Cognitive biases in implementing a performance management system: behavioral strategy for supporting managers’ decision-making processes

Abstract

Purpose The purpose of this paper is twofold: to provide a clear picture on the cognitive biases affecting managers’ decision-making process of implementing a performance management system (PMS), and to identify managerial practices, measures and the key challenges to manage the cognitive biases in the corporate strategy. Design/methodology/approach Semi-structured interviews, based on theoretical milestones of performance management and cognitive psychology, gathered from 104 experienced professionals’ evaluations on the likelihood and impact of managers’ cognitive biases in PMS implementation, potential solutions as well as drivers and connected criticalities. Findings Recurring cognitive biases, together with considerable impacts, emerged in the first, and most strategic, phases of the PMS implementation. The authors developed a roadmap to support corporate transition to integrate behavioral strategy into the PMS implementation aiming to achieve economically and efficiently sound performance. Research limitations/implications From the view of proper behavioral strategy affirmation in performance management literature, in a small way, the authors contribute to a desirable taxonomy of cognitive biases so differentiated decision-making scenarios may be built to compare results and draw new observations. Behavioral studies could transversally connect the cognitive biases of performance management to actors’ sociodemographic features and personality types. Practitioners may check biases affecting their organizations by means of the questionnaire and, consequently, adopt the framework illustrated to reduce them. Originality/value Performance management literature has constantly investigated positive and negative behavioral factors related to the PMS. This study, instead, makes a theoretical and methodological contribution to the PMS implementation as a decision-making process. The authors propose a theoretical framework that integrates cognitive psychology insights and applies measures to reduce biases.

Guest editorial: Behavioral strategy: (re-) affirming foundations

“…The opening article of this Special Issue is by Ivo Hristov et al (2022) and it is entitled “Cognitive biases in implementing a performance management system: behavioral strategy for supporting managers’ decision-making processes.” The purpose of this paper is twofold: to provide a clear picture of the cognitive biases affecting managers’ decision-making process of implementing a performance management system (PMS), and to identify managerial practices, measures and the key challenges to managing the cognitive biases in the corporate strategy. Authors conducted semi-structured interviews, based on theoretical milestones of performance management and cognitive psychology, gathered from 104 experienced professionals’ evaluations on: the likelihood and impact of managers’ cognitive biases in PMS implementation, potential solutions to biases and drivers of biases.…”

“…The opening article of this Special Issue is by Ivo Hristov et al (2022) and it is entitled "Cognitive biases in implementing a performance management system: behavioral strategy for supporting managers' decision-making processes." The purpose of this paper is twofold: to provide a clear picture of the cognitive biases affecting managers' decision-making process of implementing a performance management system (PMS), and to identify managerial practices, measures and the key challenges to managing the cognitive biases in the corporate strategy.…”

The adoption of the key performance indicators to integrate sustainability in the business strategy: A novel five‐dimensional framework

“…The Sustainable Development Goals (SDGs) discussed with the Paris Agreement in 2015 in view of the Agenda 2030 are far from to be integrated in the organizations. In fact, despite a large part of the literature suggests that the strategic alignment of SD drivers is positively correlated to the company's performance (Adams & Frost, 2006; De Villiers et al, 2016; Figge et al, 2002), its integration with performance management system (PMS) remains suboptimal and not adequately addressed (Braune et al, 2019; Hristov, Camilli, & Mechelli, 2022; Searcy, 2011) mainly for the absence of a strategic system based on sustainable performance indicators able to support managers in decision‐making process (Hristov et al, 2021). Limited research has focused on practical approaches supported by the managerial experience in developing current solutions to integrate the main key value drivers of the sustainable development (SD) in the business strategy (Hristov, Chirico, & Ranalli, 2022; Lisi, 2016).…”

La toma de decisiones (TD) en relación con la eficacia organizativa en empresas

“…En lo referente a beneficios, en cuanto a toma de decisiones Buchana & Naicker (2014) afirman que las empresas suelen generar gastos en una cantidad significativa de dinero en lo referido a mantenimiento de sus sistemas comerciales que tienen la capacidad de procesar, administrar y entregar información, y en todo eso cada jefe o personal directivo tiene que evaluar y saber los riesgos antes de poder tomar una buena decisión. Por ende, Balta et al (2010) añaden que en estos últimos tiempos la toma de decisiones ha adquirido más valor y cuidado para los diferentes directivos de las organizaciones; por tanto, Hristov et al (2022) registraron instrucciones para mejorar la selección de gerentes, y el asumir los límites de la racionalidad humana ha permitido avanzar y sugerir enfoques válidos.…”

“…Por lo tanto, los estudios psicológicos han puesto de relieve los aspectos cognitivos básicos del proceso de TD (toma de decisiones) de gestión, razón por la que se han registrado instrucciones para mejorar la selección de gerentes. Y el asumir los límites de la racionalidad humana ha permitido avanzar y sugerir enfoques válidos (Hristov et al, 2022). Asimismo, Akter et al (2019) en relación a la actualidad, el conocimiento de negocios, el fundamento en decisiones y el analizar se ha hecho base de la toma de decisiones en cuanto al entorno empresarial, ya que el tomar una decisión precisa y oportuna no solo es bueno e importante, sino que es indispensable para la subsistencia en el entorno empresarial y competitivo de hoy en día.…”