The Effect of Directional Goals and Performance Reporting Format on Subjective Performance Evaluation
Subjective performance evaluations play an important role in management control, but they can also be influenced by undesirable factors such as directional preferences, prior commitments, and individual biases. In our first experiment, we predict and find that summary metrics reduce the effect of directional goals when performance is monitored infrequently. These results suggest that when people view detailed information, they are able to seek out and interpret information in a goal-consistent fashion but this behavior is constrained when they also see summary metrics. Notably, the summary metrics were presented simultaneous with the detailed performance information. In our second experiment, we examine a setting where performance information is viewed throughout the period (i.e., frequent monitoring) rather than at the end of the period. In this situation, summary metrics can only be presented after the detailed information, and we test whether summary metrics presented in this fashion can have a similar effect on constraining directional goals. We find that summary metrics do not reduce the effect of directional goals when performance is monitored frequently. Thus, reporting systems that aggregate performance information can constrain motivated reasoning, but only under an infrequent reporting environment.