Employee significance within stakeholder‐accountable performance management systems

Research has not fully recognised the significance of employee stakeholders to the design and effective operation of performance management systems. The purpose of the paper is to demonstrate the centrality of employees within the stakeholder systems model of performance management it proposes.

Stakeholder theory is utilised to critique current scorecard‐type performance management frameworks with a particular focus on the balanced scorecard as the most popular of these. Conceptual analysis is supported by case study evidence relating to the effectiveness of performance management systems in knowledge‐intensive organisations.

The paper identifies the concept of the responsible organisation as a means of assessing organisational maturity in performance management, and links it to dimensions of organisational justice. Linkage enables stakeholder perceptions of equitable treatment to be combined with effectiveness measures in the more holistic performance management framework proposed.

The paper demonstrates the significance and application potential of the stakeholder systems development of scorecard‐type performance management frameworks. Conclusions confirm the “why” and the “how” of a more participatory role for organisation stakeholders, and why employee stakeholders merit a “first among equals” status within these.

The paper shows that the stakeholder systems approach represents a holistic approach to performance management through its incorporation of stakeholder perspectives at system design, operation and evaluation stages. The paper responds to the need for a new philosophy of performance management in an era of stakeholder accountable organisations.