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THEORY OF REMUNERATION

THEORY OF REMUNERATION

Discuss THEORY OF REMUNERATION within the Human Resources Management forums, part of the Resolve Your Query - Get Help and discuss Projects category; THEORY OF REMUNERATION The agency theory focuses on the divergent interests and goals of the organisation's stakeholders and the way ...

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THEORY OF REMUNERATION
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Sunanda K. Chavan
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THEORY OF REMUNERATION - September 13th, 2010

THEORY OF REMUNERATION


The agency theory focuses on the divergent interests and goals of the organisation's stakeholders and the way that employee remuneration can be used to align these interests and goals. Employers and employees are the two stakeholders of a business unit, the former assuming the role of principals and the latter the role of agents.

The remuneration payable to employees is the agency cost. It is natural that the employees expect high agency costs while the employers seek to minimise it. The agency theory says that the principal must choose a contracting scheme that helps align the interest of the agenis with the principal's own interests.

These contracts can he classified as either behaviour- oriented (e.g. merit pay) or outcome-oriented (e.g. stock option schemes, profit sharing, and commissions).
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Similar Threads

Thread Thread Starter Forum Replies Last Post
COMPONENTS OF REMUNERATION Sunanda K. Chavan Human Resources Management 1 September 2nd, 2014 06:30 PM
EMPLOYEES REMUNERATION Vishal Bhawsinghka Human Resources Management (H.R) 30 March 24th, 2013 12:18 AM
Remuneration Sunanda K. Chavan Human Resources Management 0 September 13th, 2010 04:36 PM
hrm-REMUNERATION & INCENTIVE checkind2 Human Resources Management (H.R) 1 February 3rd, 2010 07:58 AM
Employee Remuneration geet_11 Human Resources Management 1 May 20th, 2009 11:40 AM
 
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