In order to motivate top corporate executives to focus on long-term organizational performance, which kinds of financial targets should incentives be based on?
A)monthly
B)annual
C)multiple year
D)quarterly

Question

Quizplus · Accepted Answer

In order to motivate top corporate executives to focus on long-term organizational performance, incentives should be based on multiple-year financial targets. Monthly and quarterly targets encourage short-term thinking and may lead to unethical behavior to meet those targets. Annual targets are slightly better than quarterly targets, but may still encourage short-term thinking. Multiple-year targets encourage executives to take a wider perspective and make decisions that benefit the organization in the long run.

In Order to Motivate Top Corporate Executives to Focus on Long-Term