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In recent years, practitioners have identified a number of problems with traditional performance management (PM) systems, arguing that PM is broken and needs to be fixed. In this chapter, we review criticisms of traditional PM practices that have been mentioned by journalists and practitioners and we consider the solutions that they have presented for addressing these concerns. We then consider these problems and solutions within the context of extant scholarly research and identify (a) what organizations should do going forward to improve PM practices (i.e., focus on feedback processes, ensure accountability throughout the PM system, and align the PM system with organizational strategy) and (b) what scholars should focus research attention on (i.e., technology, strategic alignment, and peer-to-peer accountability) in order to reduce the science-practice gap in this domain.

This study investigates how a firm's regulatory focus (i.e. promotion and prevention foci) affects growth- and efficiency-oriented strategic change, highlighting the role of organizational-level regulatory focus as a cognitive frame within which to interpret performance feedback and its subsequent effects on strategic decisions.

The authors collected longitudinal data on 98 S&P 500 manufacturing firms for a seven-year period. The panel data, which includes texts from the firms' 10-K filings, were then analyzed using a feasible generalized least squares (FGLS) regression estimator to test the authors’ hypotheses.

A firm's strategic change orientation is affected by its regulatory focus and performance feedback: a promotion focus increases the magnitude of growth-oriented strategic change, while a prevention focus favors efficiency-oriented strategic change. Furthermore, both foci moderate the effect of performance feedback on the strategic change orientation: under negative performance feedback, a promotion (prevention) focus increases (decreases) the magnitude of growth-oriented strategic change relative to that of efficiency-oriented change. The findings provide robust evidence that regulatory focus can influence how organizations learn from feedback and formulate strategic change.

The authors’ examination of regulatory focus and organizational learning process relied on large manufacturing firms in the USA. However, learning process could be quite different in small and/or young firms. Future work should expand to a wider range of organizational types, such as nascent entrepreneurial ventures. In addition, the authors’ measurement of regulatory focus using corporate text has inherent weakness and could be supplemented with alternative research methods, such as surveys, interviews or experiments. All in all, however, the findings of this study offer a novel behavioral perspective while demonstrating that a regulatory focus is an important antecedent of organizational learning.

This study highlights the importance of motivational characteristics of the top managers in the process of organizational learning from performance feedback. Furthermore, recruitment of a new top manager should be aligned with the organizational context, values and goals. In addition, corporate governance systems such as managerial compensation schemes need to be carefully designed so as to maximize organizational resilience, especially in the context of performance downturn or environmental change. Establishing a constructive organizational culture so that strategic decisions are not overly swayed by the performance outcomes would also be crucial to the organizational learning process.

This study highlights the importance of understanding the motivational orientations of top managers in organizational learning. In terms of managerial compensation, for instance, an optimal incentive system should reflect the desired performance output by encouraging managerial behavior that corresponds to its objective. Furthermore, motivational orientation of new recruits should be considered in the context of the composition of the top management team members in order to achieve “optimal fit.” In addition, this study suggests that top executives' regulatory focus can be a key factor for organizations in balancing goals of different value orientations.

The findings of this study demonstrated that a firm-level regulatory focus has a significant effect on organizational learning and strategic change following performance feedback. The authors hope this study provides an impetus for future discussions on the microcognitive mechanisms of organizational learning by exploring the relations between organizations' regulatory foci, performance feedback and strategic change orientations.

In this chapter, we present a theory on how organizational performance feedback influences individual decision-maker cognitions and thereby changes a team’s attention focus in terms of strategy. We argue that when performance compares unfavorably to aspiration levels, decision-makers reconsider current strategies in favor of unfamiliar, uncertain ones and become more risk tolerant. Furthermore, as decision-makers devote additional cognitive resources to do so, changes in attention focus in a decision-making team will be observed. Using data from a business simulation and repeated questionnaires, we capture the teams’ attention focus and the organizational performance feedback evaluation process of the individuals and teams.

Corporate social responsibility (CSR) captures organizational actions that account for economic, social and environmental performance. CSR is becoming increasingly relevant for organizations because of changing societal norms and attitudes. Prior research on CSR shows that socially responsible actions are beneficial for the firm and the society. However, much less is known about the antecedents of CSR. The authors suggest that CSR is a strategic organizational decision and use organizational performance feedback theory to explain how organizations decide on CSR activities.

Using a longitudinal sample of 189 US public firms with 1,050 observations, the authors test how performance decreases below aspirations and performance increases above aspirations influence CSR. The authors also test for the moderation effect of LGBT inclusion on these relationships as a proxy for CSR consistency and stakeholder support.

The authors find that as organizational performance decreases further below aspirations, CSR increases and LGBT inclusion strengthens this increase. The authors also find that as performance increases above aspirations, organizations become more engaged in CSR, but LGBT inclusion does not moderate this relationship.

Prior research recently started extending the performance feedback theory to CSR, but empirical findings on the relationships between performance feedback and CSR are seemingly inconclusive. Moreover, studies had primarily focused on performance below aspirations and to a much lesser extent on performance above aspirations. This study aims to better integrate organizational performance feedback theory to the CSR discourse.

This paper synthesizes the extant feedback literature, focusing on how feedback affects an auditor’s learning, performance, and motivation. Performance feedback is an important component in the auditing environment for ensuring quality control and for developing and coaching staff auditors. However, the literature on feedback in the audit environment is fragmented and limited making it difficult to assess its behavioral effects on auditors. This paper has three main objectives. The first is to review some of the influential research in psychology and management to identify key variables and issues that appear to be critical in the study of behavioral consequences of feedback in organizational settings. The second is to review performance feedback research specifically in auditing to identify the areas previously examined and synthesize the findings. The third is to suggest a variety of future research opportunities that may assist in developing an understanding and knowledge of the behavioral effects of feedback on auditors. The literature analysis has significant implications for audit research and practice. In particular, the analysis provides important insights into understanding who, how, and when performance feedback should be given to improve its effectiveness in the audit environment.

