The relationships between performance measures and employee Outcomes: The mediating roles of procedural fairness and trust

Abstract

Purpose

The widespread adoption of the Balanced Scorecard has led to a need to understand how performance measures affect employees’ attitudes and behaviors. Despite the growing trend in the implementation of the Balanced Scorecard, there is little research evidence available on the behavioral outcomes resulting from the use of nonfinancial performance measures. This study seeks to address this gap by examining several behavioral outcomes, including job satisfaction, organizational commitment and managerial performance, resulting from the use of financial and nonfinancial performance measures.

Methodology

Data were collected using a mailed questionnaire survey to manufacturing organizations in Singapore. Path analysis technique was employed in this study to investigate the relationships.

Findings

The results of the study show that behavioral outcomes are indifferent regardless of the nature and type of performance measures used. However, the relationships between performance measures and behavioral outcomes are indirect through procedural fairness and trust in supervisor.

Research limitations

Survey questionnaire method was used in this study and there are limitations associated with survey questionnaire method. As our sample was selected from large organizations, it is unclear if our results are generalizable to small organizations. Also, as our sample was selected from the manufacturing sector, generalizing our results to the nonmanufacturing sectors should be made with caution.

Practical implications

This study highlights the need for organizations to pay attention to issues pertaining to procedural fairness and interpersonal trust in the design and implementation of performance measurement systems.

Citation

Chia, D.P.S., Lau, C.M. and Tan, S.L.C. (2014), "The relationships between performance measures and employee Outcomes: The mediating roles of procedural fairness and trust", Performance Measurement and Management Control: Behavioral Implications and Human Actions (Studies in Managerial and Financial Accounting, Vol. 28), Emerald Group Publishing Limited, Leeds, pp. 203-232. https://doi.org/10.1108/S1479-351220140000028016