What Drives Perceived Fairness of Performance Appraisal? Exploring the Effects of Psychological Contract Fulfillment on Employees’ Perceived Fairness of Performance Appraisal in U.S. Federal Agencies

Abstract

While the recent literature acknowledges the importance of performance appraisal fairness in high-performing organizations, one of the major challenges facing human resource management (HRM) is establishing both an effective and a fair performance appraisal system; yet little is known about the key organizational and psychological factors that affect employees’ perception of performance appraisal fairness, especially in public organizations. In regards to employees’ perception of performance appraisal fairness, most studies have focused on the structural factors rather than the cognitive or psychological perspectives. Particularly, one of the key overlooked factors driving employees’ perceived fairness of performance appraisal is psychological contract fulfillment, which describes the expectations between an employee and the employer and what each gives and expects in return from the other. This study examines whether psychological contract fulfillments are associated with employees’ perceived fairness of performance appraisals in U.S. federal agencies. Using the Federal Employee Viewpoint Survey, this study finds that psychological contract fulfillments have a positive impact on federal employees’ perceived fairness of performance appraisals.