Subjectivity and the Weighting of Performance Measures: Evidence from a Balanced Scorecard

• DOI: 10.2308/accr.2003.78.3.725
• Publication Date: 2008-04-12T00:32:39Z
• Authors: Christopher D. It...; David F. Larcker; Marshall W. Meyer
• Keywords: Quarter (Canadian coin)

This study examines how different types of performance measures were weighted in a subjective balanced scorecard bonus plan adopted by major financial services firm. Drawing upon economic and psychological studies on evaluation compensation criteria, we develop hypotheses regarding the weights placed measures. We find that subjectivity allowed superiors to reduce “balance” awards placing most weight measures, incorporate factors other than evaluations, change criteria from quarter quarter, ignore predictive future performance, not desired results. evidence suggests psychology-based explanations may be equally or more relevant economicsbased explaining firm's measurement practices. The high level led many branch managers complain about favoritism uncertainty being used determine rewards. system ultimately was abandoned favor formulaic based solely revenues.