Sensitive performance measures ________.
A) the salary component of the managers
B) are not affected by managers' performance and fail to induce them to improve
C) motivate the manager as well as limit the manager's exposure to risk, reducing the cost of providing incentives.
D) increases the exposure of credit

Question

Quizplus · Accepted Answer

Sensitive performance measures can provide motivation to the manager because these measures are directly related to their performance. Also, these measures can limit the manager's exposure to risk, which in turn reduces the cost of providing incentives to the manager. Option A is incorrect because sensitive performance measures are not directly related to the salary component of managers. Option B is incorrect because sensitive performance measures are affected by managers' performance and can indeed induce them to improve. Option D is irrelevant to the concept and is incorrect.

Sensitive Performance Measures ________