Performance Appraisal Dimensions and

The International Journal of Human Resource
Management
ISSN: 0958-5192 (Print) 1466-4399 (Online) Journal homepage: https://www.tandfonline.com/loi/rijh20
Performance appraisal: dimensions and

determinants
Alberto Bayo-Moriones, Jose E. Galdon-Sanchez & Sara Martinez-de-

Morentin
To cite this article: Alberto Bayo-Moriones, Jose E. Galdon-Sanchez & Sara Martinez-de-Morentin
(2019): Performance appraisal: dimensions and determinants, The International Journal of Human
Resource Management, DOI: 10.1080/09585192.2018.1500387
To link to this article: https://doi.org/10.1080/09585192.2018.1500387
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THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT
https://doi.org/10.1080/09585192.2018.1500387
Performance appraisal: dimensions and determinants

Alberto Bayo-Morionesa, Jose E. Galdon-Sanchezb and
Sara Martinez-de-Morentinb
a
Department of Business Administration and INARBE, Universidad Publica de Navarra,
Pamplona, Spain; bDepartment of Economics, Universidad Publica de Navarra, and IZA,
Pamplona, Spain
ABSTRACT ARTICLE HISTORY

Using a sample of Spanish establishments in the manufactur- Received 10 August 2016
ing sector, this article analyses the determinants of the dimen- Revised 25 June 2018
sions of performance appraisal. The dimensions examined are Accepted 8 July 2018
performance measures, who evaluates performance and fre-
KEYWORDS
quency. The results show that the degree of autonomy of the Performance appraisal;
workforce affects positively the use of subjective criteria. It is organizational context;
also more likely that performance appraisal is carried out by dimensions of appraisal;
the supervisor in the presence of teams and internal promo- New Economics of
tions. Regarding the explanation of the frequency, teams Personnel; Contextually-
affect negatively this dimension of performance appraisal. Based Human
Resource Theory
Introduction
Performance appraisal has been widely studied by scholars and practitioners
in the human resource management (HRM) field. According to Fletcher
(2001), performance appraisal refers to the ‘activities through which organiza-
tions seek to assess employees and develop their competence, enhance per-
formance and distribute rewards. It sometimes becomes a part of a wider
approach to integrating HRM strategies known as performance management’.
Performance appraisal raises so much interest and awareness because
it involves a variety of functions (Boswell & Boudreau, 2002). Among
them, we can cite monitoring, the communication of firm objectives and
values, the validation of HRM practices or the evaluation of training and
hiring strategies (Baron & Kreps, 1999). Moreover, designing perform-
ance appraisal is a complex endeavour, since there are multiple agents
interested in the outcomes of the practice as well as many dimensions
involved. Consequently, the body of research on the topic is extensive
and varied (Ahmed, Sultana, Paul, & Azeem, 2013; Bretz, Milkovich, &
Read, 1992; DeNisi & Murphy, 2017; Levy & Williams, 2004).
CONTACT Sara Martinez-de-Morentin sara.martinezdemorentin@unavarra.es Department of

Economics, Universidad Publica de Navarra, Campus de Arrosadia, Pamplona 31006, Spain
ß 2019 Informa UK Limited, trading as Taylor & Francis Group
2 A. BAYO-MORIONES ET AL.
Among other things, researchers on performance appraisal have been

interested in the influence that the organizational context has on the use
and characteristics of the practice (Den Hartog, Boselie, & Paauwe, 2004;
or Murphy & Cleveland, 1991). Recently, the influence of establishment
characteristics on performance evaluation has been analysed in different
institutional contexts (see, among others, Addison & Belfield, 2008;
Brown & Heywood, 2005; Grund & Sliwka, 2009; Jirjahn & Poutsma,
2013). These studies have focused on analysing the decision to imple-
ment performance appraisal, but not on the design of the practice.
However, performance evaluation is multidimensional, and the employer
has to devise it in a way that enables the firm to get positive results. As
Baron and Kreps (1999) describe, the appropriate design of performance
appraisal is conditioned by the features of both the organization and the
HRM system.
In light of the existent literature, there is a need to analyse in more
depth how establishment variables affect the design of performance
appraisal and not only its adoption. In order to do so, we address the
following dimensions of appraisal. The first dimension concerns per-
formance measures. In particular, we analyse if evaluation is based only
on objective measures or if it also includes subjective criteria. The second
dimension refers to who carries out the evaluation. More precisely, we
account for three potential evaluators: the supervisor, a higher-level man-
ager or the HRM department. Finally, we analyse the period of perform-
ance appraisal. We differentiate between evaluations carried out
biennially or annually (low frequency), and those performed biannually
or with a higher periodicity (high frequency). In order to do so, we use a
data set that contains information about HRM practices, and that was
constructed as part of a study conducted for a sample of establishments
that is representative of the Spanish manufacturing industry.
In explaining the design of performance evaluation, we derive a set of
testable hypotheses from two strands of literature. On the one hand, fol-
lowing Lazear (1993), we base our analysis in the New Economics of
Personnel (NEP). From this framework, we identify a group of variables
that represent the difficulties of measuring individual performance. More
precisely, we take into account job autonomy, job rotation and team-
work. Following Paauwe (2004), we also resort to the Contextually-Based
Human Resource Theory (CBHRT). This strand of literature comprises
elements from several approaches to HRM, from the Configurational
approach and the notion of fit, to the Resource-Based view, among
others. In particular, we analyse the complementarities between perform-
ance appraisal dimensions and training, pay for performance and
internal promotions.
THE INTERNATIONAL JOURNAL OF HUMAN RESOURCE MANAGEMENT 3
This paper contributes to the existent studies on the factors that deter-
mine performance appraisal in several ways. First, previous research has
stressed the relevance of the organizational-level variables in the relation-
ship between performance evaluation and firm performance (Den Hartog
et al., 2004). To our knowledge, this literature has considered the import-
ance of the organizational context on the adoption of performance
appraisal, but not on the dimensions of the practice. This is the main
gap in the literature on performance appraisal and the main issue we
want to address in this paper.
Second, many organizational issues, both within the HRM domain and
in other organizational domains, depend or are related to performance
appraisal (Aguinis, 2013; Lazear & Gibbs, 2014). The different dimen-
sions of performance appraisal have an impact on critical aspects such as
the flexibility of the system (Engellandt & Riphahn, 2011), whether
appraisal has a developmental or an evaluative use (Chiang & Birtch,
2010), or the possibility to solve relevant problems such as the
‘misalignment of incentives’ (Prendergast, 1999). The importance of per-
formance appraisal is supported by the significant amount of resources
and effort that organizations usually devote to this practice (Kampk€ otter,
2016). As a result, it is essential to identify the factors that determine
how performance appraisal is designed. Third, we focus on two strands
of literature, the NEP and the CBHRT to develop testable hypotheses
about the configuration of performance appraisal. The two disciplines
are closely related, since they focus on the search for an efficient use of
organizational resources. However, each of them adopts a different per-
spective when analysing efficiency. The combination of these comple-
mentary approaches enables to take into account the economic
rationality and an interdisciplinary view that focuses on a relational
rationality (Paauwe, 2004).
It is worth noticing that we focus on the analysis of the factors that
determine performance appraisal design, not performance management
design (as in Brown & Benson, 2005; Fletcher, 2001). As pointed out by
Aguinis (2013), performance management and performance appraisal are
two different, yet interrelated concepts. Performance appraisal is a rele-
vant part of performance management, but the latter concept is much
wider. We acknowledge it could be pertinent to study the factors that
determine other aspects of performance management. However, it would
be too ambitious to extend our study to other elements of the perform-
ance management system.
The next section describes the dimensions of performance assessment
considered in the article. Then, we present the theoretical concepts
related to the determinants of performance appraisal design. The
following section provides information about the methodology we use to

carry out the empirical analysis. Finally, we describe the findings and the
conclusions reached.
Dimensions of performance appraisal

