Digitalizing Performance Appraisal and Employee Performance: A Moderated Mediation Model of Employee Engagement and Manager Role

Abstract

Digital performance appraisals have emerged as a significant instrument in human resource management, playing a vital role to increase employee performance. Nonetheless, the effectiveness of performance appraisals depends on employees’ perceptions of fairness; only then can it positively affect employees and the overall organization. Accordingly, we developed and tested a dual pathway model based on social exchange theory, social identity theory and equity theory to investigate how digital performance appraisals impact employee job performance via employee engagement and Manager Role. We analyzed survey data from 251 employees in the Telecom sector along with their direct supervisors using advanced  Partial Least Square SEM-PLS 4 software. Convenience sampling technique is used with A 5-point Likert scale is used. In the case of measurement model  internal consistency reliability (Cronbach Alpha and Composite Reliability), convergent and discriminant validity of both lower and higher order constructs is measured. The structural model is used to test hypothesized relationships among the latent variables, along with evaluation of other quality criteria like estimation of Regression. In addition to evaluating other quality criteria like estimation of Regression the structural model is utilized to assess predicted correlations among the latent variables. The findings reveal that digital performance appraisals positively influence employee performance. Furthermore, employee engagement partially mediates the relationship between digital performance appraisals and job performance, while Manager Role moderates the link between employee engagement and employee performance. Our results suggest that when employees perceive fairness in their organization through digital performance appraisals, they are more likely to engage actively in their work and develop a genuine connection with their organizations, ultimately enhancing job performance and contributing to the sustainable growth of organizations. The findings also showed that employee engagement and DPA have a major effect on workers' performance. A significant contribution of the study is the establishment of the DPA process for employee performances through the mediating relationship of employee engagement. Which is a valuable contribution of the study. We also address the limitations and propose implications for both future research and practical applications.