The effect of performance appraisal
practices on employees’ satisfaction in
Petroleum Sector
Introduction
An Army General evaluated each of his soldiers and sent a report to the US War Department in
1813. In the United States, this is typically seen as the start of official performance evaluation.
The Army General used a global grading system, describing his soldiers as “a good-natured
man” or “a knave detested by all”. (Hamzah. et al., 2022).
Early work in salesman selection by industrial psychologists at Carnegie Mellon University
(Scott et al., 1941), who applied trait psychology to design a man-to-man rating system,
contributed to the establishment of performance appraisals in U.S. industry. The army used this
method to assess officer performance during World War I. Following the war, many of the
individuals who had taken part in man-to-man evaluations were hired by corporate leaders who
had been inspired by the army researchers' achievements. The graphic-rating scale was
introduced to the psychology profession by Donald Paterson (Landy and Farr, 1983). Following
this introduction, there were numerous developments in rating scale kinds and scale construction
techniques, which led to an increase in the popularity of the graphic or trait rating scale.
Performance evaluations have historically been utilized for managerial decisions like hiring,
firing, promotions, and salary administration (DeVries et al., 1981; Murphy and Cleveland,
1995; Patten, 1977).
The first tools used for evaluation were global ratings and global essays (DeVries et al., 1981).
Without distinguishing between different performances parameters, the rater provides an overall
performance assessment in global ratings. "Excellent," "okay," and "needs improvement" are
typical assessments. A rater provides a narrative response to a query like, "What is your overall
assessment of this individual over the previous year?" in global essays.
Performance Appraisal Satisfaction is the way of a worker reacts to performance reports greatly
affects their level of satisfaction. It measures employee satisfaction with the organization's
performance evaluation system and reveals the extent to which workers think that performance
ratings reflect attitudes that add value to the company.
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It is crucial for employees to be happy with the performance appraisal system that their employer
uses in order to achieve a variety of behavioral and attitude outcomes, such as employee intrinsic
motivation, creative attitude and career development, commitment and loyalty, and low turnover
intention. Employee dissatisfaction with performance reviews, on the other hand, results in
negative behaviors and perceptions, such as low morale, low productivity, absenteeism, and
turnover, which in turn cause the organization's performance evaluation system to fail and
provide undesirable work outcomes. Hence, if one wants to get the best results possible from
competent energy sources, it is imperative to make sure that employees are satisfied with how
their performance is evaluated.
When employees are happy with their performance evaluations, a company is more likely to
achieve its mission, vision, and strategic objectives.
A company's most valuable asset is its workforce, so finding ways to inspire employees could
increase both their productivity and loyalty.
Performance appraisal is a multifaceted, scientific approach that formally assesses how well an
organization is doing with its individual, team, and group duties in relation to its strategic
objectives. Although senior managers and team members who evaluate the performance of the
team dislike performance appraisal. Thus, the majority of performance reviews are conducted on
an individual basis (Marcellin, 2019).
Employers and employees can develop, communicate, and review expectations, goals, and
progress in reaching strategic objectives through performance appraisals (Bacal 2004). The goal
is to enhance employees' contributions to organizational objectives and work output. Moreover,
appraisals are meant to support, enhance, and assist an employee in growing and overcoming
performance-related obstacles. Performance evaluations can help people develop their abilities,
focus their performance on company priorities and objectives, and meet critical organizational
needs when done correctly (Lawler 1994).
However, due to the challenges involved in performing them, a number of well-known
researchers and managers have questioned whether performance reviews or assessments are
worthwhile. Hence, disputes that arise between managers and staff members can occasionally
continue a very long time (Lawler 1994). Workers that receive performance reviews are
frequently extremely dissatisfied with and reject the process and the comments they receive
(Elicker et al. 2006).
Researchers have identified a variety of elements that are connected to how employees react to
performance appraisal during the past few years. One technique to enhance the performance
review process, for instance, is to give more encouraging feedback during the performance
appraisal. They are more likely to respond positively to a review when the feedback is
encouraging and they earn higher ratings than anticipated (Blakely 1993). Beyond the appraisal
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outcome itself, researchers have found that appraisal reactions are affected by perceptions of
fairness (Cawley et al. 1998).
