Asian J.

Management 5(1): January- March, 2014

ISSN- 0976- 495X www.anvpublication.org

RESEARCH ARTICLE

Examine Relationship between Employees Satisfaction on Performance

Appraisal System with Fairness of the System
Ms. Supriya Mahajan1*, Ms. Saloni Raheja2
1
M.Phil Research Scholar, Department of Management, Lovely Professional University, Phagwara
2
M.Phil Researcher, Department of Commerce, Lovely Professional University, Phagwara
*Corresponding Author E-mail: mahajansupi@gmail.com., saloni.rahejaa@gmail.com

ABSTRACT:
Performance Appraisal Systems one of the important component of human resource management. This component
also plays a very important role in the job satisfaction of employee. It is a system which is used to evaluate the
performance of an Employee in the organisation. This is the evaluation system on the basis of which employees salary
is increased or decreased, their promotion or demotion is done. The organisation may be some institution, company,
industry or any firm. This study completely based on the Performance Appraisal System. The main purpose of the
study is to measure satisfaction of Employee with Performance Appraisal System and to find out the relationship
between Employee satisfaction on Performance Appraisal System with Fairness of the system. The organisation in this
study is educational institutes of Jalandhar. The Employees in the study are the faculty members of the educational
institutes. A sample of 200 respondents is taken to conduct the study. Correlation technique is used to find out the
relationship between Employee satisfaction on Performance Appraisal System with Fairness of the system. The
findings show that maximum number of respondents (faculty members) is satisfied with their Performance Appraisal
System. The findings also revealed that there is a positive relationship between Employee satisfaction on Performance
Appraisal System with Fairness of the system. Some suggestions have been made on the basis of the findings of the
study.

KEY WORDS: Performance Appraisal System, Employee Satisfaction, Job Satisfaction, Fairness of the System

INTRODUCTION:
Performance Appraisal System plays a very important role
in the organisation. This is a system which is used to
evaluate the performance of an Employee in the
organisation. We hear the word evaluation in the case of
students when the faculty members evaluate their
performance on the basis of test, assignments, exams and
their participation in extra circular activities. That means a
faculty use so many criteria to evaluate the performance of
students in the class. Now in the organisation point of view
the Employees working in the organisation get promotion
demotion, Employee’s salary is decreased or increased on
what basis these things happens how the higher authority
know that which Employee of the organisation is best or
poor what system or criteria they follow that system is
called Performance Appraisal System.
Received on 09.12.2013 Modified on 25.12.2013
Accepted on 27.12.2013 © A&V Publication all right reserved
Asian J. Management 5(1): January–March, 2014 page 49-54
49
The system which is used to evaluate the performance of an
Employee in the organisation is called Performance
Appraisal System. Like in school a faculty member evaluate
the performance of a student through exams, assignments,
test etc. in the same way there are some methods of
Performance Appraisal System which are used in the
organisation to evaluate the performance of an Employee. It
depends upon the organisation which method they use to
evaluate the performance of an Employee. The organisation
is the not only a company it may be a factory an institution,
a firm.
Performance Appraisal System also plays a very important
role in the job satisfaction of Employee. If the Employee is
not satisfied with their Performance Appraisal System then
he or she may leave the organisation. Dissatisfaction occurs
with Performance Appraisal System when Employee feels
that there is something wrong in their evaluation system and
it is obvious when Employee is not satisfied with their
evaluation system they leave the job. The reason of leaving
is that on the basis of this evaluation system employees
salary is increased or decreased they get promotion or
 Asian J. Management 5(1): January- March, 2014

