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Managerial Reactions to Employee Dissent: The Impact of Grievance Activity on Performance

Ratings
Author(s): Brian S. Klaas and Angelo S. DeNisi
Source: The Academy of Management Journal, Vol. 32, No. 4 (Dec., 1989), pp. 705-717
Published by: Academy of Management
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Academy of Management Journal


1989, Vol. 32, No. 4, 705-717.

MANAGERIAL REACTIONS TO EMPLOYEE


DISSENT: THE IMPACT OF GRIEVANCE
ACTIVITY ON PERFORMANCE RATINGS
BRIAN S. KLAAS
University of South Carolina
ANGELO S. DeNISI
Rutgers University
This study explored whether managerial reactions to grievance activity
introducedbias into the process of performanceappraisal. Using panel
data techniques and data on unionized employees in a public sector
organization, we examined the relative impacts of grievances filed
against supervisors and against organizational policy. The pattern of
results obtained suggests that the relationship between grievance activity and performanceratings is due at least in part to bias triggered by
employees' filing and winning grievances against supervisors.

To understand the role of grievance systems in protecting employee


rights and providing an effective voice mechanism (Freeman & Medoff,
1984), it is necessary to examine how managers react to the filing and processing of grievances. If managers react negatively to grievance activity, they
might discriminate against grievants when making decisions about disciplinary issues, work assignments, and promotions and when evaluating performance. Negative managerial reactions to grievance activity may significantly affect the costs to employees associated with using a grievance system
and, in turn, the perceived effectiveness of the voice mechanism it provides.
Although managerial reactions to grievance activity may influence a variety
of personnel decisions, this study focused on how the filing and processing
of grievances affected employee performance evaluations.
PREVIOUS RESEARCH
Existing research on the appraisal process has suggested various ways in
which the filing and processing of a grievance may result in a distorted
evaluation of a grievant's performance. Given the importance of the categorization process in performance appraisal (DeNisi, Cafferty, & Meglino, 1984;
Feldman, 1981), it is possible that grievance activity may cause an employee
to be labeled a troublemaker, a categorization that will then be used as a
framework for interpreting all other behavior the grievant exhibits. Moreover, research has suggested that a supervisor's affect toward a ratee will
have an effect on the processing of information about the ratee at the prere705

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December

cognition stage (Alexander & Wilkens, 1982; Cardy & Dobbins, 1986; Moreland & Zajonic, 1977; Wilson & Zajonic, 1980). If the filing and processing of
a grievance influences a supervisor's affect toward an employee, that change
in affect might result in unconscious bias, and thus, lower ratings for the
grievant.
Managers may also intentionally distort the ratings they assign to a
grievant. Longenecker, Gioia, and Sims (1987) found that under certain conditions managers were willing to intentionally deflate the ratings assigned to
particular employees. According to those authors, if a manager sees an employee's behavior as personally threatening or offensive, the manager might
attempt to modify the employee's behavior by intentionally deflating the
rating given to the employee. Managers use the performance evaluation process as a means by which to enhance their personal control over employees.
We expected, then, that if employees file grievances against their supervisors, those supervisors might intentionally deflate the employees' ratings in
order to maintain control over the latter and discourage any such future
behavior. And if the employees win their grievance proceedings at a level
higher than the supervisory level, the supervisors might have additional
incentives to deflate the employees' ratings intentionally. Doing so might
show the employees that although they have won a battle, they certainly will
not win the war.
Although different theoretical perspectives have suggested a possible
link between grievance activity and performance appraisals, research examining this link has been somewhat limited. Lewin and Peterson (1987) found
that grievants received lower performance evaluations in the year following
the filing of a grievance than did nongrievants. They also found that those
who won their grievance received lower evaluations than those who lost. In
the only other study in this area, Klaas, Heneman, and Olson (1988) found
that grievants received lower evaluations in the year that a grievance was
filed than they did in other years that they were employed, although no
relationship between appraisals and grievance outcomes emerged.
Existing studies suggest, then, that there may be a relationship between
grievance activity and performance evaluations. But because of the exploratory nature of those studies, it is difficult to rule out alternative explanations for the findings obtained. Actual behavioral differences related to
grievance activity may account for the relationships observed. As Ichniowski (1986) pointed out, employees may engage in grievance activity in response to feelings of inequity and may also search for other ways to respond
to the perceived inequity that resulted in the filing of a grievance. Since
much research has found a relationship between grievance activity and productivity or absenteeism (Ichniowski and Lewin [1987] reviews that
research), this possibility seems particularly likely. As lowering performance is one way of responding to perceived inequity, the relationship
between grievance activity and performance evaluation may simply be the
result of actual changes in employee behavior that occur in association with
grievance activity.

