Abstract/Summary

Many organizations conduct performance appraisal to evaluate their employees’ productivity and performance. Effective performance appraisal leads to accurate reviews and thereafter some compensation for the employees who have performed and contributed to their organizations. An effective performance appraisal process is necessary to ensure accurate performance appraisal outcomes. In year 2016, the number of private hospitals in Malaysia is recorded higher than the public hospitals where 216 as compared to 153 (Ministry of Health Malaysia, 2013). Seeing that the healthcare standards demand is high in the private sectors, it is crucial to align employees’ standard of performance with the organizational standards, especially through effective performance appraisal which able to keep track of employees’ performance standard. This study examines the factors affect the effectiveness of employees’ performance appraisal in private hospitals in Malaysia. The factors are performance appraisal process which included planning, controlling and decision making, level of trust, perceived fairness and level of communication. Research questionnaires were distributed to selected private hospitals’ employees to get the relevant data. Data collected were further analyzed using Statistical Package for the Social Science (SPSS) software to find out the results. The results show that only two factors which are performance appraisal process and perceived fairness have significant effect on effectiveness of performance appraisal. The results of the study can be implied by the human resource managers to improve on the significant factors that can affect the performance appraisal system. Keywords: Performance Appraisal, Trust, Perceived Fairness, Communication, Employees.