Cost Management 6th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 19

C ompensation, Strategy, and Market Value Jackson Supply Company is a publicly owned firm that serves the medical supply needs of hospitals and large medical practices in six southeastern states. The firm has grown significantly in recent years, as the areas it serves have grown. Jackson has focused on customer service and has developed an excellent reputation for speed of delivery and overall quality of service. The company ensures that customer service is each manager's main focus by making it count for 50 percent of the management bonus. The firm measures specific indicators of customer service monthly; progress toward these measures as well as others is used to determine each manager's bonus. In the past several months, top management has noticed that although most managers are meeting or exceeding their customer service goals and receiving bonuses accordingly, the firm's stock price has been lagging while competitive firms' stock prices have been rising steadily.
Required What modification, if any, should Jackson Supply Company make to its management compensation plan