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SNA VII DENPASAR-BALI, 2-3 DESEMBER 2004

THE ROLE OF PROCEDURAL FAIRNESS ON THE RELATIONSHIP BETWEEN MULTIPLE MEASURES-BASED

PERFORMANCE EVALUATION AND JOB-RELATED TENSION

ByMahfud Solihin & Siti Fathonah

ABSTRACT

This study examines the effect of the use of multiple performance measures (a combination of financial and non-financial measures) in performance evaluations on subordinates’ job-related tension. Specifically, this study investigates whether the effect of such measures is mediated by procedural fairness. This study hypothesizes that there is an indirect effect of multiple measures-based performance evaluation and subordinates’ job-related tension through procedural fairness. To test the hypothesis, this study employs a path analytical technique with regression approach. The results, based on a sample of 70 managers, support the expectation. That is, the use of a mix of financial and non-financial measures in performance evaluations is associated with subordinates’ job-related tension. However, such relationship is partially mediated by procedural fairness.

Key words: job-related tension; multiple performance measures; performance evaluation; procedural fairness

I. INTRODUCTION

Supervisory evaluative style (how superiors evaluate their subordinates) is an important topic in management accounting, which has earned special attention in the literature (Hartmann, 2000). Prior studies on this topic suggested that the basis of managerial performance evaluation used by superiors to evaluate their subordinates’ performance can affect the subordinates’ attitudes, such as job-related tension (Otley and Pollanen, 2000). Evidence from early research on supervisory evaluative styles, however, suggests that the effects of performance measures on the subordinates’ attitudes may be indirect through some intervening variables. For instance, both Hopwood (1972) and Otley (1978) suggested and found that evaluative style and the type of performance measures used can affect the subordinates' perception of justness in the evaluation process. Hopwood (1972) additionally found that it was not the use of accounting performance measures per se which affected subordinates’ attitudes, but rather how the measures were used.

Another important area in management accounting that has long been attracting the attention of management accounting researchers is organizational performance measurement. Otley (1999:363) suggested that “…the measurement of the performance of business (and other) organizations has long been of central interest to both managers and management accounting researchers”. One of the recent developments in performance measurement, which stimulates scholars to study is the use of multiple performance measures which incorporate both financial and non-financial measures (e.g. Kaplan and Norton, 1992, 1996b; Ittner and Larcker, 1998a). However, most studies in this topic view from an organizational perspective (e.g. Hoque and James, 2000; Hoque et al., 2001) and there is a lack of empirical evidence

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on the effects of multiple measures usage on managers’ attitudes. Therefore, this study attempts to address this gap in the literature, by empirically investigating the behavioral consequences of the use of multiple performance measures for performance evaluation. It will respond to Otley’s (1999:381) challenge that “…performance measurement practices need to be evaluated …from a social, behavioral and managerial perspective…” In addition, Atkinson et al. (1997) have also suggested that research in management accounting should address the issue of how performance measurement systems can produce desired behavior and outcomes. To respond to such concerns, this study is motivated to investigate empirically the effects of multiple measures usage on subordinates’ job-related tension.

In studying the relationships between multiple measures-based performance evaluation and subordinates’ job-related tension, this study is also motivated to investigate another important variable which is believed to act as an intervening variable based on Hopwood’s (1972) and Otley’s (1978) findings. The variable is procedural justice (procedural fairness). Lau and Lim (2002b) argue that procedural fairness is an important variable to be studied in management accounting research because of its effects on the organizational members’ attitudes and behavior. Milani (1975) and Kenis (1979) both suggested that subordinates’ perception of justice may be an important predictor of subordinates’ behavior and attitudes. There are however, very few studies in management accounting on procedural fairness (Lau and Lim, 2002b). This study may therefore provide important additional evidence on the role of procedural fairness in management accounting literature.

This study proposes there is an indirect effect of procedural fairness on the relationship between multiple measures-based performance evaluation and subordinates’ job-related tension as modelled in Figure 1.

