Organizational Commitment and Fairness of Performance Appraisal - Literature review Example

Literature Review Name: University: Table of Contents Literature Review 1 Table of Contents 2 1.0 Introduction 3 2.0 Fairness of Performance Appraisal System 3 2.1 Organizational Commitment and Fairness of Performance Appraisal 4 2.2 Performance Satisfaction Intermediary Role 6 3.0 Performance appraisal system 6 3.1 Distributive justice 7 3.2 Procedural justice 8 3.3 Interactional justice 9 4.0 Employee’s satisfaction 9 4.1Trust and job satisfaction 10 5.0 Trust and organisational commitment 12 6.0 Summary 13 7.0 References 14 Literature Review 1.0 Introduction These days, nearly all organization whether in private or public sector, needs a performance appraisal system for examining workers’ performance. In addition, performance appraisal systems in work settings are used for numerous crucial developmental and administrative decisions, such as training, promotion as well as record keeping for legal reasons. Therefore, performance appraisal systems are acknowledged as a fundamental part of organizational functions such as human resource management. Literature in performance appraisal suggest that organizational fairness in processes of management can promote workers’ approval of and positive response to scores of decisions in the organization, which includes HR interventions’ decisions like performance appraisal. 2.0 Fairness of Performance Appraisal System According to Kaleem et al. (2013), all workers wish for fair dealing in performance appraisal, but perceptions of fairness concerning a range of performance appraisal components have extremely serious implications not just for workers, but as well for the organization. Thanks to the significance of performance appraisal fairness, it has now become a topic of study amongst researchers, especially in organizational psychology field (Ikramullah et al., 2011). With regard to performance appraisal, Ikramullah et al. (2011) outline variables relating to fairness, and they include: opportunity offered to the workers for expressing their appraisal associated feelings, well-informed supervisor, and rate of appraisal. As mentioned by Ikramullah et al. (2011), if workforce have a chance to alter their ratings or offered a right to approve or disapprove the ratings, then this will give rise to fair perceptions of performance appraisal. Equally, satisfaction of employees with diverse performance appraisal aspects, such as performance feedback and setting of performance targets are all associated with fairness of appraisal system. This argument is echoed by Lau et al. (2008) assertion that perceptions of performance appraisal system fairness by employees have considerable effect on the acceptance of performance appraisal rating, workers satisfaction with organizational commitment and process of performance appraisal. Scores of organizational researchers such as Kaleem et al. (2013) have used Organizational Justice to express fairness of performance appraisal. Organizational justice in work environments manages workers’ perceptions of fairness in diverse organizational outcomes and procedures. Organizational justice or fairness as mentioned by Ikramullah et al. (2011) originated from Adam’s equity theory. Fairness perceptions by employees rely on their views relating to the diverse outcomes of the organization (distributive justice), procedures utilised in making such decisions (procedural justice), how the organization handles them (interpersonal justice) in addition to all the needed information associated with various organizational outcomes (informational justice) (Ikramullah et al., 2011). 2.1 Organizational Commitment and Fairness of Performance Appraisal Scores of organizational commitment definitions as evidenced in Salleh et al. (2013) concentrate on behaviors related to commitment as well as attitude. Organizational commitment is the virtual strength of a person’s participation in and identification with a certain organization. According to Salleh et al. (2013), managers with strong organizational commitments are typified as possessing strong conviction in the organizational goals as well as values, eager to improve the efforts for organization wellbeing. This commitment paradigm is acknowledged as affective commitment in Lau et al. (2008) study, which describes the organizational commitment from the viewpoint of the workers’ attitude towards their employers. A different acknowledged definition is rooted in the organizational commitment model that has three dimensions, specifically normative, continuance and affective commitment. Salleh et al. (2013) as well shows how different authors use the term affective commitment to typify Porters’ perceptions of the construct. Their literature claims that organizational commitment is associated with the organizational events like citizenship behavior, productivity, as well as achievement. Lau et al. (2008) emphasizes that organizational commitment can have a positive effect on productivity since workers are determined to work hard. Committed employees as per Salleh et al. (2013) are more disciplined considering that they are always present at work and support values of the organisation. Employee performance appraisal is a crucial determinant of organizational justice. Even though scores of scholars argue about fairness category, Salleh et al. (2013) believes that there is a common agreement that organizational justice has no less than two components, that is procedural and distributive justice. As it will be later discussed in the literature review, procedural justice can briefly be defined as the perception of employees that procedures utilised in evaluating their performance is fair whereas distributive justice connotes that rewards received from utilization of such procedures are fair (Sudin, 2011; Kaleem et al., 2013). Literature review from Salleh et al. (2013) study confirms that fair HRM practices, especially on performance appraisal have an extrapolative responsibility in the workers’ attitude like commitment to the organization. Performance appraisal is for that reason seen as a crucial method for changing the behaviors and attitudes of workers like affective commitment. 