The mediating role of fairness on the effectiveness of strategic performance measurement systems

Purpose: This study examines the mediating role of the fairness of performance appraisal on the association between the extent of use of strategic performance measurement systems (SPMSs) with SPMS effectiveness.

Design/methodology/approach: Data were collected using an online survey distributed to 656 Australian middle and lower level managers.

Findings: The findings reveal that informational fairness mediates the association between SPMSs (link to value drivers and the use of multidimensional performance measures) with performance-related outcomes; procedural fairness mediates the association between SPMSs (link to strategy and the use of multidimensional performance measures) with staff-related outcomes and distributive fairness mediates the association between the use of SPMSs (all three types) with both performance and staff-related outcomes.

Originality/value: The study provides a unique insight into the importance of fairness (the distributive, informational and procedural fairness of the performance appraisal system) in mediating the associations between the extent of use of SPMSs and SPMS effectiveness. The findings contribute to the human resource management (HRM) “black box” literature by providing an insight into the behavioural mechanism through which a specific human resource management practice (i.e. the SPMS) influences organisational performance.