Impact of Performance Management System on Organizational Effectiveness: A Fuzzy Logic Approach

Abstract

Performance management systems (PMS) are critical components of organizational effectiveness, shaping employee behavior, and driving performance towards strategic goals. Traditional approaches often struggle to accommodate the complexity and subjectivity inherent in human performance evaluation. However, the application of fuzzy logic offers a promising avenue for addressing these challenges and provides a flexible framework for managing uncertainty and imprecision in performance evaluation, which is used in this study to investigate the effect of PMS on organizational effectiveness (OE). Organizations can more effectively capture the complexity of human behavior and decision-making processes by incorporating fuzzy logic techniques into PMS. The study looks at how employee engagement affects the relationship between PMS and OE as a moderator. The impact of different performance management elements, such as training, reward systems, and performance appraisal, on employee engagement levels and, ultimately, organizational outcomes, is examined using fuzzy logic models. The results emphasize how crucial it is to promote employee engagement as a critical means by which PMS can advance organizational effectiveness. Regression analysis is also used in the study to compare the two fuzzy models' predictive accuracy. According to the results, the cascaded fuzzy model produces higher regression values, which suggests a better fit and more explanatory power for the data. This shows that sophisticated fuzzy logic techniques are more effective at capturing the complex, nonlinear relationships present in performance management systems, improving predictive accuracy, and providing a deeper comprehension of how PMS affects organizational effectiveness. All things considered, this study helps to show how fuzzy logic techniques can be used to improve our comprehension of the intricate connections between PMS and OE. Using MATLAB/SIMULINK, the suggested Fuzzy models are designed and their outcomes evaluated. Organizations can create more complex and context-sensitive performance management strategies that improve organizational outcomes by utilizing sophisticated fuzzy models.