The Impact of Performance Management Systems on Employee Performance: The Mediating Role of Employee Competence

Karina Octaviandi; Ilham Mubaraq Ritonga

doi:10.61987/jemr.v5i5.3170

Authors

Karina Octaviandi Universitas Harapan Medan
Ilham Mubaraq Ritonga Universitas Harapan Medan

DOI:

https://doi.org/10.61987/jemr.v5i5.3170

Keywords:

Performance Management System, Employee Competence, Employee Performance, PLS-SEM

Abstract

Effective performance management is important for improving employee performance, while employee competence may enhance the extent to which performance management practices contribute to better work outcomes. However, empirical evidence regarding the mediating role of employee competence in this relationship remains limited. This study examines the effect of performance management systems on employee performance and employee competence and investigates the mediating role of employee competence in the relationship between performance management systems and employee performance. A quantitative associative approach was employed involving 154 employees selected through saturated sampling. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) to assess direct and indirect relationships among the variables. The results indicate that performance management systems positively and significantly affect employee performance (β = 0.578; t = 6.350; p < 0.001) and employee competence (β = 0.818; t = 17.686; p < 0.001). Employee competence also positively and significantly affects employee performance (β = 0.255; t = 2.857; p = 0.004). Furthermore, employee competence significantly mediates the relationship between performance management systems and employee performance (β = 0.208; t = 2.787; p = 0.006). These findings imply that organizations should integrate effective performance management with continuous competence development to achieve sustainable improvements in employee performance.

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