Performance management systems, innovative work behavior and the role of transformational leadership: an experimental approach

Abstract

Purpose: Despite increasing attention to employee development, past research has mostly studied performance management systems (PMSs) in relation to task-related behaviors compared to proactive behaviors. Accordingly, this study addresses the relation between PMSs and innovative work behavior (IWB). Design/methodology/approach: Building on signaling theory and human resource management (HRM) system strength research, the authors designed a factorial survey experiment (n = 444) to examine whether PMSs stimulate IWB under different configurations of distinctiveness, consistency and consensus, as well as in the presence of transformational leadership. Findings: Results show that only strong PMSs foster IWB (high distinctiveness, high consistency and high consensus [HHH]). Additional analyses reveal that the individual meta-features of PMS consistency and consensus can also stimulate innovation. Transformational leadership reinforced the relationship between PMS consensus and IWB relationship, but not the relationships of the other meta-features. Practical implications: The study’s findings suggest that organizations wishing to unlock employees' innovative potential should design PMSs that are visible, comprehensible and relevant. To further reap the innovative gains of employees, organizations could also invest in the coherent and fair application of planning, feedback and evaluation throughout the organization and ensure organizational stakeholders agree on the approach to PMSs. Originality/value: The study’s findings show that PMS can also inspire proactivity in employees, in the form of IWB and suggest that particular leadership behaviors can complement certain PMS meta-features, and simultaneously also compete with PMS strength, suggesting the whole (i.e. PMS strength) is more than the sum of the parts (i.e. PMS meta-features).