAL

Performance appraisal is the process used to assess employees’ performance often times against some agreed work goals to enable organizations take some decisions. Performance appraisal is a formal process of supplying employees with an unambiguous feedback based on their work performance (Carroll & Schneier, 1982 cited in Dobbins, Cardy & Platz Vieno, 1992) but can also occur in an informal and sometimes highly biased form in any organization (Fletcher, 1997).

Performance appraisal is believed to have originated from American but has been modified to suit the UK market (see Beer et al, 1978). An effective performance appraisal should seek to understand why goals have been / not been achieved to throw more light on the employee’s capabilities and by so doing understand what training/ development the employee requires (Anderson, 1991). Several definitions of performance appraisal have been put forward and some of them are:

“An opportunity for the individual and those concerned with their performance – most usually their line manager – to get together to engage in a dialogue about the individual’s performance, development and the support required from the manager” (CIPD ,2009).

Performance appraisal is, “the formal assessment and rating of individuals by their managers at, usually, an annual review meeting” (Armstrong, 2006, p.9).

A performance appraisal is a way to “regularly record an assessment of an employee’s performance, potential and development needs. The appraisal is an opportunity to take an overall view of work content, loads and volume, to look back on what has been achieved during the reporting period and agree objectives for the next” (ACAS, p.3).

Performance appraisal is “the process of defining expectations for employee performance: measuring, evaluating and recording employee performance in relation to those expectations; and providing feedback to the employee. While a major purpose of performance appraisal is to influence, in a positive way, employee performance and development, the process also is used for a variety of other organisational purposes, such as determining merit pay increases planning future performance goals, determining training and development needs and assessing promotional potential of employees. (Bartol & Martin, 1991 p.421 cited in Coates, 1994).

Performance appraisal is also defined as, “a term once associated with a rather basic process involving a line manager completing an annual report on a subordinate’s performance and (usually but not always) discussing it with him or her in an appraisal interview” (Fletcher, 2001, p.473) he further stated that though this description still holds true in some organizations that performance appraisal is now a general term used to describe so many practices used by organizations to evaluate employees and develop their capabilities, enhance performance and distribute rewards which implies that the use to which performance appraisal is put could impact on both supervisory behaviours and employees satisfaction.

2.5 PERFORMANCE MANAGEMENT AND PERFORMANCE APPRAISAL

Although some organizations sometimes use the expressions performance management and performance appraisal to mean one and the same, there are differences between them. Performance management is, “a comprehensive, continuous and flexible approach to the management of organizations, teams and individuals which involves the maximum amount of dialogue between those concerned” (Armstrong & Baron, 2005, p.14) while performance appraisal which is narrower entails supervisors assessing and scoring their subordinates in an appraisal review.

Performance appraisal plays an important role in the performance management system because it is the medium used to explain the goals and objectives of an organization, it is also the main tool used for employees’ performance assessment and development. It is believed that with the emergence of performance management with its broader outlook, that performance appraisal now has a fundamental task in a more incorporated and vibrant set of human resources systems which implies that performance appraisal can accomplish more than it could on its own (Fletcher, 1997).

Armstrong & Baron (2005) highlighted some idealised features that differentiate performance management from performance appraisal since it has been noted that the two terms are often confused with each other (Bevan & Thompson, 1991).

Performance management

Performance appraisal

Joint process through dialogue

Top down assessment

continuous review with one or more formal reviews

Annual appraisal meeting

Ratings less common

Use of ratings

Flexible process

Monolithic system

Focus on values and behaviours as well as objectives

Focused on quantified objectives

Less likely to be directly linked to pay

Often linked to pay

Documentation kept to a minimum

Bureaucratic- complex paperwork

Owned by line managers

Owned by the HR department

Fig. 1- source Armstrong & Baron, 2005 p. 15

2.6 DEFINITION AND COMPONENTS OF ORGANIZATIONAL COMMITMENT

The phrase, organizational commitment is gradually becoming a vital organizational terminology because there is an indication that it has a positive relationship with employee behaviours that encourage organizational retention and performance’ (Chalofsky & Krishna, 2009).

