A divisional manager cuts the staff training budget and delays machine maintenance in order to meet this year's profit target. Which of the following is most likely to reduce this kind of behaviour?

Correct answer: B) Assessing performance using a range of financial and non-financial measures, including long-term indicators

Explanation

Cutting discretionary spending to boost short-term profit is short-termism. Using a broader set of measures, such as staff development, quality and customer satisfaction, and linking rewards to longer-term performance, reduces the incentive. Stronger links to annual profit or to short-term cost variances would make the problem worse.