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Compensation and Ethics

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Compensation and Ethics
Running head: COMPENSTATION AND ETHICS

Compensation and Ethics

Compensation and Ethics
The Sparklin’ Automotive Company has decided to adapt the balanced scorecard in order to measure its business performance more adequately. Recently the President of SAC set an e-mail with several questions regarding tying performance compensation to the balanced scorecard. This document will review the ethical dilemmas that may arise due to the implementation of incorrect performance measures. It will also review how SAC can avoid these issues as well as what performance measures should be implemented.
Compensation and Ethics
The Sparkiln’ Automotive Company has recently changed the method that they use to track the overall performance of the company to the balanced scorecard method. This method allows management to review the performance of the company by presenting several different performance measures all within the same document. It gives management the ability to see how changes in one measure affect other measures. The balanced scorecard gives a strong overall review of the current performance of the company. The information that is contained within the balanced scorecard is used to direct the day to day happenings within the company. At SAC the balanced scorecard has become the center of the company’s operations. With so much importance being placed on changes and adapting to the balanced scorecard format one must stop and consider our compensation model.
Currently, the compensation model at SAC is based solely on the financial success of the company. It does not take into account the customers perspective, internal business perspective, or the learning and growth perspectives that are part of the balanced scorecard. Recently there has been a great amount of interest in the idea of basing the compensation system on the information within the balanced scorecard. There are many different issues that must be considered before this change can


References: Bares, A. (2006). Choosing Incentive Plan Measures. Retrieved from, http://compforce.typepad.com/compensation_force/2006/06/choosing_incent.html Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2011).Managerial accounting. (Fourteenth ed.). McGraw-Hill/Irwin M.U.S.E. (n.d.). Balanced Scorecard & Ethics. Retrieved from, https://campus.ctuonline.edu/courses/ACCT614/p4/hub1/18046.pdf
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