Division managers’ compensation (continuation of 24-34). Rupert Prince seeks your advice on revising the existing bonus plan for division managers ofthe Media Group. Assume division managers do not like bearing risk. He is considering three ideas:

Make all of each division manager’s compensation depend on division ROI.

Make all of each division manager’s compensation depend on companywide ROI.

Use benchmarking, and compensate each division manager on the basis of his or her own division’s ROI minus the average ROI of the other two divisions.

Required Evaluate each of the three ideas Prince has put forth using performance evaluation concepts described in this chapter. Indicate the positive and negative features of each proposal.