Functions of the Performance Appraisal System: Analyses and their Impact on Level of Employees’ Motivation

In this paper, the authors integrate the analysis of functions of the performance appraisal system and research of their impact on the level of employees’ motivation in the institutions of Bosnia and Herzegovina. They start from the assumption that the purpose of effective performance appraisal system is reflected in linking employees’ activities through the stabilization function and documentary function, using valid and useful information in making administrative decisions about employees and providing feedback to employees which they will use for developing. One of the most important benefits should be enhanced employees’ motivation at work. The hypothesis was tested by stratified random sampling method, and all levels of management were encompassed. Results of empirical research have established that the existing system primarily has documentary and administrative functions, and such as that does not provide raising of level of motivation, and it should be considered in redesigning the performance appraisal system of employees.