Allocating Costs for Goal Congruence
Introduction
Creative Consumer Consultants (CCC) is a corporate consulting firm with offices in New York, Chicago, Paris and Little Rock that currently assigns general costs to each office in a degree dependent on the office's contribution to net income. Managers are free to make decisions they believe to be in the best interests of the company and their specific office, and they receive bonuses based on (1) net income of the individual office and (2) sharing the profit of the company overall. The purpose here is to assess how changes in how offices are charged for general costs could positively affect goal congruence within CCC.
Moving in a Single Direction
Goal congruence is a "condition where employees, working in their own personal interest, make decisions that help meet the overall goals of the organization" (Noll, n.d.). Where goal congruence is high, employees make decisions based on the good of the company as well as in their own self-interest. It is in their best interest to make sound decisions on the company's behalf so that the business continues to grow and prosper, and they continue to receive rewards based on that growth and remain employed with all of the benefits they currently enjoy. In short, it is not in the employee's best interest to make decisions that will be harmful to the company in the long term. Such decisions negatively affect the employee's future.
Certainly CCC's senior management wants to see each office do well over time. Offices such as the Little Rock location cannot be expected to perform as well monetarily as the one in New York, but all should exhibit growth over time.
It is reasonable that CCC corporate would assess each office a portion of non-traceable costs incurred in the conduct of business. Though it may be reasonable, it also may be quite demoralizing to those in offices around the world. As example, the Paris office has struggled in the past year but did show a...