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The Effects of Performance Rating
The Effects of Performance Rating
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Business Ethics
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J Bus Ethics (2014) 1 19:265-273
DOI 10.1007/s 1055 1-0 13- 1634-1
Received: 23 April 201 2 /Accepted: 20 January 2013 /Published online: 1 February 2013
© Springer Science+Business Media Dordrecht 2013
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266 C. Dusterhoff et al.
providing
Two formsa tool
of appraisal satisfaction have been distin- to f
employee's competenc
guished; satisfaction with the appraisal session , and satis-
tion's strategic objectiv
faction with the wider appraisal system. A second widely
If
managers expect
used appraisal reaction reported by Crawley et al. (1998) is to
process toperceived utility, originally measured by Greller (1978)
encourage em
mance, employees have
using a four-item scale that assessed the extent to which the
erally be performance appraisal-clarified supervisor expectations
satisfied with
feel the and helped to improve job performance.
process to be un
use the results of the
Giles andOrganizational
MossholderJustice Approach to Appraisal
satisfied Reactions
with the proces
evaluation and see it as
mance andAn important and influential approach to understanding
development
agreementperformance
with appraisal reactions has been provided by the
the per
improved organizational
understandin justice perspective (Elicker et al. 2006;
Thurston to
motivation and McNall 2010). Originally couched in terms
improve
ment (Burke et
of fairness and equity (Adams al.
1963; Greenberg 1986), a 197
isfaction and
number of distinct types
disagreem
of organizational justice have now
process is also
been proposed. related
The first of these, distributive justice, is
lower concerned with the fairness of rewards relative to the work
organizational com
quit (Brown expended, and haset been consistently
al. found to be an
2010
Over the important
last factor in appraisal
few reactions. Subsequently,
year
number of procedural
factorsjustice was recognized as a second thatform of
performance organizational justice. In thisappraisa
case, determinants of fair-
positive ness, beyond the outcomes themselves, are the
feedback in procedures th
one way toused in conducting
improve evaluations (Greenberg 1986). Proce- the
feedback dural justice
is is enhanced through adherence to "due pro-
positive and
expected,cess"they criteria, including lack of bias, areconsistency and mo
review (Blakely
accuracy (Leventhal 1980). In addition, some 1993)
researchers
itself, have considered "voice" - the degree of input an employee
researchers have
affected has into the evaluation
by process to be an aspect of proce-
perception
Others havedural justice (Colquitt 2001;Scandura 1999), while others
identified
between have treated voice
the as a separate factor (Cawley et al. 1998;
supervisor
more Elicker et al. 2006). A third
positive type of organizational justice
leader-me
result in has been identified in the form of interactional
higher employ justice (Bies
the and Moag 1986)
process which, in the context of performanceet
(Elicker
The appraisal, will be article
present enhanced when an employee is treated
tak
on with consideration and
appraisal respect during the appraisal process.
reactions.
judge a In a further elaboration, interactional justice has been
performance ap
moral subdivided into two types; informational justice, focusing
justifiability. App
at least in on part,
issues such as the adequacyby
of explanations,
theand
process. interpersonal justice, stressing issues of politeness, and
respect (Colquitt 2001; Greenberg 1993).
Appraisal Reactions The recognition of different forms of organizational
justice has resulted in considerable debate and research on
Researchers have typically measured appraisal reactions in the dimensionality of the construct (Colquitt 2001; Thur-
terms of appraisal satisfaction, motivation to improve, ston and McNall 2010). Some have argued that conceptual
perceived accuracy, and perceived utility (Elicker et al. confusion exists about the differences between interac-
2006). In their meta-analysis of the effects of participation tional and interpersonal justice and how these constructs
on appraisal reactions, Cawley et al. (1998) reported that should be defined (Roch and Shanock 2006). Greenberg
appraisal satisfaction was the most frequently measured (1993), for example, proposed that both interactional and
reaction, perhaps because it affects important outcome vari- informational justice may be viewed as interpersonal
ables, such as motivation, commitment, and productivity. aspects of distributive and procedural justice, respectively.
â Springer
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A Moral Judgment Perspective 267
Others individual'sthat
have argued moral cognitions. Following Kohlberg's
interactional
viewed asa component of
model, Trevino proposed procedural
that individual moral cognitions
1991). Even the are determined by the individual's
distinction stage of moral devel- the
between o
of organizationalopment.
justice
It has been proposedmay be orga-
that, like individuals, quest
and Ambrose (2001),nizations may for example,
be characterized in terms of their level of hav
moral development, and
tributive and procedural Kohlberg's approach
justice may has been not
adapted to
distinct as generally this context also (Logsdonsince
believed, and Yuthas 1997;what
what is a processReidenbach
may and Pobinoften
1991; Sridha and Camburn
be1993). a matt
Because Kohlberg's
Thus, the conceptual debate ideas have influenced
seems organizational
to all
bility of from one
and management
to four thinking on ethical
dimensions
decision making, we o
justice. Empirical begin with a brief outline of
research his theoretical position,
seems to rein
sion, with some results being
drawing primarily from his unable
own summary (Kohlberg and t
tinguish between Hersh 1977).