Others have emphasized the significance of the relationship between the manager and the
employee, arguing that this relationship is more likely to foster employee happiness and
agreement with the procedure (Elicker et al. 2006).
Performance and productivity rating satisfaction are significantly correlated. The strong
relationship showed a considerable level of motivation, while the weak relationship provided
poor work performance and internal motivation (Kuvaas, 2006).
Turnover Intention is significantly impacted by Performance Appraisal Satisfaction, with Work
Engagement serving as an intermediary variable.
Problem Definition
In any organization, employees’ performance should be closely monitored, controlled and
appraised to be aligned with the whole company’s goals. But sometimes organizations due to
cost reduction or due to time limitations they prefer not to invest in enhancing their performance
appraisal practices and save their budget for other processes, and they forgot that the process of
performance appraisal has a strong effect on employee’s satisfaction positively or negatively.
And as the employee satisfaction plays a critical role in employee morale and performance. In a
work environment, morale is a crucial subject as it’s contagious; employees may influence each
other in the same department or even in other departments. And as the employees in any
organization are considered its major asset, so employee performance affects the entire
organization. That’s why this process should be given high attention not to jeopardize the
performance of the entire company, hence the organization’s top management should invest in
enhancing this process and direct all departments managers to apply such process with their
subordinates.
The purpose of this study is to determine the effect of performance appraisal practices on
employee’s satisfaction.
Objectives
* To investigate the effect of performance appraisal practices on employee’s satisfaction.
* To identify the factors in the performance appraisal practice that affects employee’s
satisfaction
* To identify the potential problems related to performance appraisal.
* To overcome the problems in performance appraisal practice.
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Research Questions
* What is performance appraisal? How it works?
* What are the potential problems in performance appraisal practice?
* Why employees are satisfied or not with their performance appraisal?
* How Performance appraisal (process) affects performance appraisal satisfaction?
* How Performance Measurement (quality) affects performance appraisal satisfaction?
* How to overcome the potential problems in performance appraisal practice?
Literature Review
What is performance appraisal and what is the performance appraisal process?
Performance appraisal refers to assessing an employee’s current and/or past performance in
relation to his or her performance criteria.
Performance appraisal requires defining performance criteria, and supposes that the employee gets
the training, feedback, and incentives needed to get rid of performance deficiencies.
Performance appraisal process involves three steps:
1. Defining work criteria.
2. Evaluating the employee’s actual performance in comparison to those criteria.
3. Giving feedback to the employee in order to assisting him or her to get rid of performance
deficiencies or to keep performing higher than par.
Good appraisals basically start before the actual appraisal, with the supervisor setting the
employee’s job and performance criteria. Setting the job means confirming that you and your
subordinate come to an understanding on his or her duties and job criteria and on the appraisal
technique that will be used.
Why Appraise Performance?
Supervisors appraise subordinates’ performance for five reasons.
1. Many decisions such as base pay, promotion, and retention depends on employee’s appraisal.
2. Appraisals are vital in the supervisor’s performance management process.
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Performance management refers to constantly making sure that each employee’s performance
matches the company’s broader objectives.
3. Appraisal allows the supervisor and subordinate take actions for getting rid of deficiencies,
and enforcing strengths.
4. Appraisals give a chance for assessing the employee’s career plans taking into consideration his
or her strengths and weaknesses.
5. Appraisals allow the supervisor to recognize the need for training, and the type of training
needed.
Defining the Employee’s Goals and Performance Standards
The performance appraisal should compare “what should be” with “what is.” Supervisors use one
or more of three pillars—goals, job dimensions, and competencies—to set in advance what the
employee’s performance criteria should be.
First, the supervisor can evaluate to what extent the employee is accomplishing his or her
numerical goals. Such goals should originate from the company’s broader profitability, cost
reduction, or efficiency goals.
Supervisor usually say that good goals are “SMART.” They are specific, and clearly state the
desired results. They are measurable, and answer the question, “How much?” They are attainable.
They are relevant, and clearly reflect what the company wants to achieve. And they are timely,
with deadlines and milestones.
A second pillar to appraise an employee is through job dimensions or traits such as
“communication” or “teamwork.” The assumption is that “good teamwork” is a useful standard
for “what should be.”
