Effects of employees’ perception of performance appraisal fairness on job satisfaction

Abstract

This study investigates the effect employees’ perception of fairness in the performance appraisal system on job satisfaction of an employee. The perceived fairness in appraisal system is discussed with the help of organizational justice theory which was principally derived from Adam’s equity theory and used by many researchers in organizational research. The perception of fairness in performance appraisal system consists of three main factors: Distributive justice, procedural justice, interactional justice and are used as independent variables and job satisfaction of an employee as dependent variable. Using a random sample of 297 employees from a total of 1624 population the required data is obtained through structured questionnaires. Descriptive statistics, independent sample t-test, one way- ANOVA, correlation analysis and multiple regression analysis were performed. The independent sample t-test shows that there is significant difference between genders in fairness perception in performance appraisal system, however there is no significant difference between genders in distributive and procedural fairness perception. The one way- NOVA test shows that there is significant difference among work experience groups and age level groups, however no significant difference found among educational level groups. The descriptive finding of the study shows that in ASTU employees had low level of fairness perception towards the existing performance appraisal practice, and low level of job satisfaction. The correlation analysis result also indicates that distributive, procedural and interactional fairness in the appraisal system had positive and significant relationship with job satisfaction. Whereas the finding of multiple regression analysis indicates that distributive, procedural and interactional fairness in the appraisal system had positive and significant influence job satisfaction. The human resource management of the University should create organizational climate that enhance positive perception among employees regarding distributive, procedural, and interactive justices of performance appraisal more than ever.