Downside of performance appraisals & the potential for deviant behaviors.

Selvaraj, Patturaja ; Ghosh, Sumit Kumar ; Jagannathan, Srinath 等

While performance appraisals are considered to be rational systems necessary for human development in organizations, they can have potentially negative consequences. The judgments involved in performance appraisals could be experienced in subjective and partisan ways. Appraisals could be experienced as dirty work and could lead to deviant behaviors inside organizations. Particularly, those who receive good appraisals could develop emotions of contempt towards those who receive poor appraisals and thus better performers may feel justified in engaging in deviant behaviors towards poor performers. Further, it is only the sense of organizational support that may help in attenuating deviant behaviors actuated as a consequence of performance appraisals.

Introduction

In this study, we develop a series of hypotheses and test them by adopting a structural equation modeling approach to understand whether performance appraisals have negative consequences for employees. Performance appraisals have been argued to be legitimate, rational systems through which human development can be brought about inside organizations (Ilgen & Feldman, 1983). However, several gaps remain in the design and implementation of performance appraisal processes as issues of politics and bias often come up (Banner & Cooke, 1984; Pichler, 2012). While performance appraisals are meant to have developmental implications for organizations, since judgments involved in appraisals have consequences in the form of rewards and punishments, they can create a sense of anxiety among employees (Thomas & Bretz, 1994). This means that employees can react to performance appraisals in unpredictable ways, and the way appraisals are carried out could define perceptions that employees hold about the fairness of human resource processes in organizations (Greenberg, 1990).

From a social exchange perspective, organizations may believe that it is only important to design a fair and just performance appraisal system (Wayne, Shore, Bommer & Tetrick, 2002). The standard view is that any performance appraisal system is likely to throw up winners and losers. In fact, it may be the rational prerogative of performance appraisal systems to differentiate between the top and average performers (Shrivastava & Purang, 2011). The social categorization implied in performance appraisal processes could also lead to unproductive workplace behaviors among peers (Pettijohn, Pettijohn & d'Amico, 2001). Employees could often perceive negative appraisals as a form of breach of the psychological contracts with their organizations (Robinson, 1996).

Thus, it is important for organizations to remember that the losses and gains implied by performance appraisal processes need not be organically accepted by employees. The losses and gains which are a part of performance appraisal processes could lead to evaluations of trust among employees (Schaubroeck, Peng & Hannah, 2013). The breakdown of trust and the rise of narcissism among winners of performance appraisal processes could lead to deviant behaviors becoming normal among employees. While the losers of performance appraisal processes could engage in organizationally deviant behaviors, the winners of performance appraisal processes could engage in interpersonal deviant behaviors (Bennett & Robinson, 2000). In order to attenuate these negative consequences, it may be important for organizations to build support structures for employees, so that their trust in their organizations is sustained (Wayne, Shore & Liden, 1997).

Hypotheses Development

From a social exchange (Wayne, Shore, Bommer & Tetrick, 2002) and procedural justice theory perspective (Greenberg, 1990), Pichler (2012) argues that irrespective of favorable performance ratings (Dulebohn & Ferris, 1999), if there exists a high quality relationship between the rater and the ratee, then the ratee is likely to be satisfied with performance appraisals. However performance appraisals are complex and may evoke negative reactions from employees forcing raters to "fear, postpone or even discontinue performance appraisals" (Pettijohn, Pettijohn & d'Amico, 2001: 141) and therefore performance appraisals will be effective only when employees perceive them to be fair (Thomas & Bretz, 1994). One of the objectives of performance appraisals is to distinguish between high and low performers in an organization (Ilgen & Feldman, 1983).We contend that when managers have trust in their organization, their faith in the organization's ability to distinguish between high and low performers in the organization will increase. Consequently, we hypothesize that:

Hypothesis 1: Trust positively affects satisfaction with performance appraisals

Lasch (1979) states that society as a whole has become more narcissistic. Some of the employees in the narcissistic world whose performance appraisal outcome is always favorable to them perceive that they are superior to others in the organization (Wallace & Baumeister, 2002) and start demeaning other employees whose performance appraisal outcome may not be great. Social retaliation victimization may happen when supervisors or peers who are satisfied with their performance appraisal blame or threaten other members who are not performing very well, which results in interpersonal deviance. The challenges faced by Indian organizations are attracting and retaining talented employees and also overhaul of HR practices (Shrivastava & Purang, 2011). In the absence of strong HR practices, satisfaction with performance appraisals can lead to a strong sense of contempt for those who are perceived to be weak performers in an organization.

