3. WHAT IS AGENCY THEORY?
Agency Theory is a
principle that is used to
explain and resolve issues in
the relationship between
business principals and their
agents. Most commonly, that
relationship is the one
between shareholders, as
principals, and company
executives, as agents.
5. -Agency theory attempts to explain and resolve disputes over the
respective priorities between principals and their agents.
-Principals rely on agents to execute certain transactions, which
results in a difference in agreement on priorities and methods.
-The difference in priorities and interests between agents and
principals is known as the principal-agent problem.
-Resolving the differences in expectations is called "reducing
agency loss."
-Performance-based compensation is one way that is used to
achieve a balance between principal and agent.
-Common principal-agent relationships include shareholders and
management, financial planners and their clients, and lessees and
lessors.
6. CONTROL MECHANISM
A means to control the behavior of or
within a process or system. There are many
types of control mechanisms. Human
decision making is a control mechanism
made by an individual to start or delay a
process in an attempt to keep or bring a
process within a desired state.
7. CONTROL MECHANISM
Control mechanisms can be physical such
as limiting the number of trailers controls
the number of deliveries that can be made
at a given time. Software provides control
by signaling whether a process should be
started or delayed in order to achieve or
maintain a desired state.
9. MONITORING
The principal can design control systems that
monitors agent’s actions. For example,
financial reports and performance appraisal
are tools of monitoring. Agency theory has
attempted to explain why different agency
relationships involve different levels of
monitoring.
10.
11. INCENTIVE CONTRACTING
A principal may attempt to limit divergent preferences by
establishing an appropriate incentive contracts. The more an agent’s
reward depends on a performance measure; the more incentive
there is for the agent to improve the measure. Therefore, the principal
should define the performance measure to that it furthers the
employee’s interest. The ability to accomplish this is referred to as
goal congruence.
When the contract given to the agent motivates the agent to work in
the principal’s best interest, the contract is considered goal congruent.
12. A Performance Measurement System is a
simply a mechanism that improves the
organization and shows how the
organization will implement its strategy
successfully.
13. MORALE
Morale is generally considered as a group
phenomenon and in some cases it is viewed as
an individual phenomenon. It may be
described as a feeling of the employee
towards his work, organization more often
related to his personality
14. MORALE AND CONTROL
Morale is viewed as an important component for increase
in productivity. In the same line of thought, the level of
morale also induces the level of control.
15. CONTROL AND MORALE
Control and morale are interrelated. On one
hand, the high morale level improves self control
in the organization, which helps in effective
implementation of management control system.
On the other hand, an effective control system
like control of absenteeism and tardiness will
improve morale. It is a continuous process and a
miss in the link may develop a serious trouble
for the system.
17. PARTICIPATIVE MANAGEMENT
Participative Management is a
management style that requires the
cooperation of personnel. It aims to
build commitment and develop
initiatives within work teams. To do
this, the manager must delegate
parts of his power and it's necessary
that the teams decide together what
solutions to adopt.
18.
19.
20.
21. PARTICIPATIVE MANAGEMENT
Participative management is a method,
which gives employees responsibility,
accountability, and authority over their
work. The method provides simple tools for
employees to improve their work
performance and positively impact the
bottom line.
22. PARTICIPATIVE MANAGEMENT
participative management indirectly induces
the ‘self-control’ mechanism, which is rather
more powerful than any other control
mechanisms.
People solve their own issues and feel
empowered within the process of doing so.
Executives and employees learn to redesign
their workplace to be participative and self-
managing
24. PARTICIPATIVE MANAGEMENT
Participative management works best when
the organization has a clear and
compelling mission and vision. Employees
then can align their personal mission and
vision to the organization.
25. THE CRITERIA FOR SUPERIOR
PERFORMANCE ARE
➢ Control
➢Learning
➢Variety
➢Mutual Support and Respect
➢A Promising Future
➢Engage one or several of their preferred life interests
➢Challenges that match and stretch individual skills
➢Concentration and Focus
➢Fun
26. Participative management makes it to
people’s advantage to share their
knowledge because when their team is
successful they are successful. The group
excels because the criteria for superior
performance are being applied and top
management sees the benefit of all
employees contributing to the organization.
27. RESISTANCE TO THE PARTICIPATIVE
MANAGEMENT PROCESS
Whenever there is change we
can expect resistance to the
process. Many people do not
welcome change even if it is
in their best interests.
People do not want to lose
power and control. It is the
fear of the unknown that
causes problems for people.
28. RESISTANCE TO THE PARTICIPATIVE
MANAGEMENT PROCESS
An effective method for managing this
type of situation is to reassure the person
or group that the change is for the best
interest of the organization.
29. MANAGING RESISTANCE TO CHANGE
1. Participation and Involvement
2. Communication and Education
3. Leadership
4. Negotiation and Agreement
5. Willingness
6. Timing of Change
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31.
32.
33. PARTICIPATIVE MANAGEMENT MAY FAIL
BECAUSE OF THE FOLLOWING REASONS:
Resistance to Change: Participative Management
calls for a change in the entire organizational culture.
Older employees specially resist change and do not
welcome it. They take it as a device to curtail their
powers. Training is also not welcome.
Workers tendency to deviate: Managers must be
aware of the tendency of the workers to try
spending more time formulating strategies than focus
on job in hand. This needs to taken care of. Again top
level management may not support this style if they
find existent inefficiencies.
34. PARTICIPATIVE MANAGEMENT MAY FAIL
BECAUSE OF THE FOLLOWING REASONS:
One stop Solution: Participative management can not always
be a one stop solution for every problem. Often the manager
needs to delegate or take a decision on his own without
consulting or seeking others advice. For example, cases where
disciplinary action is needed do not qualify for participative
management.
Size of the Organization: This style of management can be
more difficult to implement in organizations that are big in size.
Big size means that there are large numbers of management
layers. This often makes registering opinions and suggestions
difficult. More difficult can be the implementation of the same.
35. PARTICIPATIVE MANAGEMENT MAY FAIL
BECAUSE OF THE FOLLOWING REASONS:
Abuse of Authority: Managers sometimes look upon their own
jobs as a license instead as a responsibility. They are unwilling to
give away some authority to their subordinate which slows down
and chokes the process of decision making. Often such managers
complain of being overburdened with responsibilities. This fails
the idea of participative management.
Misunderstanding Participation: This is yet another reason for
failure of participative management. Managers sometimes fail
to understand that participative management is not the same as
delegating or distributing responsibility. They fail to realize that
participative style also involves considering the suggestions and
recommendations of employees with respect and dignity.