Effectiveness of Performance Appraisal System and its Effect on Employee Motivation

Ayomikun Idowu


Employee performance has traditionally been accorded prime focus by human resource managers. As a result, a number of performance appraisal techniques have over time been devised to help establish employee’s performance. In the contemporary times, the use of performance appraisals has been extended beyond rating of the employee’s performance to aspects such as motivation. Accordingly, this study sought to investigate effectiveness of performance appraisal systems and its effect on employee motivation. The study’s main objectives pertained to establishing the moderating role of performance appraisal as a motivation tool as well as potential challenges.

The study findings show the presence of significant positive outcomes when the organisation uses performance appraisal as a motivation tool. Further, the study finds that the use of more than one appraisal techniques helps yield greater satisfaction and consequently higher motivational levels. The specific aspects of performance appraisal systems (PAS) that help improve motivation include the linking of performance to rewards; using the PAS to help set objectives and benchmarks; as well as the use of PA to help identify employee’s strength and weaknesses.


Performance Appraisal; Motivation; Employee

Full Text:



Al-Aufi, A., Al-Kalbani, K. (2014) ‘Assessing work motivation for academic librarians in Oman’, Library Management, 35(3), pp.199 – 212.

Anthony, R. and Govindarajan, V. (2007) Management Control Systems, 12th ed., Irwin, Singapore.

Appelbaum, H., Roy, and Gilliland, T. (2011) ‘Globalization of performance appraisals: theory and applications’, Management Decision, 49(4), pp.570 – 585.

Armstrong, M. (2009) Armstrong's Handbook of Performance Management: An Evidence-Based Guide to Delivering High Performance. London: Kogan Page Publishers.

Attorney, A. (2007) Performance Appraisal Handbook. New York: Nolo Publishers.

Bassett-Jones, N. and Lloyd, C. (2005) ‘Does Herzberg's motivation theory have staying power?’, Journal of Management Development, 24(10), pp.929 – 943.

Bipp, T. and Dam,K. (2014) ‘Extending hierarchical achievement motivation models: The role of motivational needs for achievement goals and academic performance’, Personality and Individual Differences, 64(7), pp.157-162.

Bipp, T. and Kleingeld, A. (2011) ‘Goal-setting in practice: The effects of personality and perceptions of the goal-setting process on job satisfaction and goal commitment’, Personnel Review, 40(3), pp.306 – 323.

Brun, J.-P. and Dugas, N. (2008) ‘An analysis of employee recognition: perspectives on human resources practices’, The International Journal of Human Resource Management, 19(4), pp. 716-730.

Cardy, L. and Leonard, B. (2011) Performance Management: Concepts, Skills, and Exercises. Delhi: M.E Sharpe.

Chen, J. and Eldridge, D. (2012) ‘Are “standardized performance appraisal practices’ really preferred? A case study in China’, Chinese Management Studies, 4(3), pp.244 – 257.

Chiang, C. and Jan, S. (2008) ‘An expectancy theory model for hotel employee motivation’, International Journal of Hospitality Management, 27(2), pp.313-322.

Choon, K. and Embi, A. (2012) ‘Subjectivity, Organizational Justice and Performance Appraisal: Understanding the Concept of Subjectivity in Leading Towards Employees’ Perception of Fairness in the Performance Appraisal’, Procedia - Social and Behavioral Sciences, 62(24), pp.189-193.

Chung, T., Rutherford, B. and Park, J. (2012) ‘Understanding multifaceted job satisfaction of retail employees’, International Journal of Retail & Distribution Management, 40(9), pp.699 – 716

Cory, S.N., Ward, S. and Schultz, S.A. (2007) ‘Managing human resources in a small firm. Motivation through performance evaluation’, The CPA Journal, pp. 62-65.

David, P., Song, M., Hayes, A. and Fredin, S. (2007) ‘A cyclic model of information seeking in hyperlinked environments: The role of goals, self-efficacy, and intrinsic motivation’, International Journal of Human-Computer Studies, 65(2), Pages 170-182.

