Performance Appraisal and Team Effectiveness: A Moderated Mediation Model of Employee Retention and Employee Satisfaction

Abstract

The changing business environment in the service sector requires service providers to adapt to the ongoing changes that incorporate more adaptability with a higher quality of service. Teamwork is an important aspect of working in the service sector as nowadays teamwork is seen as a fitting response to the changes in the business environment. Effective teamwork can help the service organizations to provide better quality service to its customers. The current study is an attempt to highlight the influence of performance appraisal (PA), employee satisfaction (ES) and employee retention (ER) on team effectiveness (TE) in the service sector. The analysis of the data was carried out using statistical tools, like the confirmatory factor analysis, and the structural equation modelling for elucidating the validity of the design. The results of the study show that PA and TE have a significant relation. ER acts as a partial mediator between PA and TE, and, on the other hand, ES acts as a moderator between PA and ER. The article provides key practical implications for the service sector in the state of Uttarakhand.

Keywords

Team Effectiveness Performance Appraisal Employee Retention Employee Satisfaction Human Resource Management

Executive Summary

This article studies the relational impact of performance appraisal (PA) on team effectiveness (TE) and mediating role of employee retention (ER) with moderation of employee satisfaction (ES). The period of the study is from June 2017 to March 2018. The research was conducted to collect the response through questionnaire by the employees working in different organizations of the service sector (such as educational institute, banking, insurance and several others) in the state of Uttarakhand. This research conveys suggestions for researchers to investigate the unrevealed actualities of TE and PA strategies in the context of the service sector of Uttarakhand. The key policy suggestion for the service organizations in Uttarakhand is to take necessary steps to improve and enhance TE, which in turn going to increase the overall effectiveness of the organization. PA strategies can help improve and develop TE, which is of paramount importance to the service sector.

Introduction

Over the past couple of decades, in developing countries like India, the service sector has demonstrated a huge steady growth, the state of Uttarakhand being especially noteworthy; the service sector has made a big contribution to the economy of the state. This sector contributed about 53.8 per cent of its gross added value in 2016–2017 and occupied 28.6 per cent of the total population. Exports of network services from India grew by 14.6 per cent in the first half of 2017–2018, and the sector attracted 60.7 per cent of total Indian inflows to India (Indian Brand Equity Foundation, 2018). The services sector of Uttarakhand (hotel business, banking, insurance and education) is one of the greatest pioneers of economic growth, accounting for 51 per cent of the gross domestic product (GSDP) in 2014–2015, increasing from 49.5 per cent in 2004 and 2005. Uttarakhand has significant potential for growth and expansion of services that can generate additional economic activity and employment in the state (ASSOCHAM, 2016).

In this race of earning profit, service organizations are also depending on the team to maximize their profit. The need for teams and teamwork is increasing day by day because a team can achieve the objectives in a faster and easier manner than any individual. Kalidoss and Vijayalakshmi (2016, p. 72) stated that human resource is valuable and has very rare capabilities; this is the reason organizations consider it as a source of imperishable competitive lead. There are several factors on which the success or failure of any organization depends on, but the most important factor that influences the overall performance of the organization is its human asset. It plays an indispensable part in achieving an inventive and high-quality product/service.

Organizations should realize that the competence of human resource is more important than the technical and infrastructure expertise of the organization (Mishra, 2013, p. 32). In order to retain these employees, organizations should make efforts to increase the motivation and commitment of their employees (Bal, Bozkurt, & Ertemsir, 2014, p. 1026). The performance of the employees is to be analysed, which can contingently impact the employee satisfaction and precisely motivate them to work for the development of the organization (Kumari, 2016, p. 39). A successful team should be assessed for both performance and effectiveness, because teams are effective in specific situations or conditions (Azmy, 2012, p. 20). Similarly, PA is considered to be a discrete format and legitimate event carried out in an organization once or twice in a year, which carries clearly stated performance dimensions for evaluation, and, hence it provides inputs for performance management and motivates employees for improved performance and ultimately affects the organizational performance (Denisi & Pritchard, 2006). One of the major purposes of conducting performance appraisal (PA) is to help employees to improve their performance as a part of organizational performance management (Ilgen, Hollenbeck, & Johnson, 2005). The study conducted by Murphy (1989) suggests that a PA system is used for multiple purposes within the same organization. The research is mainly led by the question ‘How is the team effectiveness (TE) of the employees working in the service sector affected by performance appraisal?’ On the basis of the question raised in the research, the following objectives are framed:

to assess the impact of PA on TE;

to study the mediation effect of ER on relationship between PA and TE; and

to study the moderating effect of ES on relationship between PA and TE.

