Chief Executive Officers Compensation

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The field of human resource (HR) management is one of the many interesting area of research that has witnessed a paradigm shift within the last few decades1. Within this area of research, an increasing body of literature contains the argument that, high performance work practices, including comprehensive employee's recruitment, selection procedures, incentives compensation and performance management systems, and extensive employee's involvement and training can improve the knowledge, skills and abilities of firms2.


The term human resource management is not new. It has been widely used by scholars and managers to refer to the set of policies designed to maximize organizational integration, employee commitment, flexibility and quality of work4. In the sections that follow, I will attempt each of the questions as requested and there after I will provide a brief conclusion.
In economic literature, the significance of information asymmetries, innovation and strategic behaviour has long been recognised. There exists a considerable literature on how incentives affect a variety of management problems and the methodology for analysis of incentive problems most notably the principal agent model (Turner and Muller 2006). CEOs are paid based on the job description given to them and since in America it is often believe that, they are the leaders they want others to emulate. In addition, it always costs more to hire a new person than keep the old one. Osborne, Hyman & Jack (2006:451) substantiate further that an effective human resource policy "is not only to find competent workers but also to motivate and effectively manage them, is recognised as important for the viability of the organisation".
They argued th ...
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