In an ever-complexifying business context, organizations need to continuously adapt, adjust and change their routines in order to remain competitive. Drawing upon a qualitative study focusing on three Southeastern European countries (Greece, Bulgaria and Serbia), this paper explores the role played by managerial feedback on routine change within small and medium enterprises (SMEs).

The authors draw from an in-depth qualitative study of six manufacturing SMEs located in three Southeastern European countries: Greece, Bulgaria and Serbia. The process of data collection, which spanned over a period of fifteen months, was centred around both interviews and observations.

The authors argue that feedback is a powerful and constructive managerial practice that sets to initiate changes in routines through three different means: (1) making sense of the changes required (by channelling information), (2) rationalizing the decision for changing the unproductive routines and (3) reviewing the process of change through the legitimization of situational routines. In addition to this, the authors found that managers perceive that routines need to change for four main reasons: inability to meet targets (e.g. performance); too cumbersome to deal with complex environments; inflexibility and failing to provide control; obsolete in terms of providing a sense of confidence.

This research provides evidence that feedback is an important managerial means of changing routines in informal, less bureaucratic and less formalized workplaces such as SMEs. Managers might embrace deformalized approaches to feedback when dealing with routines in SMEs. Working within a very sensitive structure where the majority of changes on routines need to be operationalized through their hands, managers and practitioners should deploy feedback in order to highlight the importance of routines as sources of guiding actions, activities and operations occurring in SMEs that create better internal challenges and processes.

The authors’ research suggests that routines are subject of change in dynamic and turbulent situations. Perceiving routines as antithetical to change fails to capture the distinctive features of change such as its fluidity, open-endedness, and inseparability. Likewise, the authors claim that routines are socially constructed organizational phenomena that can be modulated in different ways in SMEs.

The purpose of this paper is to identify how organizational learning processes influence perceived organizational performance and examine the moderating roles of organizational justice and trust in managers therein.

This study develops a theoretical model to exhibit how knowledge acquisition and transfer activities influence perceived organizational performance. Data were collected from 515 respondents and analyzed by PROCESS macro for SPSS.

This study found that feedback learning flows are strongly mediated between learning stocks and organizational performance. It also found that organizational justice moderates the effect of learning stocks on organizational performance through feed-forward learning flows, while trust in manager moderates the effect of learning stocks on organizational performance through feedback learning flows.

This study has a limitation in which it uses self-report data to measure all constructs. The objective measure may be necessary for future study.

The implications of this study are twofold. First, it finds that the higher organizational justice, the better the transfer of knowledge from the bottom up. When firms need to explore new knowledge, fairness in procedure and the distribution system is critical. Second, the higher the trust in management, the better the transfer of knowledge from the top down. The role of managers is instrumental in persuading employees and disseminating knowledge.

Combining functionalist and critical perspectives and developing a theoretical model, this study contributes to the understanding of how trust and justice facilitate learning activities within organizations.

This chapter focuses on what the key decision makers in organizations decide after having received information on the current state of the organizational performance. Because of strong attributions to success and failure, it is impossible to predict in advance which concrete actions will occur. We can however find out what kinds of actions are decided upon by means of an organizational learning model that focuses on the hastenings and delays after performance feedback. As an illustration, the responses to performance signals by trainers and club owners in Dutch soccer clubs are analyzed.

Although previous research has investigated how performance feedback may affect firms’ strategic actions, their findings has been inconsistent. The relationship between performance feedback and firms’ strategic activities thus appears complex. Moreover, the authors contend that it may vary with the measurement strategies employed (i.e. social or historical feedback, operationalizations of strategic actions or accounting- and market-based performance indicators) and the national contexts.

Therefore, the current article presents a comprehensive meta-analysis of prior research, including 1,637,817 sample observations from 101 studies that span more than 18 countries.

The results indicate that (1) performance that are below or above aspirational levels generally has a positive relationship with firms’ strategic actions; (2) these relationships are contingent on the implementation forms taken by the key variables, such as performance feedback, strategic actions and performance indicators; and (3) the relationships are much stronger in countries where managerial discretion is greater.

The findings contribute to the clarification of long-standing theoretical and empirical debates regarding the relationship between performance feedback and strategic actions, as well as some pertinent directions for future research.

The mechanism by which leadership influences organizational performance has largely been unexplained. This study intends to fill this gap. This study identified the six specific leadership practices: promoting inter-unit collaboration, managing diversity, providing performance feedback, ensuring goal directedness, developing employees, and resource provision. This study also identified a number of generic functions of leadership, that is, promoting cooperation, clarifying employees’ roles, and improving skills in organization. Then the mediating effects of the three generic functions were tested in order to link the specific leadership practices to organizational performance. The paper aims to discuss these issues.

Structural equation modeling was used for analyzing the data from the 2014 Federal Employee Viewpoint Survey to investigate the mediating model.

The effects of the six specific leadership practices on organizational performance were mediated by the three generic leadership functions.

The result of this study delineated the linking paths between leadership practices and organizational performance which has largely remained as a black box. Moreover, since the specific leadership practices are categorized by the generic functions that are instrumental for organizational performance, it provides theoretical and empirical grounds for managerial prescriptions for improving organizational performance.