The goal of the article is to study the influence of establishment charac-
teristics on the design of performance appraisal. Consequently, we begin
by describing the three dimensions we are going to focus on. These
aspects are the performance measures used, who evaluates performance
and the frequency of appraisal.
We acknowledge this is not an exhaustive description of all the dimen-
sions that characterize performance appraisal. However, the three dimen-
sions considered in this study describe the main features of performance
appraisal, providing information about how performance is measured,
about who evaluates performance, and about when the appraisal is car-
ried out. In what follows, we describe why these three aspects are rele-
vant for the purposes of our study.
Measures of performance
Different measures can be used to evaluate the performance of an
employee (Wall et al., 2004). A natural option is to consider objective
indicators such as the number of pieces produced or the amount of sales.
One of the advantages of using objective measures is that they can be
observed by both the person appraised and the evaluator. Another
advantage is that they simplify and standardize the evaluation process
(Prendergast, 1999). However, objective measures are not always avail-
able (Kampk€ otter & Sliwka, 2016). This can happen, for example, in jobs
characterized by multitasking.
Besides objective measures, evaluators may also use subjective criteria
based on their judgements (Baker, Gibbons, & Murphy, 1994). The adop-
tion of subjective measures enables the evaluator to adapt the assessment
to the characteristics of the job (Engellandt & Riphahn, 2011). Moreover,
it makes the evaluation more comprehensive. Aspects such as the rela-
tionship with customers or the collaboration with peers can only be
included in subjective performance appraisal. As a consequence, subject-
ive measures help to avoid the ‘misalignment of incentives’ problem
(Prendergast, 1999). Finally, objective and subjective measures can also
be implemented simultaneously and act as complementary determinants
of performance (Moers, 2005).
Who evaluates performance?

A key decision in the design of performance appraisal concerns who will
perform the evaluation (Levy & Williams, 2004). It is common that this
is done by the direct supervisor (Murphy & Cleveland, 1995). However,
a more skilled manager may carry out the evaluation if particular needs
emerge (Boswell & Boudreau, 2002). Under these circumstances, a
higher-level manager could be in charge of the assessment. If there are
HRM specialists in the firm, one of them may be responsible for the
evaluation. Moreover, there is the possibility that the evaluation is based
on information from different sources in order to rate various aspects of
performance (Bohlander & Snell, 2009). Hence, there are contexts in
which peers, costumers or subordinates participate in performance
appraisal, providing valuable information about workers’ performance.
For several reasons, the choice of the appraiser is crucial for organiza-
tional success because, for a specific job category, certain supervisors are
better suited to evaluate performance than others.
Frequency of appraisal
An important dimension of performance appraisal is the evaluation
period (DeNisi & Pritchard, 2006; Levy & Williams, 2004). According to
Werner and Bolino (1997), the evaluation becomes more accurate when
it is conducted more frequently. The satisfaction of employees with the
practice and the perceptions of fairness also increase with the rating fre-
quency. One of the variables that determine the period of evaluation is
the objective pursued with the appraisal (Chiang & Birtch, 2010). It is
usual that performance appraisal results are used to make administrative
decisions such as pay increases. Since these decisions are usually adopted
yearly, these organizations tend to carry out performance appraisal annu-
ally. In other cases, performance appraisal is used to gather information
about different aspects of workers’ performance with developmental pur-
poses. These evaluations are usually made for shorter periods of time
than those with administrative purposes. In addition, the characteristics
of the tasks determine if performance is assessed in the short, medium
or long run. As a consequence, the nature of the job is also a key deter-
minant of the frequency of performance appraisal (Baron &
Kreps, 1999).
Factors that influence the design of performance appraisal

In this section, we examine the determinants of performance appraisal
design. As we have previously stated, we base our analysis on two
strands of literature. On the one hand, the NEP is used as theoretical

basis. From this framework we are able to identify a group of variables
that, among others, represent the difficulties of measuring individual per-
formance. On the other hand, we resort to the CBHRT. This body of
research provides insights to understand how HRM aspects are shaped
and blended together. This literature views performance appraisal as part
of a bundle of HRM practices, policies and strategies that, jointly imple-
mented, create synergies that may affect positively firm performance. In
what follows, the two frameworks are briefly presented and the variables
that influence the design of performance appraisal identified.
As previous studies have highlighted (see, e.g. French, Kubo, &
Marsden, 2000; Guest, 2001; Gunderson, 2001; Marsden & Belfield,
2010), the combination of the NEP and the CBHRT perspectives enables
to focus on both economic and organizational factors when studying per-
formance appraisal. Whereas the NEP applies the economics rationale to
the study of personnel issues (Lazear, 1993), the CBHRT adopts a multi-
dimensional perspective, taking insights from Resource-Based theory,
Contingency and Configurational approaches to HRM and New
Institutionalism (Paauwe, 2004). As we explain throughout the section,
both approaches provide useful insights to understand the design of per-
formance appraisal. They complement each other and combine the eco-
nomic rationality with the more interdisciplinary view of HRM research
that stresses a relational rationality (Paauwe, 2004). Consequently, the
two theoretical approaches are strongly interconnected, being the effi-
cient use of organizational resources to maximize performance at the
heart of both of them.
The difficulties of measuring individual performance: the NEP

The NEP examines personnel issues from an economic point of view,
explaining the determinants of HRM practices (Gibbons, 1998; Lazear,
1993, 1999; Lazear & Gibbs, 2014). In order to do so, the NEP adopts an
optimization perspective, identifying the HRM practices that maximize
firm performance (Lazear & Shaw, 2007). Consequently, it provides a
solid, theoretically grounded and comprehensive field of study that helps
to study the determinants of performance appraisal.
A central topic in the NEP literature and its application to the HRM
field is the principal–agent problem. This problem emerges when the
principal and the agent pursue different interests and there are informa-
tion asymmetries that impose difficulties for the principal to know the
actions the agent does (Eisenhardt, 1989).
According to the NEP, the following work organization factors give

rise to a principal–agent problem: job autonomy, teamwork and job rota-
tion (Green, 2008; Jirjahn & Poutsma, 2013; Marsden & Belfield, 2010).
Job autonomy refers to workers’ discretion in their jobs, the use of team
production generates interdependencies between workers, and job rota-
tion implies multitasking in different sections of the firm. Performance
appraisal can be used as a monitoring device that aligns the interests of
the agent and the principal, and overcomes the principal-agent problem
that arises in the presence of job autonomy, teamwork and job rotation.
In what follows we explain in more detail the relationship between these
variables and performance appraisal.
Job autonomy is one of the most relevant factors considered in the
NEP (Green, 2008). When deciding to implement control systems, man-
agers should contemplate the existence of uncertainty and its effects
(Prendergast, 2002). Employers may respond to uncertainty by delegating
responsibility to workers, that is, giving them autonomy or discretion in
the deployment of their jobs. The higher the degree of autonomy, the
more difficulties arise when monitoring workers’ behaviour and perform-
ance. Autonomous workers have discretion over their choices of tasks
and effort, and information asymmetries exist between the managers and
them. In addition, the importance of communicating organizational
objectives to workers increases with their degree of autonomy, and per-
formance appraisal becomes a natural communication channel (French
et al., 2000).
Given these results, we expect the degree of autonomy to be related to
the particular features of performance appraisal. Regarding performance
measurement, job autonomy is used in more complex and less straight-
forward jobs, when it is difficult to determine the optimal actions for the
worker (Prendergast, 2002). Under these circumstances, using objective
measures of performance may cause workers to disregard actions profit-
able for the firm (Prendergast, 1999). Moreover, when there are measure-
ment difficulties, as it is the case in the presence of autonomy, additional
sources of information about workers’ performance may be needed.
Using subjective criteria in addition to objective measures could contrib-
ute to a more complete evaluation of performance. We predict that job
autonomy will favour using performance appraisal that includes subject-
ive criteria.
Those jobs involving complex functions, such as autonomous planning
and organization, are not easy to evaluate. In these cases supervisors
need to display specific capabilities in order to carry out an effective
appraisal. Murphy and Cleveland (1995) state that performance appraisal
becomes more complicated when workers are autonomous. As a
consequence, it is not easy for the immediate superior to conduct the