2.2 Performance Satisfaction Intermediary Role Quite a few studies such as Salleh et al. (2013) and Lau et al. (2008) have exhibited performance appraisal effect on worker behavior and attitudes is based on satisfaction. Organizational justice elements as indicated by Salleh et al. (2013) are vital in envisaging the workers’ performance appraisal satisfaction as well as organizational commitment. They established that managers have power over the workers' perception towards the organizational justice so they controlled employees’ involvement, commitment and satisfaction within the organization. However, Lau et al. (2008) established that performance appraisal satisfaction is crucial in connecting fairness with the organizational commitment. Therefore, the relationship between organizational citizenship behavior as well as fairness in performance appraisal is intermediated by the satisfaction of the later (Salleh et al., 2013). 3.0 Performance appraisal system Performance appraisal according to Kaleem et al. (2013) entails evaluation of job performance where the perception captures a crucial part of its process devoid of stating the actual methods utilised for measurement. For appraisal system to become effective, Ikramullah et al. (2011) posit that they must be acknowledged as well as supported by workers. Performance appraisal can be defined as a process of recognizing, evaluating and developing employees within the organizations. Still, it can be defined as an evaluation and judgment of subordinate’s performance by the superior. Guiding and encouraging improved worker performance is the main purpose of performance appraisals. However, if employees perceive performance appraisals as unfair, then appraisal systems can lessen instead of improving worker attitudes as well as performance (Ikramullah et al., 2011; Kaleem et al., 2013). Precisely, procedural justice when perceived unfair can unfavorably have an effect on workers job satisfaction, commitment to the organization, performance, trust in management, as well as organizational citizenship behavior, writes Kaleem et al. (2013). Therefore, performance management and performance appraisal are two different things considering that the former is a continuous method of managing the business. Performance appraisal, on the other hand, stresses on the evaluation of a worker’s strengths as well as weakness, and does not embrace enduring and wide-ranging feedback that a worker can utilize someday to enhance his/her performance. According to Kaleem et al. (2013), in organizational performance appraisal cycle there are four activities, that is, performance definition, measurement as well as evaluation, feedback to the worker and outcome application in various systems of the organization. 3.1 Distributive justice According to Sudin (2011), distributive justice illustrates the results fairness as well as worker rewards. Salleh et al. (2013) see it as the concerns that workers have put across regarding the distribution of organizational resources as well as outcomes. So it is the person in the organization who decides on distribution fairness through evaluation with others. According to Kaleem et al. (2013), the worker is worried about the justice fairness aspect, and if what they receive in terms of salary levels, work schedules, workloads, and bonuses is fair. Distributive justice according to Sudin (2011) is concerned about worker satisfaction with the outcomes of their work, which may result in organizational productivity. Distributive justice perceptions by workers are rooted mostly in contrast with others, which are foreseeable in the place of work. For instance, work partners can compare their wages, and if the outcome of the comparison is positive, then they may feel optimistic towards the appraisal system. However, as mentioned by Kaleem et al. (2013) if the outcome is negative, the worker may perceive the appraisal system to be unfair; thus, disputing it. Systems wherein there is unfair distribution of resources can turn out to be somewhat vulnerable to rows, contempt, mistrust, in addition to other social challenges. 3.2 Procedural justice Procedural justice as per Sudin (2011) is the fairness of the procedures utilised in determining performance appraisal outcomes. According to Kaleem et al. (2013), procedural justice is the employee’s perception of fairness in the procedures utilised for making decisions of allocation. For that reason, it is autonomously associated with attitudes towards the organization as well as the decisions. These procedures must be reliable, fair and consider all parties’ concerns and be adequate normally. Procedural justice is mainly concerned with the equality of the method used by the organization in determining the outcomes. Procedural justice perceptions as per Kaleem et al. (2013) have constantly influenced a range of outcomes variables, but still fair procedures are inclined to instigate loyalty feelings to one’s group and team, decriminalize the leaders’ power, and assist in making certain voluntary observance to the rules. Generally, procedural justice in management of the organization has positive effect on a range of workers decision as well as several behavior and emotional reactions. Such effects of procedural justice consist of variables like satisfaction, trust, organizational commitment, observance to performance and decision. 