Rethinking Performance Evaluation: Strategic Alignment in the Service Sector Through a Case-Based Framework

Abstract

Performance management is critical for aligning human capital with organizational strategy, particularly in the increasingly competitive service sector. However, universally effective performance appraisal systems (PASs) exist, as effectiveness depends on contextual and organizational specificities. In Portugal, where services account for nearly three-quarters of gross value added, PAS implementation remains underdeveloped, highlighting a gap between strategic intent and practice. This study aims to address that gap by investigating how a performance appraisal model can be tailored to the service sector. A case study was conducted at PCI—Creative Science Park, S.A., a consulting firm, using a qualitative approach. The research design combined a literature review to identify theoretical dimensions of performance evaluation with an employee questionnaire to capture organizational perceptions and priorities. Integration of both strands of evidence informed the construction of the framework. The findings indicate that employees value objective-based evaluation as the most relevant dimension, complemented by customer feedback, adaptive performance, and organizational citizenship. Furthermore, the integration of 360° feedback mechanisms and regular review cycles emerged as key enablers of fairness and engagement. By combining theoretical insights with employee perspectives, this study contributes to a customized and flexible PAS that enhances strategic alignment in the service sector. The proposed model provides both scholarly value, by advancing the discussion on context-specific PAS design, and practical value, by offering a reference for organizations seeking to align human performance with mission-critical outcomes.

1. Introduction

Human resource management, particularly performance appraisal, is widely recognized as essential for achieving organizational outcomes, regardless of the sector of activity (Kharub et al., 2024; Peng, 2022; Pulakos et al., 2015; Rahmawati & Wahyuningtyas, 2022). Considered one of the most common and impactful human resource practices (Apte et al., 2024; Tyskbo, 2020; Vidè et al., 2023), performance appraisal enables the alignment of individual contributions with the organization’s mission, fosters employee development, and reduces turnover (Dusterhoff et al., 2014; Grigoroudis & Zopounidis, 2012; Kuvaas, 2008).

Despite the consensus on its relevance, the literature primarily focuses on how performance appraisal systems (PASs) are structured and implemented (Apte et al., 2024; Pulakos et al., 2015). Over time, several studies have attempted to identify the best way to measure performance, yet no universally effective and applicable model has been established (Apte et al., 2024). This is largely due to the unique nature of human resources—endowed with motivations, personalities, and individual wills (Drucker, 2007)—which makes the design of an effective PAS a constant challenge (Yoon, 2021).

Traditional PAS frameworks are largely rooted in manufacturing-oriented or standardized environments, where tasks are more tangible, measurable, and independent. In contrast, service organizations present distinct challenges: performance is often intangible, co-produced with clients, highly relational, and dependent on interdependent teamwork (Aguinis, 2019; Grigoroudis & Zopounidis, 2012). These features question the adequacy of conventional appraisal models, which may fail to capture the multidimensional, process-based, and adaptive nature of work in services. Moreover, recent studies highlight that digital transformation and flexible performance management practices further shape the design and implementation of effective PASs in service organizations (Cosa & Torelli, 2024; Bezerra et al., 2024). This emphasizes the importance of integrating structured, process-oriented, and technologically adaptive mechanisms in appraisal frameworks.

In today’s competitive environment, intensified by globalization, companies constantly seek to increase productivity and efficiency (Guerranti & Dimitri, 2023; Aguinis, 2019; Apte et al., 2024). In this scenario, human capital is considered the main competitive factor (Miguel, 2007), with talent being the primary driver of organizational goals (Chiavenato, 2002; Drucker, 2007; Peng, 2022). However, motivated and committed employees are also those who demand the most investment. As such, organizations naturally seek ways to maximize the return on that investment without compromising financial sustainability. Performance management and appraisal emerge as strategic tools to align human potential with the organizational mission (Aguinis, 2019; Peng, 2022), transforming talent into sustainable competitive advantage. Despite its advantages, the development and implementation of effective PASs are complex tasks due to the multiple existing approaches, the diversity of organizational contexts, and the subjectivity involved (Grigoroudis & Zopounidis, 2012).

In today’s competitive and globalized context, where human capital is widely seen as the main driver of sustainable advantage (Chiavenato, 2002; Drucker, 2007; Peng, 2022), the challenge is not merely to measure performance but to design appraisal systems that are strategically aligned, culturally embedded, and sensitive to the complexity of service work. Indicators such as productivity or absenteeism, while useful, are inadequate to fully capture dimensions such as client interaction quality, adaptive performance, or organizational citizenship (Koopmans et al., 2011). Without this alignment, performance appraisal risks becoming a ritualistic practice rather than a lever for strategic impact (Chatman & O’Reilly, 2016; Henri, 2006).

This study engages with this broader debate by examining how performance appraisal frameworks can be reconfigured to address the distinctive features of service-sector organizations. More specifically, we explore the case of PCI—Creative Science Park, S.A., a Portuguese consulting firm, to investigate the following research question:

• How can performance appraisal frameworks be designed to capture the relational, process-based, and strategic dimensions of performance in service organizations?

Accordingly, the main objective is to propose a performance appraisal model tailored to the service sector. Specifically, the study aims to: (i) synthesize the state of the art in performance appraisal; (ii) analyze PCI employees’ perceptions regarding PAS implementation; and (iii) design a model adapted to the organization’s strategic and operational context.

By positioning the problem as a response to the theoretical limitations of existing appraisal systems, this study contributes to both theory and practice. Theoretically, it advances the understanding of performance appraisal in service contexts, addressing the inadequacy of traditional manufacturing-oriented models. Practically, it develops a framework that balances fairness, adaptability, and strategic alignment, thereby enhancing both service quality and organizational sustainability. This contribution is particularly relevant to the Portuguese context, where familiarity with PASs—especially in the private service sector—remains limited (Ferreira, 2024; Mourão et al., 2015). Considering that services account for nearly three-quarters of national gross value added (BP, 2023), the study responds to a pressing need for performance appraisal systems that can simultaneously strengthen organizational efficiency and employee satisfaction.

The remainder of the paper is structured as follows: Section 2 presents the literature review, Section 3 outlines the methodology, Section 4 discusses the case study, and Section 5 presents the design of the PAS. Section 6 concludes with contributions, limitations, and future research avenues.

2. Literature Review

Performance appraisal began gaining relevance in human resource management throughout the 20th century, driven by psychologists who recognized the importance of studying workplace behavior (Guerreiro, 2002; Sekiou & Blodin, 1986). Initially, appraisal systems were simple and focused on issuing judgments about employees, with direct consequences on remuneration: poor performance resulted in salary penalties, while good performance led to rewards (Ferreira Sá, 2018). However, this approach was limited, as it overlooked the potential for development, training, and appreciation of human capital (Miguel, 2007).

After World War II, performance appraisal evolved from a purely quantitative logic to a more qualitative approach, emphasizing human behaviors, teamwork, and continuous quality improvement (Marras et al., 2012; Russo & Quintas, 2017). In the 1970s, with technological advancements, globalization, and the transformation of labor relations, appraisal systems began incorporating management by objectives, with greater employee involvement in goal-setting (Drucker, 2007; Marras et al., 2012). By the late 1980s and early 1990s, influenced by the principles of Scientific Management, there was an increasing focus on evaluating individual capabilities to identify the most suitable professionals for each role (Guerreiro, 2002). During this phase, attention also turned to the appraisal context and identifying the most appropriate moments to conduct evaluations. Despite the variety of approaches developed over time, the literature converges on one essential point: performance appraisal must be a strategic development tool aligned with contemporary people management practices (Ferreira Sá, 2018).

