Impact of Performance Management Systems on Employee Performance

Eli Suherli, Hanggoro, Nur Wening, Tutut Herawan

Abstract: Performance management systems are designed to improve employee performance. However, the introduction of the Balance Scorecard redesigned the objectives of the performance management system. This study examines the moderating effect of using Balance Scorecard on the impact of performance management systems on employee performance. This research was conducted at manufacturing companies listed on the stock exchange in Indonesia. The research tool is a survey that includes 192 top managers from 63 registered manufacturing companies. The findings show that the use of Balance Scorecard moderates the impact of performance management systems on employee performance. This implies that the use of Balance Scorecard strategically complements and enhances the relationship between employee performance and performance management systems. This study shows that the Balance Scorecard must be used as a multi-dimensional method for measuring performance and as a strategic management system to improve employee performance.

Keywords: Performance Management System, Balance Scorecard, Employee Performance