The current study examines the impact of PA on TE through the mediating effect of employee retention (ER) and the moderating effect of employee satisfaction (ES) in the context of the service sector in Uttarakhand, India. The entire study is divided into the following sections: first, the theoretical framework associated with the literature reviewed and the formulation of hypotheses is discussed. Second, the research methodology is explained, including sampling methods, data collection tools and methods used for data analysis. Third, the conclusions and theoretical and practical consequences of the study are listed and, finally, the conclusion of the study.

Theoretical Framework and Formulation of Hypothesis

Conceptual Framework

Over time, researchers conducted a series of empirical studies to determine various organizational factors that influence TE. The complexity of designing a framework in empirical research is also gradually increasing, but this is not enough to match the conceptual area of TE. Until 1996, most empirical research revolved around team performance and its viability. The task of the study is to find out the factors that make the team more effective than others. In subsequent years, the researcher turned his attention to the study of more complex and nested relations between various organizational factors that influence TE. The basic input-process-output (IPO) structure of McGrath, Kelly, and Machatka (1984) has been carried forward by Cohen, Bailey, and Bailey (1997), where they design factors in it that explain indirect impact on outcome through group processes and psychosocial traits along with direct effects. In addition, Ilgen et al. (2005) revealed weaknesses in the IPO model and presented the input-mediator-output-input (IMOI) structure replacing P with M, which reflects a wider range of mediating variables. However, this structure does not take into account the possibility of moderated mediation in determining the conceptual area of TE. Hence, the present study proposes an alternate heuristic TE framework which we term as input-mediated moderation-output (IMMO), by replacing P with moderated mediation (MM) in IPO framework. Consequently, we are empirically testing the nested relationship of PA, EM and ER with TE using IMMO framework.

Team Effectiveness

The utilization of teams in the organization increased dramatically in the late twentieth century due to changing organizational needs and competitive challenges for increased flexibility and adaptation (Piña, Martínez, & Martínez, 2008, p. 7). A team comprises groups that exist to perform organizationally important assignments, have common goals, interact in the social plan, demonstrate interdependence, retain and control limits and are introduced into an authoritative installation that defines limits, forces the team and affects transactions from different units to more of an extensive element (Kozlowski & Bell, 2003, p. 334). The team’s effectiveness, as determined by Piccoli, Powell, and Ives (2004, p. 361), as a whole is a result created by the group, and in terms of the connectivity the team has with its members. Furthermore, the study explains that in order for teams to be called effective, they need to ensure a high level of product quality in the form of goods and services.

TE is concerned with the accomplishment of common objectives or goals achieved through the coordination of team members’ work exercises (Irving & Longbotham, 2007, p 100). Efficient utilization of employees and their participation in the decision-making process are important factors for TE (Tamilmani, Ravichandran, Ojha, & Kumar, 2009, p. 1). Another view on TE is by Halverson and Tirmizi (2008, p. 20), where they express that a team’s effectiveness can be dictated by its structure, participation and procedures that identify with the level of trust, union, adequacy and responsibility. There are additionally a few factors regarding authoritative and societal settings that impact teams.

Relationship Between Performance Appraisal and Team Effectiveness

PA is a crucial procedure by which an employee’s contribution to the organization during a specified time frame is assessed. The process should be done on a regular basis and performers should be awarded to motivate the human resource. The hospitality industry is a labour-intensive industry and human resources play a crucial role in customer satisfaction. Therefore, PA is important for the service industry more than any other industry (Narban, Narban, & Narban, 2016, p. 298). PA framework is a crucial instrument to gauge the effectiveness of workers in an organization (Islami, Mulolli, & Mustafa, 2018, p. 94). Van, Decramer, Vanderstraeten, and Audenaert (2017) in their findings state that different extreme environmental settings foster a nuanced understanding of which structural features of performance management foster TE in extreme environments. Team-based performance management system positively impacts team empowerment and TE (Brehony, 2008, p. 85). The purpose behind measuring performance is to generate research, provide teams with feedback, develop team training, evaluate performance and plan for the future (Salas, Reyes, & Woods, 2017, p. 33). The PA system of an organization does contain many of the important elements that make the system effective. On the other hand, ineffective appraisal processes can have a negative impact on the system and the organization as a whole (Farrell, 2013, pp. 73–74).

