Abstract
This study aims to investigate the effect of strategic performance measurement system on managerial performance that is directly tested through two variables: job relevant information and role conflict.
Research model was developed in the perspective of goal setting theory and Role Theory.
Data was collected from a survey of 480 functional managers of state-owned transportation companies under the auspices of Ministry of State Owned Enterprise. Data analysis was conducted using structural equation models and supported by LISREL 8,5.
The result of statistictical test indicated that strategic performance measurement system positively and significantly assosiated with managerial performance. Further findings indicated that strategic performance measurement system positively and significantly associated with job relevant information, but negatively but not significantly assosiated with role conflict. However, job relevant information postively and significantly assosiated with managerial performance, but negatively and significantly associated with role conflict.
Furthermore, the result of research test indicated that role conflict negatively and not significantly assosiated with managerial performance.The result of the role test of mediating variables showed that job relevant information and role conflict significantly mediated the effect of strategic performance measurement system toward managerial performance. However job relevant information has a positive and significant effect to mediate strategic performance measurement system to managerial performance and role conflict negatively and significantly mediated the effect of strategic performance measurement system toward managerial performance
Keyword: strategic performance measurement system, job relevant information, role conflict, and managerial performance.
BACKGROUND
Performance measurement system has an important role in translating organisational strategy into desired behaviour and outcome (Campbell et al., 2004; Chenhall dan Langfield-Smith 1998; Kaplan dan Norton, 2001; Lilis, 2002). Managerial success in carrying out its responsibilities can not be separated from the various influencing factors. Hence if managers are able to do their job properly, the organization will be able to reach the desired goal. A manager is expected to produce a high managerial performance in order to realize the organizational goals.
Managerial performance demonstrates the ability of management to execute its function of management in running the business activities related to decision-making process. In the other hand Mahoney argues that managerial performance is the perception of managers about the skills of managers in carrying out managerial activities such as planning, investigation, coordination, evaluation, supervision, staffing, negotiation and representation and overall performance (Mahoney et al, 1963 dalam Hall,2004).
Prior research showed that the strategic performance measurement system does not directly affect performance, but through a series of complex causal relationships, whereas the performance of the obtained results are different (Bryant, Jones, Widener, 2004).
Investigate The Effect of Strategic Performance Measurement System on Managerial Performance
(Empirical Study on Transportation Companies under the Auspices of Ministry of State Owned Enterprise)
Winarsih
Dept. of Accounting, Faculty of Economics, UNISSULA, Semarang, Indonesia Email: [email protected]
Subsequently, the results showed that the strategic performance measurement system has significant effect to the performance (Bento Al and White Laurdes F 2004). Similarly, study from Burney and Widener (2007) showed that the strategic performance measurement system has positive influence on performance through its relationship with job relevant information, role ambiguity (role ambiguity) and role conflict (role conflict).
This research was based on the research framework used by Burney and Widener (2007), which tested the whole model in order to identify the implementation of strategic performance measurement system to the following job relevant information as well as manager behavioral responses in the form of role stressors that consist of role ambiguity and role conflict and role overload toward managerial performance, either directly or through a mediating variable. Research model testing as has been stated above, that the purpose of the development of strategic performance measurement system is to achieve managerial performance. The effectiveness of the implementation of strategic performance measurement system is influenced by a variety of organizational and individual factors and is part of the process of cognition and motivation in relation to strategic performance measurement systems and managerial performance. The presence of strategic performance measurement system is expected to improve the ability of managers in decision-making and is motivated to use their potential to achieve their goals.
LITERAURE REVIEW AND HYPOTHESIS DEVELOPMENT
1. Grand Theory 1.1.Goal Setting Theory
This theory emphasize that individuals with more specific and challenging goals, in terms of performance, will be better than unspecific goals. Goal setting theory assumes that there is a direct relationship between the definition of specific and measurable objectives with performance. If managers know what their goals to be achieved, they will be more motivated to improve their performance (Locke and Latham, 2002, 1990). On the goal setting theory there are two main issues, first is cognition factors mainly related to the feedback and hope (expectacy / self-efficacy) and second is motivational factors (Lock and Latham, 1990).
Given that the goal was a thing to be achieved and based on several factors, such as past performance, the belief of the consequences of the work done and so on, therefore cognitive factors play a role in explaining the goal setting theory. This is because a person's belief will motivate his actions; on the other hand, the motivation for someone to do something is based on the input of cognition (Locke and Lathman, 1990).