O’Reilly & Chatman (1986) defines organizational commitment as the foundation of an employee’s psychological attachment to the organization whereas Porter et al (1974) states that organizational commitment is comprised of three major elements: (a) strong conviction in and acceptance of the organization’s aims, (b) readiness to go the extra mile for the organization, and (c) a strong desire to retain organizational membership.

Meyer & Allen (1991) noted that notwithstanding numerous researches, that there has been a lack of agreement with definition of concepts used in measuring organizational commitment. Moreover, the various definitions of commitment seem to point to three general components hence to minimise the issue of construct definition, they put forward three components of organizational commitment:

1. Affective commitment- the employee wants to stay because of an attachment and desire to identify and be involved with the organization.

2. Continuance commitment- the employee stays with the organization because of the need to after considering the costs related to leaving the organization.

3. Normative Commitment- the employee feels obligated to continue with the organization.

These three components reflect the fact that commitment is a psychological condition that typifies the nature of the relationship an employee will have with the organization hence will affect the employee’s decision to exit or continue with the organization. (Meyer & Allen, 1991), however they have dissimilar impact on employees’ behaviour (Lee & Bruvold, 2003).

The present study will focus on affective commitment because a Meta analysis of various researches that have tried to establish a link between work outcome and organizational commitment established that affective or attitudinal commitment showed the strongest relationship (Randall, 1990). Moreover, from the description of the three components of organizational commitment, it can be deduced that an employee that has an affective commitment for the organization will most likely exhibit more positive attitude, be willing to go the extra mile, be less likely to leave because of his/her attachment to the organization.

2.6.1 THE IMPORTANCE OF ORGANIZATIONAL COMMITMENT

The importance attached to organizational commitment could be attributed to the fact that present day organizations’ lay much emphasis on teamwork, empowerment, and flatter organizational structures thereby making it a pre requisite that certain acceptable behaviours are required from employees which are often referred to as ‘organizational citizenship behaviour’. These behaviours are “discretionary contributions that are organizationally related, but are neither explicitly required nor contractually rewarded by the organization, yet contribute to its effective functioning,” (Meyer & Allen, 1997 p.34).

Although organizational commitment may be associated with certain aspects of a flatter organization (e.g. team working and empowerment) as mentioned above, however, it does not just happen because an organization operates a less bureaucratic structure. Organizations employ different outlook of organizational theory example, a ‘unitarist’ view will elicit a different type of commitment from a ‘pluralist’ view since these two outlook will employ different management control and forms of employees management (see Perkins, 1998 p. 14). Similarly, Caldwell et al (1990) noted that variations amongst organizations with respect to the human resources policies in place affect employees’ attitudes and reactions, a statement also echoed by Perkins (1998).

Studies have indicated that commitment can promote the type of behaviours that yield desirable organizational outcomes (Dessler, 1999). Some of positive outcomes attributed to organizational commitment include: a positive relationship with motivation and involvement (Stumpf &Hartman, 1984), affirmation of positive affect and loyalty (O’Reilly & Caldwell, 1980), enhancement of some portions of job performance (Angle & Perry, 1981) and a negative relationship with absenteeism (Angle & Perry, 1981).

2.7 BASIC METHODS AND PRACTICES OF PERFORMANCE APPRAISAL

Organizations differ in characteristics (e.g. management style, size, culture, technology and sector) which imply that they will most likely implement performance appraisal practice that they perceive will be suitable for them (Bretz et al, 1992). Similarly, Tolliday & Zeitlin (1991) argues that the potential for performance appraisal with regards to its implications and definitions will be a consequence of the social and organizational stance of those who use them, however, an effective performance appraisal will be a gain for both the employees and the organization (Anderson, 1991).

Some basic methods of performance appraisal according to ACAS (2008) include:

Rating – employees’ characteristics are rated on a scale ranging from ‘outstanding’ to ‘unacceptable’.

Comparisons with objectives – employees are assessed based on how far they have met already agreed goals with supervisors.

Critical incidents – requires the supervisor to record employee’s positive and negative behaviour for a period of time.

Narrative report – the supervisor assesses the employee’s job performance using own words.

Behaviourally Anchored Rating Scales – involves the use of a number of rating scales which are tailored to suit each job.

