What Do Performance Appraisals Do?

Peter Cappelli and Martin Conyon

ILR Review, 2018, vol. 71, issue 1, 88-116

Abstract: Performance appraisals, the evaluation of an employee’s job performance over the previous period by one’s supervisor, are a standard practice in virtually every organization. They are one of the most important, time-consuming, and unpopular tasks in management. Despite this, remarkably little is known about how performance appraisals operate, especially their consequences. Indeed, much of what is written from a practitioner perspective typically suggests that they do little. By contrast, we document empirical evidence of the importance of performance appraisals using data from a large US corporation. The results in this case show that appraisals are informative and directly influence many dimensions of employee outcomes, including employee bonuses, merit pay, employee promotions, and decisions to exit the firm. The evidence shows that the appraisal process here is consistent with a relational, open-ended view of employment. It is not consistent with the common economic view that performance appraisals simply settle-up contractually based employment relationships.

Keywords: performance appraisals; merit pay; promotions; employment relationship (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://ilr.sagepub.com/content/71/1/88.abstract (text/html)

Related works:
Working Paper: What Do Performance Appraisals Do? (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:ilrrev:v:71:y:2018:i:1:p:88-116

Access Statistics for this article

More articles in ILR Review from Cornell University, ILR School
Bibliographic data for series maintained by SAGE Publications ().