The Effects of Reporting Structure and Reporting Frequency on Discretionary Performance Evaluations and Employee Effort

• In Event: Inducing Employee Effort

Abstract

Span of control and reporting frequency are two important control system elements that jointly determine the benchmarks that managers have available when evaluating employees’ performance. Using two experiments, we investigate whether widening managers’ span of control and increasing reporting frequency affect managers’ evaluation decisions and employees’ effort choices in a discretionary evaluation setting. We predict and find that managers with a wider span of control evaluate top performers more favorably and weaker performers less favorably. We also find that increasing reporting frequency has a negative effect on managers’ evaluations of their best performing employees, but only when their span of control is wide. Inconsistent with our predictions, we find no evidence that employees condition their effort level on their manager’s span of control and the frequency with which their performance is reported to their manager. We discuss the implications of our findings for management accounting research and practice.

Authors

• Victor Maas, University of Amsterdam

• Razvan Ghita, University of Southern Denmark