Exploring the Relationship Between System-Based Performance Management Systems and Employees’ Motivation: the Case of Mid-Size Enterprises

Aim: This research attempts to understand the interrelation between strategy, performance measurement and management systems (PMMS) and human behaviour. Literature and the researcher’s experience suggest that PMMS most of the time do not deliver the expected results. In the specific case the focus is on a medium-sized company in Sweden which has experienced operational troubles with respect to delivery, which in turn has impacted financial performance. The research proposes a toolbox approach to introduce and align strategy, performance management and behavioural aspects. Methodology: The research enquires about how existing performance measurement and management is influencing the behaviour of employees and managers of this organization. The actions taken during the management of the crisis and the results which were achieved are described. The method and methodology are based on constructivism in order to obtain information about the impact of the strategy, performance measurement and management systems and behaviour. Literature research provided significant conceptual frameworks for both the implementation of strategy and consequent measurement and management systems as well as human behaviour in an organizational environment, summarized in a revised conceptual framework deduced from previous research. This research brings these two fields together to examine the interrelation of both within the researched organization. The researcher is part of the system and also influences the participants and this cannot be separated from each other. The research is less concerned with a wider validity due to the uniqueness of the case. The work might be used as reference for researchers and practitioners to compare their specific situation and derive ideas how to approach them. Based on the findings, previous research is validated, and a process introduced which enables the organization to align strategy, performance measurement and management systems and behaviour. To obtain the primary data the research uses a semi structured interviewing method of both individual and focus groups interviews. The primary data is the thematically coded with NVIVO. Results: Literature suggests that the introduction of PMMS and addressing behavioural aspects are widely separate issues. In introducing new PMMS, literature often refers to “creating buy-in” or “engaging” employees but does not advise on how to address behavioural aspects. Behavioural research deals with the motivation of employees but mostly cannot establish a link between performance management and measurement systems and behaviour. In this specific research, it was found that there is validity of motivational theory with regard to human behaviour, which strongly influences the performance measurement and management of the company. The impact of motivators may have opposite effects than expected because in this specific case the PMMS of the corporate office for the local unit did not change but nevertheless financial performance improved significantly. Contribution to knowledge: A conception framework was derived from literature attempting to interrelate Strategy, PMMS and behaviour. The primary research confirmed this framework and partially validated previous research and theories. Based on the findings from literature a revised conceptual framework is proposed to link behaviour to PMMS