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Explaining Adverse Behavioural Impact of Performance Management Systems in a Professional Accounting Firm

Research output: Working paper

Published
Publication date2009
Place of PublicationLancaster University
PublisherThe Department of Accounting and Finance
Original languageEnglish

Publication series

NameAccounting and Finance Working Paper Series

Abstract

This study investigates how hierarchical level and line of service affect the behavioural effects of performance management systems (PMS) features such as performance evaluative style and goal difficulty, as well as the effects of organisational commitment. Our study provides empirical evidence of the incidence of dysfunctional behaviour in a UK accounting firm, and also show that hierarchical levels impact on the behavioural effects of PMS. We find a high incidence of dysfunctional behaviour among accounting firm staff relative to prior studies, but no evidence to suggest a difference in the incidence of dysfunctional behaviour across hierarchical levels or lines of service. We find that high organisational commitment generally tends to result in lower dysfunctional behaviour, while both target-focused evaluative style and goal difficulty generally induces more of such behaviour. However, the strength of these effects differs significantly across hierarchical levels. On one hand, where a target-focused evaluative style is used, dysfunctional behaviour only increases significantly at low hierarchical levels, while difficult performance targets only results in significant increases in dysfunctional behaviour at mid hierarchical levels. On the other hand, strong organisational commitment leads to significantly lower dysfunctional behaviour only at low and high hierarchical levels. Thus hierarchical level is an important context affecting the use of PMS. Organisations need to fit the use of PMS to the organisation's hierarchical levels.