Kế toán tài chính 2 - Chapter 26: Performance management and evaluation

Performance Management and EvaluationMultimedia Slides by: Gail A. Mestas, MAcc, New Mexico State UniversityChapter 26Learning ObjectivesDescribe how the balanced scorecard aligns performance with organizational goals, and explain the role of the balanced scorecard in the management cycle.Discuss performance measurement, and state the issues that affect management’s ability to measure performance.Copyright © Houghton Mifflin Company. All rights reserved.Learning Objectives (cont’d)Define responsibility accounting, and describe the role that responsibility centers play in performance management and evaluation.Prepare performance reports for cost centers using flexible budgets and for profit centers using variable costing.Copyright © Houghton Mifflin Company. All rights reserved.Learning Objectives (cont’d)Prepare performance reports for investment centers using traditional measures of return on investment and residual income and the newer measure of economic value added.Explain how properly linked performance incentives and measures add value for all stakeholders in performance management and evaluation.Copyright © Houghton Mifflin Company. All rights reserved.Organizational Goals and the Balanced ScorecardObjective 1Describe how the balanced scorecard aligns performance with organizational goals, and explain the role of the balanced scorecard in the management cycleCopyright © Houghton Mifflin Company. All rights reserved.The Balanced Scorecard is a framework that links the perspectives of an organization’s four basic stakeholder groups with the organization’s mission and vision, performance measures, strategic plan, and resourcesDeveloped by Robert S. Kaplan and David P. NortonCopyright © Houghton Mifflin Company. All rights reserved.Four basic stakeholder groups of an organizationFinancial (investors)Learning and growth (employees)Internal business processesCustomersThe Balanced Scorecard (cont’d)Copyright © Houghton Mifflin Company. All rights reserved.To succeed, an organization must add value for all groups in both the short and long termsMust determine each group’s objectivesTranslate objectives into performance measures that have specific, quantifiable performance targetsThe Balanced Scorecard (cont’d)Copyright © Houghton Mifflin Company. All rights reserved.Managers must evaluate the company vision from the perspective of each stakeholder groupSeek to answer one key question for each groupThese key questions align the organization’s strategy from all perspectivesPlanningCopyright © Houghton Mifflin Company. All rights reserved.Financial (investors)To achieve our organization’s vision, how should we appear to our shareholders?Learning and growth (employees)To achieve our organization’s vision, how should we sustain our ability to improve and change?Internal business processesTo succeed, at what business processes must our organization excel?CustomersTo achieve our organization’s vision, how should we appear to our customers?Planning (cont’d)Copyright © Houghton Mifflin Company. All rights reserved.Once the organization’s objectives are set, managers can select performance measures and set performance targetsTranslates objectives into an action planPlanning (cont’d)Copyright © Houghton Mifflin Company. All rights reserved.If Vail Resorts’ collective vision and strategy is customer satisfaction, its managers might establish the following overall objectivesPlanning (cont’d)Copyright © Houghton Mifflin Company. All rights reserved.These overall objectives are then translated into specific performance objectives and measures for managersExamples of how performance measures might be measured for a ski lift manager includeFinancialHourly lift costLift ticket sales in dollars and in unitsPlanning (cont’d)Copyright © Houghton Mifflin Company. All rights reserved.Learning and growthNumber of cross-trained tasks per employeeEmployee turnoverInternal business processesNumber of accident-free daysNumber and cost of mechanical breakdownsAverage lift cycle timeCustomersAverage number of ski runs per daily lift ticketNumber of repeat customersNumber of PEAKS points redeemed Planning (cont’d)Copyright © Houghton Mifflin Company. All rights reserved.Sample Balanced Scorecard of Linked Objectives, Performance Measures, and TargetsCopyright © Houghton Mifflin Company. All rights reserved.ExecutingBalance the needs of all stakeholder groups when making management decisionsUse mutually agreed-on strategic objectives for the entire organization as the basis for decision makingImprove performance by verifying and tracking causal relationshipsCopyright © Houghton Mifflin Company. All rights reserved.ReviewingEvaluate performance by comparing financial and nonfinancial results with performance measurement targetsAnalyze results and recommend changesDetermineIf the targets were metWhat measures need to be changedWhat strategies or objectives need revisionCopyright © Houghton Mifflin Company. All rights reserved.ReportingPrepare reports of interest to stakeholder groupsFinancial performance reportsCustomer PEAKS statementsInternal business processes reports for targeted performance measures and resultsPerformance appraisals of individual employeesSuch reports