Management Accounting Section Midyear Meeting

Show Me My Future! The Effect of Forecast Performance Source and Accuracy on Employees’ Willingness to Acquire Distal Skills

• In Event: New Technologies for Management Control

Abstract

This study examines the effect of providing individual forecast performance (i.e., estimated future performance ratings) to employees on their willingness to acquire distal skills that are critical for future work roles. This new type of forward-looking information can be predicted by either human forecasters (e.g., supervisors and human resource advisors) or artificial intelligence (AI)-based systems. Despite their proven forecast accuracy benefits, prior research suggests that employees are sometimes resistant to using AI-based systems for performance evaluation purposes. We conduct an experiment to examine whether and how providing employees with forecasts of their individual performance improves their acquisition of distal skills, and to what extent this effect depends on two important features associated with the forecast performance – namely, forecast performance source (human versus AI system) and accuracy. We find that providing employees with forecast performance improves their willingness to acquire distal skills. Further, employees are more willing to acquire distal skills if the forecast performance source is a HR performance advisor compared to an AI-based performance evaluation system, but this difference is weaker when the forecast source has a lower forecast accuracy in the past. Further analyses show that our findings can be explained by employees’ construal mindset when they are provided with their forecast performance. Our findings contribute to understanding the use of this new type of forward-looking information to encourage employees’ future-oriented skill-acquisition behaviors and suggests that organizations need to be aware of factors that may undermine the effectiveness of this practice.

Authors

• Fangbin Lin, UNSW Sydney

• Mandy Man-Sum Cheng, UNSW Sydney

• Kerry Anne Humphreys, UNSW Sydney