The paper examines the impact of employees’ fairness perception on their attitude and behavior. The study used data from 219 employees belonging to two public sector banks and two private sector banks in India, and factor analysis was applied to confirm the structure of justice and outcome measures. Multiple hierarchal regression analysis was applied to establish the underlying relationship between appraisal fairness perception and employees’ reactions. The results reported that informational and distributive justice predicted performance appraisal system satisfaction and satisfaction with feedback. All types of justice perception influence employees’ satisfaction with rater; distributive justice is a key determinant of rater satisfaction, followed by interpersonal, procedural and informational justice. Intention to quit is negatively influenced by procedural fairness and distributive fairness. None of the justice perception predicted pay satisfaction and work performance. Integrating previous justice researches, this study has attempted to examine the importance of employees’ fairness perception. The results suggest that justice should be of prime importance for organizations in order to generate positive outcomes for performance appraisal systems. The findings supported the current theories of appraisal justice to cross-cultural boundaries.

The present business context is defined by increased complexity, uncertainty, risk and competition. Managing and retaining talent continues to be of utmost importance to organizations not only for gaining competitive advantage but also for sustenance (Milligan, 2012). The performance appraisal system plays a significant role in managing employees and has become powerful practice in the area of human resource management. It is also acknowledged that firms having performance management programs on boards outperform on financial and productivity part than their counterparts (Molleman and Timmerman, 2003). Fletcher (2001) defined performance appraisal more broadly as ‘a generic term for a variety of activities through which organizations seek to assess employees, develop their competence, enhance performance and distribute rewards’. Various human resource decisions such as between-person decisions (salary administration, promotion, retention and layoffs); within-person decisions (training need identification, determining transfers and assignments and performance feedback); system maintenance (manpower planning, identifying appraisal training and developmental needs, and evaluation of goal achievement) and documentation (documenting personnel decisions and meeting legal requirements) are based on information obtained from performance appraisal (Cleveland et al., 1989).

Performance appraisal is also one of the most comprehensively researched topics in industrial/organizational research (Cascio and Bernardin, 1981; and Maroney and Buckley, 1992). Bretz et al. (1992), Murphy and Cleveland (1995) and Levy and Williams (2004) observed that major contribution of research is focused on information processing, rating errors, rater training, appraisal feedback and reactions to the appraisal process. Although the focus of enquiry has changed over the time, it began with information processing and psychometric properties, and then moved on to development of appraisal formats, training programs, appraisal sources and consequences of appraisal. Variables included by various researchers are as follows: Brown et al. (2010): Job satisfaction, organization commitment and turnover intention; Kuvaas (2006): Work performance, intention to quit and organization commitment; Poon (2004): Job satisfaction, turnover intention and organization commitment; and Levy and Williams (1998): Organization Commitment and job satisfaction.

Organizational Behavior Journal, Consequences of Performance Appraisal, Justice Perception, A Study of Indian Banks.