______________________Insert Figure 1 here

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The next section discusses the theory development and hypothesis formulation. This is followed by the method, empirical results, and conclusions and limitations of the study.

II. THEORY DEVELOPMENT AND HYPOTHESIS FORMULATIONA. Concept of procedural justice (fairness)According to Lind and Tyler (1988), the origin of the study of procedural justice is associated with the work of Thibaut and Walker (1975, 1978). They observed that the term procedural justice was first used by Thibaut et al. (1974) and Thibaut and Walker (1975), and refers to “social psychological consequences of procedural variation, with particular emphasis on procedural effects on fairness judgments” (Lind and Tyler, 1988:7).

While the theory of procedural justice developed by Thibaut and Walker (1978) is mainly based on research findings in a legal setting, and primarily deals with the effects of “control “ in dispute resolution, Leventhal (1980) argued that procedural justice is an important determinant of perceived fairness not only in legal settings, but it is important in the context of almost any allocation decisions. According to him, procedural fairness is “an individual’s perception of the fairness of procedural components of the social system that regulate the allocative process” (Leventhal, 1980:35) (emphasis is added). He identifies seven structural components

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of procedural fairness. They are: (1) selection of agents to gather information and make the decision; (2) setting ground rules and establishing criteria for receiving an allocation; (3) gathering information; (4) defining the decision structure of the final decision process by which reward or punishment is allocated; (5) processing appeals from the decision; (6) safeguarding the procedures by monitoring and sanctioning, when required, the behavior of those who participate in the procedures; and (7) providing mechanisms for changing the procedure when it is not working properly.

In addition to the seven structural components of procedural fairness, Leventhal (1980) also noted the importance of justice rule or procedural rule, which is defined as “a belief that allocative procedures are fair when they satisfy certain criteria” (Leventhal, 1980:39). He proposed six justice rules which can be used to evaluate the fairness of allocative procedures. The six justice rules are: (1) The consistency rule; to be fair, a procedure must be applied consistently across persons and across time. (2) The bias-suppression rule; procedures are fair if the decision maker does not have a vested interest in any specific decision, and if the decision maker is not so influenced by his or her prior beliefs that all points of view do not receive adequate and equal consideration. (3) The accuracy rule; to be fair, procedures should be based on accurate information. (4) The correctability rule; the fairness of a procedure will be enhanced to the extent that it contains some provision for correcting bad decisions. (5) The representativeness rule. This rule dictates that “all phases of the allocative process must reflect the basic concerns, values, and outlook of important subgroups in the population of individual affected by the allocative process” (Leventhal, 1980:44-45). (6) The ethicality rule; to be fair, procedures must be compatible with fundamental moral and ethical values.

The theory proposed by Leventhal (1980) above, has stimulated the extension of procedural justice research from legal settings to organizational settings. Many studies have been conducted to investigate the effects of procedural justice in organizational settings after Leventhal (1980) developed his theory. Overall, these studies found that procedural justice has positive consequences for organizations, and that procedural justice judgments affect a variety of very important beliefs and attitudes in organizations (Lind and Tyler, 1988). Brockner and Siegel (1996) suggest there are two possible explanations for procedural justice effects, namely (1) the self-interest theory (Thibaut and Walker, 1975), and (2) the group value model (Lind and Tyler, 1988). The main difference between these two theories is their assumptions about human nature, which underpin their different answers to the question why people generally prefer fair procedures to unfair procedures.

B. Linkage between multiple measures-based performance evaluation and subordinates’ job-related tension

Extant literature suggests that there is a relationship between performance evaluation style that is based on accounting or financial data (budget emphasis), and subordinates’ behavior and attitudes (Kren and Liao, 1988; Briers and Hirst, 1990; Lindsay and Ehrenberg, 1993; Otley and Fakiolas, 2000). Since performance evaluation is often linked to reward or incentive systems, performance evaluation often threatens one’s self esteem. Therefore, performance evaluation may increase subordinates’ job-related tension (Mallinger and Grainer, 1981), especially those who do not perform well. For those who have done well, it is likely that they will experience less job-related tension. Since the use of multiple measures is likely to lead

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to improved managerial performance, consequently, it is proposed in this thesis that the use of multiple measures is negatively associated with job-related tension.

