Perceived Purposes of Performance Appraisal: Correlates of Individual-And Position-Focused Purposes On Attitudinal Outcomes

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Perceived Purposes of
Performance Appraisal:
Correlates of Individual- and
Position-Focused Purposes on
Attitudinal Outcomes
Satoris S. Youngcourt, Pedro I. Leiva, Robert G. Jones
Performance appraisals have traditionally been directed at individuals,
serving either an administrative or developmental purpose. They may serve
a role definition purpose as well. This study sought to identify and
more broadly define the purposes of performance appraisals to include this
role definition purpose. Furthermore, this study examined purposes of
performance appraisals as perceived by the role incumbent, as opposed
to the stated organizational purposes. The relationships between these
perceived purposes with several attitudinal outcomes, including satisfaction
with the performance appraisal, job satisfaction, affective commitment, and
role ambiguity, are reported. Data from 599 retail service employees were
used to test the hypothesized relationships. Results suggested support for a
model consisting of three performance appraisal purposes having differential
relationships with the outcomes examined, suggesting the purpose of the
performance appraisal may influence ratees perceptions of and attitudes
toward their jobs.
Over two decades ago, Bernardin and Beatty (1984) identified many interdependent purposes of performance appraisal, including to improve the use of
resources and serve as a basis for personnel actions. Similarly, Cleveland and
A previous version of this article was presented at the annual meeting of the Academy of
Management, New Orleans, Louisiana, in August 2004.
HUMAN RESOURCE DEVELOPMENT QUARTERLY, vol. 18, no. 3, Fall 2007 Wiley Periodicals, Inc.
Published online in Wiley InterScience (www.interscience.wiley.com) DOI: 10.1002/hrdq.1207
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Youngcourt, Leiva, Jones
colleagues (Cleveland, Mohammed, Skattebo, & Sin, 2003; Cleveland, Murphy, &
Williams, 1989) have shown that in practice, performance appraisals appear to
be directed to four purposes: to make distinctions among people, distinguish a
persons strengths from his or her weaknesses, implement and evaluate human
resource systems in organizations, and document personnel decisions. Indeed,
yet another goal of performance appraisals may ultimately be to increase
performance at the individual and, subsequently, the organizational level
(see DeNisi & Gonzalez, 2000; Meyer, Kay, & French, 1965).
These distinctions among purposes of the performance appraisal are
important for human resource development (HRD) research and practice for
many reasons. Once performance ratings are made, the adequacy of management decisions about how to develop, reward, train, and otherwise attempt to
affect the behavior of job incumbents is at stake. Having a clear idea about the
links between initial rating decisions and later administrative and developmental decisions has been a major focus of considerable research literature
(DeNisi & Gonzalez, 2000; Murphy & Cleveland, 1995). Because the purpose
of performance appraisal is one of the factors that affect the characteristics and
quality of the ratings, the practical implications of this research for professionals have included numerous attempts to improve performance ratings and
measurement.
For example, as numerous researchers have demonstrated, the purpose of
the appraisal affects rating processes and outcomes (Bernardin & Beatty, 1984;
DeNisi, Cafferty, & Meglino, 1984; Murphy, Balzer, Kellam, & Armstrong,
1984; Sharon & Bartlett, 1969; Williams, DeNisi, Blencoe, & Cafferty, 1985;
Zedeck & Cascio, 1982). Appraisals conducted for developmental purposes,
for example, are less prone to rating biases (say, elevation or leniency) than are
appraisals conducted for administrative decision-making purposes (Meyer et al.,
1965; Zedeck & Cascio, 1982).
The most common purposes of performance appraisal tend to be aimed
at the measurement of individuals, with the focus being on distinguishing
either among individuals (the administrative purpose) or within individuals
(the developmental purpose; Cleveland et al., 1989, 2003). This emphasis on
individual-focused purposes, however, may be insufficient. The uncertain business environment that contemporary companies face has forced researchers
and practitioners to conceptualize organizations as open systems with objectives and goals that continually need to adapt to the changing environment
(Katz & Kahn, 1979; Schneider & Klein, 1994). Furthermore, from a more
macro strategic perspective, the resource-based view of the firm (Barney, 1991;
Barney, Wright, & Ketchen, 2001) has challenged traditional views of companies. This view proposes that the competitive advantage of a company depends
on how valuable, rare, difficult to imitate, and difficult to replace are its
resources. From this perspective, certain human resources are a cornerstone
for the development of the companys core competencies, on which the
company invests the most. This has forced researchers to identify employees
HUMAN RESOURCE DEVELOPMENT QUARTERLY DOI: 10.1002/hrdq
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Perceived Purposes of Performance Appraisal
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as a source of competitive advantage in unstable business environments

(Barney, 1991; Barney et al., 2001), especially employees who are highly
valuable and unique for the companys core competency (Lepak & Snell, 1999).
In this context, employees may play a role in the definition of their own
jobs. Popular human resource practices such as quality circles (Schneider,
Brief, & Guzzo, 1996) have demonstrated that incumbents are aware of their
environment and are able to capture customer needs and propose changes in
the work design and their own positions, thus improving organizational
performance. From this perspective, performance appraisal theory can be
expanded to suggest that performance appraisals have a third purpose that is
more focused on the position than on the individual within the position. That
is, change or clarification of the structure or content of the work associated
with a position is an important and relatively overlooked purpose of performance appraisal and likely has a different impact on incumbents than do the
traditional administrative and developmental purposes.
Research on performance appraisal has tended to focus on how various purposes of performance appraisals influence the appraiser and the rating outcome,
overlooking the impact of the perceived intent of the appraisal on the employee
being evaluated. Whereas several researchers have examined employee reactions
to the performance appraisal system (Dipboye & De Pontriand, 1981; Mount,
1983), employee attitudes related to the purpose of the appraisal remain
relatively unexplored (see Boswell & Boudreau, 2000, for an exception). Thus,
another gap that needs to be addressed in performance appraisal theory is the
impact that the purpose of the appraisal may have on employee attitudes toward
the appraisal and the organization.
Study Purpose
The overarching goal of this article is to expand the traditional way of looking
at the purposes of performance appraisal in order to increase managerial
understanding of its potential effects and subsequently enhance its use for HRD.
Beyond this objective, we have two specific purposes. The first is to expand
performance appraisal theory by identifying and more broadly defining the
purposes of performance appraisals to include a position-focused purpose in
addition to the traditional incumbent-focused purposes. Although a purpose
aimed at role definition has important implications for organizations, it has
remained relatively unexplored.
The second purpose is to expand performance appraisal theory by examining the differential relationships that employees perceptions of the various
purposes have with several criteria of interest (satisfaction, commitment, and
role ambiguity). Several researchers have demonstrated that employees perceptions of the workplace are more important than the workplace itself in
affecting attitudinal and behavioral organizational responses (Allen, 2001;
James & McIntyre, 1996). From this standpoint, two individuals working for
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the same organization could perceive the purpose of the performance appraisal
as being completely different. Regardless of the intended purpose of the
appraisal, which may in fact serve both purposes, it is the perceived purpose
of the appraisal that will likely influence the employees attitudes toward
the performance appraisal process and, ultimately, the organization.
