Journal of APJ)lltd Psyd)olQly Copyright 1990 by the Ame~ PsycholosiClll Asaoeialiocl, In<:.

1990. Vol. 75. "No. 4, 3'1-377 0021.9010/90/$00.7 s

Employee Reactions to Contextual and Session Components

of Performance Appraisal
William F. Giles and Kevin W Mossholder
Department of Management, Auburn University

A neglected area of performance appraisal research concerns the context within which the ap-
praisal process oc.curs. For a sample of exempt employees, measures were developed that assessed
system components of the appraisal context. The contribution of these variables (complexity, im-
plementation, and follow-up) to the prediction of 2 measures of employee reactions to performance
appraisal (review session satisfaction and appraisal system satisfaction) was compared with the
contribution of a more frequently studied set of variables-supervisory behaviors in the review
session. The relationship of a salary linkage variable to the 2 outcome criteria also was assessed.
The supervisory session variables were related to session satisfaction, and the system contextual
variables were primarily related to system satisfaction. Salary linlc.age was associated with system
satisfaction.

Performance appraisal research has concentrated on a num-
ber ofareas, for instance, the appraisal instrument, counseling
and development of appraisees, rater training programs, and
cognitive processes (see Banks & Murphy, 1985; Napier &
Latham, 1986). In terms of the adoption of performance ap-
praisal innovations by organizations, the impact of this re-
search has been relatively limited in proportiQn to the amount
of effort expended (Banks & Murphy, 1985). In comparison to
other performance appraisal topics, the context in which perfor-
mance appraisal is conducted has received only limited study.
This is particularly interesting because the environment in
which the performance appraisal process occurs has been desig-
nated as a source of considerable influence on the appraisal
process (Ilgen & Feldman, 1983; Landy & Farr, J980; Lawter,
Mohrman, & Resnick, 1984; Mohrman & Lawler, 1981; Zam-
muto, London, & Rowland, 1982).
As Carroll andSchneier(l982, p. 6) noted, a variety ofcontex-
tual characteristics may influence performance appraisal.
Landy and Farr (1980) designated as contextual factors those
that are not explicitly related to the nature of the rater, ratee, or
rating instrument but that may be considered part of the con-
text in which the rating occurs. Their process model of perfor-
mance rating contains three contextual components: rating
purpose, organization characteristics, and position characteris-
tics. Mohrman and Lawler (1981) specified as contextual such
factors as the job characteristics and functional areas of ap-
praisees, the nature of interpersonal relationships, and the
structure, climate, and culture of the organization.
A few studies have examined the potential impact of such
contextual variables within the performance appraisal process.
Svetlik, Prien, and Barrett (1964) found that job difficulty was
We thank Mick Mount and Mike Buckley for their helpful com-
ments on an earlier draft of this article.
Correspondence concerning thisanicle should be addressed to Wil-
liam F. Giles, Depanment of Management, Auburn University, Au·
burn Universit); Alabama 36849.
371
weakly but positively associated with ratings of job competence
but was not related to an overall performance rating. Bernardin
and Beatty (1984, pp. 268-270) described a measure, labeled
"'trust in the appraisal process," that assessed employees' per-
ceptions of the accuracy and fairness in the assessment of their
performance. In a field investigation, Bernardin and Beatty
found that lack of trust in the appraisal process was associated
with inflated appraisal ratings. Cleveland, Murphy, and Wil-
liams (1989) developed performance appraisal usage factors
and studied the linkages between these factors and organiza-
tional structure constructs.
Of the three contextual componems specified in Landy and
Farr's (J 980) model, rating purpose has received more sustained
research attention (e.g, Dobbins, Cardy, & Truxillo, 1988; Farb
& Werbel, 1986) than organization or position characteristics.
Researchers may perceive rating purpose as more tilceJy to af-
fect appraisal outcomes than the other two types ofcontextual
variables, which are only distally linked to performance ap-
praisal. Cleveland et al.'s (1989) results support the notion that it
is difficult to link conceptually distant contextual variables
directly with appraisal outcomes. Specifically, of 40 possible
com:lations between 10 organizational characteristics (e.g., cen-
tralization, size) and four performance appraisal uses, they
found only 4 that reached significance at the .05 level.