H1: PA has positive influence on TE (Figure 1).

Employee Retention as a Mediator

Effective ER is an efficient exertion by the employers to cultivate an environment that encourages current employees to remain employed with the organization by having policies and practices in place that address their various needs (Raj & Brindha, 2015, p. 1642). PA strategies like training and development, recognition/reward for good performance, a competitive salary package and job security are very crucial in influencing the employees’ decision to either leave or remain in an organization (Mathimaran & Kumar, 2017, p. 21). Performance-based reward system and performance-supporting supervision are associated with a decrease in the intention of employees to leave the organization (Lee & Jimenez, 2011, p. 178). Management of organizations should employ more strategic perform-ance management such as setting targets, performance measurements, performance review and giving incentive to employees with the view of enhancing employee retention (Mbugua, Waiganjo, & Njeru, 2015, p. 62). Human resource managers need to decide the most appropriate way to conduct good appraisal practices that need to be administered on justice principles basis. Managers need to recognize potential factors which may influence the level of job satisfaction among employees, and subsequently influence their intention to leave (Ahmed & Lemba, 2010, p. 108). Organizations can retain their talented employee through establishment of an effective appraisal system which will provide equal opportunity for each and every employee in the organization to build their career and growth (Azeez, 2017, p. 41). A fair PA system is essential in any organization to retain valuable employees. It enables employees to understand their job responsibilities and show them the path towards individual growth (Hong, Hao, Kumar, Ramendran, & Kadiresan, 2012, p. 74).

TE and ER nowadays have become major concerns for organizations. The human resource (HR) department has to concentrate more and more on developing strategies for retaining performers in the organization to increase organizational effectiveness as well as TE (Ansari & Bijalwan, 2017, p. 121). Higher turnover rates mostly affect the credibility of an entire team in the eyes of the stakeholders and consequently affects the morale and effectiveness of the team (Bauer, Truxillo, & Erdogan, 2015; Guzzo & Dickson, 1996).

As past literature prevails that, in many cases, PA significantly influences both ER and TE, and ER relates with TE; thus, as per Preacher and Hayes and Preacher (2015) criteria of mediating variable, for the present study the following hypothesis is formulated:

H2: ER positively mediates the positive relationship between PA and TE (Figure 1).

Employee Satisfaction as a Moderator

ES indicates the feelings of employees towards their work. It is an overall evaluation of the work done for the organization by an employee. ES can be viewed as a device that brings a change in the internal environment of the employee’s performance and service quality required in the repair and improvement of services rendered to customers (Ariani, 2015, p. 34). Job satisfaction represents one of the most complex areas facing today’s managers when it comes to managing their employees. Policymakers and managers have turned their attention to provide different kinds of facilities to their employees in order to satisfy their employees (Singh & Jain, 2013, p. 110). According to Lai Wan (2007), satisfaction is a critical objective that an organization must achieve, because it has been shown that profitability, productivity and customer satisfaction are connected to ES. ES along with the proper PA system plays an essential role in employees’ long-term efficiency (Naji, Ben Mansour, & Leclerc, 2015, p. 41). Proper implementa-tion of PA not only contributes to the overall performance of organizations but also improves job satisfaction and decreases turnover intention among employees (Agyare, Yuhui, Mensah, Aidoo, & Opoku Ansah, 2016, p. 294). Satisfaction of employees with the PA system of the organization leads to the improvement in the current performance of the individual and the overall organization (Waldman, Bass, & Einstein, 1987). From the above literature, it was found that ES significantly relates to both PA and TE, hence, for the present study, we are testing ES as a moderator between PA and TE, therefore the following hypothesis is formulated:

H3: ES positively moderates the positive relationship between PA and TE (Figure 1).

Figure 1.

Source: Hypothesised model proposed by authors.