2.1. Performance Appraisal Systems

Performance management, understood as a continuous and strategic process, seeks to improve organizational outcomes by identifying, measuring, and developing employee performance in alignment with organizational objectives (Aguinis, 2019; Apte et al., 2024; Rahmawati & Wahyuningtyas, 2022). Individual performance reflects the outcome of assigned tasks, shaped by competencies, effort, experience, and work environment (Hasibuan, 2017). Hence, performance appraisal (PA) emerges as a central mechanism within performance management, enabling the definition of goals, monitoring of results, provision of continuous feedback, and support for employee development (DeNisi & Murphy, 2017; Peng, 2022). Through this process, human talent can be transformed into a competitive advantage by aligning individual capabilities with organizational needs (Aguinis, 2019; Pereira, 2014).

PASs not only measure individual performance but also provide data for decision-making and organizational improvement (Chiavenato, 2014; Grigoroudis & Zopounidis, 2012). For effectiveness, PASs must be based on transparent criteria, objective methods, and trust between evaluator and employee (Ferreira Sá, 2018; Pontes, 1999; Randhawa, 2017). Their purpose is multiple—sometimes even contradictory—ranging from rewarding performance, supporting professional development, allocating employees to suitable roles, or improving internal communication (Chiavenato, 2002; McKenna et al., 2011; Pontes, 1999).

Common appraisal methods include graphic rating scales, behavioral checklists, and comparative approaches (Apte et al., 2024). Strategic frameworks such as the Balanced Scorecard integrate organizational objectives into individual goals and align employee performance with broader strategy (Peng, 2022). Although their widespread use is debated (Iqbal et al., 2015; Murphy, 2020), evidence suggests that well-implemented PASs, as in organizations like Microsoft, Google, or Adobe, are linked to superior financial performance, higher employee satisfaction, and talent retention (Aguinis, 2019; DDI, 2017).

A Performance Appraisal System should not be seen merely as an administrative or motivational tool, but as an integral part of the company’s strategy (Caruth & Humphreys, 2008). Effective PASs should not be reduced to mere control mechanisms; rather, they establish a “psychological contract” between organization and employee, aligning expectations and career development opportunities (Pontes, 1999). Beyond reviewing past performance, they serve as platforms to discuss training, progression, recognition, and rewards, reinforcing motivation and retention (Randhawa, 2017). Henri (2006) finds that organizational culture significantly influences both the design and use of performance measurement systems, which in turn affect organizational performance; to achieve this, PASs must be integrated into organizational culture, promote dialogue, and address key business challenges (Pulakos et al., 2015).

The objectives of PASs span both administrative and developmental domains (Cleveland et al., 1989; DeNisi & Murphy, 2017; Mathis & Jackson, 2008; Kondrasuk, 2012; McKenna et al., 2011). Administratively, they inform promotion, reward, mobility, or disciplinary decisions (Ben-Hador, 2023; Peng, 2022). Developmentally, they identify skill gaps, guide training, and support career planning (Chiavenato, 2002; Ferreira Sá, 2018; Lacerda et al., 2012). Key objectives include allocating employees to appropriate roles (Chiavenato, 2002), rewarding high performance (Peng, 2022), strengthening communication (Pontes, 1999), fostering skills development (Ferreira, 2024), correcting behaviors and enhancing productivity (Chiavenato, 2002), providing feedback and recognition (Mourão et al., 2015), and reinforcing commitment to organizational goals (Pontes, 1999). In specific contexts such as healthcare, SWOT-based approaches have been used to define key performance indicators (Abdel-Razik et al., 2023).

The benefits of PASs are wide-ranging. For employees, they provide structured feedback, skill development, and career guidance (Grigoroudis & Zopounidis, 2012). For organizations, they align behaviors with strategy, enable fair decision-making, and support talent identification (Aguinis, 2019). Effective PASs allow organizations to connect individual and organizational goals, justify compensation and promotion decisions, align stakeholder expectations, and anticipate training needs (Aguinis, 2019). Evidence suggests that companies with robust PAS are significantly more likely to achieve superior financial results and higher employee satisfaction (DDI, 2017). Additionally, PASs reinforce organizational justice by ensuring recognition of high performers (Harrington & Lee, 2015).

The administrative approach emphasizes differentiation among employees for promotion, reward, or sanction decisions, often through comparative rankings (Meyer et al., 1965; Boswell & Boudreau, 2002). It aligns with McGregor’s Theory X, assuming employees require external control and incentives (Greenwood, 2002; Legge, 2005). By contrast, the developmental approach prioritizes growth and continuous learning, using tools such as Likert scales to identify strengths and improvement areas (Kim & Holzer, 2016; Murphy, 2020). Rooted in Theory Y, it assumes employees, when properly guided, are capable of self-direction and responsibility (Thunnissen, 2016). While the administrative approach may foster unhealthy competition (Clifton & Harter, 2019), the developmental approach is more time-intensive, requiring sustained training and practical application (Kim & Holzer, 2016).

Employee perceptions of PASs are closely tied to the adopted approach. Administrative systems are often perceived as unfair if poorly communicated (Javad & S.D., 2015; Vidè et al., 2023), while developmental systems are seen as opportunities for growth and stronger evaluator-employee relationships (Adler & Borys, 1996; Palaiologos et al., 2011). Training evaluators to deliver constructive feedback and create open dialogue is crucial for fostering fairness and engagement (Vidè et al., 2023). Regardless of the approach, clarity that the ultimate purpose of PASs is performance improvement remains essential (Apte et al., 2024).

PASs can also be categorized into absolute and relative methods (Apte et al., 2024; Van Elten, 2017). Absolute appraisal compares employee performance against predefined standards or past performance, aligning with developmental approaches. Relative appraisal, more aligned with administrative logic, ranks employees against peers, assuming a normal performance distribution (Pereira, 2014). While relative methods may be efficient, they risk generating tension, undermining teamwork, and failing to motivate average performers (Balakrishnan et al., 2018; Hecht et al., 2019; Gill et al., 2019). Moreover, they often lack individualized development plans (Pereira, 2014). Safeguards such as evaluator anonymity and minimizing informal ranking disclosures are recommended to strengthen fairness and trust (Apte et al., 2024).

Overall, the literature reveals persistent tensions between administrative and developmental logics, as well as between absolute and relative approaches, each bringing benefits but also important limitations. More critically, most existing models were designed for manufacturing or standardized settings, which makes them ill-suited to capture the relational, process-based, and multidimensional nature of service work. This misalignment opens space for research on how appraisal systems can be reconfigured to address the specific challenges of service organizations—a gap that the present study seeks to address.

