The parent company would want to reward managers based on division revenues because
A)It decreases the incentives for the managers to make good decisions for their division
B)It increases the incentives for the managers to make good decisions for their divisions
C)It does not change the motivations for the managers
D)None of the above

Question

​The parent company would want to reward managers based on division revenues because
A)​It decreases the incentives for the managers to make good decisions for their division
B)It increases the incentives for the managers to make good decisions for their divisions
C)It does not change the motivations for the managers
D)​None of the above

Quizplus · Accepted Answer

Rewarding managers based on division revenues increases their incentives to make good decisions for their divisions. This is because division revenues are directly related to the performance of the division and the manager's ability to generate revenue. Therefore, tying compensation to division revenues can motivate managers to work harder to improve their division's performance. A is incorrect because decreasing incentives is not the desired outcome. C is incorrect as it implies no change in motivation, which is not the goal. D is incorrect as there is a clear answer.

​The Parent Company Would Want to Reward Managers Based on Division

The Parent Company Would Want to Reward Managers Based on Division