Company X: The Performance Management Revolution

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Executive Summary

Performance appraisal is an essential part of performance management since it can help companies to track employees’ productivity and motivate them to achieve better. When applied correctly, performance appraisal can benefit both companies and their employees, leading to higher motivation and job satisfaction.

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Nevertheless, Company X has been experiencing issues with job satisfaction, and the organisation’s leaders believe that the issues began when performance appraisals were introduced. Hence, the purpose of the study was to examine the impact of performance appraisals on job satisfaction in this organisational context.

The study focused on the interrelationship of three core variables: employees’ job satisfaction, perceived performance appraisal reliability, and managers’ knowledge of performance appraisal processes and practices. Ten of the company’s managers and 100 employees were selected, and each group was sent an online questionnaire. The results were analysed using linear regression and correlation tests. Additionally, factors impacting managers’ decision-making during performance appraisals were also described.

The results highlight that there is a significant positive relationship between the selected variables, leading the researcher to believe that improving performance appraisal practices will lead to enhanced job satisfaction. For this reason, it is recommended that the organisation provides comprehensive training to managers on conducting performance appraisals and institutes a regular monitoring process to track employees’ perceptions of performance appraisal reliability.

Introduction

Performance management is a crucial concern for all organisations, regardless of their type, size, or industry. Ensuring that employees perform well is necessary for achieving and maintaining excellent financial and operational performance. At the same time, companies are also required to take into account the well-being of their employees.

When employees are satisfied with their work environment and the conditions of their employment, they tend to experience higher motivation and achieve better. Consequently, employees’ job satisfaction and performance are both essential to organisational success in the contemporary world. Nevertheless, some companies experience difficulties when it comes to these indicators. For example, Company X has been experiencing issues related to declining job satisfaction among employees.

The leaders of the company connect this problem to the new performance appraisal system, which was introduced in 2018. Before that, the company did not track the performance of individual employees.

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The main problem that this research attempted to solve was identifying whether or not low job satisfaction could be related to performance appraisals. By examining the root causes of the problem, the study generated the insight necessary to provide recommendations that could help the company in improving its organisational practices to raise the levels of job satisfaction among employees.

The aims of the study were twofold. On the one hand, the study sought to determine the presence of a relationship between job satisfaction and perceived performance appraisal reliability. On the other hand, it also aimed to identify the factors influencing the reliability performance appraisals, thus highlighting practical gaps. Based on the results, the study provided recommendations to leaders of Company X on how the issue could be approached and resolved effectively.

Literature Review

Definitions

Performance management can be defined in various ways, and there are multiple definitions in the literature. Harris (2018) offers a broad definition of the concept, stating that it refers to “the design and implementation of management control systems in organisations to ensure that the strategic objectives are met” (p. 1).

In a similar fashion, Barth and de Beer (2018) define performance management as “a comprehensive, cyclical, year-around process where every individual team member of an organisation is aligned and focused in their actions and results to achieve common goals and improve performance through goal setting and clarifying expectations, receiving and providing coaching and feedback, reviewing results on goals and expectations, and recognising and rewarding members for their performance contributions” (p. 5).

The practices listed in this definition are typically part of performance management systems in organisations (Aguinis, Joo and Gottfredson, 2011; Biron, Farndale and Paauwe, 2011; Buckingham and Goodall, 2015; Cappelli and Tavis, 2016; Kuvaas, Buch and Dysvik, 2016).

Performance appraisal is part of the performance management system that commonly deals with collecting information about employees’ performance and assessing it (Barth and de Beer, 2018; Harris, 2018). Performance appraisals are crucial to organisational performance management since they provide information necessary to support managerial decision-making in designing, implementing and improving performance management (Barth and de Beer, 2018; Harris, 2018).

Fairness of performance appraisal is another important concept that will be addressed in the research. However, few scholars offer specific definitions of performance appraisal fairness. Rubel and Kee (2015) define it as “the extent to which employees perceive their organisation conducts appraisal in a fair manner that emphasises the delivery of their skills and work behaviours” (p. 185). Hence, the fairness of performance appraisal is somewhat subjective and depends on the perspectives of a particular employee.

