Partial profile · Book Profile — full narrative profile planned
The association between the interactive and diagnostic use of financial and non-financial performance measures with individual creativity: The mediating role of perceived fairness
An empirical study showing how top management's interactive and diagnostic use of financial and non-financial performance measures shapes middle and lower level managers' creativity, largely through their perceived fairness of performance appraisal.
A profile of this book is on the way.
What it’s about
Drawing on Simons' Levers of Control and organizational justice theory, this study surveys 220 Australian manufacturing managers to unpack a persistent puzzle: does performance measurement stifle or spark creativity? The answer, it turns out, depends on both the type of measure (financial vs. non-financial) and the way it is used (interactively vs. diagnostically), and crucially on how fair the resulting performance appraisal feels. Using structural equation modeling, the authors reveal that perceived fairness—distributive, interpersonal, informational, and even (surprisingly) low procedural fairness—operates as the psychological mechanism through which control systems translate into creative behavior. For managers and accountants, the book offers a nuanced, evidence-based map for designing performance measurement systems that unlock rather than suppress employee creativity.
The through-line
- Who it’s for
- A manager, accountant, or researcher who wants to design performance measurement systems that promote rather than suppress the creativity of middle and lower level managers.
- The problem
- Performance measures can either constrain or enable creative behavior, and it is unclear which types and uses of measures achieve which effect. They feel uncertain and conflicted about whether tightening control will kill the creativity their organization needs to compete.
- The plan
- Distinguish between interactive and diagnostic uses of performance measures.
- Distinguish between financial and non-financial performance measures.
- Attend to the four dimensions of perceived fairness (procedural, distributive, interpersonal, informational).
- Deploy the interactive use of financial and non-financial measures and the diagnostic use of non-financial measures to build fairness.
- Retain diagnostic financial measures given their positive net effect on creativity.
- The payoff
- Performance measurement systems that reliably enhance managerial creativity. · Managers who perceive their appraisal as fair and reciprocate with prosocial, creative behavior. · An organization better able to innovate and cope with environmental uncertainty.
See our guide
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