Whereby performance appraisals have traditionally held either administrative and developmental purposes, they speak directly to organizational
development and individual career development, respectively. Expanding performance appraisal theory to include a third purpose that goes beyond these
traditional approaches adds another dimension in which individuals may
advance their own careers (by learning what is expected of them, they know
where to focus their efforts) and identify areas in which supervisors may
choose to offer additional training and development for their employees (for
example, when the role definition purpose reveals additional requirements
for a job that the incumbent does not already possess). In addition, a purpose
aimed at role definition allows information for the organization as a whole to
develop because the information gained from this purpose may show how different positions are increasing or decreasing in role breadth, thus indicating
where more or fewer resources should be allocated. This additional purpose,
aimed at the position rather than at the individual within the position, is clearly
an overlooked area of research within the HRD literature. Therefore, we aim
to address this gap and provide an understanding of how perceptions of these
different purposes relate to important outcomes for organizations.
Literature Review
A review of the literature presents individual- versus position-focused
purposes of performance appraisal, theoretical rationale for role definition purpose, and differential relationships of perceived purposes of the
performance appraisal.
Individual- versus Position-Focused Purposes of Performance Appraisal.
From the traditional perspective, performance appraisals have been conceptualized to be intended to change the behavior of the incumbent in a position.
Following Campbells model of job performance (Campbell, 1990; Campbell,
McCloy, Oppler, & Sager 1993), performance appraisals are aimed at altering
the motivation or the knowledge, skills, and abilities (KSAs) of the person
in the position (or both). For example, supervisors may give rewards-based
feedback based on performance ratings, which is aimed at enhancing motivation of a job incumbent. Or a supervisor may decide to provide training and
development to a subordinate based on skills deficits identified through
performance appraisal. These performance appraisal outcomes have been
virtually the entire focus of performance appraisal research, in terms of either
accuracy (Landy, Barnes, & Murphy, 1978) or utility (Greller, 1978; Nathan,
Morhman, & Milliman, 1991), or more direct measures of behavior intention
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(such as fairness perceptions; Burke, Weitzel, & Weir, 1978; Taylor, Tracy,
Renard, Harrison, & Carroll, 1995).
But in a dynamic job context, another plausible purpose of performance
appraisals may be focused on the position itself rather than on the individual
occupying the position. There are several reasons a position-focused purpose
may be necessary. For example, the position requirements, for which an
incumbent is evaluated in incumbent-focused appraisals, may change.
As advancements are made in technology, the requirements for a job are likely
to change. And just because the position requirements are changing does not
mean that the employee within the position is changing too. Many employees
remain in the same positions long after initial requirements have changed and
new demands are placed on them.
Although some changes are readily apparent, such as the increased use of
technology or increasing skills required to perform a task or job, some changes
in the job are not as apparent. It is in these latter cases that a position-focused
appraisal would be most useful. For example, employees may become accustomed to assisting their fellow employees in ways that slowly transfer the
responsibilities of one employees job to that of another. Employees from two
separate positions within an organization may realize that although one of
them is supposed to be responsible for a particular task, the other actually has
more resources (such as time, opportunity, or KSAs) in order to complete the
task more efficiently or with higher quality. These changes may result without
upper managements knowledge or approval and therefore may not be reflected
in the appraisal system for the two positions (the one with added responsibility, as well as the one with less responsibility). This may be even more the case
when employees perform such activities as contextual or citizenship behaviors
(Bateman & Organ, 1983; Borman & Motowidlo, 1993; Organ, 1988; Smith,
Organ, & Near, 1983). According to Hough and Oswald (2000), organizations
clearly require both task and citizenship performance. Because employees may
assist each other and complete each others tasks, organizational decision makers would be well served to allow for and accept that jobs will slowly change
and task requirements may switch hands. This sort of employee development
by position redefinition and citizenship may have important effects on both
individual attitudes and organizational effectiveness.
In the event that employees do become responsible for additional tasks or
changes in technology or protocol occur, the performance appraisal should not
only reflect these changes; they may be a meaningful means for incorporating
these changes through the performance review process. At a minimum, an
employee should not be punished for not completing aspects of a job that are
no longer necessary to fulfillment of the purpose of the position. Similarly,
an employee should be assessed on aspects of the job that are essential for
optimal performance, regardless of whether these tasks were part of an original
job description. As long as the manager is aware of changes in position requirements and the employee is accurately assessed on his or her performance in
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the job in its current form, such problems are less likely to arise. The interaction
that occurs during feedback following the performance appraisal may be a
prime time for discussions of these changes in job and position requirements.
In the best instance, the supervisor may choose to alter the position based on
a particular strength of a particular incumbent. All of these examples illustrate
ways that the performance appraisal itself can be considered an occasion for
position, or role, definition.
From another point of view, in tight labor markets, only some incumbents
may be able to fulfill all functions of a position as it has been conceptualized
prior to their being employed. In such cases and in lieu of firing, managers
may be forced to reduce position expectations in terms of level or number.
When done systematically and with full understanding of the specific limitations of incumbents, alterations of the position and its design may serve to
accomplish the organizational functions without making unreasonable
demands on the incumbents. Similarly, in an uncertain business environment,
altering a position to take full advantage of particular incumbents talents may
help the organization gain a competitive advantage, if only by retaining a
valued incumbent.
In summary, in addition to individual-focused purposes of performance
appraisals, another possible purpose could be change in the structure of
the work associated with the position. From this perspective, performance
appraisal outcomes may ultimately lead to training an employee to improve his
or her performance (a developmental decision), removing an employee from
a position (administrative decisions such as firing, promotion, and layoff ) or
altering position requirements (role definition decisions such as reengineering
or reorganization). The former cases are akin to the individual-focused developmental and administrative purposes of the performance appraisal; the latter
case is more directed at the position, whereby the position itself may be altered
in the interest of improving organizational performance or retaining a valuable
incumbent. Thus, performance appraisal decisions are oriented toward the
effectiveness of the position as a whole, in addition to its subset of individual
incumbent effectiveness (DeNisi, 2000; Ilgen, 1993; Murphy & Cleveland,
1992, 1995).
Theoretical Rationale for Role Definition Purpose. Some models of job
performance (Campbell et al., 1993; Day, Sin, & Chen, 2004) suggest that the
determinants of performance include not only abilities and motivations, but
peoples declarative knowledge of what is expected of them. In their comprehensive theory of organizational behavior, Katz and Kahn (1979) described
this in terms of social information and refer to it as role definition: the extent
to which relevant job behaviors are clearly defined within a social environment.
To the extent that role expectations are well understood, incumbents may
demonstrate both their abilities and the level of effort they exert to meet these
expectations. If people do not know what is expected of them, there is a good
chance that their behavior will not conform to important others expectations,
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and effort and abilities will not be expressed appropriately in work behavior.
Put simply, it is important to be willing and able to do a job, but it is essential
to know what is expected in the job. It would be hard to demonstrate ones
ability and motivation without a clear idea of how and when to apply them.
But where and when do people receive role information in organizations?
This question is far from new, as discussed over a quarter of a century ago by
Katz and Kahn (1979), who noted, Research on role-sending in organizations
has thus far concentrated more on side effects than main effects (that is, role
enactment per se) and more on particular inadequacies in the expectational
pattern and sending process (conflict, ambiguity, overload) than on constructive elements (p. 203). These authors cited Likerts suggestion (1967) that
supportive supervision may contribute to effective role enactment. This notion
has received attention in the literature on participation in performance
appraisal (see Cawley, Keeping, & Levy, 1998). However, the basic construction of roles has received less attention.
