۱- Introduction

۲- Theory and hypotheses

۳- Method

۴- Results

۵- Discussion Funding

References

Abstract

Suitable and valid operational performance metrics are important means to translate an organization’s strategy into action. However, developing high-quality operational metrics is challenging because such metrics need the right degree of context specificity to be meaningful to the managers and employees who will use them. We investigated whether managers consider metrics that have been co-developed with operational employees to be of higher quality and, in turn, whether they use these metrics more—and whether this use is linked to greater employee job performance. On the basis of self-determination theory, we investigated if different uses of performance metrics have different effects. We surveyed 86 pairs of operational employees and their immediate managers in various jobs and industries and tested our hypotheses with structural equation modeling. Results showed that when employees were involved in the development of performance metrics, managers perceived the metrics to be of better quality and employed those metrics more for evaluating and rewarding employees. Moreover, we found employees’ performance was only higher when the metrics were used for evaluation purposes. We found no effect for using the metrics for monetary compensation or nonmonetary rewards. In sum, this study demonstrates that employee participation in the development of performance metrics has beneficial effects on the metrics’ quality, and shows that the subsequent effect on job performance depends on how these metrics are used. We discuss implications for managers who want to ensure that the effect on employee job performance is positive when they involve employees in the development of operational performance metrics.

Introduction

A critical function of contemporary performance measurement systems is the translation of strategies into operational terms (Evans, 2004; Franco-Santos et al., 2007, 2012; Ho et al., 2014; Melnyk et al., 2004). Here, “operational” refers to activities performed by work-floor employees inline positions, suchas operators and professionals. These individuals are directly involved in creating the actual products and/or services ofthe organization, whether they are operators in a factory, on-site construction workers, doctors working with patients, or university professors teaching classes. Our focus on operational employees and their first-line supervising managers is a distinguishing feature of this study. The work of operational employees is often context-specific (McKinnon and Bruns, 1992), and the peculiarities ofthe work present challenges to designing performance metrics that are valid, suitable, and meaningful quantified indicators of strategically relevant work activities (Hopp et al., 2009; Jordan and Messner, 2012; Lillis, 2002). Highquality operational performance metrics need to consider key details of the idiosyncratic aspects of how work is carried out, such as links between activities, reasonable standards in a particular context, resources used for the activities, and ways particular events are recorded and generate data (Wouters and Roijmans, 2011).