Final answer:
Financial performance measures can be limited in accurately capturing performance and creating goal congruence (option B). These limitations can be overcome by taking a broader view of performance and by using a balanced scorecard approach.
Step-by-step explanation:
The limitations of financial performance measures make it difficult for companies to create goal congruence. This means that the measures may not accurately capture the performance of different departments within a company, leading to conflicts and disagreements in setting goals and aligning incentives. However, these limitations can be overcome by taking a broader view of performance.
Instead of relying solely on financial measures such as profit and return on investment, companies can consider other non-financial factors that contribute to overall performance. For example, customer satisfaction, employee engagement, and environmental sustainability can all be important indicators of success. By including these factors in performance evaluation, companies can create a more comprehensive and balanced picture of their performance.
By using a balanced scorecard approach, which considers both financial and non-financial measures, companies can overcome the limitations of financial performance measures. This approach allows for a more holistic assessment of performance and encourages goal congruence by aligning different departments and stakeholders around a common set of objectives.