The Effect of Non-financial Performance Measures on Role Clarity and Procedural Fairness

Utami Puji Lestari (), Yusep Friya Purwa Setya and Lanita Winata
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Utami Puji Lestari: Politeknik Negeri Jakarta, Accounting Department
Yusep Friya Purwa Setya: Politeknik Negeri Jakarta, Accounting Department
Lanita Winata: Griffith University, Department of Accounting, Finance and Economics

A chapter in Proceedings of the 3rd Annual Management, Business and Economics Conference (AMBEC 2021), 2023, pp 212-218 from Springer

Abstract: Abstract Due to the lack of efficiencies of traditional performance measures that focus on financial performance, organizations emphasize non-financial performance measures. There is a growing discussion on the advantages and consequences of non-financial performance measures usages, such as employees’ behavior. To be accepted by employees, the performance measurement systems need to be perceived as clear and fair. This study aims to investigate the effect of non-financial performance measures on role clarity and procedural fairness. In addition, this study also examines whether the knowledge of performance appraisal systems mediates the relationships. The data were collected through survey questionnaires from 79 employees at the managerial level of service organizations, specifically public accounting firms and a state-owned administrative service located in Jakarta, Bogor, Depok, Tangerang, and Bekasi. PLS-SEM with SmartPLS Software Version 3.3.3 was used to analyze the data. The results indicate that non-financial performance measures significantly affected role clarity and knowledge of performance appraisal systems. While there are no relationships between (1) non-financial performance measures and procedural fairness and (2) knowledge of performance appraisal system and procedural fairness, there are significant associations between (1) knowledge of performance appraisal systems and role clarity and (2) role clarity and procedural fairness. These results suggest that non-financial performance measures improve employees’ perceptions of role clarity and procedural fairness through a better knowledge of performance appraisal systems.

Keywords: Non-financial performance measures; Knowledge of performance appraisal systems; Role clarity; Procedural fairness (search for similar items in EconPapers)
Date: 2023
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DOI: 10.2991/978-94-6463-026-8_24

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