Understanding and Solving Principal and Agent problems Essay

Principal and agent jobs arise when there is a struggle of Goals and involvement of the principal ( house ) and the agent ( worker ) . Besides it could originate from the difference in attitudes towards hazard or when the Agent makes determinations for the Principal. An bureau theory concerns the relationship between a principal ( house ) and an agent ( worker ) . It involves the cost of deciding jobs between the principal and the agent and alining their involvements. An bureau relationship arises when one party ( the principal ) delegates work to the other party ( the agent ) who carries out the work.

There are five different ways to work out these bureau jobs and they are as follows: Employee Relationss Wagess on employee public presentation, Work-life balance, occupation enrichment and handling employees every bit and with equity.

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Employee Relations is the relationship between employers and employees. Employee dealingss refers to an mixture of employer ‘s enterprises by bettering workplace communications, for prosecuting employees straight or indirectly in determination devising procedures and besides procuring employee conformity through disciplinary actions ( Bratton & A ; Gold 2007 ) .Employee dealingss involves employees voice, employee communicating, employee rights and employee. Employee ‘s voice involves employee engagement and employee engagement. Employee engagement tends to concentrate more on the corporate voice agreement for audience while Employee engagement tends to be direct voice enterprises with single or squad employees ( ibid ) . Employee ‘s privation to hold a sense of belonging, they want to experience of import to the organisation that is why the organisation has to do usage of the assorted ways of employee engagement by utilizing the suggestion strategy ( the employees could compose down their suggestions and drop it into the suggestion box ) , squad briefing, regular meeting of the full work force where employees sentiments are sought after and feed-back ( Employee feed-back could bring forth negative or positive effects.

It tells the employee whether there is a demand to better or whether their public presentation at work is good ) .However, employees can make up one’s mind to take a representative to stand in on their behalf likely due to the fact that they are scared of their foreman, in that instance the representative would be like the mediator between the employers and the employee but the former is more efficient. Basically the cardinal factor in employee dealingss is to acquire the workers involved in determination devising.Involving the employees in determination devising could better the psychological contract that in bend could beef up the employer/employee relationship and at the same clip employers may non be willing to give up their power ( Gallic and Raven 1958 ) .

Another manner of deciding /avoiding chief and agent job is by honoring the employees when they perform good on their occupation. It is a manner of recognizing attempts and public presentation. Expectancy theory could be used to explicate this method of deciding principal/agent job. Expectancy theory is based on the outlooks that workers bring with them to work, it implies that direction demands to show to employees that attempts would be recognised and rewarded ( Marchington and Wilikson 2008 ) . F. w. Taylor suggested that the direction actuate the staff through the wage system because he believed that workers were motivated chiefly by money ( ibid ) . Besides the employers could carry on a hebdomadal assessment and so honor the employees harmonizing to their public presentation. Herzberg ‘s two factor theory is made up of the hygiene and incentive factors. The incentive factor is made up of accomplishment, acknowledgment and duty while the hygiene factor is made up of occupation security, wage and physical working conditions ( Berry 1998 ) .

Herzberg ‘s two factor theory found out that when an employee speaks about holding a bad feeling at work it was due to in sufficient wage but when an employee speaks about holding a good feeling at work it is because they have been granted acknowledgment at work. The hygiene factor such as wage tends to actuate the employee off from being dissatisfied with the occupation and the incentive factor such as acknowledgment tends to actuate the employee towards occupation satisfaction ( ibid ) . Pay and acknowledgment are non the lone factors that could actuate the employees they can besides be rewarded with non hard currency points such as autos, publicity, private wellness insurance, preparation and development, aid towards kid attention. The benefit of honoring employee public presentation is that it would increase productiveness at work, when employees are rewarded it would do them experience valued doing them to work harder. However there may be no actuating consequence if the employee ‘s grounds for coming to work was strictly instrumental ( that is they come to work merely to gain money to enable them bask themselves outside the workplace ) . ( Marchington and Wilikson 2008 ) .

