'Relative performance contracts with hindsight' are a good idea because
A)They focus on historical standards such as last year's results
B)They make managers look good because "with hindsight' means that managers can adjust their targets after having seen actual outcomes
C)They encourage a philosophy of doing what is best for the firm in the light of current circumstances
D)They encourage competitiveness between individuals in an organization

Question

Quizplus · Accepted Answer

Relative performance contracts with hindsight focus on the current circumstances and encourage managers to make decisions based on what is best for the firm at the time. This promotes flexibility and adaptability, which are essential in a rapidly changing business environment. They do not focus solely on historical standards, and they do not allow managers to simply adjust their targets to make themselves look good. They also do not encourage unhealthy competition between individuals within the organization.

'Relative Performance Contracts with Hindsight' Are a Good Idea Because