Accurate performance appraisals are essential for effective human resource management, driving employee development, fair reward distribution, and overall organizational success. However, the inflation of performance ratings, particularly for low performers, remains a persistent challenge that undermines these goals. This study investigates the role of managers’ structured management approaches and their perceptions of organization’s cooperative norms in shaping the accuracy of performance appraisals. Using data from a multinational pharmaceutical company, we employ a mixed-methods approach—combining an anchored vignette case study with survey and administrative data, along with supplementary qualitative analysis—to examine how these factors influence managers’ appraisal decisions. Our findings reveal that managers’ use of structured management practices—such as clear guidelines, monitoring, and data-driven decision-making—significantly reduces the likelihood of performance rating inflation. However, we also find that managers’ perceptions of their organization’s cooperative norms can lead to inflated ratings if managers prioritize maintaining relational harmony over objective assessments. This research highlights the need for organizations to carefully balance structured management practices with the social dynamics within teams to ensure appraisal accuracy, providing valuable insights for enhancing the effectiveness of performance management systems.