2.2. Characteristics of a Performance Appraisal System

Performance appraisal can be analyzed by multiple dimensions, indicators, and methods, which together define its effectiveness and alignment with organizational strategy. Murphy and Kroeker (1989) were the first to systematize appraisal dimensions (Campbell, 1990). Later, based on a systematic review of 35 frameworks (17 generic and 18 specific), Koopmans et al. (2011) proposed a model composed of four core dimensions: task performance, referring to an employee’s ability to execute core job functions (Koopmans et al., 2011; Grigoroudis & Zopounidis, 2012); contextual performance or organizational citizenship behavior, which encompasses discretionary behaviors that benefit the organizational environment, such as assisting colleagues or taking on additional tasks (Koopmans et al., 2011); counterproductive work behavior, covering harmful actions such as absenteeism, tardiness, or substance misuse (Koopmans et al., 2011); and adaptive performance, which highlights the ability to adjust to changes, technologies, and evolving organizational demands (Koopmans et al., 2011). These dimensions have been widely applied, for instance, in healthcare settings (Krijgsheld et al., 2022). Yet, distinctions between task and adaptive performance are increasingly blurred in rapidly changing environments. Caruth and Humphreys (2008) argue that an effective performance appraisal system for strategic control should incorporate eleven essential characteristics—formalization, job-relatedness, clear standards and measurements, validity, reliability, open communication, trained appraisers, ease of use, employee accessibility to results, review procedures, and appeal mechanisms.

Performance information can also be classified into three categories: personality traits (e.g., initiative, creativity), behaviors, and results (Grigoroudis & Zopounidis, 2012). Rahmati and Noorbehbahani (2017) expand the dimensionality of appraisal by including ethics, innovation, discipline, teamwork, quality, and productivity. Another significant perspective is competency-based appraisal, which evaluates the skills required for each role (Kharub et al., 2024). Competencies may be grouped into four types: performance in formal job functions (Çetin & Aşkun, 2018), contributions beyond formal tasks (Gaudet & Tremblay, 2017), creative problem-solving ability (Janssen & Xu, 2008), and sector-specific knowledge (De Silva et al., 2018). Although highly effective for identifying training needs, competencies do not always directly measure practical outcomes. Armstrong and Taylor (2023) therefore propose a dual classification: job performance and positive behaviors indirectly contributing to organizational goals. Regardless of the chosen dimension, appraisal requires objective and reliable indicators.

Key Performance Indicators (KPIs) play a central role in monitoring and evaluating employee and organizational performance. Traditionally associated with management control, KPIs track progress toward strategic objectives (Domínguez et al., 2019; Rahmawati & Wahyuningtyas, 2022). Common indicators include results and their quality, efficiency, discipline, leadership, honesty, and creativity (Afandi, 2018). However, not all indicators are easily quantifiable, and discrepancies may arise between objective indicators (e.g., certifications) and subjective ones (e.g., customer satisfaction), often due to expectation management (Lee & Kim, 2024).

Methods of performance appraisal vary according to organizational policies and job characteristics. Self-assessment fosters reflection and employee involvement but is often combined with other methods (Mathis & Jackson, 2008). Peer appraisal is useful when supervisory observation is limited (Gonçalves, 2014). Upward appraisal (180°), performed by subordinates, evaluates leadership and communication (Chiavenato, 2014). Supervisor appraisal (90°) is the most traditional and remains widely used, particularly when there is close evaluator–employee interaction (Grigoroudis & Zopounidis, 2012). 360° appraisal, incorporating feedback from peers, supervisors, subordinates, and even clients, is considered the most comprehensive, objective, and transparent, though resource-intensive (Peng, 2022). Regardless of the method, goal achievement can be incorporated into the process, reinforcing the alignment of individual and organizational results.

A specific and influential approach is management by objectives, introduced by Drucker (2007). Management by objectives emphasizes participation, future orientation, and result-based appraisal, requiring employee involvement in setting goals that are aligned with organizational strategy (Pontes, 1999). Effective objectives should follow the SMART criteria—specific, measurable, attainable, relevant, and time-bound (Doran, 1981)—and must be clearly understood by employees to ensure alignment of effort and organizational outcomes (Sisinacki et al., 2017). Goals that are challenging yet realistic enhance focus, motivation, persistence, and competence application (Locke & Latham, 2002). For managers, objectives should be directly linked to strategic priorities and extend beyond individual functional units (Drucker, 2007). To avoid overload and loss of focus, the literature recommends limiting the number of goals to a manageable set (Murphy, 2020; Locke & Latham, 2019).

Recent studies, such as Bezerra et al. (2024), developed and tested a scale to evaluate individual performance appraisal processes in the public sector, focusing on theoretical constructs such as feedback, competencies, measurable standards, communication, validity, and fairness. Similarly, Kalogiannidis et al. (2025) assessed the impact of PASs on employee performance, examining variables including feedback, performance measures, training, and incentives. These findings provide empirical support for several of the essential characteristics proposed by Caruth and Humphreys (2008), particularly regarding open communication, trained appraisers, and the use of clear standards and measurements. However, they also suggest that certain elements—such as formalization or rigid structures—may require contextual adaptation, as overly bureaucratic systems can limit flexibility and diminish the developmental purpose of performance appraisal.

Although the literature presents a wide range of dimensions, indicators, and methods, much of it remains fragmented and context-dependent, with tensions between control-oriented and developmental logics, as well as between objective and subjective measures. Traditional frameworks often privilege standardization and quantification, yet struggle to capture the relational, adaptive, and process-based nature of performance in service organizations. This mismatch underscores the need for appraisal systems that move beyond generic prescriptions to frameworks that are strategically aligned, culturally embedded, and sensitive to the unique dynamics of services—an opening that guides the present study.

2.3. Implementation of Performance Appraisal System

Cosa and Torelli (2024) conducted a systematic review on the evolution of performance measurement systems in the context of digital transformation, flexibility, and adaptability. Their findings indicate that dimensions emphasized by Caruth and Humphreys (2008), such as clarity, ease of use, and strategic alignment, remain central. However, they also highlight that overly rigid or complex systems tend to be less effective as work environments change rapidly.

Building on these insights, the effective implementation of a PAS requires the integration of several steps aligned with organizational goals and developed in dialogue with employees. According to the literature, the process can be summarized in the following phases (Peng, 2022; Pulakos et al., 2015; Randhawa, 2017):

• Definition of appraisal parameters aligned with the organizational strategy and job descriptions, developed jointly with employees. These should include both results and organizational citizenship behaviors.
• Establishment of indicators/goals for each performance parameter.
• Continuous monitoring of performance, gathering information from multiple sources (managers, peers, clients, subordinates).
• Regular formal and informal feedback to adjust goals and reinforce professional development.
• Final evaluation at the end of the cycle, focused on learning, development, and future planning through an authentic, not merely bureaucratic, conversation.
• Identification of training needs based on strengths and areas for improvement.
• Review of the process to ensure the continuous improvement of the system.

Figure 1 illustrates this performance appraisal cycle.

This approach supports the creation of a robust PAS, oriented toward continuous improvement of both individual and organizational performance, while promoting strategic alignment and employee development. The authors highlight that a performance appraisal system should demonstrate ease of use, meaning it must be straightforward, not overly complex, and accessible to all participants involved in the process (Caruth & Humphreys, 2008). Nevertheless, its effectiveness also depends on transversal factors increasingly emphasized in the recent literature, transparency, feedback, new work arrangements, employee well-being, and the use of new technologies.

2.3.1. Transparency

Ensuring fairness is one of the greatest challenges in PASs. Research indicates a tendency to assign higher ratings if the employee was previously rated favorably (Saxena et al., 2020). Biases such as leniency, halo effect, central tendency, or recency effect can compromise fairness (Apte et al., 2024). These biases may stem from the evaluator, the person being evaluated, the system, or interpersonal relationships (Iqbal et al., 2015), making it essential to analyze them broadly rather than blame only the evaluators. Relative appraisal, based on peer comparisons, is especially susceptible to manipulation (Balakrishnan et al., 2018). Thus, transparency becomes a critical factor for the credibility of the system and is associated with employee satisfaction with the PAS (Apte et al., 2024).

