Effects of Introducing a Performance Management System on Employees' Subsequent Attitudes and Effort

Abstract

A longitudinal evaluation was conducted on the effects of introducing a performance management system (PMS), which featured merit-based bonus pay, on subsequent employee attitudes and self-reported work effort in a small, government organization. Additionally, employees' targets of blame for receiving lower-than-expected ratings were explored. A significant change in employees' organizational commitment occurred over the time that the PMS was implemented, with a substantial increase occurring within the performance planning/goal-setting phase, followed by a slight decay over the following year, but still ending higher than the pre-PMS baseline level. Substantial increases in ratings of satisfaction and cooperation with one's supervisor were found with the introduction of the PMS for low performers (particularly following the performance planning/goal-setting phase). In contrast, however, high performers had high base-line levels of these attitudes toward supervision, followed by substantial drops immediately after receiving appraisal and bonus pay distributions. As anticipated, most participants in this study had expected a performance rating higher than they actually received, and most of these individuals made external attributions for the rating discrepancy, blaming either their supervisor, the organization, or the PMS itself. However, neither having received a lower-than-expected appraisal rating nor having made external attributions for a lower-than-expected rating were related to changes in attitudes or self-reported effort.