Deb, T. (2009) Managing Human Resources and Industrial Relations. Delhi: Excel Books India.

Drucker, P. (2013) People and Performance. London: Routledge.

Emmerik, H., Schreurs, B., Cuyper, N. and Peters, W. (2012) ‘The route to employability: Examining resources and the mediating role of motivation’, Career Development International, 17(2), pp.104 – 119.

Espinilla, M., Andres, R., Martinez, J. and Martinez, L. (2013) ‘A 360-degree performance appraisal model dealing with heterogeneous information and dependent criteria’, Information Sciences, 222(4), pp.459-471.

Feys, M., Anseel, F. and Wille, B. (2013) ‘Responses to co-workers receiving recognition at work’, Journal of Managerial Psychology, 28(5), pp.492 – 510.

Gardner, C.E. (2008) ‘Employee evaluation: is it worth the effort?’, DVM, 18(5), pp. 647-81.

Gómez-Miñambres, J. (2012) ‘Motivation through goal setting’, Journal of Economic Psychology, 33(6), pp.1223-1239.

Grawitch, M., Gottschalk, M. and David, M. (2006) ‘The path to a healthy workplace: a critical review linking healthy workplace practices, employee well-being, and organizational improvements’, Consulting Psychology Journal: Practice and Research, 58(3), pp. 129-147.

Grund, C. and Przemeck, J. (2012) ‘Subjective performance appraisal and inequality aversion’, Applied Economics, 44 (2), pp.2149–2155.

Hon, H., Wilco W. and Chan, L. (2013) ‘Overcoming work-related stress and promoting employee creativity in hotel industry: The role of task feedback from supervisor’, International Journal of Hospitality Management, 33(2), pp.416-424.

Horng, J. S., Hsu, H., Liu, C. H., Lin, L., & Tsai, C. Y. (2011) ‘Competency analysis of top managers in the Taiwanese hotel industry’, International Journal of Hospitality Management, 30(5), pp.1044-1054.

Hsu, M., Bahtt, M., Adolfs, R., Tranel, D. and Camarer, F. (2005) ‘Neural systems responding to degrees of uncertainty in human decision-making’, Science 310 (4), pp.1680–1683.

Huang, S., Durcikova, A., Lai, H. and Lin, W. (2011) ‘The influence of intrinsic and extrinsic motivation on individuals' knowledge sharing behavior’, International Journal of Human-Computer Studies, 69(6), pp.415-427.

Jong, P., Deanne, N. and Hartog, D. (2007) ‘How leaders influence employees' innovative behaviour’, European Journal of Innovation Management, 10(1), pp.41 – 64.

Kominis, G. and Emmanuel, C.R. (2007) ‘The expectancy-valence theory revisited: developing an extended model of managerial motivation’, Management Accounting Research, 18(1), pp. 49-75.

Kumar, J. (2012) ‘Performance appraisal and promotion process: A measure approach’, International Journal of Advancements in Research & Technology, 1(1), pp.1-6.

Lee, S.-Y. and Whitford, A.B. (2007) ‘Exit, voice, loyalty, and pay: evidence from the public workforce’, Journal of Public Administration Research and Theory, 18(4), pp. 647-71.

Lepsinger, R. Lucia, D. (2009) The Art and Science of 360 degree Feedback. New York: John Wiley & Sons.

Li, X., Liu, X. and Shi, B. (2012) ‘Insiders or outsiders?: Adoption, staffing pattern, and HR configuration of temporary agency workers in the Chinese context’, Journal of Chinese Human Resource Management, 3(1), pp.33 – 48.

Long, R.J. and Shields, J.L. (2010) ‘From pay to praise? Non-cash employee recognition in Canadian and Australian firms’, The International Journal of Human Resource Management, 21(8), pp. 1145-1172.

Maana, R. (2008) ‘Strategic Aspects of the Importance of Employee Management’, Journal of Diversity Management, 3(1), pp.1-6.

Maley, J. (2013) ‘Hybrid purposes of performance appraisal in a crisis’, Journal of Management Development, 30(10), pp.1093 – 1112.

