What are the Theories Related to Performance Appraisal?

A performance appraisal system is part of a performance management system. It formally chronicles a person’s achievements concerning defined objectives and is also known as a performance review. Managing worker performance is as vital as any other task that all supervisors must complete during the year. According to Grote (2002), performance assessment is a formal management technique that aids in evaluating a worker’s performance standard. According to Schneier and Beatty, as stated in Patterson (1987), it is a process that, in addition to assessing, discovers and enhances human performance. There are several theories and concepts related to performance appraisal. Some of them are as follows:

Expectancy theory of performance management

Victor Vroom proposed the concept of expectancy theory. According to Kreitner and Kinicki (2007), the idea gets founded on the notion that individuals drive to engage in actions that would result in valued and anticipated results. Research on performance appraisal suggests an employee may be motivated when there is a conviction that greater performance would result in a favorable performance assessment, which will aid in achieving personal objectives. Motivation is a mix of valence, instrumentality, and expectation. The worth of the purported outcome gets referred to as valence. Individuals’ instrumentality is their belief in their ability to accomplish what they desire. It demonstrates that a successful deed will inevitably result in the intended outcome. Expectancy describes the various levels of expectation and confidence in one’s competence. Workers say that these constitute a motivating force, which may get expressed by the following equation: Valence x Expectancy = Motivation.

The hypothesis gets divided into three parts:

  • Relation between effort and performance
  • Relationship between performance and reward
  • Relationship between rewards and personal goals

Social comparison theory of performance appraisal

Founded on 1954 by Festinger, according to social comparison theory, people create performance judgments by comparing themselves to others. They are interested not only in their overall performance but also in how they compare to relevant colleagues. Furthermore, when confronted with unfavorable comparison data, this hypothesis proposes that workers have a strong motivation to boost their performance.

Goal setting theory

Edwin Locke introduced goal setting theory in the year 1968. According to this concept, a worker’s specific goals encourage him to work well. It is due to the employees’ continued pursuit of their objectives. If the fulfillment of targets does not occur, they either enhance their performance or adjust the goals to make them more attainable. If the performance enhances, the performance management system’s objectives get achieved. Many researchers going through the link between performance and motivation in businesses believe that goal-setting and explanation build employees’ confidence. Staff will have a clear understanding of what the organization aims to achieve if the goals are clearly defined. According to Coetsee (2003), the most productive workers are goal-oriented. Set goals enable staff to achieve the organization’s vision, aims, and strategic intent. The idea here is that if individuals identify and comprehend what gets expected of them and how it will take place, they will be driven to do it within the time frame. Goal-setting theory has been utilized more than any other as a concept to drive personnel to enhance their performance in coaching.

Feedback intervention theory

Founded by Kluger and DeNisi on 1996, according to the feedback intervention concept, when individuals face a disparity between what they want to accomplish and the feedback they obtain, they are greatly driven to reach a better level of performance. As a result, the process of performance appraisal presumes that notifying a worker about the disparities between the organization’s standard and their actual performance – suggesting that they are attaining lower than most other coworkers – will encourage the worker to perform at a higher level of performance.

Impact of performance appraisal on employee productivity

Both researchers and practitioners agree that performance assessment, in general, may favorably influence various organizational objectives, including job performance, efficiency, organizational citizenship behavior, contentment, and engagement. Companies may boost productivity by developing and implementing assessment systems, giving constructive feedback, and handing out competitive rewards. The goal is to have performance reviews regularly and to incorporate them as a part of the business culture. Workers should be encouraged to participate in their assessment and submit feedback to the organization as part of the process. Using employee ideas and expertise may assist the organization in developing more effective and productive procedures and systems. Performance assessments facilitate meaningful interaction between workers and managers or company owners that would not otherwise take place. Because many small firms are fast-paced, supervisors may not have the opportunity to offer meaningful feedback regularly to staff, and workers may not have the chance to voice concerns they are experiencing. A performance appraisal is a promise to set aside time for these types of discussions to benefit both workers and the company.


Performance assessments are vital human resource management tools. They are sometimes despised by both staff and their employers. However, they are critical when it comes to maximizing your employees’ potential, fixing defects, and establishing the most professional team possible. Performance evaluations must get handled with caution. Therefore the role of hr in performance appraisal is very critical. The consequences of performance assessment on workers will vary greatly depending on how and to whom it is delivered.