When setting performance measurement targets it should be considered t

问题

When setting performance measurement targets it should be considered that there is the possibility that managers will take a short term view of the company and may even be tempted to manipulate results in order to achieve their targets.

Which of the following would assist in overcoming the problems of short-termism and manipulation of results?

Rewards should be linked to a wider variety of performance measures including some nonfinancial measures

Managers should only be rewarded for the results achieved in their own departments

Any capital investment decision should be judged using the payback method of investment appraisal

Setting targets involving the overall performance of the company will be more motivating for managers

答案解析

Managers should also have targets which are based on the overall performance of the company and not solely based on their own responsibility centre to aid goal congruence.

Capital investment decisions may be reviewed centrally and judged on the basis of net present value (NPV).

Setting targets involving the overall performance of the company may not be motivating if poorly performing managers are rewarded in the same way as managers who are performing well.

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