Hypothesis 2: Satisfaction with performance appraisals leads to a sense of contempt for weak performers in the organization.

From a social identity theory perspective (Brewer & Gardner, 1996) it is well known that employees nurture high quality relationships in order to obtain psychological and instrumental resources for higher performance (Schaubroeck, Peng & Hannah, 2013). Similarly when an organization treats an employee well and pays him adequately, the employee might not indulge in organizational deviance. In fact s/he will work for enhancing the productivity of the organization. Gouldner (1960: 176) also reiterates that "the employer may pay his workers not merely because he has contracted to do so; he may also feel that the workman has earned his wages." Thus, when a manager feels satisfied with his/her performance appraisals, s/he may consciously work towards reducing organizational deviance.

Hypothesis 3: Satisfaction with performance appraisals has a negative effect on organizational deviance

Social identity theory can help us in the analysis of deviance (Hogg & Terry, 2000) as individuals identify with social groups on the basis of emotions and values (Tajfel, 1972). Following social identity theory expectations, high performers inside organizations may desire positive social identity through intergroup distinctiveness and the need for positive self-esteem (Abrams & Hogg, 1988), thus legitimating their deviant behaviors with others. Thus, those who held a sense of contempt towards weak performers in the organization may find it legitimate to engage in interpersonal deviance with them.

Hypothesis 4: Contempt towards weak performers in the organization positively affects interpersonal deviance.

Based on social exchange theory, Eisenberger, Huntington, Hutchison and Sowa (1986: 504) concluded that "perceived organizational support is assumed to increase the employee's affective attachment to the organization and his or her expectancy that greater work effort will be rewarded." It gets reflected when an employee is compensated monetarily or non-monetarily in the form of appreciation or reward for her good work. Perceived organizational support (POS) plays an important role in making employees feel that the organization cares for them. Performance appraisal is tangible and the result affects or benefits the employee directly, and thus employees may develop a sense of contempt for those who lose out on performance appraisals. Hence the effect of contempt leading to increase in interpersonal deviance will have a drastic effect on employees who is getting affected. POS is intangible, hence it will not be in a position to remove the effect but it can reduce the effect of interpersonal deviance to a great extent. Employees are willing to refrain from adversely reacting to negative experiences such as interpersonal deviance if POS is high (Liu and Ding, 2002). Therefore POS may attenuate the relationship between contempt and interpersonal deviance. Hence we hypothesize that:

Hypothesis 5: In the Indian context, perceived organizational support moderates the relationship between performance appraisal satisfaction and interpersonal deviance.

Methods

We conducted a survey among 232 executives from three different sectors of manufacturing, information technology and financial services. We contacted 150 organizations which were organizing management development programs (MDPs) for their employees for accessing data about the experiences of performance appraisals of employees. We chose organizations which were organizing MDPs for their employees as this embodied a developmental orientation emerging from performance appraisals. Reactions to performance appraisals are contingent on the quality of relationships between raters and ratees (Pichler, 2012). Thus, when the process of performance appraisals is oriented towards developmental processes, it is likely that the relationship between raters and ratees will improve.

The descriptive statistics for the study are shown in Table 1. It provides the sample characteristics.

Estimation Approach

The hypothesized conceptual model posits relationships between different latent variables. We adopted a Co-variance Based Structural Equation Modeling (CBSEM) approach using AMOS 18 software to test the hypothesized model. We assessed the fit of the conceptual model using the criteria of [chi square]/df (<5), goodness of fit index (GFI) (<0.9), normed fit index (NFI) (<0.9), comparative fit index (CFI) (<0.9), root mean square error of approximation (RMSEA) (<0.08) and standardized root mean square residual (SRMR) (<0.05) (Hu &Bentler, 1995).