A class of contextual variables that appears more likely than
organization and position characteristics to affect appraisal
outcomes has been suggested by recent research. In a study
involving both manager and employee samples, Mount (1983)
factor analyzed items pertaining to various aspects of the ap-
praisal process (e.g., review session, instrument, system). In ad-
dition to factors generally dealing with characteristics of the
appraisal instrument and general satisfaction, he derived fac-
tors labeled Company Policy/Procedures and Communication
of the Program for the employee sample, and Company Policy,
Appraisal Procedures, and Communication of the Program for
the managerial sample. Unfortunately, Mount did not examine
potential correlations between these factors and appraisal out-
372 WILLIAM F. GILES AND KEVIN W MOSSHOLDER
comes. In another stu~ Mount (1984) did investigate relation-
ships between appraisal system characteristics (in addition to
other appraisal-related variables) and reactions to appraisal,
but the use of single-item measures for the independent and
dependent variables limits the usefulness of his results.
Mount's (1983, 1984) research is pertinent to the present
study because it introduced a potentially important class of
contextual variables for performance appraisal research. A con-
textual component encompassing system characteristics offers
a conceptual midpoint between assessment of macro-level orga-
nization characteristics (e.g., size and structure) and micro-level
features of the performance appraisal process (i.e., rater, ratce,
instrument). It is surprising that researchers interested in con-
1extual variables have typically no1 considered characteristics
of the appraisal system per se (hereinafter referred to as system
comextual variables) because system characteristics establish
the immediate framework within which appraisal sessions oc-
cur, evaluations are given, and appraisal information is pro-
cessed. Therefore, from an applied perspective, system contex-
tual variables ought to have a greater effect on appraisal out-
comes than contextual variables having no inherent connection
with the appraisal process (e.g., organization size, decentraliza-
tion, job difficulty).
The present study had three interrelated purposes. Because
of the scarcity of specific empirical studies pertaining to sys-
tem contextual variables (Mount, 1983), the first purpose was
to extend the development of measures that assess system con-
textual aspects of performance appraisal. Consequently, the do-
main within which pertinent items were written was framed in
terms ofsystemic features of performance appraisal. When for-
mulating such items, we emphasized appraisal problems result-
ing from the situation in which an appraisal system is used
(Carroll & Schneier.1982, pp. 18-20). For example, items were
developed to reflect situations in which there is a failure to
develop or apply policies reinforcing the basic importance of
the appraisal system to the organization. Factors involved in the
design and implementation of appraisal systems (e.g., orienui-
tion, monitoring, and evaluation) also were considered (Carroll
& Schneier, I 982, pp. 217-248; Mohrman & Lawler, 198 J).
To further aid in domain definition, we conducted a prelimi-
nary survey with open-ended questions pertaining to the aP-
praisal process. Feedback from this survey helped us target the
specific system contextual characteristics perceived by employ-
ees as relevant. Subsequently, items were written that pertained
to specific system aspects of the appraisal process, for ex.ample,
introduction, training, uses (e.g., promotion and training deci-
sions), time demands, complexity, and management support.
A second purpose of this study was to investigate the rela-
tionships between system contextual variables and employees'
reactions to performance appraisal. Reaction measures were
used as dependent variables because they typically indicate
overall appraisal system viability better than more narrow psy-
chometric indices, such as leniency, halo, and discriminability
(Bernardin & Beatty, 1984, pp. 179-183). Moreover, regardless
of its psychometric soundness, an appraisal system wiJI ulti-
mately be unsuccessful if it is not accepted and supported by its
users (Carroll & Schneier, 1982, p. 218).
Although several types of dependent variables (e.g, perceived
utility, fairness, accuracy, improvement) have been used to as-
sess individuals' reactions to various performance appraisal
variables, the one most frequently used appears to be satisfac-
tion (e.g. Dorfman, Stephan, & Loveland, J986; Mount, 1984;
Nemerotf & WexJey, J979; Prince & Lawler, 1986; Russell &
Goode, 1988; Silverman & Wexley, 1984). One advantage of
using satisfaction as a measure of individual reactions is that it
appears to assess both fairness cognitions and simple affect
(Organ, 1988), thus affording a broader indicator of individ-
uals' reaction to appraisal than more specific, cognitively ori-
ented criteria (e.g, perceived utility).