Most UK organizations use appraisal of personality, appraising job related abilities and rating scales (e.g. forced distribution and behaviourally based rating scale) which are methods used for assessment and comparison appraisal while result oriented appraisal and competency based appraisal are methods use for motivation and development appraisals (Fletcher, 1997 & 2004). His classification was based on the two broad uses of performance appraisal which will be highlighted below. Although management by objective (MBO) is also used in UK (*ANDERSON) it is widely used in the US to appraise senior executives and professional employees while the trait based rating scale is used for more junior employees Bretz et al, (1992).

2.8 PERFORMANCE APPRAISAL USES

It has been stated that knowledge of the use to which performance appraisals is to be put is important to human resource development (Youngcourt et al, 2007) and essential to its design since different types of information may be required for different purposes (Cleveland, J.N., Murphy, K.R. & Williams, R.E. (1989) and research has also shown that the use to which performance appraisal is put affects the rating process and results (Jawahar & Williams, 1997; Ostroff, 1993).

Organizations use performance appraisal to achieve numerous contradicting objectives (McGregor, 1957; Meyer, Kay & French, 1965). However, some of the uses of performance appraisal are: taking reward decisions, performance improvement, employee motivation, improving communication between supervisors and subordinates, succession planning and as a formal assessment of inadequate performance (Fletcher, 1997).

According to Youngcourt et al (2007) past literature/research (Cleveland, Murphy & Williams, 1989, 2003) seem to point to the fact that there is a tendency for organizations to use appraisal to differentiate either among employees (the administrative use) or within employees (the developmental purpose). Cederblom (1982) also gave two broad classifications of performance appraisal use: counselling and development; evaluation and discussion of administrative decisions. Though it has been noted that appraisals can be put to multiple uses, the present study will use the two broad classifications listed above for ease of comparison with extant work.

2.9 A GENERAL SUMMARY OF PAST PERFORMANCE APPRAISAL STUDY AND LITERATURE

Performance appraisals has received lots of attention from industrial and organizational psychologists (Nathan, Morhman & Millman, 1991; Landy & Farr, 1980) and most of these works especially the ones dealing with cognitive aspect of performance appraisal have been methodologically and conceptually sound (DeNisi, 1997 cited in Fletcher, 2001). Researchers have conceptualized rating instrument and process; characteristics of raters and ratees as a way of understanding cognitive aspect of performance appraisal but so far, have only been able to expound our knowledge of the rating formats (Landy & Farr, 1980) yet, there is still no major positive impact on performance appraisal practice (Banks & Murphy, 1985; Fletcher, 2001). There has been quite a number of review of extant literature and research on performance appraisal practice with their implication for future research (e.g. Levy & Williams, 2004; Fletcher, 2001; Keeping and Levy, 2000; Arvey & Murphy, 1998; Bretz, Milkovich & Read, 1992; Cederblom, 1982). A brief summary of these reviews seem to indicate that researchers are still looking for ways of improving the practicality of performance appraisal process in organizations as stated by (Thorndike, 1949 cited in Bretz et al, 1992; Meyer, Kay & French, 1965 cited in Fletcher, 2001; Kluger & DeNisi, 1996; Fletcher, 1997 & 2001) but the direction so far shows that between 1950 and 1980, most research was dealing with ways to improve rating instruments used for appraisals which led to a call by Landy & Farr (1980) for more studies on cognitive aspects of performance appraisal thereby resulting in a shift of attention in the early 1980s to a better understanding of the various behaviours exhibited by a supervisor during performance appraisal. The mid 1980s till late 1990s saw an increase in research dealing with how information is handled during performance appraisal (Arvey & Murphy, 1998) which was brought to light by some researchers (e.g. Ilgen & Favero, 1985; Dipboye, 1985; Ferris & Judge, 1991) when they noted that the social and situational factors affecting performance appraisal were being overlooked by researchers.

In their review of extant performance appraisal research work of 1985 – 1990, (Bretz, Milkovich & Read, 1992) writing from a US perspective noted that majority of these work were centred on supervisor/ subordinate personal qualities, psychometric issues, rating errors/accuracy, supervisor training, performance appraisal format, cognitive aspects of appraisal and feedback. They further stated majority of these work had taken place in the laboratory and had used students as respondents also, cognition has received the highest attention and even though it is quite understandable that researchers should focus a lot of attention on studying the rating aspects of performance appraisal since it entails difficult cognitive procedures, however, the performance appraisal process takes place in an applied social and political environment, hence it would be beneficial to assess the degree to which research is contributing to the performance appraisal process. This seems to be an echo of the call by Banks & Murphy (1985) that the huge focus on cognitive aspect of performance appraisal will most likely contribute to the widening gap between research and actual practice. Napier & Latham (1986) noted that the lack of improvement in performance appraisal practice stems from the fact that researchers seem to focus on improving appraisal measurement rather than on the appraisal practicalities (Thorndike, 1949 cited in Bretz et al, 1992).