distributive and proced
other results support
Following Piaget,
the Kohlberg
full
was interested
four-fact
in the cog-
2001). Recently, nitive
Thurston
development of moral reasoningand McNal
in the individual,
evidence from infancy into adulthood.
distinguishing the Hefour concluded that justice
moral
tioned that the high
reasoning correlations
progressed through three levels, each ofamong
which in t
gains in turn consisted
incremental fit of two challenge
stages. Level I was referred to asthe
the pr
of distinguishing "preconventional" level, in which
between them.morality is determined
As of date, research on
in terms of the physicalthe
consequencesdimensiona
of actions. At Stage
tional justice and 1how
, right actions it
are thoserelates to
which avoid punishment. appra
At Stage
be characterized as
2, they
dealing
are those which satisfy with
one's own needs. At
theLevel "ho
how to separate the dimensions
II, referred to as the "conventional" level, right actionsof org
and arrange them with
consist of conforming to the other variable
expectations of the immediate
member exchangesocial quality (LMX),
group and of loyalty towards in
it. Stage 3 morality is a ca
has appraisal reactions as
typified by an orientation the
toward outcome
social approval of sig-
paper to introduce a others
nificant complementary
while at Stage 4, the "law and order ori- "ve
to the relationships
entation" among
becomes more dominant, organization
and right actions rest
nents by suggesting that
on duty, responsibility and some
respect for rules. may
At Level III, be m
than others, and that this
referred to as the may
"postconventional" provide
or principled level,
dence among them. To
moral values do
are defined so,
in terms we
of principles thatapply
have a a
framework to explain
more general application.satisfaction
At Stage 5, there is a legalistic or w
appraisal, as described below.
social-contract orientation which recognizes the relativism
of values and the need for procedural rules for reaching
democratic consensus. At Stage 6, in contrast, moral
Conceptual Framework and
judgment rests on self-chosen, Hypothes
universal, abstract, ethical
principles.
We propose that satisfaction with
Kohlberg believed that the sequence of moral develop- perfo
may depend on ment is fixed,
the degreeunidirectional, and involves
tothe which
hierarchical tho
perceive the process to
integration of be
each preceding stagemorally
into the next. The latter justif
we suggest that many of
characteristic means the
that cognition variables
at a higher stage com- pr
as being associated with
prehends each lower stage appraisal
of thinking, although there is a reactio
nized within a moral
preference to operate at the highest availableframewor
judgment stage,
In organizations, according to Kohlberg. One important modification
perceptions of towhat is
are considered to be a function both of the individual's Kohlberg's theory was proposed by Rest (1986), that
moral perspective and the moral culture of the organiza- people may simultaneously demonstrate more than one
tion. Taking a contingency view, Ferrell and Gresham stage of moral development. While there have been many
(1985) proposed that ethical decision making results from criticisms of Kohlberg's approach (Krebs and Denton
the interplay of individual, organizational, social, and2005; Snarey 1985; Sachdeva et al. 201 1), it continues to
cultural factors. Similarly, Trevino (1986) proposed an be widely influential, informing research into moral
interactive person-situation model, in which the organi- behaviour in many areas, including business and manage-
zational factors of job context, work characteristics, and ment (Greenberg 2002; Monga 2007) and related applied
organizational culture act as situational moderators of thedisciplines (Myyry et al. 2009).
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268 C. Dusterhoff et al.
Appraisal Evaluation
At Stage 5, moral judgment takes on a legalistic and social-
To the extent that an appraisal's overall evaluation of
contract orientation, emphasising due process and socially
agreed-upon individual rights. Within the context of per-
performance may be interpreted in terms of rewards and
punishments, this variable has the potential to engage
formance appraisal, the construct that most clearly reflects
this type of concern is Organizational Justice. Other things
moral judgments at the most basic level, comprising Stages
1 and 2. That is, a person reacting to the outcome of theirbeing equal, a person operating at this stage will judge an
appraisal from a perspective of rewards and punishmentsappraisal process that respects justice to be more morally
may tend to interpret a favourable outcome as more mor-acceptable than one that does not.
ally justified than an unfavourable one. If the overall
Hypothesis 4 There is a direct relationship between
hypothesis is correct, that satisfaction with performance
perceived justice and appraisal satisfaction, independently
appraisal depends on its perceived moral tightness, we
of the effects of perceived utility, LMX, and the perfor-
therefore hypothesize that:
mance rating itself.
Hypothesis 1 There is a direct relationship between the
favorability of a performance rating and appraisal
Organizational Context
satisfaction.
This study was undertaken to partially provide input into a
LMX new performance management system introduced a Cana-
dian provincial government. The system is connected to an
Within Level H, maintaining immediate social expectationselectronic review form linked to a corporate database. Each
is regarded as valuable in its own right. At Stage 3, theemployee received an overall rating on performance and
basis for moral judgment is the immediate social context, their implementation of organizational values. The form
and good actions are those approved by significant others. also allowed supervisors to offer suggestions for training,
Loyalty and support within the immediate social context development, and career advancement.