One possible exception to this is Management by Objectives (MBO;
McConkie, 1979; Murphy & Cleveland, 1995), which explicitly requires
supervisors and subordinates to negotiate mutually agreeable goals in order to
enhance incumbent effectiveness. Although this comes close to describing the
role definition purpose, there are notable differences in terms of formality,
prescription, and criteria of importance. Using Katz and Kahns terms (1979),
MBO is a formal, prescriptive system aimed at individual effectiveness. The
role definition purpose, however, may be a more nonnormative, informal part
of discussions about performance that follow from the appraisal and are aimed
not only at individual effectiveness but at the effectiveness of the position more
broadly. That is, the purpose is to alter the position and clarify actual tasks and
requirements of the position, not necessarily the agreed-on goals of the
manager and employee. In a very rough sense, this role definition purpose acts
as an ongoing job or position analysis.
In this manner, performance appraisals can serve to identify aspects of the
job that are no longer required or areas where job requirements have
expanded. We propose that the performance appraisal is an important tool
through which employees may receive information regarding their roles and
superiors may adjust role expectations. This evaluation, along with discussions
with the incumbent about organizational expectations regarding his or her role,
is an important opportunity for role definition and adjustment.
Differential Relationships of Perceived Purposes of the Performance
Appraisal. The second purpose of this article is to examine the differential
relationships of the three performance appraisal purposes (administrative,
developmental, and role definition purposes), with several attitudinal outcomes
of interest (employees commitment, satisfaction, and role clarity or ambiguity). The following sections describe the relationships that would be expected
along with the theoretical and empirical justification for these expectations.
Although testing the relationships of the different attitudinal outcomes
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considered in this study was not an aim, because previous research has
demonstrated that some of the attitudinal outcome variables share a significant
amount of variance, the hypotheses suggested in this study were tested after
controlling for some of these relationships. Figure 1 shows the hypothesized
model. We next describe the relationships among dependent variables that
need to be controlled to test the hypotheses. Then we provide the rationale to
expect the three perceived purposes of the performance appraisal system to be
correlated. Finally, we present the empirical and theoretical support to suggest
the differential relationship between each perceived performance appraisal
purpose and each of the dependent variables.
Relationships Among Dependent Variables. Numerous studies have demonstrated that job satisfaction correlates positively with commitment (Green,
Anderson, & Shivers, 1996; McFarlin & Sweeney, 1992; Mowday, Steers, &
Porter, 1979). Nevertheless, because of the difficulty of specifying the causal
precedence of different affective responses (Mathieu & Zajac, 1990; Meyer,
Stanley, Herscovitch, & Topolnytsky, 2002) and the fact that job satisfaction
and affective commitment contribute uniquely to withdrawal behaviors such
as turnover intentions (Tett & Meyer, 1993), the hypotheses suggested in this
study are tested after controlling for the bidirectional relationship between
affective commitment and job satisfaction.
Role ambiguity has been found to correlate negatively with job satisfaction
(Abramis, 1994; Jackson & Schuler, 1985). In this case, because role ambiguity is a variable that captures the perceptions individuals have regarding their
Figure 1. Hypothesized Model for the Study
Administrative
Purpose
Performance
Appraisal
Satisfaction
Job
Satisfaction
Developmental
Purpose
Affective
Organizational
Commitment
Role Definition
Purpose
Role
Ambiguity
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job and job satisfaction is a variable that captures an affective response toward
the job, the effect of role ambiguity on job satisfaction will be controlled when
testing the hypotheses suggested in this study.
Finally, individuals job satisfaction has been researched based on the
reports of workers regarding their job in general and with different facets of
their job, such as satisfaction with their pay, their supervisor, and the organizational climate. Because satisfaction with the job is broader than satisfaction
with individual facets of the job, it is logical to assume that job satisfaction is
a more distal variable than is the satisfaction with specific job facets (see Chen,
Gully, Whiteman, & Kilcullen, 2000, for similar thinking with general and
specific self-efficacy). Thus, job satisfaction can be considered an antecedent
of job satisfaction. Because satisfaction with the performance appraisal system
can be considered a facet of the job, we posit that this variable has a direct
effect on job satisfaction.
Relationships Among the Three Perceived Purposes. Researchers (for example,
Cleveland et al., 1989, 2003) have found that performance appraisals often
serve multiple purposes rather than one sole purpose. Therefore, individuals
may perceive, perhaps quite accurately, that the same appraisal is used for
multiple purposes. For example, an employee may perceive a performance
appraisal as serving a developmental purpose in that it identifies his or her
strengths and weaknesses, and simultaneously perceive the ratings as being
used to determine a raise. Similarly, the employee may perceive the
performance appraisal as indicating problems in the position (for example,
because of low ratings in an area where the employee lacks control
or opportunities to excel), thereby leading to changes in the job. Consequently, the employee may also view the same appraisal as serving a role
definition purpose. In this manner, we expect individuals perceptions of any
one purpose of the performance appraisal to be related to both of the others.
Nevertheless, we maintain that the purposes of performance appraisal are
distinct, separate purposes, as conceptualized and demonstrated by previous
researchers (Boswell & Boudreau, 2000; Cleveland et al., 1989, 2003;
Ostroff, 1993).
Effects of Administrative Purpose on Dependent Variables. Administrative
decisions can lead to such things as pay increases, bonuses, and promotions,
which are often valued outcomes to employees. Thus, it is logical to assume
that perceptions of such purposes would be related to job satisfaction.
However, we do not expect a direct relationship between the administrative
purpose and job satisfaction. Instead, we hypothesize that the relationship
between administrative purpose and job satisfaction is mediated by
satisfaction with the performance appraisal. As several researchers have
noted, a performance appraisal system will be less successful if it is not
accepted (Carroll & Schneier, 1982; Murphy & Cleveland, 1995). To the
extent employees accept or are satisfied with the appraisal, they are expected
to be more satisfied with their job in general. That is, a lack of satisfaction
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with the appraisal suggests that employees do not accept the rating or feel
the appraisal is not just or accurate, and it may subsequently lead to feelings
of overall job dissatisfaction because the valued outcomes are not as likely.
Effects of Developmental Purpose on Dependent Variables. We hypothesize
a relationship between perceptions of a developmental purpose and affective
commitment. Affective commitment has been defined as the emotional bond
individuals experience with an organization concerning their involvement
in, identification with, and attachment to their organization (Meyer & Allen,
1991). Under the tenets of social exchange theory (Blau, 1964), it is
reasonable to expect that if an individual feels the organization is providing
support and opportunities for improvement, evidenced by the appraisal
being used for developmental purposes, he or she may respond attitudinally.
That is, because the organization is viewed as caring for the employee
(through the developmental appraisal), the employee will reciprocate with
commitment to the organization (Cialdini, 2001).
