Which of the following statements is FALSE about performance metrics?
A) The cost benefit criterion leads companies to rely on imperfect, low-cost performance metrics.
B) The more a manager's reward depends on a performance metric, the more incentive the manager has to take actions to maximize that measure.
C) Top management should define the performance metric to promote goal congruence and base enough reward on it to achieve managerial effort.
D) The more uncontrollable factors affect a manager's reward, the less risk the manager bears.

Question

Quizplus · Accepted Answer

This statement is false because the more uncontrollable factors affect a manager's reward, the more risk the manager bears. If a manager's reward is heavily dependent on factors beyond their control, such as the overall market or economic conditions, the manager may be unfairly penalized despite their efforts.

Which of the Following Statements Is FALSE About Performance Metrics