Question - Performance Measurement
Over the last 5 years, True Exploits Ltd. has developed and implemented a new performance evaluation system for its four departments; the system tracks both financial and nonfinancial measures of performance. The goal of the performance evaluation system is to improve overall company profits by monitoring a number of carefully developed indicators of profitability, cost control, and employee efficiency within each department. Managers are rewarded based on their departmental performance. Overall, the system has been taken up wholeheartedly by managers. However, the corporate results for the business have been disappointing. It appears that some managers are making decisions solely for their department's benefit, sometimes to the detriment of the company as a whole.
Required: How can True Exploits change their performance evaluation system to minimize sub-optimization of decisions? Recommend specific changes the company could implement to improve their performance evaluation process.