Ahmad Akid Noor Azlee

The effects of performance appraisal towards job satisfaction 1
among low income workers of shipping industry in Malaysia.
BACHELOR IN BUSINESS ADMINISTRATION
RESEARCH METHOD
PROPOSAL TOPIC:
THE EFFECT OF PERFORMANCE APPRAISAL TOWARDS JOB

SATISFACTION AMONG LOW INCOME WORKERS OF SHIPPING INDUSTRY
IN MALAYSIA
NAME: AHMAD AKID NOOR AZLEE
STUDENT ID: 201610009

TABLE OF CONTENT
No. Topic Page number

1 Introduction
- Introduction / background of study
- Problem statement
- Research objectives
- Research questions
- Significant of study 3
- Scope of study
- Definition
a. Conceptual definition
b. Operational definition
- Conclusion
2 Literature review
- Introduction
- Theories and Models
- Previous studies 9
- Hypothesis
- Conceptual framework
- Conclusion
3 Research method
- Introduction
- Research design
- Data Collection and Sampling plan 33
- Research instruments
- Data analysis
- Conclusion
3 References 36
4 Appendices 42
INTRODUCTION
1.1 Introduction
What are the level of job satisfaction among low income workers in shipping
industry? Does performance appraisal influence the level of job satisfaction? Issues
pertaining to the questions on the importance of performance appraisal in an organization and
the influence in determining workers level of job satisfaction were still in debate. This
chapter aimed to indicate the background of the study, described statements of problem along
with the objectives of the study. Other than that, in this chapter, also will be included the
research questions, significance of the study followed by the definition of terms used in this
study.
1.2 Background of the study
Performance appraisal is reviewing and appraising performance to ensure that the

employees are able to achieve objectives of the company. It can be done in many ways
including by providing the employee with diagnostic feedback either a positive or negative
comments about their job performance (Rajkumar, 2002). Aside from that, performance
appraisal also used to determine the effectiveness of the employee in performing their work
in which indirectly affecting their level of job satisfaction (Ivancevich, 2010). It often
involves judgements and opinions of subordinates, peers, supervisors, other managers and
even the employee themselves (Jackson, Schular & Steve, 1991). Even in some context,
performance appraisal is one of the most emotionally charged procedures in management.
People have a strong feeling about being evaluated and to some extent feel vulnerable just if
the appraisal is not conducted appropriately as it will lead to the failures of managing
performance (Margulies & Swan, 1991). Furthermore, failures also is highly related to low
level of job satisfaction due to the ineffectiveness of the performance appraisal in the
organizations.
Job satisfaction is important for employee well-being. It is a significant predictor of

psychological well-being and a widely acknowledged construct linked to work related well-
being (Brough & ODriscoll 2005; Doef & Maes 1999; Ilies & Schwind 2007; Rathi &
Rastogi 2008). Murphy and Cooper (2000) find that the majority of employees spend
between one and two thirds of their waking time in the workplace. Thus, job satisfaction has
a major impact on employee well-being in the workplace, as well as at home.
In general, a safety critical organizations (SCOs) workers are commonly know for
who faced a lot of significant hazards. The shipping industry is one of a kind job represents a
SCO where shipping workers are exposed to a number of risk factors in combination, for
instance weather conditions, navigation failure or accidents during cargo operations. The
shipping industry has high potential for accidents and catastrophes due to the nature of the
working environment.
The maritime industry is regulated by the International Maritime Organization (IMO).

Still there can be significant differences in the organizational cultures and safety practices
onboard ships due to national and/or company specific characteristics. The well-known
expression happy ship indicates that job satisfaction and individual motivation are
considered crucial elements in shipping organizations. Organizational climate is made up of
shared perceptions among workers concerning the procedures and practices that are rewarded
within a specific organization (Mearns et al., 1998). In SCOs like the shipping industry,
safety climate in the form of shared perceptions of safe behavior and loss prevention should
have high priority (Zohar, 2010).
1.3 Problem statement

1. The was limited information in the previous literature reflects the effect of
performance appraisal towards job satisfaction among low income workers in
shipping industry.
2. The gap of shipping industry workers income inter-wind with the influence of
performance appraisal towards job satisfaction
1.4 Research objectives
Since past few years, there were a considerable amount of studies conducted by
researchers on the topic of the effect of performance appraisal towards job satisfaction in
organizations. Judge, Thoresen, Bono and Patton (2001). have done study in relation to this
were of research and revealed the used of performance appraisal system does effect
employees job satisfaction and performance. In accord to this finding, recent research has
shown that that performance appraisal can effect both in negative and positive way towards
the employees (Wahjono & Marina, 2016).However, looking at the effect of performance
appraisal towards job satisfaction, limited amount of researches have been done focusing on
the effect of performance appraisal towards job satisfaction among low income workers in
shipping industry.
1. To examine the level of job satisfaction among low income workers in shipping
industry
2. To determine either performance appraisal effect the level of job satisfaction among
low income workers in shipping industry
1.5 Research questions
Based on the research objectives, this study has come up with a number of research
questions:
a. What are the level of job satisfaction among low income workers in shipping
industry?
b. Does the performance appraisal effect the level of job satisfaction towards low
income workers in shipping industry?
1.6 Definition of terminology
This paper aimed to study the effect of performance appraisal towards job satisfaction
among low income workers in shipping industry. Based on the topic of this study, few terms
such as performance appraisal, job satisfaction and low income workers in shipping industry
have been identified in certain ways in past and in current research.
1.6.1 Performance appraisal
In general, employees are the key to the development and growth of an organization.
Hence, this then direct on the existence of performance appraisal system to evaluate the
current level of satisfaction while working with the company. According to Cole (2002), he
defined performance appraisal as a process to assign the duties and responsibilities equally
for employees. Therefore, it can be seen that employee appraisal result is obtained by job
performance, employee attitude and characteristics. Another point of view by Berman and his
colleagues (2005) described performance appraisal as a very essential tool for succession and
career planning for employee jobs and as well as for organization.
In the study, they found out that an effective and fair practice of performance
appraisal can bring motivation, employee behaviour and attitude development and align
individual goals with organizational goals and this will bring positive relationship between
employee and management. However, in more recent study by Ahmed, Ahmed, Hussain and
Akbar (2010), they recorded that the performance appraisal system is a core mechanism of
human resources development (HRD), which is design and utilize for the growth and
development of employees and for organization also. In short, from the past and current
researches, performance appraisal system is mainly used to determine whether employees are
performing their task and duties as per the expectations of supervisors.
a. Conceptual definition: A structured formal interaction between a subordinate

and his/her superior. It usually embraces of a periodic interview, in which the
work performance of the subordinate is examined and discussed
1.6.2 Job satisfaction
Job satisfaction represents the affective reactions of employees towards their jobs
(Parasuraman & Simmers 2001) or employees positive feeling towards their jobs. A
comprehensive definition of job satisfaction given by Locke (1969) includes individuals
cognitive, affective and evaluative reactions towards their jobs. Locke (1969) defines job
satisfaction as the pleasurable emotional state resulting from achieving ones job values,
whereas job dissatisfaction is an unpleasant emotional state resulting from frustration in
achieving ones job values. Herzberg, Mausner and Snyderman (1959) define job satisfaction
and dissatisfaction in terms of motivator and hygiene factors. They conclude that growth,
responsibility, recognition and achievement are among the factors contributing to employees
job satisfaction.
Meanwhile, company policy, salary, and relationships with employer and peers are
leading factors to job dissatisfaction. In reviewing the definitions of job satisfaction, the most
comprehensive definition, and the one that is most suited for the Malaysian context, is the
definition proposed by Spector (1997), who defines job satisfaction as, It is the extent to
which people like (satisfaction) or dislike (dissatisfaction) their jobs. As it is generally
assessed, job satisfaction is an attitudinal variable. In the past, job satisfaction was
approached by some researchers from the perspective of need fulfilment, that is, whether or
not the job met the employees physical and psychological needs for the things provided by
work, such as pay. However this approach has been de-emphasized because today most
researchers tend to focus attention on cognitive rather on underlying needs.
a. Conceptual definition: The pleasurable emotional state resulting from achieving