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Job satisfaction is a crucial notion in human resource management. Although there are various definitions available, the most basic one that is applicable to most organisational context is that job satisfaction refers to the employee’s level of content with their job (Brown, Hyatt and Benson, 2010; Deepa, Palaniswamy and Kuppusamy, 2014; Shipton et al., 2016).

Job satisfaction is affected by employees’ perceptions of and attitudes toward a wide array of work-related factors, including job characteristics, work environment, leadership, relationships with colleagues, promotional opportunities, recognition and more (Deepa, Palaniswamy and Kuppusamy, 2014; Shipton et al., 2016). Hence, it is a complex notion that has various antecedents on the organisational level and can influence other essential measures, including turnover intentions, performance and motivation (Shipton et al., 2016).

Performance Appraisal Practices

Because performance appraisals are meant to be aligned with the organisation’s strategy and goals, there is significant variation in performance appraisal practices that are applied and studied. For example, rating scales used in various organisations to evaluate employee performance can differ in their components and criteria based on organisation type or industry (DeNisi and Murphy, 2017). For instance, service organisations typically include metrics for customer service, whereas IT and tech companies could consist of measures of innovation, problem-solving and related constructs (Shipton et al., 2016).

Besides rating scales, performance appraisal practices tend to also include feedback provision and discussion of progress and goals with employees (DeNisi and Murphy, 2017; Harris, 2018; Shipton et al., 2016). These components are part of the organisational support that employees require to improve their performance.

Although significant differences in performance appraisal practices exist, the literature emphasises the need for these to be systematic, meaning that they should be applied throughout the organisation and used for long periods of time to enhance performance and other organisational outcomes (Hassan, 2016). The design and implementation of performance appraisals thus have a significant influence on their success in specific organisations, and it is crucial for managers to select and apply performance appraisal practices appropriately.

Reliability of Performance Appraisals

While various scholars explain the benefits of performance appraisals, there is also a large number of publications concerning their limitations. The main concern that is often cited in the research is the reliability of performance appraisals. Reliability is a broad term that refers to accuracy, purposefulness, and fairness of performance evaluations as they are applied in a given organisation (Iqbal and Akbar, 2015). Based on research, there are two main factors that can impair the reliability of performance appraisals.

On the one hand, managers’ knowledge can facilitate or impair the application of performance appraisals and their outcomes. According to Hermel (2015), performance appraisals can be complicated, and thus managers need specific training and knowledge in order to be able to rate their employees well. Therefore, managers’ understanding of the process, its constraints, and its influence on employees is crucial to their rating decisions and the reliability of performance appraisals as a whole.

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On the other hand, managers administering performance appraisals are also subject to bias and errors, which can impair the ratings they give employees, making them less accurate and fair. For example, managers who have excellent interpersonal connections with some employees could give them higher scores than they would if they were utterly objective (Javidmehr and Ebrahimpour, 2015).

They can also evaluate performance based on incomplete, outdated, or wrong information, causing errors in judgment (Javidmehr and Ebrahimpour, 2015). Bias and errors impacting managers’ judgment can have a negative impact on employees’ perceptions of the process of performance appraisal and even affect their opinions about the organisation (Ideogu and Ozturen, 2015; Nair and Salleh, 2015; Selvarajan, Singh and Solansky, 2018; Tahjono, 2014; Taneja, Srivastava and Ravichandran, 2015). Hence, it is crucial to assess the risk of bias and errors in managers’ decision-making to understand whether the organisation’s performance appraisal practices are reliable.

Job Satisfaction & Appraisal

Job satisfaction is a significant organisational outcome that has been widely studied in business management research. It is linked to a variety of other organisational characteristics through cause-and-effect relationships. For instance, job satisfaction can affect the employees’ level of work engagement and organisational commitment (Judge et al., 2017; Karanika-Murray et al., 2015; Lu et al., 2016; Shmailan, 2016).

Through these influences, job satisfaction can also impact other vital variables, such as employee performance, organisational productivity, turnover intentions, motivation, and more (Judge et al., 2017; Lu et al., 2016). Higher levels of job satisfaction are crucial for organisational success since they help to retain workers while also enhancing their contribution to the achievement of organisational goals.

