A STUDY ON THE INFLUENCE OF PERFORMANCE MANAGEMENT SYSTEM ON PERFORMANCE OF EMPLOYEES: MEDIATING ROLE OF WORK ENGAGEMENT

Abstract

This study examines the impact of Performance Management System Effectiveness (PMSE) on employee performance, focusing on both task and contextual dimensions, within the manufacturing sector of Chennai. Recognizing work engagement as a critical psychological mechanism, the research investigates its mediating role in linking PMSE to enhanced employee outcomes. Using data collected from 125 manufacturing employees, the study employs SEM to analyze direct and indirect relationships among variables. Findings reveal that effective performance management systems positively influence employee work engagement, which in turn significantly boosts both task and contextual performance. Additionally, PMSE exerts substantial direct effects on performance metrics. The results emphasize the importance of fostering fair, transparent, and accurate performance management practices to cultivate employee engagement and improve overall performance. These insights offer practical guidance to manufacturing organizations aiming to optimize their performance management frameworks to drive sustainable organizational success.