Impact of Performance Appraisal Justice on the Effectiveness of Pay-for-Performance Systems After Civil Service Reform

Abstract

The present study comprehensively examined how human resources (HR) directors in six U.S. state governments with drastic levels of civil service reform assess their states’ pay-for-performance effectiveness in terms of the performance appraisal justice. It was found that the effectiveness of pay-for-performance is influenced by perceived fairness of performance appraisal. More specifically, this study found that perceived politicization of performance appraisal was negatively and significantly associated with pay-for-performance effectiveness. This study also found that perceived fairness of appraisal criteria was positively and significantly associated with pay-for-performance effectiveness. In addition, this study shows that the effectiveness of pay-for-performance may be affected by some demographic characteristics (e.g., age and gender) and state differences. In particular, drastic levels of civil service reform significantly and positively influenced the effectiveness of pay-for-performance, but insignificantly affected performance appraisal fairness. These results provide scholars and practitioners in the public sector with meaningful strategies for civil service reform.