In terms of influencing factors, job satisfaction is affected by a broad range of organisational variables. One of the most prominent theories of job satisfaction, Herzberg’s Two-Factor Theory, links job satisfaction with organisational practices, rewards, and recognition schemes, as well as with the nature of work and opportunities for growth and development (Judge et al., 2017). The theory rests on the notion that organisational environment factors can be divided into two groups: motivators contribute to job satisfaction, whereas hygiene factors prevent job dissatisfaction (Miner, 2005).

The latter group of factors includes policies, work conditions, relationships with co-workers and leaders, supervision, salary, remuneration and job security. Motivators, in turn, are considered to be achievement, promotional opportunities, rewarding or exciting nature of the work, recognition, growth and responsibility (Miner, 2005). Research data confirm the effect that the working environment has on job satisfaction of employees, thus offering more support to this theory (Judge et al., 2017; Raziq and Maulabakhsh, 2015).

When implemented consistently throughout the organisation, performance appraisals become an integral part of its internal environment. Therefore, the relationship between performance appraisals and job satisfaction has also been studied in the literature. Kampkötter (2015) found that performance appraisals tied to higher job satisfaction only if they provided benefits for good performance results. Other scholars attempted to evaluate if employees’ perceptions of the fairness of performance appraisals moderated their influence on job satisfaction.

For example, researchers suggested that employees’ perceptions of the performance appraisal process could impact job satisfaction by affecting organisational trust and justice (Kim and Holzer, 2016; Tjahjono, 2014). Generally, the findings indicated that poor reliability of performance appraisals applied in organisations had an adverse impact on employees’ job satisfaction, leading to other negative consequences, including higher turnover and low organisational commitment (Brown, Hyatt and Benson, 2010; Ismail, Mohamed and Rayee, 2016; Kim and Holzer, 2016; Nawaz and Pangil, 2016; Poon, 2004; Rubel and Kee, 2015).

These findings highlight the necessity of developing and implementing high-quality performance appraisal practices in order to evaluate and improve performance, as well as to encourage a healthy workplace environment. Nevertheless, the research did not identify any recent studies on the topic conducted in Saudi Arabia. Other scholars have noted that there is a significant gap in performance appraisal literature concerning Saudi Arabia (Alharbi, 2013).

Since national context has a significant impact on management practices and the perceptions of employees in relation to them, this gap in research could affect performance appraisal and management practice in the country. Thus, investigating the relationship between these variables in this national context is crucial to support managerial decision-making in Saudi companies.

Company X was chosen as the site of this research project because the managers reported low employee satisfaction and the resulting problems with morale, motivation and employee performance. These issues began with the introduction of performance appraisals, allowing the supposition that they have influenced employees and their attitudes negatively. Conducting a study in this setting will contribute to managerial practice in company X and in similar contexts.

Moreover, the research will generate knowledge on the topic of performance appraisals and job satisfaction that reflects the interplay of these variables in the Saudi context, thus contributing to the body of scholarly research in the area. The next section will discuss research aims and questions, as well as the methods to be utilised in data collection and analysis and ethical considerations connected with this project.

Research Methods

Research Aims and Questions

The company that was chosen as the focus of this research study experienced issues related to employee satisfaction. This can negatively affect motivation, performance, commitment, retention and work outcomes of employees (Judge et al., 2017; Karanika-Murray et al., 2015; Lu et al., 2016; Shmailan, 2016).

Research Indicates job satisfaction to be influenced by the organisational environment and processes (Alegre, Mas-Machuca and Berbegal-Mirabent, 2016; Judge et al., 2017; Raziq and Maulabakhsh, 2015). Consequently, addressing the issue of employee satisfaction necessitates an evaluation of the company’s internal processes and HR practices.

Performance appraisals are an essential part of performance management at Company X. Past studies have identified a relationship between performance appraisals and job satisfaction of employees (Brown, Hyatt and Benson, 2010; Ismail, Mohamed and Rayee, 2016; Kampkötter, 2015; Kim and Holzer, 2016; Nawaz and Pangil, 2016; Poon, 2004; Rubel and Kee, 2015; Tjahjono, 2015). Hence, the research pursued two main aims:

  1. To study the relationship between performance appraisals and job satisfaction in Company X;
  2. To understand the factors impacting the reliability of performance appraisals in Company X.