evaluation. Rater skills to perform appraisal are considered crucial for
the success of the evaluation process. Biron, Farndale, and Paauwe
(2011) stress the importance of this idea and state that, when a rater is
not appropriately trained, the likelihood of bias increases and the legit-
imacy and success of performance evaluation can be compromised.
Hence, in the presence of autonomy, it is more likely that a manager
located in the hierarchy at least two levels above the employee or the
HRM department are in charge of the evaluation. The former has a glo-
bal vision of the organization, whereas the latter is more specialized in
evaluation and may carry out performance appraisal more accurately in
a complex context.
Finally, job autonomy could also influence the frequency of perform-
ance appraisal. In particular, we anticipate that autonomous workers will
be evaluated more frequently. Autonomous employees have more influ-
ence over their jobs, have a higher degree of responsibility and need to
find solutions for the problems and challenges they face in their daily
work. Under these circumstances, frequent appraisal could be needed in
order to communicate the organizational targets to the workers and give
them feedback for improvement (Baron & Kreps, 1999). Furthermore,
Brown and Heywood (2005) state that ‘formal appraisal will yield bene-
fits when each worker has substantial scope in determining their tasks
and effort levels and the results of these choices are not immediately
obvious’. When workers are autonomous and they decide over tasks and
effort, supervision is more valuable compared to, for example, routine
jobs in which tasks and effort are determined by the production process.
In addition, monitoring asymmetries are larger and more monitoring
devices are needed. Therefore, a higher frequency of performance
appraisal is predicted for autonomous workers.
Hypothesis 1: When workers have autonomy, performance appraisal (a) includes
subjective criteria, (b) is conducted by managers at an upper hierarchical level in
the company or by the HRM department and (c) is more frequent.
Another relevant topic in the NEP concerns the implications of team-

work, which also introduces difficulties in measuring performance (Levy
& Steelman, 1997). Some work environments are characterised by diver-
sity of tasks, interdependencies between workers and high levels of
responsibility. Under these circumstances, cooperation with colleagues
and teamwork are necessary. As suggested by the NEP, under these cir-
cumstances, individual contributions to firm value are difficult to iden-
tify. In other words, it is complex to determine individual productivity
from the observation of team output (Alchian & Demsetz, 1972;
Heywood & Wei, 1997). In addition, shirking costs increase in the
presence of teamwork, since shirking affects the productivity of co-work-

ers (Heywood, Jirjahn, & Wei, 2008).
Levy and Williams (2004) relate teamwork to performance measures.
In particular, working in a team hinders the identification of individual
performance because of the presence of interdependencies. As a result, it
might not be useful for an employer to use only objective indicators
when evaluating a worker. To address this problem, subjective measures
of performance could be used, as they facilitate a more comprehensive
evaluation of employees’ deployment. In this line of reasoning, these
authors indicate that performance appraisal in team-based work should
be broad enough to consider all relevant aspects of performance, from
objective aspects such as production quantity to subjective criteria such
as customer satisfaction or communication skills. This idea is supported
by Aguinis (2013), who considers the measurement of team performance
a complex task, suggesting the use of multiple methods and data sources.
Although the use of teamwork introduces certain complexities regard-
ing the measurement of individual performance, it can facilitate some
aspects of the evaluation process. One of the features associated with
teamwork is the monitoring of peers and the existence of collective
responsibility over the performance of the group (Loughry & Tosi, 2008;
May & Gueldenzoph, 2006). Therefore, those employees working in
teams will be motivated by such collective responsibility and the sense of
belonging to a group. Under these circumstances, supervisors with spe-
cific capabilities seem not so necessary. In addition, each member of a
team may have specific skills and abilities that complement each other,
generating strong interdependencies between them (Heywood et al.,
2008; Levy & Williams, 2004). The immediate superior may be well posi-
tioned to observe and evaluate the interdependencies and complex rela-
tions that emerge within a team, getting first-hand knowledge of how
the team works. On the contrary, this direct evaluation may be more dif-
ficult to accomplish by a supervisor at a higher level.
Regarding the timing of evaluation, we anticipate that the evaluation
of performance will be carried out with a lower frequency in a team,
since co-workers can facilitate some functions of the appraisal process.
Peers observe directly their team partners, set standards, sanction
undesirable actions or low effort, and may even report information about
their colleagues to managers (Loughry & Tosi, 2008). In other words, in
the presence of teamwork, certain functions commonly assigned to
appraisal can be accomplished by co-workers themselves. Under these
circumstances, performance appraisal is not so necessary and, therefore,
it can be applied less frequently.
Hypothesis 2: In the presence of teamwork, performance appraisal (a) includes

objective and subjective criteria, (b) is conducted by the supervisor, and (c) is
less frequent.
Finally, job rotation might also generate problems when measuring