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707

PURPOSE OF THE PRESENT STUDY


The present study was designed to examine the impact of grievance
activity on performance appraisals in a way that would allow us to determine whether managerial reactions to grievance accounted for any relationship observed. One way to accomplish that end was to recognize that some
grievances are more likely than others to elicit a negative reaction from
management. Whereas existing studies have not distinguished between
grievances likely to elicit hostile reactions and grievances not likely to do so,
this study explored the relative effects of different types of grievance activity.
Specifically, we expected that grievances filed against immediate supervisors would be more likely to trigger a negative reaction from those
supervisors than would grievances over some aspect of organizational policy. Presumably, supervisors are more likely to be offended or threatened by
grievances aimed directly at their own actions and decisions. Similarly, we
expected that when employees win their grievances, supervisors are more
likely to react negatively if the grievances concerned a supervisory decision
than if they concerned broader organizational policy. Therefore, if we observed a relationship between grievance activity against a supervisor and
performance appraisals but not between grievance activity against organizational policy and appraisals, we might more confidently conclude that managerial reactions to grievance activity were affecting performance appraisals.
The present study was also designed to reduce the degree to which
unmeasured differences in actual performance could bias parameter estimates for variables measuring grievance activity. To the extent that actual
changes in performance-related behavior are controlled for, it becomes difficult to argue that actual changes in employee behavior are the cause of a
relationship between grievance activity and appraisal scores. To that end,
this study expanded on previous efforts by including performance-related
control variables when estimating the impact of grievance activity on appraisal scores.
In sum, then, in order to gain insight into the impact of managerial
reactions to grievance activity on performance evaluations, this study examined the following hypotheses:
Hypothesis 1: With performance-related behavior held
constant, as the number of grievances an employee files
against a supervisor increases, the subsequent evaluation
of that employee's performance will decline.
Hypothesis 2: The number of grievances filed by an employee concerning organizational policy will have no impact on the subsequent evaluation of the employee.
Hypothesis 3: With performance-related behavior held
constant, as the number of positive outcomes from grievances an employee has filed against a supervisor in-

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December

creases, the subsequent evaluation of that employee's


performance will decline.
Hypothesis 4: The number of positive outcomes from
grievances filed by an employee concerning organizational policy will have no impact on the subsequent evaluation of the employee.
RESEARCH DESIGN
Data
In order to test these hypotheses, data were collected from a public
sector organization for 1978 through 1985. The work performed in this organization was generally nonroutine and required employees to exercise
some degree of both skill and discretion. In any given year, there were
approximately 460 unionized employees in the organization. Since we were
focusing on the effect of change in independent variables on change in the
dependent variable, we were only interested in employees who had been
employed for more than one year and whose grievance and performance
behavior was not constant across the years they had been employed. As a
practical matter, we were interested in only those who had been employed
for at least two years and who had filed at least one grievance during the
eight years from which the data were drawn. During the 1978-85 period,
217 employees met both criteria.
However, 44 of those employees had filed a grievance and thenbecause of transfers or because their supervisor quit-had been evaluated by
a supervisor other than the one present at the time of the filing. Deleting
those employees from the group studied resulted in a working data base of
173. Since we have one observation for each year that each grievant was
employed from 1978 to 1985, the total number of observations is 1,001. The
number of person-periods included for each employee depends solely on the
number of years the employee had worked between 1978 and 1985. Thus,
even though the 173 employees studied varied substantially on the total
number of grievances filed, that variation had no impact on the number of
person-periods included for a particular employee.
Measures
Dependent variable. The dependent variable of interest was the annual
performance rating each employee received at the beginning of each year.
The organization rated employees on ten performance dimensions, with
each rating made on a 5-point scale that it had developed.' Since the orga1 The ten dimensions were as follows: attendance, equipment operation, human relations
skills, initiative and performance of duties, knowledge of responsibilities, appearance, practical
judgment, problem-solving capacity, report writing, and response to supervision. The average
correlation among the dimensions in a random sample of 200 evaluations was .34, suggesting
the evaluations contained relatively little halo error.

