OUM BUSINESS SCHOOL

_________________________________________________________________________
BMBR5103
BUSINESS RESEARCH METHODS
ASSIGNMENT 1
JANUARY 2015
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The Influence of Leadership on the Relation between Level of Satisfaction in

Performance Appraisal and Reward (PAR) Process and Motivation: A Case of Royal
Malay Regiment
A) INTRODUCTION

i) Research Background
PAR system outcomes tend to have high motivational impact and are a major
determinant of employee performance. Results-oriented government reform efforts have made
the PAR system a central part of public agencies’ performance management (Shafie, 1996). In
Malaysian Army organisation, it is done once a year as part of the performance measurement
and development process. Each military personnel need to set their own annual work target,
discuss with immediate superrior based on their job specification, set the target of respective
year, and subsequently will taken through the consistency check with their immediate
superrior at the middle of the year before it been evaluated at the end of the year. Annual
appraisal will determine the performance achievement of each military personnel.
In Army organisations, the infantry has always been the backbone of many armies and
despite marked advantages in war fighting provided by technology, the vital asset in the
infantry remains the infantryman which is the military personnel that work in Infantry Corps.
Due to the quick expansion in the number of infantryman and the new tasks assigned to them,
Infantry Corps are beginning to feel pressure on their officers and infantry personnel’
abilities, that is, the processes of recruitment, placement, training, promotion and appraisal, in
order to ensure that the right number of personnel with the right capacities are available at the
right time and for the right places. PAR system is one of the key factors of organisational
ability which is the focus of this study.
Therefore, an important issue is to determine the factors related to PAR systems that can
elicit positive employee reactions to performance appraisal which in turn can motivate
employees to improve performance. In addition, understanding the effects of leadership
during appraisal process is also important because leadership is viewed by some researchers
as one of the key driving forces for improving employees’ performance. Some scholars like
Wright (2007) suggest that leadership will result in high levels of cohesion, commitment,
trust, motivation, and hence performance in the organisation. This study attempts to
investigate the impact of satisfaction level towards PAR process and leadership towards the
motivation level of officers and infantry personnel in Royal Malay Regiment (RMR).

ii) Problem Statement

There is a general atmosphere of dissatisfaction among the employees, and Malaysian
Army organisation is not left out in the general state of dissatisfaction and frustration. Inderjit

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(2000) and Ungku Zahar and Din (2005) highlighted that the current system in Malaysian
Army is conflicting as PAR process are dealing with the human factor. Inderjit (2000) reveals
that some of the respondents are not satisfied with the rates given by their raters. In addition,
Lawler (2003) and Samuel and Geraldine (2014) argues that the PAR process is considered as
an unpleasant, burdensome and distasteful task for managers and supervisors which is either
avoided or carried out in a hurried manner.
Second, there is an issue of subjectivity in the performance evaluation in the public
sector (Ahmad & Bujang, 2013). Although there is a formal evaluation form written in black
and white to be as objective as possible, however, during the implementation of appraisal, the
evaluation becomes subjective. In addition, the guidelines issued by the Public Service
Department for the preparation of annual work targets are too general (Shafie, 1996). Shafie
(1996) also acknowledged that there is rater-bias by the superior and reviewing officers
working in public sector in Malaysia.
Third, the issue of quota in rewards system practiced in Malaysian public sector
organisation also creates dissatisfaction among employees (Ahmad & Bujang, 2013;
Malaysian Army, 2000; and Shafie, 1996). According to them, only a small portion of the
employees will get excellent service award. Therefore, although the employees may perform
well, they might not get rewards because it depends on the quota system. This will lead to a
decrease in self-esteem and subsequently decrease in work performance and loyalty to the
organisations.
Finally, the issue in the practicing appraisal activity is the fairness of the evaluation
decision. The superrior appraisal decision will be confronted with few of criticisms and
comments such as superrior or raters’ ability, accuracy of the appraisal, discrimination, and
other aspects. Some of the superrior have problems evaluating the performance appraisal in a
proper way. The factors that contribute to personnel dissatisfaction are the superrior are not
knowledgeable, do not have the required skills and not properly manage. Shafie (1996)
reveals that public service officers who had been trained for the implementation of PAR
system by INTAN were not able to carry out their tasks satisfactorily.
A study on PAR process is consider as critically important because there are many
instances where, negative PAR process creates resentment and the consequent low morale
among soldiers. Since appraisals are subjective in nature, they cannot easily be disputed in
case they are negative. Sometimes, most appraisers turn to give positive appraisal to soldiers
when they do not even deserve it. Therefore, due to the subjectivity, this may will lead to a
decrease motivation for future work performance, self-esteem and loyalty to the organisation.

