Perceived Fairness of Performance Appraisals in the Federal Government: Does It Matter?

Abstract

Studies suggest that the success of the performance appraisal system may depend on how to manage employees’ perceptions of its fairness, not the system per se. Using the 2005 Merit Principles Survey, this study tests the efficacy of perceived fairness of performance appraisals as a key determinant of intrinsic motivation. The purpose of this article is twofold: (a) to identify factors of perceived fairness of performance appraisal and (b) to assess the differential impact of each factor of perceived fairness of performance appraisal on intrinsic motivation. An exploratory factor analysis generated three separate but interrelated notions of perceived fairness variables: distributive, procedural, and interactional fairness. Using these three perceived fairness variables, a hierarchical regression analysis was performed. The results showed that although all three perceived fairness variables positively associated with intrinsic motivation, they accounted for only 5% of variance in prediction. When control variables were added, only perceived procedural fairness appeared to positively affect intrinsic motivation. The results raise the question of the role of performance appraisals as a motivational tool for performance improvement. Nonetheless, managing perceived procedural fairness may still be a useful lever for enhancing intrinsic motivation.