2.3.2. Feedback

Feedback represents one of the most valuable tools of the PAS, enabling timely interventions and behavioral corrections (Pulakos et al., 2015). Beyond individual development, it strengthens relationships, increases engagement and motivation by showing the impact of individual work on the organizational mission. Effective feedback should include recognition of strengths and be structured, for example, using the situation-action-impact approach (Ferreira, 2024). Both formal feedback—essential for organizational decision-making—and informal feedback—focused on immediate learning—should be encouraged (Pulakos et al., 2015; Dwiyanti et al., 2020). Employees also play an active role: they should seek, accept, and provide feedback, including to peers, especially in virtual or peer-to-peer environments, adjusting the form and content of messages as needed (Pulakos et al., 2015).

2.3.3. Remote Work and Flexible Hours

The COVID-19 pandemic accelerated the adoption of telework and flexible schedules, enabled by digital technologies that reduced dependence on physical presence (Tran et al., 2022; Raghuram et al., 2019). These arrangements have shown benefit for employees, supporting work–life balance (Biron et al., 2023) and for organizations, improving productivity and reducing fixed costs (Choudhury et al., 2021; Pérez et al., 2003; Raghuram et al., 2019). Evidence indicates that telework enhances autonomy and control, with positive effects on productivity (Sekhar & Patwardhan, 2023). However, if poorly managed, it can blur the boundaries between personal and professional life, affecting mental health and performance (Wöhrmann & Ebner, 2021). Empirical evidence on the direct relationship between telework and organizational performance remains limited (Campo et al., 2021), possibly due to contextual variables such as inadequate physical conditions or workplace interruptions. By contrast, flexible working hours tend to produce positive effects by allowing employees to work during their most productive periods (Naqshbandi et al., 2024).

2.3.4. Employee Well-Being

Employee well-being, often neglected in traditional approaches, directly influences performance (D. E. Guest, 2017). Criticism has been directed at High-Performance Work System (HPWS) and High Involvement Management (HIM) for prioritizing performance at the expense of well-being. Job satisfaction, whether intrinsic or extrinsic, arises from the perception of alignment between one’s role and personal values (Schwepker, 2001). It reduces negative behaviors such as absenteeism (Cohen & Golan, 2007) and is higher in challenging roles (Agyare et al., 2016). The Portuguese standard NP 4590:2023 on Organizational Well-being and Happiness sets requirements for policies fostering healthy, balanced, and positive environments (IPQ, 2023). Its implementation aims to increase employee engagement, with positive impacts on productivity and organizational sustainability, aligning with SDGs 3 and 8 (Apcer Group, 2023; IPQ, 2023). PASs should therefore function not only as evaluative mechanisms but also as promoters of well-being and workplace happiness.

2.3.5. New Technologies in Performance Appraisal

The integration of automation, artificial intelligence (AI), and big data analytics is transforming PASs (Mohan & Vasumathi, 2024; Mulder & Beer, 2020; Vuong & Nguyen, 2022). These technologies enhance objectivity, reduce bias, and facilitate continuous development. Supported by accurate data and appropriate frameworks, AI can propose corrective actions, deliver impartial feedback, and accelerate decision-making (Jangbahadur et al., 2024). Digital platforms monitoring employee activity are particularly useful in highly digitalized work contexts (Vuong & Nguyen, 2022). However, limitations persist: technology may overlook the complexity of human performance, risk dehumanizing appraisal, or increase stress in contexts of high surveillance (Van Aerden et al., 2023). Thus, while highly promising, technological tools must be applied cautiously, ensuring a balance between objectivity and sensitivity to human nuances.

In conclusion, implementing a PAS requires more than sequential stages—it demands careful consideration of fairness, feedback, work arrangements, well-being, and technology. Only through this multidimensional approach, which aligns with key dimensions highlighted by Caruth and Humphreys (2008) and confirmed in recent studies such as Cosa and Torelli (2024), can organizations ensure that appraisal systems are both effective and adaptable to rapidly changing work environments. Yet, much of the existing literature examines these elements in isolation, often assuming stable contexts and overlooking the tensions between efficiency, employee experience, and adaptability. This fragmentation reveals a critical gap which we think must be addressed: the need for integrative frameworks that move beyond generic prescriptions to account for the relational and process-based realities of service organizations.

3. Materials and Methods

This study adopts a single case study design, selected for its suitability in addressing “how” and “why” questions and for investigating phenomena within their real-life organizational context (Yin, 2009). Case studies are particularly appropriate for exploratory research, allowing the identification of requirements and the development of practical frameworks grounded in empirical observation (Humphrey & Scapens, 1996; Irvine & Gaffikin, 2006; Parker & Roffey, 1997). Despite criticisms regarding potential subjectivity due to researcher proximity, the method provides a robust approach to capture organizational complexity and dynamics that cannot be fully addressed through purely quantitative designs (Yin, 2001).

Consequently, this is an exploratory study, as it seeks to develop and clarify concepts based on a literature review, document analysis, and a case study (Gil, 2008). This research is exploratory and explanatory, combining literature review, document analysis, and field data collection. The literature review was conducted systematically: key concepts were identified, debates were analyzed, and gaps in existing frameworks were synthesized to inform the research questions and questionnaire design. Documents analyzed included internal organizational records, performance reports, and relevant policies, enabling triangulation with primary data.

For data collection, a questionnaire survey was administered to the employees of the organization under study (PCI). This technique, common in sociological research (dos Santos & Lima, 2019) and frequently used in case studies (Amado & Freire, 2014; Yin, 2009), allows for anonymous responses, encouraging authenticity and offering a low-cost option. However, it also presents limitations, such as potential misinterpretation or lack of knowledge of the subject (Santos & Henriques, 2021).

The questionnaire will include open-ended, closed, and multiple-choice questions (dos Santos & Lima, 2019), and must be formulated clearly, coherently, and without bias (Pardal & Correia, 1995). The questionnaire’s construction followed the steps proposed by Pardal and Correia (1995), including: problem formulation; definition of objectives; literature review; formulation of research questions; identification of variables and indicators; and sample definition.

This study adopted a methodological approach akin to a conceptual viewpoint, following Caruth and Humphreys (2008), by combining a review of the relevant literature with the practical experience of one of the researchers working within the organization. The research was conducted with the authorization of the general director, who also tested and validated the questionnaire by completing it and suggesting adjustments.

The sample consisted of 12 employees (simple random sampling), selected through simple random sampling, ensuring that all employees had an equal chance of being chosen regardless of their position (Pocinho, 2009). The number of participants was defined based on the concept of theoretical saturation—the point at which new responses no longer yield relevant information (Saunders et al., 2018). Despite the limitations of this concept (Rego et al., 2018), a sample of 12 participants is considered adequate, as suggested by authors such as G. Guest et al. (2006) and Boddy et al. (2015), taking into account the informational power of the sample (Malterud et al., 2016). Participants were defined as the first 12 responses to the survey, which will be distributed by the company.

The data collected will be analyzed according to its qualitative nature. Qualitative research values context and focuses on observing individuals in their own environment and language (Amado & Freire, 2014; Denzin & Lincoln, 2008; Kirk & Miller, 1986).