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709

nization weighted each dimension equally in producing a total score, it


summed ratings for the individual dimensions, which resulted in a range of
possible ratings from a low of 10 to a high of 50. The organization used this
total score in making various personnel decisions. The performance ratings
heavily influenced movement through six labor grades and decisions on
promotions to supervisory positions. Additionally, when evaluation scores
were relevant, the organization used them to support decisions to terminate
individuals' employment.
Independent variables. We counted the number of grievances each employee had filed against his or her supervisor and against an organizational
policy during each year studied. We determined whether a grievance was
aimed at the decision of a supervisor or at organizational policy on the basis
of summaries provided in the grievance log as to the nature of the violation
and the remedy requested. For example, a typical grievance against a supervisor might refer to the manner in which the latter assigned overtime among
subordinates or to the supervisor's refusal to schedule a day off for an employee. Alternatively, a typical grievance against organizational policy
might refer to the organization's policy on the use of compensatory time or
to its policy on shift differentials. We then counted the number of rulings of
either type made at the second stage of the grievance process or later that
were in favor of an employee. We determined if an employee had received
a positive outcome on the basis of the responses the official responsible for
the decision had provided in the grievance log. If an official indicated that a
grievance was granted at the last stage to which it was appealed, we coded
the grievant as having received a positive outcome on the date the decision
was rendered.
In addition to data on grievance activity, we collected data on variables
that were likely to be related to both grievance activity and temporary
changes in performance. Inclusion of such variables as controls better enabled us to assess managerial reaction to grievances independent of actual
changes in employee behavior. The three variables considered were absenteeism, measured as the number of hours an employee had been absent from
work in a given year; tenure, the number of years an employee had worked
for the organization; and production hours, the number of hours in the year
an employee had spent on primary production activities divided by the total
number of hours worked. The production-hours ratio reflects time spent on
primary production activities as opposed to, for example, travel time, downtime for equipment repair, report writing, and other ancillary activities. Although the need to perform such activities is to some extent beyond the
control of employees, they have substantial discretion over how efficiently
they complete them. We included absenteeism and the production-hours
ratio as control variables because they reflected actual behavioral change
that might occur in association with grievance activity. Absenteeism and the
production-hours ratio do not completely capture all aspects of performance, but they are reasonable proxies for employee behavioral response in
association with grievance activity. Tenure was included because experi-

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December

ence may be correlated to skill acquisition and, in turn, to performance


(Becker, 1975) as well as to supervisory perceptions of performance. And
given that tenure may also affect both an employee's propensity to file a
grievance and the type of grievance filed, its inclusion was appropriate.
Estimation
Because grievance activity varies over time, we used panel data techfixed-effect regression analysis-to
explore whether
niques-specifically,
change over time in individuals' grievance activity was related to change in
their performance ratings. Because we examined the effect of change in the
independent variable on change in the dependent variable, omitted variables
that were stable over time could not influence the estimates obtained (Chamberlain, 1982). For example, it may be that grievants have deeper feelings of
hostility toward management than do other employees and that this hostility
influences both grievance activity and performance. The present approach,
then, should allow for estimates of the effects of grievance activity on performance, unbiased by omitted variables such as a stable level of hostility.
The following equation illustrates the structure of the fixed-effect approach. If, for example, we were interested in simply examining the effect of
grievances filed against a supervisor on performance ratings, we would estimate this model:
Yit - Yi= f[a + B1(Xlit - Xli) + (eit - ei)]
and i = 1 ... N; t = 1 ... T,
where Yit is the performance rating that the ith employee received in period
t and Yi is the mean value of Y for the ith individual averaged across the T
periods. Xlit indicates the number of grievances filed against a supervisor
during period t by the ith employee, and X1, is the average number of grievances against supervisors that the ith individual filed across the T periods.
We also differenced the residual (eit - ij.
This fixed-effect approach was used to estimate a model that included
the predictor variables we have described. With T equal to one year, we
calculated individual means by averaging each variable for each employee
across the number of years of employment between 1978 and 1985. Additionally, we estimated a second model that included the predictor variables
and the four grievance activity variables lagged by one year.
RESULTS
Table 1 shows means and standard deviations for each variable for
1978-85 and intercorrelations among the deviated variables. The latter suggest that the productivity proxies are, as expected, related to performance
evaluations. Absenteeism is significantly correlated to all forms of grievance
activity and tenure is significantly correlated to organizational policy grievances. Also, there is a significant correlation between grievances against a
supervisor and grievances concerning organizational policy. The distribution of grievance activity across the person-periods studied was as follows:

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1989

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Klaas and DeNisi

TABLE 1
Means, Standard Deviations, and Intercorrelationsa
3

Means

s.d.

