Divisional versus company-wide focus: the trade-off between allocation of managerial attention and screening of talent

Article Abstract:

A study is conducted to examine why managers are sometimes more interested in pursuing local objectives than organizational goals. Some American executives, for instance, have been criticized in popular press for focusing too much on divisional performance and ignoring overall corporate performance. It is proposed that this narrow managerial focus is an optimal response to the organization's existing reward system and that the answer to this puzzle is the trade-off between allocation of managerial attention and the costs of screening of managerial talent. The study identifies conditions under which it may be optimal to give up the desired effort allocation for improved screening of managers. The results are discussed.

Evaluation, Recruiting, Executives, Organizational effectiveness, Executive ability, Executive recruiting

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Participation, slack, and budget-based performance evaluation

Article Abstract:

A class of budget-based techniques for performance evaluation can be used to induce informed managers to set unbiased standards. Budget-based compensation regimes are characterized as a menu of linear compensation functions, each of which is correlated with distinct cost estimates made by managers. Budget-based regimes can be effective in accounting contexts that are characterized by asymmetric information and a moral hazard. Research has centered on a single-period setting, and it is not certain whether budget-based regimes can be effective in multi-period settings.

Analysis, Accounting, Compensation management, Management research, Wages, Wages and salaries, Employee performance appraisals, Performance appraisals

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