You are the manager of the Midwest Region, a 27-restaurant division that is part of the chain “Bites and Bits.” The restaurants offer casual dining and compete with such chains in your region as Olive Garden and Outback Steakhouse. You receive an annual cash bonus of 5 percent of sales when residual income in your region exceeds the required minimum return on invested capital of 15 percent. You are using a similar performance evaluation plan to reward each of the managers in your 27 restaurants.

You are concerned that important performance variables are being overlooked. For example, you have heard complaints from other regions and in your own region that the quality of the food is bad, it is difficult to retain serving staff in the restaurants, and finding a good chef is very difficult. At an upcoming planning meeting for all regional directors, the agenda includes considering the business performance evaluation and compensation plan. What could you say about the current compensation plan and what would you propose to remedy the problems?