The use of return on investment (ROI) as a performance measure may lead managers to reject a project that would be favorable for the company as a whole.

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ROI is a financial ratio that measures the profitability of an investment in relation to its cost. While it is a commonly used performance measure, it can also be limiting as it may not account for other important factors such as long-term benefits or strategic alignment. Managers may prioritize projects with a higher ROI, even if they do not align with the overall goals and objectives of the company. As a result, this may lead to the rejection of projects that could have a positive impact on the company as a whole, but have a lower ROI.

The Use of Return on Investment (ROI) as a Performance