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The Link Between Performance Appraisals and Culture: An Examination Across 21 Countries

    February 21, 2016

    By Hilla Peretz, Ph.D. | Department of Industrial Engineering and Management, Ort Braude College, Israel


    Yitzhak Fried, Ph.D. | Whitman School of Management, Syracuse University


    Research has shown that the use of individual-based merit performance appraisal practices has a positive impact on organizational outcomes. Such merit systems are widespread in the United States and are consistent with the individualistic values that characterize this nation. However, are such performance appraisal practices equally effective in organizations embedded in countries that may have a more collectivistic orientation?


    This study examined the influence of cultural values on performance appraisal practices adopted by organizations across 21 countries. Further, it explored the impact of the level of fit between a nation’s cultural values and the characteristics of the organization’s performance appraisal practices on organizational performance.


    Key Findings and Implications for Practice

    Power distance is the degree to which members of a collective expect power to be distributed equally. In high power-distance societies, hierarchy is rigidly adhered to.

    • Organizations in cultures with high power distance are less likely to use 360-degree performance appraisal processes.

    • 360-degree performance appraisal systems reduce absenteeism and have a positive effect on innovation and productivity rates in lower power-distance societies rather than higher power-distance societies.

    Future orientation is the degree to which individuals engage in future-oriented behaviors such as investment and development to prepare the workforce to meet future organizational needs.

    • Organizations in cultures with strong future orientations are more likely to use performance appraisal processes to evaluate employees.

    • In societies characterized by high future orientation, organizations that adopt performance appraisal systems and evaluate a high proportion of employees have higher productivity and innovation levels and lower absenteeism rates.

    Individualism/collectivism refers to the degree to which societies value individual rights and opportunities versus group success and loyalty to the group.

    • Organizations in collectivist cultures are more likely to use 360-degree performance appraisal systems.


    • In collectivist societies, organizations that adopt performance systems with a high focus on individual outcomes have higher levels of absenteeism and turnover and lower levels of innovation, relative to organizations that adopt performance systems that do not emphasize individual outcomes.

    Uncertainty avoidance is the extent to which a society relies on social norms, rules and procedures to alleviate the unpredictability of future events. Societies high in uncertainty avoidance are more likely to develop strict rules and norms.

    • Organizations in cultures high in uncertainty avoidance are more likely to use performance appraisal systems.

    • In societies characterized by high uncertainty avoidance, organizations that implement formal performance appraisal systems tend to have lower levels of absenteeism and turnover and higher levels of innovation than organizations that do not implement such formal performance appraisal systems.

    Bottom line:

    • National culture influences the types of performance appraisal processes that are implemented.

    • Organizations should understand the cultural values in which the organization operates to ensure that the performance appraisal system used is appropriate and effective.

    Source: SHRM Foundation Research: National values, human resource practices and organizational performance: A study across 21 countries