3.3 Interactional justice According to Sudin (2011), interactional justice associates with the fairness of interpersonal communication associating with procedures of the organization. It concentrates on how the organization’s information was communicated and if people influenced by the organization decision were cared for with regard in a civil and polite manner. Ikramullah et al. (2011) assert that fairness in the organisation is the most vital feature of work setting that impacts the worker relationships and manager-employee relationships. In the organization processes as well as procedures, the worker’s perceptivity of fairness is believed to impact his/her relationship with senior staff, work mates, the organization, which as a result influence his/her work outcomes and behavior. Kaleem et al. (2013) argues that generating and handling fairness is significant for work organization for the reason that it impacts workers’ performance as well as attitudes. 4.0 Employee’s satisfaction All performance appraisals as mentioned by Kaleem et al. (2013) must be performed fairly wherein no favoritism takes place during the process of evaluation. The literature studies indicate that the far this evaluation issue is pursued is a concern since not all superiors or managers are appraising their employees fairly; from time to time it relies upon the existing relationship between them. Ikramullah et al. (2011) argued that performance appraisal must be performed without favoritism in order for the organization to achieve an actual and affective appraisal. These days, employees can just be satisfied with the process of performance appraisal if it accomplishes the fairness criteria. If there are unfairness feelings concerning the appraisal process and injustice take place during evaluations, then the performance appraisal will be unpromising. Therefore, by utilizing appraisal outcome the HR department can be able to appraise and do the essential tasks like preparing the employee promotion, succession plans, rewards, bonus, and the like. According to Lau et al. (2008), workers get satisfied with the appraisal outcomes when they trust their supervisor and perceive them supportive, especially in the field of skill development. Career development takes place during the session of appraisal, and when workers have the feeling that the time offered for expressing their perspectives is adequate, have chance to have a say on the outcome as well as satisfactory enlightenment of their ratings (Kaleem et al., 2013). Employee satisfaction with regard to performance appraisal has widely been measured, and in Sudin (2011) study it was largely conceptualized in three ways: satisfaction with the performance appraisal system, with the interview of performance appraisal, and with performance ratings. Sudin (2011) posits that it is essential to manage workers’ reactions toward evaluation of their performance considering that their reactions symbolize a measure of great significance to practitioners as well as the verity that their reactions have been related theoretically to determinants of appraisal success as well as acceptance. Both Sudin (2011) and Kaleem et al. (2013) agree that performance appraisals can positively impact job satisfaction, particularly when workers deem that the performance appraisal is following a proper criterion. 4.1Trust and job satisfaction Trusting superiors can probably to be associated with job satisfaction, and can have an effect on the confidence that workers have in their manager’s intentions and motives concerning issues pertinent to their status and careers within the organisation (Lau et al., 2008). If workers hold the view that the managers are probable to exploit the arising opportunities so as to advance employees interests, they will probably trust their superiors. This as mentioned by Lau et al. (2008) can result in more friendly working relationships that can consequently be related to increased job satisfaction. In addition, trust can be related to a working setting wherein communication between workers and their superiors is effective. In working environments with high trust, managers are more transparent and ready to keep their employees completely knowledgeable about issues that concern them. As a result, the employees will feel free to talk to their superiors about issues as well as challenges they experience to complete their tasks, with no fear of putting their careers at risk. This improved communication in the workplace can result in higher job satisfaction. On the contrary, in work environments with low trust, both the workers and their superiors are not free to talk about the organizational and personal issues. So managers may be less transparent and more secretive while the workers may find out that it might be reckless to be free to their superiors. This tense working relationship according to Lau et al. (2008) can result in low job satisfaction. Some of the negative emotional reactions that may lead to lower job satisfaction include negative mood and anger. Kaleem et al. (2013) examined attitudinal reactions to general job satisfaction and established that in an organisation with poor communication, unfairness in evaluation of performance, and where workers are not allowed to voice their views the level of job satisfaction is extremely lower. Bearing in mind that workers judge their state of affairs by contrasting them to the situation of others workers, and so if employees who get positive outcomes in performance appraisal, they may still be dissatisfied if other workers are well rewarded than him. Hence, lack of fairness may lead to distrust, and as a result, lower job satisfaction. 