Role for nonfinancial information for senior executives A recent article on the de-

cline of a U.S. corporation described the information provided and the reward structure of senior managers: "Summarized data on sales and sales growth were dis¬ played on senior executives' instrument panels and the managerial reward system gave generous weight to sales volume. In contrast, the senior executives' dash¬ board lacked summarized information on field failures, their effect on customer relations, the performance of competing machines, the growing cancer of failure- prone features, and the extent of customer defections."6 REQUIRED

(a) Should senior executives be responsible for delivering excellent financial per¬ formance to shareholders, leaving the details of customer relations, engineer¬ ing design, and manufacturing operations to the vice presidents and managers of these various departments?

(b) Are financial measures alone sufficient to measure the performance of an or¬ ganization during a period and to use as a basis for compensating the senior executives of an organization? Why or why not?

(c) What problems, if any, arise from monitoring and rewarding senior executives by a combination of financial and nonfinancial measures?

(LO 4, 5)