ones job values, whereas job dissatisfaction is an unpleasant emotional state
resulting from frustration in achieving ones job values (Locke, 1969)
b. Operational definition: Operationally defined through five facets that focus on job
designs and characteristics like skill variety, task identity, task significance,
autonomy and feedback
1.6.3 Low income workers in shipping industry

a. Conceptual definition: Employees who worked in the shipping industry of
Malaysia who earned less than RM1500 per month either in public or private
sector organizations
b. Operational definition: Workers of shipping industry in Malaysia who earned
the income of RM2000 per month or below
1.7 Significance of the study
The researcher believes that the findings of this study will be of use to the
management of shipping industry generally in understanding the successes and challenges of
the appraisal process and its effect on staff performance. This will contribute to improvement
in the staff appraisal process. The study will also contribute knowledge to the field of staff
appraisal and other academicians and future researchers may carry out further research on
various aspects of the study findings. This will further the understanding of performance
appraisal and job performance. With staffing being a cardinal part of the management
process, the findings of this research will contribute to better management by providing
critical information on an important element of staffing which is, job satisfaction and the
impact of performance appraisal towards job satisfaction among low income workers
particularly.
1.8 Conclusions
In this chapter, great interests of the researchers on the effect of performance appraisal
towards job satisfaction among low income workers in shipping industry were presented. The
problem statement of this study were presented with the purpose of filling the existing
research gap. This was followed by listing the research objectives as well as researches
questions. This paper was aimed to study the effect of performance appraisal towards job
satisfaction of low income workers in shipping industry. Based on the topic of this study, a
number of terms such as performance appraisal, job satisfaction and low income workers in
shipping industry have been defined in certain ways with the reference of past studies and
current research. The remainder of this chapter considers the significance of the current
studies which is to examine the level of job satisfaction among low income workers in
shipping industry and the influence of performance appraisal into context.
LITERATURE REVIEW
2.1 Introduction
This chapter reviews literature on the past and current research on variables studied
ranging from performance appraisal, job satisfaction and the relationship between the
variables. The first section of the study reviews the extent to which performance appraisal
importance, quality, process and challenges faced. The second section determines the extent
to which the dimensions of job satisfaction in organizations among employees. The section
then ends with a chapter summary.
2.2 Theories and Models
According to Victor Vrooms (1964) Expectancy Theory, an employee performs or is

motivated to do so according to the expected result of the work done. Vroom concludes that
people will be motivated to the extent that they can perceive links between effort,
performance and rewards available. He further argues that performance is a vital component
of the expectancy theory. Specifically, he is concerned with the linkage between effort and
performance. That employees need to know what to expect after a given task, however it is
critical for management to communicate what is expected of the employees. Furthermore, he
argued that they must feel confident that if they exert an effort within their capabilities, it will
result in a satisfactory performance as defined by the criteria by which they are being
measured.
However, Vroom under-estimated the fact that employees should feel confident in the
process of evaluation in that, if they perform as they are being asked, they will achieve the
rewards they value. He suggests that the expected reward (financial and non-financial) will
motivate or be the basis of the employee performance. Taylor and Kalliathan (2001) in his
work; Training Programs and their effects on the performance of staff emphasized the need
for on-job training, short seminars and team building workshops as programs that increase the
employee performance. In fact, according to Whiting, Podsakoff and Pierce (2008) the
performance appraisal process offers employees the opportunity to receive structured,
constructively framed feedback about their work and growth potential. Alternately,
Armstrong (2006) argues that appraisal and improvement are critical to developing and
maintaining a strong capable workforce. Structured performance incorporates the

organizations vision and mission into the overall evaluation of the employee.
Other than that, various theories are forwarded in job satisfaction literature. For
example, Maslow (1954) suggests that individuals need to satisfy their basic needs (food,
cloth and shelter) in order to achieve the higher needs in their lives until they achieve their
self-actualization. Researchers normally investigate the factors that are affecting the level of
satisfaction of employees based on the theory of necessity. Under Herzbergs (1968) theory,
employees who are satisfied with both motivation (nature of their jobs, achievement in the
work, promotion opportunities, and chances for personal growth and recognition) and
hygiene factors (company policies, supervision, salary, interpersonal relations and working
conditions) are satisfied employees, while those who are dissatisfied with both factors would
more likely to be poor performers.
2.3 Past and current studies

2.3.1 Performance appraisal in organizations
There is an increasing use of the performance appraisal process (Carrol& Schneir,

1982; Ishaq, 2009; Dechev Z. , 2010) which is mostly motivated by an organizational need to
have an effect on employee`s attitudes, behaviors and eventually, organizational performance
(Murphy & Cleveland, 1995). This happens as a result of the establishment of objectives at
the beginning of the assessment cycle which brings employees with obvious performance
goals view, also the supervising of performance during the assessment cycle (which can be
helpful for poor performers) and the support provided for high-quality performance through
rewards, typically in the type of higher pay (Milkovich, A.K., & Wigdor, 1991). Performance
appraisal is considered to encourage employee performance in consequent performance
cycles (Heneman& Werner, 2005).
2.3.1.1 Performance appraisal quality
The capacity to achieve these positive outcomes will be a function of the quality of
the performance appraisal experience. By the help of the operations management field, we
can realize the meaning of quality which is typically explained as establishing and operating
processes that support organizational effectiveness. The aim of a quality approach is to
reduce variation in each process in order to get greater consistency (Roberts &Sergesketter,
1993). Employees are sensitive to quality variations in performance appraisal as its processes
are a powerful determinant of employees futures such as having promotion, rewards,
demotion or even termination of their job within the organization (Mayer & Davis, 1999).
Thayer (1987) suggested performance appraisal quality variations will generate strong
reactions among employees. Organizational efficiency can be affected by the quality of the
performance appraisal process (Brown, Haytt, & Benson, 2010).Based on Brown and et al.,
(2010) research; one source of quality variation in performance appraisal is the approach and
attitudes of supervisors to the performance appraisal. One basis of quality variation is given
from the general attitudes that supervisors have towards this process. Many writers have
identified the unwillingness of supervisors to carry out appraisals. According to a survey,
managers frequently stay away from the appraisal process because they either feel the
potential returns from their appraisal efforts are not valuable of the essential investments or
they fear the consequences (Latham et al. 1993).
2.3.1.2 Importance of performance appraisal
As noted by Vance et. al (1992), the existence of performance appraisal was visible
since the early 1900s. The role of performance appraisals and the importance of the process
itself have been changing over the years to suit the goals and objectives of organizations.
Henderson (as cited in Boice & Kleiner, 1997) noted that performance appraisal systems are
not generic or easily passed from one company to another; their design and administration
had to be tailor-made to match employee and organizational characteristics and qualities.
Generally, performance appraisal was incorporated for a number of potential agendas.
Edmonstone (1996) noted that some of the agendas that lead to performance appraisal
procedures being conducted within an organization include:-
a) Improvement in the communication between boss and subordinate through the use
of feedback between them.
b) Identification of the scope for performance improvement and the means to achieve
this.
c) Identification of individual training and development needs.
d) Identification of the potential of individuals for future promotion, succession
planning, or for retention or termination purposes.
e) As the basis for remuneration and reward, on the basis of performance.

