Difference between revisions of "ROI as a performance related reward"

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ROI as a performance related reward
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Using [[ROI|ROI]] as a performance related rewards is a dangerous, myopic measure:
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* They encourage division manager to retain assets beyond their optimal life and not to invest in new invest
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* They can cause corporate managers to over-allocate resources to divisions with older assets because the appear to be more profitable
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=Con's=
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All of the con's for [[Accounting Myopia|Accounting Myopia]]
 
[[Category:finance]]
 
[[Category:finance]]
  

Latest revision as of 19:25, 27 August 2020

Using ROI as a performance related rewards is a dangerous, myopic measure:

  • They encourage division manager to retain assets beyond their optimal life and not to invest in new invest
  • They can cause corporate managers to over-allocate resources to divisions with older assets because the appear to be more profitable

Con's

All of the con's for Accounting Myopia