enable managers to monitor and evaluate performance measures that add value for stakeholder groupsCopyright © Houghton Mifflin Company. All rights reserved.The Balanced Scorecard and the Management CycleDiscussionWith regard to evaluating the company vision from the perspective of the learning and growth (employee) stakeholder group, what key question would managers want to answer?To achieve our organization’s vision, how should we sustain our ability to improve and change?Copyright © Houghton Mifflin Company. All rights reserved.Performance MeasurementObjective 2Discuss performance measurement, and state the issues that affect management’s ability to measure performanceCopyright © Houghton Mifflin Company. All rights reserved.Performance Management and Evaluation System is a set of procedures that account for and report on both financial and nonfinancial performanceUsed to identifyHow well a company is doingWhere it is goingWhat improvements will make it more profitableCopyright © Houghton Mifflin Company. All rights reserved.What to Measure, How to MeasurePerformance measurementThe use of quantitative tools to gauge an organization’s performance in relation to a specific goal or an expected outcomeTo succeed, managers must be able to distinguish between what is being measured and the actual measures used to monitor performanceCopyright © Houghton Mifflin Company. All rights reserved.Other Measurement IssuesA unique set of performance measures must be developed that are appropriate to each organization’s situationCopyright © Houghton Mifflin Company. All rights reserved.Other Measurement Issues (cont’d)Issues to consider other than what to measure and how to measure itWhat performance measures can be used?How can managersMonitor the level of product or service quality?Monitor production and other business processes to identify areas that need improvement?Measure customer satisfaction?Monitor financial performance?Copyright © Houghton Mifflin Company. All rights reserved.Other Measurement Issues (cont’d)Are there other stakeholders to whom a manager is accountable?What performance measures do government entities impose on the company?How can a manager measure the company’s effect on the environment?Copyright © Houghton Mifflin Company. All rights reserved.DiscussionWhat does a performance management and evaluation system identify?How well a company is doing, where it is going, and what improvements will make it more profitableCopyright © Houghton Mifflin Company. All rights reserved.Responsibility AccountingObjective 3Define responsibility accounting, and describe the role that responsibility centers play in performance management and evaluationCopyright © Houghton Mifflin Company. All rights reserved.Responsibility AccountingAs part of their performance management systems, many organizationsAssign resources to specific areas of responsibilityTrack how the managers of those areas use those resourcesEvaluate managers at all levels in terms of their ability to manage their area of responsibility in keeping with organizational goalsCopyright © Houghton Mifflin Company. All rights reserved.Responsibility Accounting (cont’d)Is an information systemClassifies data according to areas of responsibilityReports each area’s activities by including only the revenue, cost, and resource categories that the assigned manager can controlCopyright © Houghton Mifflin Company. All rights reserved.Responsibility Accounting (cont’d)Responsibility centerAn organizational unit whose manager has been assigned the responsibility of managing a portion of the organization’s resourcesThe activity of the responsibility center dictates the extent of a manager’s responsibilityCopyright © Houghton Mifflin Company. All rights reserved.Types of Responsibility CentersCost centersDiscretionary cost centersRevenue centersProfit centersInvestment centersCopyright © Houghton Mifflin Company. All rights reserved.Cost CenterA responsibility center whose manager is accountable only for controllable costs that have well-defined relationships between the center’s resources and products or servicesPerformance is usually evaluated by comparing an activity’s actual cost with its budgeted cost and analyzing the resulting variancesCopyright © Houghton Mifflin Company. All rights reserved.Cost Centers (cont’d)ExamplesAssembly plants in manufacturing organizationsRelationship between the costs of resources and resulting products is well definedFood services in hospitals and nursing homesClear relationship between costs of food and direct labor and the number of inpatient meals servedCopyright © Houghton Mifflin Company. All rights reserved.Discretionary Cost CenterA responsibility center whose manager is accountable for costs only and in which the relationship between resources and products or services produced is not well definedCost-based measures cannot usually be used to evaluate performanceCopyright © Houghton Mifflin Company. All rights reserved.Discretionary Cost Centers (cont’d)ExamplesAdministrative activitiesAccountingHuman resourcesLegal servicesResearch and DevelopmentMight measure number of patents obtained and number of cost-saving innovations developedService organizationsUnited Way might measure administrative activities by how low their