However, as proposed in Figure l, the relationships between multiple measures usage and subordinates’ job-related tension may be indirect via procedural fairness. The theoretical supports for these expectations are provided in the following sections.

C. Linkage between multiple measures-based performance evaluation and procedural fairness

Folger and Konovsky (1989) define procedural justice as the perceived fairness of the means used to determine the amount of reward or compensation the employees receive. In the context of performance evaluation, procedural fairness is likely to be the concern of both the subordinates and the superiors. Subordinates usually consider performance evaluation to be very important, because it is often linked to the reward system that will determine their remunerations and promotions (Lau and Lim, 2002a). Due to the importance of performance evaluation, subordinates normally expect that the procedures used for evaluating their performance should be fair. High procedural fairness is also an important concern of the superiors and the organisations as a whole. There is much evidence which indicates that the implementation of procedures perceived by subordinates as unfair is detrimental to the organizations’ interest (e.g. Friedland et al., 1973; Thibaut et al., 1974; Lissak, 1983; Kanfer et al., 1987; Greenberg 1987). Based on their review of procedural justice research, Lind and Tayler (1988, p. 179) concluded that, “organizations that ignore procedural justice concerns run the risk of engendering negative organizational attitudes, dissatisfaction with organizational outcomes and decisions, non-compliance with rules and procedures, and, in some instances, lower performance.” Since the perception of unjust procedures can negatively affect organizations, superiors are likely to maintain high procedural fairness in conducting performance evaluations. It is likely that the adoption of multiple measures usage, instead of solely financial measures in subordinate performance evaluation, may be viewed as fair by subordinates for the following reasons.

Performance evaluation that takes into accounts both financial and non-financial indicators relies on more than one aspect or dimension of subordinates’ performance. Multiple measures-based performance evaluation views subordinates’ performance in a broader scope. Kaplan and Norton (1996a) argue that multiple measures-based evaluation considers both lagging and leading indicators, and both short and long-terms objectives. It also includes both external measures and internal measures of critical business processes, innovation, and learning and growth. In addition, it provides a balance in terms of the outcome measures - the results from past efforts - and the measures that drive future performance. Finally, this form of evaluation balances objective and easily quantified outcome measures, with subjective and somewhat judgmental performance drivers of the outcome measures. Subordinates are likely to regard such balances in performance evaluation as fair. For example, it is possible that in a certain period, such as in the research stage of developing a product, subordinates may produce unsatisfying financial results. Such innovative acts, however, may lead to a better organizational performance in the long term. Therefore, if a subordinate is evaluated based only on financial performance measures, the evaluation may view the subordinate as a poor performer. Such an unbalanced evaluation may lead the subordinates to perceive the evaluation process as unfair. On the other hand, if the performance evaluation also considers the

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performance in terms of research and innovation, subordinates are likely to view the evaluation process as fair.

Based on the above argument, it is possible to conclude that subordinates whose performance is evaluated based on both financial and non-financial measures are likely to perceive the evaluation procedures in their organization as fair. Consequently, in this study, it is proposed that multiple measures-based performance evaluation is positively associated with procedural fairness.

D. Linkage between procedural fairness and subordinates’ job-related tension

Extant literature in legal, political and organisational contexts suggest that procedural fairness affects performance and attitudes (e.g. Earley and Lind, 1987; Earley, 1984; Cornelius, 1985; Alexander and Ruderman, 1987; Folger and Konovsky, 1989; McFarlin and Sweeney, 1992). Based on an extensive review of the literature on the relationships between procedural justice and performance-behaviour in various settings, Lind and Tayler (1998) conclude that procedural justice does affect performance and behavior. Overall, the literature suggests an association between procedural fairness and managers’ behavior (e.g. performance) and work-related attitudes, such as job-related tension.

