When rewards such as pay, bonuses, and promotions are tied to meeting budget targets, there is yet another danger: distorting the information system of the organization. Managers and employees learn to lie, to massage, embellish, or disguise the numbers that are used to calculate their pay. But since these are the very numbers that executives use to coordinate the activities of the organization and decide on the allocation of future resources, the productivity and efficiency of the organization is damaged as resources are misallocated.
