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
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| 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 |
