Abstract
This study provides an empirical insight into the mediating role of the quality of performance appraisal systems, assessed using four quality dimensions (trust, clarity, communication and fairness), on the association between the level of employee empowerment of lower level managers and their performance, assessed in respect to their business unit’s performance. Data were collected from 203 Australian lower level managers using an online survey. The findings reveal that while employee empowerment is positively associated with all four dimensions of the quality of the performance appraisal system, one specific dimension, trust, mediates the association between employee empowerment and business unit performance. Specifically, trust is found to mediate the effect of employee empowerment on both financial and non-financial business unit performance. These findings highlight the importance of enhancing employee empowerment and improving the quality of performance appraisal systems, in particular the level of trust. This study provides an initial empirical insight into whether ‘real autonomy’ is provided by focusing on the extent to which empowerment extends to other aspects of employees’ organisational experience, specifically their performance appraisal system, and the subsequent impact on performance.
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Notes
As indicated business unit performance is divided into financial and non-financial performance dimensions in line with the CFA results.
While two control variables, age and organisational size, were also incorporated into the SEM model, they
are not reported in the final model as neither variable was found to be significantly associated with the four dimensions of performance appraisal system quality or both financial and non-financial performance.
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Appendices
Appendix 1: Questionnaire items and CFA statistics
These are the retained items after confirmatory factor analysis. The first item of each scale has no t-value since it has a fixed parameter in AMOS.
Constructs and items | Factor Loading | t-value | SE | Cronbach alpa |
|---|---|---|---|---|
Employee empowerment | 0.799 | |||
They have a high level of collaboration/involvement in decision making. | 0.745*** | NA | NA | |
There are official channels or certain norms or rules to guarantee their participation in the decision-making process. | 0.714*** | 8.677 | 0.108 | |
They contribute directly to the decision-making process, rather than through intermediaries (e.g. supervisors). | 0.756*** | 8.976 | 0.111 | |
They have authority/power to make and implement decisions about tasks. | 0.609*** | 7.592 | 0.103 |
The quality of the performance appraisal system | |||
Fairness | 0.864 | ||
My last performance rating accurately represented how well I have performed in my job | 0.786*** | NA | NA |
My last performance appraisal was fair | 0.845*** | 12.374 | 0.081 |
My supervisor’s las rating of my performance was justified | 0.848*** | 12.405 | 0.082 |
My last performance rating was free from bias | 0.069*** | 9.557 | 0.093 |
Constructs and items | Factor Loading | t-value | SE | Cronbach alpa |
|---|---|---|---|---|
Communication | 0.788 | |||
The progress towards my goals set in previous appraisal meetings is frequently reviewed by my supervisor with me | 0.769*** | NA | NA | |
My supervisor gives me guidance about how to improve my performance | 0.818*** | 8.461 | 0.135 | |
I am given opportunities to express my feelings when my performance is evaluated | 0.648*** | 8.077 | 0.096 | |
Goodness-of-fit: Scores not available as only three items | ||||
NB One item—“My supervisor is mainly focused on evaluating my performance rather than providing feedback” did not load on this dimension | ||||
Trust | 0.872 | |||
My supervisor is competent to evaluate my performance | 0.708*** | NA | NA | |
My supervisor is familiar with the details and responsibilities that my job entails | 0.879*** | 10.551 | 0.125 | |
I have confidence and trust in my immediate supervisor regarding his/her general fairness | 0.834*** | 11.750 | 0.103 | |
I trust my supervisor to accurately report my performance to his/her supervisor | 0.926*** | 11.068 | 0.118 | |
Goodness-of-fit: CMIN/DF = 2.631; GFI = 0.994; CFI = 0.997; AGFI = 0.936; RMSEA = 0.090 | ||||
Clarity
This dimension only consisted of the following item:
It was made clear to me when I was hired that the results of my performance evaluation would be tied to certain personnel actions (i.e. pay rises, promotions, terminations ect.
Construct and items | Factor Loading | t-value | SE | Cronbach alpha |
|---|---|---|---|---|
Organisational performance | ||||
Financial performance | 0.863 | |||
Profit goals have been achieved. | 0.824*** | NA | NA | |
Sales goals have been achieved. | 0.872*** | 12.444 | 0.092 | |
Return on investment goals have been achieved. | 0.777*** | 11.661 | 0.089 | |
Goodness-of-fit: Not available as only three items | ||||
Non-financial performance | ||||
Our product(s) are of a higher quality than that of our competitors. | 0.710*** | 0.803 | ||
We have a higher customer retention rate than our competitors. | .0911*** | 8.731 | 0.150 | |
We have a lower employee turnover rate than our competitors. | 0.670*** | 8.708 | 0.116 | |
Goodness-of-fit: Not available as only three items. |
Appendix 2: The results of exploratory factor analysis with all items for all variables
Cross loadings | |||||
|---|---|---|---|---|---|
1 | 2 | 3 | 4 | 5 | |
Fairness1 | 0.790 | 0.151 | 0.074 | 0.161 | 0.118 |
Fairness2 | 0.765 | 0.285 | 0.070 | 0.085 | 0.035 |
Fairness3 | 0.737 | 0.323 | 0.078 | 0.116 | 0.104 |
Fairness4 | 0.698 | 0.307 | 0.002 | 0.034 | 0.177 |
Communication1 | 0.628 | 0.349 | 0.260 | 0.124 | 0.126 |
Communication2 | 0.456 | 0.591 | 0.223 | 0.037 | 0.067 |
Communication3 | − 0.245 | 0.370 | − 0.405 | − 0.163 | − 0.032 |
Communication4 | 0.428 | 0.595 | − 0.039 | 0.121 | 0.206 |
Trust1 | 0.288 | 0.724 | 0.239 | 0.134 | 0.063 |
Trust2 | 0.255 | 0.775 | 0.167 | 0.110 | 0.191 |
Trust3 | 0.361 | 0.713 | 0.106 | 0.165 | 0.216 |
Trust4 | 0.357 | 0.752 | 0.086 | 0.128 | 0.137 |
Clarity | 0.545 | 0.112 | 0.417 | 0.092 | − 0.019 |
Employeeempowerment1 | 0.207 | 0.143 | − 0.031 | 0.744 | 0.230 |
Employeeempowerment2 | 0.185 | 0.203 | 0.160 | 0.748 | − 0.023 |
Employeeempowerment3 | 0.037 | 0.111 | 0.059 | 0.828 | − 0.010 |
Employeeempowerment4 | 0.026 | − 0.051 | 0.122 | 0.723 | 0.213 |
Financialperformance1 | 0.057 | 0.197 | 0.840 | 0.061 | 0.184 |
Financialperformance2 | 0.136 | 0.125 | 0.837 | 0.050 | 0.185 |
Financialperformance3 | 0.084 | 0.177 | 0.723 | 0.138 | 0.299 |
Nonfinancialperformance1 | 0.061 | 0.242 | 0.165 | 0.216 | 0.740 |
Nonfinancialperformance2 | 0.108 | 0.188 | 0.304 | 0.113 | 0.796 |
Nonfinancialperformance3 | 0.189 | 0.075 | 0.165 | 0.057 | 0.785 |
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Baird, K., Tung, A. & Su, S. Employee empowerment, performance appraisal quality and performance. J Manag Control 31, 451–474 (2020). https://doi.org/10.1007/s00187-020-00307-y
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DOI: https://doi.org/10.1007/s00187-020-00307-y