f) As a powerful means of managerial control, through the setting of objectives in a
hierarchical fashion and a review of success or failure in achieving these.
Hence, from the reviews of the literatures, there stages of performance appraisal
process are noticeable, each with its own importance. First stage of the performance appraisal
process is about providing direction for the employees. Lawler (as cited in Vance et. al, 1992)
noted that performance appraisal provides direction for employees behavior in-line with the
organizational goals where necessary control can be achieved through a clear system of rules
and procedures to direct and standardize employee behavior, resulting in predictability and
accuracy of performance. Similar idea was noted by Edmonstone (1996).
The second stage practices the evaluation of the employees current performance and
then reflected, improving both performance and supervisor-employee relationship. Arbaiy
and Suradi (2007) noted that performance appraisal system allowed managers to evaluate the
management of the effectiveness and efficiency of employees and/or other resources within
the organization, thus creating competitive advantages amongst employees. Furthermore,
Kane, Bernardin and Wiatrowski (1995) suggest that, in providing feedback, supervisors
should allow employees the opportunity to share their insights and evaluations concerning
their own performance. Thus, an effective performance appraisal feedback seemed to involve,
inform, and motivate employees and also create improved supervisor-employee
communications (Edmonstone, 1996; Villanova, Bernardin, Dahmus & Sims, 1993).
Finally, the third stage discusses the important role performance appraisal plays
towards the future development of both the employees and the organization as a whole. This
was seen in Arbaiy and Suradi (2007) where the authors noted that performance appraisal is
conducted to identify strengths and weaknesses, as well as opportunities for improvement and
skills development. Moreover, Squires and Adler (1998, p.446) suggest that an appraisal
system must not only evaluate what has been accomplished, but also guide future
development, leverage existing strengths, and address skill deficiencies.
The importance of performance appraisal system in Malaysia is summarized by

Arbaiy and Suradi (2007). The authors indicated that in the Malaysian Public Services, a
performance appraisal system that was designed to be a systematic annual process is used to
evaluate each staff which involves evaluating employee's set targets, perceived behaviour
evaluation and work achievement during the year of evaluation. In this system, each targeted
departmental activities, programs and projects were decided upon, in reference to
predetermined overall organizational policy and strategies agreed upon at the beginning of
the year of evaluation. And, the appraisal focuses upon the integration and achievement of
individual targets, behaviour and performance at work as compared to the goals of the
organization. Arbaiy and Suradi (2007) also concluded that performance appraisal systems
are mainly used for judgmental and developmental purposes in order to make good
administrative decisions. The similar importance of PA was noted by Coutts and Schneider
(2004).
2.3.1.3 Processes of performance appraisal
Hodgetts (2002) on the other hand managed to categorizes a four- step process of the
performance appraisal system. Performance appraisal systems comprises of established
performance standards, a method of determining individual performance, comparison against
standards and an evaluation of performance based on the comparison. The first step of
establishing performance standards outlines the employees job responsibilities. The job
standards are set against the worker performance. The second step involves pegging the
worker performance (such as traits approach, behavioural approach, ranking methods,
alternation ranking, and results methods, productivity measures, 360 degrees evaluation and
Management by Objectives (MBO). Thirdly, there is comparison against standards. At some
point, the individual work record it compared with the standards set for the job. Fourth, an
evaluation of performance is made pegged on the comparison.
Selvarajan and Cloninger (2008) suggest that some organizations are dissatisfied with
their performance appraisal process. This implies that the performance appraisal process is
not an appropriate mechanism for addressing employee motivation. But performance
appraisal is considered to be essential to create a positive effect work environment and
improve the quality of service. Selvarajan and Cloninger (2011) argue that there are a number
of issues associated with the performance appraisal process and these include poor design,
lack of attention to the organizational culture, and unwillingness to confront issues of poor
performance, as well as time pressure. Hence, the next section looks at the different
performance review process and their effect on employee motivation while looking at the
past oriented and future oriented methods.
2.3.1.3.1 Past-Oriented Methods
2.3.1.3.1.1 Rating Scales
The rating scale method provides a well structured performance appraisal. Each
employee characteristic is rated against a scale with points that range from poor to
excellent performance (Afriyie, 2009). The ratings are based on the ability of the employee
to work as a team player, communication skills and technical competence (Khan, 2013). The
scale is necessary for the appraisers job (Okeyo, Mathooko and Sitati, 2010). The biggest
advantage for this technique is the comparison of the employees performance in the entire
workforce (Ali, Mahdi and Malihe, 2012). This brings about fairness among all appraises and
provides standards of performance measurement in all the departments in the organization.
Rating scale technique can be used easily and this leads to the high adoption of the approach
(Barringer, Jones & Neubaum, 2005). The disadvantage of this technique is the lack of
applicability on all sorts of jobs. It is also not applicable in measuring the workers traits (Ali,
Mahdi and Malihe, 2012).
2.3.1.3.1.2 Check-list Method
Under this method, checklist of Statements of Traits of employee in the form of

YES or No based questions is prepared. Here, the rater only does the reporting or checking
and HR department does the actual evaluation (Okeyo et al., 2010). The rater concerned has
to tick appropriate answers relevant to the appraisers. When the check-list is completed, it is
sent to HR department for further processing. Various questions in the check list may have
either equal weight or more weight may be given to those questions which are more
important (Afriyie, 2009). The HR department then calculates the total scores which show the
appraisal result of an employee. The advantage of the check list methods is its economic
nature, ease of administration, there is limited training which is required and is standardized.
However, the disadvantage is the raters biases, use of improper weights by Human resource
department that do not allow rater to give relative ratings (Caruth & Humphreys, 2008).
2.3.1.3.1.3 Force Choice Method
The first choice method is a series of statements arranged in the blocks of two or more
are given are rater indicates which statement is true or false. The rater is forced to make a
choice. HR department does actual assessment. The advantage of this technique is that it has
no personal biases because of forced choice but the disadvantage is incorrectly framed
statements (Denby, 2010). One of the problems faced in large organizations is relative
assessment tendencies of raters. Some are too lenient and others too severe. This method
overcomes that problem. It forces everyone to do a comparative rating of all the employees
on a predetermined distribution pattern of good to bad (Ichniowski and Shaw, 2009). Say
10% employees in Excellent Grade, 20% in Good Grade, 40% in Average Grade 20% in
Below Average Grade and 10% in unsatisfied grade. The real problem of this method occurs
in organizations where there is a tendency to pack certain key departments with all good
employees and some other discards and laggards. Relatively good employees of key
departments get poor rating and relatively poor employees of laggards departments get good
rating (Jayawarna et al., 2007).
2.3.1.3.2 Future-Oriented Methods
2.3.1.3.2.1 Management by Objectives
The use of management objectives was first widely advocated in the 1950s by the
noted management theorist Peter Drucker. MBO (management by objectives) methods of
performance appraisal are results- oriented. That is, seek to measure employee performance
by examining the extent to which predetermined work objectives have been met (Newman,
Thanacoody and Hui, 2012). Usually the objectives are established jointly by the supervisor
and subordinate. Once an objective is agreed, the employee is usually expected to self-audit;
that is, to identify the skills needed to achieve the objective. Typically they do not rely on
others to locate and specify their strengths and weaknesses. They are expected to monitor
their own development and progress (Porter, 2008).
The MBO approach overcomes some of the problems that arise as a result of
assuming that the employee traits needed for job success can be reliably identified and
measured. Instead of assuming traits, the MBO method concentrates on actual outcomes. If
the employee meets or exceeds the set objectives, then he or she has demonstrated an
acceptable level of job performance (Qureshi at al., 2007). Employees are judged according
to real outcomes, and not on their potential for success, or on someones subjective opinion
of their abilities. The guiding principle of the MBO approach is that direct results can be
observed, whereas the traits and attributes of employees (which may or may not contribute to
performance) must be guessed at or inferred (Scott, Clotheir and Spriegel, 2007). The MBO
method recognizes the fact that it is difficult to neatly dissect all the complex and carried
elements that go to make up employee performance. MBO advocates claim that the
performance of employees cannot be broken up into so many constituent parts as one might
take apart an engine to study it. But put all the parts together and the performance may be
directly observed and measured (Shaw et al., 2008).
2.3.1.3.2.2 Assessment Center Methods
An assessment center refers a central location where the managers form a team to
participate in job evaluation exercises invigilated by trained assessors. It is more focused on
observation of behaviors across a series of select exercises or work samples (Porter, (2008).
Assesses are requested to participate in in-basket exercises, work groups, computer
simulations, role playing and other similar activities which require same attributes for
successful performance in actual job (Qureshi et al., 2007). Well conducted assessment centre
can achieve better forecasts of future performance and progress than other methods of
appraisals. Also reliability, content validity and predictive ability are said to be high in
Assessment Centers (Scott, Clotheir and Spriegel, 2007). The tests also make sure that the
wrong people are not hired or promoted. Finally, it clearly defines the criteria for selection
and promotion. However, as the method concentrates on future performance potential it
ignores past performance. It is very costly as the employees have to travel and lodge plus the
use of psychologists. The rating is strongly influenced by assessors interpersonal skills but
employees with solid performers may feel suffocated in simulated situations (Porter, 2008).
2.3.1.3.2.3 360 degree Appraisal
It is a technique in which performance data/feedback/rating is collected form all