demotion, some increase in their incentives if these things an appraisal category, 4) better timing, and 5) better
are not properly done in the organisation then the Employee involving constituencies.
leaves their job. That means the evaluation system or
Performance Appraisal System of the organisation is not Saqib et al. (2012) wants to compare the performance
fair. appraisal practices undertaken in the government offices in
Pakistan with various methods of performance appraisal
When the Employee feels that they do their best in the job methods discussed in the contemporary academic research.
but they are not getting proper output that’s the reason of It is satisfactory to know that government offices in
dissatisfaction. When Employee feels that there is some Pakistan are applying some of the contemporary
partial behaviour done by the Rater (who evaluate the performance appraisal methods like Adjective Rating Scale,
performance) on the basis of religion, cast, gender etc. that Management by Objectives, and Narrative Method in a
is also the reason of dissatisfaction. When the Employee traditional way which reminds of the British colonial
feels that they are not getting proper feedback of their legacy.
performance from the rater that is also the one of the reason
of dissatisfaction. So it is very important for the Frieda Siaguru (2011) examined the current Performance
organisation that their appraisal system should be fair so Appraisal Systems of some private sector organizations in
Employees are satisfied with their job Papua New Guinea with the aim to provide a description of
the primary purposes of Performance Appraisal Systems,
Employee wants fair dealing in Performance Appraisal how these systems are implemented and, any difficulties
System which is an important component of organisation’s experienced in implementing the Performance Appraisal
Human resource management. Understanding Fairness in Systems. The findings of this study are important for at
performance appraisal practices is important for least two reasons. Firstly, it contributes to descriptive
organisation because it completely link with Employee’s information on performance appraisal, in non–western
job satisfaction and organisational commitment. developing countries and also provides an important
building block for further studies. Secondly, an
REVIEW OF LITERATURE: understanding of the current Performance Appraisal
Mahdieh Darezereshki (2013) Examine the role of Systems and their difficulties may provide some guidance
performance appraisal quality on one important human for human resource managers in developing new appraisal
resource management function that is job satisfaction. In systems and making appropriate improvements to current
this study performance appraisal quality is used as systems particularly, in the country’s context.
independent variable whereas job satisfaction is dependent
variable. By using data of 133 employees of multinational Ikramullah et al. (2011) wants to explore appraisees’/ratees’
companies of Malaysia employee experience of Fairness perceptions of Performance Appraisal System
performance appraisal were identified. To find out the (PAS) in the civil service of Pakistan and find out that that
relation between performance appraisal quality and job appraises’ perceive the system fair as diagnosed by four
satisfaction the tool which is used is regression analysis. factors of justice. Moreover, high interpersonal justice and
The result indicate that the employee with high quality distributive justice also revealed issues with the system.
performance appraisal experiences were more likely to be However, on few aspects of the system, appraises’ have
satisfied with their job. mentioned their neutral responses.

Mensah et.al (2012) focused on employees perceptions of
performance appraisal biases or Errors, and examined the
implications for developing and implementing an effective
appraisal system. The results of the study indicate that
employees perceive that the Performance Appraisal System
of the institution is affected by subjectivity, and is
influenced by some major Errors. The findings have serious
managerial implications for training, motivation and
provision of resources for effective performance appraisal.
Jack N. Kondrasuk (2012) Conducted research to ascertain
all problems that are occurring with present Performance
Appraisal Systems. A list of 76 performance appraisal
problems was reduced to 4 general categories and find out
that Performance Appraisal Systems are improved by
rectifying common shortcomings (e.g. reducing biases,
training those involved, using formats with research
substantiation). However, the most important changes
required 1) clarifying the goals of performance appraisal, 2)
focusing on both results and behaviour appraisals, 3) adding
Suhaimi Sudin (2011) explored employees' satisfaction
consist of satisfaction with the last performance appraisal
ratings, satisfaction toward supervisor in relation with
appraisal process and satisfaction toward the Performance
Appraisal System Relationships. The findings showed that
distributive and informational justice are significantly
related to satisfaction with the last appraisal ratings;
distributive, interpersonal and informational justice are
significantly related to satisfaction with supervision; and
distributive and informational justice are related to
satisfaction toward the Performance Appraisal System. It
also showed that distributive, interpersonal and
informational justices are related to overall employees'
satisfaction.
Sarminah Samad (2011) in his study wants to investigate
the relationship between independent variable i.e
Organisational commitment, Job satisfaction and
demographic variables with dependent variable employee’s

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 Asian J. Management 5(1): January- March, 2014

