Emerging Tech

Reading The Org Chart: What A Firm's Structure Can Tell Us

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Executive Summary

When marketing competencies are more critical to the firm's success than any other function, the firm might benefit from a central marketing group. An important difference between the two organizational forms is how each structure informs managerial compensation. To elicit high-quality effort and align the manager's actions with the firm's objectives, firms tie compensation to observable performance measures such as profitability or stock price. But performance measures are often affected by factors outside an individual manager's control.

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