ACCA Strategic Professional · Strategic Business Leader · Enabling success: performance excellence
Kestrel Logistics has set a stretch target of 98% on-time delivery. Regional managers, whose bonuses depend solely on this figure, have begun reclassifying late deliveries as 'customer-requested delays'. Which performance management problem does this best illustrate?
The scenario shows measure fixation and data manipulation. Because bonuses depend on one target, managers reclassify late deliveries to hit it. This is a dysfunctional behavioural effect of a narrow incentive scheme and a governance and ethical risk, not a benchmarking, stakeholder or controllability problem.
- AMeasure fixation leading to data manipulation, a dysfunctional behavioural effect of a narrow incentiveCorrect
- BPerformance prism failure arising from too many stakeholders being considered
- CBenchmarking error caused by comparing against a non-competitor
- DLack of controllability because delays are caused by external factors
Explanation
Rewarding a single metric encourages managers to game the figure rather than improve performance, which is dysfunctional behaviour and creates an ethical and governance risk. The prism and benchmarking options do not describe manipulation of reported data. Controllability is not the issue because managers are reclassifying data, not facing uncontrollable events.
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