We also posit that perceptions of the performance appraisal as serving a
developmental purpose are related to job satisfaction through satisfaction with
the performance appraisal. Considering that developmental performance
appraisals are aimed at identifying strengths and weaknesses for the purposes
of improvement and enhancement, individuals who perceive the appraisal as
being used for this purpose may believe the organization is interested in their
improvement and well-being. We believe this may be reflected in part through
their satisfaction with the appraisal. This satisfaction with the appraisal is then
expected to lead to job satisfaction.
Effects of Role Definition Purpose on Dependent Variables. Because performance appraisals aimed at role definition purposes are defining and
clarifying roles, we posit that individuals who perceive the performance
appraisal as being for this purpose will have lower levels of role ambiguity.
Thus, by definition, if an individual views the appraisal as being at least in
part intended for role clarification, then it is likely he or she will experience
less ambiguity regarding the expectations of the job.
We also posit that individuals who view the purpose of the appraisal as
being for the clarification of roles will be more satisfied with the performance
appraisal and consequently more satisfied with their job. This may result from
several mechanisms. First, having a chance to communicate their opinions
regarding the expectations and requirements of the job has been shown to
have a positive relationship with satisfaction. For example, in a sample of
management-level employees, Korsgaard and Roberson (1995) found that both
instrumental voice and noninstrumental voice were important in predicting
satisfaction with the evaluation. Second, there is some reason to believe
that having an opportunity to help craft the job through role definition in
performance appraisal may have an effect on satisfaction as well. Using metaanalytic procedures, Spector (1986) found that high levels of perceived control
are positively related to job satisfaction. The feedback discussion following the
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performance appraisal may be a good time for employees to be actively

involved in the definition of their jobs and may give employees a sense of control over both the performance appraisal process and their job. Although voice
and actual control over the process may not truly exist, the perceptions that
the appraisal is helping to clarify roles is the key to these affective reactions.
Thus, perceptions that the performance appraisal serves a role-definition
purpose are expected to relate positively to performance appraisal satisfaction.
Satisfaction with the appraisal is believed to then lead to job satisfaction, as we
have already noted.
We further propose that when individuals perceive the performance
appraisal as serving role definition purposes, they will have greater levels of
affective commitment. When employees view the performance appraisal being
used to make changes in their job, they may feel a sense of ownership and control over the appraisal and the job. Spector (1986) showed that high levels of
perceived control are related to greater commitment toward the organization.
Consequently we posit that employees will feel a greater sense of commitment
toward the organization to the extent that the performance appraisal clarifies
expectations and make necessary changes in the job.
Summary of the Problem and Hypotheses

As part of our overarching goal to expand the traditional way of looking at
performance appraisal purposes, we aim to increase managerial understanding
of the potential effects of there being a role definition purpose in addition to the
traditional purposes. As such, this study posed two primary research questions:
(1) Do employees perceive performance appraisals to be used for these three purposes? and (2) How do these different purposes relate to employee perceptions
of job satisfaction, satisfaction with the performance appraisal, commitment to
ones job, and understanding of the expectations of their role?
Boswell and Boudreau (2000) found that the perception of the developmental use of the performance appraisal influenced employee satisfaction with
the performance appraisal and satisfaction with the appraiser but found no
such relationship between the perception of evaluative use of performance
appraisals and these two attitudinal outcomes. We expand on their research
by examining the relationships between perceptions of the two traditional
purposes of the performance appraisal (administrative and developmental), as
well as the third purpose of role definition that we have proposed. Furthermore, we expand the attitudinal outcomes to include overall job satisfaction,
affective commitment, and role ambiguity.
In the light of our research questions, and based on the rationale we have
outlined, we proposed and tested the following hypotheses:
HYPOTHESIS 1. The three performance appraisal purposes are separate but related
constructs.
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HYPOTHESIS 2. The relationship between perceptions of an administrative purpose

of the performance appraisal and job satisfaction is mediated by satisfaction with
the performance appraisal.
HYPOTHESIS 3. There is a positive relationship between perceptions of a developmental purpose of the performance appraisal and affective commitment.
HYPOTHESIS 4. The relationship between perceptions of a developmental purpose of
the performance appraisal and job satisfaction is mediated by satisfaction with the
HYPOTHESIS 5. There is a negative relationship between perceptions of a role definition purpose of the performance appraisal and role ambiguity.
HYPOTHESIS 6. The relationship between perceptions of a role definition purpose of
the performance appraisal and job satisfaction is mediated by satisfaction with the
HYPOTHESIS 7. There is a positive relationship between perceptions of a role definition purpose of the performance appraisal and affective commitment.
Method
Data for this study were collected as part of a larger examination of the effectiveness of a companys performance appraisal system. Questionnaires were
sent through an interstore mail system to all employees and managers at 298
randomly selected automotive parts stores in a single organization. Originally
300 stores were selected, but 2 stores could not be used because they were not
yet open. A total of 3,556 questionnaires were distributed to stores in Iowa,
Kansas, Missouri, Nebraska, and Texas. Participants were told that this was
university-based research designed to evaluate the companys performance
appraisal system, that completion of questionnaires was voluntary, and that all
individual responses would be kept confidential. Participants were given two
weeks to return the questionnaire, with an e-mail reminder from human
resources sent two days before the deadline. The questionnaires were returned
to the human resource department in envelopes marked as confidential and
were seen only by the researchers responsible for data entry.
Participants. A total of 1,047 individuals returned questionnaires, for a
response rate of 29 percent. Only individuals classified as employees were
included in this study, however, because we were interested in employees
perceived purposes of the appraisal, as opposed to the intended purposes of
the appraisal. Consequently, managers and respondents who did not report
their position were eliminated. From the sample of 643 employees who
returned the questionnaires, 559 employees reported complete information for
the variables of interest. Most of these respondents were white (79 percent)
and male (70 percent), representative of the organization as a whole.
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Measures. We next present each of the measures used in this study.

We have organized them by the independent variables (which include the three
perceived purposes of the performance appraisal) and the dependent variables
(which include the attitudinal outcomes of role ambiguity, job satisfaction,
satisfaction with the performance appraisal, and affective commitment).
Independent Variables. Perceptions regarding the three purposes of the
companys performance appraisal system were measured with nine items: six
(three administrative and three developmental) were taken from existing
research (Cleveland et al., 1989; Longenecker, Liverpool, & Wilson, 1988),
and three role definition purpose items were developed for this study.
Response options ranged from 1 (strongly disagree) to 5 (strongly agree).
The items taken from previous research were chosen based on how
representative they were of the constructs of interests. The items used to
assess perceptions of an administrative purpose were (1) Performance
appraisals help determine whether to promote, retain or terminate an
employee, (2) Performance appraisals determine what raise someone
should receive, and (3) The performance appraisal process documents and
recognizes employee performance. The items assessing perceptions of a
developmental purpose were (4) Performance ratings let employees know
where they stand, (5) Performance ratings are used to provide feedback
about employee performance, and (6) Performance appraisals identify
individual strengths and weaknesses. Finally, the three items selected to
measure perceptions of a role definition purpose were (7) Performance
appraisals provide information about what employees are responsible for
accomplishing, (8) Performance appraisals provide information that helps
make positive changes in the job itself, and (9) Performance appraisals
provide information about what employees actually do in their jobs.
Reliability estimates for administrative, developmental, and role definition
purposes were .70, .75, and .73, respectively.
