Strategic Performance Measurement System: A Service Sector and Lower Level Employees Empirical Investigation

Abstract

Resorting to the Schatzki's (2002) 'site of the social' theoretical construct and stance on the peculiar 'sites' of construction and institutionalisation of social practices, we aim to locate the use and efficacy of strategic performance measurement system (SPMS) in service sector organizations and at the lower hierarchical level, and its effect on role clarity, employees' psychological empowerment and performance. This study aims to further the relevant literature, which covers the phenomenon in the manufacturing industry and at the upper level of the organizational hierarchy (Hall, 2008). A survey study of employees at the lower hierarchical level in the banking sector of the southern part of Sumatera including the provinces of Lampung, South Sumatera, Bengkulu and Jambi was conducted and data analyzed using SmartPLS. Our analysis of the empirical data we gleaned from our survey of 135 respondents endorsed the hypotheses set for the study confirming a positive impact of the use of CPMS on lower level employees' role clarity and overall performance in service sector organizations, however, did not support CPMS's effect on the employees' 'psychological empowerment'. The effect and efficacy of the use of SPMS on role clarify, performance and psychological empowerment in the manufacturing sector employees at the upper hierarchical level have already been empirically investigated (see Hall, 2008). This current study aims to not only extend such studies to the service industry but also contribute to the management accounting literature through extending the use of the strategic performance measurement system to employees at the lower hierarchical level in the service sector. It aims at apprising practitioners and policy-makers on the utility and limitation of the use of CPMS in these contexts.