The third purpose of this study was to assess the extent to
which system conte1'tual variables, as compared with supervi-
sory session variables, were related to employee satisfaction
with appraisal. Supervisory session variables are those behav-
iors exhibited by the supervisor in the review session. These
variables were used for comparison purposes because previous
research assessing employee reactions to performance ap-
praisal components has focused considerable attention on char-
acteristics of the appraisal discussion while neglecting charac-
teristics of the appraisal system (Mount, 1983}. These studies
indicated that certain supervisory session variables-goal set-
ting, encouragement of employee participation, and supervi-
sory support or criticism-are consistently related to employee
reactions (see Cederblom, 1982, for a review of research in these
areas). Responses to our preliminary survey suggested that an-
other session-related variable-salary linkage-should be con-
sidered as well.
Because satisfaction criteria needed to be appropriate for the
two sets of independent variables (supervisory session and sys-
tem contextual), satisfaction with the review session and satis-
faction with the appraisal system were used as dependent vari-
ables. Each has been used in past research (e.g., Prince &
Lawler, 1986), but much Jess attention has been focused on
satisfaction with the appraisal system (Mount, 1984). This
omission is potentially serious because the review session is
only one component of the overall appraisal system. Moreover,
the perceptions that employees bave of the overall performance
appraisal system, regardless of the system's specific features,
will have much to do with its success (Mohrman & Lawler,
1981).
Because goal setting, participation.and support or criticism
have been clearly shown to be related to employee satisfaction
with the review session, we included them in this study to deter-
mine whether system contextual and supervisory session vari-
ables would exhibit different relationships with appraisal sys-
tem satisfaction and session satisfaction. We hypothesized that
supervisory session variables would correlate more strongly
with employee session satisfaction than would system contex-
tual variables. This is logical because a supervisor's review ses-
sion behaviors ought to more directly affect subordinates' satis-
faction with review sessions. In contrast, we expected system
contextual variables to correlate more strongly with appr.tisal
system satisfaction than would supervisory session variables.
The context in which perfunnance appraisal is conducted per-
meates the whole appraisal process, whereas the review session
constitutes only a portion of the total system.
 CONTEXTUAL AND SESSION COMPONENTS OF APPRAISAL
Method
Subjects
The original subject pool consisted of 510 exempt employees from a
national textile company. Data werccol.lected from multiple geographi-
cal locations. Ofthese employees, I02 were used as subjects in the main
data analyses. In this subsample, 95% of the employees were men, their
average tenure with the company was 8. I years, and their mean age was
39.5 years. Eighty-three percent had obtained a bachelor's degree or
more advanced academic credentials. Subjects held lower and midlevel
management positions. The functional area most heavily represented
was production management (n == 53); other areas (e.g., finance/ac-
counting, personnel, industrial engineering) were represented to a
lesser extent
Procedure
We first developed a preliminary open-ended survey, which was dis-
tributed to a random sample of200 employees. Of these, 122 returned
usablequestionnairesfor a return rateof61 %. Questions on this prelim-
inary form asked employees to describe what they perceived to be the
major positive aspects, limitations, and needed improvements of the
performance appraisal system. The company had implemented a cor-
porate-wide performan<:e appraisal system approximately 2 years be.
fore the data in this study were collected.
For the final questionnaire, items pertaining to contextual issues
were based on appraisal systems considerations (Carroll &. Schneier.
1982; Mohrman & Lawler, 1981) and feedback from the preliminary
survey. Items concerning supervisory session behaviors were based on
pertinent measures used in past research on appraisal sessions (Burke,
Weitzel, & Weir, 1978; Dorfman et al~ 1986; Greller, 1978; Nemeroff&
Wellley, 1979; Prince &. Lawler, 1986) and feedback from the prelimi-
nary survey.
The final questionnaire was sent to 805 exempt employees through
the company mail; 510 surveys containing complete or partial data on
items measuring the study variables were received, a return rateof63%.
From this sample, 102 employees met the following two criteria: ta)
They provided complete data on the study variables, and (b) they had
participated in at least one performance appraisal review in the role of
a
a subordinate and none in the role of supervisor. We used the latter
criterion because the focus of this study was on employee (not supervi·
so1' reactions to performance appraisal factors. We felt that it might be
difficult for an employee who bad participated in appraisal sessions as
both an appraiser and an appraisee to resJ>Ond to the questionnaire
solely from the ~ive of an appraisee, even if instructed to do so.