sections of people employee interacts in the course of his job like immediate supervisors,
team members, customers, peers, subordinates and self with different weight age to each
group of raters (Ohabunwa, 2009). This technique has been found to be extremely useful and
effective. It is especially useful to measure inter-personal skills, customer satisfaction and
team building skills (Qureshi et al., 2007). One of the biggest advantages of this system is
that assesses cannot afford to neglect any constituency and has to show all- round
performance. However, on the negative side, receiving feedback from multiple sources can
be intimidating, threatening, and expensive and time consuming (Shaw et al., 2008).
2.3.1.3.2.4 Psychological Appraisals
These appraisals are more directed to assess employees potential for future
performance rather than the past one. It is done in the form of in-depth interviews,
psychological tests, and discussion with supervisors and review of other evaluations. It is
more focused on employees emotional, intellectual, and motivational and other personal
characteristics affecting his performance (Ohabunwa, 2009). This approach is slow and costly
and may be useful for bright young members who may have considerable potential. However
quality of these appraisals largely depends upon the skills of psychologists who perform the
evaluation (Shaw et al., 2008). With all these methods of ratings, the employees may be de-
motivated if the appraisal process is not based on accurate and current job descriptions. But
ensuring that appraisers have adequate knowledge and direct experience of the employees
performance can motivate the employees to give their best (Jayawarna et al., 2007). Offering
adequate support and assistance to employees such as professional development opportunities
can improve their motivation and performance of the staff. Failure to conduct appraisers on a
regular basis due to the limitation of resources may affect the performance of the staff but
regular supervisor ratings may have a positive impact on the motivation of the employees
(Ali, Mahdi and Malihe, 2012).
2.3.1.4 The effect of appraisal system on employees motivation
There are a number of different options concerning who should evaluate the
individual employee, and the decision needs to be based on a series of factors. Traditionally,
it has been the sole responsibility of managers or supervisors to assess performance (Afriyie,
2009). However, other organizational members (such as clients, co-workers and
subordinates) can be valuable source of information as they are likely to have exposure to
different aspects of an employees performance (Afriyie, 2009). Collecting information from

multiple sources can increase the accuracy of performance evaluation (can reduce bias) and
increase employees perceptions of fairness (Vasset, Marnburg and Furunes, 2011).
The supervisors are known to evaluate the performance of employees. The

supervisors evaluate employees on their performance however there are a number of
problems. Sometimes the supervisors are not there to find time to evaluate the employees.
Many times supervisors may be in a different building or even a different city than the
individuals they supervise (Vasset, Marnburg and Furunes, 2011). Virtual teams,
Internetlinked offices, telecommuting, and other factors cause supervisors to not be in
constant touch with their employees, unlike the situation 20 or 30 years ago. There are other
problems as well such as personality conflicts or they may just not relate well to some of their
employees. This may cause a personal bias for, or against, certain employees that may
invalidate the appraisal process if its significant enough (Selvarajan and Cloninger, 2011).
In todays work environment, with the amount of information necessary to do the

complex tasks that organizations must accomplish in order to compete, nobody can know
every job which includes the supervisors (Ohabunwa, 2009). Theres just too much
information for any one individual to learn. So jobs have been segmented down into smaller
and smaller areas, and the supervisor may not know each of those jobs in great detail (Shaw
et al., 2008). So there are certainly problems that can occur in the case of a supervisor being
responsible for a subordinate employees evaluation process. To overcome the supervisor
problems, multiple measures can be used to make performance assessment more accurate
(Qureshi et al., 2007). For example, using other evaluators can help overcome personal bias
and provide information that supervisors dont always know about.
On the other hand, peers or co-workers can be involved in the appraisal of individual
employees. Peer evaluation is valuable where the supervisors are absent or has infrequent
contact with the employees (Ali, Mahdi and Malihe, 2012). Also, all employees have
multiple co-workers who they interact with on a frequent basis, peer evaluations may be
valuable. Peers or coworkers also often know the job of the individual employee better than
the supervisor does and they are more directly affected by the employees actions, either
positive or negative (Jayawarna et al., 2007). In addition, peers can evaluate the ability of the
individual to interact with others successfully in a group or team setting. This may be very
difficult for supervisors to see unless they are intimately involved with the group.
There are certainly issues that can come up in peer evaluations that can cause the
process to become less objective (Ohabunwa, 2009). In fact, research evidence regarding the
validity of peer evaluations is really unclear. Personality conflicts and personal biases can
affect how individual employees rate their peers (Vasset, Marnburg and Furunes, 2011).
Individuals within a group or team may just have significantly different personality types and
these differences can cause friction within the work group that may spill over when it comes
time to evaluate those with whom they are in conflict. This leads to personal biases which can
affect the working relationships and employee motivation that may show up in peer
evaluations (Shaw et al., 2008).
Typically, subordinates can evaluate their seniors in the organization. Subordinate

evaluations can give good insight into the managerial practices and potential missteps of
people who control other employees in the organization. As a result, subordinate evaluations
may give valuable information that one would be unable to find out using any other means
(Khan, 2013). The problems with this kind of an evaluation is the potential for bias especially
from the subordinates who have been disciplined by the supervisor. The subordinates may try
to get back at their supervisor for giving them tasks that they did not want to perform, or for
disciplining them for failure in their jobs (Afriyie, 2009).
There may also be a personality conflict as some subordinates certainly may be biased
against their supervisor or manager. This results to negative evaluation by the subordinates
(Khan, 2013). On the other end of the scale, the subordinates may inflate the capabilities of
the manager, at least partly because of a lack of understanding of all the tasks and duties
required of the manager. In fact, it is common to find the employees rating their managers
higher than the managers self-ratings. In all of these problem areas, there are potential
problem that must be guarded. If there are outliers that provide either very high or very low
marks for the supervisor, the outliers should be thrown out of the calculation when
determining overall marks for the supervisor (Kumbhar, 2011).
Another significant issue in the case of subordinate evaluations is confidentiality.

Subordinate evaluations must be confidential in nature, or it is unlikely that the subordinates
will provide an honest evaluation of their supervisor. If the evaluation is not confidential, the
supervisor can and may take retribution on subordinates who provide unflattering evaluations
(Jayawarna, Wilson and Macpherson, 2007). So, if the evaluation is not anonymous, many of
the subordinates will likely inflate the capabilities of the supervisor, which minimizes the
value of the evaluation process itself. So, even though subordinate evaluations have the
potential for biases and other problems, it is important to provide valuable information about
the supervisors capabilities (Lowe and Vodanovich, 2005).
Self-assessment is also an option in the performance appraisal process. Virtually all

