The current study aims to investigate the impact of performance measures controllability (financial and non-financial measures) on organizational commitment, and it examines whether the effect is mediated by fairness (procedural, distribution, interpersonal and informational). The knowledge regarding the association between three constructs in a mediation research framework is important, and it is rarely researched.
This is quantitative research employing an online survey. The data were collected from respondents consisting of 291 middle managers of the electricity companies in Indonesia. The partial least squares structural equation modeling (PLS-SEM) is used to test the hypothesis. A mediation research approach is employed to provide a more comprehensive understanding regarding the associations between variables under investigation.
The empirical findings reveal the following. First, performance measures controllability effects organizational commitment. Second, fairness partially mediates the relationship between performance measures controllability and organizational commitment. However, only procedural fairness does not have a mediation effect, while distribution, interpersonal and informational fairness partially mediate the impact of performance measures controllability on organizational commitment.
Firstly, the primary data were collected through an online survey, which, although efficient, may not fully capture the dynamics of the industry. The survey was conducted during a period of significant transformation in the electricity industry, which was regulated by the government. This transition may have affected respondents’ perspectives and data quality.
Practically, this study provides actionable insights for the electricity industry in regulated companies like Indonesian state-owned electricity. By emphasizing the importance of fairness in performance evaluations, the findings encourage companies to adopt fair and transparent systems that integrate both financial and non-financial measures. These practices not only enhance organizational commitment but also mitigate the economic risks associated with managerial dissatisfaction and turnover.
Social perspective, promoting fairness in the Indonesian electricity industry regulated by the government, can positively influence public attitudes towards these organizations. A transparent and fair work environment contributes to higher employee satisfaction and productivity, which in turn improves the quality of services provided to the public. In the electricity industry, where reliable service is critical to daily life, this could enhance public confidence in energy providers, contributing to improved quality of life and community well-being. Furthermore, fair treatment of employees aligns with broader societal values of equality and fairness, strengthening the role of this organization as a responsible and community-oriented entity.
The current study explores the deeper effects of performance measure controllability on organizational commitment by examining financial and non-financial measures. Additionally, it examines the mediating roles of all four dimensions of fairness (procedural, distributive, interpersonal and informational). These dimensions of fairness are crucial in aligning personal and corporate goals, thus enhancing organizational commitment. Managers who have greater control over performance measures tend to be more motivated and committed to their organizations. This research, conducted in Indonesia’s highly regulated electricity industry, in contrast to studies conducted in more flexible industries, provides new insights into the unique dynamics of this industry.
