The Performance Management Process : Influences of the Perceived Accuracy and Fairness on Employees’ Engagement in Austrian Consulting Companies

Abstract: The demographic shifts, the increased workforce mobility, and the shortage of skilled workers have led to a new thinking within the human resource management. Organizations are becoming aware that their employees are a key asset for success. To address this issue, organizational processes are adjusted to incorporate employees’ needs and wants more sophisticatedly, which can be seen for instance in the area of performance management. Performance management is the basis of every human resource management area and essential for the success and development of organizations, given the main goal, which is the improvement of employees’ performance. Although scientific literature has examined the topic very thoroughly in the last decades, research gaps regarding the performance management process were detectable. Hence, the purpose of this master thesis is to expand the theoretical aspects of the performance management process, define the determining factors of the process effectiveness and efficiency, and examine their influence on the employee engagement. To accomplish the purpose, a comprehensive literature review and an empirical study with employees in Austrian consulting companies were conducted. The study findings suggest the use of a holistic performance management process, consisting of the elements performance definition, performance evaluation, performance review, and performance consequences. As determinants for the process effectiveness and efficiency, the perceived accuracy and the perceived fairness were detected. The empirical study confirms the importance of accuracy and fairness as influencing variables for the employee engagement, with a particular focus on the performance evaluation accuracy, the performance consequences accuracy, the procedural fairness, and the informational fairness. Despite the significant study results, the study has some limitations, in particular the acknowledgment of the contingency theory, which argues that the success of a process depends on organizational circumstances, and cannot be generalized therefore. To consider implications for practice, companies have to incorporate their vision, mission, and organizational objectives in the implementation and adjustment of the performance management process, while executives have to ensure an ongoing communication with their employees, to enable a mutual understanding of the process and reflect on employees’ perceptions.