The impact of Performance Appraisal on Employee Performance: The Mediating Role of Employee Motivation

Abstract

One of the significant aspects in the success of organizations is the performance of employees, and this is particularly in developing economies such as Pakistan where the formal HR practices are yet to take a formal approach. The research reviewed the relationship between Performance Appraisal (PA) and Employee Performance (EP) and a mediating variable Employee Motivation (EM).The-mediating variable between the two variables was a quantitative cross-sectional survey design. Structured questionnaires were used to gather data with the Pakistani organization employees. The demographic distribution revealed that there was moderate gender imbalance; 62.63 percentage of the respondents were males, and 37.37 percentage were females. Most of the participants were between 30 and 39 years (52.53%), with the next highest percentage of 20-29 years (29.20%), 40-49 years (16.16%), and 50 and above (2.02%) meaning that the predominant percentage of the respondents were young and mid-career professionals (81.73% of 20-39 years). Findings indicated that the performance appraisal has a positive impact on employee motivation and the motivational level has a strong positive effect on the performance of employees. The mediation testing established that the PA and EP relationship is mediated by the employee motivation partially, indicating that appraisal enhances performance in a direct and indirect manner through motivation. This has limitations in terms of self-reported measures and omissions of other performance drivers like leadership support and fairness in rewards. The study suggests transparent, equitable and feedback-based appraisals with more reward parity to maintain motivation and enhance performance.