employees do a self-assessment whether they are actually formally asked to do so as part of
the assessment or not which is required with MBO (Ichniowski and Shaw, 2009). Even when
not asked to do a self-assessment, employees will still walk into the review discussion with
some informal self-assessment that they compare to the supervisors rating. Most of the
research evidence shows that self-assessments tend to overestimate the individuals ability to
do a job (Jayawarna, Wilson and Macpherson, 2007). However, some of the research says
that employees either underestimate or accurately estimate their job performance over time.
A significant portion of the evidence seems to show that individuals with lower levels of
knowledge and skills within their field tend to inflate their self-assessment of their abilities
(Holzer, 2007). Conversely, as individuals become more knowledgeable and more skilled, the
evidence tends to show that they will either accurately estimate or even underestimate their
capabilities in their jobs (Lowe and Vodanovich, 2005).
Most of the evidence shows that employees overestimate their ability to do their job
but this indicates that the performance appraisers still have measurement concerns (Holzer,
2007). The measure may have validity concerns, if self-evaluations are skewed as it is
common with this type of appraisal. In addition, receiving information from individuals
concerning their perception of skill set is extremely valuable in a number of management
processes, including plans for training and development opportunities, providing work
assignments, counselling and disciplinary measures, among others (Ichniowski and Shaw,
2009). A big step in overcoming self-assessment problems, as well as other assessment
problems, is the Blanchard test (Denby, 2010).
For some company, customers may be asked to evaluate individuals within the
company. Customers can include people outside the organization, including customers for
products and services and suppliers to the firm. Customers can also be internal including
people in other departments of the firm for example, the print shop that makes copies for
other departments or the mail room that receives and delivers communications and products
to the rest of the firm. Customer evaluation process is important when employees interact
routinely with internal or external customers (Ichniowski and Shaw, 2009). It is important to
know how customers feel about their interactions with the employees because obviously
external customers are the ones who ultimately pay the bills. If external customers are upset
about their interactions with the employees, they have the ability to go elsewhere with their
business (Jayawarna et al., 2007). Even internal customers can create significant problems
within the firm due to conflict between departments or divisions. So the customers are asked
to evaluate the individual employees with whom they come into contact (Lowe and
Vodanovich, 2005).
However, there are a number of major problems with customer-based evaluations.

One problem is that customer assessments commonly use simple rating scales, which are very
subjective. Also, customers are usually not trained to do an accurate assessment. So bias is a
problem. For these reasons, the popular opinion is that customer evaluations are almost
always skewed to the negative (Jayawarna et al., 2007). However, research shows that this is
not necessarily the case. In some situations, customer evaluations actually exceed evaluations
of the individual that are internal to the firm or department. Despite the problems with the
evaluations, customers can provide valuable information concerning employees who have
direct customer contact (Ichniowski and Shaw, 2009). Another solution is adjusting the
customer evaluation process to compare the individuals being evaluated and identify the
ratios of negative and positive comments to allow the organization identify more successful
and less successful employees. Although this is an imperfect measure, it still provides value
to the organization in the fact that customers perception is critical to customer relationships
(Jones and Wright, 2007).
To ensure that the performance criteria are relevant to work practice and acceptable to
appraisers and employees, the performance evaluation criteria should have an up-to-date job
description in consultation with the appraisers and employees (Ichniowski and Shaw, 2009).
Clear and explicit links between performance appraisal and a job description will ensure the
relevance of the appraisal. If a detailed job description is not available or is out-of-date, it is
strongly recommended that an accurate job description be developed prior to conducting a
performance appraisal. Linking performance appraisals with job descriptions can help to
focus the appraisal process on the key competencies, behaviours and outcomes associated
with a particular role or position (Jayawarna, Wilson and Macpherson, 2007).
It can also be useful to consult with employee to ensure that key aspects of a role or
position are represented in the job description (Okeyo, Mathooko and Sitati, 2010). For
example, conducting assessments, planning interventions, managing cases, liaising with other
providers, keeping up-to-date service records and case notes, writing reports, developing a
clear understanding of the relative importance of various competencies, behaviours and
outcomes, identifying how these key competencies, behaviours and outcomes can be fairly
and accurately assessed (Ichniowski and Shaw, 2009). Employees are more likely to accept
and be satisfied and motivated with the appraisal system if they participate in the
development of appraisal criteria and measures, and in the process of conducting appraisals
(Holzer, 2007). Strategies for facilitating employees participation can also include
engagement in formal meetings or informal discussions with supervisors to seek input and
feedback on appraisal measures and criteria, representation on groups or committees involved
in the design and implementation of performance appraisals and inclusion of self appraisals
in the appraisal process (Jones and Wright, 2007).
2.3.1.5 The challenges in applying workers performance appraisal
From all, performance appraisals are often retrospective. A typical traditional

appraisal usually occurs once or twice a year. There would be extended time gaps of months
between establishing goals and reviewing them, and objectives that were set upon in the
beginning of the year are usually only dragged out during appraisal time (Afriyie, 2009).
While performance appraisals provide the perfect opportunity for managers and staff to have
a one-on-one discussion, it is unfortunately open to biased ratings (Khan, 2013). For
example, some managers tend to be liberal or strict in their rating of staff. Managers may also
fall into the trap of the recent performance effect where they generally only recall the
recent actions of employees at the time of the appraisal and award points based on recent
favourable or unfavourable events rather than whole years worth of activities (Jones and
Wright, 2007).
There is also a tendency to focus on the weaknesses instead of strengths, which

creates conflicts between manager and staff as well as a negative work environment Okeyo,
Mathooko and Sitati, 2010). What organisations do not realise is that skills gaps need to be
addressed quickly as it would impact the bottom line (Afriyie, 2009). During the performance
appraisal process, there are common problems that emerge and they include: bias,
stereotyping, halo error, distributional errors, similarity error, the appraisal conflicts,
proximity error, recency error, contrast error and attribution error .
The first major challenges on implementing appraisal system is on bias as it is a