1.2. Role Theory
The underlying theory that underlies research in the field of management accounting is role theory (Kahn et al, In Michaels et al 1987). Role theory states that when the expected behaviors of a person is inconsistent, a form of role conflict, it will experience stress, dissatisfaction, and perform less effective (Rizzo, House & Lirtzman, 1970). Thus, the role can be a cause of stressors, and a role in this case is defined as the specific position within an organization. Role stressors are defined as sources of stress associated with the expectation of behavior of someone who occupy certain positions
Characteristic of role stress has three different forms; they are role ambiguity, role conflict, and role overload. If individuals who are dealing with them are high then they will experience anxiety, dissatisfaction, and ineffectiveness of doing the job than any other individual. However the impact of stress does not always lead to a negative thing, but it can motivate an individual to act positively. Someone who experience stress and react positively,
it can generate productive stress called eustress. On the other hand if they react negatively, it can cause role dysfunction, which is called distress.
2. Strategic Performance Measurement System
Performance measurement system is a major mechanism that can be used to achieve the purpose of organizational strategy. This can be achieved through the influence of managerial behavior, where the manager deals with how to implement the strategy of the organization.
According to Kaplan and Norton (1995), a presence of performance measurement system can help towards improving managerial performance better.
Strategic performance measurement system is a system that measures performance of formal procedures and routines based on information used by managers to maintain or change the pattern of the organization's activities (Simons, 2004). Furthermore, Simon added that the purpose of the strategic performance measurement system is to collect information by using financial and non-financial measures. Based on the arguments above, it shows that the strategies can be considered as a tool that can be used by organizations to decide whether the goal can be achieved.
3. Job Relevant Information
Job relevant information is information that can assist managers in choosing the best course of action through a well informed effort. The availability of job relevant information will assist managers in making important decisions and can help managers to complete the task, which is expected to increase the performance of managers. Information relevant to the work will improve performance, because such information facilitates a more accurate prediction of environmental decisions, a more effective selection toward an appropriate course of action, and clarification of the purpose and the tools to reach the intended goals (Kren, 1992).
4. Role Conflict
Role conflict is defined as the degree to which the performance of the role thought to be influenced by the pressures that can lead to conflict or conflicting behavior (Seniati, 2002).
This is in accordance with the opinion of Kahn, Wolfe, Quinn and Snoek (1964), that the role conflict means a presence of incorrect demand on someone. This suggests that there is a conflict between the demands of the organization with the values of a person, or in other words a person receives a series of assignments that are difficult to work with.
5. Managerial Performance
The success of a company can be measured through its managerial performance. In general managerial performance is defined as one of the important factors in the company, because with increasing managerial performance, it is expected to improve the performance of the company. According to Hartmann and Slapnicar (2009), to increase the effectiveness of the company it is necessary to evaluate managerial performance, especially in terms of the implementation of managerial functions. Manager's performance evaluation is expected to rise, and with the increased performance of managers, the company's performance will be better.
Hypothesis Development
The effect of Strategic Performance Measurement System to Job Relevant Information Strategic performance measurement system is useful to clarify and communicate the strategic objectives of a company to the manager. Banker et al (2004) concluded that if the manager cares / sensitive to the company's strategy, the size of which is contained in the strategic performance measurement system will have a job relevant information that is useful for managers. Furthermore, strategic performance measurement system provides feedback information to managers on progress related to organizational goals (Kaplan and Norton, 1996; Simons 2000). In the literature of management control, job relevant. information is defined as information that facilitate decision (Kren 1992), or that reduce the uncertainty of pre-decision (Sprinkle, 2003, 302). Based on a study conducted by McWhorter (2003), there is a positive relationship between the use of strategic performance measurement systems and perceptions of managers about the availability of job relevant information. The more information available about a job, it will increasingly encourage people to use their potential to reach work (Ilgen, et al, 1979). This is consistent with the argument of goal setting theory on cognition factor, especially on the feedback and hope (Locke and Latham, 1990), and effectiveness will increase when a person is psychologically feel empowered. Based on the arguments above, the proposed hypothesis is as follows
H1 : Strategic performance measurement system positively affect job relevant information.