With respect to job-related tension, Ross (1994) argued that evaluation of subordinates’ performance could lead to increased job-related tension. Mallinger and Grainer (1981) similarly suggest that performance evaluation often threatens the self-esteem of the persons being evaluated. This may lead to increased levels of stress, which in turn, can lead to high job-related tension. However, such feelings may decrease if the evaluation process is perceived as being conducted in a fair manner. Consequently, job-related tension is likely to be negatively associated with procedural fairness.

As previously discussed in section B, multiple measures-based performance evaluation is expected to be related to job-related tension. Since multiple measures-based performance evaluation is also expected to be associated with procedural fairness (section C), and procedural fairness is also expected to be related to job-related tension (section D), it is possible to conclude that the effect of multiple measures-based performance evaluation on job-related tension may be mediated by procedural fairness. The above discussion therefore suggests that there is an indirect relationship between multiple measures-based performance evaluation and subordinates’ job-related tension via procedural fairness (see Figure 1). The following hypothesis is therefore tested:

H1: There is an indirect effect of multiple measures-based performance evaluation on the subordinates’ job-related tension through procedural fairness.

III. METHODA. Data And SampleData for this study were collected using a questionnaire survey sent to 229 managers working in organizations listed as manufacturing companies in the Jakarta Stock Exchange. The names of the companies were published in the Indonesian Capital Market Directory (2000). The managers were selected from various manufacturing companies. This approach avoids external validity problems and enhances the possibility of generalizing results (Chong and Bateman, 2000). Only those

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manufacturing companies employing more than 100 employees each were studied, as firms with fewer than 100 employees may not have formalized control systems, and are unlikely to have clearly defined areas of responsibilities (Brownell and Dunk, 1991). In addition, the selection of organizations with more than 100 employees is useful for the control of the size of the organizations (Lau and Lim, 2002a).

The manufacturing sector was selected for study because it is the largest sector (52%) published in the Indonesian Capital Market Directory. It is very common in management accounting research to study a single sector, but involving a number of organizations (e.g. Simon, 1986; Brownell and Dunk, 1991; Lau et al., 1995; Libby and Waterhouse, 1996; Hoque and James, 2000; Lau and Lim, 2002a, b). Listed companies were selected because almost all the largest and most advanced Indonesian companies were listed in the Jakarta Stock Exchange. This permits the selected sample to include the largest and most advanced companies in Indonesia. Although the sample was derived from manufacturing organizations, it was not the intention of this study to investigate a particular function (e.g. manufacturing). In order to ascertain if the results are generalized across functional areas, following previous management accounting studies (e.g. Hopwood, 1972; Otley, 1978; Brownell and Dunk, 1991; Otley and Pollenan, 2000; Lau and Lim, 2002b), this study selected samples from across functional areas.

In order to provide some degree of control over the seniority of the respondents across organizations, only functional heads were selected. The functional heads were selected as follows. Telephone calls were made to the secretary of each company to obtain the names of the functional heads. This method ensured that the functional heads would receive the questionnaires and that they would be the only ones who answered the questionnaires. In addition, to avoid bias, only a maximum of 4 managers were selected from each company. On average, each company provided the names of two managers.

Based on the Indonesian Capital Market Directory (2000), there are 146 manufacturing companies. One company has less than 100 employees. Hence, it was excluded from the sample. One company regarded itself as a service rather than a manufacturing organization. Consequently, this company was also excluded from the sample. Thirty two companies informed the researchers that it was their policies not to disclose the name of their managers. As a result, the researcher was able to obtain the names of 229 managers from 112 companies. Table 1 and Table 2 present the industry types of the targeted sample companies and the sample selection process, respectively.