By achieving these aims, the research offered a way of understanding the current situation in the company and developing strategies for improvement that could help managers to achieve higher levels of satisfaction. Addressing employee satisfaction, in turn, enabled the project to contribute to the company’s HR practices in an evidence-based way, drawing on employees’ answers to determine the changes required.

Because the study is focused both on the relationship between performance appraisals and job satisfaction and on the factors impacting performance appraisals, the study had four main research questions to answer:

  1. What is the relationship between the reliability of performance appraisals and job satisfaction?
  2. What is the relationship between managers’ knowledge of performance appraisal practices and principles and employees’ job satisfaction?
  3. What is the relationship between managers’ knowledge of performance appraisal practices and principles and performance appraisal reliability as reported by employees?
  4. What factors impact the decisions of managers during performance appraisals?

Research Strategy & Design

The selection of research design was influenced by research goals and questions, as well as by the COVID-19 pandemic, which restricted face-to-face communication with the company’s employees. Thus, the researcher selected a survey design so that information could be collected easily and quickly without the need for in-person interaction. The methodology of the study was quantitative since it was necessary to answer the identified research questions. According to Gray (2020), quantitative data collection and analysis methods provide specific, factual answers, which distinguishes them from qualitative methods.

Data Collection

The sample of the study included managers and employees working in Company X since this company was selected as the focus of the project. The company’s senior managers were contacted for approval, and an e-mail with information about the project was sent through the corporate communication system to invite employees to participate.

They received information about the study and provided informed consent before the data collection process began. Two surveys were used for data collection: one for employees in non-managerial roles to study their perceptions of performance appraisal and job satisfaction, and one for managers to investigate their knowledge of performance appraisals and decision-making factors. Both questionnaires were adapted from prior research studies on the topic and the questions included had high construct validity and reliability.

Fairness of performance appraisals was evaluated based on the scale developed by Colquitt (2001), which was used in many other studies considering PA fairness due to high validity and reliability. Job satisfaction was measured using a single-item scale to improve validity and reliability, as advised by Poon (2004).

Managers’ knowledge of performance appraisal and the factors influencing their decisions were evaluated using original items graded by a Likert scale. The questions were based on past research explaining factors affecting the reliability of performance appraisals (Javidmehr and Ebrahimpour, 2015).

Data Analysis

The data analysis process was also guided by research questions and objectives. Descriptive analysis was applied to all data in order to illustrate common trends or characteristics of the sample. The relationship between fair performance appraisal, knowledge of managers and job satisfaction was analysed to answer Research Questions 1 and 2. The primary data analysis instrument used was Excel analysis software, which was to perform correlation and regression tests. Since the last question of the study is merely descriptive, the data related to it were excluded from correlation and regression analyses.

Ethical Issues & Limitations

Research involving human subject faces a number of ethical considerations since it is essential to prevent harm to participants. In the present case, the risk of damage was meager since variables were not manipulated in any way, and the answers were collected remotely. The only ethical concerns that were relevant to this project concerned data privacy, confidentiality and voluntary participation. These concerns were sufficiently addressed both before the data collection process began and throughout the duration of the project.

All participants received full details about the study before providing informed consent, and their identifying information was not recorded in the questionnaires. The data obtained as part of the project is stored on a password-protected computer and will be erased after five years. These measures ensure that the participants’ right to privacy of information will not be violated.

Analysis and Results

The aims of the study were to examine the relationship between performance appraisals and job satisfaction and understand the factors impacting the reliability of performance appraisals in Company X. To fulfil these aims, ten managers and 100 of their subordinates were selected. The managers filled in questionnaires focusing on their knowledge of performance appraisals and the factors impacting their decision-making, whereas employee surveys concentrated on performance appraisal reliability and job satisfaction.

To ensure that the results were representative, an equal number of employees responding to each manager were selected, thus creating ten groups of ten employees. Following the data collection stage of the research, the results were transferred into an Excel file and subjected to data analysis using correlation and regression features of Excel. Descriptive statistics were also used to examine the variables of managers’ knowledge, performance appraisal reliability, and job satisfaction.