Dependent Variables. Three items measuring perception of role ambiguity
were taken from Rizzo, House, and Lirtzmans measure (1970) of role
definition problems. The three role ambiguity items were (1) I know exactly
what is expected of me, (2) I feel certain about how much authority I have
on the job, and (3) I know what my responsibilities are. Only three items
were used due to space considerations in the final questionnaire
administered. These items were chosen because of their relevance to the
construct of interest and because they were among the items with the highest
factor loadings in Rizzo et al.s original article (.61, .51, and .61, respectively).
Response choices ranged from 1 (strongly disagree) to 5 (strongly agree).
All items were reverse-coded to reflect ambiguity rather than clarity.
The reliability estimate for this scale for the current study was .75.
Job satisfaction was measured with three items previously used by Tremble
and Alderks (1992). These items were (1) I usually feel that my job is
worthwhile, (2) I am interested in my present job, and (3) Overall, I am
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satisfied with my current job, Response choices ranged from 1 (strongly

disagree) to 5 (strongly agree). The reliability estimate for this scale was .81.
Satisfaction with the performance appraisal was measured with the
following two items: (1) I am pleased with how performance appraisals are
handled, and (2) I am generally satisfied with the performance appraisal
process. A response set from 1 (strongly disagree) to 5 (strongly agree) was
used. The reliability estimate for this scale was .86.
Affective commitment to the organization was assessed using three items
from Allen and Meyers affective commitment scale (1990): (1) I really feel as
if this companys problems are my own, (2) This company has a great deal
of personal meaning for me, and (3) I do not feel emotionally attached to
this company, (reverse-coded) with a scale ranging from 1 (strongly disagree)
to 5 (strongly agree). Allen and Meyers full eight-item scale was not included
due to space limitations in the questionnaire. However, the three items were
shown in their original study as being related to a single factor, with loadings
of .52, .79, and .81, respectively. The reliability estimate for this scale for the
current study was .69.
Analyses and Results

To test the hypothesized model (see Figure 1), analyses of covariance structures
were performed in LISREL 8.3 (Jreskog & Srbom, 1993). To control for
capitalizing on chance when sequentially introducing modifications to
the model, we followed MacCallums suggestion (1992), performing the
analyses in three sequential steps. In the first step, tau-equivalent measurement
models were estimated for the independent variables and the dependent
variables separately using a first subsample (n 155). In the second step,
the hypothesized model was tested with a second subsample (n 197).
And in the third step, the results were cross-validated with a third subsample
(n 207). These three subsamples were obtained randomly from the original
sample. To control for the threat of common method bias due to the crosssectional nature of the data, as recommended by Podsakoff, MacKenzie, Lee,
and Podsakoff (2003), all analyses were performed controlling for the effects of
a single unmeasured latent method factor. In addition, to control for item carryover effects, we assessed the correlations between the errors of sequential items
but retained only the significant paths for the analyses.
To test the appropriateness of the models estimated through the analyses,
we provide several indicators of the goodness of fit. First, we provide
the goodness-of-fit index (GFI), which deals with error in reproducing the
variance-covariance matrix and should be equal to or greater than .90 to accept
the model. However, because GFI tends to be sensitive to the sample size
and the distribution of the data, we also provide the comparative fit index (CFI),
which has been shown to be among the measures least affected by sample size
(Fan, Thompson, & Wang, 1999). By convention, the CFI should be .90 or
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greater to accept the model. Another index that we included, which is less
affected by sample size and deviations from the normal distribution, is the
nonnormed fit index (NNFI), in which values below .90 indicate a need to
respecify the model, and values .95 and above indicate a good model (Hu &
Bentler, 1999). Finally, we use the root mean square error of approximation
(RMSEA) as an indicator of goodness of fit. Researchers (Hu & Bentler, 1999)
have suggested that an RMSEA value of .06 or less indicates good model fit,
although there is a tendency for it to overestimate goodness of fit for small
sample sizes (Fan et al., 1999). To test the improvement of the goodness of
fit of a model when removing (or adding) parameters, we examine the increase
of the chi square of the nested model at a level of significance of .05. Therefore, if a path is removed from a model and the increase on the chi square is
not significant, the more parsimonious model is considered a better solution.
Table 1 shows scale means, standard deviations, reliability coefficients, and
intercorrelations among the variables of interest. As shown, the correlations
among variables were all significant at a level of .01 even after controlling for
common method variance, which tends to contribute to inflated correlations.
Independent Variables Measurement Model. We first estimated the independent variables measurement model assuming tau equivalence among
the items for each scale. To do this, a three-factor model underlying the nine
performance appraisal purpose items was estimated with a four-factor confirmatory factor analysis (CFA), which controlled for a single unmeasured latent
factor. In this analysis, the paths between the items and their hypothesized factor,
as well as the paths between each item and the unmeasured latent factor, were
constrained to be equal, the correlations among the three hypothesized factors
were left free for estimation, and the correlations of the three factors with the
fourth single unmeasured latent method factor were constrained to zero. Also,
the correlations between the errors of two pairs of sequential items were left free
Table 1. Descriptive Statistics, Reliabilities, and Correlations
for the Variables Examined
M
1. Administrative purpose
2. Development purpose
3. Role definition purpose
4. Affective commitment
5. Job satisfaction
6. Role ambiguity
7. Performance appraisal
satisfaction
3.65
3.84
3.60
3.32
3.95
4.00
3.39
SD
0.72 (.70)
0.62 .73 (.75)
0.70 .60
.67 (.73)
0.86 .36
.37
.40 (.69)
0.71 .39
.46
.45
.48 (.81)
0.67 .31
.42
.36
.29
.48 (.75)
0.98 .43
.43
.49
.39
.45
.30 (.86)
Note. N 599. All correlations are significant at a level of .01. Reliability coefficients are along the
diagonal.
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for estimation to test the presence of item carry-over effects. To test hypothesis 1,
the goodness of fit for this model was compared with (1) one two-factor model
with one common factor (representing administrative, developmental, and role
definition purposes combined into a single purpose) and a second single unmeasured latent method factor, and (2) three three-factor models obtained with all
possible combinations of two of the three factors (administrative and developmental combined versus role definition separate, developmental and role definition combined versus administrative separate, and administrative and
role definition purposes combined versus developmental separate) and a third
single unmeasured latent factor. After testing for the appropriateness of the
hypothesized three-factor structure, the loadings obtained for the items in each
scale and the correlations among the three factors were retained to constrain
these paths when testing the hypotheses with the second subsample.
The four-factor CFA performed on the nine independent variable items
yielded an appropriate fit. However, because the correlations between the
errors of two pairs of consequential items were not statistically significant,
the model was estimated again without leaving free for estimation those
parameters. As shown in Table 2, when compared with the two-factor solution,
in which all the items were associated with one common factor and a single
unmeasured latent factor, the four-factor solution resulted in a statistically
significant chi-square increase, suggesting that the hypothesized solution has
a better fit. Furthermore, change in chi square was statistically significant when
compared with any of the possible combinations of the three-factor model.
The four-factor solution showed that each of the three perceived administrative purpose items loaded 0.59 on their latent factor, the three perceived
developmental purpose items each loaded 0.55 on their factor, and the
perceived role definition purpose items all loaded 0.66 on their factor. In
addition, as expected, the three hypothesized factors were highly correlated.
