TY - UNPB

T1 - Explaining Adverse Behavioural Impact of Performance Management Systems in a Professional Accounting Firm

AU - Ururuka, V

AU - Otley, D T

AU - Beekes, W A

PY - 2009

Y1 - 2009

N2 - 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.

AB - 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.

KW - Performance evaluative style

KW - Goal difficulty

KW - Organisational commitment

KW - Dysfunctional behaviour

KW - Quality threatening behaviour

KW - Performance measurement systems

KW - Management control systems

KW - Hierarchical levels

KW - lines of service

M3 - Working paper

T3 - Accounting and Finance Working Paper Series

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

PB - The Department of Accounting and Finance

CY - Lancaster University

ER -