OTTO-VON-GUERICKE-UNIVERSITYMAGDEBURGBEIJINGNORMALUNIVERSITYProf.Dr.BirgittaWolff,MarjaanaRehu,M.AOtto-von-Guericke-University,GermanyII. Human Resource ManagementVariable or Fixed SalaryProf.Dr.BirgittaWolffBejing, Sept.2002MarjaanaRehu,MA
Prof. Dr. Birgitta Wolff Marjaana Rehu, M.A. II. Human Resource Management Variable or Fixed Salary OTTO-VON-GUERICKE-UNIVERSITY MAGDEBURG BEIJING NORMAL UNIVERSITY Prof. Dr. Birgitta Wolff, Marjaana Rehu, M.A. Otto-von-Guericke-University, Germany Beijing, Sept. 2002
RecapSessionI...threecriticalaspectsoforganization:Theassignment ofdecisionrights within thecompany·Themethodsofrewarding individuals· The structure of systems to evaluate the performance of both individualsand business units(BSZ 5)Bejing, Sept.2002Prof Dr.BirgittaWolffMarjaana Rehu, M.A
Prof. Dr. Birgitta Wolff Marjaana Rehu, M.A. „. three critical aspects of organization: • The assignment of decision rights within the company • The methods of rewarding individuals • The structure of systems to evaluate the performance of both individuals and business units“ (BSZ 5) Recap Session I Beijing, Sept. 2002
Outline1.IncentiveProblem2. Compensation Contracts3. Output-Based Pay4. Input-Based Pay5. Incentive PayProf.Dr.Birgitta WolffBejing, Sept. 2002Marjaana Rehu, M.A
Prof. Dr. Birgitta Wolff Marjaana Rehu, M.A. Outline 1. Incentive Problem 2. Compensation Contracts 3. Output-Based Pay 4. Input-Based Pay 5. Incentive Pay Beijing, Sept. 2002
1.IncentiveProblemCoordination and Motivation ProblemTaskCoordinationMotivationWho does what,How do Iget somebodyIndividualwhen....to perfom a task,improve the quality...=>IncentiveProblemDistributionofAllocationofInputOutputResourcesProf.Dr.Birgitta WolffBejing, Sept. 2002MarjaanaRehu,MA
Prof. Dr. Birgitta Wolff Marjaana Rehu, M.A. 1. Incentive Problem Coordination and Motivation Problem Distribution of Output Task Individual Allocation of Input Resources Coordination Who does what, when,. Motivation How do I get somebody to perfom a task, improve the quality,. => Incentive Problem Beijing, Sept. 2002
1.IncentiveProblemWhydoIncentiveProblemsExist?WhydoIncentiveproblems exist?Employeeandemployerhavedifferentinterests- Employer would want the employee to take actions that maximizethe profit of the firms, but the employee might rather like spendinghis time with his/her family or play golf-All actions of the employee cannot be monitored and/or controlledby contracts (risk for the employer)- Employers have to compensate employees for doing undesirabletasksProf.Dr.Birgitta WolffBeijing, Sept. 2002Marjaana Rehu, M.A
Prof. Dr. Birgitta Wolff Marjaana Rehu, M.A. 1. Incentive Problem Why do Incentive Problems Exist? Why do Incentive problems exist? • Employee and employer have different interests − Employer would want the employee to take actions that maximize the profit of the firms, but the employee might rather like spending his time with his/her family or play golf − All actions of the employee cannot be monitored and/or controlled by contracts (risk for the employer) − Employers have to compensate employees for doing undesirable tasks Beijing, Sept. 2002