Figure 1 depicts the hypothesized model where, Team Effectiveness (TE) is a dependent variable, whereas PA is an independent variable. The impact of PA on TE is mediated by ER, also the impact is moderated by ES.

Research Methodology

Sampling and Data Collection

Over the past few years, the service industry in Uttarakhand has witnessed an exemplary development, but in the field that has led to the growth of further research in this industry and geographic area, still limited investigations have been conducted in this region. In addition, the increase in the business of service industry requires further research in this industry and geographical location, as the academicians and organizational leaders can have a better understanding of the current patterns and other factors that help in improving the delivery of services and employee productivity, and consider approaches for improving organizational practices to increase the volume of services in Uttarakhand. Likewise, one of the reasons for choosing Uttarakhand for the research motivation was the author(s)’ accessibility to the region. Therefore, data for the study were collected from this area.

Data was collected through questionnaires by random sampling from different organizations of the service industry in Uttarakhand. Mainly five types of service organizations were selected for data collection based on their market share. These organizations were banks, insurance companies, educational institutes, telecom service providers and hospitals. Initially, around 650 ques-tionnaires were distributed in different branches of the above industries, out which we received 530 responses, of which around 32 were incomplete and 20 were outliers. Finally, the data of 478 respondents was used for analysis. The details of the scale are as follows.

Scales Used

Standard scales have been used by the authors, which were used in earlier researches to measure the construct. The scales are described below.

A 12 items five-point scale was adapted from the scale by Udai and Surabhi (2011) for measuring TE.

A 12 items 5-point scale was adopted from the study of Katevich (2013) for measuring PA satisfaction of the employees.

A standard questionnaire developed on general satisfaction by Taylor and Bowers (1972) was adopted in the study, which contains seven questions covering satisfaction on the part of employees, satisfaction with supervision, satisfaction with the work itself, satisfaction of the firm as a whole, satisfaction with wages and satisfaction with the prospects for advancement. Respondents were asked to indicate the level of satisfaction or dissatisfaction using a 5-point Likert scale: 1 = very dissatisfied and 5 = very satisfied.

ER was measured by an 11 items scale adopted from the study of Kyndt, Dochy, Michielsen, and Moeyaert (2009). Respondents’ response was taken using a 5-point Likert scale: 1 = strongly disagree and 5 = strongly agree.

Analytical Approach

The data collected through questionnaires was analysed through AMOS 21 and SPSS 21. The descriptive statistics like mean and standard deviation (SD) were calculated. The measurement model was built and assessed by conducting confirmatory factor analysis (CFA) using AMOS20. To estimate model fit, conventional fit indicators, i.e., CMIN/df, comparative fit index (CFI), standardised root mean square residuals (SRMS), root mean square error of approximation (RMSEA), PClose (Hair, Black, Babin, & Anderson, 2010) were examined.

Results

Description of Respondents

The description of the demographic profile of the respondents is shown in Table 1. Table 1 shows that out of 478 respondents, 46.6 per cent of the respondents were male and 53.4 per cent were female; which means that the number of female employees is more than the male employees. Other demographic characteristics like qualification and experience were also included for the study.

Table 1.

Description of Respondents

Details of Employees (n = 478)	Characteristics	Frequency	Percentage
Gender	Male	223	46.6
	Female	255	53.4
Qualification	Up to intermediate	134	28
	Graduate	166	34.7
	Post graduate	162	33.9
	Professional degree	16	3.4
Experience	Up to 5 years	109	22.8
	5–10 years	157	32.8
	10–15 years	125	26.2
	Above 15 years	87	18.3

Source: Description of demographic data collected through questionnaire by authors.

Descriptive Statistics

Table 2 indicates the mean, standard deviation and interrelation among the considered variables in the study. In addition, causal relationships among the variables cannot be tested as data for all the measure used in the study are collected at same point of time.

Table 2.

Descriptive Statistics

Descriptive Statistics
	Mean	Std. Deviation	Qualification	Experience	PA	ES	ER	TE
Qualification	2.1270	0.86166	1
experience	2.3995	1.03093	0.026	1
PA	2.9940	1.27470	0.167*	0.381*	1
ES	2.9909	1.26014	0.172*	0.363*	0.846*	1
ER	2.8690	1.12623	0.174*	0.388*	0.783*	0.734*	1
TE	2.9729	1.13633	0.200*	0.532*	0.765*	0.728*	0.767*	1

Source: Descriptive statistics calculated through IBM SPSS 21.