Measures
Employees used a 6-J>Oint Likertscale ranging from strongly disagree
to strongly agree to resJ>Ond to the items. The factors derived from
these items were scaled so that higher scores represented greater per-
ceived presence of a factor.
The questionnaire was divided into two sections with separate in-
structions requiring resJ>Ondents to answer the questions from differ-
ent perspectives. In the first section, which primarily contained items
penaining to system aspects of performance appraisal, respondents
were simply asked to indicate their extent of agreement or disagree-
ment with each item. In the second section, which generally contained
items pertaining to supervisors' review session behaviors, resJ>Ondents
were instructed (a) to answer these items only if they had participated
as an appraisee in at least one appraisal session and (b) to respond to
items pertaining to the review session in terms of the last session in
which they had participated in the role of a subordinate.
373
From a factor analysis (principal axes with varim.ax rotation) of22
relevant items in the first section of the questionnaire, four factors
were extracted: Fuoctionality, Complexity, Implementation, and Fol-
low-Up. Of the original sample of S I0 questionnaires, all those with
complete data on the 22 ,items (n = 3 l 8) were used in the factor analysis.
The Functionality factor contained seven items (e.g., "The performance
appraisal system helps an employee and his/her manager to recognize
a.nd discuss the employee'sstrong and weak areas;; alpha was.89. The
Complexity factor contained four items (e.g., "The performance ap-
praisal system is too complex for the average salaried employee to
understand"); alpha was .83. The Implementation factor contained
four items (e.g., "The meetings and training sessions which were used to
introduce the performance appraisal system were not very effective"
(reverse scored}); alpha was.73. The Follow-Up factor contained three
items {e.g., "The performance appraisal system needs to be monitored
better to be sure that supervisors discuss appraisals with their subordi-
nates" (reverse scored)); alpha was .68.
The system contextual factor of Functionality was not used in subS(>
quent analyses because it appeared to be operating as a surrogate sys-
tem satisfaction measure. Support for this interpretation comes from a
number ofsources. First, although the concepts of utility and satisfac-
tion are conceptually distinct. they may be so closely linked in daily
job experiences and subsequent perceptions that clear distinctions are
not made between them. The high correlation between Functionality
and system satisfaction (r = .73) supports this notion. Second, unlike
the other system contextual factors {Complexity, lmplementation, and
Follow-Up), the Functionality factor did not focus on a specific system
facet; rather, it pertained to the utility of performance appraisal in
relation to a large number ofsupervisory functions (e.g., training, coun-
seling, communication, development of employee potential). Third,
utility has been used as a dependent variable, along with appraisal
satisfaction measures, in a number of studies (Greller, 1978; Prince &
Lawler, 1986; Silverman & Wexley, 1984), indicating that it may more
logically be regarded as a genera] outcome variable than as a specific
system contextual variable. Fourth, Mount (1983) found a general Satis-
faction factor in his factor analysis of appraisal items, suggesting that
the presence of a general factor may be a recurring phenomenon.
From a factor analysis (principal axes with varimax rotation) of 17
relevant items in the second section of the questionnaire, four factors
were extracted: Participation. Goal Setting, Criticism, and Salary Link-
age. Of the original sample of 510 questionnaires, an those with com-
plete data on thel7 items(n ~ 373)wercuscd in the factor analysis. The
Participation factor contained four items (e.g., "In the most recent per-
formance appraisal session, the supervisor invited my participation");
alpha was .82. The Goal Setting factor contained four items (e.g., "After
my last performance appraisal session. there was no doubt in my mind
as to what goals I should accomplish"); alpha was .75. The Criticism
footor contained five items (e.g., "The supervisor was quite critical of
my performance in the last appraisal session;; alpha was .69. The
Salary Linkage factor contained two items (e.g. "In the appraisal ses-
sion, my supervisor discussed how my salary adjustment is aifeaed by
my appraisal'1; alpha was .64.
Because no general factor emerged, all four factors were used in later
analyses. Moreover, the Participation, Goal Setting, and Criticism fac-
tors corresJ>Onded quite closely to those that Cederblom (1982) identi-
fied as the three major process factors in the review session.
