One major purpose of performance appraisals is to determine individual merit, especially where pay for performance systems are employed. Based upon expectancy theory, high performance ratings should entail high merit increases while low performance ratings result in low merit increases. However, it appears that decoupling performance ratings and merit increases is a common practice, as evident from a survey that was administered to knowledge workers at multiple sites in Pittsburgh, Pennsylvania, USA. Human capital themes that appeared to be fair and/or equitable among the sampled knowledge workers, using a grounded theory approach, included the following collective concepts: marginal, actual performance, good reviews associated with good raises, nice raises, management's reviews are partly or mostly objective, employee intrinsic motivation, attitude, years of service, and appropriate education level. Negative aspects of the performance/reward systems were also explored. Associated training suggestions included constant attention by management that keeps the coupling of performance evaluations and motivational/incentive pay systems alive and well, as well as a system to track corporate goals that allow management to compare training, performance metrics, employee retention, and other data with company‐wide goals and employees’ expectations.
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