Performance appraisal practices in nonprofit organisations in Australia

338 Pages·2015·2.61 MB·English

Performance appraisal practices in nonprofit organisations in
Australia

by
Ancy Ramasamy
BA (Hons) Law and Management
LLM (International Commercial Law)
MBus (IR & HRM)

Institute of Chartered Secretaries and Administrators

Submitted in fulfillment of the requirements of the degree of
Doctor of Philosophy

College of Business
Victoria University
11 August 2015

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To my mum, husband & daughter
& in memory of my dad
in love and gratitude

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Declaration
“I, Ancy Ramasamy, declare that the PhD thesis entitled ‘performance appraisal practices in
nonprofit organisations in Australia’ is no more than 100,000 words in length including quotes
and exclusive of tables, figures, appendices, bibliography, references and footnotes. This thesis
contains no material that has been submitted previously, in whole or in part, for the award of
any other academic degree or diploma. Except where otherwise indicated, this thesis is my own
work”.

Signature Date: 11/08/2015

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Acknowledgement
This PhD would not have been possible without the support of a large number of people. Above
all, I am thankful to Prof. Pauline Stanton and Dr. Annie Delaney for their intellectual input,
encouragement, and patience. Despite moving to another university and acquiring additional
responsibilities, Prof. Stanton continued supervising this work due to her passion for research
and her commitment to students, and not on the basis of any pecuniary benefits. For this, I am
extremely grateful. Dr. Delaney deserves credit for untiringly reading through drafts of the
thesis, and patiently guiding me throughout the research process. Prof. Pauline Stanton and Dr.
Annie Delaney were both generous with their time and wisdom, and helpful as criticis of my
work. Their endless encouragement and advice helped me endure this project, and their
feedback significantly improved the quality of this thesis. I would also like to thank Prof.
Donna Buttigieg for kindly agreeing to join the doctoral committee, intervening with her
acquaintances to help me get access to one of the case study organisations, helpful feedback
and encouragement. I am deeply indebted to all three supervisors, and express my heartfelt
gratitude and appreciation to them.
I would like to express my sincere thanks to the gatekeepers who granted me access to their
organisations. I am also thankful to all respondents who voluntarily took the time out of their
busy work lives to participate in this study. Their input and rich comments constituted the key
ingredients to completing this project.
This thesis bears the mark of Victoria University, and the friends and and colleagues that I have
met there. Special thanks go to Ms. Penny Bassett for encouraging me to do a PhD, to Victoria
University for granting me a scholarship to undertake this project, and to Prof. Anne Marie
Hede for kindly allocating additional funds for transcription purposes. I would like to thank
Dr. Gitika Sablok for being a good friend and for her involvement in the peer debriefing
exercise. A great expression of thanks goes to the staff of the Graduate Research Centre,
specially Ms. Tina Jeggo, Dr. Lesley Birch, Ms. Rita D'Souza and Ms. Katie Batterham for
their friendship and help in sorting the administrative aspects of my research in a timely
manner. I am grateful to the librarians for occasionally expediting my requests for academic
materials, and to all the friends that I have made while studying and working at Victoria
University (including Adeng, Angeera, Amal, Ishani, Dana, Joe, Barbs, Simi, Lina and
Evangelina).
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Furthermore, I would like to thank SmartDocs for their professionalism, confidentiality and
accuracy in transcribing part of the data.
On a personal level, this thesis could not have been completed without the love, encouragement
and sacrifices of my family. During the time that has spawned this thesis, numerous challenges
cropped up in my life – challenges that sometimes appeared so insurmontable that I even
thought about giving up on my PhD. This piece of work would never have seen the light of day
if it was not for my family who gave me the courage and willpower to push through. As such,
I would like to express my gratitude to my mum for putting her life on hold on many occasions
and coming to my rescue. Her dedication as a mother knows no bounds, and I hope that I will
have the opportunity to show the same dedication to my daughter one day. I am also grateful
to my Aunt Rada for travelling to Australia and bestowing upon my daughter the same love
and tenderness that she gave me as a child. More generally, I thank my brother, sister-in-law,
niece, nephew, cousins, aunts, uncles, and friends in Mauritius and elsewhere for their love and
support.
Last but not least, I would like to express my heartfelt gratitude to two extremely important
people in my life: my husband, Nilantha, who has stood by me through thick and thin, and my
two-year old daughter, Miheli, who has taught me the true meaning of the words ‘commitment’
and ‘selflessness’. My PhD journey would have been a lonely one without you, and it is only
memorable because you were both an integral part and a product of it.

