Editorial: Only a Three-Legged Stool? A Review of the Concept of Alignment in the Economics of Performance Management

By G. Sriharana, Michael S. C. Tseb

aUniversity of Adelaide, Australia

bHolmes Institute, Australia

 

Abstract

This editorial revisit the concept of alignment within the agency theoretic view of organisational performance management. Based on an analysis of a real-life case, we examine how far the theoretical reasoning based on the concept of ‘three-legged stool’ is practically relevant. Findings of our case suggests that while there is seemingly misalignment among the three established structures of performance evaluation, decision right allocation and incentive compensation, the ‘misalignment’ is ‘repaired’ with the support of two other governance structures namely, HR and CRM policies. We believe that the design of performance management is not to be confined to the ‘three-legged stool’ but practically extended to other forms of governance structures.

Keywords: Agency Theory; Alignment; Decision Right Allocation; Evaluation; Performance Management; Incentive Compensation

Download: MAF Vol. 2 – Editorial