Performance management systems in Vietnam :antecedents and impacts on organisational performance explored through a contingency perspective

Abstract

Adopting a contingency perspective, this study employs a sequential mixed research design using a questionnaire survey and case studies to explore performance management systems (PMASs) in relation to contingent variables, namely perceived environmental uncertainty (PEU), task uncertainty and organisational culture, and organisational performance in listed Vietnamese organisations. Quantitative analyses indicate that NFPMs are adopted because these measures help managers to obtain information about different dimensions and areas of organisational performance. Although NFPMs are not used to a great extent in formulating and implementing business strategy, they are used to achieve pre-set organisational performance targets through tracking progression against these targets. Concerning organisational structure, departmental managers in today’s Vietnamese context are delegated more authority to make decisions within their departments than they were before. These managers have a relatively high level of involvement in setting targets for their firm performance. Moreover, a highly objective style of performance evaluation and rewards was evidenced. Qualitative analyses also suggest a lack of cohesion between different control elements of PMASs. Integrated findings indicate substantial impacts of PEU and task uncertainty on PMAS practices as motiving variables for changes in these practices. However, organisational culture characterised by relatively high power distance, collectivism and uncertainty avoidance hinder such changes. Simultaneously, new cultural practices, namely outcome-oriented culture and innovation-oriented culture, have emerged in Vietnam. Quantitative findings indicate that only three PMAS practices, namely the adoption of NFPMs, the decentralisation of decision-making and the participation of lower managers in setting targets for organisational performance, positively impact upon organisational performance. Moreover, only interactions between PEU and task uncertainty and the two latter PMAS practices result in improvement of organisational performance. The qualitative results suggest that changes in PMAS practices result in better organisational performance through enhancing the decision-making quality and creating both extrinsic and intrinsic motivation for individuals.