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

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.