The impact of performance appraisal systems (PAS) on organizational performance; The mediating role of employee satisfaction HR sector in Bangladesh

Performance appraisal systems (PAS) are an essential human resource management activity that relates worker performance to organizational goals and attempts to ensure overall effectiveness. Unfortunately, there has been less empirical study of the impact of performance appraisal systems and their psychological underpinning on the performance of organizations in developing nations such as Bangladesh. This paper aims to explore the relationship between performance appraisal systems and organizational performance, emphasizing the meditating role of worker satisfaction. This study uses the Social Exchange Theory and follows a quantitative approach. A survey method was employed using a structured questionnaire among 358 workers, administrators, and HR practitioners. The study uses various statistical techniques such as reliability analysis, correlation analysis, and linear and mediation analysis using SPSS and AMOS. The empirical analysis clearly supports that performance appraisal systems have a large and significant positive impact on worker satisfaction and organizational performance. Worker satisfaction has a strong and large positive relationship with organizational performance. More importantly, this study finds that worker satisfaction acts as a partial mediator between performance appraisal systems and organizational performance. This paper has been able to contribute to the body of HRM research in providing insight and practical implications for a fair and smooth process. Keywords: Performance Appraisal, Employee Satisfaction, Organizational Performance, Human Resource Management.