simple a personality-based tendency, either toward or against something. In the case of
performance assessment, bias is toward or against an individual employee. All human beings
have biases, but supervisors especially cannot afford to allow their biases to enter into their
evaluation of subordinates in the firm (Kumbhar, 2011). This is very easy to say, but very
difficult to do. Biases make the evaluation process subjective rather than objective, and
certainly provide the opportunity for a lack of consistency in effect on different groups of
employees (Ali, Mahdi and Malihe, 2012). So to overcome the bias problem, the appraiser
needs to be objective and not let their feelings of liking or disliking the individual influence
their assessment (Caruth and Humphreys, 2008).
Stereotyping on the other hand is mentally classifying a person into an affinity group,
and then identifying the person as having the same assumed characteristics as the group
(Afriyie, 2009). Though stereotyping is almost always assumed to be negative, there are
many incidents of positive stereotypes. However, regardless of whether the stereotype is
positive or negative, making membership in a group, rather than explicitly identifying the
characteristics of the individuals, creates the potential for significant error in evaluations
(Holzer, 2007). Stereotyping can be avoided by getting to know each employee as an
individual and objectively evaluating individual employees based on their actual performance
(Denby, 2010).
Aside from that, another challenges faced by the management called halo error occurs
when the evaluator has a generally positive or negative (negative halo error is sometimes
called horns error) impression of an individual, and the evaluator then artificially extends
that general impression to many individual categories of performance to create an overall
evaluation of the individual that is either positive or negative (Jones and Wright, 2007). In
other words, if employees are judged by their supervisor to be generally good employees,
and the supervisor then evaluates each of the areas of their performance as good, regardless
of any behaviours or results to the contrary, the supervisor is guilty of halo error (Ngo et al.,
2008). The halo error can be avoided by remembering that employees are often strong in
some areas and weaker in others that should objectively evaluate individual employees based
on their actual performance for each and every item of assessment (Mamoria, 2005).
Decenzo and Robbins (2003) also notes that the halo effect or error is a tendency to
rate high or low on all factors due to the impression of a high or low rating on some specific
factor. According to them, if an employee tends to be conscientious and dependable, the rater
might become biased toward that individual to the extent that he will rate him or her
positively on many desirable attributes. Also as per their observation in an institution,
students tend to rate a faculty member as outstanding on all criteria when they are particularly
appreciative of a few things he or she does in the classroom as compared to a few bad habits
which might result in students evaluating the instructor as lousy across the board. Cleaveland,
Murphy and Williams (2009) also postulate that the halo error is perhaps the most pervasive
error in performance appraisal as raters who commit this error assign their ratings on the
basis of global impressions of ratees. According to them, an employee is rated either high or
low on many aspects of job performance because the rater knows (or thinks he or she knows)
that the employee is high or low on some specific aspects.
The distribution error is often based on the ranking method of evaluation and forced
distribution. These errors occur in three forms: severity or strictness, central tendency, and
leniency (Porter, 2008). They are based on a standard normal distribution, or the bell curve.
In severity or strictness error, the rater evaluates everyone, or nearly everyone, as below
average. Central tendency error occurs when raters evaluate everyone under their control as
average where nobody is either really good or really bad (Scott, Clotheir and Spriegel, 2007).
Finally, leniency error occurs when the rater evaluates all others as above average. Leniency
error, therefore, is basically a form of grade inflation. Distributional errors can be avoided by
giving a range of evaluations (Shaw et al., 2008).
For, similarity error it usually occurs when raters evaluate subordinates that they
consider more similar to themselves as better employees, and subordinates that they consider
different from themselves as poorer employees (Skarlicki and Folger, 2007). People have a
tendency to feel more comfortable with people who feel the same way which can allow this
feeling of comfort with similar individuals to be reflected in the performance appraisal
process (Teseema and Soeters, 2006). To avoid similarity error, it is important to embrace
diversity and objectively evaluate individual employees based on their actual performance,
even if they are different from the appraisers and dont do things the same way (Tassema and
Soeters, 2006).
Proximity error on the other hand states that similar marks may be given to items that
are near (proximate to) each other on the performance appraisal form, regardless of
differences in performance on those measures (Newman, Thanacoody and Hui, 2012). This
error can be avoided by objectively evaluating employees actual performance on each and
every item on the assessment form (Teseema and Soeters, 2006). 2.4.7 The Appraisal
Conflicts Conflict of interest constantly happens in an organisation. One of the reasons is
because of the practice of performance appraisal activities. Conflict probably occurs because
of disagreement of the ratees regarding the implementation of the performance appraisal
process (Porter, 2008). It can be categorised into several categories such as conflicting intra-
individual goals, which is the desire for honest feedback versus desire for selfconcept
affirming feedback and recognition. Besides that, there is a conflict on individual workers
with their colleagues goals, which means that a persons desire for rewards contradicts with
other colleagues desire (Skarlicki and Folger, 2007).
Recency error occurs when raters use only the last few weeks or month of a rating
period as evidence of their ratings of others (Qureshi et al., 2007). For instance, if a
warehouse worker has been a strong performer for most of the appraisal period, but right
before his annual evaluation he knocks over a stack of high-cost electronic equipment while
driving a forklift, he may be rated poorly due to recency error (Shaw et al., 2008). Recency
error can be avoided by evaluating the employee based on the entire assessment period,
commonly 612 months. Using the critical incidents method really helps recall and provide
an assessment of the entire period more objectively (Tassema and Soeters, 2006).
In contrast error, the rater compares and contrasts performance between two
employees, rather than using absolute measures of performance to measure each employee
(Scott, Clotheir and Spriegel, 2007). For example, the rater may contrast a good performer
with an outstanding performer, and as a result of the significant contrast, the good performer
may seem to be below average. This would be a contrast error (Qureshi et al., 2007).
Contrast error can be avoided by objectively evaluating individual employees based on their
actual performance. The ranking method can be used correctly by assessing each individual
based on the items on the assessment form then rank the individuals based on their
assessments (Shaw et al., 2008).
In simplified terms of attribution error is defined as a process where an individual

assumes reasons or motivations (such as attitudes, values, or beliefs) for an observed
behaviour. So, attribution error in performance appraisal might occur when the rater observes
an employee action such as an argumentative answer to a question and assumes that the
individual has a negative attitude toward the job and is a poor performer (Scott, Clotheir and
Spriegel, 2007). This may not be true, and in such a case the rater would be guilty of an
attribution error. There is need to avoid attribution error because it is based on subjective
conclusion (Skarlicki and Folger, 2007). When in doubt, the rater shouldnt assume they
know why the employee did or didnt do something. The rater should talk to employees to
find out so that they can objectively evaluate employees based on their actual performance
(Shaw et al., 2008).
A successful performance appraisal system must fit the organisation. Organisations

need to assess the suitability of performance appraisal systems to their own workforce before
implementing one that meets their needs (Skarlicki and Folger, 2007). The primary purpose
of an appraisal system is to sieve out those who cannot or would not do the job. It has to be
communicated to all involved parties and appropriate support and training should be provided
especially to managers conducting such sessions with their staff (Shaw et al., 2008).
Employers should also take note that performance evaluation is a continuous process and not
one that happens only once a year. The best appraisals are a two-way discussion and focus on
the employee assessing his own performance and setting goals for improvement. And as best
practice, organisations should ensure Key Performance Indicators (KPIs) are well
communicated to and clarified with staff, and there are proper benchmarks in place against
which staff are assessed. Data collected from appraisals should be used to track the success of
recruitment and induction practices (Qureshi et al., 2007).
2.3.2 Dimensions of job satisfaction
Job satisfaction is commonly known as how pleased a person is with his or her work,
and can be defined as how people feel about their jobs and different aspects of their jobs
(Spector, 1997, p. 2). The subject has been a popular research area since the 1930s when the
industrial companies realized that job satisfaction was to some degree positively correlated
with productivity (Vroom, 1967). As a result, today one can observe many different
approaches and definitions on the subject.
One should be concerned with job satisfaction for several reasons (Spector, 1997).
Firstly, job satisfaction can to some extent reflect how employees are treated with regards to
respect and fairness. Secondly, job satisfaction can be an indicator of an employees
psychological and emotional health. Thirdly, it can affect the behaviour of the employee, and
thus the organizational functions and productivity. Moreover, job satisfaction can be a
reflection of the organizational performance, where differences between groups can lead to
future problems within the company.
2.3.2.1 Factors effecting workers job satisfaction
Even up until now, several approaches developed for determination of the employee
job satisfaction and many studies were conducted about factors that affect employee job
satisfaction in the literature. Therefore, significant background information is obtained about
the related and effecting factors of job satisfaction. Some researchers examined the
determinants of job satisfaction. Locke (1976) defined the fundamental dimensions of job
satisfaction as the job itself, payment, promotion, working conditions, benefits of the work,
fellow workers, personal values, employee relationship. In 1962, Vroom pointed out that the
job satisfaction has seven aspects, i.e. the compensation, the supervisor, the colleagues, the
working environment, the job content, the promotion, and the organization itself. As a recent
study, irin (2009) states the factors affecting job satisfaction as follows; feeling of success,
relations with the management and employees, job safety, responsibility, recognition, high
salary, promotion opportunity, clarity of roles, participation in decisions, freedom, good
coordinated work, lack of continuity, relocation, performance, life satisfaction, and perceived
work stress (nar & Karcolu, 2012). All these kind of studies support the idea that
employee satisfaction has many aspects and influenced by various factors (Zaim, et al.,
2012).
Some of determinant factors are explained in detail in the following parts. The factors
are divided into two main groups as the determinant factors of job satisfaction: environmental
factors and personal factors according to the study of Spector (1997). Environmental factors
consist of working conditions, personal development opportunities, rewards, supervision, co-
workers and communication. Personal factors include demographic variables, which are
gender, educational level, and seniority.
2.3.2.1.1. Environmental Factors
Working conditions consists of the physical and social conditions at the work. People
want to work in a comfortable, safe environment, a clean, modern and enough-equipped
environment (Sun, 2002) and work in good conditions such as appropriate temperature,
lighting and noise (Green, 2000). For example, people can be disturbed when they are
distracted by unexpected noise such as telephones, conversations or crowding (Bridger &
Brusher, 2011) and absence of temperature or lighting causes strain (MacMillan, 2012)
Nevertheless, workers also want to improve their skills, abilities, knowledge, and to
learn new things especially, which provide personal growth. In parallel with, if they are
satisfied on self-improvement opportunities, their overall job satisfaction level increases.
Therefore, job training plays a key role for personal development opportunities and helps
employees to be more specific with their job, as a result, employee job satisfaction increases.
In addition, employee development programs improve workers satisfaction level by giving
them more sense of confidence, providing to control over their career and increasing positive
feelings towards their job (Jin & Lee, 2012).
According to Kalleberg (1977), reward is related with the employees desire, and it
motivates employees. It shows what an employee wants after performing a certain task.
According to Gerald & Dorothee (2004), rewards are very strongly correlated with job
satisfaction (Javed et al., 2012). Moreover, according to the related literature, rewards are
divided into two categories as; extrinsic rewards and intrinsic rewards. Extrinsic rewards
consist of money, promotion and benefits. Intrinsic rewards include having a sense of
achievement, being part of a team success, being appreciated by superiors because of a good
performance and feeling recognized. Job satisfaction increases with all these feelings and
returns (Baar, 2011).
Other than that, employee job satisfaction also have positively affected by
supervisors support and recognition of employees (Yang, et al., 2011). Since the supervisors
are representative for the institution, if they are supportive and helpful, employees perceive
the organization as the same (Emhan, et al., 2014). Communication between supervisors and
subordinates determines employees attitudes towards their jobs. In addition, management
style of supervisors is important and it can be different. For example, in one type, supervisors
implement such things like checking to see employees performance and communicating with
subordinates. In another type, they allow their subordinates to participate in decisions related
with their jobs (Yeltan, 2007, & Beiktas, 2009). Moreover, lack of communication between
employees and supervisors negatively affect employees job satisfaction.
In other researches, the study found that employees that have a better relationship
with their coworkers are more likely to be satisfied with their job (Yang, et al., 2011).
According to Locke, employees prefer to work with people being friendly, supportive, and
cooperative (Baar, 2011). Since people spend majority of their times with colleagues, if co-
workers make them happy, this has positive impact on their job satisfaction (Beiktas, 2009).
Last but not least, communication within workplace is essential for organizations in
terms of job satisfaction. According to Ozturk, Hancer et al. (2014), there are two different
dimensions of internal communication in organizations. One of them is managerial
communication such as giving oral presentation and giving feedback, the other one is
informal interaction such as communication with each other beyond formal channels.
Effective interaction and communication provide to improve job satisfaction; on the contrary,
lack of communication causes dissatisfaction.
2.3.2.1.2. Personal Factors
In the literature, there are many studies investigating relationships between gender
and job satisfaction. There are different results about this issue. Some of them propose that
women are more satisfied than men are; some of them suggest the vice-versa. Because of the
fact that men and women have different social roles, their expectancies from job may also be
differ. For example, women give more importance to working conditions and social
relationship, whereas men are more satisfied with some factors such as pay and promotion
opportunities. This may be resulted from the difference between expectancy levels of each
gender, in which expectancy of women are relatively less than men are, so, women can be
satisfied with more (Beiktas, 2009, & Spector, 1997).
Other than that, some other researches indicate that as the level of education
increases, job satisfaction may decrease. Highly educated workers may be dissatisfied with
their work if it requires performing the repetitive tasks (Green, 2000). Requirements of jobs
should be fitted with educational level of employee, otherwise, if educational level of a
worker is so high for requirements of the job, this causes dissatisfaction (Sun, 2002). Another
reason of dissatisfaction among highly educated people is to have higher levels expectation
for their job.
Seniority is defined as how long employees have been working in their jobs within the
same organization. There are different views about the relationship between seniority to job
satisfaction. Some of studies states that as with age, seniority is also expected to contribute to
increase of job satisfaction due to the familiarity with work content and work environment.
On the other hand, some of them suggest that job satisfaction and seniority are negatively
correlated as shown in De Santis and Dursts study (Green, 2000).
2.3.2.2 Measurement of job satisfaction
Unlike many technical issues, determination, measurement, and improvement of job