Another review of existing study of performance appraisal from 1993 – 1998 carried out by Arvey & Murphy (1998) further buttressed the issues raised in the Bretz et al (1992) review but Arvey & Murphy also noted that research is now widening towards the notion of contextual aspect of job performance.

Similarly, Fletcher (2001) writing from a UK perspective, while concurring with the views raised in the Bretz et al (1992) review also noted that there seems to be no considerable improvement in performance appraisal practice as most UK organizations indicate disappointment with their performance appraisal scheme which implies that performance appraisal not only yields unconvincing ratings but most likely is unsuccessful as an employee development and motivational tool as indicated by (Meyer, Kay & French, 1965 cited in Fletcher, 2001).

Keeping & Levy, (2000), writing on performance appraisal reaction which is pertinent to the present work agrees with the views already noted by the studies above on performance appraisal practice in general but they further narrowed down their views to studies pertaining to appraisal reactions. They observed that performance appraisal effectiveness has been heavily researched with some of the work focusing on aspects like: appraisal frequency, faith in supervisor, participation, validity of ratings and employee reactions to performance appraisals.

On the issue of appraisal reactions, they differentiated the various reaction measures that have received great deal of attention and they include: satisfaction, fairness, perceived utility, perceived accuracy but they pointed out that there seems to be some contradictions with measurements of reaction, concepts and the way some measures have been operationalized. They also noted that dependent variables should be of interest and use to human resource practice as indicated by Balzer & Sulsky, (1990, cited in Keeping & Levy, 2000) that most of the dependent variables so far used in extant studies are of little use to human resources practitioners while the important ones have so far been ignored by researchers.

Cederblom (1982) had reviewed the appraisal session, another important area to the present study and stated that though some writers had indicated that there are some difficulties associated with an appraisal section that involves a joint discussion of development and salary, however most of these research had come up with inconclusive reports (e.g. Meyer et al, 1965; Cummings,1973 cited in Cederblom, 1982) thereby making it difficult to conclude on the noted difficulties, however some studies (e.g. Burke, Wetzel & Weir, 1978 cited in Cederblom, 1982) indicated that certain discussion on reward during an appraisal session seems to increase employees’ satisfaction. Cederblom (1982) stated that there are some factors that have been shown to improve the effectiveness of a performance appraisal session which are: supervisor’s level of competence of employee’s job and performance; goal setting; supervisor’s support; encouragement of employee’s participation.

2.10 PERFORMANCE APPRAISAL SESSIONS

The appraisal session involves the actual meeting of the supervisor and subordinate to discuss the subordinate’s past performance and possibly future goals, development and salary. It has been identified to be a key part of a performance appraisal system by contributing to its effectiveness since the appraisal session is the avenue for gathering employees’ opinion and other needed information Roberts (2002).

There have been a number of researches on this area of performance appraisal (e.g. Burke & Wilcox,1969; Greller, 1975; Burke at al, 1978; Fletcher, 2001; Asmub, 2008) however most of the studies have been centred on the appraisee’s experiences of the appraisal session though attention is now being directed towards the supervisor’s experience (Burke et al, 1978)

Nathan, Morhman & Millman (1991) noted that there are some shortcomings with most of the past researches as most of the them seem to have overlooked the interpersonal perspective in which appraisal occurs (Wexley & Klimoski, 1984 cited in Nathan et al, 1991) and instead focused on pointing out the problems with supervisors even though they are the motivational impartial factors of the performance appraisal procedure and thus directing attention on how to reduce these errors with enhanced rating scale and training (Hogan, 1987, p.364). Their study substantiated the importance of the need for good interpersonal relationship as employee’s participation, the standard used to assess the employee and review of issues that are vital to the employee’s development are all affected by the type of supervisor/subordinate relationship.

