Impact of performance appraisal justice on employee engagement: a study of Indian professionals
| Pages | 61-78 |
| DOI | https://doi.org/10.1108/01425451311279410 |
| Published date | 09 November 2012 |
| Date | 09 November 2012 |
| Author | Vishal Gupta,Sushil Kumar |
| Subject Matter | HR & organizational behaviour |
Impact of performance appraisal
justice on employee engagement:
a study of Indian professionals
Vishal Gupta and Sushil Kumar
Human Resource Management Group,
Indian Institute of Management Lucknow, Lucknow, India
Abstract
Purpose – Performance appraisal is one of the most impo rtant human resource management
practices as it yields critical decisions integral to various human resource actions and outcomes.
The purpose of this paper is to explore the relationship between perceptions of perfo rmance appraisal
fairness and employee engagement in the Indian business context.
Design/methodology/approach – The study was conducted in two parts. The first part explored
the relationship between justice perceptions and a one-dimensional conceptualization of engagement.
The second part explored the relationship between justice perceptions and a three-dimensional
conceptualization of engagement. The relationships between justice perceptions and engagement were
analyzed using zero-order correlations and hierarchical regression analysis.
Findings – The study findings suggest a significant positive association between distributive and
informational justice dimensions and employee engagement. Distributive justice and informational
justice dimensions were found to have a stronger impact on employee engagement conceptualized as
antipode of burnout.
Research limitations/implications – The research was cross-sectional and so any inferences
regarding causality are limited. All responses on engagement and justice scales are from self-report
measures and it is likely that method variance inflated the relationships among these variables.
Practical implications – Psychometrically valid scales for performance appraisal justice and
engagement were developed and tests of relationships between them have been established. The study
suggests that distributive and informational justice perceptions during a perfor mance appraisal
session lead to enhanced engagement among employees.
Originality/value – The study tests the relationship between performance appraisal justice and
employee engagement in the Indian context. A significant positive relationship betwe en some
performance appraisal justice dimensions and engagement has been established. To the best of the
authors’ knowledge, such a study is the first of its kind undertaken in the Indian context.
Keywords Performance appraisal, Procedural justice, Distributive justice, Informational justice,
Employee engagement, Indian context, Performance management, India
Paper type Research p aper
Introduction
Performance appraisal (PA) is one of the most important human resource management
(HRM) practices in organizations as it yields critical decis ions integral to various
human resource actions and outcomes (Jawahar, 2007; Murphy and Cleveland, 1995;
Steensma and Visser, 2007). Implementation of PAsystems remains one of the greatest
challenges of effective HRM (Taylor et al., 1995). While a good PA system is expected
to provide valuable information to an employee about his/her performance and
progress at work, appra isal reliability and validity continue to remain a major concern
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0142-5455.htm
Employee Relations
Vol.35 No.1, 2013
pp. 61-78
rEmeraldGroup Publishing Limited
0142-5455
DOI 10.1108/01425451311279410
The authors gratefully acknowledge the helpful comments of anonymous reviewers on earlier
drafts of this manuscript.
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Performance
appraisal justice
for organizations and also PAs are often met with substantial resistance (Banks and
Murphy, 1985; Cleveland et al., 1989; Taylor et al., 1995).
PA has broad implications for attitudes and behaviors in organizations (Erdogan,
2002). Reactions to appraisal and the appraisal process are believed to significantly
influence the effectiveness and the overall viability of appraisal systems ( Jawahar,
2007). Of late, employee engagement has received increased attention from researchers
as an important determinant of employee perfo rmance (Gruman and Saks, 2011). The
construct has become popular among consulting firms and has be en found to
positively influence an individual performance as well as organizational p erformance,
productivity, retention, financial performance and even shareholder return (e.g. Bates,
2004; Baumruk, 2004; Gruman and Saks, 2011; Harter et al., 2002; Richman, 2006;
Rich et al., 2010; Robinson, 2006; Welbourne, 2007). Given the importance of employee
engagement to organizations, a key issue is how to promote the engagement of
employees (May et al., 2004). As has been explained in the next section, engagement
researchers (e.g. Kahn, 1990; Hallberg and Schaufeli, 2006) contend that
engagement is conceptually distinct from traditional variables like commitment,
motivation and therefore the factors that produce engagement may be different from
those that produce these variables (Macey and Schneider, 2008).
The notion of “fairness” has been identified as one of the most impor tant aspects of
employees’ responses to PA sessions (Bretz et al., 1992; Erdogan, 2002). Perceptions
of PA justice can lead to satisfaction with performance ratings, PA system, rater and
appraisal feedback (Cawley et al., 1998; Jawahar, 2007; Korsgaard and Roberson, 1995;
Thurston and McNall, 2010) and to individuals’ feelings of instrumental control over
the appraisal process thereby enha ncing their sense of psychological safety, self-worth
and group standing (Kahn, 1990; Taylor et al., 1995). Little is known about the potential
impact of PA justice on employee engagement (Moliner et al., 2008) and presents
a significant research gap in justice, performance management and engagem ent
literatures. Though there exist few studies that have explored the imp act of justice
perceptions on employee engagement, most of these have been conducted in a
developed economy context. The focus of the present study is to test the impact of PA
justice on employee engagement in India, an emerging economy.
With the liberalization of the Indian economy and opening of its markets to foreign
firms, India has become an extremely important contributo r to the world economy and
the global order. According to a World Bank report, it is likely that by 2025 emerging
economies – such as Brazil, China, India, Indonesia and the Russian Federation – will
be major contributors to global growth, alongside the advanced economies (World
Bank, 2011). During the past two decades India has increased its share of global GDP
from 3 to 7 percent (Harris, 2005; Olarreaga et al., 2007). Indian and multin ational
corporations based in India are playing an increasingly prominent role in global
business and cross-border investment. The best Indian companies like the Tata Group,
Bharti Airtel, ArcelorMittal and Infosys have become global competitors even
expanding abroad through numerous acquisitions. India is currently the tenth largest
economy in terms of GDP and one of the world’s largest trading economy (Olarreaga
et al., 2007).
Along with its strong economic potent ial, India is distinct from other countries in
terms of its culture (high-power distance, strong long-ter m orientation, low uncertainty
avoidance, medium collectivist orientation and medium masculinity) (Hofstede, 2001).
People’s perceptions of fairness in organizations requires considering the prevailing
cultural standards in which those organizations operate. Markus and Kitayama (1991)
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