PurposeThe purpose of this paper is to examine how ethical assessments of employees are influenced by job performance outcomes, that is, by an employee's success or failure as measured by a successful or unsuccessful job appraisal.Design/methodology/approachA sample of 180 employees rated the performance of a fictitious salesperson described in one of four written vignettes as successful/ethical, successful/unethical, unsuccessful/ethical or unsuccessful/unethical.FindingsJob performance outcomes bias the ethical assessments of raters, even raters with stronger ethical beliefs. Successful employees were judged to have exhibited more ethical behaviors than unsuccessful employees.Research limitations/implicationsJob performance outcomes are a systematic source of bias that should be examined to determine the locus of effect as either rater perception and/or recall of ethical behavior that is biased by the job outcomes achieved by ratees. Studies should also examine other rater characteristics such as cognitive moral development; whether ethical intensity of the incidents in the vignettes influences assessments; whether training or other sources of appraisal (e.g. customers or peers) moderates bias; and field settings.Practical implicationsManagers who reward unethical performance with positive job appraisals will influence other employees to be more accepting of unethical behavior and may undermine organizational processes such as background checks. Organizations may try to counter these effects by other sources of appraisal (e.g. customers or peers), training, or supplementary methods.Originality/valueThe research provides important new empirical evidence regarding incorporating ethical behavior into performance appraisals, and has implications for managers seeking to improve employees' ethical behaviors, and for researchers examining performance appraisals, cognition, ethics, and organizational processes.