Individual Performance Measurement Systems - The Effects on Creativity and Coordination

Abstract: The aim of this study is to examine how a performance measurement system designed and used on an individual level (i.e. designed by the employees themselves) can affect creativity and coordination. For this purpose, a qualitative case study was conducted, using a world leading IT-company, Digital Inc, as object of study. We show that individual performance measurement systems can both promote creativity and coordination, when used interactively (face-to-face communication, intensive use by superiors, intensive use by subordinates). We combine Moulang's (2015) theory on the relationship between interactively used PMS and psychological empowerment, with Adler & Borys' (1996) theory on enabling formalization. By doing this, we show how the enabling design features (global transparency, internal transparency, flexibility and repair) of a performance measurement system (PMS) are affected when the PMS is used in an interactive way, and how this impacts individual motivation. In contrast to previous research advocating user involvement when designing and implementing an enabling control tool, we conclude that for an individually designed PMS, managerial involvement is more important for the enhancement of individual motivation. Finally, we conclude that an individual PMS, despite a non-frequent and non-intensive use, can affect intrinsic motivation, and thereby creativity. The autonomy and responsibility characterizing an individual PMS, signals organizational support and thereby affects intrinsic motivation positively (Amabile, 1998).