Insert Table 1 and 2 about here

B. Survey AdministrationA questionnaire together with a prepaid return addressed envelope and a covering letter explaining the objectives of the research was mailed to each of the 229 intended respondents. As the instruments used to measure the variables examined in this study were developed in English, and English is not widely used in Indonesia, it was necessary to translate the instruments into Indonesian. The translation process involved three separate steps as recommended by Hofstede (1980). First, the researchers translated the questionnaire from English into Indonesian. Second, a

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university professor in Indonesia, who is bilingual and also an Indonesian national, translated the Indonesian version of the questionnaire back into English. Third, a cross-check of the latter English version with the original English version was performed. This third step was to ensure that the translation was accurately done. Only the Indonesian version of the questionnaire was used in the survey.

The questionnaires were mailed out in November. A reminder letter was mailed after three weeks. Managers who did not respond to the questionnaire two weeks after the reminder letters were sent out, were contacted by phone. Out of the 229 questionnaires mailed, 83 responses (36%) were returned. Thirteen responses were excluded from the study because of the failure of the respondents to complete the whole questionnaire. As a result, there were 70 usable responses. Given that the survey was undertaken in Indonesia, such a response rate may be considered very high. Gudono and Mardliyah (2001) noted that response rates in Indonesia generally range from 10% to 16%.

The demographic data indicated that, on average, the respondents’ age was 41.3 years and they had held their current positions for 5.4 years. The average experience of the respondents in their area of responsibility is 10.4 years.

C. Measurement InstrumentsMultiple measures-based performance evaluation: This variable was measured using a modified 20-item instrument developed by Hoque et al. (1997) and subsequently used by Hoque and James (2000) and Hoque et al. (2001). The 20 items were derived from Kaplan and Norton’s (1992) four dimensions of the Balanced Scorecard. The questionnaire was modified because it was developed to measure organizational performance while in this study it was used to measure individual manager performance. The instrument asked respondents to indicate how much importance their superior attaches to the twenty items when the superior evaluate the subordinates’ performance. A factor analysis indicates that two items (items 13 and 17), which were expected to load to customer perspective, loaded into innovation and learning group and internal business perspective, respectively. Consequently, those two items were not included in further analysis. However, the results of the hypothesis tests undertaken later indicated that there were no statistical differences in the results regardless of whether the multiple measures was assessed by the 18 items or by all the original 20 items. The Cronbach alpha coefficient (Cronbach, 1951) for this instrument in this current study was 0.95.

Procedural fairness: This variable was measured using a four-item, five-point Likert-type scale instrument developed by McFarlin and Sweeney (1992). It asks respondents to rate the fairness of the procedures used to evaluate their performance, to communicate performance feedback, and to determine their pay increases and promotion. An overall measure of procedural justice is obtained by summing up responses to the four individual items. The factor analysis extracted only one factor with eigenvalue greater than one (eigenvalue= 2.351; total variance explained=58.77). This supports the unidimensional nature of this instrument. A reliability check produced a cronbach alpha of 0.77.

Job-related tension Job-Related tension was measured by the Job-related Tension index (Kahn et al., 1964) developed by the Institute for Social Research at the University of Michigan. This index has 15 items with seven-point scale, and measures

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an individual’s feeling towards his or her working environment. This instrument had been used extensively by prior studies in management accounting (eg. Hopwood, 1972; Otley, 1978; Hirst, 1983; Brownell and Hirst, 1986; Bottger and Hirst, 1988; Harrison, 1992, Lau and Buckland, 2001). Factor analysis of the 15 items indicated three underlying factors, but with one predominant factor (factor 1), which has eigenvalue of 5.84 and accounting for 38.91 of the variance. All items loaded above 0.5 except for item 9 (Having to decide thing that affect the lives of individuals, people that you know) and item 15 (Feeling that your job tends to interfere with your family life). These two items were dropped from factor 1. The results of the hypothesis tests undertaken later indicated that there were no statistical differences in the results, regardless of whether job-related tension was assessed by the 13 items or by all the original 15 items. The Cronbach alpha coefficient is 0.88. Descriptive statistics for the variables used in this study are presented in Table 3.

