For many years, managers at Formosa Plastics Group (FPG) used a management control system with an element

Question:

For many years, managers at Formosa Plastics Group (FPG) used a management control system with an element that was somewhat unique for a large corporation-all employees were evaluated subjectively. In making their judgments, evaluators looked at objective performance measures but subjectively made many adjustments for factors they deemed to be beyond the employee's control. One effect of this system was thai bottom-line profit was not even considered in the evaluations of some profit center managers: These managers were evaluated only in terms of the controllable factors driving profit, such as meeting production schedules, efficiency, cost control, and quality.

When pressed as to how these factors were weighted in relative importance, Mr. Hsiao said the first factor would be weighted about 40 percent, the second about 30 percent, and the other three about 30 percent in total. But he emphasized, "The weightings are not made very clear to anybody." It was clear to Mr. Hsiao, however, that achievement of his division's profit plan was certainly not the only factor on which he was evaluated.