perception on performance appraisal. The result showed relationship between the independent variable (motivational
that organisational commitment, job satisfaction and motive and punishment motive) with dependent variable
demographic variables are the important factors in (employee turnover intention).
determining employee’s perception on performance
appraisal of managers in Malaysian commercial bank. Birte Asmu (2008) investigates how one of the crucial and
most delicate activities in performance appraisal interviews,
Selvarajan et al. (2011) examine the relationship between namely, giving critical feedback, is conducted. The results
performance appraisal characteristics (Performance indicate that there is an orientation to critical feedback as a
appraisal purpose, appraisal source and feedback richness) socially problematic action despite the institutional
and employee perception of appraisal accuracy and character of the talk.
appraisal Fairness in the Mexican context. Further this
study examine the relationship between perceived accuracy Doleh and Veir (2007) explore the attitudes of human
and perceived Fairness on appraisal satisfaction and resource managers working in the Jordanian private and
motivation to improve performance in the future and find public organizations towards the functions of their
out that multisource performance appraisal in the Mexican Performance Appraisal Systems, and to the ways in which
Context were positively related to perception of Performance Appraisal Systems are implemented. Major
distributive, procedural and interactive Fairness. It also find research findings of this empirical study include that
that performance appraisal from multisource in the Mexican Performance Appraisal Systems had a moderate impact on
Context were also negatively related to perceived accuracy the four functions of Performance Appraisal Systems.
of appraisal. This study also suggest that appraisal that are These functions were grouped as: (1) between-individuals
feedback rich are perceive as fact in terms of procedural and comparisons; (2) within-individuals comparisons; (3)
interactive justice dimensions by the Mexican employees. systems maintenance; and (4) documentation. The results of
the study revealed that private organizations’ performance
Shah et al. (2011) investigates Fairness perception of appraisal had significantly greater impact than their
Performance Appraisal System among supervisory counterparts in the public sector on promotion,
(appraisers/appraises) and non-supervisory (appraisees) in retention/termination, lay-offs, identifying individual
the civil service of Pakistan. The result indicate that there training needs, transfers and assignments. This study also
was significant difference of Fairness perception among indicated that performance appraisals were conducted once
supervisory and non-supervisory working in two public a year, and the appraise managers were primarily
sector department and supervisory employees perceive responsible for conducting performance appraisals.
system fairer as compared to non-supervisory employees.
Migiro (2011) appraise the Performance Appraisal System Chu (2002) proposed a comprehensive framework of
in the bank of Botswana. This study uses the qualitative performance appraisal including six categories, namely,
research design. Sample of the study was drawn from a appraisal purposes, appraisal personnel, appraisal criteria,
population of 417 employees working in all nine appraisal methods, appraisal timing and appraisal feedback.
departments of this bank. The result of the study indicates Jeffrey (2000) developed a conceptual framework for
that the system is used to identify employee for promotion examining employee’s reaction to performance monitoring.
and to decide salary reward. It was also found out that the The framework incorporates attitudinal and motivational
reward system does not show a positive reflection of effects of performance monitoring on monitored employees
performance system outcomes. and discuss effects of performance monitoring on
performance feedback and performance appraisal. The
Saeed et al. (2011) investigates the employee’s perception framework is used to organize a review of research
about the outcomes Performance Appraisal System and literature relevant to employee reactions to electronic and
identifies the factors which can harm the successful non-electronic performance monitoring. The article includes
implementation of performance appraisal and finds that the specific propositions for additional research and general
employees are aware about the useful outcomes of the directions for future research in performance monitoring.
performance appraisal but they lack knowledge in
implementing an effective performance appraisal. Jobber et.al (1993) confirmed that a large organisation tends
to adopt quantitative criteria; more formalized appraisal
Agbola et al. (2010) investigates the effectiveness of the methods and predetermined performance standards, while a
Performance Appraisal System of the Ghana public health small organisation is apt to use qualitative and informal
and find out that appraisal process ineffective and appraisal methods. Although these studies did not make
employees highly dissatisfied with the system. direct comparison between service and marketing
industries, their result can explain the fact that there is a
Ahmad et al. (2010) examines the effect of performance link between organisational characteristics and functions of
appraisal on employee turnover intention. This research Performance Appraisal System.
focuses on two elements or political motive influencing
employee turnover intention i.e. motivational motive and
punishment motive and conclude that there is a positive

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 Asian J. Management 5(1): January- March, 2014