costs are as a percentage of total contributionsCopyright © Houghton Mifflin Company. All rights reserved.Revenue CenterA responsibility center whose manager is accountable primarily for revenue and whose success is based on its ability to generate revenuePerformance is usually evaluated by comparing its actual revenue with its budgeted revenue and analyzing variancesCopyright © Houghton Mifflin Company. All rights reserved.Revenue Centers (cont’d)ExamplesCar rental reservation centerClothing retailer ecommerce order departmentPerformance measures for both manufacturing and service organizations may includeSales dollarsNumber of customer salesSales revenue per minuteCopyright © Houghton Mifflin Company. All rights reserved.Profit CenterA responsibility center whose manager is accountable for both revenue and costs and for the resulting operating incomeExampleLocal store of a national chain such as Wal-Mart, Kinko’s or Jiffy LubePerformance evaluated by comparing figures from actual income statements with figures in its master or flexible budget income statementCopyright © Houghton Mifflin Company. All rights reserved.Investment CenterA responsibility center whose manager is accountable for profit generation and can also make significant decisions about the resources the center usesPerformance of both manufacturing and service organizations usually evaluated using measures such asReturn on investmentResidual incomeEconomic value addedCopyright © Houghton Mifflin Company. All rights reserved.Copyright © Houghton Mifflin Company. All rights reserved.Organizational Structure and Performance ManagementA company’s organizational structure formalizes its lines of managerial authority and controlOrganizational chartVisual representation of an organization's hierarchy of responsibility for purposes of management controlFive types of responsibility centers are arranged by level of management authority and controlCopyright © Houghton Mifflin Company. All rights reserved.Organizational Structure and Performance Management (cont’d)Responsibility accounting systemEstablishes a communications network within an organizationIdeal for gathering and reporting information about the operations of each area of responsibilityUsed to Prepare budgets by responsibility areaReport the actual results of each responsibility areaCopyright © Houghton Mifflin Company. All rights reserved.Organizational Structure and Performance Management (cont’d)The report for a responsibility center should contain only controllable costs and revenuesThe costs, revenues, and resources that the manager of a center can controlA responsibility accounting system assures managers will not be held responsible for items they cannot changeCopyright © Houghton Mifflin Company. All rights reserved.Partial Organizational Chart of Café Cubano, a Restaurant ChainCopyright © Houghton Mifflin Company. All rights reserved.Organizational Structure and Performance Management (cont’d)Performance reports for each level of management are tailored to each manager’s individual needs for informationThe same information may appear in various formats in several different reportsInformation from reports for lower-level managers is usually summarized and condensed when it appears in upper-level managers’ reportsCopyright © Houghton Mifflin Company. All rights reserved.DiscussionWhat is the difference between a cost center and a discretionary cost center?The managers of cost centers are accountable for controllable costs that have well-defined relationships between the center’s resources and products or services The managers of discretionary cost centers are accountable for costs in which the relationship between resources and products or services produced is not well defined. Therefore, cost-based measures cannot usually be used to evaluate performanceCopyright © Houghton Mifflin Company. All rights reserved.Performance Evaluation of Cost Centers and Profit CentersObjective 4Prepare performance reports for cost centers using flexible budgets and for profit centers using variable costingCopyright © Houghton Mifflin Company. All rights reserved.Performance Evaluation of Cost Centers and Profit CentersPerformance reports Allow comparisons between actual performance and budget expectationsContain information about costs, revenues, and resources that are controllable by individual managersAllow evaluation of an individual’s performance with respect to responsibility center objectives and companywide objectivesRecommend changesIf a performance report includes items that the manager cannot control, the credibility of the entire responsibility accounting system can be called into questionCopyright © Houghton Mifflin Company. All rights reserved.Evaluating Cost Center Performance Using Flexible BudgetingOrlena Torres, the VP of food products at Café Cubano, is responsible for the central kitchen, where basic preparation is done on the food products the restaurants sellThe central kitchen is a cost centerIts costs have well-defined relationships with the resulting productsTo ensure the central kitchen is meeting its performance goalsTorres has decided to evaluate the performance of each food item producedA separate report will be prepared for each productWill compare actual costs with the