Goal congruence
Goal congruence is the alignment between a manager's personal incentives and the organisation's objectives, such that decisions that benefit the manager also benefit the firm.
See it move
A Venn diagram places the manager's incentive in one circle and the firm's objective in the other; the shaded intersection is labelled "Goal congruence" and represents the zone where both interests coincide. Where the circles diverge outside the overlap, rational managers will optimise their own performance measure at the firm's expense. A note beneath the diagram states that without this alignment, self-interested behaviour is the predictable outcome — not a failure of character.
Check yourself
A divisional manager at Callera Group is assessed solely on this quarter's operating profit. To protect his bonus, he defers a major maintenance overhaul costing €80,000 now that would prevent an estimated €300,000 breakdown over the next two years. What does this situation best illustrate?