The Role of Employee Engagement, Empowerment and Culture in Effective Performance Management

Abstract

Performance management systems (PMS) are an essential tool in shaping employee behaviour in organizations. PMSs are also an important part of today's organizations and provide a framework for improving employee performance, productivity and leadership. Previous studies have not examined how PMSs influence employee behaviour, i.e. what are the mediating and moderating roles in this relationship. This article reviews and synthesizes current scientific knowledge on the influence of performance management systems on employee behaviour and examines the role of mediating and moderating mechanisms in this relationship. A systematic review of 83 research articles published in English up to 2022 was conducted. The review investigated various mechanisms through which PMS influences employee behaviour (specifically employee commitment, motivation and satisfaction). Promising trends and research trajectories were identified through content analysis with a mediating and moderating role. The PMS influences employee behaviour primarily through three constructs - clearly set goals, properly set rewards, and effective feedback delivery. A consistent (effective) PMS subsequently contributes to employee engagement and empowerment, which mediate the relationship. Organizational culture is a moderator because it can deepen the relationship between PMS and employee behaviour. The performance-oriented organizational culture in a company helps to create an effective PMS that positively influences employee behaviour. From a theoretical perspective, this paper synthesizes the results of each research, assesses the knowledge base in our selected research area, and clarifies potential avenues for future research and trends. This research contributes valuable insights for organizations seeking to improve their PMS for sustained employee success and satisfaction, as the literature search described the impact of PMS on employee behaviour through the identification and examination of individual mediating and moderating roles. Managers who pay attention to employee engagement and empowerment can then set up activities to have a good and necessary impact on employee commitment, motivation and satisfaction.