Similarly, Finn & Fontaine (1984) put forward that supervisors and employees should relate together to categorize the major work attitudes that are very crucial to the appraisal which may likely involve the use of a well structured job analysis that will not only form the basis for measuring past performance but also form the foundation for building future performance.

The organizational culture which affects means and manner of its communication will affect performance appraisal discussion (Maroney & Buckely, 1992) since employees’ attitude is a function of their convictions which is guided by the organization’s communication means and hierarchy (Nystrom & Starbuck, 1984 cited in Maroney & Buckely, 1992).

Some guidelines given by Armstrong & Baron (2005) for the appraisal session are:

1. Supervisors should come prepared by going through a list of the pre set goals and probably their record of employee’s performance for the year. They need to give consideration to the likely reasons that could have resulted in the employee’s high/low performance, changes that may have occurred between the last appraisal and the intended one. It is also advisable for employees to come prepared with their own records so they can contribute effectively.

2. The environment should be informal to allow for an open and honest discussion with less conflict.

3. The session should be carried out according to plans made earlier but should also allocate enough time for employee’s contribution.

4. Supervisors should ensure they give a positive, frank, and merited feedback which will motivate the employee especially when they are commended for high achievement.

5. The employees should have ample time to contribute so they can reveal the issues they are encountering and this also will make them feel the appraisal session was fair.

6. Allowing the employee to self appraise will afford the opportunity of seeing things from an employee’s perspective and will also form part of the appraisal discussion.

7. Employees’ performance that has been stated accurately should be the focus of the appraisal session rather than the supervisor’s personal view of the employee.

8. It is also advisable that both appraisee and appraiser jointly review probable causes of good/poor performance rather than it being just the supervisor’s views.

9. The supervisor as much as possible should stick to facts rather than discuss issues that will come as a surprise to the employee.

10. The agreed goals should be measurable and there should be a plan or discussion on how to achieve them and supervisors’ should ensure the session ends positively.

The overview of performance appraisal uses; methods and practices; past performance appraisal research and appraisal session above is indicative of the fact that performance appraisal use, the discussion during an appraisal session (e.g. goal setting, feedback, participation, relationship between the supervisor and employee, rating score, salary and development discussion) will likely have an effect on employees’ satisfaction with the appraisal.

Hypothesis 1: employees will be satisfied with their performance appraisal session when they have good interpersonal relationship with the supervisor, actively participate, adequate and constructive feedback, favourable rating and the appraisal discussion includes salary and development.

2.11 ISSUES AND CRITICISMS OF PERFORMANCE APPRAISALS

Fletcher & Williams (1992) noted that there have been issues regarding the use of performance appraisal which have lingered for years and a survey of some UK organizations (IRS, 2005, no 828, p.9) seem to buttress this point as most of the employees stated that there are issues in the way and manner performance appraisals are being delivered in organizations which they attributed to lack of training for line managers on how to develop effective performance appraisals, too much use of paperwork (IRS, 2005, no 828, p. 9). Similarly, Stroul (1987) stated that both management and employees are resentful of the mandatory yearly performance appraisal process (Stroul, 1987). Other issues noted with performance appraisal include

Anderson (1993) also identified a number of problems related with performance appraisal:

Classifying the standards that will be used for assessing performance.

Gathering correct and sufficient data employee performance data.

Managing conflicts between supervisors and subordinates.

Defensive behaviour of most employees.

The various issues noted above coupled with dissatisfaction with performance appraisal as indicated by organizations (Mount 1983; Stroul, 1987; Fletcher, 2001) has led to criticisms from several authors.

Deeming (1986) called on organizations to get rid of their performance appraisal scheme while Armstrong and Murlis (1994) stated that performance appraisal is bound to become a ‘dishonest annual ritual’.

Stroul (1987) points out that criticism of performance appraisal dates back to the article, ‘an uneasy look at performance appraisal’ written by Mcgregor (1957) where he stated that the ‘judge’ and ‘counsellor’ roles required of supervisor’s during appraisal are not suited to each other thereby reducing the efficacy of the feedback. Stroul, (1987), notes that there are two theoretical purposes of performance appraisal: “a control mechanism to monitor performance and goal attainment and a feedback mechanism to foster individual growth and development” (p. 70) however, it is clear that both the employees and the organization have different goals but in practice performance appraisal only serves the first purpose.

