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Impact of Fairness of Performance Appraisal System on Employee Motivation

This presentation is about the impact of perceived fairness on the motivation of employees. There are two variables that I took to prove the hypothesis via a survey that grabbed data from about 100 respondents.

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Impact of Fairness of Performance Appraisal System on Employee Motivation

  1. 1. XLRI Jamshedpur
  2. 2. Introduction PMS (Performance Management System): Consists of aspects such as goal setting, communication of the goals, periodic feedback, competency development etc. Performance Appraisal System (PAS), a subset of PMS, is considered one of the most important aspects of PMS. Hence, we have focused on PAS. PAS: Typically the employee- engagement meeting.
  3. 3. Research & Hypothesis Our research focuses on one of the important aspects of PAS: perceived fairness of this system. Fair PAS is expected to happen when the employees’ ratings are commensurate with what they truly deserve. Hypothesis: Perceived fairness in PAS leads to motivation of employees.
  4. 4. Methodology Data collected by a survey questionnaire and was filled by PGDM (GM) batch of 2014-15 & ex-colleagues of the team members across organizations. A total of 99 respondents filled our survey. Perceived fairness of PAS was measured using questionnaire on a five-point scale ranging from 1 (very unfairly) to 5 (very fairly). Motivation was measured using set of 18 questions, using a scale ranging from 1 (does not correspond at all) to 7 (corresponds exactly).
  5. 5. Findings & Discussions As expected, we found a positive correlation between perceived fairness and “external regulation, identified regulation and integrated regulation” As expected, we found no correlation between the perceived fairness and “amotivation and intrinsic motivation “ Correlation between perceived fairness and introjected regulated form of extrinsic motivation was negligible.
  6. 6. Findings & Discussions continued....
  7. 7. Findings & Discussions continued....
  8. 8. Strengths & Limitations Strengths : Questionnaire- High citations- Fairness- 213, motivation- 79. We have explored 5 different kinds of motivation: intrinsic motivation, integrated regulation, identified regulation, external regulation and introjected regulation. We surveyed employees from TCS, Siemens, Steria, Ericsson, Schenider and Oracle. The respondents of the survey have had an average of at least 5 years of work experience. Therefore, their responses would not be affected by a single PAS. This research is applicable to almost all the industries globally. Limitations : The questionnaires for perceived fairness and motivation have different scales. Due to this, it was challenging to jumble the questions across input and output variables. Because of different scales, the regression analysis could not be carried out on the sample data.
  9. 9. Future Scope The research has focussed procedural justice. The impact of distributive justice and interactional justice on employee motivation could be explored This research only focuses on PAS as it the most important aspect of PMS. However, employee motivation could be a function not only of the PAS but the entire PMS. Further research could take a deep-dive into these parameters in order to ascertain the relationship between these variables. The causality between perceived fairness of PAS and motivation can be better tested by conducting the survey twice: Sometime (4 weeks) before the PAS and say (4 weeks) after PAS.
  10. 10. Conclusion The study clearly shows that the perceived fairness of the PAS by the employee has a positive effect on his/her Identified Regulation and External Regulation type of extrinsic motivations. The most influenced motivation with the fairness of the PAS is the Identified regulation motivation - personal importance and conscious valuing. Results also conclude that other very strong significant extrinsic motivation is the External Regulation- any rules, regulations or orders. Amotivation & intrinsic motivation have a negligible correlation with fairness of PAS. In summary, perceived fairness of PAS is positively correlated with employee motivation.