Open-ended responses were coded thematically based on performance appraisal dimensions and emerging concepts. Quantitative representations, such as frequency counts, percentages, and simple figures, were used to support interpretation and facilitate visualization of trends. This combination of qualitative depth and quantitative illustration enhances credibility, rigor, and transparency of the findings.

The study is guided by a conceptual framework linking organizational strategy, PAS dimensions, employee perceptions, and performance outcomes (Figure 2). The framework illustrates how input from literature, internal documents, and employee feedback informs the design of a tailored performance appraisal framework, ensuring alignment with strategic objectives and contextual realities of the service sector.

4. Analysis and Findings of the Case Study

4.1. Organizational Context: PCI—Science and Innovation Park, S.A

Performance evaluation in the service sector presents distinct characteristics, related to the intangibility of results, the predominance of human interaction, and the resulting variability in performance. Service quality and customer satisfaction emerge as key indicators, requiring a combination of qualitative and quantitative criteria, especially in areas such as communication, empathy, and problem-solving (Bahadur et al., 2018).

The PCI · Creative Science Park—Aveiro Region, founded in 2010, is the result of an initiative by the University of Aveiro, in collaboration with public entities, companies, and financial institutions in the region. This collaboration led to the formation of a public limited company with a share capital of €7.5 million, mostly held by public entities but privately managed in the public interest. Its shareholder structure includes organizations such as CGD, CIRA, Grupo Visabeira, PortusPark, AIDA, ANJE, and APA, among others. In operation since 2018, PCI is a member of the International Association of Science Parks and Areas of Innovation.

PCI’s mission is to drive innovation, knowledge, and entrepreneurship in the Aveiro region through the management of a science and innovation ecosystem. It operates in strategic areas such as Agri-food, Energy, Materials, Information and Communication Technologies and Electronics (ICTE), and the Marine sector. As of 2022, PCI had three buildings—the Central Building and two shared laboratories dedicated to ICTE and Materials + Agri-food—with further infrastructure expansion planned.

PCI’s activities are divided into three business units: the Design Factory Aveiro, a co-creation space for innovative products and services based on collaborative design; the UA Incubator, open to external entrepreneurs since 2018 and currently supporting 46 projects; and the Business Innovation Center, the most recent unit, which provides accounting, consulting, and space management services.

Most PCI employees have higher education, an average age of 40, a female majority, and an average tenure of three years. Although performance evaluation has already been identified as a priority by management, the organization does not yet have a formal PAS, which limits individual performance monitoring and the identification of professional development opportunities aligned with strategic goals.

4.2. Exploratory Survey on Performance Evaluation at PCI

Based on the theoretical framework and as preparation for developing a PAS suited to PCI’s reality, an exploratory survey was conducted among a sample of employees. This survey aimed to gather perceptions about performance evaluation, clarifying that the proposed system would be comprehensive, covering all employees regardless of their function or hierarchical position.

4.2.1. Perception of Performance and the Performance Evaluation System

In response to the first question of the survey, which presented various statements about perceptions of a PAS and asked respondents to indicate their level of agreement, there was a markedly positive tendency regarding the usefulness of such a tool.

All respondents agreed that implementing a PAS could bring benefits to the organization, consistent with the arguments of Aguinis (2019), who emphasizes the strategic role of performance evaluation in enhancing organizational effectiveness. Likewise, all respondents—except one—believe that the PAS can also be beneficial to employees, a perspective supported by Ferreira Sá (2018) and Grigoroudis and Zopounidis (2012), who highlight individual gains in terms of professional development.

Most respondents, eleven to be exact, also recognize that a PAS can provide recognition, satisfaction, and greater engagement at work, in line with literature emphasizing the importance of positive reinforcement and alignment between individual and organizational goals (Agyare et al., 2016; Chiavenato, 2002; Cohen & Golan, 2007; Ferreira, 2024; Mourão et al., 2015; Pontes, 1999). Similarly, ten employees believe that the system can contribute to a general sense of fairness, as proposed by Harrington and Lee (2015) and Vidè et al. (2023), who stress the perception of equity as a critical factor for the success of evaluation processes.

Regarding interpersonal relationships, responses were mixed. While part of the literature argues that a PAS can enhance peer relationships (Chiavenato, 2002; Palaiologos et al., 2011; Pontes, 1999; Vidè et al., 2023), seven employees expressed concerns about its potential negative impact, also documented by other authors who warn of possible feelings of competition or unfairness (Clifton & Harter, 2019).

In terms of performance and new work arrangements, several studies point to positive effects, particularly in flexible or remote work contexts (Biron et al., 2023; Choudhury et al., 2021; Raghuram et al., 2019; Sekhar & Patwardhan, 2023). This trend is confirmed by the survey data: all employees recognize that flexible hours have a positive impact on performance, also evidenced by Naqshbandi et al. (2024). However, only nine recognize this impact in the case of remote work. This hesitation may be related to the relative novelty of the modality and the ongoing adaptation process, as suggested by Campo et al. (2021), Jackson and Fransman (2018), and again Naqshbandi et al. (2024).

4.2.2. Characteristics of the Performance Appraisal System

Employees were asked what the objectives of a PAS at PCI should be. The options provided were based on literature (Ben-Hador, 2023; Chiavenato, 2002; Ferreira, 2024; Ferreira Sá, 2018; Kondrasuk, 2012; McKenna et al., 2011; Mourão et al., 2015; Peng, 2022; Pontes, 1999), with the possibility of suggesting additional objectives, which are marked in Figure 3 with “(O)”.

The analysis of the figure shows that the option “to enhance employee development” received unanimous agreement from all respondents, confirming the importance of this goal, as supported by Chiavenato (2002), Ferreira (2024), Ferreira Sá (2018), Peng (2022), and Pontes (1999).

Other widely selected objectives included: rewarding good performance (Chiavenato, 2002; Peng, 2022), correcting behavior to stimulate higher productivity (Chiavenato, 2002; Ferreira, 2024; Pontes, 1999), and gathering information about the employee to provide better feedback (Chiavenato, 2002; Ferreira, 2024; Mourão et al., 2015; Pontes, 1999).

It is noteworthy that twelve employees identified rewarding good performance as a priority PAS objective. This finding is reinforced by a follow-up question, where four respondents expressed the expectation that performance evaluation would be accompanied by a reward system. This expectation aligns with the literature, which recognizes the importance of the link between effort and reward in the perception of fairness and acceptance of the evaluation process (Locke & Latham, 2002). Furthermore, clear communication about the benefits associated with evaluation contributes to the adoption of new behaviors and enhances employees’ intrinsic motivation (Pulakos et al., 2015).

Other objectives mentioned by respondents include: assigning employees to the roles best suited to their skills (mentioned by n = 11) (Chiavenato, 2002), improving relationships between superiors and subordinates (n = 8) (Chiavenato, 2002; Pontes, 1999), and aligning employees with the organization’s strategic objectives (n = 2). Additionally, individual suggestions (each mentioned by n = 1) include: analyzing feedback from employees, assessing leadership, improving service quality, ensuring fair career progression, and motivating employees.

Regarding how employees should be evaluated—whether comparatively or individually—most respondents (n = 9) believe that evaluation should be conducted individually, without direct comparison to colleagues. This preference aligns with the views of Apte et al. (2024), Balakrishnan et al. (2018), Hecht et al. (2019), and Pereira (2014), who highlight the risks of social comparison in performance evaluation, such as rivalry or perceptions of unfairness. On the other hand, three respondents supported peer comparison, suggesting that this approach may be relevant in certain contexts or dimensions. The possibility of combining both approaches was also considered valid by the respondents.