Deeming (1986), a major critic of performance appraisal advocated that organizations should do away with performance appraisal practice because of several negative outcomes and rather embrace total quality management schemes.

Coates (1994) argued that organizations use performance appraisal to wield a sort of restrained control on employees and as result reduces the amount of control they have. There is reduced responsibility and more control over employees because the performance appraisal process acts as a check used to ensure that employees conform to the organization’s desired values, attitudes and behaviour.

Although performance appraisal promises so much yet delivers so little (Armstrong & Baron, 2005), however, Fletcher (2004) argues that there is yet no other existing substitute for performance appraisal since it occurs formally and informally in organizations hence he advised that organizations should do well by embracing it since an informal appraisal will still result in the same difficulties of bias and unfairness experienced in a formal one.

2.12 EMPLOYEE PERFORMANCE APPRAISAL REACTIONS

The purpose of the present study is to determine the relationship between employee satisfaction and the supervisory behaviours during performance appraisal session and ultimately examine the effect on affective commitment. Satisfaction with appraisal however is one of the measures used to evaluate appraisal reaction concept hence the inclusion of a brief explanation of performance appraisal reaction and the various ways it has been measured.

The importance of performance appraisal to the human resource practices of organizations (Judge & Ferris, 1993) has made it one of the most widely studied areas of organizational/ industrial psychology (Landy & Farr, 1980). Moreover, there had been a lot of disenchantment with performance appraisal by both government (Latham & Wexley, 1981), employees and organizations (Fletcher, 2001) hence researchers and human resource practitioners are keen on studies that are related with its effectiveness and assessment (Cawley, Keeping & Levy, 1998; Mount, 1983). Performance appraisal effectiveness has been described by Cawley et al (1998) as the extent to which an appraisal system is effective as a means of measuring job performance.

Cascio (1991) advocated that performance appraisal effectiveness should be seen as a ‘multidimensional construct’ which can only be indirectly evaluated through other secondary measures which include: ‘rater errors, rating accuracy and qualitative aspects of the appraisal’ (Cardy & Dobbins, 1994 cited in Cawley et al. 1998). Although it has been stated that all three aspects of appraisal effectiveness are essential, research however has been centred on rating errors and accuracy with less study focused on the qualitative aspect which include: employees’ performance appraisal reactions and the factors leading to these reactions (Cardy & Dobbins, 1994; Murphy & Cleveland, 1995 cited in Cawley et al, 1998).

Appraisal reactions is an important concept of performance appraisal (Keeping & Levy, 2000) and is perceived to be essential towards the validity of appraisal (Lawler, 1967 cited in Dipboye & DePontbriand, 1981; Dobbins et al, 1990) hence the reason (Murphy & Cleveland, 1995, p.310) labelled it the ‘neglected criterion’ that could be vital in assessing the effectiveness of an appraisal system yet has been neglected by researchers. Therefore, it is becoming vital that research should focus more attention on ways of ensuring that employees accept both the appraisal session and system (Dipboye & DePontbriand, 1981). Moreover, it has been suggested that performance appraisal will only improve employees’ behaviour and development when they react positively to it otherwise the whole process will be deemed a failure (see, Cardy & Dobbins, 1994 cited in Kuvaas, 2006).

Similarly, Keeping & Levy (2000) stated that employees’ reaction to performance appraisals is essential because:

It is a concept that is of great interest to human resources practitioners.

Has been theoretically identified to have an impact on performance appraisal success yet has been neglected by researchers.

They further stated that these statements seem to fit in within the issues of the scientist-practitioner gap being debated in the industrial/organizational psychology field (see Hyatt et al, 1997; Banks & Murphy, 1985).

Researchers have used numerous variables to study employees’ performance appraisal reaction e.g. fairness, perceived utility, accuracy and improvement but satisfaction has received most attention (e.g. Dorfman et al, 1986; Mount, 1983 & 1984; Prince & Lawler, 1986; Giles & Mossholder, 1990; Boswell & Boudreau, 2000; Kuvaas, 2006).