Springer
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A Moral Judgment Perspective 269
Survey Sample "I felt satisfied with the performance review session."
"Overall, I felt the performance review process (including
Seventy-one respondents, out of a total sample of 166 the planning and focusing phases) was valuable." "I have
employees in an organizational unit, responded to our inter- positive expectations of future performance review meet-
net survey, representing a 43 % response rate. The majority ings." "I agreed with my performance review result."
of the participants were female (70 %). The average age of (Alpha = 0.78).
the participants was 42 years, and the average tenure was We also collected information on age, gender, length of
13 years. service, and job position.
Measures
Results
The survey included measures of performance rating,
LMX, utility, justice, and performance appraisal satisfac-The results from survey respondent (N = 71) are summa-
tion. Except where otherwise noted, ratings used a five- rized in Table 1, which presents the means, standard
deviations, and correlations for the various measures.
point Likert-type scale ranging from 1 = strongly disagree
to 5 = strongly agree. (Entries on the main diagonal show alpha values for multi-
item scales.) For all variables, mean ratings were above the
Performance Rating scale midpoints, indicating that respondents were in gen-
eral more positive than not. As can be seen from Table 1,
Respondents were asked to report the rating they received inall of the correlations between variables were positive and
the most recent performance appraisal. Ratings used a five-
significant (p < 0.05), as would be expected from previous
point scale of: 1 = ineffective, 2 = developing, 3 = solid
research. The correlations between the four-independent
performance, 4 = high achievement, 5 = exceptional. variables and appraisal satisfaction variables ranged from
0.52, for performance rating, to 0.78, for organizational
Leader-Member Exchange justice. This set of significant positive correlations is gen-
erally consistent with our hypotheses. A more detailed test
LMX was measured using a seven-item scale (Graen andis described below.
Uhl-Bien 1995). Sample items included: "I know where I
stand with my supervisor". (Alpha = 0.91). Hierarchical Regression Analysis
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270 C. Dusterhoff et al.
B SE B ß B SE B ß B SE B ß B SE B ß B SE B ß
now additional
entered next, and increased R2 by an been well-established
15,(Erdogan
to and Liden 2006).
LMX has been reported
49 %. Again, the change in R2 was significant to influence both appraisal satis-
(p < 0.001),
factionsatisfaction
supporting the hypothesis that appraisal and perceived utility,
ismediated
a by voice, and justice
perceptions
positive function of LMX, when the effects of(Elicker
the et al. 2006). Sparr and Sonnentag
perfor-
(2008) reported
mance rating itself are controlled for. Testing that the relationship
Hypothesis 3, between perceived
perceived utility of the appraisal was justice
addedof performance
on the appraisals
next and job satisfaction was
fully mediated
step, and resulted in a further increase in R2 by LMX.
to Similarly,
65 %.Masterson et al. (2000)
Again, the increase was significant ( preported
< 0.001),that LMX mediated the relationship between
supporting
interactional
the hypothesis that appraisal satisfaction isjustice and job satisfaction, while Piccolo
a positive
function of the perceived utility of theet al.appraisal,
(2008) found that LMX moderated the effects of
beyond
the effects of the rating itself and the perceived justice on withdrawal.
relationship with the Erdogan (2002) proposed
a model in which
supervisor. As a test of Hypothesis 4, perceived pre-appraisal
justice was LMX and favorability of
entered on the final step, and increasedperformance
R2 by 6 ratings
%, positively
to 71 affect
%. justice perceptions
The significant increase (p < 0.001)
which supported the
in turn positively affect post-appraisal LMX and
hypothesis that appraisal satisfaction is various performance-related
a direct function outcomes.
of
organizational justice, independently What is less expected,
of the combined perhaps, is that the individual
relationships
effects of the rating itself, the relationship with conformed to a pattern consistent with a
the super-
visor, and the perceived utility of the hierarchical
appraisal. ordering of justice-relevant variables. Based
on Kohlberg' s (1969) theory of moral reasoning, and
informed by applications of the theory to organizations
Discussion (Reidenbach and Pobin 1991; Trevino 1986), we suggested
that a number of variables previously observed to correlate
with appraisal satisfaction might all be aspects of the single
In some respects, the results of this study are unsurprising.
The individual relationships observed here between per- construct of "moral justifiability". We proposed that, other
things being equal, a performance appraisal that is per-
formance appraisal satisfaction and the other factors have
ceived to be morally justified will be perceived as more
all been previously reported, as have interrelationships
among various combinations of the factors. For example,satisfactory than one that is not. From Kohlberg's per-
spective on moral cognitions, the performance rating itself,
the relationship between LMX and justice perceptions has
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A Moral Judgment Perspective 27 1
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272 C. Dusterhoff et al.
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A Moral Judgment Perspective 273
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