Key factors influencing employee perceptions of performance management system effectiveness: Evidence from the Dubai Government Sector

Performance management system (PMS) plays a crucial role in directing employees’ and organizations’ performance and growth. In addition, PMS ensures the stability of organizations by maintaining high levels of human capital productivity by managing, inspiring, and measuring employees’ performance. Hence, perceived performance management system effectiveness (PMSE) plays a vital role in raising employees’ level of engagement with PMS. Generally, employees base their judgment on their feelings and views, which determines their behavior of accepting or rejecting PMS. Therefore, this paper aims to examine key factors impacting perceived performance management system effectiveness by investigating the influence of contextually relevant factors (manager-employee relationship quality and trust in managers), as well as process-related variables (feedback environment and PMS practices) on perceived performance management system effectiveness.

Considering gaps in PMS research, which dominantly focused on PMS design, fairness of performance appraisal, and poor implementation, the present study explores PMSE in a contextually relevant manner where most influencing factors are closely scrutinized in Dubai’s government sector, specifically through focusing on the impact of trust in managers and manager-employee relationship quality (MERQ) which are essential elements in a high-context workplace setting. In addition, the factors related to the process of performance management were selected, which are the implementation of PMS practices and feedback environment. The interactions between these factors and how they influence the PMSE Dubai government sector have been rarely examined in previous studies.

The research follows quantitative methods, where an online survey was used to gather data from 304 employees in Dubai government organizations. Subsequently, the data were analyzed using structural equation modeling (SEM). The research findings suggest that manager-employee relationship quality, mediates the relationship between source and feedback credibility, source and feedback availability, favorable feedback, and perceived performance management system effectiveness. In addition, factors related to trust in managers negatively moderate the relationship between source and feedback credibility and manager-employee relationship quality and positively moderate the relationship between source and feedback availability and manager-employee relationship quality. Moreover, trust in managers moderates the relationship between PMS practices and perceived performance management system effectiveness.

The findings indicate that in a high-context culture, mainly in the Arab Middle Eastern region, such as the Dubai government sector, manager-employee relationship quality plays a significant role in positively influencing employee perceptions of performance management system effectiveness. In addition, the results of the present study show that trust in managers affects the way PMS practices impact perceived performance management system effectiveness. Specifically, the findings show that trust in managers positively moderates the relationship between source and feedback availability and manager-employee relationship quality. Nevertheless, trust in managers negatively moderates the relationship between source and feedback credibility and manager-employee relationship quality, even when levels of trust in managers are low (in the case of new employees).

Examining MERQ and trust in managers unique to high-context settings such as the public sector in Dubai setting, wherein relationship building is a crucial factor in conducting business, makes this study contextually relevant. A holistic analysis of MERQ, trust, PMS implementation processes, and a constructive feedback environment leads to unique findings contributing to both scholarly literature and practical implications.

Future research may examine the applicability of the proposed framework in new settings, such as private sector contexts, which have distinct cultures through its predominant focus on increasing shareholder value. Moreover, the present research is a cross-sectional study where data was gathered at a certain point in time, and therefore, a longitudinal study carried over time may reveal different results.