The Complexity, Implementation, and Follow-Up factors contained
only items pertaining to system contextual aspects of performarn:e
appraisal and were therefore labeled system contextual factors. Like-
wise, the Participation, Goal Setting, and Criticism factors contained
only items pertaining to supervisory bebavio~ in the appraisal session
and were therefore categorized as supervisory session factors. The two-
item Salary Linkage factor contained one supervisory session item
374 WILLIAM F. GILES AND KEVIN W. MOSSHOLDER
(previously listed) and one system contextual item (''My salary adjust-
ments have been closely linked to the appraisals l have received"). The
latter item was included in the second rather than the first section of
the questionnaire because it was one of a few contextual items that
called for a response solely from an appraisee~ perspective. Respon-
dents were instructed to answer items in the second section from an
appraisee's point of view.
We developed five other measures for this s~ Session and system
satisfaction were used as criteria, and job satisfaction, satisfaction with
supervisor, and last appraisal rating served as controls. The Session
Satisfaction measure contained three items (e.g., ul felt quite satisfied
with my last appraisal scssionj; alpha was .89. The system satisfaction
measure contained three items(e.g., ~in general, I feel the company has
an excellent periOnnance appraisal system"); alpha was .81. The job
satisfa1.tion measure contained three items (e.g., "I'am quite satisfied
with my job"); alpha was. 78. The supervisor satisfaction measure con-
tained four items (e.g., "My supervisor is a very competent person");
alpha was .79. Performance appraisal data from each employee's last
review were gathered from personnel files. The company used a perfor-
mance appraisal form on which employees were rated (on a 9-point
scale) on up to 20 job dimensions. A global performance rating was
derived for each employee by computing the mean of the supervisor's
performance ratings on those job dimensions judged by the supervisor
as relevant to the employee~ job.
Scores for the other 11 measures (system contextual, supervisory
session, salary linJcaae, and satisfaction variables) were obtained by
computing the mean of items constituting each measure.
Design and Analysis
The system contextual, supervisory session, and salary linkage fac-
tors were used as independent variables in two multiple regression
analyses, one with session satisfaction serving as the dependent vari-
able and the other with system satisfaction in this role. Job satisfaction,
satisfaction with supervisor, and the global performance rating served
as control variables in both analyses. The contributions of the seven
independent variables to session satisfaction and system satisfaction
were determined only after the contributions made by the three control
variables were: assessed. This procedure minimized the possibility that
the system contextual, supervisory session, and salary linkage vari-
ables were simply serving as surrogates of more global attitudes.
Job satisfaction was used to control for variations in system or ses-
sion satisfaction that might be due to an employee's overall job satisfac-
tion, because it is possible for an individuals overall reaction to affect
his or her reactions to specific satisfaction facets (Mount, 1984). The
most recent appraisal ratings were used bc<::ause an employee's rating
may have an overriding effect on his or her reactions to the appraisal
session or system (Dorfman et al, 1986; Russell & Goode, 1988). Fi-
nal!~ supervisor satisfaction was used because there is evidence that
session satisfaction is influenced by this variable (Russell & Goode,
1988).
Results
Means, standard deviations, and an intcrcorrelation matrix
of the variables are shown in Tuble 1. The average intercorrela·
tion among the 10 independent variables was .27. There were a
number of relatively high intercorrelations between system con-
textual and supervisory session variables. This is not surprising
because various performance appraisal process models have
posited conne.ctions between the context of appraisal and the
review session (Carroll & Schneier, 1982, p. 218; Decotiis &
Petit, 1978; Landy & Farr, 1980; Mohrman & Lawler, 1981 ).
The correlation between session satisfaction and system satis-
faction was .56. Dipboye and de Pontbriand (1981), Mount
(1984), and RusselJ and Goode (1988) obtained conelations
between these variables of .74, .56, and .21 , respectively.
Simple c.orrelations between each of the supervisory session,
system contextual, and salary linkage variables and each of the
two dependent variables were significant (p <.OJ); criticism
and complexity were negatively correlated with the dependent
variables. The most recent performance appraisal rating did
not correlate with any of the other 11 variables. Previous re-
searchers have obtained differing results regarding the influ-
ence of prior performance ratings on employee reactions to
various appraisal-related dimensions (see Dorfman et al., I 986;
Landy & Farr, 1980; Russell & Goode, 1988). An element con-
tributing to these differences may be the extent to which ratings
are communicated to employees, either verbally or in terms of
pay increases and promotions.