Note: PA = Performance appraisal, ER = employee retention, TE = team effectiveness and ES = employee satisfaction.

*Denotes significance level of 0.01.

Measurement Model

A structural model of the scales was made using AMOS 21.0. This model has 813 available degrees of freedom because there are 42 observed variables used in the model. This model is structurally identified, as the coefficients of the path calculated in the structural model (Figure 2) were found significant at p < 0.01, confirming the validity of the construct.

Confirmatory Factor Analysis

Before testing the hypothesis, CFA was performed using AMOS 21, so as to assess the validity of the scales and also to confirm the fitness of the hypothesized model. Hu and Bentler (1999) empirically examine various cut-offs and suggest that to minimize type I and type II errors under various conditions, one should use a combination of relative fit indices such as chi-square (χ2) degrees of freedom (df), chi-square divided by the degree of freedom (χ2/df), CFI, standardized residual mean square (SRMR), RMSEA and finally Pclose. The CFA results, as shown in Table 3, are according to the suggested range by Hu and Bentler (1999), which reveals overall good model fit corresponding to the observed data; (χ2 = 1,150,420, df = 813, χ2/df = 1,415, p < 0.001, CFI = 0.983, SRMR = 0.028, RMSEA = 0.071, Pclose = 1,000).

Table 3.

Model Fit Measures

Measure	Estimate	Threshold	Interpretation
CMIN	1150.420	–	–
DF	813	–	–
CMIN/DF	1.415	Between 1 and 3	Excellent
CFI	0.983	>0.95	Excellent
SRMR	0.028	<0.08	Excellent
RMSEA	0.033	<0.06	Excellent
Pclose	1.000	>0.05	Excellent

Source: Calculated through Gaskin’s ‘Model Fit Measures’, AMOS 21 (Gaskin & Lim, 2016).

Convergent Validity

Although all the four questionnaires were taken from past studies, but these were used in a different time zone, place, culture, industry and study. To check whether these questions are appropriate for this study as well, a validity check was performed.

Figure 2.

Source: Constructed using IBM AMOS 21.

Furthermore, the convergent validity was tested by assessing the frequently used indices like, composite reliability (CR) estimates, which should be ≥0.7 according to the study of Nunnally and Bernstein (1994), an average variance extracted (AVE) estimate, which should be ≥0.5 as per the study of Fornell and Larcker (1981) and all items loading in the CFA should be ≥0.6 as per the suggestions of Nunnally and Bernstein (1994) in their study. Table 4 indicates that the values of AVE (0.76–0.92) and CR (0.88–0.97) fell into the standardized accepted limits. According to the research of Malhotra and Dash (2016), AVE is considered to be a more predictable measure to estimate convergent validity.

Table 4.

Model Validity Measures

	CR	AVE	MSV	MaxR(H)	PA	TE	ER	ES
PA	0.986	0.854	0.687	0.986	0.924
TE	0.963	0.684	0.555	0.963	0.745*	0.827
ER	0.962	0.696	0.579	0.962	0.761*	0.742*	0.834
ES	0.974	0.841	0.687	0.974	0.829*	0.709*	0.726*	0.917

Source: Calculated through Gaskin’s ‘Master Validity Tool’, AMOS 21 (Gaskin & Lim, 2016).

Note: PA = Performance appraisal, ER = employee retention, TE = team effectiveness and ES = employee satisfaction.

*Denotes significance level of 0.01.

Discriminant Validity

Furthermore, discriminant validity was also tested to see the distinctiveness of one construct from another. AVE and maximum shared variance (MSV) are the two parameters considered for estimating discriminant validity, and then two criteria based on these parameters as suggested by Hair et al. (2014) in their study. The first criteria: the value of AVE should be higher than that of MSV, and secondly, the square root of AVE should be higher than the corresponding inter-construct correlations. It can be seen from Figure 2 and Table 4 that all dimensions of the constructs correspond to the above criteria with AVE (0.76–0.92) and MSV (0.20–0.32), which is acceptable according to Hair et al. (2014). Therefore, we conclude that the model does not contain questions of discriminant reliability.

