The influence of performance-driven cultures on performance appraisal best practices effectiveness

Abstract

Purpose This paper aims to analyze the synergistic influence of performance appraisal (PA) practices and performance-driven culture (PDC) on the effectiveness of the performance management (PM) system, which is measured by employees' reactions, namely satisfaction and perceived utility. It also analyzes the type of relationship between PA practices and PA satisfaction, specifically whether it is additive or modeled as a latent factor.Design/methodology/approach This is a cross-sectional study. Data were collected from 513 managers and employees working in 135 public and private organizations. The research model and hypotheses were tested using structured equation modeling.Findings The results support the positive impact of a set of four PA best practices on PA satisfaction. It shows that PDC is an enabler for the effective deployment of PA practices. It also demonstrates that the perceived utility of the PM system plays a role as a mediator in the relationship between PA practices and PA satisfaction.Research limitations/implications Data were collected using a questionnaire at a single point in time, and thus, cause-and-effect inferences were not possible.Practical implications The results provide guidance to organizations that are interested in designing and implementing PM systems and PA practices that contribute toward enhancing employees' managing performance experiences.Originality/value This study advances our understanding of the mechanisms by which organizational culture and PA practices influence the effectiveness of the PM system. It suggests that organizations, to benefit the most from a set of PA best practices, need to have a PDC.