The Impact of Superior-Subordinate Identity and <i>ex post</i> Discretionary Goal Adjustment on Subordinate Expectancy of Reward and Performance

Burt, Ian; Libby, Theresa; Presslee, Adam

doi:10.2308/jmar-52559

Cited by 13 publications

(16 citation statements)

References 39 publications

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“…Goal adjustments occur when a previously established goal is adjusted either upwards or downwards prior to or at the end of the performance period (Burt et al 2020). These adjustments are often employed in practice when unforeseen and/or uncontrollable events occur that impact goal attainment (Gibbs et al 2004).…”

Section: Goal Adjustmentsmentioning

confidence: 99%

“…Both Burt et al (2020) and Kelly et al (2015) examine the use of downward ex post goal adjustments and the impact of these adjustments on employee performance using experimental studies. Burt et al (2020) build on the Arnold and Artz (2015) study by examining the direct and indirect effect of ex post goal adjustment expectancy on performance through the impact of the possibility of goal adjustments on reward expectancy, when bonuses are tied to goal attainment. Consistent with Arnold and Artz (2015), Burt et al (2020) find that the expectancy of goal adjustments has a direct negative effect on performance.…”

Section: Goal Adjustmentsmentioning

confidence: 99%

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Revisiting the Impact of Goals on Affect and Effort*

Lane

2021

Accounting Perspectives

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Performance goals are one of the most prevalent management controls used in practice to address motivational concerns. Goals influence employees' affective state by enabling them to evaluate their performance against a standard and determine if their performance is satisfactory. The objective of this paper is to understand and extend the current management accounting literature on goals and their effect on employee effort via affect. I address this objective in three ways. First, I conduct a systematic review of the management accounting literature to determine what we know about goals and determine if the literature acknowledges the important effects that goals have on affect. From the literature review, I note the paucity of research that examines the affective consequences of using performance goals. Second, I discuss some of the prominent theories from psychology that explain the relationship between goals and affect and provide suggestions for research questions. Third, I develop an experimental manipulation using online participants to demonstrate that goal attainment and goal failure lead to significant positive and negative affective reactions, respectively. By sharing my research method, I provide a starting point that accounting researchers can employ to examine how affect can influence effort, which has an important causal linkage with performance outcomes.

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Section: Goal Adjustmentsmentioning

confidence: 99%

Section: Goal Adjustmentsmentioning

confidence: 99%

Revisiting the Impact of Goals on Affect and Effort*

Lane

2021

Accounting Perspectives

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“…study also shows how employees react to managers' use of ex post adjustments. When work periods are difficult and when ex post adjustments are available to filter out negative uncontrollable events, superior-subordinate identity moderates the relationship between the availability of an ex post adjustment and the expectancy of receiving a reward, such that the expectancy of the reward is higher when superior-subordinate identity is high compared to when it is low (Burt et al 2020). Research from the field also examines how employees' performance is affected by managers' use of ex post adjustments.…”

Section: Risk Reductionmentioning

confidence: 99%

“…Although prior research identifies that managers' use of subjectivity benefits the compensation contract by reducing compensation risks (Bol 2008), the true benefit will not be fully known until empirical research can support how employees themselves react to such subjectivity. While some research shows that performance can be improved when there is environmental uncertainty and subjective ratings are provided (Aranda et al 2019), experimental evidence shows that contextual factors can hinder the effectiveness of subjectivity on performance (Burt et al 2020;Kelly et al 2015). Additional research in understanding employees' reactions to subjective adjustments would broaden our understanding of how contextual variables may hinder the effectiveness of compensation risk reduction.…”

Section: Critique Of Existing Literature and Future Research Opportunitiesmentioning

confidence: 99%

Subjectivity in Performance Evaluations: A Review of the Literature*

Wick

2021

Accounting Perspectives

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Subjectivity is an important element of employees' performance evaluations because its use can motivate employees and improve their productivity. Given this importance, it has been a prominent area of research within the management accounting literature. Using a structured approach, I review articles from 11 highly ranked accounting journals across 12 years with the objective of synthesizing and assessing the research to identify research gaps and opportunities for future research. I observe that two types of subjectivity are commonly studied: subjective performance measures and ex post discretion, across a wide range of settings. Research questions are investigated, drawing on theory from economics, psychology, and organizational behavior and using experimental, field study, survey, archival, analytical, and interview methods. My synthesis of the literature highlights many opportunities for future research to further the study of subjective performance evaluations. This study contributes to practice and accounting research by synthesizing and providing insights about the subjectivity literature as well as identifying opportunities for future research.

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“…However, prior work has mainly focused on situations in which fairness criteria are relatively clear-cut standards and often coincide with the actors' self-interest. For example, Burt et al (2020) analyze the effects of SPE in a setting where a clearly identifiable exogenous event negatively influences employee performance. Thus, any compensation of the external shock by the superior should lead to an increase in employee compensation, and it is quite unlikely that an employee would perceive the (positive) compensation of a negative external event as "unfair".…”

mentioning

confidence: 99%

Challenges of subjectivity in team performance evaluation

Arnold

2021

PAR

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Purpose This paper aims to analyze challenges of subjective performance evaluation (SPE) and their effects on team performance. It focuses on discretionary bonus allocations in teams and challenges driven by cognitive biases on the superior or the employee side. This is important as efficient teamwork is a relevant source of competitive advantages in firms, and firms often rely on teams to coordinate various, mutually supportive organizational activities. Design/methodology/approach The author analyzes results that have recently been discussed in the literature and link them to each other to create a more holistic picture about potential performance effects of SPE. Based on the analyses, the author develops avenues for future research and point out open questions. Findings Exploring employees’ fairness perceptions in team settings in which there is no clear standard for a “fair” team bonus allocation, the author finds that perceived fairness of team bonus allocation may decrease under SPE because employees interpret the “fairness” of the bonus allocation from an egocentric perspective. Such decrease in perceived fairness can eventually even lead to decreased team performance. Likewise, on the superior side, more complex, but highly relevant team can cause cognitive biases of superiors in assessing employee performance, thereby decreasing the potentially positive effects of SPE on team performance. Originality/value This paper contributes to the literature by analyzing recently discovered challenges of SPE in teams and linking them to each other to draw more general conclusions about the performance effects of SPE. For practice, my findings imply that firms may want to be cautious when evaluating the potential effects of SPE – as it is made by human beings with their cognitive biases. For research, the paper opens up new research possibilities and points out open questions.

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The Impact of Superior-Subordinate Identity and ex post Discretionary Goal Adjustment on Subordinate Expectancy of Reward and Performance

Cited by 13 publications

References 39 publications

Revisiting the Impact of Goals on Affect and Effort*

Revisiting the Impact of Goals on Affect and Effort*

Subjectivity in Performance Evaluations: A Review of the Literature*

Challenges of subjectivity in team performance evaluation

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