The Effect of Performance Measurement Systems on Individual Behavior: An Empirical Study at the Operational Employee Level
DOI:
https://doi.org/10.64229/dxpawh72Keywords:
Performance measurement system, Trust in managers, Trust in peers, Employee performance, Banking industry, Social exchange theory, Job demands-resources theoryAbstract
This paper investigates whether trust acts as a behavioural channel through which a Performance Measurement System (PMS) shapes the work output of front-line banking staff. We collected 105 valid responses from operational employees of Indonesian commercial banks via an online Google Forms questionnaire and ran the analysis in SmartPLS using a Partial Least Squares Structural Equation Modelling (PLS-SEM)l. To justify the sample size, an a priori power analysis (G*Power 3.1) confirmed that n = 105 exceeds the minimum required (n = 92) for detecting medium effect sizes at 80% power. The results indicate that PMS has a meaningful direct effect on individual performance, and that an indirect path also operates through peer (horizontal) trust (β_indirect = 0.261, 95% CI [0.130, 0.405]; Variance Accounted For (VAF) = 44.8%, indicating partial mediation). The parallel pathway running through trust in managers (vertical trust) is not statistically supported. We interpret this pattern as evidence that, at the operating tier of a bank, lateral trust among co-workers is the relational asset that converts measurement signals into discretionary effort, while vertical trust does not show the same conversion role, a finding consistent with the high-power-distance cultural context of Indonesia and the intensive monitoring regimes of post-crisis Indonesian banking. The study contributes to the management accounting literature by refining social exchange theory, showing that the reciprocation of PMS fairness signals is referent-specific and by separating two trust referents within a single model, with Job Demands-Resources (JD-R) theory and psychological safety invoked as complementary explanatory lenses in a developing-country banking context. Common Method Bias (CMB) was assessed via Harman's single-factor test (32.7% variance explained; below the 50% threshold) and full collinearity Variance Inflation Factors (VIFs) (all < 3.3), providing initial evidence that CMB is unlikely to be a major confound. Generalisability is limited by the single-industry sample, and replication in other sectors and longitudinal data is suggested for future work.
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Copyright (c) 2026 Maryani Maryani, Rindu Rika Gamayuni, Fajar Gustiawaty Dewi (Author)
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