Performance Appraisal: Impact of Justice Perceptions on Employee Adaptive Performance as Mediated By Satisfaction with Appraisal Process in Private Sector Organizations

Abstract

Performance appraisal is one of the most common management tool in private sector organizations of Pakistan. Earlier research on improving appraisal effectiveness, focusing on its utility, quantitative and qualitative aspects has done little to improve its usefulness as a managerial tool for enhancing adaptive performance of employees. This study sought to contribute to this body of knowledge by investigating influence of justice perceptions of performance appraisal on employees’ adaptive performance as mediated by satisfaction with the appraisal process in private sector telecom and banking organizations. The study was anchored on organizational justice and social exchange theories. Pilot survey was administered to 50 employees of telecom and banking organizations to assess reliability of the instrument. Reliability analysis depicted study variables to be reliable and suitable for further analysis. Data collected from 932 respondents through standardized survey questionnaire was initially assessed for missing values and sample descriptives using SPSS version 20. Then two step approach to Structural Equation Modelling was applied using AMOS version 21. In the first step, confirmatory factor analysis was conducted to assess fitness of measurement model and construct validity. In the second step, structural model was estimated for testing theoretical relationships. Results indicated that proposed measurement and structural models met the fitness criteria. Findings confirmed positive relationships between justice perceptions (distributive, procedural and informational) and adaptive performance, however, results did not support relationship between interpersonal justice and adaptive performance. Results supported positive relationships between justice and satisfaction constructs. Study established positive relationship of satisfaction constructs with adaptive performance. Satisfaction constructs partially mediated relationship between justice constructs and adaptive performance. Study provided support to propositions of organizational justice and social exchange theories wherein enhanced level of employee satisfaction and adaptive performance can be achieved viii by ensuring justice in the organizational practices. Policy makers may use the findings to evaluate how well private sector telecom and banking organizations can be leveraged through fair performance appraisal practices and enhanced level of adaptive performance to safeguard interests of employees thereby increasing its productivity which will contribute towards economic growth of the country. Practitioners in the field of human resource management can use findings of this study to support case for development and implementation of just performance appraisal practices for improving adaptive performance of employees to achieve and sustain competitive advantage. Future research could use longitudinal studies to provide better understanding of the influence of justice perceptions of performance appraisal process on employees’ satisfaction with appraisal process and adaptive performance. Investigation of justice perceptions of managers and employees separately, in future studies, will also help analyze perspective of both sides.