A third pillar is to appraise employees according to the level they master the competencies (the
skills, knowledge, and/or personal behaviors) the job needs.
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Who Should Do the Appraising?
Appraisals done by the direct supervisor is yet the base of most appraisals. Normally the supervisor
has the prime place to notice and assess the subordinate’s performance, and is accountable for his
or her performance.
Depending only on supervisors’ appraisals isn’t recommended. For example, the supervisor may
not value how clients and colleagues perceive the employee’s performance. There is also always
some risk of bias. If so, supervisors have many choices including peer appraisals, crowd appraisals,
virtual games, rating committees, self-ratings and appraisals by subordinates.
360-DEGREE FEEDBACK The employer uses 360-degree feedback to gather performance
information surrounding an employee—from supervisors, subordinates, peers, and clients—in
general for improvement rather than pay purposes.
What are the traditional methods for performance appraisal?
Graphic Rating Scale Method
The graphic rating scale is a method in which a checklist of traits is used to assess performance.
The manager rates each employee by circling or checking the score that most matches the
employee’s performance for each trait, and sums the ratings.
Alternation Ranking Method
The alternation ranking method is a method in which employees are ranked from best to worst
on a certain trait or traits.
Paired Comparison Method
The paired comparison method is a method in which the manager compares every employee
with every other employee.
Forced Distribution Method
The forced distribution method is a method in which the manager is needed to force
subordinate’s appraisal rates according to a bell-shaped curve.
Critical Incident Method
The critical incident method, is a method in which the manager keeps a record of positive and
negative critical incidents of an employee’s work-related behaviors.
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Narrative Forms
Part or all of the appraisal could be in a narrative format. The manager evaluates the employee’s
past performance and needed aspects of development. The manager’s narrative evaluation assists
the employee in recognizing his or her performance deficiencies and setting plan for developing
them, in addition to pointing out strengths to keep enforcing them.
Behaviorally Anchored Rating Scales
A behaviorally anchored rating scale (BARS) is a method in which the manager anchors a
numerical rating scale with specific illustrative examples of good or poor performance.
Five steps involved in creating a BARS:
1. Write critical incidents.
2. Develop performance dimensions.
3. Reallocate incidents.
4. Scale the incidents.
5. Develop a final instrument.
Management by Objectives
Management by Objectives (MBO) is a multi-phase process that involves setting objectives and
developing appraisal plan across the entire company. In MBO the manager with each employee
set clear, quantifiable goals that are relevant to the company, and then review the employee's
progress toward these goals in a periodic manner. The steps are
1. Set the organization’s goals.
2. Set departmental goals.
3. Discuss departmental goals.
4. Define expected results (set individual goals).
5. Conduct performance reviews.
6. Provide feedback.
Dealing with Rater Error Appraisal Problems
In an ideal world, all supervisors could use performance appraisal systems with specific
objectives, fair appraisals, swift feedback, and useful coaching. However, appraisals are subject
to many “rater error” problems. These are systematic errors in judgment that happen when
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people evaluate one another: unclear standards, halo effect, central tendency, leniency or
strictness, and bias.
Possible Rating Problems
UNCLEAR STANDARDS This scale of evaluation looks objective. However, because the
characteristics and levels of competency are vague, it may very well lead to unjust assessments.
For instance, various supervisors may have varied definitions of what constitutes "good," "fair,"
and so on performance. The same can be said for characteristics like "quality of work."
The solution to this issue is to include definitional or illustrative statements for each characteristic.
HALO EFFECT It is defined as “the influence of a rater’s general impression on ratings of
specific ratee qualities.” For instance, rather than just on "gets along well with others," supervisors
frequently give hostile workers lower ratings across the board. The first step in preventing this
issue is becoming aware of it.
CENTRAL TENDENCY It refers to rating all employees with an average score. This skews the
assessments, which makes them less relevant for promotion, pay raises, or counselling needs.
LENIENCY OR STRICTNESS Other supervisors tend to rate all their subordinates high (or
low). This strictness/leniency issue is specifically serious with graphic rating scales. Ranking
forces supervisors to differentiate between high and low performers.
RECENCY EFFECTS Recency refers to focusing on employee’s most recent actions and
ignoring his or her performance all over the year. This issue could be solved mainly by
accumulating critical incidents all year long.
