Many firms that use multiple lead measures in their performance measurement systems do not validate the causal model linking these measures to future financial outcomes, and the cause‐and‐effect relationships in the model are often left to subjective estimates that may be prone to errors. Using an experiment, this study examines how the accuracy of assumptions about the relative importance of lead measures in a causal model affects managerial performance and knowledge, when managers are given the opportunity to learn over multiple periods. The results show that having inaccurate relative weights on lead measures improves performance, reduces performance variability, and enhances knowledge, relative to not having any weights. Furthermore, performance is similar under accurate versus inaccurate relative weights, whereas knowledge is better under inaccurate than accurate relative weights, providing no support for the biasing effects of inaccurate relative weights. The findings suggest that, at least under certain circumstances, managers benefit even if they are given inaccurate relative weights on lead measures, and they are able to correct those inaccuracies to reach a comparable level of performance and knowledge as if they had been given accurate relative weights.

De nombreuses sociétés qui utilisent de multiples indicateurs avancés de rendement ne valident pas le modèle causal qui relie ces indicateurs aux résultats financiers futurs, et les relations de cause à effet du modèle sont souvent abandonnées aux estimations subjectives qui peuvent être sujettes à l’erreur. En procédant à une expérience, l’auteure examine comment l’exactitude des hypothèses au sujet de la pondération des indicateurs avancés dans un modèle causal influe sur le rendement et les connaissances des gestionnaires, lorsque lesdits gestionnaires se voient offrir la possibilité d’apprendre au fil de plusieurs périodes. Les résultats obtenus montrent que le fait que des coefficients de pondération inexacts soient affectés aux indicateurs avancés améliore le rendement, réduit la fluctuation du rendement et enrichit les connaissances, comparativement à l’absence de coefficients de pondération. En outre, le rendement est semblable, peu importe que les coefficients de pondération soient exacts ou inexacts, alors que les connaissances sont meilleures lorsque les coefficients de pondération sont inexacts que lorsqu’ils sont exacts, ce qui ne confirme en rien les effets de polarisation des coefficients de pondération inexacts. Les observations résultant de l’étude semblent indiquer qu’à tout le moins dans certaines circonstances, les gestionnaires tirent avantage des coefficients de pondération affectés aux indicateurs avancés, même lorsqu’ils sont inexacts, et sont en mesure de corriger ces inexactitudes pour parvenir à un niveau comparable de rendement et de connaissances, comme s’ils avaient disposé de coefficients de pondération exacts.

This paper examines how adding leading non-financial value drivers to a lagging summary financial measure affects managerial decision making in firms where either intangible assets (intangible assets firm) or tangible assets (tangible assets firm) are more important for future financial performance. Using an experiment, I compare a control performance evaluation system (PES) with feedback and incentives on only a summary financial measure to a PES with added feedback on non-financial measures and a PES with added feedback and incentives on non-financial measures. I find that managers increase their decision quality more in the intangible assets firm than in the tangible assets firm when both feedback and incentives on non-financial measures are added, but not when only feedback on non-financial measures is added. Early in the experiment, managers of the intangible assets firm do not make better decisions with the adding of only feedback on non-financial measures, but do so with the further adding of incentives on non-financial measures. However, managers of the intangible assets firm improve their decisions over time with the adding of only feedback on non-financial measures. On the other hand, managers of the tangible assets firm do not make better decisions with the adding of only feedback on non-financial measures nor with the further adding of incentives on non-financial measures. The results suggest that the benefits of adding non-financial value drivers may vary based on a firm's dependency on tangible versus intangible assets, and on whether the non-financial value drivers are explicitly rewarded in the incentive contract.

Recent management trends highlight two techniques firms use to motivate employee effort: (1) fostering employees' organizational identification (OI) and (2) offering employees tangible rewards such as gift cards instead of cash rewards. We use three studies to examine how OI affects employees' reward valuation and how such effects differ depending on the reward type. Study 1 is an experiment, demonstrating that increasing OI increases the emphasis participants place on a reward's symbolic value, which then increases the total value of the reward—to a larger extent when the reward is tangible than when it is cash. Study 2 is an experiment, providing evidence that Study 1 results are robust to using a tangible reward that is not socially consumed, that is selected either by the firm or by the employee, and that is either a good or poor fit with the employee's personal preference. Finally, Study 3 is a survey, asking respondents about actual rewards they received from their current employer and capturing their actual OI with their current employer. Results in Study 3 are inferentially similar to those in Study 1 and Study 2, albeit stronger for rewards of smaller monetary value. Collectively, these results highlight the particular benefit of strong OI on how employees value tangible rewards relative to cash rewards, which should be of interest to incentive system designers.

The provision of more frequent feedback to employees is increasing, although prior research has found mixed results as to the effect of increased feedback frequency on employee performance. Narcissism research identifies narcissistic oversensitivity as a key narcissistic subdimension that may result in particularly strong responses to performance feedback. We predict and find in an experiment that increased performance feedback frequency has a more negative impact on the performance accuracy of individuals with higher levels of narcissistic oversensitivity and that this negative interactive effect of feedback frequency and narcissistic oversensitivity is mitigated by the priming of a growth mindset. These results should be of practical interest to firms as they design their management control systems to improve employee performance, considering the variation in narcissistic oversensitivity among their employees. These results also contribute to recent accounting research on the effects of feedback frequency and employee mindsets.