The effect of Strategic Performance Measurement System to Role Conflict
Strategic performance measurement system can be used to enrich the information about specific actions to achieve organizational objectives, and will encourage managers to behave in accordance with the goals and provide feedback on the achievement of objectives (Ittner et al. 2003). Hence it results in using trial and error approach during decision making process to meet the expectations of his boss (Rizzo et al, 1970).
Role theory stated that when the expected behaviors inconsistent person is a form of role conflict, then he will experience stress, dissatisfaction, and perform less effective than if desired expectations of the behavior in conflict (Rizzo, House & Lirtzman, 1970).
Role conflict emerges if the manager is not able to meet the expectations of the job because of inappropiate demands (Rizzo et al. 1970; Van Sell et al. 1981; Kren 1992; Fogarty 1996).
Thus, the aforementioned arguments can be used as a foundation for building the following hypothesis:
H2 : strategic performance measurement system negatively affect the role conflict
The effect of Job Relevant Information to Role Conflict
Job relevant information is any information related to the task which can help managers in choosing the best course of action through well informed efforts. Kren (1992) argues that job relevant information explains the scope of information available to the manager. Role conflict is a mismatch in expectations which affects the work performance. Availability of job relevant information will assist managers in making important decisions and help to predict accurately the state of the organization's environment hence will reduce role conflict.
Thus, the proposed hypothesises are:
H3: Job relevant information negatively affects role conflict
The effect of Strategic Performance Measurement System to Managerial Performance Implementation of strategic performance measurement system is expected to affect the performance of managers to better direction. This is because strategic performance measurement system can provide comprehensive information, including financial and non- financial aspects. Moreover based on the results of research conducted by Ulrich and Tuttle (2004) it provide evidence that the reporting of performance in various areas will affect the manager in terms of allocation of time to area of responsibility in the financial and non- financial aspects
Some researchers argue that the presence of strategic performance measurement systems can assist in improving managerial performance (Bento Al and Lourdes F, White (2006). In accordance with the basic premise of goal setting theory, that person will be motivated to do business when there are goals to be achieved (Locke, et al, 1981; Locke and Latham, 2002).
Based on the above arguments, we can build following hypothesis:
H4 : Strategic performance measurement system positively affect managerial performance.
The effect of job relevant information on managerial performance
Job relevant information can help managers to gain better information, so that the manager will be able to take action to support the work performance. Romney and Steinbart (2003) stated that an information considered relevant if such information can reduce uncertainty, improve the ability of decision makers in making predictions, or to confirm or correct prior expectations. The more information available will encourage people to maximise their potential to achieve the goal (Ilgen, et al, 1979). This is in line with the arguments goal setting theory that cognition factor, especially on the feedback and expectations (Locke and Latham, 1990). Based on the description above, the proposed hypothesis is as follows:
H5 : Job relevant information positively affects managerial performance
The effect of role conflict on managerial performance
Role theory states that if the expected behaviors is inconsistent then someone will experience stress, dissatisfaction, and hperform less effectively than desired (Rizzo, House & Lirtzman, 1970) , The arguments mentioned above is in line with goal setting theory, that in the perspective of the mechanism of cognition and motivation, role clarity will improve managerial performance, while role conflict will impair managerial performance. Thus, the hypothesises are:
H6 : Role conflict negatively affects managerial performance
Based on the hypothetis development above, we can infer the research model as shown in Figure 1.
Figure 1. Research Model
RESEARCHMETHODE
The data used in this study are primary data obtained directly from the functional managers of transportation company under the auspices of the Ministry of State Owned Enterprises (SOEs), which consists of PT. Garuda Indonesia (Persero) Tbk, PT. Kereta Api Indonesia (Persero), Perum Damri dan PT. Pelabuhan Indonesia (Persero) I,II dan III.
The data collected is screened and sorted. To process research data, we use Structural Equation Modelling (SEM). Data processing is performed by using the program Lisrel 8.5 covariance - based structural equation modeling (CB - SEM).
RESULTANDANALYSIS
Structural model compability test results are shown in Table 1. The result gives the value of Chi-Square of 9455.360 with P- Value = 0.000, which shows data not spread normal multivariate. The alternative solutions is data transformation with score normal, Robust Maximum Likehood and Bootstrap.
Testing Measurement Model
Table 1 shows that the Testing Measurement Model in the category is match beetwen model with the data.
Table 1. Results for Measurement Model
Strategic Performance Measuremen
t System
Job Relevant Information
Role Conflict
Managerial Performance H1
H2
H3
H4
H5
H6
Testing The Structural Model
The assessment of the overall fit of the proposed model is presented in Table 2.
