Works Councils and Performance Appraisals

Christian Grund, Dirk Sliwka () and Krystina Titz ()
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Dirk Sliwka: University of Cologne
Krystina Titz: RWTH Aachen University

No 12670, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Drawing on two large German representative data sets, we analyze the role of works councils for the use of performance appraisals (PA). We distinguish between the incidence of performance appraisal systems as intended by the firm and their actual implementation on the level of the individual employee. We find that works councils tend to promote rather than restrict PA. Employees working in establishments with a works council are more likely to face a formal performance appraisal procedure. Works councils also act as a transmission institution for the actual use of an existing PA system – i.e. among the firms that claim to implement performance appraisals for all their employees, the likelihood of their employees actually having regular appraisals is substantially larger when works councils are in place. Moreover, the existence of works councils is positively related particularly to PA systems, which affects bonus payments.

Keywords: performance appraisals; voice; works councils; performance pay (search for similar items in EconPapers)
JEL-codes: J53 J83 M12 M54 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2019-10
New Economics Papers: this item is included in nep-bec, nep-eur, nep-hrm and nep-lab
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Published - published in: Journal of Participation & Employee Ownership, 2020, 3, 29-50

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