______________________Insert Table 3 here

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IV. EMPIRICAL RESULTSThis study investigates whether multiple measures-based performance evaluation is associated with subordinates’ job-related tension and if so, whether such relationship is indirect through procedural fairness. A path analysis is considered as an appropriate technique to investigate such relationship. Hence, this study employs a path anlitical technique with regression approach. Cohen and Cohen (1983) suggest that to assess the adequacy of regression models, the residuals of the estimated values of the regression should be tested. Therefore, before testing the hypothesis, tests were performed to ensure that the inherent assumptions of the regression models were satisfied. Tests undertaken included testing for the normality of residual, homogeneity of variance of residuals and the appropriateness of the linear models. The results of these tests indicate that the inherent assumptions of the models used were validated.

In addition, it is also important to conduct non-response bias tests before analyzing the data as suggested by Oppenheim (1966). These tests are undertaken to ascertain whether there are systematic differences between responses that came in early, and those which arrived late. In conducting these tests, the responses were divided into two groups based on their dates of arrival. The first half comprises the 50 percent of responses, which came in early, and the second half comprises the last 50 percent of responses received. These tests were performed by running t-tests to compare the mean of responses for each variable between the two groups. The results indicate that there are no significant differences between the early responses and the late responses for all the variables examined in this study. Based on these results, it can be concluded there is no non-response bias.

The zero-order correlations between the variables examined in this study are presented in Table 4. These results provide preliminary support for the hypothesis. Multiple measures usage is negatively associated with job-related tension. Additionally, Table 4 shows that procedural fairness is negatively and significantly associated with job-related tension suggesting that multicolinearity may exist. Therefore, in addition to the three inherent assumptions of regression models, the presence of multicolinearity was also assessed by performing tolerance and variance inflation factor (VIF) tests for the regression model. The results, presented in Table 5, indicate that multicolinearity among variables was not detected. Therefore, there is no problem with the regression models used in this study.

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______________________Insert Table 4 and 5 about here

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Hypotheses Testing

Hypothesis H1 states that there is an indirect effect of multiple measure-based performance evaluation on the subordinates’ job-related tension through procedural fairness. To ascertain if such effect eexists, further analysis is needed. As indicated in Table 4, there is a significant zero order correlation between multiple measures-based evaluation and job-related tension. The indirect effects of multiple measures-based performance evaluation on subordinates’ job-related tension which is mediated by procedural fairness is calculated as follows based on the values of the path coefficient in Table 6:

MM – PF – JRT : 0.305 x – 0.312 = - 0.095

MM is multiple measures-based performance evaluation, PF is procedural fairness, and JRT is job-related tension.

The results show that the relationship between multiple measures-based performance evaluation and job related tension comprises two effects. First, there is a direct effect of -0.224 and second, there is an indirect effect of -0.095, which is mediated by procedural fairness (see table 7). Table 6, shows that after controlling the indirect effect of procedural fairness, the direct effect of multiple measures-based performance evaluation on job-related tension (-0.224) is still significant (p<0.009). These results indicate that procedural fairness mediates partially the relationship between multiple measures-based evaluation and job-related tension (Baron and Kenny 1986). Thus, the hypothesis, which states that there is an indirect effect of multiple measures-based performance evaluation on job-related tension is supported through procedural fairness is supported.

Table 7 provides a summary of the decomposition of the zero order correlations between multiple measures usage and job-related tension into direct effect and indirect effect.

______________________Insert Table 6 and 7 about here

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V. CONCLUSION AND LIMITATIONS The main objectives of this study are (1) to investigate whether multiple measures-based performance evaluation affects subordinates’ job-related tension; (2) if so, whether the effect is mediated by procedural fairness. Consequently, this study hypothesizes that there is an indirect effect of multiple measures-based performance evaluation on job-related tension is supported through procedural fairness.

In order to test the hypothesis, this study employed a path analytical model to analyze the data collected from 70 managers of various Indonesian manufacturing companies. The results indicate that there is a significant association between multiple measures-based performance evaluation and job-related tension. Further analysis indicates that that there is an indirect effect of multiple measures-based performance evaluation on job-related tension through procedural fairness. These results suggest that fair procedures play important roles in performance evaluation. They suggest that

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multiple measures based performance evaluation is associated with enhanced procedural fairness which, in turn, is associated with lower job-related tension.

