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Abstract
This study reviews the literature on performance management systems, and notes the negative consequences of the prevalence of measurement as a component within the performance management process. This study then describes how insufficient knowledge of performance management systems can encourage inappropriate behaviour among employees. These
inappropriate behaviours may contribute to the underutilisation of performance measurement and control systems with consequences for organisational outcomes. The focus is specifically aimed at perceptions of performance management systems within the finance industry, as
observed in a sample of industry participants from Australia, Indonesia, Malaysia, China and Singapore.
In spite of the importance of performance management systems to overall organisational performance in knowledge-intensive industries, this study found that only around half of the sample of finance employees have a very good understanding of their key performance indicators (KPIs), while a very small proportion of employees indicated that they “just know what
they need to know”. In addition, the majority of finance employees in this sample acknowledged that they apply the knowledge learned and used in their previous jobs in their current jobs.
With respect to research implications, a framework is proposed, expanded from Holton's (1996) factors affecting the transfer of knowledge (incorporating motivation, climate, and design). Based on the findings in this study, Holton's model is extended to include the component of individual
evaluation. This component, if used appropriately, may assist in the process of aligning employees’ perceptions with the requirements of performance management systems. This study concludes with a discussion of the broad implications of a lack of employee understanding of performance management systems for knowledge management, employee training and overall organisational performance.