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This paper investigates the impact of performance management (PM) practices on firms' financial performance and the mediating role of co-worker and supervisor support.

Data were collected through a two-wave survey. The authors tested the hypotheses using data from 439 employees.

The authors find that PM practices positively influence a firm financial performance. The results also show a positive indirect relationship between PM practices and firm financial performance through co-worker support. The mediated effect is about 0.2 times as large as the direct effect of PM practices on firm financial performance. The results also show that supervisor support partially mediates the relationship between PM practices and firm financial performance.

The authors extend our knowledge of PM practices–firm financial performance relationships. The study advances the existing knowledge on this relationship beyond the traditional input-output models by exploring the mediating role of employee involvement in the relationship between PM practices and firm financial performance. Specifically, the authors' findings reveal that co-worker and supervisory support can act as a mediator in this relationship, shedding new light on the importance of employee/supervisor involvement in PM practices.

The findings highlight the need for managers to take a crucial look at the importance of co-worker and supervisor support. This suggests that organisations can focus on providing adequate training to managers and supervisors to enhance their ability to provide social support to their employees. Organisations can also encourage a positive and supportive workplace culture to foster an environment that promotes employee engagement, motivation and performance.

The results of this study enrich the literature on PM practices–firm financial performance by conceptualising supervisor and co-worker support as mechanisms through which this relationship occurs. By so doing, the authors clarify how PM practices affect firm financial performance.