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 In order to remain relevant as the backbone of the Malaysian Army, it is important to
ensure the motivation of infantry personnel is at the high level because it will determine their
performance and the strength of Malaysian Army as a whole. In this context, a comprehensive
evaluation of the influence of leadership on the relationship between the level of satisfaction
in PAR process and motivation is required and hence the present study is needed.

iii) Research Questions, Research Objectives and the Scope of the Research
The main research questions of this study is does leadership moderate the relation
between the levels of satisfaction and motivation in the context of infantry personnel during
PAR process? In addition, the research question of this study are summarised in as follow:
1. What is the level of satisfaction on factors related to PAR process among infantry
personnel?
2. Is there any association between the level of satisfaction on PAR process and infantry
personnel’ motivation?
3. Is there any association between leadership during PAR process and infantry
personnel’ motivation?

Specifically the main objective of the research is to investigate whether leadership

moderate the relation between the levels of satisfaction and motivation in the context of
infantry personnel during PAR process. In addition, this research also aims to evaluate the
following issues;

1. To examine the level of satisfaction on factors related to PAR process among infantry
personnel.
2. To investigate the relationship between the level of satisfaction on PAR process and
infantry personnel’ motivation.
3. To investigate the relationship between the leadership during PAR process and
infantry personnel’ motivation.

The scope of this study is limited to only the officers and infantry personnel of 1 st and
24th RMR located in Kuala Lumpur and Rasah, Negeri Sembilan, respectively. Thus, the
findings will reflect the perception of both the officers and infantry personnel. Even though
this research is only focusing on two units of RMR, it can serve as a check and balance to
avoid biasness.

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B) LITERATURE REVIEW

Performance appraisal and rewards (PAR) process has been recognized as an

important management tool for measuring employee job performance, clarifying personnel
decisions such as promotion, transfer, or retention, and allocating financial rewards; as well as
helping develop employee capacity through feedback or identifying their training needs
(Fletcher 2001; and Mani 2002). Performance evaluation can be a one-time-only activity
where “data are collected only until an intelligent appraisal of a situation can be made” or “a
continuous activity where data processing eventually becomes an established housekeeping
routine” on the basis of which continuous and long-term improvements are effected (Cronin,
1982).

i) Level of Satisfaction on PAR process and Motivation

a) Knowledge
Clearly pronounced of PAR system is very critical for an employee to know what is
expected out of him and what the performance parameters are. According to adequate notice
principle, ratee must know objectives and standards of the PA system before the PAR process
starts (Erdogan, 2002). Together, these principles suggest that knowledge of the PAR system
criteria, methods, and measurements are important components of the due process system and
thus should be related to PAR system. Several studies have shown that knowledge, or
individuals’ beliefs regarding how well they understand the PAR system is a factor to the
level of satisfaction towards PAR system (Harris, 2011; Monis & Sreedhara, 2010; Rasheed
et al., 2011; and Reinke, 2003). Recent study by Samuel and Geraldine (2014) reveal that how
effective PAR process is conducted and how the employees perceived its, can influence to an
extent the work performance of the employees.
b) Attitude
Employees' attitude to the fairness of the appraisal system may affect their motivation to
correct weak performance or develop unused potential. Akuoko (2012) reveals that there is a
high level of employee involvement or cooperation in the PAR process in financial
institutions in Ghana. He added that employee participation in setting job objectives yielded
employee motivation. The argument is that, employees feel fairly treated and motivated if
their appraisal results are based on adequate notice, fair hearing, and judgment based on
evidence.

