Workplace Culture Mediates Performance Appraisal Effectiveness and Employee Outcomes: A Study in a Retail Setting

Performance measures have long played a central role in motivating employees to help achieve organizational objectives. However, previous research regarding the effectiveness of performance measures and the performance appraisal process does not provide consistent recommendations for improvement. This study explores the effect of a positive work environment that mediates the relationship between the effectiveness of the performance appraisal process and employee outcomes. Based upon experimental findings in the growing field of positive psychology as applied to a business setting, or positive organizational scholarship, this study puts forward a new construct, workplace culture, that measures the employees' perception of a positive, holistic, transparent, and supportive workplace and examines how it affects outcomes associated with employee success. Using a large sample of sales associates from a national retailer, our results indicate that workplace culture mediates the relationship between the effectiveness of the performance appraisal process and job satisfaction, employee retention, and self-reported performance.