performance. In particular, job rotation introduces multitasking in the
organization, which occurs across different jobs instead of within jobs
(Jirjahn & Poutsma, 2013). The implications of multitasking for perform-
ance appraisal have been extensively examined in the NEP literature (see,
e.g. Holmstrom & Milgrom, 1987, 1991).
Regarding performance measurement, when workers are subject to fre-
quent changes between jobs, it is more useful to adopt a system of evalu-
ation based on subjective criteria. It may be difficult to evaluate multiple
tasks with objective performance measures. On the contrary, a subjective
performance appraisal is more flexible and can be adapted to different
circumstances, accounting for the different dimensions of a job
(Engellandt & Riphahn, 2011). This idea matches the theories of
Holmstrom and Milgrom (1991) and Baker (1992) and their assumption
that jobs with many tasks are harder to measure and should be evaluated
using subjective criteria. This argument has been supported empirically
(Brown, 1990; MacLeod & Parent, 1999). These authors predict that the
use of objective measures is negatively associated to how many tasks a
job includes. From their review of theoretical models of incentives,
Gibbons and Waldman (1999) conclude that, in settings with multiple
tasks, agents should be paid for their contributions according to subject-
ive rather than objective assessments.
The workers’ immediate superior may not be well suited to evaluate
workers when they rotate from one job to another. The problems of rely-
ing on the direct supervisor might be particularly relevant when the jobs
involved belong to different sections or departments. As Jirjahn and
Poutsma (2013) stress, frequent changes between jobs make appraisal
more difficult and costly. Under such conditions, organizations require
supervisors that are better qualified than the immediate superior to per-
form effectively a complex process of appraisal (Boswell & Boudreau,
2002). To deal with the monitoring problems that emerge when workers
rotate between jobs, employers may rely on a higher-level manager with
a global vision of the organization and able to judge performance in dif-
ferent positions. Alternatively, performance appraisal could be conducted
by the HRM department, since their specialists have the necessary know-
ledge, experience and skills to do it. Finally, regarding the frequency of
performance appraisal, our hypothesis is that it should increase with the
use of job rotation. Among other things, performance appraisal is espe-
cially useful to determine the abilities of workers and decide whether
they fit or not a particular job (Baron & Kreps, 1999; Boswell &
Boudreau, 2002). In order to do so, the employer needs to communicate
workers the specific objectives of the organization and what the company
wants to be done, to identify training needs and to provide feedback for
self-improvement, among other things. Hence, when there are frequent
changes between jobs, the firm might want to repeat the process and re-
evaluate the worker in each new position. Given these considerations, we
expect that job rotation increases the frequency of evaluation.
Hypothesis 3: In the presence of job rotation, performance appraisal (a) includes
subjective criteria, (b) is conducted by managers at upper hierarchical levels in the
company or by the HRM department, and (c) is more frequent.
The CBHRT
The second strand of literature we use to develop our theoretical frame-
work is the CBHRT (Paauwe, 2004). From this theory, we can gain rele-
vant insights into how organizations shape their HRM systems and how
these systems evolve over time. To do so, the CBHRT adopts an exhaust-
ive perspective, taking insights from New Institutionalism (Greenwood &
Hinings, 1996), Resource-Based theory (Barney, 1991), and Contingency
and Configurational models (Delery & Doty, 1996).
One of the strengths of this theory is the analysis of the impact of
HRM on performance from a multidimensional perspective. In particu-
lar, the Contextually-Based Human Resource examines the appropriate-
ness of combining different HRM practices taking into account their
effects on organizational performance, but also their implications for
other stakeholders such as employees, trade unions, etc. (Paauwe, 2009).
The CBHRT emphasizes the notion of fit between the HRM system
and the organizational context (Wood, 1999). More specifically, the the-
ory differentiates four dimensions of fit: strategic, horizontal, organiza-
tional and environmental (Paauwe & Farndale 2012; Wood, 1999). As
explained below, the notion of horizontal fit provides relevant insights
into the establishment-level variables that influence performance
appraisal design. This type of fit is concerned with the existence of com-
plementarities between HRM practices that create a competitive advan-
tage and increase organizational performance (Kepes & Delery 2007).
A recurrent topic in the literature of horizontal fit is the use of per-
formance appraisal as a practice that may complement training, compen-
sation and promotion. Previous studies support that several practices
within these areas are implemented in conjunction with performance
appraisal (Becker & Gerhart, 1996; Huselid, 1995). In what follows, we
analyse the design of performance appraisal and training provision, pay
for performance and internal promotion (Aguinis & Pierce, 2008;

Roberts, 2001).
As indicated above, organizations are expected to implement perform-
ance appraisal together with training because both practices present cer-
tain complementarities (Boswell & Boudreau, 2002). Regarding the
design of performance evaluation, we acknowledge that the provision of
training may affect the way performance is measured. Among the func-
tions of performance appraisal, we can cite the identification of training
requirements, the evaluation of training programs or the provision of
feedback to employees that guides their development. Hence, when per-
formance appraisal is linked to training, it has a developmental purpose
(Aguinis and Pierce, 2008; Macky & Boxall, 2007; Whitener, 2001).
Stavrou, Brewster, and Charalambous (2010) review the literature on
HRM bundles and identify performance appraisal as part of the training
and development bundle. Therefore, a distinction can be made between
administrative and developmental performance appraisal (Chiang &
Birtch, 2010). When evaluation is used for developmental purposes, per-
formance should be assessed exhaustively, taking into account the differ-
ent aspects of the job. Using only an objective measure may impose
difficulties to carry out a comprehensive developmental perform-
ance appraisal.
Regarding who conducts the evaluation, a supervisor with specific
capabilities should be in charge of performance appraisal when there are
specific appraisal needs, such as the determination of training require-
ments or the evaluation of training programs. The workers’ immediate
superior may not have the ability to detect training needs and implement
the required training programs. A person from the HRM department is
better suited to carry out these functions, having the specific knowledge
to do so as well as a more general vision about the training needs of the
organization. As Aguinis (2013) describes, a developmental approach to
continuous learning requires to improve and sustain performance in the
current job, preparation for career advancement, feedback provision, and
accomplishments identification, among many other objectives. We there-
fore hypothesise that an evaluation of this sort would be conducted more
accurately by a HRM specialist.
Finally, we predict a positive incidence of training on the frequency of
evaluation. The objective pursued in performance appraisal may influ-
ence its timing (Murphy & Cleveland, 1995). In particular, developmen-
tal performance appraisal is expected to be conducted more frequently
than administrative performance appraisal (Murphy & Cleveland, 1995).
As we have already stated, the goal of performance appraisal used in
conjunction with training could be the development of capabilities and
investment in human capital (Macky & Boxall, 2007). This type of appraisal
requires a careful and exhaustive evaluation process. The organization will
need to use performance appraisal with a high periodicity in order to iden-
tify training needs, assess the effectiveness of training programs, communi-
cate new objectives to workers and inform them about their performance
(Aguinis, 2013). Consequently, a positive association is anticipated between
training and the frequency of performance appraisal.
Hypothesis 4: When training is provided to workers, performance appraisal (a)
includes subjective measures, (b) is conducted by the HRM department, and (c) is
more frequent.
Another reason for using performance evaluation is to support the adop-

tion of a pay system based on individual performance (Grund & Sliwka,
2009; Whitener, 2001). An effective combination of pay for performance
and performance appraisal may have a positive impact on motivation, lead-
ing to increased individual and firm performance (Banks & Kepes, 2015).
Boswell and Boudreau (2002) point out that establishments may adopt per-
formance appraisal as an administrative tool for monitoring workers’ effort
and set compensation accordingly. This is also pointed out by Aguinis
(2013), who states that the adoption of compensation practices in which
pay depends on performance evaluation belongs to the administrative func-
tion of performance appraisal. Therefore, performance appraisal jointly
implemented with a pay scheme linked to individual performance could
serve that administrative purpose. This evaluation is considered to be more
simple and more standard than performance evaluation aimed at, for
example, developing human capital. Prendergast (1999) makes reference to
some of the advantages associated with objective measures of performance
in pay for performance. These measures can be verified by third parties,
they are easy to implement by the supervisor, they do not suffer from sub-
jectivity problems and they provide a clear signal for workers about what to
do to improve their performance. All these features suggest that objective
measures fit the use of administrative performance appraisal. Hence, we
hypothesise that performance evaluation will use only objective indicators
when it is related to individual pay for performance.
As far as who conducts the evaluation is concerned, payment is com-
monly administered by the HRM department. Therefore, when imple-
mented jointly with individual pay for performance, performance
appraisal is expected to be conducted more probably by the HRM
department. In addition, when performance pay is administered by the
HRM department, it is easier to set common criteria to evaluate workers,
so they can understand better how their payment is determined. In other
words, it is expected that procedural justice increases when pay is set
using common standards and performance appraisal is carried out by
HRM professionals with experience in evaluation. Previous analyses have

shown that employees respond better to pay for performance if it is based
on criteria they understand well (Dulebohn & Martocchio, 1998;
Konowsky, 2000). Consequently, in the presence of individual pay for per-
formance, an HRM professional with specific knowledge and experience in
evaluation is expected to be better suited to manage performance appraisal.
As previously explained, the purpose of performance appraisal may influ-
ence the evaluation period. In particular, pay decisions as well as other
administrative arrangements, are generally taken annually. When HRM
practices are bundled together, it becomes necessary to synchronize their
periodicity. Hence, an appraisal process that complements individual pay
for performance should be carried out with the same periodicity, that is,
once a year. Consequently, we predict a negative influence of individual
pay for performance on the frequency of performance assessment.
Hypothesis 5: In the presence of individual pay for performance, appraisal (a) is
based solely on objective criteria, (b) is conducted by the HRM department, and (c)
is less frequent.
Finally, we analyse the link between the implementation of performance

