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Goal congruence

Goal congruence exists when managers’ and employees’ decisions that serve their own objectives also support the organisation’s goals. Performance measures, transfer prices, targets and rewards influence that alignment. A technically correct measure can encourage a poor decision if it rewards local results while ignoring wider costs or long-term effects. Evaluate the decision rule and behaviour together rather than assuming personal motivation automatically creates organisational value.

Worked example

A divisional manager rejects a positive residual-income project because it lowers the division’s average ROI and their bonus. The incentive system lacks goal congruence.

Common mistake

A favourable divisional result can be harmful to the group if it arises from internal pricing or actions that damage other units.

Where it appears in your exams

QualificationExamRelationshipPeriod
ACCA APM Direct September 2026–June 2027
ACCA BT Supporting September 2026–June 2027
ACCA MA Direct September 2026–June 2027
ACCA PM Direct September 2026–June 2027
FIA FBT Supporting September 2026–June 2027
FIA FMA Direct September 2026–June 2027