The dilemma of Bias
Biased evaluations (bias refers to a preference toward a particular idea or group such as religion,
age, race, and sex that affect the appraisal ratings) have many reasons. A common reason is rater
personality.
The Need for Fairness
So, as a result of either the supervisor’s incompetency or unfairness of the appraisal methods
involved, various appraisals are unfair. The employees’ standards should be clear, employees
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should understand the basis on which you’re going to appraise them, and the appraisal should be
objective. Give the employee an opportunity to express his or her opinions.
What Is Performance Management?
In comparing performance management and performance appraisal, “the distinction is the contrast
between (1) a year-end event (the completion of the appraisal form) and (2) a process that starts
the year with performance planning and is integral to the way people are managed throughout the
year.”
Performance management is the continuous process of identifying, measuring, and developing
the performance of individuals and teams and aligning their performance with the organization’s
goals.
Performance managements can be summarized in six basic elements as follows:
1. Direction sharing.
2. Goal alignment.
3. Continuing performance monitoring.
4. Continuing feedback.
5. Coaching and developmental support.
6. Recognition and rewards.
Theoretical Framework:
The theoretical framework for this study is based on the expectancy theory of motivation. This
theory suggests that individuals are motivated to perform if they know that their performance is
recognized and rewarded (Vroom, 1964).
Employees are more likely to be motivated to perform well in the context of performance appraisal
if they feel that their performance will be fairly evaluated, that their performance will be linked to
rewards, and that their performance will give them opportunities to grow and develop.
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Conceptual Model:
The conceptual model of this study is based on the theoretical framework and includes the
independent variables of performance appraisal practices, performance measurement quality,
performance fairness, and performance related pay, and the dependent variable of employees'
satisfaction. The model proposes that the independent variables have a direct impact on
employees' satisfaction.
Definition of the Research Variables:

Dependent variable: Employee satisfaction
Refers to the extent to which employees are happy with their jobs. This is important because
employee satisfaction is linked to a number of positive outcomes, such as increased productivity,
reduced turnover, and improved customer service.

Independent variable: Performance Appraisal Practices
Refers to the methods used by an organization to assess the performance of its employees. These
practices can include things like setting goals, providing feedback, and evaluating performance
against those goals.

Independent variable: Performance Measurement Quality
Refers to the accuracy and reliability of the methods used to measure employee performance. This is
important because employees are more likely to be satisfied with their performance appraisals if they
believe that the process is fair and accurate.

Independent variable: Fairness
Refers to the extent to which employees believe that the performance appraisal process is fair and
unbiased. This is important because employees are more likely to be satisfied with their performance
appraisals if they believe that they are being treated fairly.

Independent variable: Related pay
Refers to the extent to which employee pay is linked to their performance. This is important because
employees are more likely to be satisfied with their performance appraisals if they believe that their
pay is fair and that it is based on their performance.
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1. Conceptual Model
Performance
Appraisal
Practices
Performance
Measurement
Quality
Performance
Appraisal
Fairness
Performance
Related Pay
IVs
H1
H2
Employees’
Satisfaction
H3
H4
DV
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2. Hypotheses
H1
H2
H3
H4
H5
Hypothesis
There is a significant relationship between
performance appraisal practices and employees’
satisfaction.
There is a significant relationship between
performance measurement quality and
employees’ satisfaction.
There is a significant relationship between
performance appraisal fairness and employees’
satisfaction.
There is a significant relationship between
performance related pay and employees’
satisfaction.
There is a significant relationship between
performance appraisal practices, measurement
quality, fairness and related pay and employees’
satisfaction.
Variable(s)
PA & SP
Statistic
PM & SP
The correlation
between the
predicting and
criterion
variables
PF & SP
PP & SP
PA, PM, PF, PP &
SP
Where;
PA = Performance appraisal practices
PM = Performance measurement quality
PF = Performance appraisal fairness
PP = Performance related pay
SP = Employees’ Satisfaction
Methods
Research Design
The study's research design is descriptive because it is intended to identify the main factors
affecting employee morale and job satisfaction in the Petroleum industry in Egypt. In this
investigation, both quantitative and qualitative methods were utilized to collect the necessary
data.
