Motivational effect of performance management: Does leadership matter?

Abstract

Many have expected that performance management will enhance the motivation of public employees. However, studies have reported that the motivational effect was minimal. This study examines whether the motivational impact can be enhanced by exerting transformational and transactional leadership. The analysis of the 2013 Federal Employee Viewpoint Survey reveals that while transformational leadership has a positive main effect on motivation, transactional leadership did not do so. As for moderator analysis, it indicates that transactional leadership has a positive moderating effect on the relationship between performance management on motivation, while transformational leadership does not. These results indicate that leadership makes significant differences in the motivational effect of performance management and that transactional leadership and transformational leadership influence worker motivation in distinctive ways. Hence, managers need to strike a balance between exerting transformational and transactional leadership to motivate people effectively in the era of performance management.