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How Incentives for Long-Term Management Backfire

Harvard Business

This is a classic story of unintended consequences — inadvertently short-circuiting long-term management — to the detriment of companies, investors, and the economy. The board chose earnings per share (among other financial metrics) to measure and reward executives for long-term performance.

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Is Corporate Short-Termism Really a Problem? The Jury’s Still Out

Harvard Business

On the one hand, there are many anecdotes suggesting that pressures to manage earnings hold back investment. On the other hand, some of what is done in the name of managing for the long term may be unmonitored waste. Some companies have great ideas, great management teams, and compelling strategies.