evaluation and the use of internal promotions. Promotion decisions involve
an exhaustive appraisal of workers’ performance in order to select the
appropriate candidate (Grund & Sliwka, 2009). Hence, both practices might
be bundled together because they serve complementary purposes. Offering
promotion opportunities is associated with the expectation of a long-term
employment relationship within the organisation. It requires a careful selec-
tion process in order to make an efficient assignment of workers to jobs.
Therefore, performance appraisal used in promotion decisions will require
a comprehensive evaluation of workers. Such evaluation system will include
some sort of subjective evaluation, since using solely objective criteria could
limit the exhaustiveness of the appraisal process (Engellandt & Riphahn,
2011). Subjective measures of performance enable an evaluation of employ-
ees’ deployment in all the facets of their work. It also enables to evaluate
not only performance but also the capabilities of workers, which is essential
to make promotion decisions.
We also anticipate that the workers’ immediate superior may not be
well suited to determine whether a worker deserves to be promoted.
Promotions are highly relevant decisions for organizations (Jirjahn &
Poutsma, 2013) as they serve many different purposes (Prendergast,
1999). These decisions are complex since the supervisor not only has to
evaluate employees under their current working conditions, but also to
determine how they will perform in a new position. A manager higher in
the hierarchy has a global perspective of the organization and may be in a
better position to rank workers and determine who should be promoted.
Figure 1. Summary of hypotheses concerning performance measures.
In addition, workers are sometimes promoted to a different section, and a

manager at a higher level has better information about positions in differ-
ent sections and the demands of those positions. HRM specialists have spe-
cific knowledge and experience to evaluate workers comprehensively, so
they are also capable of carrying out performance appraisal for internal
promotion decisions. On the contrary, the workers’ immediate superior has
a narrower perspective of the organization and the evaluation processes.
Finally, and regarding the frequency of appraisal, promotions are strategic
decisions with relevant implications for organizations in the long run. In
order to decide whether workers should be promoted, it is necessary to
compile all the information necessary to efficiently match the employees’
skills with the requirements of the job and the organization. Hence, pro-
motion decisions should be associated with a comprehensive appraisal pro-
cess that gathers exhaustive information about employees’ abilities and
knowledge. In addition, as Prendergast (1999) describes, promotions are
used for many different purposes: sorting employees according to their
ability, providing incentives in the form of tournaments, etc. Given the
multiple functions associated with evaluations linked to promotions, it may
be valuable to carry out performance appraisal with a high periodicity.
Consequently, a positive correlation is anticipated between internal promo-
tions and the frequency of performance evaluation.
Hypothesis 6: In the presence of promotions, performance appraisal (a) includes
objective and subjective criteria, (b) is conducted by managers at upper hierarchical
levels in the company or by the HRM department, and (c) is more frequent.
Figures 1–3 include a summary of all the hypotheses formulated in

this section.
Methodology
Data description
We use a data set with information on HRM practices in Spanish estab-
lishments with 50 or more workers in the manufacturing industry. In
Figure 2. Summary of hypotheses concerning the person who evaluates performance.
Figure 3. Summary of hypotheses concerning the frequency of performance appraisal.
order to gather the data, a manager was interviewed in each establish-

ment (for further information about the main features of the Spanish
context, see Bayo-Moriones, Galdon-Sanchez, & Martinez-de-Morentin,
2013a). We focus on establishments because in the manufacturing indus-
try this is the main business unit. Furthermore, each establishment
adopts its particular HRM practices, so this is where potential problems
may arise and where results should be analysed.
There are several reasons why we decided to gather information about
the manufacturing sector. This industry has an important relevance in the
Spanish economy, what enables to obtain more general conclusions.
Furthermore, manufacturing establishments are more homogeneous than
establishments in other sectors. Regarding the type of worker examined,
most of the questions about HRM issues refer to production workers only.
Each group of workers within an organization may be subject to specific
HRM policies and internal labour markets. Consequently, the focus on pro-
duction workers facilitates comparisons across establishments.
Most interviews were held with the human resources manager of the
establishment. When this was not possible, the general manager
responded to the questionnaire, since this position has also a broad
knowledge about HRM issues. The interviews with managers were car-
ried out by specialists in computer-assisted telephone interviews. This
methodology was chosen for various reasons. The computer-assisted sys-
tem controls that every question included in the questionnaire is read to
the respondent, so the interviewer does not skip relevant information. In
addition, there is constant online supervision and assistance of the inter-
viewers, and repeated contacts with plants are easier to implement
if necessary.
The interviewers contacted 2933 establishments and obtained 1001
valid interviews. Hence, the response rate of the survey is 34.1%1. In
some cases, respondents did not report information about some of the
topics included in the questionnaire that are relevant for the purposes of
our analysis. Consequently, we use a final sample of 774 observations,
which guarantees that we have complete information about all the varia-
bles of interest. From these observations, 370 plants use performance
appraisal for at least 50 per cent of their workers.2
Variable description
Through the process described in the previous section, a data set was
constructed with exhaustive information about performance appraisal.
The sample means, standard deviations and definitions of all the varia-
bles are presented in Table 1.
We now turn to the description of the variables included in the ana-
lysis. First, Performance Appraisal is a binary variable (as in Addison &
Belfield, 2008; Brown & Heywood, 2005; Jirjahn & Poutsma, 2013) that
takes value 1 if performance appraisal is used for 50% of production
workers or more, and 0 otherwise. Regarding performance measures, the
variable Subjective Measures equals 1 if performance appraisal includes
subjective criteria, and 0 if it is based exclusively on objective criteria.3
In order to account for who evaluates performance, three binary varia-
bles are included. These variables represent whether the evaluation is
conducted by the supervisor, a manager at a higher level or the HRM
department, respectively. Finally, frequency is captured using a variable
that takes value 1 if appraisal is performed biannually or with a higher
periodicity (high frequency) and value 0 if the evaluation is made annu-
ally or biennially (low frequency).
Regarding the independent variables, and similarly to Park and Jang
(2017), the degree of autonomy of production workers is the mean of
five items measured in a 0 to 10 scale (for a description of these items,
see Table 1). Teamwork captures the percentage of production workers
in autonomous work teams (as in Black & Lynch, 2001). Job Rotation
Table 1. Variable definitions and descriptive statistics.

