 There are several purposes of performance evaluations including promoting goal congruence and coordination, communicating expectations to lower level managers, motivating lower level managers to perform better, providing feedback both down to lower level managers and up to top level managers, and benchmarking against various key indicators. Set managers may not always make decisions consistent with the overall goals of an organization. A company will be able to achieve its goals only if each unit moves in a synchronous fashion towards the overall company goals. The performance measurement system should provide incentives for coordinating the subunit's activities and direct them towards achieving the overall company goals. The performance measuring system should spell out the unit's most critical objectives. Without a clear picture of what management expects, unit managers will have little to guide their daily operating decisions. Unit managers are usually motivated to make decisions that help to achieve top management's expectations. For additional motivation, upper management may offer bonuses to unit managers who meet or exceed performance targets. Top management must exercise caution in setting performance targets. Unattainable goals are D motivators. Performance evaluation systems provide upper management with feedback, the feedback it needs to maintain control over the entire organization. If targets are not met at the unit level, upper management may take corrective actions ranging from modifying the unit goals, if the targets were unrealistic, to replacing the unit managers, if the targets are achievable but the manager fails to reach them. Finally, benchmarking is the practice of comparing a unit's achievements against other company subunits or other companies in the same industry, or best practices in the same industry, or even the subunit's past performance. Performance evaluation systems revolve almost entirely around financial performance. On the one hand, this focus makes sense because the ultimate goal of a company is to generate a profit. On the other hand, current financial performance tends to reveal the results of past actions rather than indicate future performance. We call these lag indicators. Management needs to know the results of past decisions for sure, but they also need to know how current decisions may affect the future. To adequately assess the performance of subunits, managers need to, they need lead indicators in addition to lag indicators. Another limitation of financial performance measures is that they tend to focus on a company's short-term achievements rather than the long-term performance. So performance evaluations are important, and there's something to be prepared for, like Dwight. You're going to give me this raise. I deserve this raise. Yes! Yes! Yes! Ha! The least you can do is keep my salary consistent with inflation. Ha! Yes! Why are you going to give me this raise? Why?