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ACCA Strategic Professional · Advanced Performance Management · Performance and reward

Brightwell Logistics pays warehouse supervisors a bonus for achieving a target of 98% on-time dispatch. Supervisors have begun recording orders as dispatched when they are merely packed, and have stopped reporting delayed orders. This is an example of which problem with performance-related reward?

This is gaming, or manipulation of reported data, caused by linking a bonus to a single target. Supervisors misclassify packed orders as dispatched and hide delays to hit 98%. Remedies include independent data capture, verification of reported results and a balanced set of measures so one number cannot be exploited.

  1. AGaming or data manipulation caused by tying reward to a single reported targetCorrect
  2. BInflation of the target due to benchmarking
  3. CLack of controllability of the measure
  4. DOver-reliance on subjective appraisal

Explanation

Supervisors are misreporting data to reach a bonus threshold, which is gaming caused by pay depending on one reported metric. Controls such as independent data capture, audit of reported figures and balanced measures reduce it. The issue is not controllability or subjective appraisal, since the measure is objective but falsifiable.

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