Measures

We used multi-item scales for measuring the explanatory and dependent variables used in the study. Each item was measured on a seven point Likert type anchor.

Dependent Variables: The dependent variables used in the study are interpersonal deviance and organizational deviance. Organizational deviance and interpersonal deviance were measured using three item scales each developed by Bennett and Robinson (2000).

Explanatory Variables: Organizational trust was measured by using four items from the scale developed by Robinson (1996). Satisfaction with performance appraisals was measured by using four items from a scale developed by Harris (1988). Perceived organizational support was measured using four items from the scale developed by Eisenberger, Huntington, Hutchison and Sowa (1986). Contempt was measured using six items contextually adapted to the performance appraisal context from work done on categorizing emotions by Melwani, Mueller and Overbeck (2012). We found that the scales used in the study showed reasonable convergent and discriminant validity. As can be seen from Table 2, the requirements proposed by Fornell and Larcker (1981) were satisfied by the scales used in the study.

Hypotheses Testing

Table 3 indicates the mean, standard deviation and correlations between important constructs in the study.

First, we examined the fit measures of our model. Our analysis indicated that the data fit the conceptual model adequately ([chi square] = 436.60, df =473, p = 0.884; GFI = 0.902; RMSEA = 0.00; SRMR = 0.044; CFI = 1.00, NFI = 0.925). This indicates that the data fits the conceptual model adequately (Hair et al., 2012). The results of the hypothesis testing are shown in Table 4.

Hypothesis 1 stated that greater organizational trust leads to improved levels of satisfaction with performance appraisal. We find that our data supports hypothesis 1 ([beta] = 0.34, p<0.01).

Hypothesis 2 stated that greater levels of satisfaction with performance appraisal lead to a greater sense of contempt for weak performers in the organization. We find that our data supports hypothesis 2 ([beta] = 0.52, p<0.01).

Hypothesis 3 stated that greater levels of satisfaction with performance appraisal lead to lower levels of organizational deviance. We find that our data supports hypothesis 3 ([beta] = -0.28, p<0.01).

Hypothesis 4 stated that a greater level of contempt for weak performers in the organization leads to greater levels of interpersonal deviance. We find that our data supports hypothesis 4 ([beta] = 0.52, p<0.01).

Hypothesis 5 stated that positive organizational support negatively moderates the relationship between contempt and interpersonal deviance. We find that our data supports hypothesis 5 ([beta] = -0.16, p<0.05).

Discussion

Based on our quantitative study, we believe that performance appraisals embody the orchestration of dirty work in organizations. Our data reveal that there is a lot of subjectivity and politics associated with performance appraisals. Consequently, organizational efforts at separating strong from the weak performers is never neat. It involves processes of subjugation and unfairness. Thus, performance appraisals lead to the development of negative emotions and resentments in organizations (Pichler, 2012).

Those who survive the game of performance appraisals believe that they are more legitimate entities in the organization than the others. They develop a sense of contempt towards weak performers inside the organization, as performance appraisals themselves may be associated with the taint of dirty work (Ashforth & Kreiner, 1999). This helps them to justify their behaviors of interpersonal deviance towards weak performers in the organization. Thus, performance appraisals lead to a greater sense of individualization of behaviors and fragmentation in the organization. It is only the sense of perceived organizational support that leads to a greater sense of collective spirit in the organization.

When managers perceive that the organization is supporting them, their collective identity of belonging to the organization is awakened in them (Brown, 2006). This then reduces their tendency to engage in interpersonal deviance with respect to others whom they perceive as weak performers. At the same time, satisfaction with performance appraisals increases the sense of attachment to the organization. Thus, the tendency to engage in organizational deviance reduces among those who are satisfied with their performance appraisals in the organization. At the same time, the effects of trust inside the organizations are also fairly ambiguous.

Organizational trust leads to the formation of in-groups inside the organization. Those who are a part of these in-groups feel that the organization is a trusted site for them. They are able to reinforce each other's sense of safety and security inside the organization by ensuring that members of the in-group receive adequately satisfactory performance appraisals (Borman, 1987). This then consolidates the emotional responses of in-group members towards out-group members. They begin to treat out-group members who have received lower performance ratings with contempt.