Table 2: Model Goodness- of- Fit
Measures Acceptable Estimated Model
Absolute Fit Measures
Chi-Square 658.57
df 344
RMR Close to zero 0.08
GFI Close to 1 0.88
AGFI 0.90 0.85
Incremental Fit Measure
NFI 0.90 0.88
IFI 0.90 0.91
CFI 0.90 0.92
Prasimonious Measure
Chi-Square/df 1-5 1.914
RMSEA < 0.08 0.044
Regression test results structural model equation is as follow : Tabel 3: Regression test results
JRI = 0.74*SPKS, Errorvar.= 0.24 , R² = 0.54
RC = - 0.39*JRI - 0.030*SPKS, Errorvar.= 0.95 , R² = 0.17
MP = 0.55*JRI - 0.030*RC + 0.16*SPKS, Errorvar.= 0.44 , R² = 0.47
Result of Structural Model in Table 4 shows that there are four significant lines; strategic performance measurement system variable to job relevant information and to managerial performance, job relevant information variable to role conflict and to managerial
performance.
Furthermore, there are two no significant lines; variable strategic performance measurement system on job relevant information , and role conflict on managerial performance.
Measures Acceptable SPMS JRI RC MP
Absolute Fit
Measures
Chi-Square 28.99 0 12.57 42.96
df 27 0 14 27
p > 0.05 0.36 1 0.56 0.026
RMR Close to
zero 0.055 0 0.078 0.12
GFI Close to 1 0.93 1 0.97 0.9
AGFI 0.90 0.89 1 0.93 0.83
Incremental Fit
Measure
NFI 0.90 0.95 1 0.94 0.9
IFI 0.90 0.96 1 0.96 0.91
CFI 0.90 0.96 1 0.96 0.91
Tabel 4 Result of Structural Model
Hyphoteses
Standardized
Regression T-Value Significant H1 Strategic Performance Management System Job Relevant
Information 0.74 14.17 YES
H2 Strategic Performance Management System Role Conflict -0.03 -0.35 NO H3 Job Relevant Information Role Conflict -0.39 -4.59 YES H4 Strategic Performance Management System Management
Performance 0.16 2.00 YES
H5 Job Relevant Information Management Performance 0.55 5.76 YES
H6 Role Conflict Management Performance -0.03 -0.55 NO
Hypothesis 1 states that the strategic performance measurement system positively affects job relevant information. Based on the results , the value of direct relationship of strategic performance measurement system to the job relevant information reaches 0.74 standardized regression, which means it is received. It means that the strategic performance measurement system is able to provide job relevant information for managers, so that there is a positive relationship between the use of strategic performance measurement system and managers' perceptions about the availability of job relevant information
Hypothesis 2 states that strategic performance measurement system negatively affect role conflict. Based on the results of data processing shows that the direct relationship value of strategic performance measurement system to role conflict reached -0.030 standardized regression, with a negative value, thus the hypothesis is rejected. Implementation of strategic performance measurement system does not guarantee to reduce conflicts experienced by managers, this is because the manager is not able to meet job expectations because of the inappropriate demands on the implementation of the strategic performance measurement system
Hypothesis 3 states that job relevant information negatively affect role conflict. Based on the results of data processing shows that the direct effect of job relevant information to role conflict is - 0.39 standardized regression, so that the hypothesis is accepted. Job relevant information can explain the scope of information available to the manager. However, if managers obtain other information related to tasks that contrary to previous information, the result of confusion over the information can trigger conflicts which is reflected in the behavior. Thus job-relevant information can reduce the occurrence of conflicts experienced by manager.
Hypothesis 4 states that the strategic performance measurement system positively affects managerial performance. Based on the results, the value is very small with standardized regression of only 0.16, is significant, meaning that hypothesis 1 is declined. It means that the strategic performance measurement system does not guarantee to be able to improve managerial performance, or the strategic performance measurement system made by the company cannot strongly affect their managers to improve work performance.
Hypothesis 5 states that the job relevant information has positive influence on managerial performance. Based on the results of data processing shows that the direct effect of job relevant information on role overload is 0.55 standardized regression. Job relevant information is a prediction of managerial performance, so the hypothesis 5 is accepted. These results indicate that the job relevant information can to improve managerial performance.