Factors influencing managerial decision-making during performance appraisals were processed using Excel to describe the frequency of responses and the level of influence that each element had on the decisions of managers. The rest of the section will discuss the results based on the research questions set for the study.

Sample Description

As stated in the previous paragraph, the total number of employees who have completed the questionnaires was 100, with ten employees answering to each manager. Some demographic and employment data were also gathered as part of data collection to understand the sample better. These included gender, age, and years served in Company X. In terms of gender, the distribution was somewhat uneven, with 59 female (59%) and 41 (41%) male employees.

The mean age of employees was 36.5, with a median of 36, a mode of 51 and a standard deviation of 8.55 and a range of 29. The minimum age of employees involved in the study was 23, and the maximum was 52. With respect to tenure, the mean number of years served in the company was 5.99, with a median of 6, a mode of 7 and a standard deviation of 3.74. The minimum number of years served was 0 since some employees only served for a few months, and the maximum tenure was 15 years.

Given that the company is relatively young, these data suggest that employees generally stay in the company for long and are thus pleased with the conditions and the work environment. The demographic data for managers was not included because, with only ten managers participating in the study, demographic data could threaten their privacy. Full descriptive statistics for appropriate demographic variables, as well as for other variables reviewed in the study are presented in Table 1.

Table 1. Descriptive Statistics.

Age Tenure JS PA reliability MK
Mean 36.53 5.99 3.35 39.3 35.9
Standard Error 0.86 0.37 0.11 0.86 0.43
Median 36 6 4 40 37
Mode 51 7 4 39 39
Standard Deviation 8.55 3.74 1.14 8.57 4.30
Sample Variance 73.18 13.97 1.30 73.38 18.47
Kurtosis -1.14 -0.49 -0.87 -0.76 -1.02
Skewness 0.25 0.48 -0.27 -0.19 -0.41
Range 29 15 4 32 14
Minimum 23 0 1 23 28
Maximum 52 15 5 55 42
Sum 3653 599 335 3930 3590
Count 100 100 100 100 100

Performance Appraisal Reliability and Job Satisfaction

The first research question that the study sought to answer concerned the relationship between the reliability of performance appraisals and job satisfaction. Performance appraisal reliability was measured based on an 11-item questionnaire modelled after the tool suggested by Colquitt (2001).

Each item was graded on a five-point Likert scale, and combined scores were used to establish each employee’s perception of performance appraisal fairness. Job satisfaction was measured using a single-item tool, which was rated by the same scale. On the whole, the mean score of PA reliability was 39.3 out of 55, which is a relatively good result. The median and mode for this variable were 40 and 39, respectively, and the standard deviation was 8.57.

The lowest score rated by an employee was 23, and the highest was 55. Job satisfaction gathered scores from 1 to 5 with a mean of 3.35, a mode and median of 4, and a standard deviation of 1.14. Based on the results of the correlation analysis, there is a medium positive correlation between PA reliability and job satisfaction since the correlation coefficient is 0.43. Regression analysis also confirmed the presence of a relationship.

The coefficient of determination in this pair of variables was 0.18, indicating that PA reliability explains variations in job satisfaction levels in about 18% of cases. Based on these outcomes, it can be concluded that PA reliability impacts employees’ job satisfaction in Company X positively.

Managers’ Knowledge and Job Satisfaction

The second question posed for the study was whether or not managers’ knowledge of performance appraisal practices and principles influenced job satisfaction of employees in Company X. Therefore, the second pair of variables that were considered in the analysis were managers’ knowledge of performance appraisals and employees’ job satisfaction. The former variable was assessed using a nine-item original questionnaire, with each item graded on a Likert scale.

Combined scores from all items were used in the analysis, producing a total grade between 9 and 45 for each manager. In terms of descriptive statistics, the mean result in managers’ knowledge was 35.9 with a median of 37, a mode of 39 and a standard deviation of 4.3. The lowest total grade reported by managers was 28, and the highest was 42 out of 45. In general, the results of managers’ knowledge assessment were positive and indicate that managers in Company X have a good grasp of performance appraisal principles and practices.