corresponding amounts from the flexible and master budgetsCopyright © Houghton Mifflin Company. All rights reserved.Central Kitchen’s Performance Report on Café Cubano’s House DressingCopyright © Houghton Mifflin Company. All rights reserved.Evaluating Profit Center Performance Using Variable CostingProfit center performance is usually evaluated by comparing actual income statement results to the budgeted income statementCopyright © Houghton Mifflin Company. All rights reserved.Evaluating Profit Center Performance Using Variable Costing (cont’d)Variable costingMethod of preparing profit center performance reports that classifies a manager’s controllable costs as either variable or fixedInstead of a traditional income statement, a variable costing income statement is producedAlso called full costing or absorption costing income statementUsed for external reporting purposesSame as a contribution income statementUseful because it focuses on cost variability and the profit center’s contribution to operating incomeCopyright © Houghton Mifflin Company. All rights reserved.Evaluating Profit Center Performance Using Variable Costing (cont’d)When using variable costing to evaluate profit center performanceVariable cost of goods sold and variable selling and administrative expenses are subtracted from sales to arrive at the contribution margin for the centerAll controllable fixed costs are subtracted from gross margin to determine the operating income Includes fixed manufacturing costs and fixed selling expensesCopyright © Houghton Mifflin Company. All rights reserved.Evaluating Profit Center Performance Using Variable Costing (cont’d)When preparing a traditional income statementAll manufacturing costs are assigned to cost of goods soldCost of goods sold is subtracted from sales to arrive at the gross marginVariable and fixed selling expenses are subtracted from gross margin to determine operating incomeCopyright © Houghton Mifflin Company. All rights reserved.Evaluating Profit Center Performance Using Variable Costing (cont’d)Variable costing income statementGroups costs according to whether they are variable or fixedTraditional income statementGroups cost according to whether they are costs of goods sold or manufactured or period costsCopyright © Houghton Mifflin Company. All rights reserved.Variable Costing Income Statement Versus Traditional Income Statement for Trenton RestaurantCopyright © Houghton Mifflin Company. All rights reserved.Evaluating Profit Center Performance Using Variable Costing (cont’d)The manager of a profit center may also want to measure and evaluate nonfinancial informationPerformance reportsVary in format depending on the type of responsibility centerShare common themesCompare a center’s actual results to its budgeted figuresFocus on the differencesOnly items managers can control are includedCopyright © Houghton Mifflin Company. All rights reserved.DiscussionHow does a variable costing income statement arrive at profit center income?Variable cost of goods sold and variable selling expenses are subtracted from sales to determine the contribution margin. All fixed manufacturing costs and fixed selling expenses are subtracted from the contribution margin to arrive at profit center incomeCopyright © Houghton Mifflin Company. All rights reserved.Performance Evaluation of Investment CentersObjective 5Prepare performance reports for investment centers using traditional measures of return on investment and residual income and the newer measure of economic value addedCopyright © Houghton Mifflin Company. All rights reserved.Performance Evaluation of Investment CentersPerformance evaluation of an investment center must includeComparison of controllable revenues and costs with budgeted amountsPerformance measures for capital investments that mangers controlCopyright © Houghton Mifflin Company. All rights reserved.Return on InvestmentTakes into account both operating income and the assets invested to earn that incomeCommon measureAssets invested is the average of the beginning and ending asset balances for the periodCopyright © Houghton Mifflin Company. All rights reserved.Return on Investment (cont’d)Income and assets specifically controlled by a manager must be properly measuredCritical to the quality of ROIROI may be used to evaluate the manager of any investment centerAn entire companyA unit within the companySubsidiary, division, or other segmentCopyright © Houghton Mifflin Company. All rights reserved.Performance Report Based on Return on Investment for the Café Cubano Restaurant DivisionCopyright © Houghton Mifflin Company. All rights reserved.Return on Investment (cont’d)The ROI computation is the aggregate measure of many interrelationshipsThe basic ROI equation can be rewritten to show the many elements a manager can influenceCopyright © Houghton Mifflin Company. All rights reserved.Return on Investment (cont’d)Two important indicators of performanceProfit marginRatio of operating income to salesRepresents the percentage of each sales dollar the results in profitAsset turnoverRatio of sales to average assets investedIndicates the productivity of assetsNumber of sales dollars generated by each dollar invested in assets Copyright © Houghton Mifflin Company. All rights reserved.Return on Investment (cont’d)Profit margin and asset turnover help to explain Changes in ROI for a single investment centerDifferences of ROI among investment centersROI formula is useful for analyzing and interpreting the elements that make up a business’s overall return on investmentCopyright © Houghton Mifflin Company. All rights reserved.Return on Investment (cont’d)A single ROI number is a composite index of many cause-and-effect relationships and interdependent financial elementsManagers can improve ROI byIncreasing salesDecreasing costsDecreasing assetsCopyright © Houghton Mifflin Company. All rights reserved.Factors That Affect the Return on Investment CalculationCopyright © Houghton Mifflin Company. All rights reserved.Return on Investment (cont’d)ROI should be used cautiously in evaluating performanceAffected by many factorsIf overemphasizedInvestment center managers may make business decisions that favor their personal ROI At the expense of companywide profits or long-term success of other investment centersTo avoid this problem, always use other performance measures in conjunction with ROI Copyright © Houghton Mifflin Company. All rights reserved.Return on Investment (cont’d)Other performance measures to use in conjunction with ROIComparisons of revenues, costs, and operating income with budgeted amounts or past trendsSales growth percentagesMarket share percentagesOther key variables in the organization's activityRatio of ROI to budgeted goals and past ROI trendsChanges in this ratio over time can be more revealing than any single numberCopyright © Houghton Mifflin Company. All rights reserved.Residual Income (RI) is the operating income that an investment center earns above a minimum desired return on invested assetsDeveloped because of pitfalls in using ROI as a performance measureCopyright © Houghton Mifflin Company. All rights reserved.Residual Income (cont’d)Is not a ratio but a dollar amountAmount of profit left after subtracting a predetermined desired income target for an investment centerAs with ROI computations, assets invested is the average of the center’s beginning and ending asset balances for the periodCopyright © Houghton Mifflin Company. All rights reserved.Residual Income (cont’d)The desired RI will vary among investment centers depending on theType of businessLevel of risk assumedCopyright © Houghton Mifflin Company. All rights reserved.Performance Report Based on Residual Income for the Café Cubano Restaurant DivisionCopyright © Houghton Mifflin Company. All rights reserved.Residual Income (cont’d)Comparisons with other RI figures will strengthen the analysisTo add context to the analysis, the following questions should be answeredHow does the division’s RI for this year compare with previous years?Did actual RI exceed budgeted RI?How does this division’s RI compare with the RI of other investment centers of the company?Copyright © Houghton Mifflin Company. All rights reserved.Residual Income (cont’d)When comparing a division’s RI with the RI of other investment centers of the company, caution should be usedFor RI figures to be comparable, all investment centers must have Equal access to resourcesSimilar asset investment basesManagers may be able to produce a larger RI simply because their investment centers are largerMay not reflect better performance Copyright © Houghton Mifflin Company. All rights reserved.Economic Value Added (EVA) is the shareholder wealth created by an investment centerUsed as an indicator of performanceIs a registered trademark of the consulting firm Stern Stewart & CompanyCopyright © Houghton Mifflin Company. All rights reserved.Economic Value Added (cont’d)Calculation can be complexMakes various cost of capital and accounting principles adjustmentsEVA is expressed as a dollar amountorCost of capital is the minimum desired rate of return on an investment, such as assets invested in an investment centerCopyright © Houghton Mifflin Company. All rights reserved.Performance Report Based on Economic Value Added for the Café Cubano Restaurant DivisionCopyright © Houghton Mifflin Company. All rights reserved.Economic Value Added (cont’d)Caution should be used when evaluating performance using EVAMany factors affect the economic value of an investment centerCompare the current EVA withEVAs from previous periodsTarget EVAsEVAs from other investment centersCopyright © Houghton Mifflin Company. All rights reserved.Factors Affecting the Computation of Economic Value AddedCopyright © Houghton Mifflin Company. All rights reserved.Economic Value Added (cont’d)An investment center’s EVA is affected by a manager’s decisions onPricingProduct sales volumeTaxesCost of capitalCapital investmentsOther financial decisionsCopyright © Houghton Mifflin Company. All rights reserved.Economic Value Added (cont’d)The EVA number is a composite index drawn from many cause-and-effect relationships and interdependent financial elementsManagers can improve the EVA of an investment center byIncreasing salesDecreasing costsDecreasing assetsLowering the cost of capitalCopyright © Houghton Mifflin Company. All rights reserved.The Importance of Multiple Performance MeasuresTo be effective, a performance management system must consider both operating results and multiple performance measures, such as ROI, RI, and