Employee empowerment, performance appraisal quality and performance

This study provides an empirical insight into the mediating role of the quality of performance appraisal systems, assessed using four quality dimensions (trust, clarity, communication and fairness), on the association between the level of employee empowerment of lower level managers and their performance, assessed in respect to their business unit’s performance. Data were collected from 203 Australian lower level managers using an online survey. The findings reveal that while employee empowerment is positively associated with all four dimensions of the quality of the performance appraisal system, one specific dimension, trust, mediates the association between employee empowerment and business unit performance. Specifically, trust is found to mediate the effect of employee empowerment on both financial and non-financial business unit performance. These findings highlight the importance of enhancing employee empowerment and improving the quality of performance appraisal systems, in particular the level of trust. This study provides an initial empirical insight into whether ‘real autonomy’ is provided by focusing on the extent to which empowerment extends to other aspects of employees’ organisational experience, specifically their performance appraisal system, and the subsequent impact on performance.