1. Performance evaluation
2. Grievances against
supervisor
3. Grievances about
organizational policy
4. Positive outcomes,
grievances against
supervisors
5. Positive outcomes,
policy grievances
6. Hours absent
7. Production hours

33.33

7.59

0.12

0.41

-.10

0.12

0.41

- .07

.52

0.07

0.32

-.07

.10

.04

0.07

0.27

.06

.54

57.88
0.25
5.96

-.03
- .08
.10
.07

.20

73.27
0.62
11.50

.10
-.04
.04

.09
-.03
.12

.14
-.03
.01

8. Tenure

Variables

.07
- .02
.05

.04
.12

.04

r = .064 is significant at p < .01. All variables are values averaged across 1,001 personperiods.
a

one or more grievances against a supervisor were filed in 92 of the personperiods; one or more organizational policy grievances were filed in 95 of the
person-periods; one or more grievances against a supervisor were granted in
54 of the person-periods; and one or more grievances against organizational
policy were granted in 63 of the person-periods.
Table 2 presents the results of the two fixed-effect models estimated,
one synchronous and one lagged. In the synchronous model, the coefficient
for grievances filed against supervisors and the coefficient for the positive
outcomes from such grievances are statistically significant and negative,
indicating that, as hypothesized, (1) as the number of grievances an employee filed against a supervisor increased within a period, the evaluation
assigned to that employee declined and (2) as the number of positive outcomes from such grievances increased within a period, the evaluation assigned to that employee declined. Conversely, no relationship emerged between grievances over organizational policy and performance evaluations.
Neither the coefficient for grievances filed against organizational policy nor
the coefficient for positive outcomes from such grievances is significant.2
The coefficients for the control variables, absenteeism, production hours,
and tenure, are all significant and in the direction expected.
The results for the lagged model are virtually identical to those for the
synchronous model: coefficients that are significant in the synchronous
model are also significant in the lagged model. The coefficient for the num2
Given the possibility that employees may respond to low performance evaluations by
filing grievances against their supervisors, we examined the impact of appraisal scores, lagged
by one year, on subsequent grievance activity. No relationship emerged. Thus, it is doubtful the
results obtained are due to reverse causation.

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TABLE 2
Fixed-Effect Coefficient Estimatesa
Variables
Constant
Grievances against supervisors
Grievances about organizational policy
Positive outcomes, grievances against supervisors
Positive outcomes, policy grievances
Hours absent
Production hours
Tenure
Grievances against supervisors, T

Synchronous
Model

Lagged
Model

-0.501
(0.165)
- 1.090*
(0.531)
0.565
(0.656)
- 0.848*
(0.510)
- 0.732
(0.823)
-0.012**
(0.005)
9.060**
(3.033)
0.223**
(0.085)

- 0.496
(0.165)
- 1.166*
(0.532)
0.508
(0.663)
0.953*
(0.522)
0.934
(0.842)
-0.012**
(0.005)
8.823**
(3.038)
0.241**
(0.086)
- 1.036*
(0.561)
0.577
(0.724)

Grievances about policy, T - 1


Positive outcomes, grievances against supervisors, T

-0.780t

Positive outcomes, policy grievances, T - 1


5.028**
.03
1,001

F
R2
N
a

(0.566)
0.683
(0.915)
3.705**
.04
1,001

Standard errors are in parentheses.


tp < .10
* p < .05

** p < .01

ber of grievances filed against supervisors, lagged by one year, is both negative and significant. The coefficient for the number of positive outcomes
from supervisory grievances is negative but significant only at .10. Neither
the coefficient for grievances against organizational policy lagged by one
year nor the lagged coefficient for the number of positive outcomes from
policy grievances is significant. This pattern of results suggests that the
effects of grievance activity against supervisors may extend beyond the year
in which a grievance is filed.
The results of these analyses clearly support our hypotheses. In order,
however, to reduce the plausibility of any alternative explanation for these
findings more effectively, we performed additional analyses. These analyses
used data on employees who filed grievances and then, within the same

