Managerial Economics & Organizational Architecture 6th Edition by James Brickley , Clifford Smith ,Jerold Zimmerman

Exercise 22

A basic principle in accounting is that of "responsibility accounting." Under this principle, it is inappropriate to base performance evaluation on measures that are beyond the control of the employee. Do you think that you should ever include variables in a worker's compensation plan that are not under at least partial control of the employee Explain.