The Research On The Intrinsic Mechanism Of Designing Performance Appraisal System

Currently, the human society is in a particular period named"The Postmodern Turn"between modern and post-modern society. While traditional industrial society stressed material production, the community now shows the return of human nature and the respect for individual differences. The development of information technology, rapid proliferation of knowledge have brought great changes of people's behavior patterns, and corporate as well. To meet the upgrades of consumer's demand and the need of personalized aspirations and the competition of external networks, effective management requires enterprises unite all managers and staff's attention and action orientation, leading to the same goal——create value for customers. However, the enterprise management in reality faces with the challenges results from the adapter and synergies of organizational elements because of the complexity, the uncertainty and unintellectuality of the management. So how to achieve the harmony and matching of organizations is becoming a serious issue for research and practice.Organizational conflict in reality mostly results from the confrontation between the autonomy requirements of staff and the outdated control of organizations. In the context of contemporary knowledge work, how to authorize staff under hierarchy structure of the organization so as to tap potentials inherent self-management capabilities with the upgrade of staff has to find a balance. On the other hand, how to effectively exert control and influence in the age of empowerment in order not to have the organization, team or individuals deviating from the goal of the enterprise also should find a balance. The Janus complex, that is to say the dual characteristic of management calls for enterprises using the organizational rules and strategies contingently and artistically, and keeping the organization harmony dynamic and development healthy.Of all the business management procedures, performance appraisal can reflect the control will of organization mostly. Enterprise's strategic intentions are promoted to implement by performance appraisal system and effects of the implementation are tracked by assessing. It is precisely because of its control that performance appraisal has brought much controversy, and so that is called Achilles' heel. If controls improperly, it may injure the enterprise's performance, what worse more, it will restrict the development of enterprise, even result in internal turbulence. In the corporate practice, the cases of"Performancism Destroy SONY"and"Non-normal deaths of staffs in Huawei corporate"caused people to reflect on how to balance the relationship between performance and achievement motivation, performance and commitment, performance and the physical and mental health of staff against the background of high-performance corporate culture.Based on mentioned above, studying on how to design and develop an effective performance appraisal system, by which to accelerate (rather than restrain) the organizational socialization of staffs so as to enhance staff's performance continuously, and to guide the behavior but not shackle their creativity and reduce their occupational sense of achievement, and so that to promote the organizations'balance between control (stability) and flexibility (adaptation), is an significant topic in theory and practice.The ultimate aim of this study is to research the dimensions of performance appraisal system and its mechanism on the job performance. From the perspective of empiric, this study try to probe into whether the dimensions, which include Goal-setting, Formalization, Process justice and Hierarchy, can notablely predict on staff's job performance. At the same time, this study discuss the effects of interaction between dimensions of performance appraisal system and the structural dimensions of organization including position-level, task structure, the level of human capital that played moderator roles, and the same as the contextual dimensions of organization including scale, life-cycle stage, cultural orientation. In one word, the purposes of the study are to construct an theoretical models of the issues above and have an empirical testing on it, so as to eliminate the controversy of performance appraisal gradually, and have a better guidance on performance appraisal practice of enterprise. The main content of this paper is as follows.First of all, in view of the misconceptions and controversy both in theory and practice, the paper firstly make use of meta-evaluation technology to analyze the contextual embeddedness, the hierarchical structure, coupled mechanism and the antecedents and consequences of the components of the performance appraisal system, and than discuss the psychological process and socialization trends of performance appraisal, and extract the four dimensions of the mechanism in Designing an effective performance appraisal System.Secondly, based on mechanism design theory, from the Perspective of incompleteness of contract and repeated games, this paper constructs an theoretical model named IAPM, and deduce the optimal models of performance appraisal system in three situations and study the internal formation mechanism that effect on the performance of staffs.Once again, through the mapping of the theoretical models, this paper proposes the conceptual model and put forward the research's hypotheseses. Through variable definition and measurement, hypothesis testing and results analysis, the conclusion of the study are as follows:Performance appraisal system mainly covers four dimensions composed by Goal-setting, Formalization, Process justice and Hierarchy. Designing performance appraisal system, enterprises must consider distal variables such as position-level, task structure, the level of human capital and cultural orientation, and co-ordinate arrangements fully.For the staff, the department or business with specific assignmen, it should mainly focus on the formal incentive, reduce the subjective factor in the performance appraisal process, enhance the formal degree of performance appraisal system, make the performance appraisal to be more objective.And when faces low programmed degree of task, it should reduce