Perceived Fairness of Performance Appraisal

Abstract

This thesis is written for a local bakery shop `Oulun Leipomokauppa.com Oy`. The purpose in this study is to determine the influence of perceived fairness of performance appraisal on employee´s performance and productivity. This thesis will help the owners and the managers of the bakery to make fair measures to evaluate employee performance at work. It will also help the managers in making decisions about the salary increment, promotion and giving rewards to the employees.

The objective of this thesis is to study the impact and the significance of perceived fairness of performance appraisal on employee´s productivity. Along with that, the employee´s perspective about the appraisal system is studied. The theoretical part of the thesis consists of latest books, journals and scholarly articles. Relevant books have been approached to consolidate the literature part for the questionnaire. The questionnaire is based on the three variables (interpersonal, procedural and outcome fairness) of perceived fairness. Different questions are extracted from these variables and responses have been analyzed under the results and findings chapter.

After analyzing the questionnaire, it can be concluded that the perceived fairness of performance appraisal is very important in the organization so as to maintain the employee-manager relationship and peace. The age and gender, if neglected, may cause negative consequences that can damage the organization internally. Also, the fairness in the compensation procedure supports and motivates employees to work harder and better.

At the end of the study the recommendations are to link the goals and objectives of the organization with the employee’s goals and objectives and it is suggested that organization should build the culture that values feedback. It is because valuing feedback will help managers to stay away from personal critiques, avoid exaggerations and biases.