Performance management and work engagement – New evidence using longitudinal data

The value and the impact of performance management systems on employee-level and firm-level outcomes is a widely discussed topic in both academia and practice. In this paper, we investigate the impact of performance management and evaluation practices (PMEPs), such as performance appraisal interviews, formal target agreements and performance-related pay schemes, on employee-level work engagement. Building on management theories, we argue that PMEPs relate positively to employee-level work engagement. By applying a contingency perspective, we further explore the context dependence of this relationship with respect to firm size, industry, and ownership type. Using a longitudinal, linked employer-employee data set in four waves; and by applying various fixed effects regressions to account for unobserved heterogeneity, our results imply a positive and statistically significant impact of PMEPs on work engagement. We further find that the relationship between PMEPs and work engagement is smaller for larger firms and for firms in the IT, Communication & Other Services sector.