PetroChina Company Limited is China's biggest oil and gas producer. PetroChina uses a very accurate and...

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PetroChina Company Limited is China's biggest oil and gas producer. PetroChina uses a very accurate and efficient performance evaluation system. PetroChina uses performance contracts to ensure performance supports its business strategy. All managers in nationwide companies, regional companies, senior management, and several functional departments are required to sign the contract. The contract identifies specific KPIs used in assessment and emphasizes meeting budget targets. KPI targets are discussed and then set by the CEO, senior management, and the company's general manager before being sent for approval to the budget commission and the board of directors. The KPI targets for an individual regional company are jointly determined by the general manager of the nationwide company and that particular company's top management. All values are clearly mentioned in these performance contracts, which are first signed by the board of directors and then by managers from nationwide and regional companies. PetroChina also involves its middle- and low-management officials in the budgeting process. Managers submit annual budget drafts to top-level decision-makers. The budgets include specific annual targets, goals, and action programs for each product line company. At the end of the year, senior managers are awarded bonuses based on their achievements in the performance contract. The performance contract score includes two components: a contribution score and actual performance score. These two scores added together represent the performance contract score for a senior manager. DISCUSSION QUESTION 1. Which of the performance measures criteria are influenced by the performance contracts? Explain your answer. PetroChina Company Limited is China's biggest oil and gas producer. PetroChina uses a very accurate and efficient performance evaluation system. PetroChina uses performance contracts to ensure performance supports its business strategy. All managers in nationwide companies, regional companies, senior management, and several functional departments are required to sign the contract. The contract identifies specific KPIs used in assessment and emphasizes meeting budget targets. KPI targets are discussed and then set by the CEO, senior management, and the company's general manager before being sent for approval to the budget commission and the board of directors. The KPI targets for an individual regional company are jointly determined by the general manager of the nationwide company and that particular company's top management. All values are clearly mentioned in these performance contracts, which are first signed by the board of directors and then by managers from nationwide and regional companies. PetroChina also involves its middle- and low-management officials in the budgeting process. Managers submit annual budget drafts to top-level decision-makers. The budgets include specific annual targets, goals, and action programs for each product line company. At the end of the year, senior managers are awarded bonuses based on their achievements in the performance contract. The performance contract score includes two components: a contribution score and actual performance score. These two scores added together represent the performance contract score for a senior manager. DISCUSSION QUESTION 1. Which of the performance measures criteria are influenced by the performance contracts? Explain your answer.

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The performance measures criteria influenced by the performance contracts at PetroChina are Key Perf... View the full answer