Manning (1988) identify a variation to more common Research Design:

appraisal methods. The author suggests a self-evaluation Descriptive Research Design has been used to achieve the
component be added to the standard supervisor review. This objectives of the study.
is then compare and contrasted with the evaluation
completed by the supervisor. The results potentially lead the Sampling Size:
employee and supervisor to more meaningful discussion. For this study, 200 employees have been taken as the
He emphasize that this evaluation process always result in sample. The sample has been collected from four
an engaging discussion between the employee and manager. educational institutes. Here employees are the faculty
The author also suggest that an appraisal that does not members of the educational institutes.
include a meaningful discussion between the manager and
supervisor potentially crudes the usefulness and Sampling Technique:
effectiveness of the process. Convenience sampling technique has been used in this
study. Selection of faculty members and institutes is done
Evans (1987) states that it is essential to create work according to convenience sampling technique.
climate that is conductive to productive appraisal. This must
start at chief executive’s office and being transmitted RESULT AND DISCUSSION:
downward through the agency. It must include an appraisal This section contains the analysis of data collected during
system that is understood by all members of the the survey. Data is analysed by using MS-Excel and SPSS.
organisation, be linked to established job performance Data so collected is being interpreted as per the objectives
standards and used not to enhance only productivity of of the study.
organisation, but the individual employee as well.
The first objective of the study is to measure the satisfaction
NEED AND SCOPE OF THE STUDY: level of faculty members with Performance Appraisal
Fairness in Performance Appraisal System is very important System of their institutes.
for the organisation. If the system of the organisation is not
fair that means employee is not satisfied with their appraisal The above table shows that out of 200 respondents 3
system which leads to the result of leaving the job by the respondents are strongly disagree with the statement that
employee. That means increase in Employee Attrition. The they are satisfied with their appraisal System. 16
main reason of doing this study is increase in Employee respondents are those who are disagree with the statement.
Attrition. 12 respondents having neutral response with the statement
whereas 157 respondents are those who are agree and 12 are
OBJECTIVES OF THE STUDY: those who are strongly agree with the statement that they
฀ To measure the satisfaction level of faculty members are satisfied with their appraisal System. That means
with respect to Performance Appraisal System of their maximum no. of respondents having positive response.
institutes. Maximum no of respondents feel that they are satisfied with
฀ To find out the relationship between Employee their Performance Appraisal System.
Satisfaction on Performance Appraisal System with
Fairness of the System Now the second objective is to measure the relationship
between Employee Satisfaction on Performance Appraisal
System with Fairness of the System. Correlation technique
HYPOTHESES:
is used to achieve this objective. The hypothesis based on
The hypotheses has made according to the second objective
this objective is
of the study i.e.
H0 – There will be no significant relationship between
H0 – There will be no significant relationship between
Employee Satisfaction on Performance Appraisal System
Employee Satisfaction on Performance Appraisal System
with Fairness of the System
with Fairness of the System
H1 -- There will be a significant relationship between
H1 -- There will be a significant relationship between
Employee Satisfaction on Performance Appraisal System
Employee Satisfaction on Performance Appraisal System
with Fairness of the System
with Fairness of the System
RESEARCH METHODOLOGY: To achieve this objective firstly the Fairness average of the
Sources of data: responses of the respondent has been taken. After taking
For this study both primary as well as secondary data was average all the respondents has one value of Fairness.
used. The primary data for the study has been collected with
the help of faculty members by using well-structured
questionnaire and secondary data was collected from books,
journals and various websites.

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 Asian J. Management 5(1): January- March, 2014

Table 1 Shows the Employee Satisfaction with Performance Appraisal System of their institutes.
I Am Satisfied With My Current Performance Appraisal System
Frequency Percent Valid Percent Cumulative Percent
Valid Strongly Disagree 3 1.5 1.5 1.5
Disagree 16 8.0 8.0 9.5
Neutral 12 6.0 6.0 15.5
Agree 157 78.5 78.5 94.0
Strongly Agree 12 6.0 6.0 100.0
Total 200 100.0 100.0

Table 2 is the example of responses of 10 respondents to show that how these calculations was done on excel sheet.
FAP Stands for Fairness of Performance Appraisal System
Respondent
No. FAP1 FAP2 FAP3 FAP4 FAP5 FAP6 FAP7 FAP8 FAP9 FAP10 FAP11 FAP12 Fairness Average
1 4 4 4 4 4 2 4 4 2 4 5 4 3.8
2 4 4 4 4 4 2 5 5 2 4 4 4 3.8
3 4 4 4 4 4 2 5 4 2 4 4 4 3.8
4 4 4 4 4 4 2 5 4 2 5 4 4 3.8
5 4 4 4 4 4 3 5 4 3 5 5 5 4.2
6 4 4 4 4 4 2 5 4 2 5 5 5 4.0
7 4 4 4 4 4 2 5 4 2 4 4 4 3.8
8 4 4 4 4 4 2 5 4 2 4 4 4 3.8
9 4 4 4 4 4 2 4 4 3 4 4 4 3.8
10 4 4 4 4 4 2 4 4 2 4 5 4 3.8
Here FAP1 to FAP12 represents the 12 statements which is related to Fairness of Performance Appraisal System.
After finding the Fairness average SPSS is used to find out the relation between Employee Satisfaction on Performance Appraisal System with
that of Fairness of the System.