Hypothesis Testing

Final Model

The proposed model of the study was made by using four standard scales of PA, TE, ES and ER. The data was collected from more than 500 respondents from the service industry of Uttarakhand. The dimensions of the construct discovered through principal component analysis (PCA) were imputed and the total score of all the dimensions of the scale is used after standardizing using SPSS 21.

Figure 3 of the proposed model represents PA as independent variable and TE as dependent variable, whereas ER is a mediating variable and ES is a moderating variable between PA and TE. PA_X_ES represents the interaction of PA and ES.

Model Fit

Figure 3 represents the final proposed model of the research which was constructed using IBM AMOS 21. On the basis of Figure 3, the indices of model fit such as CFI, SRMR, RMSEA, Pclose and others were assessed. Table 5 shows the model compliance indicators, which show an overall good model fit corresponding to the observed data; (χ2 = 0.390, df = 1, χ2/df = 0.390, p < 0.001, CFI = 1.000, SRMR = 0.007, RMSEA = 0.000, Pclos = 0.691).

Table 5.

Model Fit Measures

Measure	Estimate	Threshold	Interpretation
CMIN	0.390	–	–
DF	1	–	–
CMIN/DF	0.390	Between 1 and 3	Excellent
CFI	1.000	>0.95	Excellent
SRMR	0.007	<0.08	Excellent
RMSEA	0.000	<0.06	Excellent
PClose	0.691	>0.05	Excellent

Source: Calculated through Gaskin’s ‘Model Fit Measures’, AMOS 21 (Gaskin & Lim, 2016).

Figure 3.

Source: Created through IBM AMOS 21.

H1 Performance Appraisal has Positive Influence on Team Effectiveness

Table 6 illustrates the regression analysis between different variables used, that is, PA, TE, ER and ES calculated in AMOS 21; where DV = dependent variable, IV = independent variable, S.E. = standard error, C.R. = critical ratio and P = significant value. The results show that there is a positive significant relation between PA and TE; p < 0.01. Therefore, the hypothesis H1 is accepted.

Table 6.

Regression Analysis

DV	←	IV	Estimate	S.E.	C.R.	P
ER	←	PA	0.692	0.028	24.417	***
TE	←	ER	0.408	0.048	8.561	***
TE	←	ES	0.164	0.050	3.300	***
TE	←	PA_x_ES	0.095	0.033	2.867	0.004
TE	←	PA	0.258	0.059	4.356	***

Source: Calculated through AMOS 21.

Note: ***p < 0.01. PA = Performance appraisal, ER = employee retention, TE = team effectiveness and ES = employee satisfaction.

H2 ER Positively Mediates the Positive Relationship Between Performance Appraisal and Team Effectiveness

Mediation Effect: Mediation effect of ER on the positive relation between PA and TE was assessed using the bootstrapping method in AMOS 21.0. Number of bootstrap samples for bias corrected bootstrap confidence intervals was 5000 and level of confidence for all confidence intervals in output was 95.0. Table 7 represents the direct and indirect effects with p < 0.01. This means that PA does affect TE through ER. To check the significance of indirect effect of PA on TE, the Sobel test was also conducted using the online calculator of the test (http://quantpsy.org/sobel/sobel.htm). The test was found significant (t = 8.396, Std. error = 0.045, p = 0.00), which indicates significant moderating effect of ER in the relation between PA and TE. Hence, the hypothesis H2 is accepted that ER positively mediates the positive relation between PA and TE.

Table 7.

Mediation Analysis

Hypothesis	Direct	Indirect	Total	Result
PA→ER→TE	0.258***	0.282***	0.540***	Partial mediation
PA × ES→TE	0.095***	NA	0.095***	Significant positive moderation

Source: Calculated through AMOS 21.

Note: ***p < 0.01. PA = Performance appraisal, ER = employee retention, TE = team effectiveness and ES = employee satisfaction.

H3 Employee Satisfaction Positively Moderates the Positive Relationship Between Performance Appraisal and Team Effectiveness

Moderating Effect: Figure 4 is the graph for moderating effect, which represents that the positive relationship between PA and TE is moderated by ES significantly. It clearly indicates that the positive moderation effect increases with higher satisfaction of employees. Which means that, a satisfied employee works with the organization effectively and with the higher commitment for a long time.

