TY - GEN
T1 - Nonfinancial performance measures
T2 - How do they affect fairness of performance evaluation procedures?
AU - Lau, Chong M.
AU - Berry, Erin
PY - 2010
Y1 - 2010
N2 - Purpose - The purpose of this study is to investigate the process by which nonfinancial performance measuresaffect employee perceptions of how fair are their organizations'performance evaluation procedures.With increased interest in performance measurement systems that rely heavily on nonfinancial measures (e.g., balanced scorecard), it is important to understand the ramifications of these measures. Methodology - Data are drawn from mail survey questionnaire responses of 121 Australian managers and analyzed by structural equation modeling. Findings - The results provide support for the proposition that employees perceive the use of nonfinancial measures as fair. However, these effects are found to be indirect through (1) the enhancement of employee role clarity, and (2) the enhancement of the trust the employees have in their supervisors. Research limitations and practical implications - This study does not directly address the issue of whether nonfinancial measures will ultimately lead to improved overall organizational performance. However, the results do suggest that the use of nonfinancial measures for employee performance evaluation is beneficial. Hence, there may scope for increasing their role in the workplace. This may ultimately lead to improved organizational performance. Value of paper - The current interest in multidimensional performance systems clearly necessitates systematic empirical investigation to ascertain their effectiveness and benefits. This study contributes in this regard by focusing on nonfinancial measures, a key component of multidimensional performance measurement systems. It also adds to our understanding of the process by such systems influence employee reactions and ultimately overall organizational performance.
AB - Purpose - The purpose of this study is to investigate the process by which nonfinancial performance measuresaffect employee perceptions of how fair are their organizations'performance evaluation procedures.With increased interest in performance measurement systems that rely heavily on nonfinancial measures (e.g., balanced scorecard), it is important to understand the ramifications of these measures. Methodology - Data are drawn from mail survey questionnaire responses of 121 Australian managers and analyzed by structural equation modeling. Findings - The results provide support for the proposition that employees perceive the use of nonfinancial measures as fair. However, these effects are found to be indirect through (1) the enhancement of employee role clarity, and (2) the enhancement of the trust the employees have in their supervisors. Research limitations and practical implications - This study does not directly address the issue of whether nonfinancial measures will ultimately lead to improved overall organizational performance. However, the results do suggest that the use of nonfinancial measures for employee performance evaluation is beneficial. Hence, there may scope for increasing their role in the workplace. This may ultimately lead to improved organizational performance. Value of paper - The current interest in multidimensional performance systems clearly necessitates systematic empirical investigation to ascertain their effectiveness and benefits. This study contributes in this regard by focusing on nonfinancial measures, a key component of multidimensional performance measurement systems. It also adds to our understanding of the process by such systems influence employee reactions and ultimately overall organizational performance.
UR - http://www.scopus.com/inward/record.url?scp=84866869674&partnerID=8YFLogxK
U2 - 10.1108/S1479-3512(2010)0000020013
DO - 10.1108/S1479-3512(2010)0000020013
M3 - Conference proceeding contribution
AN - SCOPUS:84866869674
SN - 9781849507240
VL - 20
T3 - Studies in Managerial and Financial Accounting
SP - 285
EP - 307
BT - Performance Measurement and Management Control: Innovative Concepts and Practices
PB - Emerald Group Publishing
ER -