The Effectiveness of Performance Management Systems and its Systemic Value

Sammanfattning: This thesis aims to explore how managers comprehend the systemic value of a companies’ Performance Management System (PMS). The study findings show that PMS causes path-dependent behavior, leading to organizational rigidities, strategic inertia, and diminishing PMS effectiveness. Managers' comprehension of the multifaceted, complex, and systemic nature of PMS can counteract the unintended negative consequences of PMS, such as the lock-in effect, and improve its effectiveness. This study recommends practitioners adopt a systems-based view of their PMS to raise their awareness of the PMS systemic value by identifying mediating variables, seeking a PMS-internal fit between PMS categories through congruent interdependencies, questioning its potential, and using the PMS dynamically.