McCalley, T. (2006) ‘From motivation and cognition theories to everyday applications and back again: the case of product-integrated information and feedback’, Energy Policy, 34(2), pp.129-137.

Miao, C., Evans, R. and Shaoming Z. (2007) ‘The role of salesperson motivation in sales control systems — Intrinsic and extrinsic motivation revisited’, Journal of Business Research, 60(5), pp.417-425.

Nijhof, A., Krabbendam, K. and Looise, J.K. (2002) ‘Innovation through exemptions: building upon the existing creativity of employees’, Technovation, 22(11), pp. 675-83.

Oshri, I. and Ravishankar, N. (2014) ‘On the attractiveness of the UK for outsourcing services’, Strategic Outsourcing: An International Journal, 7(1), pp.18 – 46.

Pat-El, R., Tillema, H. and Sabine W. (2012) ‘Effects of formative feedback on intrinsic motivation: Examining ethnic differences’, Learning and Individual Differences, 22(4), pp.449-454.

Pearson, C.M. and Porath, C.L. (2005) ‘On the nature, consequences and remedies of workplace incivility: not time for ‘nice’? Think again’, Academy of Management Executive, 19(1), pp. 7-18.

Petersen, J., Kaplan, E. and Samuels, A. (2007) ‘Effects of Subordinate Likeability and Balanced Scorecard Format on Performance-Related Judgments’, Advances in Accounting, 23, pp.85-111.

Peterson, T.M. (2007) ‘Motivation: How to increase project team performance’, Project Management Journal, 38(4), pp. 60-69.

Rowland, A. and Hall, D. (2012) ‘Organizational justice and performance: is appraisal fair?’, EuroMed Journal of Business, 7(3), pp.280 – 293.

Saeednia, Y. (2011) ‘Generating a scale measuring hierarchy of basic needs’, Procedia - Social and Behavioral Sciences, 15(1), pp.3084-3094.

Sahoo, C. and Mishra, S. (2012) ‘Performance management benefits organizations and their employees’, Human Resource Management International Digest, 20(6), pp.3 – 5.

Samarakone, P. (2010) ‘Improving performance appraisals using a real-time talent management system: The advantages of a real-time talent management system’, Human Resource Management International Digest, 18(4), pp.35 – 37.

Stein, G. (2010) Managing People and Organizations. Amsterdam: Emerald Group Publishing.

Stringer, C., Didham, J. and Theivananthampillai, P. (2011) ‘Motivation, pay satisfaction, and job satisfaction of front-line employees’, Qualitative Research in Accounting & Management, 18(2), pp.161 – 179.

Sutton, A. and Watson, S. (2013) ‘Can competencies at selection predict performance and development needs?’, Journal of Management Development, 32(9), pp.1023 – 1035.

Swan, S. (2012) Ready-to-Use Performance Appraisals. New York: John Wiley & Sons.

Tuytens, M. and Devos, G. (2012) ‘Importance of system and leadership in performance appraisal’, Personnel Review, 41(6), pp.756 – 776.

Van Herpen, M., Van Praag, M. and Cools, K. (2005) ‘The effects of performance measurement and compensation on motivation: an empirical study’, De Economist, 153(3), pp. 303-29.

Wirtz, J. (2004) ‘Improving the measurement of customer satisfaction: a test of three methods to reduce halo’, Managing Service Quality, 11(2), pp.99 – 112.

Wolff, B., Gunkel, M., Lusk, E. J., & Li, F. (2007) ‘Gender‐specific effects at work: an empirical study of four countries’, Gender, Work & Organization, 14(1), pp.56-79.

Woods A. (2012) ‘Subjective adjustments to objective performance measures: The influence of prior performance’, Accounting, Organizations and Society, 37(6), pp.403-425.

Wright, P. and Cheung, K. (2007) ‘Articulating appraisal system effectiveness based on managerial cognitions’, Personnel Review, 36(2), pp.206 – 230.

DOI: http://dx.doi.org/10.20321/nilejbe.v3i5.88


  • There are currently no refbacks.

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.