An analysis of the issue and challenges in the practices of HR-performance appraisal activities in the 21st century

Purpose This study aims to examine and explore the issues and challenges in the practices of HR-performance appraisal (PA) activities that may restrict the performance of employees and organizations. Design/methodology/approach Thirty papers published in Scopus and Web of Science journals between 2012–2024 were selected for this study through systematic review for classification and synthesis of findings on the subject. Findings Three themes about PA are identified in this study: the first theme is related to the significance of PA to organizational performance (OP), the second is concerned with issues and challenges in the practices of HR-PA activities and their effects on organizational behaviour of employees. Overall, the findings show that PA system is critically important in terms of their effects on OP. The findings also show that goals ambiguity, injustice and mismatching of feedback to strategic goals negatively affects OP. This can have a negative effect on, job satisfaction, work engagement and productivity. Furthermore, both of turnover and absenteeism have a significant effect on costs and key employees, but from strategic perspective, justice and transparency will remain the issues in effective PA. Social implications Future research is recommended to delve deeper into the ethical, legal and social implications of artificial intelligence in PA as well as long-term outcomes. Originality/value This study examined the issues and challenges in the practices of HR-PA activities in the 21st century by identifying the significance of PA to OP, issues and challenges in the practices of HR-PA and their effect on organizational behavior of employees.