Under what circumstances does the validity of peer appraisals decrease?

The validity of peer appraisals decreases significantly in a highly competitive organizational reward system because competition among peers can lead to bias in their evaluations. When individuals know that their rewards or recognition are linked to how they evaluate one another, it can create a scenario where personal conflicts, jealousy, or rivalry influence their assessment. This competitive environment may lead peers to inflate or deflate evaluations based on personal relationships rather than objective performance, undermining the reliability and fairness of the appraisal process.

In contrast, strong peer relationships and high employee morale typically promote honest feedback and constructive evaluations, while training for peer evaluations is designed to standardize and improve the quality of feedback, supporting overall validity. Thus, while these factors can enhance peer appraisal systems, a competitive reward structure may distort the motivations behind the evaluations, leading to a decrease in validity.