Dipboye & DePontbriand (1981) noted that employees will have a positive reaction towards their performance appraisal when they participate in the process and the appraisals are goal oriented which is in line with extant literature on goal setting and participation in appraisals (Landy, Barnes & Murphy, 1978 cited by Dipboye & Pontbriand, 1981).Feedback has been potentially linked with positive employee reaction (Giles & Mossholder, 1990) although Dorfman et al (1986) noted that supervisors are reluctant to give negative feedback. However a good interpersonal relationship between the supervisor and employee as noted in 2.9 above will help mitigate the manner of feedback from the supervisor.

Hypothesis 2: Employees’ reaction to their performance appraisal session will be positive when the appraisal session includes discussions that are related to their set and agreed goals and they participate in the process.

2.13 EMPLOYEE PERFORMANCE APPRAISAL SATISFACTION

Performance appraisal satisfaction measures the extent to which employees and supervisors accept the validity or usefulness of a Performance appraisal system and discussion (the present study will be dealing with employees’ satisfaction with their appraisal session) and has been the most researched of all performance appraisal reactions (Keeping & Levy, 2000; Giles & Mossholder, 1990). There have been a lot of studies on factors that aid employee satisfaction with their appraisal (Levy & Williams, 2004) though there is little research data explaining the importance of performance appraisal satisfaction (Kuuvas, 2006). However, performance appraisal satisfaction has been shown to have a positive relationship with affective commitment and a negative relationship with employee turnover (Kuuvas, 2006). Moreover, Lee & Bruvold, (2003) also argued that when employees are satisfied with their performance appraisal and have a sense of belonging, they will most likely want to commit to the organization.

Giles & Mossholder (1990) suggested that part of the huge interest in satisfaction as a measure of performance appraisal reaction could be due to the fact that Organ (1988) had highlighted that it seems to measure both fairness cognitions and simple affect thereby giving a broader view of employees performance appraisal reaction than more cognitively centred criteria.

Similarly, interest in performance appraisal satisfaction could be due to the fact that previous research has shown that it positively affects variables such as productivity, motivation and organizational commitment (see IIgen, Fisher, & Taylor, 1979; Larson, 1984; Pearce & Porter, 1986). In another vein, Dobbins et al (1990) stated that discontents with performance appraisal process will most likely result in employee turnover, reduced motivation and a sense of unfairness; also using performance appraisal outcome to distribute rewards might be difficult.

Dobbins et al (1990) pointed out that indication from past studies shows that performance appraisal satisfaction depends on the depth of assessment and feedback given. Dipboye & DePontbriand (1981) discovered that employees are more satisfied with their appraisal when they receive higher ratings and vice versa. The statement that employees have also been noted to be more satisfied with more feedback of their job performance example, Landy, Barnes & Murphy (1978) noticed that the inclusion of formal assessment system, regularity of assessment, discussion of plans to improve weaknesses, raters knowledge of employee’s performance, employee’s participation all contributed to employees’ perception of fairness of their appraisal while Dipboye & DePontbriand (1981) similarly noted that employees’ satisfaction was a function of the level of their participation, the criteria used for the evaluation was related to their job and discussion of performance improvement.

Keeping & Levy (2000) noted that appraisal satisfaction have been conceptualized in three ways: Satisfaction with the session, the appraisal system and ratings though researchers seem to have used different methods to operationalize satisfaction measures.

Hypothesis 3: Employees’ will be more satisfied with their appraisal session when they receive extensive work related feedback, the criteria used for evaluation is related to their job and the discussion includes ways to improve their performance.

2.14 SUPERVISORY BEHAVIOURS DURING A PERFORMANCE APPRAISAL

Reviews of extant work on performance appraisal have indicated that there are certain requirements and behaviours required of the supervisor that are essential towards its success. Martin & Bartol (1986) argues that it is imperative that supervisors’ are aware of the essential behaviours and significance of performance appraisal as an element of performance management since supervisor’s behaviour strongly affects how employees view the appraisal and the organization in general. They advocated the importance of supervisor training as a critical success factor for performance appraisal which they believe should involve some aspects of the appraisal process together with any grounds for employee appeal in the training design. However, several organizations do not train their supervisors (Locher & Teel, 1988) although training is believed to be essential for supervisors (Kirkpatrick, 1986) and studies have indicated that employees have a more positive reaction of the appraisal and supervisor when they understand the supervisors have been trained (see Bannister, 1986; Fulk et al, 1985).