The results of the hierarchical regression analyses are pre-
sented in Table 2. The three control variables were entered as
the first set of variables and the supervisory session, system
contextual, and salary linkage variables were added as the sec-
ond set. Within each of these two sets, individual variables were
entered according to stepwise criteria.
For session satisfaction, the three control variables contrib-
uted an initial R 2 of .46, and the remaining seven variables
contributed an incremental R 2 of.31 (final R 2 =. 77). All super-
visory session variables and one system contextual variable (fol-
low-up) were related to session satisfaction.
For system satisfaction, the three control variables contrib-
uted an initial R 2 of .23, and the remaining seven variables
contributed an additional R2 of. 34 toward the cumulative R2 of
.'57. Two system contextual variables (complexity and imple-
mentation) and the salary Jinkagc variable correlated with
system satisfaction, but none of the supervisory session vari-
ables did.
To test the hypothesis that, as a set, supervisory session vari-
ables were more related to session satisfaction th.an were the
. system contextual variables, we entered each set ofindependent
variables in a regression equation (with session satisfaction as
the dependent variable) after the control variables and other set
of independent variables were entered. When the supervisory
session set was entered last, its incremental R1 was .12 (p <
.001 ). When the set ofsystem contextual variables was entered
last, its incremental R 2 was .04 ( p < .0 I). It thus appears that the
supervisory session variables, as a set, were more related to
session satisfaction than were the system contextual variables.
To determine if the set of system contextual variables was
more related to system satisfaction than was the supervisory
session set, we performed asimilar analysis with system satisfac-
tion as the dependent variable. When the set ofsystem contex-
tual variables was entered last, its in<:remeotal R 2 was .14 ( p <
.00 I). When the supervisory session variable set was entered
last, its incremental R2 was .01 (nSJ. These results indicate that
the system contextual variatSles as a set correlated more
strongly with system satisfaction than did the supervisory ses-
sion variables.
Because session satisfaction and system satisfaction are both
reaction outcomes to performance appraisal, an auxiliary analy-
sis was performed to assess the influence of possible overlap
between these two criteria on the results reported in Table 2.
Specifically. for each regression equation involving a particular
 CONTEXTUAL AND SESSION COMPONENTS OF APPRAISAL 375

Table 1
Means, Standard Deviations. and lntercorrelation Matrix ofStudy Variables
Variable M SD 2 3 4 5 6 7 8 9 10 11 12

1. Participation 4.37 .95 -.45• .60• .23• .52• -. 15 .46• ,39• .19 .5 1* .74• .45•
2. Criticism 2.32 .62 -.47* .04 -.53* .21• -.46• - .20• - .04 -.40• - .59• -.36•
3. Goal setting 4.26 .91 .35* .so• -.21• .43• .40• .12 57• .75* .46•
4. Salary linkage 3.10 1.20 .23• -.09 .21• .13 .03 .16 .31 • .43•
5. Implementation 3.77 .96 -.32• .56* .37• .08 .30* .56* .55*
6. Complexity 3.32 1.09 -. 17 -.05 .04 .00 - .26• -.43•
7. Follow-up 3.52 1.13 .23• .07 .Jo• .62• ,31•
8. Job satisfaction 4.90 .92 .03 .17 .41* .45*
9. Performance 6.30 .86 .16 .11 .04
10. Satisfaction with supervisor 4.80 .81 .61* .26*
I I . Session satisfaction 4.28 1.08 .56•
12. System satisfaction 3.74 1.03

Nole. Ne 102.
• p < .05 (nondirectional).

dependent variable, the other dependent variable was entered
into the equation at the first step along with the three control
variables. In this manner, any common variance between the
two dependent variables would be partialcd out. Results from .
the auxiliary analysis are presented in Table 3. A comparison of
Tables 2 and 3 reveals only two changes from significance to
nonsignificance (or vice versa) for the beta weights and R 2 in-
crements. For system satisfaction, the beta weight for follow-up
changed from - .13 (nSJ to - . l 9 ( p < .05), and the incremental
R 2 for supervisor satisfaction changed from .03 ( p < .OS) to
.01 (ns).