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 c) Communication
Communication plays a crucial role in transferring and sharing the information for PAR
process activity between raters and rates (Ahmad & Bujang, 2013). Adkins (2006) notes that
communication is very essential to keeping employees motivated and helps in maintaining a
‘motivated culture’ in the workforce. By so doing, employees can get a clear sense of what is
expected of them. Previous research suggests that session behaviours of rates that are
respectful and providing two-way communication are likely to lead to motivation for work
(Akinbowale et al., 2013; Bascal, 1999; and Walsh, 2003).
d) Transparency
PAR process supposed to be a transparent process and a completely clear organisation
where everybody should know who their rater is and what their responsibilities are (Beletskiy,
2011). There is immerse need of transparent PA feedback as the previous results show that
employees agreed that the PAR system can affect their performance in a positive manner, if
conducted fairly, transparently, and systematically (Malik & Aslam, 2013; Rasheed et al.,
2011; Selvarajan & Cloninger, 2011). Furthermore, Walsh (2003) reveals that employee in
US perceived their PAR system to be fair and they are satisfied with the fairness on the way it
conducted.
e) Rewards
Numerous studies on rewards and work motivation seem to confirm that rewards will
increase the employee’s motivation (Abdul Kader Jalaini et al., 2013; Aktar et al., 2012;
Ghazanfar et al., 2011; Khan & Farooq, 2010; Malik et al., 2011; Okojie, 2009; and
Sterlington, 2009). Most organisations view that rewards are intended to motivate employees
to perform effectively and efficiently towards achieving organisational goals. Malhotra et al.
(2007) note that no matter the kind of organisation one looks at, ‘rewards play an important
role in building and maintaining the commitment among employees that ensures a high
standard of performance and workforce stability’. Therefore, the PAR system encouraged
employees to put in more effort in order that they may be rewarded with accelerated salary
increases and other incentives, such as prospects for faster promotion and career development
(Shafie, 1996).

ii) Leadership in PAR process and Motivation

a) Relationship with leader
Leader-employee interactions occur in the PAR process, therefore PAR process is
expected to be affected by the quality of this relationship. Tyson and York (2000) claim that

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communication is the key to success in any relationship. Over time, as communication
develops and the parties get to know each other; relationships proceed to identification-based
trust (Lewicki & Bunker, 1996). Past studies confirm that trust-based relationship and
manager-subordinate interaction explains the variance of employees’ acceptance of the
appraisal and this boosted employee performance (Akuoko, 2012; Akinbowale et al., 2013;
Erdogan, 2002; and Reinke, 2003). In addition, Akuoko (2012) and Akinbowale et al. (2013)
revealed that manager-subordinate interaction was very cordial and this boosted employee
performance. With a good relationship with supervisors, employees are more likely to
perceive the whole appraisal process as less biased, free from discrimination, and a fair
process that can capture their true performance.
b) Perception towards leader
Leadership credibility is a critical factor in the implementation of PAR systems (Gabris
& Ihrke, 2000). One of the key responsibilities of the leader in any organisation is to evaluate
the performance of his subordinates and this has been acknowledged by several researchers.
Therefore, satisfaction with rater was included as a potential predictor of satisfaction with
appraisal feedback. Yongjun (2013) propose that PAR system can enhance employees trust
for leaders. Therefore, he suggests that leaders should adopt objective indicators in PAR
system as far as possible, and adopt scientific methods to quantize performance. On the other
hand, Awan et al. (2012) suggests that managers and leaders should adopt servant leadership
style for increasing the motivation level and performance of the employees.
c) Perception towards leader’s rating decisions
Literature on PAR system has noted the critical role of honest appraisal feedback in
improving performance and motivating individuals. According to Erdogan (2002), employees
must be provided with continuous feedback on how they are performing and where they could
improve. The success of the feedback depends on the acceptance of the process. The source of
the feedback must be perceived by the recipient as being trustworthy, credible, reliable,
objective, and properly motivated (Dechev, 2010). Various researchers have touted the
importance of feedback that managers give to employees have on motivation (Agarwall,
2011; Akinbowale et al., 2013; Akuoko, 2012; Malhotra et al. 2007; and Selvarajan &
Cloninger, 2011). Employees who have higher expectation towards supervisors’ rating show
more positive attitudes (Lee & Shin, 2000).