Cederblom (1982) noted that some essential supervisory behaviour includes: supporting the employee, encouraging employee participation and adequate knowledge of employee’s job (Cederblom, 1982).

Similarly Dorfman et al (1986), identified several other required supervisory behaviours from existing studies which are believed to positively impact on the success of an appraisal session some of which are: giving negative/positive feedback in a friendly manner (McGregor, 1957 cited in Dorfman et al 1986), soliciting the appraisee’s participation in resolving conflicts and job difficulties (Greller, 1975 cited in Dorfman et al, 1986), setting up the exact goals for the employee and considering ways of improving work performance (Latham & Yukl, 1975), discussing pay and promotion (Lawler, Mohrman, & Resnick, 1984), using the review to increase understanding and communication.

Although supervisor’s behaviour contribute to employees’ satisfaction with performance appraisal as noted above, most performance appraisal issues e.g. rating bias has been as a result of supervisor’s inadequacy (Hogan, 1987). On the other hand, some supervisors may be reluctant to give accurate rating due to personal, social or organizational reasons (Tsui & Barry, 1986). However, they are vital to the performance appraisal process as they are seen to be the motivational neutral factors (see DeNisis, Cafferty & Meglino, 1984).

Hypothesis 4: Employees will be satisfied with their performance appraisal when the supervisor exhibits the following behaviours: allows them to participate and contribute; gives extensive and constructive feedback; displays good knowledge of their job; has good interpersonal skills; discusses the following: goal setting, development and salary.

2.15 AFFECTIVE COMMITMENT AND PERFORMANCE APPRAISAL

Affective commitment has been described as an “employee’s emotional attachment to, identification with and involvement in the organization” (Meyer & Allen, 1991, p.67) and is also an “affective or psychological bonding that binds an employee to his/her organization” (Chalofsky & Krishna, 2009, p.198) and has been discovered to have a strong positive relationship with desirable employee outcomes in the form of job satisfaction, continuance and affective and overall organizational commitment (Jawahar, 2006). It has been stated that organizations should do well to support employees since by way of development and enabling them achieve their desired goals, employees will most likely demonstrate high levels of commitment (Dessler, 1999).

Kuvas, B. (2006) suggested that performance appraisal activities can be developmental when organizations use it to communicate their strategies, goals and visions and Latham (2003) believes that the affective and emotional aspects of these goals may win employees over to the organization by giving them a cause to rally round. Furthermore, Gaertner and Nollen (1989 cited in Lee & Bruvold, 2003) stated that employees’ psychological attachment is affected by their organization’s level of career development practices.

Naumann (1993 cited in Lee & Bruvold, 2003) established that training is positively related to affective commitment, similarly, Paul & Anantharaman (2004) noted that career development, wide range of training, development centred appraisal and a friendly work environment all have strong correlation with commitment amongst other HR management variables that correlate with it.

Furthermore, when the supervisor discusses employees’ development; highlights and identifies training needs; agrees with and sets goals; discusses job related issues; discusses job difficulties and ways of overcoming them; supports and encourages the employee; allows the employee’s participation; the employee will perceive that the organization is ready to develop his/her career which will likely improve their loyalty to the organization.

Hypothesis 5: employees will be satisfied with a developmental appraisal which will increase their affective commitment to the organization.

2.16 SUMMARY

The indication from the literature review points to the fact that the effectiveness of performance appraisal is affected by so many factors: culture of organization, aims, structure, rater and employee.

This chapter gave a general overview of performance management and appraisal; organizational commitment. It also discussed appraisal uses, methods, issues, criticisms, review of performance appraisal study, appraisal session, satisfaction with appraisal, supervisory behaviours and affective commitment.

The evidence from literature seem to indicate that certain practices and supervisory behaviour are necessary to make the performance appraisal session a satisfying one for employees which will ultimately have a positive impact on their affective commitment to the organization which is the argument being raised in this study.

Therefore, summarizing the five hypotheses stated in sections 2.10; 2.12; 2.13; 2.14; 2.15, the following arguments will be tested in this study:

1. The relationship between employees’ satisfaction with their appraisal and supervisory behaviours will be positive.

2. Employees satisfaction with the performance appraisal session will have a positive effect on their affective commitment.