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713

period, were evaluated by different supervisors.3 (Recall that these individuals were deleted from the original group studied.) Presumably, a supervisor
who was not the one present at the time of grievance activity would be less
likely to be biased by that activity when evaluating employee performance.
We again estimated both the synchronous and the lagged model, using this
smaller group (N = 252). In these models, production hours and tenure were
significant and in the direction expected, but none of the grievance activity
variables were significant.
Finally, as Table 2 indicates, although the value of F for both models is
significant, the amount of explained variance in each case is relatively small.
However, as Abelson (1985) pointed out, under certain conditions the percent variance explained may not be an appropriate index by which to judge
the explanatory value of a model. With the fixed-effect models estimated
here, we attempted to explain deviations from individuals' mean ratings,
thus controlling for stable differences across ratees. Although much of the
variation in performance level across individuals is likely to be due to stable
differences between individuals, much of the variation in an individual's
rating over time is likely to be random. Moreover, by looking at changes over
time, we are likely to see less variance in the dependent variable than we
would if we looked at differences between individuals. Both of these factors
restrict the magnitude of the R2.
DISCUSSION
The results of this study suggest that supervisors' reactions to employees involved in grievance activity may influence performance ratings. Specifically, supervisors seem to react negatively to employees who file grievances when those grievances are filed against the supervisors, and they do so
especially when those grievances are decided in favor of the employee. On
the other hand, filing grievances concerning organizational policies appeared to have little impact on employees' evaluations, regardless of the
outcome of the grievances. Further, among employees who were rated by a
supervisor who was not the one present at the time of the grievance activity
in question, there was no relationship between the grievance activity and
ratings. Our use of the fixed-effect approach combined with the inclusion of
relevant control variables reduced the potential for omitted variable bias and
thus further supports the suggestion that managerial reactions to grievance
activity, not actual changes in behavior, account for the results reported.
Although earlier studies (e.g., Lewin & Peterson, 1987; Klaas et al., 1988)

3 Some of the individuals


included in this group, however, also filed grievances during a
different time period and were then evaluated by the supervisor present at the time of these
other grievances. We deleted these person-periods from the second group studied.

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December

have also found negative relationships between grievance activity and performance ratings, those studies could not rule out behavioral change as an
explanation for the relationships. Several aspects of the present results, however, speak against this alternative explanation.
First, filing a grievance against a supervisor was the only type of grievance activity that significantly affected appraisals. It would be difficult to
argue that those grievants felt a strong sense of inequity but that those who
filed grievances against organizational policies did not. Second, as noted
above, employees who were rated by a supervisor other than the one who
was involved in the grievance did not receive lower evaluations following
grievance activity, even though the productivity proxies clearly influenced
their ratings. If the relationship between grievance activity and performance
evaluation were simply due to behavioral change, subsequent performance
appraisals would presumably reflect that change, regardless of who completed an evaluation. The fact that we observed a relationship only when the
raters were the supervisors against whom grievances had been filed suggests
that grievance activity may cause supervisors to distort their evaluation of
grievants. Finally, if reduced effort represents an expression of inequity, we
would expect that if an employee won a grievance, the person's sense of
equity would be restored and he or she would again increase efforts. However, as noted earlier, our results suggested that winning a grievance against
a supervisor was also related to lower ratings. Moreover, the results also
suggest that employees who win their grievances will still receive lower
evaluations in the year following the year in which the grievance occurred;
even if employees lower performance in response to inequity felt at the time
of filing a grievance, it seems unlikely that they would continue to do so
more than a year after receiving a positive outcome from that grievance.
On a practical level, the overall pattern of results suggests that the value
of the voice provided by grievance systems may be limited, given that filing
and winning grievances may impose costs upon employees. These costs may
discourage employees from using the voice mechanism that their grievance
system provides. Thus, they might turn to other channels to express their
that include quitting, absenteeism, and sabotage. A
discontent-channels
potential implication is that a grievance system might cease to serve as a
mechanism through which workers and managers can freely communicate.
Moreover, negative managerial reactions to grievance activity might even
exacerbate a conflict that originally led to the filing of a grievance.
In order to understand more fully the practical significance of our findings, it is necessary to explore the potential magnitude of the costs associated
with grievance activity. To this end, we examined employees who had filed
a grievance against a supervisor but who had not engaged in any other
grievance activity for four years prior to filing that grievance. We plotted the
ratings these employees received during the four years prior to the grievance
activity (T - 1 to T - 4) and during the year (T) in which the grievance
activity occurred (Figure 1). Figure 1 also shows the ratings received by a
comparison group of employees who filed no grievances during this period.

