appraisal fairness (Bretz, Milkovich, and Read, 1992). How PAs are used has been shown
to influence rating behavior and outcomes (for example, Jawahar and Williams, 1997) and
to be an important predictor of employee attitudes toward their supervisor, the job, and the
appraisal process (Jordan and Nasis, 1992). In the Meyer, Kay, and French (1965) study,
for example, researchers proposed that conducting salary discussions during the annual
performance review interfered with the constructive discussion of plans for future
performance improvement and could lead to negative reactions. However, in the first
empirical test of the Meyer, Kay, and French study, salary discussion was found to have
either no impact or a slightly positive impact on employee attitudes (Prince and Lawler,
1986). Thus, how PAs are used has developed as an area of interest, yielding mixed results
and conclusions.
Previous research has relied on PA administrators (human resource managers, for example)
to provide information on how the appraisal is used (Cleveland, Murphy, and Williams,
1989). As suggested by Bretz, Milkovich, and Read (1992), these respondents may be
describing the PA system as intended instead of actual practice. An alternative approach is
to investigate the appraised individuals perceived PA use. If people perceive PA purposes
differently, as has been suggested , then attitudes may vary depending on that perception.
For example, how a PA is used may signal to employees their value to and future in the
organization.
Firms engage in the performance-evaluation process for numerous reasons. Managers may
conduct appraisals to affect employee behavior through the feedback process, or to justify
some sort of human resource management action (termination, transfer, promotion, etc.).
However, many other benefits may also accrue from the information yielded by the
appraisal. These benefits include increases in knowledge regarding the effectiveness of
selection and placement programs, training and development needs, budgeting; human
resource planning, and reward decisions.
One current problem which performance appraisal faces is that the term is often used
synonymously with that of "performance management". Yet performance management is
clearly more than a new name for performance appraisal ( Fletcher, 1992 ) defines
performance management as:
"an approach to creating a shared vision of the purpose and aims of the organisation,
helping each individual employee understand and recognise their part in contributing to
them, and in so doing manage and enhance the performance of both individuals and the
organization."