Work-life balance can be seen as a motivation factor at work. The term work-life balance refers to the extent to which an person is every bit engaged and satisfied with his or her work function and household function ( Greenhaus et al, 2003 ) . Employees want to be able to equilibrate their work life with their household life, their societal life and personal committednesss. Border theory fundamentally sees work and household as different domains which influence each other with different patterns, behaviors. Employees are the boundary line crossers as they move from work life to household life every twenty-four hours. The function of the organisation is to seek to change the boundaries so as to forestall the work life crashing with the household life ( hypertext transfer protocol: //hum.sagepub.com/content/53/6/747.abstract ) .

The work-life balance could be improved by supplying flexible working options such as: parttime working, occupation sharing, compressed working hours, one-year hours, Tele working, Home working. John Lewis is an illustration of an administration that uses different flexible working options to fulfill different clients with different flexible working demands. Some of the employees may necessitate to take attention of their ill relations, others may necessitate flexible working options that could enable them analyze while working while some may necessitate flexible working options that suit their location. The benefit of supplying flexible working options is that it reduces emphasis, which in bend reduces employee absence from work. The downside to utilizing flexible options could be that it would be difficult for the directors to pull off the employees because if any employee does n’t demo up for work it may be difficult to look for person else to cover up him/her. Besides those working from place could be gaining money from making small or no work at all hence bewraying the line director ‘s trust.

Jobs can be restructured to increase employee satisfaction. Harmonizing to ( Warr 2002 ) : ‘The manner occupations are designed has of import effects for single results such as occupation satisfaction and emphasis every bit good as organisational results such as client satisfaction ‘ . Because of its impact on organisational results occupation design has important deductions on employee ‘s wellness and productiveness. Job design has a short-run positive consequence on satisfaction but a long-run consequence on occupation public presentation. Jobs can be redesigned to do the work more ambitious and interesting and besides to better chances for accomplishment.

Hackman and Oldman proposed five nucleus occupation features for occupation satisfaction and occupation design which are: skill assortment, undertaking individuality, undertaking significance, liberty and undertaking feedback ( Porteous 1997 ) . For illustration Peter Warr vitamin theoretical account has two effects ; the worsening consequence which is the AD and the changeless consequence which is the changeless consequence. If the occupation assortment is increased it would take to a higher occupation duty which could in bend generate emphasis and lead to lower degree of productiveness ( worsening consequence ) . The undertaking feedback could take to employee satisfaction more employee feedback would hold really small or no alteration on the employee satisfaction ( changeless consequence ) .

Employees want to be treated with regard, equity and they want to be valued. They want to be given the same intervention as other employees. Peoples make societal comparings with people at work which can do them to experience reasonably or below the belt treated. Equity theory is based on this sense of equity that employees want to experience in the work topographic point ( Berry 1998 ) . Employees compare their input and end product to the input and end product of another employee. Inputs could be: preparation, educational makings and difficult work and end product could be pay, acknowledgment, benefits.

When this comparing is made employees would experience either over paid or under paid. If they feel they are under paid this could cut down their motive to work and it would in bend cut down their public presentation at work whereas if they feel over paid they can make up one’s mind to work harder to increase productiveness ( ibid ) . Besides, based on Maslow ‘s hierarchy of demands which is made up of psychological, safety, societal, self regard and self realization demands. The employee wants his/her occupation to be able to fulfill each degree of demands when this is non met it would cut down employee committedness. The key here is to handle each employee every bit and with equity.

In decision, psychological contract is the perceptual experience of the employee and employer about what their common duties are towards each other ( Guest et al, 2002 ) . Therefore in order to work out the principal and agent job the psychological contract should be good understood so as to avoid struggles that could ensue from transgressing the contract.If the contract is breached it is the occupation of the employer to seek and mend it.

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