Running head: EMPLOYEE PARTICIPATION IN MAKING PERFOMANCE APPRAISAL 1

Can Employee Participation in Making Performance Appraisal System Have Impact on Business
Performance?
Laxman Rao Medavarapu
Savannah State University






EMPLOYEE PARTICIPATION IN MAKING PERFOMANCE APPRAISAL 2

Abstract
Employees are asset to any organization. Their performance can lead to organizational
performance. Employee motivation leads to best performance. Towards this end, for motivating
employees there have been measures to rate employee performance and provide incentives or
increase in salaries besides many other benefits. These HRM activities help in retaining
employees and get new employees as well. The focus of this paper is to study the relationship
between employee participation in making performance appraisal systems. Since employees are
stakeholders of the organization, their feedback can help in improving systems. Towards the
existing research proved the fact that employee involvement has positive impact on the
organizational performance. However, it does not consider on the negative impact. In this paper
we investigated both positive and negative sides and understood that the hypothesis Employee
participation in making performance appraisal systems can have impact on business performance
is proved positively. However the management needs to keep an eye on employees who
intentionally influence management to inject a defect in performance appraisal system. This will
make the appraisal systems more perfect and increase organizational performance.

Keywords: Employee performance appraisal system, organizational performance




EMPLOYEE PARTICIPATION IN MAKING PERFOMANCE APPRAISAL 3

Can Employee Participation in Making Performance Appraisal System Have Impact on Business
Performance?
Employee participation in making performance appraisal systems and important policy
decisions of an organization can have its impact on the organizational performance. This is the
main research area focused by this paper. The need for this study is to test the hypothesis
Employee participation in making performance appraisal systems can have impact on business
performance. Past research on the literature review pertaining to this hypothesis revealed that
there is impact on the effectiveness of organizational performance when employees are
participated in making appraisal systems and high involvement influences organizational
effectiveness. For instance researchers such as Roberts (2003), Konrad (2006), Guthrie (2002)
and Wolf & Zwik (2008) focused on employee involvement in appraisal systems and the need
for high involvement work practices. The essence of the research made by these authors is that
there is relationship between employee involvement in making performance appraisal system
and organizational performance.
The main deficiency in the past research is that it lacked in making succinct study on the
negative side of the area. For instance they did not try to investigate the problems with employee
involvement in appraisal systems. In this paper we overcome this problem as our study considers
the negative effects of the employee involvement. The negative side is that employees can have
influence on the appraisal system to have false rating that can help employees to pretend to have
skills while they do not have them obviously. This leads to a defect in employee performance
appraisal system. Thus the significance of this research is that it throws light on the negative side
of the hypothesis while the hypothesis is proved positively. The remainder of this report throws
light into the literature review, research methodology, implications, conclusions and future work.
EMPLOYEE PARTICIPATION IN MAKING PERFOMANCE APPRAISAL 4

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EMPLOYEE PARTICIPATION IN MAKING PERFOMANCE APPRAISAL 5

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