What does the performance appraisal approach tell us about the organizational culture's basic assumptions?

Purpose Performance appraisal (PA) is an organizational practice whose ultimate goal is to improve employee performance. This goal can be achieved using two approaches: the administrative approach, which emphasizes materialistic incentives and rewards excellent performers, and the developmental approach, which focuses on employee personal and professional development. The literature points out that organizations cannot utilize both approaches at the same time, but the reason for this is vague. Therefore, the research purpose is to bridge this gap by exploring the basic assumptions behind the administrative and developmental PA approaches as part of the hidden layers of organizational culture. Design/methodology/approach A qualitative document analysis (QDA) was used to analyze 124 Israeli organizations' PA forms and employee reports. Findings The organization's PA approaches were diagnosed as a first step in revealing the reason for the inability to use both approaches simultaneously. In the next step, it was revealed that organizational culture assumptions are the reason for the contradiction of the PA approaches. Eventually, McGregor's theory X is the basic assumption behind the administrative approach, and theory Y is the assumption behind the developmental approach. Since these two approaches contradict each other, it explains the difficulty of using both approaches simultaneously. Originality/value This study dives into the hidden levels of organizational culture and attempts to bridge a long-standing but still current research gap, as well as extend and refine organizational culture and performance appraisal theories.