satisfaction is not so easy, because there are psychological effects and concerns about them.
In order to prevent this issue, many researches are conducted and questionnaire methods are
developed to deal with factors related to job satisfaction and to measure job satisfaction level.
Literature review about job satisfaction and measurement techniques is presented in the
following part. In the literature, there is a consensus among researchers about the definition
of job satisfaction, however; measurement of it is still on debate. Measurement of job
satisfaction is a complex issue since job satisfaction is explained by not only job
characteristics, but also personal characteristics, needs, values, expectancies. Because of that
reason, for example, two employees working in the same job can experience different
satisfaction level (Harputlu, 2014).
Smith, Kendall and Hulins on Job Description Index (1969), which is one of the most
widely used approaches to identify factors affecting job satisfaction, indicates that job
satisfaction can be measured with five aspects namely; pay, coworkers, promotions,
supervision and the nature of the work. Minnesota Satisfaction Questionnaire was also
designed to measure job satisfaction of employees. It contains three scales. These scales are
intrinsic satisfaction, extrinsic satisfaction and general satisfaction (Zaim, et al., 2012).
The present study examines the level of job satisfaction among Malaysian low income
workers in shipping industry. The significance of the study is taken between the levels of
Malaysian job satisfaction and those from previously reported samples from both the United
States and Singapore (Spector & Wimalasiri 1986). The study of Spector and Wimalasiri
(1986) is selected because the Job Satisfaction Survey (JSS), which was originally developed
in the US, was then administered in Singapore, a country which is in close geographic
proximity to Malaysia and shares a similar history, ethnicity, religion, language and
economic development. Although the JSS was originally developed for application in human
services in public and nonprofit organizations (Spector 1985), Spector (1997) finds the JSS is
also suitable for general use and not restricted to a specific organizations.
Previous Malaysian studies on job satisfaction employ instruments such as the Job
Descriptive Index (JDI) (Smith, Kendall & Hulin 1969) when focusing on small and medium
industries and tourism industry (Abdullah et al. 2007; Yew 2007); the Job Diagnostic Survey
(Hackman & Oldham 1975) when examining nursing, private and public sectors (Pearson &
Chong 1997; Samad 2006; Shamsuri 2004); and the Job Stress Questionnaire in relation to
teachers (Ahsan, Abdullah, Fie & Alam 2009). Although the JDI and JSS are used globally
for job satisfaction as well as individually dimensions, the JDI mainly concentrates on five
facets ranging from work, supervision, pay, co-workers and promotion (Spector, 2008) and
some items may not apply to all employees (Cook et al. 1981). Unlike the JDI, the JSS
examines five facets that focus on job designs and characteristics like skill variety, task
identity, task significance, autonomy and feedback.
2.3.3 Relationship between performance appraisal and job satisfaction
Related literature compares the analysis from previous research studies carried out on
aspects of workers appraisal and performance with an aim to draw relationship to the
prevailing situations in Malaysia shipping industry and further identify gaps for future
research. Expected rewards (financial and non-financial) should be made-to-order to suit the
employees efforts invested in their performance as a recognition for their hard work in
increasing the growth of the company. However, what was not considered by them was the
fact that all the above should have a basis of individual focus such as suggested by the past
review of mass studies.
It should be put to record that most studies have undermined the importance of the
employee involvement in the designing of the seminars, workshops, and any other training to
such an extent that they feel part of the process. Important to note is that Latham and Latham
(2000), recommend the need to evaluate the appraisal process. In reference to their
recommendations, if staff is to have positive attitude towards the appraisal system, the
performance appraisal should undergo regular review and improvement. For example, focus
groups or surveys could be conducted to gauge staff perceptions of the appraisal process.
This confirms Roberts (2002) recommendations that a successful performance

appraisal process should demonstrate a change in both the ratings of staff performance and
aspects of the work environment that impact upon work performance. Job satisfaction
represents one of the most complex areas facing todays management and although thousands
of papers and research have been conducted on job satisfaction all over the world, a lot more
aspect is missing to be explored. Many studies have demonstrated an unusually large impact
of job satisfaction on motivation of employees, while motivation level has an impact on
productivity and thus on development of many organizations.
2.3.4 Conceptual framework
Level of job satisfaction Satisfaction on Performance