The results of this study supported the previous findings of procedural fairness studies in legal, political and organizational contexts (e.g. Earley and Lind ,1987; Earley, 1984; Cornelius, 1985; Alexander and Ruderman, 1987; Folger and Konovsky, 1989; McFarlin and Sweeney, 1992) and in management accounting context (e.g. Lindquist, 1995; Libby, 1999; Lau and Lim, 2002a). The literature above suggests that procedural fairness affects behavior. Therefore, our study provides additional evidence on the importance of procedural fairness in the performance evaluations. These results may have important implications for organizations in the design and implementation of effective and efficient management accounting control systems, especially in performance evaluations.

As with other empirical studies, there are limitations associated with this study. First, there are the limitations associated with the survey questionnaire method, such as the inability of the questionnaires to be clarified due to the absence of the researcher. Second, although the sample of this study was selected from across functional areas, the number of responses from any particular function is small. Hence, analysis of results on functional basis was not undertaken. In addition, since our sample was selected from larger-sized organizations with more than 100 employees each, it is unclear if our results can be generalized to smaller-sized organization with less than 100 employees each. Finally, as this study only selected sample from the manufacturing sector, generalizing our results to non-manufacturing sector should be made with caution.

Notwithstanding the aforementioned limitations, this study is one of the early study which explores the relationships between multiple measures-based usage in managerial performance and managers’ work-related attitudes. These results provide timely evidence which may have important practical and theoretical implications for the adoption of multiple measures-based performance evaluation which is gaining popularity in increasing number of organizations globally.

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Figure 1

The relationship between multiple measures-based performance evaluation and job-related tension

.

128

Multiple measures-

based performance

evaluation

Procedural Fairness

Job-related tension


Table 1. Industry types of targeted sampleIndustry Type Number of

CompaniesFood and beverages 21Tobacco 3Textile mill products 8Apparel and other textile products 15Lumber and wood products 5Paper and allied products 6Chemical and allied products 8Adhesive 4Plastics and glass products 11Cement 3Metal and allied products 11Fabricated metal products 3Stone, clay, glass and concrete products 4Machinery 2Cable 6Electrics and electronic equipment 5Automotive and allied products 16Photographic equipment 3Pharmaceuticals 8Consumer goods 4Total 146

Table 2. Sample selection processDescription Number of companiesTargeted company sample 146Has less than 100 employees 1Regarded itself as a service organization 1Will not disclose the name of their managers 32Final company sample 112

Table 3 Descriptive statistics

Variables MeanStandard deviation

Theoretical range Actual range

Min Max Min MaxMM-based evaluation 84.04 24.81 18.00 126.00 32.00 132.00Procedural Fairness 13.06 2.61 4.00 20.00 7.00 18.00Job-related tension 40.84 12.94 13.00 91.00 15.00 70.00

Table 4. Correlation matrix among independent and dependent variables

Procedural Fairness Job-related tension

Multiple measures-based evaluation0.305* -0.319**

Procedural Fairness -0.380**

** p<0.01

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* p<0.05

Table 5. Multicolinearity detection with job-related tension as dependent variableVariable Colinearity statistics

Tolerance VIFConstant n/a n/aMM-based evaluation 0.907 1.102Procedural fairness 0.907 1.102

Table 6. Path analysis results with multiple regression approach

Dependentvariable

Independentvariable

Path coefficient t-value p-value

Procedural Fairness MM-based evaluation 0.305 2.638 0.010Job-related tension MM-based evaluation -0.224 -2.702 0.009

Procedural Fairness -0.312 -1.940 0.057

Table 7. Decomposition of the observed correlations (managerial performance)

PathLinkage

Observed Correlation

Directeffect

IndirectEffect

MM-based evaluation/ Procedural fairness 0.305* 0.305MM-based evaluation/Job-related tension -0.319** -0.224 0.095

** p<0.01 * p<0.05

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