Hypothesis 6 states that e role conflict negatively affects managerial performance. Based on the results of data processing shows that the direct effect of role conflict on managerial performance is -0.033 standardized regression with a positive direction. Role conflict is not a prediction of managerial performance so the hypothesis 6 is rejected. The incident of role conflict experienced by a manager does not reduce its efforts to perform the correct managerial functions primarily related to planning and coordination of duties and other managerial functions. The existence of a conflict does not necessarily lead to negative consequences, but it can be a positive force for managers. Stress can produce a positive result, i.e. better performance because it can produce new and innovative ideas that can ultimately improve managerial performance
Analysis of Indirect Influence and Role of Mediating Variables
This study stated that the job relevant information and role conflict mediates the relationship between strategic performance measurement systems and managerial performance. Given the existence of mediating variables, thus calculation is used to determine the value of indirect and total effect (see Table 5).
Tabel 5 Total and Indirect Effect
Pengaruh Besar Pengaruh
SPMS JRI 0.740
SPMS RC -0.310
SPMS MP 0.570
JRI RC -0.390
JRI MP 0.560
RC MP -0.030
SPMS JRI RC MP 0,41
JRI RC MP -0,01
The calculation result of direct and indirect influencestated that Strategic Performance Management System variable gave influence to Managerial Performance which amounted to 0.57 of standard deviation. On the other hand, Job Relevant information variable gave slightly smaller influence to Managerial Performance which is 0.56 of standard deviation. The magnitude of indirect influence from Strategic Performance Management System variable toward Managerial Performance through Job Relevant Information and Role Conflict was 0.41 of standard deviation. Conversely, the indirect influence of Job Relevant information toward Managerial Performance through Role Conflict was only -0.01 of standard deviation.
The high influence of Strategic Performance Management System variable toward Managerial Performance through Job Relevant Information showed the importance of Job Relevant Information in improving Managerial Performance. Conversely, the presence of negative indirect influence from Job Relevant information toward Managerial Performance through Role Conflict indicated that Role Conflict could decrease Managerial Performance.
CONCLUSION
Based on the results of data analysis and hypothesis testing, this study resulted in several findings that can be used as a reference to draw conclusions from the overall model that has been built in this study, which are summarized as follows:
First, strategic performance measurement system affect the job relevant information. It is described that the strategic performance measurement system can provide feedback information to the manager about the progress related to the goals of the organization
Second, strategic performance measurement system does not affect role conflict. Results of this study demonstrate that the application of strategic performance measurement system leads to increased role conflict, meaning that strategic performance measurement system can increase conflicting demands from leaders as well as role conflict.
Third, , job relevant information affects the role conflict. This illustrates that that the relevant information related to the task can facilitate in making accurate predictions of the actions to be taken, because job relevant information can explain the scope of information available to the manager.
However, if managers obtain other information related to tasks that contrary to previous information, the result of confusion over the information can trigger a conflict which is reflected in the behavior.
Thus job relevant information can reduce the incident of conflicts experienced by managers
Fourth, strategic performance measurement system affects the managerial performance. However this illustrates that the strategic performance measurement system is not enough to directly affect managerial performance. That is, what comes out of this strategic performance measurement system has not been able to adapt well to the environmental organizations to improve managerial performance.
Fifth, job relevant information affects the on managerial performance. It is described that the relevant information associated with the task are needed by managers to improve performance. But the results of this study indicate that job relevant information cannot improve managerial performance.
Sixth, role conflict does not have sufficient evidence of an effect on managerial performance. It is indeed described that role conflict experienced by a manager does not reduce the effort to maintain its managerial functions primarily related to the planning and coordination of duties and other managerial functions within the company.
Seventh, Job relevant information Variables are variables that have the most impact on managerial performance so that changes in these variables that will significantly improve managerial performance . Role conflict in this study did not have a significant impact on the managerial performance.
Research Limitation
This study uses the performance evaluation on the basis of manager self-assessment, therefore it is possible if respondents only based the answer on prior knowledge and usually do not reflect a consistent opinions over time, which in turn can lead to bias.
Recommendation
1. Consider confirmation from senior manager / supervisor related to the performance level of functional managers
2. Consider other methods of research, for example in the form of the experimental method.
Test the role of moderating leadership style on strategic performance measurement system influences on managerial performance. It is based on the premise that leadership style will determine the performance of the organization
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