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Management Control Problems

In: Business and Management

Submitted By elinolo
Words 548
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TWO BUDGET TARGETS
Right or Wrong-Logical Ethical Analysis
Joe has created two separate targets based on two separate reasons. Firstly he has created aggressive performance targets for his subordinates in order for them to be as effective as possible and always perform at their best. On the contrary he has negotiated highly achievable targets for himself the past three years and gotten away with it through being the one who knows the market better than his superiors and thus
This is not an unknown or unusual phenomenon, but rather a common way of “creating slack”. There can however be reasons for this kind of behavior. Though it may seem unethical it can be argued for being a way to protect oneself from rigid, unfair performance evaluations. The previously stated can further be argued to be appropriate considering the rapidly growing, uncertain market that may justify taking such safety actions due to unpredictability of the performance measures that this type of market can cause.
He does not fire those of his subordinates that fails to meet their targets (only 25% are met), but nor does he give bonuses to those who “underachieves”. Instead, he simply provides the vast majority of the bonus to those (relatively few) who does meet the aggressive performance targets. As for himself, he has negotiated for highly achievable targets leading to high bonus rewards as a consequence of exceeding those targets by staggering 40%.
However, it is safe to say that Joe’s actions definitely are affected by self-interests in terms of security in reaching the performance targets and thus achieving a successful evaluation leading to a great bonus for him. The contradiction in this is the unfairness it creates between the evaluation of himself, compared to his subordinates. The majority of the subordinates get to settle for the simple bonus of not getting fired. Even though the...

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