Employee participation, performance metrics, and job performance: A survey study based on self-determination theory

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.