Variable Definition Percentage/mean SD
Dimensions of performance appraisal
Performance appraisal 1 if performance appraisal is applied to the 37.111% 0.483
majority of production workers; 0 otherwise
Subjective measures 1 if the evaluation uses subjective criteria; 0 if 62.162% 0.486
based only on objective criteria
Immediate superior 1 if the evaluation is conducted by the 52.747% 0.500
supervisor; 0 otherwise
Manager at high level 1 if the evaluation is conducted by a manager 35.440% 0.479
at a higher level; 0 otherwise
Person from HRM department 1 if the evaluation is conducted by the HRM 28.022% 0.450
department; 0 otherwise
High frequency 1 if the evaluation is conducted biannually or 49.565% 0.501
more frequently (high frequency); 0 if
annually or biennially (low frequency)
Explanatory factors
Autonomy Job autonomy of production workers. Mean of 4.609 2.099
five items capturing, in a 0 to 10 scale, to
what extent workers: (a) prepare the
machinery they use, (b) maintain their
equipment, (c) analyse the data resulting
from their work, (d) plan and organise their
work autonomously, and (e) set their
work path.
Teamwork Percentage of production workers in 30.843% 36.562
autonomous work teams
Job rotation Percentage of production workers that rotate 22.831% 28.047
between jobs in different sections
Training Percentage of production workers attending 37.825% 35.834
off-the-job training
Individual pay for performance 1 if pay for individual performance for produc- 34.782% 0.477
tion workers; 0 otherwise
Promotions 1 if external candidates are the only source of 2.024% 0.854
recruitment (no internal recruitment)
2 if external candidates are preferred, other 1.417%
things being equal, over exter-
nal candidates
3 if applications from internal and external 9.717%
candidates are given the same preference
4 if internal candidates are preferred, other 39.069%
things being equal, over exter-
nal applicants;
5 if internal candidates are the only source of 47.773%
recruitment (no external recruitment)
Percentage of casuals Percentage of production workers that are 14.014% 16.264
casual workers
Turnover Percentage of production workers that left the 9.967% 13.417
plant during the previous year
Size Logarithm of the number of workers in 4.780 0.787
the plant
Supervisors per worker Average number of supervisors per 0.093 0.090
production worker
Union influence Perception of union influence over 1.151
production workers:
1 if very low 11.020%
2 if low 30.896%
3 if medium 21.215 %
4 if high 29.763%
5 if very high 57.106%
Age Age of the establishment (logarithm) 3.353 0.745
White collar Number of non-production workers in the 3.525 1.045
establishment (logarithm)
measures the percentage of production workers that rotate between jobs

in different sections (Lynch, 2012). The provision of training is repre-
sented as the proportion of workers attending off-the-job training (as in
Konings & Vanormelingen, 2015). We use a binary variable to capture
the use of individual pay for performance for production workers (as in
Brown & Heywood, 2005). Finally, Promotions is a multinomial variable
that describes the way vacancies are filled by comparing the priority
given to external and internal applicants (Wu, Bacon, & Hoque, 2014).
See Table 1 for more information.
We have included several control variables: the tenure of the work-
force, the size of the plant, the number of supervisors per employee and
the influence of unions over production workers. First, it is more likely
that establishments with many short-tenured workers use performance
appraisal to do job assignment or make dismissal decisions (Brown &
Heywood, 2005). We include the percentage of casual workers in the
establishment and the turnover rate in order to control for tenure.
Second, performance appraisal is more likely to be implemented in large
establishments due to the economies of scale that reduce its per capita
costs (Jirjahn & Poutsma, 2013). This effect is captured by the Size vari-
able, computed as the logarithm of the number of workers in the estab-
lishment. An establishment needs a fairly large number of supervisors in
order to take advantage of performance appraisal (Brown & Heywood,
2005). Hence, we take into account the average number of supervisors
per production worker in the analysis. Finally, unions disapprove per-
formance appraisal if it causes pay differences among employees (Brown
& Heywood, 2005). Union Influence captures the perceptions employers
have about the influence of trade unions in a 1 to 5 scale (see Table 1).
Finally, as we discuss in the next section, we include two variables as
instruments in our estimation procedure: the age of the establishment
(Age variable) and the number of non-production workers (White col-
lar variable).
Estimation procedure
Our empirical analysis involves estimating five probit models. Firstly, we
analyse the factors that influence performance measures. Secondly, we
estimate three models for who evaluates performance: the supervisor,
another manager or the HRM department. Thirdly, we estimate the
influence of the explanatory variables on the frequency of the evaluation.
We control for sample selection bias. This control is necessary because
the data on the dependent variables are available only for establishments
in which performance appraisal is in use. Consequently, we need to
define a selection equation to estimate the variables that determine the

adoption of performance evaluation. Given that the dependent variable is
discrete, we use a probit model. The selection and the outcome equations
contain the same explanatory variables, except the two exclusion restric-
tions (Leung & Yu, 1996; Puhani, 2000). The instruments are the age of
the establishment and the number of non-production workers. We have
selected these particular variables because, in our view, they meet the
theoretical and empirical criteria required to be valid instruments.
On the theoretical side, firms of different ages may show different
organizational characteristics and use different HRM practices such as
performance appraisal (see, e.g. Jirjahn & Poutsma, 2013). In addition, it
is more likely that performance evaluation is used for non-managerial
workers in those establishments where there are many managers (Brown
& Heywood, 2005). On the empirical side, we consider that the design of
appraisal does not depend on the age of the establishment and the num-
ber of white-collar workers, which is corroborated by the empirical ana-
lysis. Taking into account these considerations, we estimate five sample
selection models of the dimensions of performance appraisal. These sam-
ple selection tests point out to the absence of selection bias in our regres-
sions. Given the outcomes of these tests, the initial results do not need
to be corrected. They are described in the next section.4
Results
The findings of the estimations regarding the dimensions of performance
appraisal are presented in Tables 2–4. We provide information about
the average marginal effects of the probit regressions described in the
previous section.
A positive relationship is found between Autonomy and the inclusion
of subjective measures in performance appraisal, which confirms
Hypothesis 1(a) (see Table 2). As explained above, workers’ autonomy
increases when jobs are complex and less straightforward. Consequently,
it reduces the likelihood of using performance appraisal based only on
objective measures. Concerning Hypotheses 1(b) and 1(c), no significant
correlation is found between Autonomy and who performs appraisal or
the frequency of the practice (see Tables 3 and 4).
Hypothesis 2(a) is not confirmed by our results. No relationship is
found between Teamwork and performance appraisal measures.
Hypothesis 2(b) states that the probability that the supervisor performs
the assessment depends positively on teamwork. This is supported by
our estimations (see Table 3). In addition, teamwork reduces the likeli-
hood that the evaluation is made by the HRM department. As
Table 2. Determinants of the use of subjective measures in the evaluation—pro-

bit regression.
Variable Subjective measures
Constant 1.433 (0.724)
Autonomy 0.024 (0.014)
Teamwork 0.050 (0.073)
Job rotation 0.132 (0.102)
Training 0.040 (0.077)
Individual pay for performance 0.011 (0.056)
Promotions 0.018 (0.032)
Percentage of casuals –0.126 (0.208)
Turnover 0.063 (0.247)
Size 0.052 (0.038)
Supervisors per worker 2.019 (0.500)
Union influence –0.019 (0.026)
Chi-squared 20.57
Pseudo R2 0.053
N 290
p < 0.01
p < 0.05
p < 0.10
Standard errors in brackets
Table 3. Determinants of the appraiser—probit regressions.