Appraisal System
(Independent variable)
(Dependent variable)
2.3.5 Conclusion
This chapter reviewed literature on the relationship between performance appraisal

and job satisfaction. The first section of the study reviewed the extent to which the
importance of performance appraisal system ranging from its quality, effectiveness and
challenges in applying performance appraisal. The second section determined the extent to
which explaining the dimensions of job satisfaction and continued with the section of
shipping industry. The last section of this chapter discussed on the relationship existed
between performance appraisal and job satisfaction. The next chapter deals with the research
methodology.
RESEARCH METHODOLOGY
3.1 Introduction
This chapter describes the research method and procedures that was followed in
conducting the research. The first part of this section discussed the research type, followed by
an explanation of the research design. The second part explained the population of the study.
The third section of the research methodology discussed the sample technique and the sample
size used in this research. The fourth part explained the data collection instrument used
around the questionnaire, followed by the research procedure was used to gather the data and
the end this chapter discusses the data analysis used in this study.
3.2 Research design
The research design is the plan to be followed in order to realise the research
objectives or hypotheses. It represents the master plan that specifies the methods and
procedures for collecting and analysing the required information. A framework is developed
to address a specific research problem or opportunity (Tustin, Ligthelm, Martins and Van
Wyk, 2005). The study used a quantitative research design method since it wanted to solicit
responses from a large number of respondents. Using a quantitative method of research the
study came up with responses from the sample. The study adopted a descriptive research
design. This is because the researcher attempts to determine the impact of the variables in
relation to each other so as to present the bigger picture of the variables in a particular
situation as recommended by Churchill and Iacobucci (2002).
3.3 Data Collection and Sampling plan
Questionnaires were the most effective way of data collection tool for the survey of
this study. Standardised questionnaires helped to investigate a widely distributed population.
The advantage of this approach was that the researcher can collect data from a controlled
number of variables or unlimited number of variables. The questionnaire was split into three
sections. The initial section asked questions concerning the general responded information.
The second section established the level of job satisfaction among low-income workers in
shipping industry. The third section determined the extent to which examine the satisfaction
towards organizations performance appraisal system.
For the sample size, it is set for the study participants to be taken in sample size that is
a smaller set of the larger population (Cooper and Schindler, 2006). Determining sample size
is a very important issue for collecting an accurate result within a quantitative survey design.
One of the real advantages of quantitative methods is their ability to use smaller groups of
people to make inferences about larger groups that would be prohibitively expensive to study
(Fisher, 2007). Mugenda and Mugenda (2003) argue that the sample must be carefully
selected to be representative of the population and that there need for the researcher to ensure
that the subdivisions entailed in the analysis are accurately catered for.
Hence, a sample size of 171 was selected from a total population of 200 employees
based on past research on the same aspect of management researches. The selection of the
sample is sufficient and representative enough of the entire population limiting the influence
of outliers or extreme observations. The sample size was sufficiently large enough to produce
results among variables that are significantly different and it broadens the range of possible
data and forms a better picture for analysis.
3.4 Research instruments
In this study, the JSS of Spector (1985) is employed to measure job satisfaction. The
JSS consists of 36 items that are used to assess total job satisfaction using 9 subscales (each
consisting of 4 items). These subscales include pay, promotion, fringe benefits, contingent
rewards, supervision, co-workers, operating procedures, nature of work and communication.
Respondents rate the favorable and unfavorable aspects of their jobs ranging from 1 (disagree
very much) to (6 agree very much). Higher scores on the JSS indicate higher levels of job
satisfaction. The internal consistency of total job satisfaction in this study was .84. Prior to
the data collection, the original English version of the JSS was translated into Malay, which
was then checked through back to back translation for equivalency in consultation with two
independent experts. Both translation processes were carried out in consultation with staff
from University Teknologi Mara Johor in the departments of Psychology and Counseling and
English. No translation errors were detected that could change the meaning of important
items, indicating the compatibility between the original English questionnaires with the back
translation version. The Cronbachs alpha of the Malay version in the pilot study was 76.
Performance appraisal satisfaction was measured using the 25-item scale developed
by Cook and Crossman (2004). This measure asks respondents to indicate on a five point
Likert scale, ranging from strongly agree to strongly disagree how satisfied they are with
aspects of their performance appraisal system. Cook and Crossman report that Cronbachs
alpha for this measure is .84, which is good. Some items were modified for the current
research to reflect terminology that is more suitable for a general department in organizations
rather than a specific context.
3.5 Conclusion
This chapter described the research method that was used in conducting the research.
The section discussed the research type, followed by an explanation of the research design.
The plan population of the study was explained together with the data collection instrument
used along the study on the effect of performance appraisal towards job satisfaction among
low-income workers in shipping industry.
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APPENDIXES

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The effects of performance appraisal towards job satisfaction 1

among low income workers of shipping industry in Malaysia.

BACHELOR IN BUSINESS ADMINISTRATION

THE EFFECT OF PERFORMANCE APPRAISAL TOWARDS JOB

NAME: AHMAD AKID NOOR AZLEE

STUDENT ID: 201610009

No. Topic Page number

1.2 Background of the study

Performance appraisal is reviewing and appraising performance to ensure that the

Job satisfaction is important for employee well-being. It is a significant predictor of

The maritime industry is regulated by the International Maritime Organization (IMO).

1.3 Problem statement

1.4 Research objectives

1.5 Research questions

1.6.1 Performance appraisal

a. Conceptual definition: A structured formal interaction between a subordinate

1.6.2 Job satisfaction

a. Conceptual definition: The pleasurable emotional state resulting from achieving

1.6.3 Low income workers in shipping industry

1.7 Significance of the study

2.2 Theories and Models

According to Victor Vrooms (1964) Expectancy Theory, an employee performs or is

maintaining a strong capable workforce. Structured performance incorporates the

2.3 Past and current studies

There is an increasing use of the performance appraisal process (Carrol& Schneir,

2.3.1.1 Performance appraisal quality

2.3.1.2 Importance of performance appraisal

e) As the basis for remuneration and reward, on the basis of performance.

The importance of performance appraisal system in Malaysia is summarized by

2.3.1.3 Processes of performance appraisal

2.3.1.3.1 Past-Oriented Methods

2.3.1.3.1.1 Rating Scales

2.3.1.3.1.2 Check-list Method

Under this method, checklist of Statements of Traits of employee in the form of

2.3.1.3.1.3 Force Choice Method

2.3.1.3.2 Future-Oriented Methods

2.3.1.3.2.1 Management by Objectives

2.3.1.3.2.2 Assessment Center Methods

2.3.1.3.2.3 360 degree Appraisal

It is a technique in which performance data/feedback/rating is collected form all

2.3.1.3.2.4 Psychological Appraisals

2.3.1.4 The effect of appraisal system on employees motivation

different aspects of an employees performance (Afriyie, 2009). Collecting information from

The supervisors are known to evaluate the performance of employees. The

In todays work environment, with the amount of information necessary to do the

Typically, subordinates can evaluate their seniors in the organization. Subordinate

Another significant issue in the case of subordinate evaluations is confidentiality.

Self-assessment is also an option in the performance appraisal process. Virtually all

However, there are a number of major problems with customer-based evaluations.

2.3.1.5 The challenges in applying workers performance appraisal

From all, performance appraisals are often retrospective. A typical traditional

There is also a tendency to focus on the weaknesses instead of strengths, which

The first major challenges on implementing appraisal system is on bias as it is a

In simplified terms of attribution error is defined as a process where an individual

A successful performance appraisal system must fit the organisation. Organisations

2.3.2 Dimensions of job satisfaction

2.3.2.1 Factors effecting workers job satisfaction

2.3.2.1.1. Environmental Factors

2.3.2.1.2. Personal Factors

2.3.2.2 Measurement of job satisfaction

Unlike many technical issues, determination, measurement, and improvement of job

2.3.3 Relationship between performance appraisal and job satisfaction

This confirms Roberts (2002) recommendations that a successful performance

2.3.4 Conceptual framework