Performance Measures and Job Satisfaction: The Role of Fairness

Abstract

Employees tend to be more focus on a company's performance evaluation process, including the types of performance measures used by the company to measure its' employees performance. This is because the performance evaluation affects reward and compensation systems. The use of proper performance measures in the performance evaluation process would affect employees' performance, which in turn increasing the company's performance as a whole. It is expected that the use of financial and non-financial performance measures would affect job satisfaction. However, it is not clear whether this relationship is direct or not. The objective of this study is to investigate the mediating role of procedural and distributive fairness in the relationship between financial and non-financial performance measures and job satisfaction in the service industry. The data were collected from employees of accounting firms in Jakarta, Bogor, Depok, Tangerang, Bekasi, and Serang. Partial Least Square Structural Equation Modelling (PLS-SEM) was used to test the hypotheses. The results show that while the relationship between financial performance measures and job satisfaction is direct, the distributive fairness has a role in fully mediating the relationship between non-financial performance measures and job satisfaction in the service industry.