Discussion
The results of this study suggest that additional attention
should be given to characteristics of the appraisal system in
Table 2
Hierarchical Regression Results for Session
and System Satisfaction
Session System
satisfaction satisfaction
future research on contextual influences in the performance
appraisal process. We identified three system-related contex-
tual measures, two of which (Complexity and Implementation)
correlated with employees' satisfaction with the appraisal sys-
tem. The remaining measure (Follow-Up) was related to session
satisfaction rather than to system satisfaction. The fact that
Follow-Up items referred to the session may account for I.his
result even though the focus of this measure was on whether or
not the session occurred (as opposed to what transpired in the
session).
As hypothesized, the set of system contextual variables was
more strongly related to employees' appraisal system satisfac-
tion than was the set of supervisory session variables. Con-
Table 3
Auxiliary Hierarchical Regression Results for
Session and System Satisfaction
Session System
satisfaction satisfaction
Variable p• llR 2 p• t.R2

Variable fJ• ~2 {J' 4R1 Control

System satisfaction .15• .17...
Control Session satisfaction .3 1* .31 ...
Job satisfaction .10 .09-• .27... .20••• Job satisfaction .06 .02• .24- .Q6••
Performance - .02 .00 .00 .00 Performance -.02 .00 .01 .oo
Supervisor satisfaction .19** .37*** .04 .03* Supervisor satisfaction .is•• .37••• -.02 .01
Supervisory session Supervisory session
Participation .30... .17*** .09 .00 Participation .29*** .06- .00 .00
Goal setting .23•• .04*** -.0 1 .00 Goal settin11. .23.. .03••• -.08 .oo
Criticism -.17* .01* -.13 .01 Criticism -.1s• .01• -.07 .00
Contextual System contextual
Complexity -.09 .01 -.29*** .11••• Complexity -.05 .00 -.26"* .w-•
Implementation - .07 .00 .24• .05•• Implementation - .10 .00 .26** .03*
Follow-up .21•• .08*.. - . 13 .01 Follow-up .23••• .12- -.19* .02
Salary linkage .08 .00 .33*•• .10••• Salary linkage .03 .00 .30*0 .01·-
Note. N - 102. The three control variables were entered on the first Note. N = 102. The control variables were entered on the first step. For
step. For session satisfaction, R 1 = .77, adjusted R 2 = .76. For system session satisfaction, R 2 = •79, adjusted R2 = .77. For system satisfaction,
satisfaction, R 2 = .57, adjusted R 2 = .Sl. R 2 . . .58, adjusted R1 = .53.
•Beta weights are controlled for all other variables. • Beta weights are controlled for all other variables.
*p< .OS. **p<.01. -p<.001. • p <.OS. •• p < .01. ••• p < .001.
376 WILLIAM F. GILES ANO KEVIN W. MOSSHOLDER
versely, the set of supervisory session variables (as compared
with the set of system contextual variables) correlated more
highly with employees' session satisfaction. The salary linkage
variable related to system satisfaction.
The finding that salary linkage was positively related to sys-
tem satisfaction is of particular interest. Traditionally, it has
been recommended that salary discussions be separated from
nonevaluative appraisal feedback because of the presumed neg-
ative repercussions (Meyer, Kay, & French, 1965; Sashkin,
1981). Recent research (Prince & Lawler, 1986), however, has
found no evidence that discussion of salary produces negative
consequences in relation to the review session. In fact, Prince
and Lawler (1986) found that discussion ofsalary had a positive
impact on employees' reactions to appraisal sessions under cer-
tain conditions. The present study extends these findings by
demonstrating that linking salary to performance appraisal
leads to higher employee satisfaction with the performance ap-
p1aisal system. This suggests that system credibility is likely to
erode if subordinates perceive that organizational reinforce-
mentS are not related to the appraisals they receive.
The salary linkage variable may have correlated with system
rather than session satisfaction because it primarily reflects the
fairness of outcomes, whereas the participation, goal setting,
and criticism variables reflect the fairness of procedures
(Greenberg, 1986). Most employees would probably hold their
supervisors responsible for using fair procedures in the review
session, but would probably perceive their salary adjustments
to be influenced by a number of factors (see Longenecker, Sims,
& Gioia, 1987; Mohrman & Lawler, 1981) in addition to their
supervisors' input (e.g., the organization's compensation proce-
dures, market pressures, opinions of higher level managers).
One potential limitation of this research is that all variables
(except performance) were assessed with the same question-
naire, raising the possibility that common method variance
may have affected the findings. Two points should be made
regarding this issue. First, the results for the system contextual,
supervisory session, and salary linkage variables were obtained
only after job satisfaction and satisfaction with supervisor were
entered into the regression models. To the extent that any com·
mon method variance was associated with either of these two
global measures, it would have been minimized in terms of its
influence on variables entered later in the models.