EVAComparing actual results to budgeted figures adds meaning to the evaluationCopyright © Houghton Mifflin Company. All rights reserved.The Importance of Multiple Performance Measures (cont’d)Performance measures such as ROI, RI, and EVA Indicate whether an investment center is effective in coordinating its goals with companywide goalsTake into account both operating income and the assets used to produce that incomeAre limited by their focus on short-term financial performanceManagement should break these measures down into their components, analyze information over time, and compare current results to targeted amountsCopyright © Houghton Mifflin Company. All rights reserved.DiscussionWhat may happen if return on investment is overemphasized as a performance measure?Investment center managers may make business decisions that favor their personal ROI at the expense of companywide profits or long-term success of other investment centers To avoid this problem, always use other performance measures in conjunction with ROI Copyright © Houghton Mifflin Company. All rights reserved.Performance Incentives and GoalsObjective 6Explain how properly linked performance incentives and measures add value for all stakeholders in performance management and evaluationCopyright © Houghton Mifflin Company. All rights reserved.Performance Incentives and GoalsThe effectiveness of a performance management and evaluation system depends on successful coordination of goals betweenResponsibility centersManagersEntire companyTwo key factorsLogical linking of goals to measurable objects and targetsPerformance-based payCopyright © Houghton Mifflin Company. All rights reserved.Linking Goals, Performance Objectives, Measures, and Performance TargetsThe causal links between an organization’s goals, performance objectives, measures, and targets must be apparentRecall that the balanced scorecard also links objectives, measures, and targetsCopyright © Houghton Mifflin Company. All rights reserved.Performance-Based Pay is the linking of employee compensation to the achievement of measurable business targetsIncreases likelihood that the goals of responsibility centers, managers, and the entire organization will be well coordinatedCopyright © Houghton Mifflin Company. All rights reserved.Performance-Based Pay (cont’d)Common types of incentive compensationCash bonusesUsually awarded for short-term performanceAwardsMay be a trip or some other form of recognitionProfit-sharing plansReward employees with a share of the company’s profitsStock option programsUsed to motivate employees to achieve financial targets that increase the company’s stock priceCopyright © Houghton Mifflin Company. All rights reserved.The Coordination of GoalsIncentive plans must be developed with input from all employees to be effectiveEmployees and managers must answer the following questions to determine the right performance incentives for their organizationWhen should the reward occur?Whose performance should be rewarded?How should the reward be computed?On what should the reward be based?What performance criteria should be used?Does the performance incentive plan address the interests of all stakeholders?Copyright © Houghton Mifflin Company. All rights reserved.The Coordination of Goals (cont’d)The effectiveness of a performance management and evaluation system relies on the coordination of responsibility center, managerial, and company goalsCan be optimized byLinking goals to measurable objectives and targetsTying appropriate compensation incentives to the achievement of the targetsCopyright © Houghton Mifflin Company. All rights reserved.The Coordination of Goals (cont’d)Each organization’s unique circumstances will determine its correct mix of measures and compensation incentivesIf management values the perspectives of all its stakeholder groups, its performance and evaluation system will balance and benefit all interestsCopyright © Houghton Mifflin Company. All rights reserved.DiscussionThe successful coordination of goals between responsibility centers, managers, and the entire company is dependent upon what two key factors?The logical linking of goals to measurable objects and targets and performance-based payCopyright © Houghton Mifflin Company. All rights reserved.Time for ReviewDescribe how the balanced scorecard aligns performance with organizational goals, and explain the role of the balanced scorecard in the management cycleDiscuss performance measurement, and state the issues that affect management’s ability to measure performanceCopyright © Houghton Mifflin Company. All rights reserved.More ReviewDefine responsibility accounting, and describe the role that responsibility centers play in performance management and evaluationPrepare performance reports for cost centers using flexible budgets and for profit centers using variable costingCopyright © Houghton Mifflin Company. All rights reserved.And FinallyPrepare performance reports for investment centers using traditional measures of return on investment and residual income and the newer measure of economic value addedExplain how properly linked performance incentives and measures add value for all stakeholders in performance management and evaluationCopyright © Houghton Mifflin Company. All rights reserved.