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FIGURE 1
Performance Ratings Across Time: Nongrievants Versus Employees Filing
Grievances Against Supervisors
Performance
Ratings
444240383634

-.

32

-*

30
2826-

T-4

Nongrievants (N
- - -- -? .

T-3

T-2

T-1

707)

Grievances against supervisors (N

30)

Grievances against supervisors with positive outcomes (N = 10)

As can be seen, despite some fluctuations, a substantial drop occurred


in the average rating received in the year during which a grievance was filed.
The average drop for all persons filing grievances against their supervisors
was 5.1 (on a scale of 50 points), and the average drop for grievants who won
their grievances was 5.5 points. Nongrievants' ratings remained essentially
constant over the period. The average reduction, given that the average overall rating during the period was 33, represents a drop of just under one
standard deviation. It is important to note, though, that there was some
fluctuation over time in the ratings received by grievants; that fluctuation is
perhaps to be expected given the number of observations.
The present findings also have implications for theory-building in the
area of performance appraisal. Researchers have paid considerable attention
to how ratee characteristics affect ratee decisions (cf. Landy & Farr, 1980) but
relatively little to the role of employee dissent. As noted in our introduction,
although two studies have found a relationship between grievance activity
and performance evaluations, our ability to interpret that relationship is

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limited because it may be due to actual behavior change, stable behavioral


differences, or managerial reactions to grievance activity. The present study
suggests that specific types of grievance activity, especially when successful,
can influence ratings beyond any effects attributable to behavioral change.
Further research is needed, however, to determine whether conscious or
unconscious bias accounted for the lower ratings grievants received. Do
supervisors consciously give lower ratings to grievants in order to get even
or to discourage future grievance activity? Or is it that when employees file
grievances, raters categorize them as troublemakers? This categorization process could then affect what performance information supervisors perceive
and how they process it (cf. DeNisi et al., 1984, and Feldman, 1981). Under
such circumstances, supervisors would not necessarily be aware of any bias.
Nonetheless, they would be making what appeared to be an unbiased decision on the basis of biased information.
Finally, it is important that future researchers investigate the conditions
under which appraisal bias toward grievants is likely to arise. For example,
as noted earlier, there may well be observable differences between unionized
and nonunionized organizations. Perhaps the presence of a union serves as
a counter to serious rater bias. On the other hand, an organization that adopts
a formal grievance procedure voluntarily rather than because a collective
bargaining agreement mandates such adoption may be more committed to
fair administration of the procedure. It would also be interesting to see if the
frequency of grievance activity has any effect on the process. Perhaps when
grievances are filed infrequently, supervisors who are the targets of grievances take the filings personally and thus react especially harshly. It is also
possible that supervisors with low commitment to values like fairness and
honesty (Ravlin & Meglino, 1987) will be more likely to take action against
grievants.
Clearly, there is a need for further research in this area. For now, however, the present study shows that filing and winning a grievance against a
supervisor can diminish subsequent appraisals. Moreover, given the pattern
of these results, it is difficult to attribute this relationship simply to changes
in ratee behavior. To the extent that organizations use ratings to make decisions about pay, promotions, and discipline, the implications of these findings are indeed important.
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Brian S. Klaas earned his Ph.D. degree from the Industrial Relations Research Institute
at the University of Wisconsin. He is an assistant professor of management at the
University of South Carolina. His current research interests include the role of grievance systems, employee discipline, and the interaction between performance appraisals
and merit pay.
Angelo S. DeNisi earned his Ph.D. degree in industrial-organizational psychology from
Purdue University; he is a professor of human resources management at the Institute for
Management and Labor Relations, Rutgers University. His current research interests
include cognitive processes in performance appraisal, job analysis, and the role of
values in determining workplace behavior.

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