Performance Appraisal Satisfaction & Organizational Commitment.
| Author | Ahuja, Kanika K. |
Introduction
Understanding how a diverse range of organizational practices impact employee behavior and outcomes has been at the core of Human Resource Management. One such critical human resource practice is performance appraisal. It is seen as the mechanism for evaluating how each employee's day-to-day performance is related to organizational goals. As a process that reveals employees' strengths and weaknesses, performance appraisal impacts employees in tangible ways through pay raises and promotions, and in intangible ways by enhancing self awareness, and self esteem in some areas and motivating them to improve performance in other areas. Further, by creating a platform for engagement and feedback between both the employee and the organization, performance appraisal acts as a fulcrum in the bidirectional relationship between the employee and the organization.
Interest in the area of how employees react to performance appraisal emerged predominantly in the late 1970s and early 1980s (Landy & Farr, 1980). Four main constructs have been used to investigate employee reactions to performance appraisal systems: satisfaction, fairness, utility and accuracy (Keeping & Levy, 2000).The present study focuses on Performance Appraisal Satisfaction (PAS). Research suggests that when organizations assess employee reactions to performance appraisal systems, employee dissatisfaction with the system is commonly reported. Satisfaction with performance appraisal subsumes satisfaction with the appraisal outcomes, satisfaction with the appraisal interview and satisfaction with the appraisal process (Katavich, 2013).
Research has found each of these components to be important predictors of employee satisfaction with the appraisal system. Informing employees of the purpose of performance appraisal, the policies and procedures which relate to the system, expectations from the employee, how the system will be monitored- aspects of the appraisal process- have all been found to lead to employee satisfaction with the appraisal system (Levy & Williams, 1998). The appraisal interview may be used both for evaluation and developmental purposes. However, employee satisfaction has been found to be higher when it is used for a developmental purpose, since that focuses on helping employees succeed in their roles (Dorfman et al., 1986). Feedback provided during the appraisal interview has been found to be an important predictor of satisfaction, especially when feedback is specific, goal-oriented and received from a credible source (Jawahar, 2010). Last, while the appraisal yields several outcomes such as pay increments, promotions, professional development etc., the value that a good performance rating holds for an employee is immense.
PAS has been found to be affected by variables such as the richness of feedback (Kinicki et al., 2004), perceived accuracy (Wood & Marshall, 2008), perceived fairness (Youngcourt et al., 2007), and trust in appraisal (Naji et al., 2015). Similarly, research on PAS as a predictor has been robust. Four major outcomes of effective performance appraisal have been identified: improved employee performance, enhanced motivation, reduced employee turnover, and equity among employees (Selvarajan & Cloninger, 2009). A range of studies have established a positive relationship between PAS and employee outcomes such as motivation, performance and commitment (Weerakkody & Mahalekamge, 2013), motivation, performance and productivity (Mohamed Aly & El-Shanawany, 2016) and behavioral indices like work performance, affective attachment to the organization, motivation improvement and unwillingness to quit job (Fakhimi & Raisy, 2013). Kuvaas (2006b) also reports a positive relationship between PAS and performance. In India, Singh & Rana (2014) examined the impact of performance appraisal on the motivation of 170 teachers in professional institutes in Uttarakhand and found a significant positive correlation.
Research also indicates that if employees are satisfied with performance appraisal, they have lower intentions of leaving the organization. Ahmed et al. (2010) explored the relationship between PAS, job satisfaction and turnover intentions in semi-governmental organizations in Pakistan and found PAS to be significantly and positively correlated with job satisfaction and significantly and negatively correlated with turnover intention. One of the behavioral outcomes of PAS that is particularly relevant in Human Resource Management is Organizational Commitment (OC) and the current study focuses on this relationship.
Organizational Commitment
Commitment at the workplace has been a major area of interest for academicians, researchers and for those actively involved in the organizational settings. Porter et al. (1974) have defined organizational commitment as "the strength of an individual's identification with and involvement in a particular organization". They identify 3 main components: a strong belief in and acceptance of the organization's goals, a willingness to exert considerable effort on behalf of the organization, and a definite desire to maintain organizational membership. Meyer & Allen (1997) describe three kinds of commitment. Affective commitment (AC) refers to employees' emotional attachment to, identification with and involvement in the organization. Continuance commitment (CC) is based on the employees' awareness about the costs of leaving the organization, making them stay for the sake of the benefits to be obtained or lost if they were to leave. Normative commitment (NC) reflects a feeling of obligation to continue employment out of loyalty, obedience and obligation.
Multivariate studies in the area of organizational commitment have identified a range of individual and organizational factors that affect commitment. Among the individual variables affecting commitment are age and tenure, gender, education, employment alternatives, sense of competence and internal locus of control. Organizational variables affecting commitment are diverse and interacting. These include perceived structure, process, and climate, job satisfaction, organizational culture, organizational socialization, person-organization fit, role conflict and organization citizenship behavior, among others.
PAS as a Predictor of OC
Among the organizational factors affecting OC, PAS holds a prominent place. Existing research attests that satisfaction in the performance appraisal process and outcomes significantly impact different dimensions of OC. Kuvaas (2006b) investigated relationships between PAS and employee outcomes in the form of self-reported work performance, affective OC and turnover intention through a cross- sectional survey of 593 employees from 64 Norwegian savings banks. PAS was found to be directly related to AC ([beta] = .19, p
Studies in the Indian context have established a positive and significant relationship between PAS and OC (Kumar & Krishnaveni, 2008; Singh & Rana, 2013; Saxena & Rai, 2015). Shahnawaz & Juyal (2006) studied the impact of various HRM practices and OC in two organizations and reported that among all the HRM practices, performance appraisal emerged as the most significant predictor of commitment in both the organizations ([beta] = 0.35, p
Further, among the dimensions of satisfaction in performance appraisal, fairness of the performance appraisal process has been found to have a significant bearing on the commitment of employees. For instance, Salleh et al. (2012) studied the perception of 425 civil servants towards the fairness of performance appraisal and its effect on OC and found that perceived fairness of performance appraisal influenced their commitment towards organization through the mediating factor of satisfaction.
The Present Study
This study aimed to assess the strength and direction of the relationship between PAS and OC of employees working in private sector organizations in Delhi-NCR. Based on the existing literature, the following were hypothesized:
H1: There will be a significant and positive relationship between performance appraisal satisfaction of employees and organizational commitment (total).
H1A: There will be a significant and positive relationship between performance appraisal satisfaction of employees and affective organizational commitment.
H1B There will be a significant and positive relationship between performance appraisal satisfaction of employees and continuance organizational commitment.
H1C There will be a significant and positive relationship between performance appraisal satisfaction of employees and normative organizational commitment.
H2: Organizational Commitment (total) of employees will be significantly influenced by their satisfaction with performance appraisal system.
H2A: Affective Organizational Commitment of employees will be significantly influenced by their satisfaction with performance appraisal system.
H2B: Continuance Organizational Commitment of employees will be significantly influenced by their satisfaction with performance appraisal system.
H2C: Normative Organizational Commitment of employees will be significantly influenced by their satisfaction with performance appraisal system.
Sample & Procedure
Data were collected from 112 participants from 18 private sector organizations located in the Delhi/NCR. A minimum of 4 participants per organization were...
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