Table 3 Shows the Correlation between Employee Satisfaction on Performance Appraisal System with Fairness ofthe System
Correlations
I am satisfied with my current
Performance Appraisal System Fairness average
I am satisfied with my current Pearson Correlation 1 .655**
Performance Appraisal System Sig. (2-tailed) .000
N 200 200
Fairness average Pearson Correlation .655** 1
Sig. (2-tailed) .000
N 200 200
**. Correlation is significant at the 0.01 level (2-tailed).

The above table 3 shows that there is a significant SUGGESTIONS:

relationship between Employee Satisfaction on
Performance Appraisal System with Fairness of the System.
The value of correlation “r” is .655 which is positive that
shows that there is a positive correlation between Employee
Satisfaction on Performance Appraisal System with
Fairness of the System. That means Performance Appraisal
System should be fair so that employees are satisfied with
their appraisal System. This correlation also shows that
employees are satisfied with their Performance Appraisal
System when their System is fair and there is no partial
behaviour is done on the basis of the System.
FINDINGS:
฀ The findings shows that maximum no. of respondents
are satisfied with their Performance Appraisal System.
฀ The findings also revealed that there is a significant
relationship between Employee Satisfaction on
Performance Appraisal System with Fairness of the
System.
Some suggestion has been made based on findings of the
study. Few of the faculty members feel that they are not
satisfied with their appraisal System. The institutes have to
make some strategies so that the faculty members are
satisfied with their appraisal System. Firstly institute
should know why their faculty members are dissatisfied
with their appraisal System .The reason of dissatisfaction
may be they are not getting proper output or according to
them their System is not fair the reason of dissatisfaction
may be any but the institute has to make some strategies so
that the dissatisfied faculty members also feel satisfied with
their appraisal System. For example if the employee feel
that they are not getting proper incentives according to their
work in this case institute has to provide incentives to the
employee according to their performance, another reason
may be employees are not getting proper feedback of their
performance from their rater in this case institute has to
solve this problem of rater’s error. So by using strategies
according to the reason all the employees feel satisfied with
their Performance Appraisal System.

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 Asian J. Management 5(1): January- March, 2014

CONCLUSION: 16. Ruby Melody Agbola, S. H. The Effefectiveness of Performance

The study concludes that Performance Appraisal System is
one of the important component of job satisfaction. So the
satisfaction of employee with Performance Appraisal
System is very important. Employees are only satisfied with
their System if the System is fair free from errors and they
are getting proper output according to their performance.
That means satisfaction with appraisal system depend on
the Fairness of the system. Study also concludes that there
is a relationship between Employee Satisfaction on
Performance Appraisal System and Fairness of the system.
If the System is fair employees are satisfied with their
appraisal System and they are also satisfied with their job
that means they feel good with their present job and which
results decrease in Employee Attrition. So it can be
concluded that Fairness of the Performance Appraisal
System is also very important for organisation.
Appraisal as a Tool for Enhancing Employee Performance in the
Public Health Sector. Global Management Journal.2010:81-96.
17. Siaguru, F. Performance Appraisal Systems: Procedural and
Implementation Issues in Papua New Guinea. Journal of
Management Policy and Practice. 12(5); 2011: 116-127.
18. Sudin, S. Fairness of and Satisfaction with Performance
Appraisal Process. Journal Of Global Management. 2(1); 2011:
66-83.
19. Samad, S. Predictors of Performance Appraisal Among Managers
in Malaysian Commercial Banks . International Conference on
Management and Artificial Intelligence. 6; 2011: 64-167.
20. T. T. Selvarajan, P. A.Can Performance Appraisals Motivate
Employees to Improve Performance? A Mexican Study . The
International Journal of Human Resource Management.
2011: 1-22.
21. Zereshki, M. D. Effects of Performance Appraisal quality on Job
Satisfaction in Multinational Companies in Malayasia.
International Journal of Enterprise. 2013: 1-18.

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