The Impact of Performance Evaluation and Reward System on the Employee Performance in the State Electricity Sector in Sri Lanka

Performance appraisals are a part of career development and consist of regular reviews of employee performance within organizations This research was developed with the aim of investigating how the employee performance has been effected by the performance appraisal process and rewards. Literature review paved the way to expand the selected variables, namely performance appraisal process, rewards and employee performance. A thorough study was done to find out what were the sub variables used by previous researches. Accordingly, some of them were selected on the basis of appropriateness for the selected context. Sub variables selected for performance appraisal process are perceived accuracy and perceived fairness. Perceived fairness was further divided as perceived distributive fairness, procedural fairness and the interactional fairness. Rewards were quantitatively measured using sub variable intrinsic rewards and extrinsic rewards. After studying several previous research models, it was decided to add motivation as a moderating variable to the relationship between performance appraisal process, rewards and employee performance. The population of the selected context is approximately 16,000. This research used a self-administered questionnaire as primary data collecting method and a literature review as the secondary data collection method. The reliability of the data set was tested calculating Cronbach's alphavalue and the sample adequacy was tested using Kaiser-Meyer-Olkinvalue. Then the regression analysis was done to test four hypotheses and Hayes Process Macro in SPSS was used to test the moderation impact. Results shows that there is a significant positive relationship between performance appraisal and employee performance as well as rewards and employee performance.