The correlation analysis suggests that there is a positive relationship between managers’ knowledge and employees’ job satisfaction because the correlation coefficient was 0.4. Similarly, the results of the regression analysis suggest that managers’ knowledge of performance appraisals can impact employees’ job satisfaction. However, the effect here was less significant than in the first pair of variables. With an r2 coefficient of 0.16, managers’ knowledge of performance appraisal practices and principles explained variations in employee satisfaction in about 16% of cases.

Managers’ Knowledge and PA Reliability

The third question posed for the study was whether or not managers’ knowledge of performance appraisals influenced performance appraisal reliability as reported by employees. This pair of variables was studied using the same analysis methods, with combined scores from employees’ and managers’ assessments used to evaluate the results. Based on the correlation analysis, the relationship between them was positive and moderately strong, with a correlation coefficient of 0.47.

Regression analysis further revealed that the influence of managers’ knowledge on employees’ ratings of PA reliability was relatively strong. The independent variable impacted the dependent one in about 22% of instances (r2=0.22). This means that managers’ knowledge of performance appraisal practices and principles has a positive influence on employees’ ratings of performance appraisal reliability.

Managers’ Decision-Making

Finally, the fourth question that the study sought to answer was “What factors impact the decisions of managers during performance appraisals?”. This question was assessed descriptively using a seven-item questionnaire instrument that managers completed. Each statement concerned the influence of a specific factor on their decision-making, and the full list of questions can be found in Appendix 1. The results were processed using Microsoft Excel, and a stacked column chart was created to represent the results (Figure 1).

Factors Impacting Managerial Decision-Making During Performance Appraisals.
Figure 1. Factors Impacting Managerial Decision-Making During Performance Appraisals.

Responses to Statement 1 indicate that all managers base their evaluations on a large volume of information about the employee and their work rather than on a single action or behaviour: 40% of managers agreed, and 60% agreed strongly with this statement. Similarly, responses to Statement 2 were all affirmative, meaning that all managers included in the study avoided basing performance appraisal decisions on personal views of the employee and their relationships.

Statement 3 raised some concerns since 50% of the managers responded with “Disagree”, and one was left undecided. This statement focused on assessing employees individually and avoiding comparing them to other workers during assessments. Statements 4 through 6 received the majority of affirmative votes, highlighting managers’ willingness to spend sufficient time with each employee during evaluations, ignore past results, and take into account organisational and individual factors that could have affected employees performance.

Still, responses to the final Statement revealed that a significant share of managers (40%) fails to discuss preliminary appraisal results with the employee and consider their perspective when making the final decision. This could affect employees’ perceptions of the process and their assessments of performance appraisal fairness. Hence the results for the fourth research question suggest some critical areas for improvement.

Summary

Overall, the results allowed answering all of the research questions posed for the study. The outcomes of the analysis revealed that job satisfaction of employees in Company X was influenced positively by both performance appraisal reliability and managers’ knowledge of performance appraisal principles and practices.

At the same time, the study also confirmed the link between managers’ knowledge and performance appraisal fairness as perceived by employees. Lastly, the research also revealed some gaps in the factors impacting managers’ decisions during performance appraisal that the company should address to improve outcomes.

Discussion and Limitations

Performance Appraisal Reliability and Job Satisfaction

The first relationship that was studied as part of the research was that between performance appraisal reliability and job satisfaction of employees. The results highlight the presence of a positive causal relationship, meaning that higher perceived reliability of performance appraisals leads to improved job satisfaction.

These results are in line with the findings generated by previous studies on the topic. Multiple authors have suggested that unreliable performance appraisals can lead to reduced job satisfaction. For example, Brown, Hyatt and Benson (2010) found that poor experience with performance appraisals can impact employee satisfaction along with motivation. Similarly, Ismail, Mohamed and Rayee (2016) suggested that performance appraisal practices that are perceived by emplloyees as being unfair or unreliable reduce their job satisfaction by impacting perceptions of organisational justice.

Other studies also confirm these results, noting the presence of a causal relationship between the two variables (Kim and Holzer, 2016; Nawaz and Pangil, 2016; Poon, 2004; Rubel and Kee, 2015). Some scholars have also suggested that the relationship between performance appraisal reliability and job satisfaction could be due to organisational trust.

