R&D Storage Is a Small,but Diversified,moving and Storage Company

question 56

Essay

R&D Storage is a small,but diversified,moving and storage company.In recent years,its profit has declined to unacceptable levels.To change the direction of the company,the board of directors hired a new chief executive officer.She is currently considering three alternative ways to reward division managers for performance.They are:
1.Give each manager a competitive salary with no bonus for performance.
2.Give each manager a base salary with the largest portion being a bonus based on performance,ROI being the yardstick.
3.Give each manager a base salary with a bonus based on comparative performance with the other divisions.
Required:
Evaluate each of the ideas,giving strengths and weaknesses.
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Definitions:

Arbitration Clause

An arbitration clause is a section in a contract that requires the parties to resolve disputes through arbitration instead of going to court.

Insurance Dispute

A disagreement between an insurance provider and a policyholder regarding the coverage or compensation terms of an insurance policy.

Commercial General Liability Policy

An insurance policy designed to provide coverage to businesses for bodily injury, personal injury, and property damage caused by the business’s operations or products.

Personal Injury Suits

Legal actions initiated by individuals seeking compensation for injuries they have suffered due to someone else's negligence or wrongdoing.