Thus, trust is a part of the individualization of the employment relationship which leads to the legitimization of behaviors of interpersonal deviance with respect to other employees in the organization (Brown, 1998). Trust contains several darker aspects of the employment relationship. Trust is often accompanied by social relations of allegiance. When people participate in social relations of allegiance, there is a sense of agency that is broken in them. They respond to this broken sense of agency by engaging in deviant behaviors towards others.

They are also engaging in a sense of extracting allegiance from others (Bicknel & Liefooghe, 2010). Thus, performance appraisals are also complicit in a game of allegiance inside the organizations. Appraisers are likely to give higher performance ratings to likeable subjects. The un-liking of some subjects based on identity or other micro-political realities inside the organizations leads to lower performance ratings. Thus, performance appraisals structure social relations inside the organizations which are premised around realities of politics and power.

Performance appraisals refer to tasks of evaluation or exercising judgment (Banner & Cooke, 1984). The act of judgment already carries a moral taint with it as it can never completely be an act of justice. Consequently the ontological lack structured by the gap between judgment and justice renders performance appraisals as the dirty work of constructing the organization around subjective hierarchies of competence. Consequently, the sense of collegiality or democratic social relations inside the organization is already vitiated. Thus, performance appraisals refer to organizational dilemmas around which social relations inside the organization are influenced in deep, affective ways.

Contributions to Theory

In this study, we make two primary contributions to theory. First, we conceptualize performance appraisals as dirty work inside the organizations and thus rendering the rational spirit of several human resource management processes inside organizations as a problem. In their pretense of rationality, these human resource management processes inadequately seek to conceal the subjectivities involved in their operation. Second, we indicate the darker consequences of performance appraisals in terms of vitiating social relations inside the organizations. Thus, we make a call for understanding affective responses to several human resource management processes operating inside the organizations.

Contributions to Practice

In this study, we make two important contributions to practice. First, we have constructed a scale for contempt which can be used by managers with respect to various organizational processes. Mangers can use this scale in a variety of organizational contexts including mergers and acquisitions to assess whether different actors feel a sense of contempt towards others. Second, we have indicated that several positive organizational states such as trust and satisfaction with performance appraisals can have darker consequences such as interpersonal deviance. Therefore, there is a need for organizations to pay attention to these darker consequences by building collective identity based resources through interventions such as organizational support.

Limitations &Future Research

One of the limitations of this study is that it does not rely on a longitudinal design. It might be interesting to study what happens to different forms of deviance on account of sustained levels of satisfaction with performance appraisals or contempt. For instance, satisfaction with performance appraisals leads to lower levels of organizational deviance. But it will be interesting to study whether this relationship holds if a manager is satisfied with performance appraisals for three or four consecutive years. If performance appraisals are understood as games which have negative consequences for individuals, it will be interesting to understand when these negative consequences catch up with organizations as well.

Patturaja Selvaraj (Email: patturaja@iimidr.ac.in) is Associate Professor, Sumit Kumar Ghosh (Email: skghosh@iimidr.ac.in) is Professor & Srinath Jagannathan (Email: srinath.jayanti@gmail.com.) is Assistant Professor, Organizational Behavior and Human Resource Management Area, Indian Institute of Management Indore.

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Table 1 Descriptive Statistics

Sample Characteristic      Number of Employees
                                 (Percentage)

Sector
Manufacturing                       52(22.41)
Information Technology             100(43.10)
Financial Services                 70 (30.17)

Ownership
Public Sector                     115 (49.57)
Private Sector                     117(50.43)

Management Level
Junior Management                   32(13.79)
Middle Management                  138(59.48)
Senior Management                  62 (26.72)

Gender
Male                               216(93.10)
Female                               16(6.90)
Age (years)                      40.94 (mean)
                                   10.38 (sd)
Work Experience (months)        132.22 (mean)
                                  115.06 (sd)

Table 2 Constructs Measurement Summary: Confirmatory
Factor Analysis & Scale Reliability

Item Description                           Standardized   Reliability
                                               Loading      (CR (a),
                                                            AVE (b))

Satisfaction with Performance Appraisal

My most recent performance rating                0.551    CR = 0.813
represents a fair and accurate picture                    AVE = 0.526
of my job performance.

