To reduce the excessive focus of subunit managers on their own subunits, many companies compensate subunit managers on the basis of ________.
A) both the operating income earned by their respective subunits and the company as a whole
B) both the investing income earned by their respective subunits and the company as a whole
C) only the investing income earned by their respective subunits
D) both the net income and earned by their respective subunits and the company as a whole

Question

Quizplus · Accepted Answer

Compensating subunit managers based on both the operating income earned by their respective subunits and the company as a whole can encourage them to not only focus on the performance of their own subunit but also on the overall performance of the company. This can lead to better decision-making and support the achievement of company goals. Option B and C do not consider operating income, which is a crucial factor in assessing the performance of subunits. Option D only considers net income, which may not provide a comprehensive view of performance.

To Reduce the Excessive Focus of Subunit Managers on Their