5.0 Trust and organisational commitment According to Lau et al. (2008), trusting superiors can be related to organisational commitment considering that management represents the organisations. Therefore, the workers are likely to judge their organisation through the managers supervising them. With regard to their organisational commitment analysis, literature in Lau et al. (2008) point out that organisational commitment seems to be mainly impacted by situational factors, like behaviors of the leaders as well as the level of leader communications. Therefore, if the negative or positive feelings are harbored by workers toward their managers, who are acting for the organisation, then the workers will most probably harbor same feelings toward their organisation (Lau et al., 2008). Therefore, it is evident that high trust level in the organization managers can probably convert into positive feelings towards the organisation. This can result in the workers becoming attached to the organisation, and so leading to, high organisational commitment. According to Ikramullah et al. (2011), affective commitment mirrors an emotional bonding to the engaging organisation, so it will take place just when the working setting is harmonious and conducive. In the literature of Lau et al. (2008), it was suggested that the degree of the employees' sense of comfort in their bond with the organisation can have an effect on the affective commitment. The workers comfort in the organization relationship, as a result, can be influenced by variables like whether the managers are interested to employees' ideas, whether there is fairness on performance appraisal, and cohesion existence between the workers and their superiors. According to Lau et al. (2008), these conditions can be established by the degree of interpersonal trust between employees and managers. Therefore, trusting the manager can be certainly related to organisational commitment. In the literature, they argue that workers with well-built affective commitment hang about for the reason that they desire to, those with well-built continuance commitment remain since they must, and those with well-built normative commitment remain because they believe they should do so (Lau et al., 2008). 6.0 Summary In summary, this literature review has analyzed the studies detailing the relationship between fairness of performance appraisal as perceived by employees as well as how it influences their reaction toward the appraisal system. A theoretical evaluation seems to point out that worker perceptivity towards fairness in addition to their reactions would on average have chain effect, which normally has an effect to the system’s benefits. Therefore, a detailed knowledge in the dynamic relationship of performance appraisal’s organizational justice is very important in promoting and allowing performance appraisal to be a useful method for both the employee and organization in realizing their goals. All studies reviewed concur that it is essential to set up a fair performance appraisal in the organization in order that workers can be punished or rewarded on account of their actual job performance, as opposed to employees likes or dislikes of the manager or other inappropriate criteria of assessment. Similarly, it is as well imperative that management offer complete concentration to workers’ fairness perceptions of performance appraisal so as to get users opinions concerning the appraisal system. In due course, this will assist the management in designing and putting into practice the appraisal system based on the needs of its users. Therefore, immediately a fair performance appraisal is established by the organization, the duty for its consistent and fair operation lies squarely on the shoulders of persons tasked with carrying out the appraisal process. 7.0 References Ikramullah, M., Shah, B., Hassan, F. S., Zaman, T., & Khan, H. (2011). Fairness Perceptions of Performance Appraisal System: An Empirical Study of Civil Servants in District Dera Ismail Khan, Pakistan. International Journal of Business and Social Science, 2(21), 92-100. Kaleem, M. M., Jabeen, B., & Twana, M. J. (2013). Organizational Justice in Performance Appraisal System: Impact on Employees Satisfaction and Work Performance. International Journal of Management & Organizational Studies, 2(2), 28-37. Lau, C. M., Wong, K. M., & Eggleton, I. R. (2008). Fairness of performance evaluation procedures and job satisfaction: the role of outcome-based and non-outcome-based effects. Accounting and Business Research, 38(2), 121-135. Salleh, M., Amin, A., Muda, S., & Halim3, M. A. (2013). Fairness of Performance Appraisal and Organizational Commitment. Asian Social Science, 9(2), 121-128. Sudin, S. (2011). Fairness of and satisfaction with performance appraisal process. Journal of Global Management , 2(1), 62-83. Read More