Performance evaluation and feedback
• Completing the cybernetic loop
• Ensuring accountability
• Behavioural effects of evaluation styles
• Performance evaluation in practice: transfer pricing
For students to:
1. Understand how MAS can be are used to inform performance evaluation in organisations
2. Evaluate the effectiveness of performance evaluation systems in organisations, both from a technical and behavioural perspective
3. Make recommendations for how performance evaluation systems could be improved
Theory recap questions
1. On page 110 Hopwood states "While budgetary information obviously indicates whether or not a manager has succeeded in meeting his current budget, it does not necessarily indicate whether he is behaving in a manner which is consistent with achieving the organisation's longer-term effectiveness". Why might this be the case? Why might actual-target performance variances not necessarily reflect whether a manager is behaving in a goal congruent way?
2. What are some of the differences between a budget-constrained and a profit-conscious style of evaluation?
3. What are some of the problems of using a budget-constrained evaluation style?
4. What influences how performance information is used by managers?
Case style question
Lisa and Frits eventually decided to evaluate James performance as "below par" on customer satisfaction, but Frits chose to override the system and gave James an overall "above par" rating for the year. On the basis of this evaluation they decided to award James a cash bonus equal to 25% of his annual salary.
In your opinion, how appropriate is this performance evaluation and reward decision in the context of Citibank California?
Provide an extended response to this question based on your conceptual understanding on the technical and behavioural implications of designing and using performance evaluation and reward systems in organisations. Structure your response in an essay format below. Justify your arguments through reference to specific theory and concepts from course as well as particular evidence from the case.