The Effects of Performance Appraisal on Employee Motivation and Organizational Commitment

Sammanfattning: In the past couple of years there has been a shift in the business world since a number of corporations have decided to scrap their rating systems and current, quantitatively focused, forms of performance reviews and instead adopt qualitative feedback systems. This shift has opened up for investigating potential differences between different types of performance appraisal systems and their subsequent effects on employees and the organization. This study therefore examines how different performance appraisal systems, building on qualitative or quantitative feedback, affect employee motivation and organizational commitment through perceived satisfaction alternatively dissatisfaction with the feedback and the feedback system. Employee motivation and organizational commitment are examined due to its direct link to employee performance and ultimately the performance of the organization. Thereby the study aims to identify how employee reactions towards different performance appraisal systems have potential different ultimate effects on employee and organizational performance. Employing a qualitative single-case study approach, at a management consulting organization, two types of feedback, qualitative and quantitative feedback, were investigated. Using an adapted version of Iqbal et al.'s (2014) integrated framework, with the measurement criteria of perceived accuracy, purposefulness, fairness, and the added criterion perceived understanding, the findings from the semi-structured interviews indicate differences in employee reactions between the two performance appraisal systems. The qualitative feedback system resulted in positive employee reactions towards the measurement criteria, thus creating both motivation and organizational commitment. The quantitative feedback system resulted in both positive and negative employee reactions. A low level of organizational commitment was one outcome, a result in line with preexisting theory. A second outcome of the employee reactions towards quantitative feedback was a high level of motivation, which is a result contradicting preexisting theory. This phenomenon could instead be explained, in this case study, by identity work theory. The findings fill the intended literature gap as well as shed light on adjacent topics and bring insights that problematize existing theory. Conclusions from these findings offer, in their turn, new insights and knowledge, which should be useful for both researchers and practitioners.