These findings, while reflecting the specific case of PCI, also engage critically with established appraisal frameworks by emphasizing developmental and fairness-oriented objectives, thus highlighting how the proposed PAS both extends traditional models and addresses their limitations in service-sector contexts.

4.2.3. Dimensions and Indicators of the Performance Appraisal System

The development of an effective PAS requires a clear definition of the dimensions to be evaluated and the indicators to be adopted. In this study, an effort was made to identify the most relevant performance evaluation dimensions for the consulting sector, based on literature and the perceptions of PCI employees. Respondents were presented with various dimensions drawn from well-established authors in the field (Çetin & Aşkun, 2018; De Silva et al., 2018; Gaudet & Tremblay, 2017; Griffin et al., 2007; Grigoroudis & Zopounidis, 2012; Janssen & Xu, 2008; Kharub et al., 2024; Koopmans et al., 2011; Krijgsheld et al., 2022; Murphy & Kroeker, 1989; Rahmati & Noorbehbahani, 2017; Todorović et al., 2015; Yeh & Huan, 2017), and were asked to select and rank them by relevance.

Relevance of the Dimensions

According to the results obtained (Figure 4), Goal-based Evaluation stood out at the most consensual dimension, being considered relevant by all respondents. This supports the proposals of Peng (2022), Pereira (2014), and Pontes (1999). Client Evaluation followed, selected by eleven respondents, with theoretical support from authors such as Mathis and Jackson (2008), Murphy (2020), Pontes (2021), Randhawa (2017), and Silva (2014). Adaptive Performance was also selected by eleven respondents, as discussed by Koopmans et al. (2011) and Krijgsheld et al. (2022).

The remaining dimensions were less expressive. None of the dimensions focused exclusively on competencies was selected by more than eight employees, suggesting a stronger preference for result-oriented dimensions. Noteworthy mentions include Organizational Citizenship Behaviors, selected by eight respondents, and Colleague Relationships, chosen by seven, with theoretical backing from Grigoroudis and Zopounidis (2012) and Koopmans et al. (2011).

The dimensions considered least relevant were Competencies for tasks not included in job functions and Counterproductive Behavior, each selected by only four and five employees, accordingly.

Examples of Indicators per Dimension

Based on indicator formulation criteria advocated by various authors (Afandi, 2018; Domínguez et al., 2019; Peng, 2022; Pereira, 2014; Rahmawati & Wahyuningtyas, 2022; Randhawa, 2017), employees suggested specific indicators for the selected dimensions, listed by frequency:

• Goal-Based Evaluation: On-time delivery rate of requests; Percentage of physical and financial project execution; Ratio of implemented projects vs. identified opportunities; Client growth rate; Rate of successful submission of payment requests; Number of actions to attract new projects; Reduction in incidents and costs; Growth in social media reach/engagement.
• Organizational Citizenship Behaviors: Participation in extra-functional tasks (e.g., onboarding, events); Number of internal trainings delivered; Peer feedback; Participation in community/events.
• Colleague Relationships: Survey-based evaluation (cordiality, empathy, mutual help); Assessment by direct supervisors.
• Counterproductive Behavior: Unjustified absenteeism rate; Disciplinary actions for recorded infractions
• Adaptive Performance: Autonomy in new tasks; Adoption of new technologies; Participation in industry events; Maintenance of results despite changes
• Client Evaluation: Client satisfaction (surveys); Penalties due to formal complaints.
• Training: Execution rate of training plan; Weighted evaluations of training; Participation in non-professional development training.
• Job-Related Competencies: Qualifications and training in accordance with the job profile.
• Competencies for Extra-Role Functions: Participation in tasks not formally assigned.
• Creative Problem Solving: Success in alternative solutions leading to resource savings.
• Industry Knowledge: Participation as a subject-matter expert in events (e.g., speaker).

It was evident that respondents found it more difficult to suggest indicators for competency-based dimensions, reinforcing a preference for measurable, objective criteria.

Employees’ Perspective on the PAS

In terms of theoretical perspectives, employees’ alignment with McGregor’s Theory X and Theory Y (1965) was evaluated. Figure 5 shows a clear preference for Theory Y, which has a developmental orientation, by eleven respondents—aligning with authors such as Javad and S.D. (2015), and Palaiologos et al. (2011).

Regarding evaluation periodicity, employees were split between annual and semi-annual evaluations (Figure 6), while feedback frequency preferences were split between quarterly and informal feedback. Notably, no one supported annual feedback only (Figure 7).

Desired Features of the PAS

According to Figure 8, the most valued features were: Transparency of evaluation criteria (n = 9); Objectivity of the system (n = 5); Disclosure of results (n = 4); Transversality (n = 2); Clarity in communication (n = 2).

Other suggestions included: 360° evaluation; Leadership evaluation; Feedback focused on improvement; Anonymity; Openness to suggestions; Use of the SMART methodology; Alignment with organizational strategy.

Expectations for the PAS

In terms of expectations for the PAS (Figure 9), employees hoped the system would promote motivating goals, align with organizational strategy, and recognize individual effort, echoing the suggestions of Pulakos et al. (2015).

These expectations also resonate with Cosa and Torelli (2024), who highlight that modern performance appraisal systems in service organizations benefit from flexible and digitally supported designs, enabling adaptability to evolving organizational needs and enhancing employee engagement.

Participants in the Evaluation Process

In defining PAS participants (Figure 10), all employees agreed on the involvement of direct supervisors.

Client evaluations were also valued, especially for roles involving direct interaction. In managerial roles, the inclusion of subordinates was well accepted, while peer evaluations faced greater resistance. The most consensual model proved to be the 360° evaluation, as supported by authors like Dwiyanti et al. (2020), Mathis and Jackson (2008), Murphy (2020), and Peng (2022). In this sense, we can see the responses are also aligned with Bezerra et al. (2024), who demonstrate that multi-rater approaches enhance objectivity and the developmental impact of appraisal processes. Finally, when asked about the discussion and potential revision of results, all respondents emphasized the importance of discussing outcomes, and the majority were in favor of revisions, provided they are properly justified, reinforcing the need for continuous, transparent, and participatory evaluation practices (Bezerra et al., 2024; Cosa & Torelli, 2024).

Finally, when asked about the discussion and potential revision of results, all respondents emphasized the importance of discussing results, and the majority were also in favor of revisions, provided they are properly justified (Figure 11).

The empirical analysis reveals a clear preference for results-oriented dimensions, especially Goal-Based Evaluation, along with a strong concern for transparency and fairness in the evaluation process. The proposal for a PAS in PCI should, therefore, incorporate these aspects, fostering a participatory approach tailored to the reality of the consulting sector in Portugal. Based on the collected data and existing literature, this study aims to develop a performance appraisal model tailored to the service sector that aligns individual objectives with organizational strategy, ensures valid and feasible indicators, and engages all stakeholders in a fair and effective manner. By combining established dimensions with employee-driven indicators, this study not only adapts traditional PAS frameworks to the consulting sector but also advances them by integrating goal-based evaluation, client feedback, and developmental orientations in a coherent model that addresses limitations of prior approaches. This approach demonstrates how service-sector PASs can be both empirically grounded and theoretically informed, extending traditional models to better capture relational and adaptive dimensions.

