Academic journal article Indian Journal of Industrial Relations

Employee Reactions to Performance Appraisal System in Indian Banks

Academic journal article Indian Journal of Industrial Relations

Employee Reactions to Performance Appraisal System in Indian Banks

Article excerpt

Introduction

Performance appraisal system (PAS) has been a key organizational process for the management and the development of personnel (Lee, 1985; Eberhardt & Pooyan, 1988; Baruch & Harel, 1993; Fletcher, 2001; Tizner et al., 2001; Levy & Williams, 2004; Ferris et al., 2008). Fletcher (2001) defines performance appraisal (PA) more broadly as "activities through which organizations seek to assess employees and develop their competence, enhance performance and distribute rewards". Performance appraisals are considered to be the most essential element in creating a positive work environment and involve a range of attributes such as reward, communication, feedback, employee reactions, equity and fairness, trust and acceptance, attitudes towards conflict, and social context (Brown & Heywood, 2005; Elenkov, 1998; Erdogan et al., 2001; Fulk et al., 1985; Lawler, 2003; Levy & Williams, 2004). Keeping & Levy (2000) argued that it is necessary to address employees' reactions toward their performance appraisal for many reasons, including (a) the notion that reactions represent a criterion of great interest to practitioners and (b) the fact that reactions have been theoretically linked to determinants of appraisal acceptance and success but have been relatively ignored in research. Earlier researchers have claimed that in order for performance appraisal to positively influence employee behavior and future development, employees must experience positive appraisal reactions to important aspects of the appraisal process (Bernardin & Beatty, 1984; Cardy & Dobbins, 1994; Kuvaas, 2006; Murphy & Cleveland, 1995). Appraisal reactions such as satisfaction, acceptability, and motivation to use feedback, are cited as an important trend in the appraisal research during the past ten years (Levy & Williams, 2004).

The domino effect of Liberalization-Privatization-Globalization and the advances in information and communication technology have major HR implications for Indian banking sector as well. This scenario has forced the banking industry in India, which is largely in public sector, to compete with not only the indigenous private banks but also with the foreign banks operating in India. Simultaneously, it is not an easy ride for private sector and foreign banks to challenge the prima donna status of public sector banks in India. How well these challenges are met will mainly depend on the extent to which banks leverage their human resources in the context of changing economic and business environment. Erdogan (2002) suggested that performance appraisal can make important contribution to effective human resource management, and eventually organizational performance. Employee performance has, therefore, been identified as a crucial determinant of success in the banking sector and hence there is a growing interest in the effective management of employee performance. A number of observations have been made in earlier research (e.g., Shrivastava & Purang, 2012; 2011; Juneja, Shankar & Bhattacharya, 2007; Priyadarshini & Venkatapathy, 2003, etc.) as regards the performance appraisal practice in the banking industry, but there is dearth of studies which addressed assessment and comparison of PA reactions among public and private sector banks and also foreign banks operating in India. The present study has been an endeavor to address this research gap.

Review of Literature

Extant literature has shown that there is a critical link between satisfaction with appraisal processes and appraisal effectiveness (Bernardin & Beatty, 1984; Dobbins, Cardy & Platz-Vieno, 1990). Dipboye & de Pontbriand (1981) showed that employees were more satisfied and had greater acceptance of PA when employee development and performance improvement were emphasized in it. Jain & Kamble (2005) pointed out that the effectiveness of performance appraisal system is based on the extent to which the system is HRD oriented. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.