Specifically, the correlation between perceived administrative purpose and
perceived developmental purpose factors was .98, the correlation between
the perceived developmental purpose and the perceived role definition
purpose factors was .92, and the correlation between the perceived developmental purpose and the perceived role definition purpose factors was .76.
Table 2. Independent Variables Measurement Models

Goodness-of-Fit Indexes
Models
Four factors
Two factors
2
df
GFI
CFI
30.95 30 .42 .96 1.00

57.51 33 .00 .92 .98
NNFI RMSEA
, 2*
df
1.00
.96
26.56
.00
.014
.007
Note: GFI goodness-of-fit index; CFI comparative fit index; NNFI nonnormed fit index;
RMSEA root mean square error of approximation.
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The strong correlations among the three purposes can be explained to

some extent by the statistical technique used to perform the analysis. Because
covariance structural analysis is a statistical technique in which the error of
measurement is considered and partialed out from the item variances when
analyses are performed, the correlations between latent factors tend to be much
stronger than the zero-order correlation obtained from the scale scores. In this
case, the correlation between administrative purpose and developmental
purpose, initially estimated as being .73 when error of measurement is not
removed, is .97 after correcting for the item error of measurement. In addition,
the correlation between developmental purpose and role definition purpose,
initially estimated as being .67, is .92 after controlling for the item error of
measurement. Finally, the correlation between administrative purpose and role
definition purpose, initially estimated as being .60, is .76 after controlling
for the error of measurement. Despite the strong correlations among the
independent variables, the fact that the four-factor measurement model (three
hypothesized factors and a single unmeasured latent factor) demonstrated
statistically better fit than any other possible factor structure gives strong support
for our first hypothesis. Thus, it appears that the three perceived performance
appraisal purposes, although highly correlated, are empirically distinct.
Dependent Variables Measurement Model. In the second set of analyses,
similar to the procedure used to estimate the independent variables measurement model, a series of CFAs was performed to test the appropriateness of the
hypothesized four-factor solution for the dependent variable items (that the four
dependent variablesjob satisfaction, satisfaction with the performance
appraisal, affective commitment, and role ambiguityare all separate
constructs). In this case, a four-factor model underlying the eleven dependent
variable items was estimated performing a five-factor CFA, which controlled for
a single unmeasured latent factor (to control for the threat of common method
bias, as described earlier). As with previous analyses, the paths between the
items and its hypothesized factor and those between each item and the unmeasured latent factor were constrained to be equal, the correlations among the four
hypothesized factors were left free for estimation, and the correlations of those
factors with the fifth single unmeasured latent method factor was constrained
to zero. Also, the correlations between the errors of two pairs of sequential items
were left free for estimation. The goodness of fit for this model was compared
with (1) a two-factor model with one common factor (all dependent variable
items loading on the same factor) and a second single unmeasured latent
method factor, (2) six possible four-factor models obtained with all combinations of three out of four factors and a fourth single unmeasured latent factor,
and (3) seven possible three-factor models obtained with all combinations of
two out of the four factors and a third single unmeasured latent factor. After
testing for the appropriateness of the hypothesized three-factor structure, the
loadings obtained for the items in each scale were retained to constrain these
paths when testing the hypotheses with the second subsample.
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The five-factor CFA performed with the eleven dependent variable items
obtained an appropriate goodness of fit. This analysis also showed that
the error of the two pairs of sequential items was not statistically significant,
so the analysis was performed constraining to zero the relationship between
their errors of measurement. Table 3 shows that when a two-factor solution in
which the eleven items load on a common factor and a single unmeasured
latent factor was compared to the hypothesized factor structure, the increase
in chi square was statistically significant, suggesting that the hypothesized factor structure had a better fit than the alternative factor structure. Furthermore,
the comparison of the hypothesized factor structure with all other possible
alternative factor structures demonstrated that the hypothesized model yielded
better fit than any other possible factor structure. In terms of specific factor
loadings, the hypothesized five-factor solution showed that the three commitment items each loaded 0.72 on their latent factor, the three satisfaction items
loaded 0.62 on their factor, the role ambiguity items all loaded 0.65 on their
factor, and the satisfaction with performance appraisal items loaded .90 on
their latent factor.
Structural Equation Model: Testing the Hypotheses. After estimating the
independent variable and dependent variable measurement models separately,
using the second subsample, we assessed the hypothesized relationships
between the independent and dependent variables estimating a null model, in
which the paths between all the latent exogenous factors and the latent endogenous factors were constrained to zero, while the hypothesized relationships
between dependent variables were left free for estimation. In order to estimate
the suggested bidirectional relationship between organizational commitment
and job satisfaction, the beta paths between these two variables were constrained to be equal. The results obtained for each of these paths were retained
to test the hypothesized model. Then we assessed the goodness of fit of the
hypothesized model structure with all the proposed relationships. Parameter
estimates were reviewed and modification indexes explored to test each of the
remaining six hypotheses. Once the final model was identified, the solution was
compared with a competing model, in which all the paths between the latent
exogenous factors and the latent endogenous factors were left free for estimation. The final solution was cross-validated using the third subsample.
Table 3. Dependent Variables Measurement Models

Goodness-of-Fit Indexes
Models
Five factors
Two factors
2
df
GFI
CFI
NNFI
RMSEA
, 2*
df
94.66
298.46
45
51
.00
.00
.90
.74
.96
.77
.95
.65
.08
.17
203.81
.00
Note: GFI goodness-of-fit index; CFI comparative fit index; NNFI nonnormed fit index;
RMSEA root mean square error of approximation.
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The estimation of the null model showed that the suggested relationships
were statistically significant. The bidirectional relationship between organizational commitment and job satisfaction was .22, the effect of satisfaction with
performance appraisal on job satisfaction was .22, and the effect of role ambiguity on job satisfaction was .42. Therefore, the hypothesized model shown in
Figure 1 was estimated with structural equation modeling techniques, leaving
free for estimation the hypothesized relationships between exogenous and
endogenous latent variables. In this way, the parameter estimates suggested
that the solution was not appropriate. That is, several estimated paths were not
significant, and the estimation of simultaneous relationships forced the model
to overestimate some of the parameters. One of the explanations for the overestimation of the parameters is the high correlations among the independent
variables, which leave little variance to estimate the relationships with the
dependent variables. Therefore, we had to adopt a different strategy to test
the hypotheses. First, we estimated an alternative model in which the
administrative purpose (satisfaction with performance appraisal), developmental purpose (affective commitment), and role definition purpose
(role ambiguity) paths were included. Second, we estimated the increase in the
chi square when each of the other hypothesized relationships was successively
included in the model.
The suggested alternative model obtained acceptable goodness of fit (x2(186)
288.67, p .01, GFI .86, CFI .96, NNFI .96, RMSEA .05).
This provided support for hypothesis 3, which suggested that perceived
developmental purpose was significantly related to affective commitment, and
support for hypothesis 5, which suggested that perceived role definition
purpose was significantly related to role ambiguity.