When employees experience fair treatment by and positive relationships with the management, they are more likely to trust their organisations and have positive attitudes toward their jobs (Kim and Holzer, 2016; Tjahjono, 2014). Consequently, the study supports the hypothesis of the company’s management that performance appraisals could be the driving force behind the evident decline in job satisfaction.

Managers’ Knowledge, Performance Appraisal Reliability and Job Satisfaction

The second pair of variables that was taken into account in this study was managers’ knowledge of performance appraisal processes and practices and employees’ job satisfaction. To the best of the author’s knowledge, this relationship has not been studied in previous studies on the topic. Hence, suggestions regarding it were based primarily on theoretical knowledge. Scholars explain that performance appraisals are highly complex since there are multiple factors that should be taken into account by managers (Hermel, 2015).

This implies that managers who are not well-trained in this process or have some critical knowledge gaps in terms of performance appraisals could deliver them with errors. Additionally, performance appraisals are subject to individual biases and practice gaps (Javidmehr and Ebrahimpour, 2015). Ensuring that managers are aware about these issues and tackle performance appraisals with due diligence is essential to prevent negative consequences.

In the context of the present study, it was theorised that managers’ knowledge of performance appraisal processes and practices could impact employees’ job satisfaction through performance appraisal reliability. In other words, it was suggested that performance appraisals conducted by managers who have gaps in knowledge or training would be perceived by employees as unreliable, thus decreasing their job satisfaction.

This theory proved to be right based on the data gathered from the project, and it also related to previous studies in the area of performance appraisals. Multiple studies have shown that bias and errors in managers’ decisions about performance appraisals could impact employees’ attitudes toward their organisations (Ideogu and Ozturen, 2015; Nair and Salleh, 2015; Selvarajan, Singh and Solansky, 2018; Tahjono, 2014; Taneja, Srivastava and Ravichandran, 2015).

Another possible explanation for the influence of managers’ knowledge on job satisfaction lies in Herzberg’s Motivator-Hygiene theory. Relationships with leaders, recognition and supervision are among the most crucial factors impacting job satisfaction in this model (Miner, 2005). Hence, it could also be that leaders’ poor knowledge of performance appraisal processes and practices affects staff perceptions of their fairness, leading to negative experiences that lower satisfaction. Further studies could explore this relationship in greater depth using larger samples of data.

Factors Impacting Managers’ Decision-Making

In order to understand whether there are specific gaps that should be targeted by the organisation in an effort to improve managers’ knowledge of performance appraisals, the study also collected data on decision-making factors. The results in this area were crucial since they revealed that some managers tended to draw comparisons between workers instead of addressing them individually and failed to discuss preliminary appraisal results with employees to gain their perspectives on the process.

These results show that there is a heightened risk of bias in some managers’ practices of performance appraisals, which can impact the process and its outcomes negatively (Ideogu and Ozturen, 2015; Javidmehr and Ebrahimpour, 2015). Consequently, addressing these gaps should be among the company’s priorities for resolving the problem of low job satisfaction among employees.

Additionally, managers’ responses to other questions also show that there is room for improvement. For instance, some of them revealed that they allowed previous assessment results to affect current evaluations or that they did not spend equal time with all employees during the process of performance appraisals. Building managers’ awareness and skills in these areas would help the organisation to overcome its problems and achieve higher performance appraisal reliability and job satisfaction.

Limitations

On the whole, the study provided the information that was necessary to answer each of the proposed research questions. Nevertheless, there were some limitations that affected its outcomes and the conclusions that can be drawn from them. First of all, the study was conducted in Saudi Arabia, a country with a high cultural context that might have impacted the participants’ perceptions and decision-making both at work and while completing this study. Thus, it is not advised to extend the results of the current study to other cultural contexts until they are supported by evidence from different countries.

Secondly, the study only included ten managers in the analysis, since it was restricted by company size. Conducting a similar study in a larger company or in several different organisations would have allowed including more managers, thus making the sample size larger. This would have had a positive impact on the reliability and validity of the results, thus allowing to generalise them to other settings.

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