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Sampling
As we move on in our research, we need to do survey for the targeted population to collect the
required date for our research, accordingly we have identified our sampling process as follows:
1. Population
All the employees in the petroleum sector.
2. Sampling Frame
The frame Will be a list of all employees in the petroleum sector , this list will be obtained from
the general union of petroleum sector workers in Egypt .
3. Sampling design
Using “Simple random sampling “will be the best method to follow for the research as
the population is homogenous as they are all employees from the petroleum sector with
no specific characteristics.
4. Sample Size
The sample size is 384 employees to accurate results, however, due to time constrains the
sample size will be 100 employees and this will be good enough to represent the
population and test the hypothesis.
5. Sampling Bias
To prevent any bias, the questionnaire will be sent to random employees from the general
union of petroleum sector workers in Egypt
6. Generalizability
The sample targeted in our research can provide us results that can be generalized among
people working on the petroleum sector.
Data Collection
Using the survey for the data collection is the best technique for this research as it is valid and
reliable tool for date collection. It is stable (ability of the measure to remain stable over time) and
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consistent (homogeneity of the items in the measure) plus it ensures the ability to measure the
intended concept.
Using the closed ended questions in the survey to help the researchers make quick decisions and
helps them to code the answers too.
To make sure that the questionnaire in the survey is well structured, user friendly for the sample
to answer and assure getting valuable data, the following aspects were respected in the
questionnaire:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Avoided double barreled questions
Avoided using ambiguous words
Using ordinary words
No leading questions
No social desirability questions
No questions depending on memory
No double negative wordings
Questions started from general to specific
Used the 4 types of scale in the questions
Questionnaire:
The Effect of Performance Appraisal Practices on Employees’ Satisfaction in Petroleum Sector
Dear Participant,
This questionnaire is intended to investigate the aspects of performance appraisal process. The
information you provide will help us better understand the effect on employees’ satisfaction. Since
you are the one who can give us a correct picture of how you experience your performance
appraisal process, I request you to respond to the questions truthfully and honestly.
Your response will be treated in complete confidence. The information you provide will only be
accessible to the study team members. In order to ensure the utmost privacy, we have provided an
identification number for each participant. This number will be used by us only for follow‐up
procedures. The numbers, names, and the completed questionnaires will not be made available to
anyone other than the research team.
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Thank you very much for your time and cooperation. I greatly appreciate the help of your
organization and yourself in furthering this research endeavor.
Cordially,
Estimated Time: 3 Minutes
Number of questions: 13
The questions below ask about how you experience your appraisal process in a multiple-choice
format where you are requested to choose the most appropriate response based on your past and
current experiences.
Q-01. What is your gender?
o Male
o Female
Q-02. What is your age group?
o 20 - 30
o 31 – 40
o 41 – 50
o 51 - 60
Q-03. Are you satisfied with the appraisal process of the organization?
o Yes
o No
Q-04. Is the performance appraisal system transparent?
o Yes
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o No
Q-05. Do you think that the feedback given to you is honest?
o Yes
o No
Q-06. Are you satisfied with the criteria adopted to appraise you?
o Yes
o No
Q-07. To what extent do you think the appraisal process is fair?
o Very Unfair
o Unfair
o Neither Fair nor Unfair
o Fair
o Very Fair
Q-08. Are you satisfied with the quality of performance measurement process?
o Yes
o No
Q-09. To what extent do your satisfaction is affected by the appraisal process?
o Strongly Not Affected
o Not Affected
o Neither Affected nor Not affected
o Affected
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o Strongly Affected
Q-10. Do you feel performance appraisal process is sufficient in appraising the performances of
employees?
o Yes
o No
Q-11. Do you think performance appraisal feedback is affecting the satisfaction of employees?
o Yes
o No
Q-12. Do you agree or disagree that pay related performance is affecting the satisfaction of
employees?
o Strongly Disagree
o Disagree
o Neither Agree nor Disagree
o Agree
o Strongly Agree
Q-13. From your point of view what factor is highly affecting the satisfaction of employees?
o Performance appraisal practices
o Performance measurement quality
o Performance appraisal fairness
o Performance related pay
o All the above
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I sincerely appreciate your time and co-operation
Thank you
Methods of Data Analysis
Data Analysis
Conclusions
Recommendations
References
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