Variable Immediate superior Manager at high level Person from HRM department
Constant –2.303 (0.757) 1.533 (0.756) 0.361 (0.756)
Autonomy 0.014 (0.015) –0.018 (0.014) 0.017 (0.013)
Teamwork 0.142 (0.075) 0.033 (0.073) –0.120 (0.068)
Job rotation 0.021 (0.103) –0.140 (0.099) 0.093 (0.089)
Training 0.033 (0.080) 0.076 (0.077) –0.010 (0.068)
Individual pay for performance –0038 (0.058) –0.021 (0.056) –0.003 (0.051)
Promotions 0.081 (0.035) 0.072 (0.033) 0.365 (0.030)
Percentage of casuals –0.107 (0.215) 0.194 (0.206) –0.386 (0.214)
Turnover –0.500 (0.261) 0.366 (0.240) –0.060 (0.263)
Size 0.082 (0.039) –0.081 (0.036) 0.010 (0.032)
Supervisors per worker 0.382 (0.534) 0.179 (0.519) –0.857 (0.457)
Union influence 0.022 (0.027) 0.012 (0.026) –0.049 (0.023)
Chi-square 23.44 17.23 16.50
Pseudo R2 0.055 0.046 0.045
N 285 285 285
p < 0.01
p < 0.05
p < 0.10
mentioned in the theoretical section, teamwork can simplify some

aspects of the evaluation process. In particular, teamwork is characterised
by the monitoring of peers and the existence of collective responsibility
over the performance of the group. Therefore, workers will be motivated
by such collective responsibility, so it may not be necessary that the
evaluation is carried out by supervisors with specific capabilities. Finally,
teamwork decreases the frequency of appraisal. This supports Hypothesis
2(c). The reason for this is that high levels of teamwork imply that cer-
tain functions of performance appraisal are accomplished by co-workers
(see Table 4).
Table 4. Determinants of the frequency—probit regression

Variable High frequency
Constant –0.940 (0.778)
Autonomy –0.009 (0.015)
Teamwork –0.183 (0.075)
Job rotation –0.051 (0.107)
Training 0.100 (0.080)
Individual pay for performance –0.071 (0.058)
Promotions 0.010 (0.036)
Percentage of casuals 0.276 (0.223)
Turnover 0.241 (0.282)
Size –0.120 (0.039)
Supervisors per worker 0.327 (0.510)
Union influence 0.078 (0.026)
Chi-squared 27.71
Pseudo R2 0.073
N 274
p < 0.01
p < 0.05
p < 0.10
Unfortunately, none of the predictions included in Hypotheses 3, 4

and 5 are supported by our empirical analysis. Job rotation, training and
individual pay for performance do not have any significant influence in
the design of performance evaluation in our sample.
Regarding Hypothesis 6, the promotion of internal workers does not
affect the measures used to evaluate performance (see Table 2). It is
more probable that the supervisor carries out the appraisal in the pres-
ence of Promotions. On the other hand, Promotions influences negatively
evaluation by a manager at a higher level (see Table 3). These results are
contrary to our expectations about the influence of promotions on the
person conducting the evaluation. Finally, our results do not reveal any
significant effect of this explanatory factor on the frequency of appraisal
(see Table 4).
Finally, we briefly describe the results obtained for the control varia-
bles. Subjective measures use is influenced positively by the span of con-
trol. As far as the person who performs appraisal is concerned, the
turnover rate negatively influences the probability that the immediate
superior evaluates workers’ performance. In addition, the percentage of
casual workers correlates negatively with the fact that the HRM depart-
ment does the evaluation. The number of employees influences positively
that performance appraisal is done by the supervisor and negatively
affects that performance appraisal is done by a manager at a higher level.
Finally, both the span of control and union influence reduce the prob-
ability that the HRM department is in charge of performance appraisal.
Concerning the frequency of the practice, it is negatively influenced by
the establishment size. Furthermore, the frequency of the evaluation
increases with union influence.
Conclusions
This paper uses the NEP and CBHRT theories to study the design of
performance appraisal in Spanish manufacturing establishments. The
main objective is the analysis of how establishment characteristics affect
the dimensions of this HRM practice. We contribute to the previous lit-
erature on the topic by considering the design of the practice and not
only the probability that performance appraisal is adopted. The relevance
of this article lies in the idea that the dimensions of performance
appraisal should fit work organization and other HRM practices.
In general, it is not easy to derive a clear pattern of adoption of per-
formance appraisal in relation to the two groups of explanatory variables.
However, several significant relationships have been found between the
features of an establishment and the design of performance appraisal. In
other words, we provide evidence on whether work organization and
other HRM practices affect the dimensions that shape perform-
ance appraisal.
Regarding teams, our analysis complements the results presented in
previous studies, providing new evidence of the correlation between
teamwork and monitoring. It has been argued that, in the presence of
teamwork, workers’ productivities become interdependent and monitor-
ing performance is more difficult (Heywood et al., 2008). Jirjahn and
Poutsma (2013) point out that this relationship is complex and highlight
the importance of considering specific dimensions of performance
appraisal such as performance measures. However, they do not provide
empirical evidence that addresses the configuration of appraisal. In con-
trast to previous studies, we present evidence related to the design of
performance appraisal that could have practical implications for manag-
ers: teams make more likely that the evaluation is done by the supervisor
and increases the period of time subject to the evaluation. These results
suggest that, even though teams may introduce complexities regarding
workers’ monitoring, they could facilitate some aspects of the evaluation
process. When working in teams, employees can monitor and exert peer-
pressure on each other. Under these circumstances, the process of evalu-
ation can be simplified and costs reduced.
In addition, other organizational features have a bearing on perform-
ance appraisal design. The positive incidence of job autonomy in the use
of subjective measures suggests that not any type of performance evalu-
ation is appropriate when workers enjoy independence and control over
their work. This does not mean that the arguments presented in previous
studies are not valid, but they should be formulated with precision in
order to be useful for managers when designing performance appraisal.
For example, Brown and Heywood (2005) report a positive effect of job
autonomy on the use of performance appraisal. Our results are more

specific and point to an association between job autonomy and perform-
ance appraisal including subjective measures. In addition, internal pro-
motions correlate positively with performance appraisal done by the
supervisor. Jirjahn and Poutsma (2013) show that organizations with
internal promotions use performance appraisal with a higher intensity.
Again, our results complement existing evidence about the determinants
of performance appraisal, making explicit reference to the design of the
practice and not only to its use.
Overall, the variables representing difficulties of measuring perform-
ance seem to have a higher influence on performance appraisal design
compared to complementary HRM practices. In particular, training and
individual incentives do not affect performance appraisal dimensions.
Although we have not reported these results in the paper, these two
practices have a positive impact on the probability of adopting perform-
ance appraisal. Other authors have also found support for these relation-
ships. Brown and Heywood (2005) find that performance appraisal is
more likely when training is provided and individual pay for perform-
ance is used. Similarly, Addison and Belfield (2008) find that training
and profit-related pay tend to be adopted together with performance
appraisal. These results suggest that employers acknowledge the existence
of complementarities or synergies between HRM practices and adopt
performance appraisal jointly with other practices. However, these com-
plementary practices do not affect the design of performance appraisal in
our sample.
A strength of the paper is the application of two different but inter-
dependent perspectives: NEP and CBHRT. The combination of these
approaches has enabled to make an analysis of performance appraisal
based on both the economic rationality used in the NEP and on the
interdisciplinary view of the CBHRT. It would be interesting to use these
interrelated perspectives when examining the determinants of other
HRM practices.
Although in different ways, these theoretical approaches make predic-
tions about a design of performance appraisal that tries to improve per-
formance. The weak support found for our theoretical predictions
suggests that Spanish manufacturing companies are designing and imple-
menting performance appraisal in a way that does not reap its full bene-
fits. We can offer some explanations for this result.
One of them relates to the traditional approach to the HRM function
in Spain. As Gonzalez-Menendez, Gutierrez-Palacios, and Martinez-Lucio
(2011) explain, the process of professionalization of HRM started late, as
in other Mediterranean economies. Regarding the HRM practice analysed
in our paper, this fact is reflected in a low incidence of performance