Figure 4.

Source: Graph prepared through Interaction Software by Daniel S. Sopher.

Discussion

There are several key implications drawn from the analysis. First, there is a statistically significant positive relation between TE and PA, ER, ES. Second, it is observed that PA, if implemented effectively, can result in better team performance and help in retaining the best talents in the organization.

The findings shows the positive significant relation between PA and TE, hence the hypothesis H1 is accepted. Also, the findings have revealed that ER partially mediates the relation between PA and TE, and ES moderates the relation between PA and ER, therefore the hypothesis H2 and H3 are accepted. The results of this study are consistent with other research findings (Jansirani, Hatrikrishnan, Jaya kani, & Saisathya, 2013, p. 23). Implementation of PA techniques leads to increment in the productivity of employees. Effective appraisal systems need to be adopted by organizations as it leads to better job performance (Daoanis, 2012, p. 60). The appraisal system plays a vital role in retaining the talented employees in an organization. This helps to identify the strengths and weakness of the employees. Also, it enables the leaders/supervisors to identify the skills needed to be developed by the employees for future performance (Azeez, 2017, p. 40). PAs have greater impact on employee job satisfaction, which also have an effect on employees’ commitment towards the organization (Agyare et al., 2016, p. 294).

Theoretical Implications

The findings bear significant implications for the surveyed executives as well as for the executives working in a similar nature of industries in Uttarakhand. Taking the above literature review into account, it can easily be estimated about the criticality of TE and PA practices in service sector, contributing to the achievement of goals, objectives and organizational mission. PA condition did have significant effects on teamwork processes and on individual performance (Brown, 2009, p. 28). The employees have a tendency and intention to quit from their jobs if their performance is not rated as per their work performance (Ahmed & Lemba, 2010, p. 107). Human resource management (HRM) practices such as training, PA, teamwork and compensation should be maintained properly in order to achieve a high level of job satisfaction (Jeet & Sayeeduzzafar, 2014, p. 68). This study takes on this issue by examining the factors affecting the effectiveness of teamwork among service providers in relation to the state of Uttarakhand, India. In addition, this study adds to the ER literature as a mediator, because it played an important role mediating the connection between PA and TE, and the study also contributed to moderating ES literature, playing the role of moderator between PA and ER.

Practical Implications

The findings of the current work suggest that organizations have to work seriously on some concrete and effective HRM policies for the satisfaction of their workforce/team. Team leaders/managers should take care of the proper implementation of PA in organization to enhance TE. PA affects the productivity of employees in the form of job performance, affective commitment and turnover intention, which in turn leads to organizational performance (Bekele, Shigutu, & Tsegay, 2014, p. 166). It is essential to spend a substantial amount in designing PA systems and its various instruments, but its efficiency will depend to a large extent on those who implement it, as it is going to impact ES and TE (Naji, Ben Mansour, & Leclerc, 2015, p. 50). This study would enable HR practitioners, managers/team leaders to comprehend the significance of the precursors considered, and their centrality to the result, focusing on which, they can consolidate techniques that prompt more effectiveness in teamwork. This research is important for business visionaries, policymakers and managers in the service sector, who tend to pay less attention to issues related to employees, in particular the relevance of PA of workers and its impact on TE.

Conclusion

This study attempted to test and assess the impact of PA on TE in the service sector in Uttarakhand. The evaluation model of the study and its results clearly show that PA, ER and ES have a significant impact on TE. A satisfied employee remains in the organization longer and works efficiently in achieving the organizational goal. The study recommended that the service industry in Uttarakhand should develop a new policy to increase the participation of employees at the middle level of management and management at the highest level. To ensure a high level of job satisfaction, it is necessary to support other methods such as training, performance evaluation, teamwork and compensation. The longer the staff members work in the organization, the more they tend to stay in the organization (Kyndt et al., 2009, p. 13). The PA should be fair to the organization, and cooperation should be designed to maintain a balance of authority and production in the organization. Service managers can use this study as a guide to manage their workforce in a way that maximizes TE and fosters organizational growth.

Footnotes

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.

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