My supervisor allows me to help choose           0.716
the goals that 1 am to achieve.

The most important parts of my job are           0.748
emphasized in my performance appraisal.

My supervisor and I agree on what                0.862
equals good performance in my job.

Contempt

I have complete disregard for weak               0.873    CR = 0.926
performers in my organization

I like to maintain a distance from               0.896    AVE = 0.677
weak performers in my organization

1 cannot appreciate those who fail to            0.925
perform in my organization

1 believe that weak performers do not            0.694
have a moral right to be treated
equally in my organization

I cannot get along well with weak                0.762
performers in my organization

I feel that weak performers are                  0.906
worthless to my organization

Perceived Organizational Support

Help is available from the organization          0.839    CR = 0.900
when I have a problem

The organization cares about my                  0.887    AVE = 0.692
general satisfaction at work

The organization cares about my                  0.794
opinions

The organization tries to make my                0.810
job as interesting as possible

Interpersonal Deviance

I have never said something hurtful to            0.94    CR = 0.893
someone at work[R]

I have never acted rudely towards                0.932    AVE = 0.739
someone at work[R]

I have never publicly embarrassed                0.683
someone at work[R]

Organizational Deviance

I have never neglected to follow                 0.705    CR = 0.528
my boss's instruction[R]

I have never discussed confidential              0.369    AVE = 0.286
company information with an
unauthorized person[R]

I have never put less effort than what           0.476
is required into my work[R]

Trust

I believe my employer has high                   0.796    CR = 0.803
integrity

I can expect my employer to treat                0.639    AVE = 0.508
me in a consistent and predictable
manner

In general,1 believe my employer's               0.799
motives and intentions are good

My employer is open and upfront with me          0.597

(a) Composite Reliability [[rho].sub.c] = [([summation]
[[lambda].sub.i]).sup.2] Var([xi])/[([summation][[lambda].sub.i])
.sup.2] Var([xi]) + [summation][[theta].sub.ii]]

(b) Average Variance Extracted [[rho].sub.c] = [[summation]
[[lambda].sup.2] Var([xi])/[[summation][[lambda].sub.i].sup.2]
Var([xi]) + [summation][[theta].sub.ii]] (Fornell & Larcker, 1981)

Table 3 Construct Correlation Matrix.

                                         Correlation Matrix

Construct         Mean    Standard           1           2
                          Deviation

Satisfaction      4.61        1.31           1
with PA

Contempt for      4.23        1.51    0.455 **           1
Weak Performers

Perceived         4.28        1.30    0.639 **    0.561 **
Organizational
Support

Interpersonal     2.99        1.45     0.227 *    0.397 **
Deviance

Organizational    2.33        1.01       -.046     -.155 *
Deviance

Trust             6.68        1.58    0.598 **    0.530 **

                               Correlation Matrix

Construct                 3           4        5     6

Satisfaction
with PA

Contempt for
Weak Performers

Perceived                  1
Organzational
Support

Interpersonal        0.157 *          1
Deviance

Organizational        -.019    0.278 **              1
Deviance

Trust              0.680 **    0.210 **    -.122     1

** Correlation is significant at 0.01 level

* Correlation is significant at 0.05 level

Table 4 Construct Structural Model

Linkages in the model                     Hypotheses   Standardized
                                                        regression
                                                            weight

Trust [right arrow] Satisfaction with            H1        0.34 **
Performance Appraisal (SPA)

SPA [right arrow] Contempt                       H2        0.52 **

SPA [right arrow] Organizational                 H3       -0.28 **
Deviance

Contempt [right arrow] Interpersonal             H4        0.52 **
Deviance

Contempt * Perceived Organizational              H5        -0.16 *

Support [right arrow] Interpersonal
Deviance

* p<0.05; ** p<0.01