appraisal in Spain compared to other European countries (CRANET,
2005; Eurofound, 2015). In 2013, approximately 50% of Spanish estab-
lishments used the practice, whereas the average in the European Union
was 70%. As a consequence, the development of the personnel function
seems to be an inconclusive process that combines traditional elements
and more innovative traits. In this context, many companies may still
lack the knowledge and the resources needed to design their HRM sys-
tems in accordance with the suggestions of the theoretical approaches.
The regulation school points out that the way national systems evolve
could be path dependent (Brewster, Croucher, Wood, & Brookes, 2007).
More precisely, a national system is path dependent when its historical
course conditions the institution’s activities. It is possible that the trad-
itional orientation of HRM is preserved over time by the historical tra-
jectory of the country, its national culture or the resistance to change of
employers and unions.
Overall, we can conclude that a higher development and professional-
ization of HRM issues and practices should be a priority for managers
and practitioners, since it is still a pending task in many Spanish compa-
nies. This should come together with a greater consideration of HRM
aspects at the strategic level (Filella, 1991). This managerial implication
is in accordance with the view of Andolsek and Stebe (2005), who sug-
gest that the HRM function has been historically underrated in Spain,
leading to HRM being an exclusive responsibility of line management in
many companies.
A research topic worth exploring in the future is the impact of the
business system context in the configuration of performance appraisal.
Previous analyses have found certain similarities but also differences
between countries in the factors that shape the diffusion of performance
appraisal (see the analysis of Brown and Heywood, 2005, in Australia
and its replication by Addison and Belfield, 2008 in the UK). Regarding
the particular case of Spain, this country has traditionally presented a
labor market characterised by a high degree of regulation. This strong
regulation affects the employment relationship and might be a constraint
on the implementation of certain HRM practices by managers. Gonzalez-
Menendez et al. (2011) summarize the main institutional features of the
Mediterranean economies and their implications for HRM. Among these
features, we can cite the prevalence of a hierarchical management orien-
tation and a Taylorist organization of production. These characteristics
reduce cooperation levels between employees and hinder their confidence
within organizations. In addition, the strictness of labour regulation
results in small differences in HRM policies between firms. In light of
these general features, it is expected that our findings are generalizable to

Mediterranean economies, such as Greece, Italy or Portugal. On the con-
trary, these results are less likely to be replicated using data from coun-
tries with more flexible institutional frameworks, where managers have
higher freedom to adapt HRM to the conditions of the organization. To
our knowledge, this is still an unexplored topic that is worth considering
in future studies of performance appraisal.
Another area of interest concerns the effects of performance appraisal
design on firm performance. Previous literature has analysed the impact
of specific features of performance appraisal on individual performance
(DeNisi & Pritchard, 2006). However, it would be relevant to study if
organizations actually improve their performance by choosing an appro-
priate design for performance appraisal. More precisely, future work
should examine the role of establishment features as moderating varia-
bles in the relationship between performance appraisal design and firm
performance. The CBHRT could provide relevant insights that might
help to understand better this relationship, since it constitutes a compre-
hensive approach to the analysis of HRM and its impact on
performance.
Some limitations of our study must be identified. One of them
emerges from the use of cross-section data and the fact that causality
cannot be proved. Furthermore, only production workers in the manu-
facturing sector are empirically analysed, which limits the generalizability
of the findings. Furthermore, as highlighted above, we acknowledge that
the results might be influenced by the particularities of the institutional
context in Spain. Certainly, further research on the topic addressed to
different countries would be useful to ascertain the impact of the busi-
ness system context. Finally, the influence of organizational factors on
performance appraisal should be examined more deeply. However, we
hope our study improves the understanding of the topic, and helps to
develop additional research on the different dimensions involved in the
configuration of performance appraisal.
Funding
The authors would like to thank Fundaci on BBVA for funding the sur-
vey used in this work. Alberto Bayo-Moriones acknowledges financial
support from the Ministerio de Ciencia y Competitividad (project
ECO2017-86305-C4-4-R). Jose Enrique Galdon-Sanchez and Sara
Martinez-de-Morentin also acknowledge financial support from the
Ministerio de Ciencia y Competitividad (project ECO2015-64330-P).
Notes
1. Other surveys exploring HRM issues have similar or lower response rates (see, for
example, Camelo, Martin, Romero, & Valle, 2004; Jirjahn & Poutsma, 2013; Roche
& Teague 2011; or Bayo-Moriones, Galdon-Sanchez, & Guell, 2010 for Spain). In
addition, this same data set has been previously used in Galdon-Sanchez, Gil, and
Bayo-Moriones (2015) and Bayo-Moriones, Galdon-Sanchez, and Martinez-de-
Morentin (2013b), among others.
2. The questions of the survey are published in the Appendix of Bayo-Moriones,
Galdon-Sanchez, and Martinez-de-Morentin (2017).
3. It is worth noticing that, in our data base, there is information about the
establishments that use only objective criteria in performance appraisal, those that
use only subjective criteria and those that combine both criteria. However, very
few respondents reported to use subjective criteria only (less than seven per cent of
establishments using performance appraisal). The low amount of observations in
this category does not allow us to perform a regression analysis that differentiates
between the three types of establishments. Consequently, we have combined the
plants that use only subjective criteria with those using both objective and
subjective criteria in one category.
4. Due to space constraints, we have not included the results of the selection
equation, the sample selection models and the selection bias tests in the paper.
They are available from the authors upon request.
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The International Journal of Human Resource

ISSN: 0958-5192 (Print) 1466-4399 (Online) Journal homepage: https://www.tandfonline.com/loi/rijh20

Performance appraisal: dimensions and

Alberto Bayo-Moriones, Jose E. Galdon-Sanchez & Sara Martinez-de-

To link to this article: https://doi.org/10.1080/09585192.2018.1500387

Published online: 14 Feb 2019.

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Performance appraisal: dimensions and determinants

ABSTRACT ARTICLE HISTORY

CONTACT Sara Martinez-de-Morentin sara.martinezdemorentin@unavarra.es Department of

Among other things, researchers on performance appraisal have been

following section provides information about the methodology we use to

Dimensions of performance appraisal

Who evaluates performance?

Factors that influence the design of performance appraisal

strands of literature. On the one hand, the NEP is used as theoretical

The difficulties of measuring individual performance: the NEP

According to the NEP, the following work organization factors give

consequence, it is not easy for the immediate superior to conduct the

Another relevant topic in the NEP concerns the implications of team-

presence of teamwork, since shirking affects the productivity of co-work-

Hypothesis 2: In the presence of teamwork, performance appraisal (a) includes

Finally, job rotation might also generate problems when measuring

for performance and internal promotion (Aguinis & Pierce, 2008;

Another reason for using performance evaluation is to support the adop-

HRM professionals with experience in evaluation. Previous analyses have

Finally, we analyse the link between the implementation of performance

Figure 1. Summary of hypotheses concerning performance measures.

In addition, workers are sometimes promoted to a different section, and a

Figures 1–3 include a summary of all the hypotheses formulated in

Figure 2. Summary of hypotheses concerning the person who evaluates performance.

Figure 3. Summary of hypotheses concerning the frequency of performance appraisal.

order to gather the data, a manager was interviewed in each establish-

Table 1. Variable definitions and descriptive statistics.

measures the percentage of production workers that rotate between jobs

define a selection equation to estimate the variables that determine the

Table 2. Determinants of the use of subjective measures in the evaluation—pro-

Table 3. Determinants of the appraiser—probit regressions.

mentioned in the theoretical section, teamwork can simplify some

Table 4. Determinants of the frequency—probit regression

Unfortunately, none of the predictions included in Hypotheses 3, 4

autonomy on the use of performance appraisal. Our results are more

in our paper, this fact is reflected in a low incidence of performance

these general features, it is expected that our findings are generalizable to

Delery, J. E. & Doty, D. H. (1996). Modes of theorizing in strategic human resource

Wood, S. (1999). Human resource management and performance. International Journal

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