Answered: “Managers should be rewarded only on…

“Managers should be rewarded only on the basis of their performance measures. They should be paid no salary.” Do you agree? Explain.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter1: Introduction To Cost Management

Section: Chapter Questions

Problem 12DQ: Firms with higher ethical standards will experience a higher level of economic performance than...

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Making managerial pay contingent on measures of managerial and/or firm performance motivates them to deliver good performance for shareholders. However, it also burdens them with greater risks than they may like. How do organizations balance these two considerations when choosing managerial pay and performance measures?
Is there a way to prevent managers from focusing on accounting measures as performance measures?
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