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 iii) Influence of leadership on the relationship between satisfaction and motivation
The linkage between PAR process and employee motivation has been established by
several studies. Previous studies suggest that the higher levels of satisfaction with PAR
process were positively related to motivation to improve performance in the future (Iqbal et
al., 2013; Ojokuku, 2013; Saeed et al., 2013; and Selvarajan & Cloninger, 2011). PAR
process is used to help public servants to know about what is expected to them, increased
their motivation, and improve their performance (Erasmus et al., 2005; and Seong & Lewis,
2009). Besides that, research in PAR process suggests that when employees are satisfied with
their appraisal systems, they are more inclined to use the feedback to improve future
performance (DeNisi & Pritchard, 2006).
Based on views presented in the previous literature, it is found that attempts to link
public sector PAR process and employee motivation by several studies, however, have
produced mixed results. The inconsistency of the empirical findings, perhaps may be the
result of incomplete rather than inaccurate theoretical models, as these studies often do not
include any underlying process variable that explain how such differences have an impact on
employee work motivation. Therefore, these considerations provide this study with a
motivation to explore the level of satisfaction on different factors related to PAR process and
subsequently how such differences have an impact on motivation in the context of Malaysian
Army focusing on Infantry Corps personnel. In addition, there is little evidence regarding how
leadership may affect the influence of level of satisfaction in PAR process on work
motivation. In an attempt to bridge the gap in the literature, another different point that this
research intents to investigate is whether leadership has any influence on the relationship
between the level of satisfaction in PAR process and motivation in Malaysian public sector
environment.

C) THEORETICAL FRAMEWORK

From the literatures presented in previous section, this study proposed a theoretical
framework as presented in Figure 1. This theoretical framework is developed based on
expectancy theory. Expectancy theory indicates that employees will be most highly motivated
when they expect that (a) their effort leads to higher performance, (b) higher performance
leads to rewards, and (c) the rewards are valuable to them (Vroom, 1964).
Under this framework, the level of satisfaction on PAR process is assumed to correlate
with motivation. The theoretical framework consists of five factors which form the IV for the

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level of satisfaction on PAR process, which includes knowledge, attitude, communication,
transparency, and rewards will be tested against the DV, which is motivation. On the other
hand, the leadership is theorized to play a moderator role on the relationship between the level
of satisfaction and motivation. It is theorized that the relationship with leader, perception
towards leaders, and leader’s rating decision is likely to enhance the level of satisfaction and
motivation, thus, lead to a better work performance.

Figure 1: Research Framework

Level of Satisfaction on
Factors related to
H3 MOTIVATION
Performance Appraisal &
Reward (PAR) Process
H5
H1A- H1E
H4
Leadership
H2A– H2C

The hypotheses for the present study have been formulated based on the literature
discussed in the earlier section. Therefore, this section further provides the lists of hypotheses
formulated for the present study. The following are the research hypotheses of this study:

H1A: There is a significant positive association between knowledge and motivation.

H1B: There is a significant positive association between attitude and motivation.
H1C: There is a significant positive association between communication and motivation.
H1D: There is a significant positive association between transparency and motivation.
H1E: There is a significant positive association between rewards and motivation.
H2A: There is a significant positive association between relationship with leader and
motivation.
H2B: There is a significant positive association between perceptions towards leader and
motivation.
H2C: There is a significant positive association between leader’s rating decision and
motivation.
H3: There is a positive association between the level of satisfaction on PAR process and
motivation.

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H4: There is a positive association between leadership and motivation.
H5: There is a positive influence of leadership on the relation between satisfaction and
motivation.

All the elements in the theoretical framework will be measured using a set of
questionnaires developed by instruments that have been adopted from previous studies and
modified to suit with the situation and PAR implementation in Army organisation. Table 1
summarises the elements and its operational definition for each of the element in this study.

Table 1: Operational Definition of Elements under Study

Elements Operational Definition Adopted from
Knowledge The extent of understanding regards to the method, Harris (2011)
purpose, and measurement used in PAR process.
Attitude The familiarity with the PAR process and whether the Harris (2011)
PAR being useful for the career development, and for
“personally”.
Communicatio Communicating the outcomes, expectations, and appeal Walsh (2003)
n process when there is a perceived disagreement.
Transparency The setting of PAR process in term of knowing rater, Walsh (2003)
accessible to performance rating, and corrective actions
from the appraisee.
Rewards Agreement towards the implementation of rewards Sterlington
from PAR system, and whether the reward is (2009)
motivating factor.
Relationship Perceived interpersonal relations, expertise, and Walsh (2003)
with Leader trustworthiness of the appraiser/leader.
Perception Perceptions towards leader in specific items such as Walsh (2003)
towards Leader planning ability, degree of self-improvement and goal
achievement.
Leader’s Rating Perception on the rating decisions given by their Walsh (2003)
Decisions appraiser or leader.
Motivation The impact of recent PAR process on the motivation to Jose (2011)
improve performance in the future.

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