5. Design of the Performance Appraisal System

Considering the analysis and the findings of the survey, we are now able to answer the research question—How can performance appraisal frameworks be designed to capture the relational, process-based, and strategic dimensions of performance in service organizations?—with the design of the PAS to be applied to PCI.

The PAS developed is designed to be applied transversally to all employees of PCI, regardless of their hierarchical position or business unit. Given this broad scope, one of the main concerns during its construction was ensuring flexibility without compromising objectivity.

The design of the PAS was based on a review of specialized literature and information collected through surveys conducted with the organization’s employees, considering the impact of digital transformation and flexible work arrangements, as highlighted by Cosa and Torelli (2024), to ensure the system remains adaptable and responsive to evolving organizational contexts.

5.1. Goal-Based Evaluation

Goal-based evaluation emerges as the central dimension of the PAS, reflecting both theoretical consensus (Boswell & Boudreau, 2002; Dusterhoff et al., 2014; Drucker, 2007; Locke & Latham, 2002; Miguel, 2007; Peng, 2022; Pereira, 2014; Pontes, 1999; Ryan, 1970) and the preferences expressed by PCI employees. This dimension accounts for 50% of the final score when client evaluation is applicable and 70% when it is not. Kalogiannidis et al. (2025) highlight that goal-based evaluation is a key element of PASs because it contributes both to organizational effectiveness and to employee satisfaction and engagement.

The definition of objectives must follow clear and measurable criteria (Apte et al., 2024; Drucker, 2007; Locke & Latham, 2002; Russo & Quintas, 2017; Sisinacki et al., 2017). Based on the literature, it is considered appropriate to define between 3 and 7 objectives per employee, with 5 objectives being the ideal number (Doran, 1981; Locke & Latham, 2002, 2019; Murphy, 2020).

Furthermore, Kalogiannidis et al. (2025) indicate that systems incorporating regular feedback, clear objectives, and trained appraisers have a statistically significant positive impact on employee performance. These findings strongly support the relevance of several essential characteristics proposed by Caruth and Humphreys (2008), namely “trained appraisers,” “open communication,” and “standards and measurements,” reinforcing the importance of integrating these elements into the PAS design.

5.2. Client Evaluation

The client evaluation dimension, with a weight of 20%, was identified as highly relevant both in the literature (Mathis & Jackson, 2008; Murphy, 2020; Pontes, 2021; Randhawa, 2017; Silva, 2014) and in the empirical data collected. Client feedback will be gathered through scaled satisfaction surveys, conducted semi-annually. This approach is effective, efficient, and already widely used within the organization.

5.3. Adaptive Performance

Given PCI’s nature—centered on supporting entrepreneurship and innovation—the ability to adapt and continuously update skills is especially important. The adaptive performance dimension (Allworth & Hesketh, 1999; Griffin et al., 2007; Koopmans et al., 2011; Krijgsheld et al., 2022; Pulakos et al., 2000) evaluates this ability through the following indicators, as summarized in

Table 1. Indicators and weights for the Adaptive Performance dimension in PCI’s PAS.

Dimensions	Weighting	Parameters	Indicators	Specific Weighting
Adaptative Performance	20%	Voluntary Participation in Relevant Sector Events	Number of events attended/Number of relevant industry events	30%
		Success Rate in Solving Problems with Innovative Solutions	Number of innovative solutions applied/Number of problems identified	30%
		Training Plan Execution Rate	Number of training sessions carried out/Number of training sessions proposed	40%

:

• Training Plan Execution Rate (40%): Measures commitment to continuous knowledge updating.
• Success Rate in Solving Problems with Innovative Solutions (30%): Encourages creative methodologies and the use of new technologies (Janssen & Xu, 2008; Kharub et al., 2024; Rafique et al., 2022; Yeh & Huan, 2017).
• Voluntary Participation in Relevant Sector Events (30%): Promotes networking and staying informed on sector trends.

5.4. Organizational Citizenship

Although it has a lower weight (10%), the organizational citizenship dimension complements performance evaluation by focusing on employees’ contributions beyond their formal responsibilities (Armstrong & Taylor, 2023; Caruth & Humphreys, 2008; Grigoroudis & Zopounidis, 2012; Pereira, 2014; Pulakos et al., 2015; Randhawa, 2017). This dimension is inspired by Koopmans et al. (2011) but adapted to PCI’s reality by prioritizing behaviors with organizational and community impact.

Suggested indicators for this dimension are presented in

Table 2. Indicators for the Organizational Citizenship dimension in the proposed PAS.

Dimensions	Weighting	Parameters	Indicators	Specific Weighting
Organizational Citizenship	10%	Participation in tasks outside formal job responsibilities, such as onboarding new colleagues or supporting events	Number of extra tasks participated in/Number of extra tasks proposed	40%
		Participation in volunteer activities	0: 0% 1 to 2: 25% 3 to 5: 50% 5+: 100%	20%
		Number of internal training sessions delivered to colleagues	0: 0% 1 to 2: 25% 3 to 5: 50% 5+: 100%	40%

:

• Participation in tasks outside formal job responsibilities, such as onboarding new colleagues or supporting events;
• Participation in volunteer activities;
• Number of internal training sessions delivered to colleagues.

5.5. Exclusion of Competency-Based Evaluation

Competency-based evaluation was considered unsuitable in this context. Although Bezerra et al. (2024) emphasize the assessment of employee competencies as a central aspect of performance appraisal, its practical applicability is limited, as it does not necessarily reflect actual performance but rather potential or generic capabilities.

5.6. Final Framework Structure

The final structure of the PAS is illustrated in Figure 12, with the following weights:

• Goal-Based Evaluation: 50% (or 70% if client evaluation is not applicable)
• Client Evaluation: 20% (when applicable)
• Adaptive Performance: 20%
• Organizational Citizenship: 10%.

This configuration enables a balanced evaluation, integrating measurable objectives, external perception (clients), adaptive capabilities, and organizational involvement.

The definition of performance objectives should preferably be carried out by the direct supervisor, with the participation of the employee, adjusted according to the level of autonomy and the nature of the role. This participatory model aims to enhance commitment to the goals and promote alignment between individual and organizational expectations.

For employees in leadership positions, such as team or department managers, it is recommended to mandatorily include an objective related to leadership and team management skills. This objective should be evaluated based on the average ratings provided by team members, ensuring the application of upward feedback principles (Drucker, 2007; Peng, 2022).

The evaluation system will follow an annual cycle, consisting of two formal meetings held semi-annually:

• Meeting 1 (Start of Cycle): Review of the previous period’s results and joint definition of new objectives (Peng, 2022).
• Meeting 2 (Mid-Cycle): Review of partial results and reassessment of previously defined objectives, allowing adjustments based on organizational changes (Peng, 2022; Pereira, 2014; Pulakos et al., 2015).

This structure fosters regular communication between evaluator and evaluatee, a crucial element for professional development (Ferreira, 2024; Qawasmeh et al., 2024). Bezerra et al. (2024) found that feedback emerged as a significant influencing factor in the individual performance appraisal process, reinforcing the importance of open communication, applicable metrics, and clear evaluation criteria, which align closely with the essential characteristics proposed by Caruth and Humphreys (2008). Incorporating structured and process-oriented evaluation practices, as suggested by Bezerra et al. (2024), can enhance the clarity, fairness, and developmental impact of the PAS, ensuring that feedback is actionable and aligned with organizational objectives.

