Answer to Question #269842 in Management for niel

Question

1.      The management of International Heal Medical Company is evaluating the performance of its three (3) divisions. The Booboo Division had operating profit of ₱24,950 and on average used assets with a book value of ₱311,900. The Splint Division had an operating profit of ₱17,500 and used average assets of ₱177,950. The Intensive Care Division had an operating profit of ₱28,500 and average assets of ₱475,000. The company is planning to award the Intensive Care Division relying on its high operating profit. Should the management continue with this decision? Justify your answer.

Answer 1

No, the management should consider other options to motivate underperforming divisions too. In this case, rewarding the most performing division will affect employee morale of the other divisions in terms of human resources management. The organization should consider using a harmonized motivation system that will benefit the Intensive Care Davison and motivate employees in other divisions to perform better. Intensive care has the highest average assets; therefore, more profits should be expected. In conclusion, the organization should motive all divisions accordingly.