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Ratees' reactions to performance appraisal (PA) system suggest how effective the system is. However, there is less clarity about those different reactions that good versus poor performing ratees show vis-à-vis their performance appraisals. This paper seeks to examine the possible PA responses (PA fairness and PA satisfaction) of the ratees for the cases where they receive equitable versus equal performance-based rewards and punishments.

Two studies were designed. Study 1 was a scenario-based experiment in Pakistan (N = 100 students) and Study 2 was based on surveys in Japan (N = 123 employed students) and Pakistan (N = 111 full-time working professionals). Data were analyzed using one-way repeated measures (Study 1) and structural equation modeling (Study 2).

Overall, good performers considered PA fairer and more satisfying under equity than under equality. However, poor performers considered PA fairer under equity than under equality.

The study has value for PA theorists and managers, as it offers: (a) an understanding on the differential effect of equity versus equality, on employees' perceptions of fairness and satisfaction in a PA setting; (b) clarity about the likely disparity between good and poor performers' reactions toward perceived fairness and satisfaction; and, (c) ratee reactions from both organizational and social perspectives contributing to the philosophical debate questioning whether both distributive fairness and retributive fairness should operate under similar or different normative principles.