Although survey data indicated a preference for annual or semi-annual cycles, the literature highlights challenges in defining valid SMART objectives for a 12-month period. In dynamic organizational contexts, goals often become outdated quickly (Pulakos et al., 2015). Therefore, it is suggested that the evaluation cycle be semi-annual, with repetition every six months to ensure the ongoing relevance and adaptability of objectives.

In addition to formal meetings, quarterly feedback moments should occur, in a more informal and continuous manner, whenever necessary. These feedback moments are intended to monitor objective progress, assess their current relevance, and identify any organizational support needed for their achievement (Pulakos et al., 2015).

Finally, the proposed model follows a 360° evaluation approach—Multi-Rater (360°) Model—, incorporating various stakeholders in the appraisal process to provide a broad and diverse perspective on performance and reduce the bias associated with one-directional evaluations.

This framework aligns with the findings of Kalogiannidis et al. (2025), who highlight the importance of integrated and adaptable PASs that consider factors such as feedback, training, and incentives to enhance organizational performance. The design also emphasizes the alignment of PASs with the organization’s strategic objectives and human resource development, ensuring both relevance and effectiveness in practice.

The emphasis on goal-based evaluation reflects established models (Drucker, 2007; Locke & Latham, 2002) and is supported by employee preferences, demonstrating alignment between empirical data and theory. The inclusion of client evaluation, adaptive performance, and organizational citizenship is similarly interpreted in light of literature on multi-dimensional appraisal systems (Pulakos et al., 2000; Caruth & Humphreys, 2008), highlighting how these dimensions contribute to organizational effectiveness and employee engagement. Exclusions, such as competency-based evaluation, are justified through both theoretical reasoning and practical considerations, illustrating analytical depth in design decisions.

Overall, the analysis demonstrates how the PAS integrates empirical findings with conceptual frameworks to produce a robust, theoretically grounded model that addresses both organizational objectives and employee development. While grounded in a single organizational case, this PAS design contributes to the broader performance appraisal literature by adapting established models to the consulting sector and highlighting how goal-based evaluation, client feedback, adaptability, and organizational citizenship can be combined in practice—offering insights that both build on and challenge traditional approaches.

6. Conclusions

This study aimed to answer the central question: How can performance appraisal frameworks be designed to capture the relational, process-based, and strategic dimensions of performance in service organizations? To this end, a case study at PCI—Creative Science Park, S.A., a consulting firm, combined a literature review to identify theoretical dimensions of performance evaluation with an employee questionnaire to capture organizational perceptions and priorities.

The literature review provided an understanding of the current state of research on performance appraisal, highlighting its importance in aligning organizational strategic goals with individual performance. Although some criticisms exist regarding its effectiveness, the literature converges on the idea that the main purpose of PASs is professional development and continuous performance improvement, through rewards, feedback, and training opportunities.

Building a PAS first requires a clear definition of its end goals, which may include assigning employees to the most suitable positions, fostering organizational development, improving internal communication, and reinforcing commitment to organizational objectives. A PAS thus proves to be a tool with the potential to generate mutual benefits for employees and organizations, namely by providing feedback, correcting behaviors, identifying skills, and promoting professional growth.

One of the main challenges in designing a PAS lies in determining what should be evaluated. The literature highlights three particularly relevant dimensions: task performance, organizational citizenship behavior, and adaptive performance. However, it is not possible to establish a universal model, as organizational and sectoral contexts impose specific requirements.

The selection of performance indicators is a critical task and should ensure objectivity and representativeness of the aspects being assessed. Although objective indicators are generally preferred, it is important to acknowledge that in some contexts, subjective indicators may offer a more accurate representation of actual job performance.

Defining the stakeholders involved in the evaluation depends on the system’s goals and the organization’s policies. Evaluation methods can include self-assessment, peer assessment, 90° evaluations (by supervisors), 180° evaluations (including feedback from subordinates), or 360° evaluations (a broader model involving multiple raters). The latter was adopted in the proposed framework.

Goal-based evaluation was identified as the central dimension of the proposed framework, reflecting a future-oriented, results-driven model that fosters employee motivation and engagement. This approach, consolidated since the 1950s, enables the alignment of individual goals with organizational strategy.

The development of a PAS should involve several stages: identification of performance parameters, definition of indicators, continuous data collection, progress monitoring, and both formal and informal feedback. Moreover, it is essential to consider contemporary transformations in the world of work, including the impact of artificial intelligence, remote work, and new models of labor flexibility.

Given the absence of a PAS model tailored to the services sector in Portugal, this study sought to fill that gap by constructing a framework specifically for PCI. Based on data collected from employees, a PAS was proposed with the following characteristics:

• Flexible, allowing its transversal application across different roles;
• Objective and transparent, facilitating understanding and acceptance by employees;
• Based on four main dimensions:

  ➢

  Goal-based evaluation (central and most heavily weighted dimension);

  ➢

  Client feedback, collected semi-annually through surveys;

  ➢

  Adaptive performance, essential in a context of innovation and change;

  ➢

  Organizational citizenship, with lesser weight but still a relevant role.

Competency-based evaluation was excluded from the model, as it does not directly reflect effective task performance. However, competencies such as creativity, continuous learning, and problem-solving are embedded in the adaptive performance dimension.

The framework developed thus constitutes an innovative and tailored proposal for the reality of PCI—a Science and Innovation Park established in 2010, led by the University of Aveiro and various public and private regional entities. This model may serve as a reference for other organizations in the services sector.

One of the main limitations of this study lies in the fact that the proposed framework has not yet been implemented at PCI, preventing the assessment of its practical applicability, effectiveness, and the need for adjustments based on real results. Moreover, consistent with recent studies (Bezerra et al., 2024; Kalogiannidis et al., 2025; Cosa & Torelli, 2024), feedback emerges as a critical element in PASs, playing a central role in employee engagement, professional development, and alignment with organizational goals. Incorporating continuous, structured, and transparent feedback—together with clear objectives, adaptive performance measures, and client input—appears essential for enhancing both individual and organizational performance, particularly in dynamic service-sector contexts characterized by innovation, remote work, and technological transformation.

As this is a single case study, it is not possible to generalize the findings to the entire services sector. It is recommended to replicate the study in other organizations within the business consulting sector, and potentially in other sectors, to test the robustness and applicability of the model. Additionally, the Portuguese organizational culture may have influenced the framework’s construction. To assess its cultural neutrality and international viability, it is recommended to apply the model in organizational contexts in other countries.

Future research could also focus on exploring new dimensions of performance evaluation and developing innovative measurement methodologies, especially considering the ongoing advances in technology and the digitization of processes. Finally, further investigation into the relationship between PASs and reward systems is suggested, as this topic was frequently mentioned by surveyed employees as a relevant motivational factor that should be integrated with performance evaluation.

In sum, the design of the proposed PAS framework captures the relational dimension through client feedback and organizational citizenship, addresses the process-based dimension via structured cycles, continuous monitoring, and 360° evaluations, and ensures alignment with strategic objectives through goal-based evaluation, thus providing a coherent, tailored, and theoretically grounded model for service organizations. Moreover, meeting with Cosa and Torelli (2024), the model anticipates contemporary transformations in work, including digitalization and flexible work arrangements, supporting its applicability in evolving service contexts.