In the modern organization, educated employees and the competition for such personnel has increased. Employees are more aware of their value and the need for an organization to treat them as valuable. Today, the question is not on staying on the job but the fulfillment and happiness the job brings to the employee. The new working generation is more after self-fulfillment needs than the need to stay on the job. These changes in the organization have greatly increased the level of incentive conflict in organizations.
Perquisite Taking
According to Maslow, self-actualization, a growing need, is a key motivating factor for employees. However, these needs may eventually fail to motivate the employees if their deficiency needs are not met. In an organization, deficiency needs stay unmet for managers because the owners do not want to fulfill these needs. Managers want more pay as well as perquisites to help them in their personal lives. For instance, a manager may need perquisite like great daycare to help them balance their personal and work life. However, the owners feel that this is an added cost to the company and may eventually deny them.
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In such cases, the owners do not look at how it is in their interest to offer these to the managers and other employees to improve firm value. When employees are content, they are more productive hence, the firm will see better results. An incentive conflict like perquisite taking is a direct result of unbalance in the decision rights of the managers. Where there is an imbalance in the organization stool, there is a high risk of low performance, hence reduced firm value.
Conclusion
Decision rights is a leg of the organization that allows the participation of the managers in decision making for the interests of the company. When owners, managers, and other employees are not on the same page on how to delegate decision-making, then there will be no balance in the organization stool. An imbalance will definitely lead to poor performance in the company
References
Brickley, J., Smith, C., & Zimmerman, J. (2016). Managerial Economics and Organizational Architecture (6th ed.). New York: McGraw-Hill Education.
Setiawan, B., Putrawan, I., Murni, S., & Ghozali, I. (2016). Effect of Organizational Structure, Leadership and Trust on Job Performance of Employee: A Case Study on Employee at Universitas Ternama. International Review of Management and Marketing, 6 (4), 711-721.
