Performance appraisal is used for a variety of developmental and administrative purposes in organizations, and it is one of the most widely researched topics in personnel psychology. Much of pervious literature on appraisals has focused on the rating errors and improving the accuracy of ratings by means of better instrument. However, some doubt has been brought up about the degree of accuracy improvement by the increase in accuracy of instrument. This critical situation led researchers to getting a different viewpoint, fairness in the performance appraisal.
Perceptions of fairness have been extensively researched in the organizational justice literature and described as a function of distributive justice and procedural justice. Distributive justice defined by previous studies reflects some fair proportion between what to give and what to receive. In contrast, procedural justice defined as "the perceived fairness of decision-making process," or "the perceived fairness of the means used to determine the amount of compensation employee receives" concerns if the decision-making procedure or instrument is fair.
The purpose of this study is to identify the antecedents and dependent variables of distributive and procedural justice in performance appraisal situation. More specifically, the main objectives of this study are as follows:
(1) to identify the factors influencing actual performance ratings, the expectation of ratings, and expectation inflation, and their influences on appraisal reactions and organizational attitudes.
(2) to analyze the moderating effects of supervisor characteristics on relationships between performance appraisal process variables and justice perceptions.
(3) to analyze the relationships between reference point characteristics and justice perceptions.
(4) to analyze the relationships between justice perceptions and appraisal reactions and organizational attitudes.
Drawing from organizational justice theory and performance appraisal research, fifty-four hypotheses were generated and tested using two kinds of data, one collected from a longitudinally designed questionnaire survey and secondary rating data of 201 employees of a public R&D institute in Korea, and the other acquired from a questionnaire survey of 134 researchers of five public R&D institutes in Korea.
Correlation analyses, t-tests, analysis of variances(ANOVAs), analysis of covariances (ANCOVAs), and moderated and hierarchical regression analyses were employed to test the hypotheses.
The major findings of this study are as follows:
(1) Most employees expected their appraisal ratings above average. Actual performance ratings was well explained by work load and leader-member exchange quality(LMX), the expectation of ratings was significantly related with role ambiguity, work load, supervisor's subordinate job knowledge, error tendency, and LMX, and expectation inflation was significantly influenced by role ambiguity. Expectation inflation explained compliance with supervisor, job satisfaction, and organizational commitment well. The results also revealed that Group A (high expectation E and high appraisal rating F) showed significantly greater values than Group C (low E and low F) in appraisal satisfaction, procedural justice, compliance with supervisor, job satisfaction, and organizational commitment. Specifically, the high expectation groups showed greater levels in the attitudes toward compliance with supervisor and toward organizational commitment than the low expectation groups.
(2) Performance appraisal process variables, such as participation, goal setting, and action plan explained both distributive and procedural justice well. The interactions of some supervisor characteristics (i.e., opportunity to observe subordinate's performance, knowledge of subordinate's job, and LMX) and some performance appraisal process variables(participation and action plan) explained distributive and procedural justice well. The interactions between supervisor characteristics(i.e., opportunity to observe subordinate's performance, knowledge of subordinate's job, and LMX) and goal setting also explained procedural justice well. The interaction between rating error tendency and goal setting explained procedural justice well, and that of rating error tendency and action plan explained distributive and procedural justice well. Besides, the interactions of supervisor characteristics(supervisor's opportunity to observe subordinate's performance, supervisor's knowledge of subordinate's job, rating error tendency, and LMX) and performance appraisal process variables(participation, goal setting, and action plan) explained distributive and procedural justice in various ways.
(3) Characteristics of reference point such as familiarity, competition in good faith, and liking showed significant relationship with distributive and procedural justice. In addition, spacial distance explained procedural justice well. The results also showed that distributive justice was differentiated among R&D professionals' reference points at the public R&D institutes, while procedural justice was not.
(4) Both distributive and procedural justice explained appraisal reactions (i.e., appraisal satisfaction, appraisal effectiveness, and appraisal system satisfaction) and organizational attitudes (i.e., job satisfaction, organizational commitment, intent to quit, and trust in supervisor) well respectively. Hierarchical regression analyses and useful analyses revealed that distributive justice explained appraisal satisfaction, appraisal effectiveness, and trust in supervisor better than procedural justice, and procedural justice explained appraisal system satisfaction, job satisfaction, organizational commitment, and intent to quit better than distributive justice.
The implications of the findings for performance appraisal and justice theory, some practical suggestions for personnel managers, and the required research were discussed.
