Performance Appraisal Systems: Determinants and Change

Using establishment data from the Australian Workplace Industrial Relations Survey, this paper estimates the determinants of performance appraisal systems. The results indicate that performance appraisal is associated with workers having shorter expected tenure and greater influence over productivity. We argue these results reflect those circumstances in which the net benefits of performance appraisal are likely to be greatest. The results also show that complementary human resource management practices, such as formal training and incentive pay, are associated with an increased likelihood of performance appraisal, but that union density is associated with a reduced likelihood of performance appraisal.