To test hypotheses 2, 4, 6, and 7, we compared this alternative model successively with other models to test each of our hypotheses. When the direct
path between administrative purpose and job satisfaction was included in the
model, the increase in chi square was not statistically significant, suggesting
that the relation between perceived administrative purpose and job satisfaction was fully mediated by satisfaction with the performance appraisal system
(x2(185) 285.15, p .01, GFI .86, CFI .96, NNFI .96, RMSEA .05,
dx2(1) 3.42, p .06). This provides full support to hypothesis 2, which
suggested that the perceived administrative purpose of performance appraisal
is related to job satisfaction and mediated by satisfaction with the performance
appraisal.
When the relationship between perceived developmental purpose and job
satisfaction was included in the alternative model, the increase in chi square was
not statistically significant (x2(185) 285.60, p .01, GFI .86, CFI .96,
NNFI .96, RMSEA .05, dx2(1) 3.07, p .08). Furthermore, when the path
between perceived developmental purpose and satisfaction with the
performance appraisal was included in the alternative model, the increase in chi
square was not statistically significant (x2(185) 285.16, p .01, GFI .86,
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CFI .96, NNFI .96, RMSEA .05, dx2(1) 3.51, p .06). Thus, hypothesis 4, which suggested that the relationship between perceived developmental purpose and job satisfaction was mediated by satisfaction with performance
appraisal, was not supported.
When the relationship between the perceived role definition purpose and
job satisfaction was included in the alternative model, the increase in chi
square was not statistically significant (x2(185) 286.80, p .01, GFI .86,
CFI .96, NNFI .96, RMSEA .05, dx2(1) 1.07, p .17). In addition,
the inclusion of a path between perceived role definition purpose and
satisfaction with the performance appraisal into the alternative model did not
yield a statistically significant increase in chi square (x2(185) 287.06, p .01,
GFI .86, CFI .96, NNFI .96, RMSEA .05, dx2(1) 1.61, p .21).
Thus, we found no support for hypothesis 6, which suggested that the relationship between perceived role definition purpose and job satisfaction was
mediated by satisfaction with the performance appraisal.
Finally, when the relationship between the perceived role definition purpose
and affective commitment was included in the alternative model, the chi-square
increase was not statistically significant (x2(185) 288.65, p .01, GFI .86,
CFI .96, NNFI .96, RMSEA .05, dx2(1) 0.02, p .89). Therefore,
hypothesis 7, which suggested a significant relationship between perceived role
definition purpose and affective commitment, was not supported.
The total unstandardized effects of the exogenous variables on the endogenous variables showed that perceived administrative purpose had a significant
and strong effect on satisfaction with performance appraisal (.53), a significant but small effect on job satisfaction (.14), and a significant but very small
effect on affective commitment (.03). Perceived developmental purpose had a
significant and strong effect on affective commitment (.49) and a significant
but small effect on job satisfaction (.11). Finally, perceived role definition
purpose had a significant and moderate effect on role ambiguity (.33),
significant but small effect on job satisfaction (.15), and significant but
very small effect on affective commitment (.03). Figure 2 shows the completely
standardized solution for the final model.
To test the stability of the final model, a cross-validation was performed
with the third subsample. The model fit was marginally acceptable (x2(186)
415., p .01, GFI .81, CFI .93, NNFI .93, RMSEA .07), and all
paths between the exogenous variables and endogenous variables were significant at a level of .05. This result offers stronger support for the already
supported hypotheses: 1, 2, 3, and 5.
Discussion
Our first objective was to identify and more broadly define the purposes of performance appraisals. In addition to the traditional administrative and
developmental purposes aimed at incumbent performance management, we
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Figure 2. Completely Standardized Solution for the Final Model
Administrative
Purpose
.58
Performance
Appraisal
Satisfaction
.22
.98
.76
Job
Satisfaction
Developmental
Purpose
.22
.47
Affective
Organizational
Commitment
.92
Role Definition
Purpose
.33
.42
Role
Ambiguity
proposed that another purpose of the appraisal may be directed toward defining
the position itself: a role definition purpose. We assessed employee perceptions
of these three performance appraisal purposes and found that performance
appraisal systems were not only perceived to provide information regarding
the employees administrative future and their own development, but also were
directed at the position as a whole within its organizational context.
Although we expected the three purposes to be correlated with one
another, they were correlated to a greater extent than is ideal. Specifically, the
two individual-focused purposes were the most correlated (.98), followed by
the relationship between developmental purpose and role definition purpose
(.92), and then the relationship between administrative purpose and role definition purpose (.76). We assert, however, that they are still separate constructs
for several reasons. First, although they are the highest correlations within this
article, previous researchers have demonstrated that the two individual-focused
purposes (administrative and developmental) are empirically distinct. Given
that these two purposes are both individual focused, it is not altogether surprising that they are highly correlated. The distinction between these two
purposes, however, is not the focus of this study. The high correlations between
the role definition purpose and the other two purposes are the primary
concern here. Nevertheless, they are clearly separate from a theoretical stance.
Furthermore, we refer to previous studies (Bosson & Swann, 1999; Chen,
Gully, & Eden, 2004) that also had high correlations between their constructs
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of interest. Specifically, Bosson and Swann (1999) found that peoples feelings of
self-liking and self-competence were highly correlated with one another
(.76) yet independently related to self-verification strategies. Similarly, Chen
et al. (2004) found that general self-efficacy and self-esteem were highly
correlated (.80) but were considered to be empirically and conceptually
distinguishable because they related to task performance in predictably distinct
processes. Thus, in both examples, although highly intercorrelated, they were
considered to be distinct constructs because they were differentially related to
outcomes of interest or related in manners that were predictably different. Also,
the error of measurement is considered and partialed out from the item
variances when analyses are performed using covariance structural analysis;
thus, the correlations between latent factors are inflated compared to what one
would find with zero-order correlations. Indeed, our analyses comparing
models indicate that the three purposes are best thought of as being empirically distinct. Therefore, although they are highly intercorrelated, they can be
considered separate constructs.
The second objective of this study was to examine the differential
relationships these various purposes have with several criteria of interest.
We hypothesized numerous relationships and tested these using structural
equation modeling techniques. Although the first model did not support all of
our specific predictions, the model supported our overall propositions:
(1) employees distinguish among the three proposed performance appraisal
purposes, and (2) the perceptions of different purposes for the performance
appraisal system are related differentially to the different attitudinal variables.
Our results suggest that the perception of each of the three purposes of
performance appraisal systems relates differently to attitudinal outcomes.
Specifically, perceived administrative purpose was related to job satisfaction
through satisfaction with the performance appraisal; perceived developmental
purpose yielded direct relationships with job satisfaction and affective
commitment; and perceived role definition purpose was directly related to role
ambiguity, which related to job satisfaction.
Implications for HRD Research and Practice. This study contributes to
HRD research and practice in several ways. In terms of implications for HRD
research, our second objective at least begins to answer Cleveland et al.s long
overdue call (1989) for more research on the correlates and consequences of
using performance appraisals for potentially conflicting uses. Future research
is needed to explore the consequences of using performance appraisals
for multiple purposes. An extension of these effects to nonattitudinal
consequences might be particularly useful. Along these lines and in line with
implications for HRD practice, to the extent that there are any differences in
the perceived purpose of the performance appraisal, employers may want to
be clearer in communicating the intended purpose of the system depending
on the outcome they hope to achieve. For example, in times of change,
managers may find that employees are confused about what their actual job
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responsibilities entail. Under these conditions, managers may want not only
to build a role definition purpose into the performance review system but to
communicate this intent to employees in order to increase employee perceptions of role clarity.
