The Role of Tacit Knowledge in Auditor Expertise and Human Capital Development



“Very broadly speaking, I study the role of financial information within organisations, and in particular within evaluation systems and performancerelated pay, such as financial incentives, in the business sector. Such systems are based on both objective and subjective criteria. Subjective factors include communications skills, team spirit, and a sense of responsibility.

I have studied various aspects of this evaluation process, such as the extent, and role, of subjectivity within it. Research shows, for example, that evaluations involving a high degree of subjectivity had little differentiation. Managers clearly had difficulty with a tough evaluation because they had to continue working with the employee in question. The more subjective aspects you include in the evaluation, the less differentiation there is in compensation and compensation is generally higher. That, of course, is not the intention. If you are too afraid of differentiating, you run the risk of ultimately giving everyone an identical evaluation. I examine the way in which you can improve the usefulness of financial incentives and the role of financial data in evaluating people at all levels within organisations. I also study how employees respond to evaluations, as well as how assessors deal with the task, especially if they have to pass on bad news.

Another area of my research is the question of how capital is distributed among divisions within an organisation. How do you decide at top level how much money to allocate to the various divisions? This subject ties in with joint discussions regarding conglomeration and the spin-off of divisions, for example huge conglomerates whose divisions operate in various industries. How do you achieve an efficient allocation across the various divisions and on what do you base your decision? This area too is also closely tied in with performance evaluation and performance-related pay, i.e. incentives in the broad sense of the term. My field of study is extremely stimulating and practically oriented. It is very important to carry out thorough academic research into performance evaluations and performance-related pay. It benefits both employers and employees.”

This seminar is organised by the Erasmus Accounting Research Group.