GMGT 1010 Lecture Notes - Lecture 16: Balanced Scorecard, Executive Compensation, Human Nature

• School: University of Manitoba
• Department: General Management
• Course: GMGT 1010
• Professor: Farhan Islam

Document Summary

Short-termism short-term tactics help a firm deal quickly with crisis or rapid change. Because these actions are quick and often low cost, their effect tends to be incremental: for example, refining a product rather than developing something entirely new. Usually the benefits and costs appear quickly and are easy to measure. Through long-term actions, firms seek to achieve more significant, even transformational changes that will enable durable success. They may invest in new infrastructure or business areas. These investments take longer to pay off, and can be difficult to quantify in advance but can act as game changers for a firm. Short-term and long-term actions are both important for companies but in the modern economy, the short-term tends to dominate. Investor pressure companies that are financed by the stock market are often pressured by investors who want quarterly returns maximized. As a result, companies often report quarterly earnings with sales targets focused on maximizing profits during these periods.