Another implication for our study with HRD research and practice involves
the criteria that we chose to use. The criteria of interest in this study
(satisfaction, commitment, and role ambiguity) are primarily attitudinal
variables, which have broad implications for their responses to individual development systems, organizational development, and ultimately organizational
effectiveness. Employees attitudes, especially to the organization, are increasingly relevant for companies in the contemporary unstable and competitive
business environment. It has been demonstrated that organizational attitudes
predict turnover (Griffeth, Hom, & Gaertner, 2000), which may hurt company
performance from at least two standpoints. In the short term, turnover has a
financial impact on an organization because of the costs associated with recruiting, selecting, hiring, and training a new employee (Abbasi & Hollman, 2000).
Moreover, these costs are usually higher for valuable and unique human
resources, which demand more investment (Lepak & Snell, 1999, 2002).
Turnover also has a financial impact on the organization in the long term, as it
may represent a loss of a companys competitive advantage when valuable, rare,
hard-to-replace, and inimitable employees leave the company (Barney, 1991;
Barney et al., 2001).
Our research also provides recommendations regarding perceptions of
appraisals that individuals may have. This research focused on employee
perceptions of performance appraisal purposes rather than on actual intended
purposes of the appraisals, as designated by the organization. Therefore, our
results support the importance of employee perceptions, regardless of actual
use, a finding that is similar to that of Boswell and Boudreau (2000). Depending on the outcomes they are interested in (for example, role clarity versus
affective commitment), organizations could make certain aspects of the
performance appraisal process clear so that employees understand and believe
that the appraisal is truly for that purpose, such as personal and career development. However, we echo Boswell and Boudreaus recommendation (2000)
that organizations should be mindful in matching employee perceptions to
what the organization is really doing in order to avoid possible feelings of
manipulation or injustice.
Finally, HRD practitioners may want to take note of the versatility that a
third purpose offers: it allows many different decisions to be made from the
same evaluation (such as whom to promote, areas for employee development,
or what parts of the job to restructure). For example, in tight labor markets,
only some incumbents may be able to fulfill all functions of a position as it has
been conceptualized prior to their being employed. In such cases, and especially
where training is not feasible because costs are too high or no trainers are
available, for example, managers may be forced to reduce position expectations
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in terms of level or number. When done systematically and with full understanding of the specific limitations of incumbents, alterations of the position
and its design may serve to accomplish the organizational functions without
making unreasonable demands on the incumbents. Similarly, in an uncertain
business environment, altering a position to take full advantage of particular
incumbents talents may help the organization gain a competitive advantage, if
only by retaining a valued incumbent. Thus, this broader conceptualization of
the purposes of the performance appraisal may be advantageous to employees
within the positions as well as the organization as a whole.
Strengths, Limitations, and Future Research. This study has several
strengths. First, data were obtained from employees within a single organization across the Midwest. By limiting the sample to a single organization, we can
be assured that relationships between the perceived purposes of the appraisal
and the attitudinal outcomes are truly representing the perceptions and are not
confounded by the actual purpose of the appraisal. That is, the actual purpose
of the performance appraisal did not vary by store in this organization,
although clearly the perceived purposes varied in their relationships with
outcomes.
Another strength is that the relatively large sample that was available allowed
us to perform cross-validations, in order to account for several potential
problems, including common-method bias and item carry-over effects. An even
larger sample size would have been ideal because larger subsamples may have
prevented instability in the expected relationships among variables. Still, the
representativeness of a sample to the overall organization was certainly a strength.
Yet another strength is the use of covariance structure analysis to test our
seven hypotheses. This statistical analysis allows us to test multiple relationship
hypotheses at the same time while controlling for type 1 error, which is inflated
when multiple relationships are tested sequentially using different statistics (as in
typical regression techniques used to test mediation, for example).
This study is not without limitations. First, although we maintain that the
three purposes are distinct, as demonstrated by the criterion-related validity
and results of the structural equation models provided, they were still correlated to a greater extent than is ideal. Nevertheless, future researchers may want
to consider using different items that are even more distinct. In addition,
researchers may want to focus on whether there are differences between actual
and perceived purposes and whether there is less of a distinction when
considering employee perceptions. Unfortunately, we did not collect data on
the actual uses of the performance appraisal and are therefore unable to
examine this within the current study context.
Another limitation with our study was that all data were cross-sectional,
and therefore we are unable to infer causality. For example, satisfied and committed employees may perceive performance appraisals purposes differently,
rather than the perception of purpose driving satisfaction and commitment.
Clearly a longitudinal design would need to be employed in the future versus
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the cross-sectional one used in the current study. In addition, although our
final sample size was more than sufficient, our response rate (29 percent) was
somewhat lower than we would have liked. That is, although some researchers
(among them, Steeh, 1981) have noted that for most mailed surveys, a
response rate of 10 percent is typical and 20 percent is the best that can usually
be expected, others (including Baruch, 1999; Kerlinger, 1986) have set the
typical response rate at closer to 40 or 50 percent. Nonetheless, despite efforts
to increase the return rate (reminder e-mails and organizational support), our
response rates remained somewhat low. Future researchers may want to
consider offering incentives or conducting data collection on-site in order
to achieve higher response rates.
Two other limitations in this study concern our measures. First, our measure of role definition does not clarify for whom role definition is intended.
For example, the items for this purpose all say, Performance appraisals provide
information . . . , but they do not state the target of this provided information.
It could be that information provided primarily to the organization would
serve as documentation function, whereas information provided to the
manager-employee dyad actually leads to a renegotiation of the role itself.
Thus, although the performance appraisal purpose questions were constructed
in the same fashion, the role definition purpose scales could have included the
target of the provided information.
A second limitation concerns our measure of satisfaction with the performance appraisal not clearly differentiating between satisfaction with the process
and satisfaction with the outcome. These two components are embedded
within the scale, with satisfaction with the process implied in the first item and
satisfaction with the process and outcome in the second item. Thus, it is not
possible to separate out these different elements of the performance appraisal.
This was not a key component of our study, however, and thus was not
deemed to be a substantial limitation. Nevertheless, future researchers should
measure process and outcome satisfaction separately and build the two
variables into the theoretical model.
Finally, we limited the outcome variables used in this study to attitudinal
variables. Although the focus of the research is on the purposes of the performance appraisal, not on the outcomes themselves, future research in this area
may benefit from moving beyond attitudinal outcome variables. That is,
although we addressed outcomes that are quite relevant for contemporary
companies and have been linked with numerous important outcomes, it would
be worthwhile to examine such aspects as individual and firm performance.
In addition, performance ratings would be interesting to examine within the
framework used here. For example, one could argue that the relationship
between the perceptions people have regarding the performance appraisal
system and attitudinal variables may be moderated by previously obtained performance appraisals ratings (Boswell & Boudreau, 2000, 2002). Unfortunately,
this information was not available for the study examined here.
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Satoris S. Youngcourt is assistant professor of psychology at

Kansas State University.
Pedro I. Leiva is professor of psychology at P. Universidad Catolica
de Valparaso in Chile.
Robert G. Jones is associate professor of psychology at Missouri State University.

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