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Abstract
This study sets out to examine performance appraisal practices (PA) in nonprofit organisations
(NPOs) in Australia. The study draws together various theoretical approaches – namely
institutional theory (DiMaggio & Powell 1983), the HR strength theory (Bowen & Ostroff
2004), the contingency and configuration approaches (Delery & Doty 1996), the process-based
perspective on fit (García-Carbonell, Martin-Alcazar & Sanchez-Gardey 2014), and the values
(Burchielli 2006) and justice literature (Bies 2001; Folger, Konovsky & Cropanzano 1992;
Greenberg 1986) – to construct an integrated approach to PA in the nonprofit sector. The
research questions were formulated based on this integrated approach, and relate to an
investigation into the impact of the external environment on NPOs’ PA practices; the
relationship between NPOs’ core values and their PA practices; the horizontal and vertical
integration of PA practices in NPOs; and employees’ justice perceptions toward PA in NPOs.
To address the research questions, a qualitative case study design was adopted. Two case study
organisations – a community welfare agency (Dogood) and a trade union (Employee Rights
Union) – were selected. Multiple sources of evidence, namely documentary evidence, semi-
structured interviews, focus groups and observational evidence and field notes, were used. Data
was also collected from multiple groups of individuals, namely senior managers, line managers
and employees. The sample size for each case study organisation consisted of twenty-one
respondents in the case of Dogood, and twelve respondents in the case of ERU. Thematic
analysis was undertaken. Several rigour strategies were adopted by this study, namely data
triangulation, the establishment of a case study database, peer debriefing, amongst others. The
empirical findings indicate how external environmental forces influence the content and
process of PA. They also show how NPOs are unable to align their PA practices with their core
values, organisational strategy and other HRM practices due to the weakness of the PA and
‘values’ messages communicated by NPOs. Finally, findings highlight the mixed justice
perceptions of nonprofit employees towards PA. In conclusion, this study makes a key
contribution to theory and management practice by acknowledging the importance of giving
context and meaning to HRM, and proposing a pragmatic and an inclusive way of thinking
about PA in the nonprofit sector.

