RewardingBusinessPerformanceChapter25PowerPointAuthors:SusanCoomerGalbreath,Ph.D.CPACharlesW.CaldwelLD.BA,CMAJonABookerPh.D.,CPA,CACynthiaJRooney;Ph.D.,CPAnnpnetoenoconticomoeMotivationandAligningGoalsandObjectivesGoalCongruenceAlignmentofemployeegoalsandobjectiveswithorganizationalgoalsandobjectives.MotivationandAligningGoalsandQbjectives0皙MeasureperformancealFeedbackOSteeremployeestowardgoalsMeasureprogressinachievinggoals1Improveperformance一|RewardperformanceReturnonInvestment(ROI)Returnoninvestmentistheratioofoperatingincometotheaverageinvestmentusedtogeneratetheincome.OperatingIncomeROI=AverageTotalAssetsUsingROLtoevaluatebusinessperformanceisoftenreferredtoastheDuPontsystem.ComponentsofROIReturnonInvestment(ROI)HollyCompanyreportsthefollowing:Profit$30,000Sales中500,000AverageInvestment口200,000LetscalculateROLReturnonInvestment(ROI)OBeratingIncomeROLI=AverageTotalAssetsROL=-880.000=15o%$200,000“Rol=_ProfitSales“SalesAverageInvestment_630,000$500,000ROL-$500,000K$200,000ROL=6%X“2.5=150,ImprovingROI扑DecreaseExpensesOIncreaseLowerSalesInvestedPricesCapitalThreewaystoimproveROI,ImprovingROIsHollysmanagerwasabletoincrease呆salesrevenueto$600,000whichincreasedincometo$42,000.Therewasnochangeininvestedcapital.LetscalculatethenewROL.d,ImprovingROIProfitSalesROISalss“AverageInvestment_642,000$600,000ROL=$600,000X$200,000_ROLI=7%_X3.0=21%HollyincreasedROIfrom15%to21%.