Second, a major purpose of the study was to determine the
relative degree to which supervisory session and system contex·
tual variables were related to session and system satisfaction.
By definition (see Campbell & Fiske, 1959), method variance
should similarly inflate relationships among all variables as-
sessed in the same questionnaire, so that the difference be--
tween relationships ought to be largely unaffecte.d.
These findings suggest that companies ought to use different
types of interventions depending on whether they want to im-
prove employees' satisfaction with performance appraisal ses-
sions or with the appraisal system. For the former, attention
should be directed toward eliciting certain types of managerial
behaviors in the appraisal session (i.e., more partfoipation and
goal setting, less criticism). For the latter, interventions targeted
primarily at the system level (e.g, appraisal system design, pol-
icy, and implementation) may offer more promise.
To provide an optimum context for performance appraisal in
terms of the variables examined in this study, organizations
might consider a number of possible interventions. In regard to
system complexity, it appears desirable to involve future users of
an appraisal system in its development. lt is likely that partici-
pants would consider "user·friendliness" issues (Wiersma &
Latham, 1986), knowing that they will have to Jive with the
system in the future. Employee participation in system develop-
ment would be particularly vital in organizational units judged
roost likely to perceive the system as overly complex (e.g., those
with educational levels below the average ofsystem users).
When implementing an appraisal system, organizations
should attend to raters' ability and willingness to give accurate
ratings (Banks & Murphy, 1985; Longenecker et al, 1987). To
improve appraisers' skills, training programs could cover a
range of appraiser-related behavior (e.g., skills in the appraisal
session) in addition to improving managers' capabilities to rate
employees accurately (Sashkin, 1981 ). Managers must be ap-
prised of the crucial role performance appraisal serves in rela·
tion to other organizational functions. Emphasizing top man-
agement's support ofthe appraisal program also ought to have a
positive influence on participant motivation (Beer, Rub, Daw-
son, McCaa, & Kavanagh, 1978).
Organizations need to monitor their appraisal systems to in-
sure that employees have review sessions with their managers at
specified times. Simply ltaving subordinates sign off on ap-
praisal forms to indicate that an appraisal session bas occurred
is not adequate because employees might feel pressured to do
so. Managers and subordinates might also be queried periodi-
cally about their appraisal session experiences (Carroll &
Schneier, 1982, p. 246; Sashkin, 198 I) to detect when subordi-
nates are either not receiving appraisal sessions or are receiving
ones that are ineffectual.
It is important that employees understand the connections
between their performances, appraisals, and salary adjust-
ments. These linkages, referred to by Greenberg (1986) as dis-
tributive justice factors, are often poorly articulated in organiza-
tions. Moreover, the role of other influential factors (e.g, labor
market pressures) on the salary adjustment process should be
made explicit (Mohrman & Lawler, 1981). Organizations also
ought to continuously monitor the relationship between perfor-
mance ratings and salary adjustments.
Research on system contextual variables needs to be per-
formed in other organizations to determine the generalizability
of the present findings. Moreover, as additional research is con-
ducted on contextual factors and knowledge of their possible
antecedents and oonsequences accumulates, path analytic tech-
niques can be used to investigate causal linkages. Another re-
search area could be the development of variables related to
specific aspects of the relationship between performance ap-
praisal and salary (e.g., historx organizational policy).
The results of this study mesh well with practicality issues
that have been raised in regard to performance appraisal re-
search (Banks & Murphy, 1985; Napier & Latham, 1986;
Wiersma & Latham, 1986). Organizations are more likely to be
capable of influencing system contextual variables than, for
example, raters' cognitive processes (see Banks & Murphy,
1985). Removirtg excessive complexity from appraisal systems,
properly introducing them into organizations, ensuring that su-
pervisors conduct appraisal sessions, and linking salary adjust-
 CONTEXTUAL AND SESSION COMPONENTS OF APPRAISAL
ments with appraisal results are all actions within most organi-
zations' capabilities. If such actions are neglected, it is likely
that the impact of the appraisal system will be substantially
reduced.
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Received October 3, 1988
Revision received November 21, 1989
Accepted December 22, 1989 •