the performance control degree. That is to say, when environment is uncertain (or organic), the assignment should adjust frequently and re-set. It's time to set a flexible performance appraisal system, and the regulation and the procedure of performance appraisal should reduce correspondingly, and realize the balance of the quantitative target and the qualitative target, the market achievements target and the financial achievements target, the financial and the non-financial target, and integrate the objective performance appraisal results with the subjective results considerably to design an incentive mechanism.The hypotheses is not received that Goal-Setting dimensions can predict the performance of staff, so when enterprises want to convey organizational expectations by goal setting during the process of performance appraisal, it must attach importance to participation, feedback, self-efficacy, strategies, satisfaction and so on, which play an important role of moderator or mediator variable between goals and performance.The process of performance appraisal that has the formal legitimacy, interactive construction and reasonable results, has significant positive impact to enhance the performance of the staff. In particular the staff with important role or status in enterprises, if enterprise tries to improve their justice perception of procedures it will lead to higher performance. However, concerns capacity and competitive incentive-based and the pursuit of equitable distribution overly will have a negative impact on the contextual performance of the staff, which is not conducive to altruism and organizational citizen behaviors of the staffs. Cultural orientation moderates the relationship between degrees of formalization of performance appraisal system and job performance.Horizontal-Collectivism culture (HC) stresses common goals and the community, and does not easily submit to authority, and thus it is suitable for a lower level of performance control mode; on the orther hand Vertical- Individualism culture (VI) stresses task-oriented manner and the rules of the game, and so enterprises have to moderately increases the level of t performance control mode, and then result in high performance output.From the point of topics, currently the literature on internal formation mechanism of the performance appraisal is less relatively, and mostly researches only focus on the singleness dimension of performance appraisal system that impact on staff's job performance. This paper studies the entire dimension that constructed the performance appraisal system under the specific contextual of the organization and its impact on the performance through constructing an theoretical model and empirical analysis.This paper reflects the multidisciplinary field of vision, which related to Strategic management,Organizational management, Human resources management, Sociology, psychology, Economics of information, Game theory, Statistics etc. In this paper, the theoretical contribution is expressed in the following areas:First, the paper constructs an IAPM model. On the basis of theoretical models of traditional mechanisms design theory, by introducing variable of the Discount rate(r), and subjecting to individual rational constraint, incentive compatibility constraint and commitment constraint, the traditional model will become dynamic and contingency. The output shows that social control and self-restraint can reduce the need for increasing control norms by the organization, so building trust and emotional mechanisms between enterprises and employees is helpful to reduce negative effect drawn by formalization of the performance appraisal. At the same time, the performance appraisal system acted as engine-driven is conducive to excavate staff's creativity, cohesive organization, team synergy and the soft support of organizational culture, encouraging enterprises to a higher level on value creation.,Second, through drawing distal variables to research the impact on job performance, this paper has more in-depth probed into the designing mechanism of the performance appraisal system. The results show that, by integrating organically of the goal-setting, process fair perception, level of control, enterprises should be contingent on the specific organizational context to design the performance appraisal system.Third, the paper develops the scale of performance appraisal system designing (named PASD Scale), which meets the requirements of measurement both in the reliability and validity, and lays a good foundation on researching the relationship between performance appraisal and other organizations outputs, such as employee satisfaction, organizational commitment, and so on for the further research. The contribution in practice of this paper is studying the optimal performance appraisal system design types under different organizations situations in detail, and gives the main concern dimensions and the corresponding organizations situation in designing performance appraisal system. At the same time, it gives an empirical analysis to China's enterprise performance appraisal system, and finds that companies tend to use high-performance controlling, and the specific mode of performance appraisal system does not match with organizational situation so it can not achieve the optimal Pareto improvement of staff's performance.Furthermore, this article gives some policy recommendations on the labor legislation about introducing performance appraisal system just like the Equal Employment Opportunity Committee (EEOC) of the United States. In short, in the context of social transformation, by theoretical model deductions and empirical testing, the paper aims at revealing the internal mechanism of the performance appraisal system and researching the key factor constraining and affecting enterprise to design an excellent and effective performance appraisal system. The proposes drawn by this paper was that, the Chinese enterprise should adhere to the principles of which compounding individual goal with the organization, and balancing the organization's adaptatibility and the Stability, to design the performance appraisal system and correspondingly impetus enterprise performance management innovation and construction of harmonious labor relationships.