Can Performance Appraisal Systems Inspire Intrinsically Motivated Employees?

• Author: Seong Soo Oh,Gregory B. Lewis
• Date: 01 June 2009
• Published date: 01 June 2009
• DOI: 10.1177/0734371X09331616
• Subject Matter: Articles

Review of Public Personnel
Administration
Volume 29 Number 2
June 2009 158-167
© 2009 Sage Publications
Can Performance Appraisal
10.1177/0734371X09331616
http://roppa.sagepub.com
Systems Inspire Intrinsically
hosted at
http://online.sagepub.com
Motivated Employees?
Seong Soo Oh
gregory B. Lewis
Georgia State University
Can a performance appraisal system (PaS) elicit better performance from an intrinsi-
cally motivated workforce? By explicitly linking extrinsic rewards to performance, a
PaS might actually discourage the work effort of the primarily intrinsically motivated
federal workforce. Data from the 2000 Merit Principles Survey show that few federal
employees believe that the PaS increases their productivity. Logit analysis confirms
that intrinsically motivated employees are more skeptical of the effectiveness of PaS
than are extrinsically motivated employees who are demographically similar, work in
similar positions, and have similar beliefs about the fairness of the system and the prob-
ability of being rewarded for superior performance.
Keywords: performance appraisal; extrinsic rewards; work motivation; intrinsic
motivation; federal workforce
Results-oriented government reform efforts have made the performance appraisal
system (PaS) a central part of public agencies’ performance management. PaS
aims to improve organizational productivity by providing developmental feedback
and by linking rewards to performance (Boswell & Boudreau, 2000; Daley, 1992,
2005; Rynes, gerhart, & Minette, 2004). By tying pay to performance, agencies
hope to increase the productivity of poor performers while maintaining or enhancing
that of higher performers (Milkovich & Wigdor, 1991; Rynes, gerhart, & Parks,
2005). although the two largest federal departments (Homeland Security and
Defense) have made the strongest efforts toward pay-for-performance systems, using
pay banding to widen the gap between the pay of high and low performers (Hyde,
2005; Naff & Newman, 2004), pay for performance has not been very effective in
the public sector to date (Ingraham, 1993; Kellough & Nigro, 2002). Critics have
largely focused on the inadequacy of the financial rewards (Perry, 2003; Risher,
2002; Trahant & Yearout, 2005) and the shortage of incentives for public managers
to implement them effectively (Johnson & Libecap, 1994).
The more important problem, however, may be a fundamental mismatch between
PaS and a primarily intrinsically motivated workforce. although this hypothesis is
controversial, extrinsic rewards may discourage intrinsically motivated workers
(Crewson, 1997; Ryan & Deci, 2000a), and public employees place greater value on
158

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Oh, Lewis / Performance appraisal Systems 159
intrinsic motivators than do private sector workers (Crewson, 1997; Frank & Lewis,
2004; Houston, 2000, 2006; Rainey, 1982; Wittmer, 1991). By explicitly tying
extrinsic rewards to performance, PaS could potentially demotivate a large group of
federal employees.
Data from the 2000 Merit Principles Survey indicate that few federal employees
see the PaS as motivating them to do a better job but that the pattern is particularly
dismal for the intrinsically motivated. Logit analysis confirms that more intrinsically
motivated employees find fewer benefits from PaSs—even holding constant demo-
graphics, hierarchical level, and agency as well as satisfaction with supervisors, skep-
ticism about the link between performance and rewards, and beliefs about the fairness
of performance standards, all important beliefs for PaS to motivate workers.
Literature Review
Intrinsically motivated employees work for the inherent satisfaction of the labor
(Cameron & Pierce, 2002; Ryan & Deci, 2000a), whereas extrinsically motivated
employees “engage in the work in order to obtain some goal that is apart from the work
itself” (amabile, 1993, p. 188). Hackman and Oldham (1980) argued that strong
intrinsic motivation occurs when three psychological states are created: “1) experi-
enced meaningfulness of the work, 2) experienced responsibility for outcomes of the
work, and 3) knowledge of the actual results of the work activities” (p. 77); they urged
organizations to restructure work to induce intrinsic motivation. greater skill variety,
task identity, and task significance increase the experienced meaningfulness of the
work, autonomy raises experienced responsibility, and feedback provides knowledge
of results (Hackman & Oldham, 1980). PaS is one means to facilitate that feedback.
governments largely rely on “separable consequences” (e.g., pay, promotions,
working conditions, and fringe benefits) to motivate employees (Kellough, 2002;
Nigro & Nigro, 2000), even though many researchers have regarded intrinsic motiva-
tion as more important (Ryan & Deci, 2000a). Frank and Lewis (2004), for instance,
found that intrinsic motivators are more strongly related to self-reported work effort
than are extrinsic motivators. Until the 1960s, the dominant perspective was that
extrinsic and intrinsic motivations were independent and that performance would be
highest when they were combined (Cameron & Pierce, 2002). Several studies, how-
ever, suggested that extrinsic rewards can drive out intrinsic motivation, particularly
when a majority of employees are intrinsically motivated (Canton, 2005; Frey, 1997;
James, 2005; Kohn, 1993; Ryan & Deci, 2000b). Other empirical studies, however,
indicated that pay is an important motivator (Lawler, 1971; Locke, Feren, McCaleb,
Shaw, & Denny, 1980) and that extrinsic rewards do not negatively affect intrinsic moti-
vation (Cameron, Banko, & Pierce, 2001; eisenberger & Cameron, 1996).
Since Perry and Wise (1990) popularized the concept of public service motivation
(PSM), several empirical studies have supported their hypotheses that public

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160 Review of Public Personnel administration
employees are more likely to be motivated by “a desire to serve the public interest,
loyalty to duty and to the government as a whole, and social equity” (p. 369;
Crewson, 1997; Frank & Lewis, 2004; Houston, 2000, 2006) and that high-PSM
employees may be more productive workers (alonso & Lewis, 2000; Naff & Crum,
1999).
PaSs are used to provide extrinsic rewards to employees who perform well.
...