Behavioral effects of nonfinancial performance measures : the role of procedural fairness

Recent suggestions that nonfinancial measures are essential to overcome the inadequacies of traditional financial measures have led to the widespread adoption of such measures. It is, however, unclear how employees react to these new measures. This study hypothesizes that favorable employee behaviors will only occur if employees perceive performance evaluation criteria as fair. It is therefore important to ascertain if the use of non financial measures as performance criteria is procedurally fair. Based on a sample of 149 managers from the United Kingdom, the results indicate that the use of nonfinancial performance measures was perceived as procedurally fair. We also find that such perceptions are associated with higher organizational commitment which, in turn, enhances employee job performance.17 page(s