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Table of contents
Declaration ................................................................................................................................. ii
Acknowledgement ................................................................................................................... iii
Abstract ...................................................................................................................................... v
Table of contents ....................................................................................................................... vi
List of Figures .......................................................................................................................... xii
List of Tables ......................................................................................................................... xiii
ABBREVIATIONS ................................................................................................................ xiv
1 CHAPTER ONE: INTRODUCTION ................................................................................ 1
1.1 Aim and context of the study: The nonprofit sector.................................................... 1
1.2 Integrated approach to performance appraisal in nonprofit organisations .................. 2
1.3 Methodology ............................................................................................................... 5
1.4 Contribution of the study............................................................................................. 6
1.5 Roadmap through the thesis ........................................................................................ 8
2 CHAPTER TWO: LITERATURE REVIEW (PART I) .................................................. 11
2.1 Introduction ............................................................................................................... 11
2.2 What is the nonprofit sector? Approaches and terminology ..................................... 11
2.2.1 Approaches to defining the nonprofit sector ...................................................... 12
2.2.2 Defining the nonprofit sector ............................................................................. 13
2.3 Distinctive characteristics of nonprofit organisations ............................................... 18
2.3.1 Centrality of values ............................................................................................ 20
2.3.2 Employees’ strong values orientations ............................................................ 29
2.3.3 Governance structure ......................................................................................... 34
2.3.4 The unique case of trade unions......................................................................... 37
2.4 External environment of nonprofit organisations...................................................... 41
2.4.1 Going business in an anti-business environment ............................................... 43
2.4.2 Resource dependency and mission drift ............................................................ 47
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2.5 The Australian nonprofit landscape: Historical and contemporary sketches ............ 49
2.6 Conclusion ................................................................................................................. 51
3 CHAPTER THREE: LITERATURE REVIEW (PART II) ............................................. 52
3.1 Introduction ............................................................................................................... 52
3.2 Performance appraisal – Benefits, criticisms and definitions ................................... 52
3.2.1 Performance appraisal – Does it really matter? ................................................. 53
3.2.2 What is performance appraisal? ......................................................................... 54
3.3 Strategic human resource management approach to performance appraisal ............ 56
3.3.1 Approaches to strategic human resource management ...................................... 57
3.3.2 The ‘black box’ ............................................................................................. 60
3.3.3 The HR strength theory – Bowen & Ostroff (2004) .......................................... 61
3.3.4 Strategic human resource management debate in the nonprofit sector .............. 68
3.4 Organisational justice approach to performance appraisal ....................................... 69
3.4.1 Dimensionality of organisational justice ........................................................... 70
3.4.2 Effects of organisational (in)justice ................................................................... 73
3.5 Integrated approach to performance appraisal in nonprofit organisations ................ 75
3.5.1 Performance appraisal and the external environment ........................................ 76
3.5.2 Performance appraisal and nonprofit organisations’ core values .................... 77
3.5.3 Performance appraisal, organisational strategy and other human resource
management practices ....................................................................................................... 79
3.5.4 Performance appraisal and organisational justice .............................................. 81
3.5.5 Conceptual framework ....................................................................................... 83
3.6 Conclusion ................................................................................................................. 89
4 CHAPTER FOUR – METHODOLOGY ......................................................................... 91
4.1 Introduction ............................................................................................................... 91
4.2 Paradigms of performance appraisal and positioning of the researcher .................... 91
4.2.1 Paradigms of performance appraisal .................................................................. 92
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4.2.2 Positioning of the researcher .............................................................................. 93
4.3 Methodology: Overarching research strategy ........................................................... 94
4.3.1 Design framework: a case study approach......................................................... 95
4.3.2 Selection of participating nonprofit organisations ............................................. 96
4.3.3 Sampling strategy............................................................................................... 97
4.3.4 Sample size justification .................................................................................. 100
4.3.5 Data collection sources and methods ............................................................... 101
4.3.6 Data analysis procedures.................................................................................. 107
4.3.7 Rigour matters .................................................................................................. 111
4.4 Ethical considerations ............................................................................................. 113
4.5 Conclusion ............................................................................................................... 114
5 CHAPTER FIVE: DOGOOD (PART I) ........................................................................ 115
5.1 Introduction ............................................................................................................. 115
5.2 Profile ...................................................................................................................... 116
5.3 Impact of the external environment ........................................................................ 118
5.4 Performance appraisal practices at Dogood ............................................................ 122
5.4.1 The Planning, Development and Review (PDR) system ................................. 122
5.4.2 PDR reality: Ambiguous, disconnected, inconsistent, and subjective practices
123
5.4.3 Disconnect between performance appraisal and core values ........................... 127
5.5 Vertical and horizontal misfit .................................................................................. 129
5.5.1 Dogood’s organisational strategy .................................................................. 129
5.5.2 Misalignment between performance appraisal and organisational strategy .... 130
5.5.3 Misalignment between performance appraisal and other HRM practices ....... 133
5.6 Conclusion ............................................................................................................... 135
6 CHAPTER SIX: DOGOOD (PART II) .......................................................................... 136
6.1 Introduction ............................................................................................................. 136
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6.2 Respondents’ engagement to organisational values ............................................. 136
6.2.1 Commitment to core values ............................................................................. 136
6.2.2 Values myopia: Losing sight of core values .................................................... 138
6.3 (In)justice dimensions of PDR ................................................................................ 142
6.3.1 Procedural (in)justice of PDR .......................................................................... 142
6.3.2 Distributive (in)justice of PDR ........................................................................ 147
6.3.3 Interactional justice of PDR ............................................................................. 152
6.4 Conclusion ............................................................................................................... 154
7 CHAPTER SEVEN: ERU (PART I) .............................................................................. 155
7.1 Introduction ............................................................................................................. 155
7.2 Profile ...................................................................................................................... 156
7.3 Impact of the external environment ........................................................................ 168
7.4 Performance appraisal practices at ERU ................................................................. 171
7.4.1 Informal performance appraisal practices ........................................................ 171
7.4.2 Formal performance appraisal practices .......................................................... 176
7.5 Vertical and horizontal (mis)fit ............................................................................... 182
7.5.1 ERU’s organisational strategy ....................................................................... 182
7.5.2 Mis(alignment) between performance appraisal and organisational strategy .. 183
7.5.3 Misalignment between performance appraisal and other HRM practices ....... 184
7.5.4 Political barriers to strategic HRM .................................................................. 185
7.6 Conclusion ............................................................................................................... 187
8 CHAPTER EIGHT: ERU (PART II) ............................................................................. 189
8.1 Introduction ............................................................................................................. 189
8.2 Respondents’ engagement to organisational values ............................................. 189
8.2.1 Commitment to core values ............................................................................. 190
8.2.2 Values myopia: Losing sight of core values .................................................... 192
8.3 (In)justice dimensions of performance appraisal .................................................... 194
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