Chapter 12, Problem 1RQ

Why is goal congruence important to an organization’s success? How does a responsibility-accounting system foster goal congruence?

To determine

State the reason for which goal congruence is important to the success of the organization and explain the meaner in which the responsibility-accounting system fosters goal congruence.

Explanation of Solution

Responsibility accounting: Responsibility refers to the several concepts and tools used by managers to evaluate the performance of departments and people in order to “foster goal congruence”.

Goal congruence results, only if the managers of subunits throughout an entire organization work towards achieving the objectives that are reliable with the goals made by top management. The managers and employees throughout the organization must try hard in the direction of consistent goals, in order for the organization to be successful.

Responsibility-accounting systems encourage “goal congruence” by setting up the performance criteria by which each manager is measured. Growth of “performance measures and standards” for those measures helps to make sure that managers are determined toward goals that support the overall objectives of the organization.