The Role Of Performance Feedback In Management Control System

As one of the most important parts in management control system(MCS), management accounting has long been regarded as an information system that creates value. From the viewpoint of Systematology and Cybernetics, MCS is designed to achieve organizational goals. Performance feedback system, which is the subsystem of MCS, is the key to achieve organizational goals. Consequently, performance feedback is widely used in practice, and it is included in both organizational management and management accounting study. However, due to its complexity, research in this field is far from enough. The purpose of this paper is to make an intensive study of the performance feedback system from the perspective of management control. Through questionnaires survey research, experiment, and case study, this paper investigates the application status, antecedents, outcomes and mechanisms of performance feedback. Findings of this paper are as follows.Overall, performance feedback is more frequently used than performance evaluation and formal rewards, and positive feedback is more frequently used than negative feedback. As for the contents, relative performance information is included in 50% of the surveyed feedbacks. The specific amount of outputs, goals and standards, task descriptions, outcome analysis and improving methods are included in over 60% of feedbacks. The objective descriptions of performance and subjective evaluations, which appears in more than 80% of feedbacks, are the most common contents in performance feedback.Antecedents of the performance feedback system include environmental factors(both external and internal) and personal characteristics. The increase of environmental uncertainty would result in the reduction of feedback content and relevancy between feedback content and performance indicators. The increase in the level of competition would raise the feedback frequency, richness, and the relevancy between feedback contents and performance indicators. Higher level of performance management quality and decentralization would lead to higher frequency and richness of performance feedback. The increase of subordinates’ task uncertainty would make superiors give him/her more feedbacks.The outcomes of performance feedback are generally positive: it can improve the economic, psychological, and sociological consequences. Further analysis shows that performance feedback would improve organizational performance through the information and incentives it provides.The findings of multiple research methods show that different feedback contents(information) have different effects. First, objective performance feedback and explanatory feedback provide useful information that helps subordinates’ task learning, and then contribute to performance improvement. Second, the specific amount of outcome, relative performance information, goals and standards, explanatory feedback can affect the subordinates’ expectation of rewards and punishments; therefore they reinforce the incentive effect of performance evaluation and rewarding system, and finally improve organizational performance. In addition, the more specific of the feedback information, the more significant for its outcomes.This paper helps get the whole picture of performance feedback system, including its applications, functions and mechanism. Meanwhile, the findings provide guidance to improve organizations’ management control system, which contributes to the achievement of organizational goals.