Dysfunctional behaviour
Dysfunctional behaviour occurs when actions taken to satisfy a measure or reward system harm the organisation’s underlying objectives. Examples include producing unwanted inventory, deferring maintenance, rejecting useful investment or manipulating report timing. The problem can arise even when reported numbers comply with the formal target. Design balanced measures and investigate causal effects, controllability and long-term consequences rather than trying to eliminate all employee discretion.
Worked example
A manager runs unnecessary production to spread fixed overhead across more units and raise absorption profit, increasing inventory and storage risk without extra customer demand.
Common mistake
Meeting a numerical target is not proof of good performance if it damages quality, cash, sustainability or future capability.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | APM | Direct | September 2026–June 2027 |
| ACCA | MA | Direct | September 2026–June 2027 |
| ACCA | PM | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
