Ensuring the growth of enterprises and organizations through the motivation of managerial staff

The article studies the motivational issues of managerial staff in the context of ensuring the growth of enterprises and organizations. Design/Methodology/Approach: Eurostat data have been used within the framework of the disclosure of the article. Such methods of economic analysis as generalization and comparison have been applied for processing statistical data. Findings: It has been established that in the countries of European Union, such as Great Britain, Spain, Germany, Poland and France, there is an acceptable, in particular high level of satisfaction of their own job by employed persons, including managerial employees (managers). It has been established, that timely identification and diagnosis of problematic situations that arise on the path of development and growth of enterprises and organizations substantially depends on the level of qualification and professionalism of the head, that is, the manager. Practical Implications: The results are interesting from the theoretical and practical aspects to be applied for the improvement of the motivation to employees, including managerial staff at the enterprises and organizations. Originality/Value: The insight of the article’s subject matter requires an analysis of such key indicators as the occupational level, population’s education index, individual level of the population’s digital skills, the proportion of people who speak a foreign language, the proportion of people employed and at the same time are satisfied with their job.peer-reviewe

Knowledge Management What Can Organizational Economics Contribute?

Knowledge management has emerged as a very successful organization practice and has been extensively treated in a large body of academic work. Surprisingly, however, organizational economics (i.e., transaction cost economics, agency theory, team theory and property rights theory) has played no role in the development of knowledge management. We argue that organizational economics insights can further the theory and practice of knowledge management in several ways. Specifically, we apply notions of contracting, team production, complementaries, hold-up, etc. to knowledge management issues (i.e., creating and integration knowledge, rewarding knowledge workers, etc.) , and derive refutable implications that are novel to the knowledge management field from our discussion.Transaction costs, organizational economics

Модельний аспект оцінки ефективності організації управління та мотивації персоналу

This paper proposes methodological aspects of evaluation of organization efficiency of personnel management and motivation on the bases of application of economic and mathematical tools by implementing a three-component algorithmic model. The structural divisions heads’ work effectiveness evaluation is carried out on the basis of econometric systems of structural equations that allow you to rank personality, communicative, innovative, social and corporate managers characteristics that have the greatest impact on the overall performance indicators of the bank staff among which are considered amount of attracted funds; assessment of employee's compliance with the standard; activity efficiency (number of contracts); contribution to development. The obtained modeling results confirm the hypothesis that structural unit managers need to work on the development of their communicative, innovative, personal and social characteristics. Models for analyzing the personnel motivation factors on the bases of the methodology of multivariate statistical factor analysis with initial list of 13 main indicators of staff motivation are proposed; as a result, we set up the aggregated factors that reflect the properties of several motivational components such as financial, social incentives and medical insurance for employees. The model for estimating influence of motivation factors on results of bank's activity on the bases of nonlinear econometric functions is constructed. The regression equation of the motivation factors influence on the bank total profit is obtained. The proposed model toolkit for evaluation of efficiency of management and staff motivation will allow the bank's management to improve motivation and incentives mechanisms in order to raise efficiency of stuff productivity in direction of increasing bank profitability and competitiveness.У статті запропоновано методологічні аспекти оцінки ефективності організації управління персоналом та мотивації на основі застосування економіко-математичного інструментарію шляхом реалізації трьохкомпонентної алгоритмічної моделі. Здійснено оцінку ефективності праці керівників структурних підрозділів на основі економетричних систем структурних рівнянь, що дозволяють ранжувати особистісні, комунікативні, інноваційні, соціальні та корпоративні характеристики, які в найбільшій мірі впливають на загальні показники ефективності роботи персоналу банку, серед яких розглядаються обсяг залучених коштів; оцінка працівника щодо відповідності стандарту; ефективність діяльності (кількість контрактів); вклад у розвиток. Отримані результати підтверджують гіпотезу, що керівникам структурних підрозділів треба працювати над розвитком своїх комунікативних, інноваційних, особистих та соціальних характеристик. Запропоновані моделі аналізу факторів мотивації персоналу за методологією багатовимірного статистичного факторного аналізу на основі вихідного переліку з 13 основних показників мотивації персоналу, у результаті чого сформовані агреговані фактори, що відбивають властивості декількох мотиваційних компонентів, а саме: матеріального стимулювання робітників, соціального стимулювання та охорони здоров’я персоналу. Побудовано модель оцінки впливу факторів мотивації на результати діяльності банку на основі нелінійних економетричних функцій. Отримано регресійне рівняння впливу факторів мотивації на загальний прибуток банку.Запропонований модельний інструментарій оцінювання ефективності управління та мотивації персоналу дозволить керівництву банку вдосконалити механізми стимулювання та заохочення працівників з метою підвищення ефективності їх праці в напрямі підвищення прибутковості та конкурентоспроможності банку

Authority and Discretion Tensions, Credible Delegation and Implications for New Organizational Forms

We analyze a key problem in organization theory and design, namely the potential tension between authority (i.e., the power to make decisions which guide the decisions of another person) and the discretion of employees (i.e., the ability of an agent to control resources including his own human capital). The problem is rooted in the fact that in organizations, decisions rights are always loaned rather than owned; a hierarchical superior can always in principle overrule a hierarchical inferior. We provide an integrative treatment of the tensions that are involved in the interaction between authority and discretion, and the motivational problems that may result from this tension. We discuss how these problems may be checked by credible managerial commitments and other mechanisms. The framework is then applied to an analysis of new organizational forms, specifically internal hybrids. Thus, the framework adds to the understanding of the costs and benefits of alternative organizational forms.Managerial intervention, credible delegation, new organizational forms, organizational economics

Corporate control mechanisms, voting and cash flow rights, and the performance of Dutch firms

This paper exploits several unique institutional features in the Dutch system of corporate control to examine the relations among investor protections, concentrated ownership, and firm performance. Four conclusions emerge. First, controlling shareholders do not appear to ameliorate corporate governance problems to any great extent. Second, the identity of ownership matters; when a firm is controlled by a few large individual shareholders, firm performance suffers. Expropriation costs are very high for this type of investor. Third, and somewhat at odds with the bulk of the prevailing literature, performance is enhanced when the firm is freed of equity market constraints. These results are consistent with recent theoretical models emphasizing that too much oversight can be detrimental to performance by forcing firms to underinvest in physical or human capital. Fourth, we distinguish between voting rights providing the means for intervening in firm affairs and cash flow rights providing the required motivation. Considering both rights are important for the empirical results. Apart from its substantive contributions, the paper develops a new four-step estimation strategy to control for the reverse causation problem plaguing econometric studies of corporate control mechanisms and firm performance.

Selective Intervention and Internal HybridsInterpreting and Learning from the Rise and Decline of the Oticon Spaghetti Organization

Infusing hierarchies with elements of market control has become a much-used way of simultaneously increasing entrepreneurialism and motivation in firms. However, this paper argues that such “internal hybrids,” particularly in their radical forms, are inherently hard to successfully design and implement, because of fundamental credibility problems related to managerial promises to not intervene in delegated decision-making ¾ an incentive problem that is often referred to as the “problem of selective intervention.” This theoretical theme is developed and illustrated, using the case of the world-leading Danish hearing aids producer, Oticon. In the beginning of the 1990s, Oticon became famous for its radical internal hybrid, the ”spaghetti organization.” Recent work has interpreted the spaghetti organization as a radical attempt to foster dynamic capabilities by imposing loose coupling on the organization, neglecting, however, that about a decade later, the spaghetti organization has given way to a more traditional matrix organization. This paper presents an organizational economics interpretation of organizational changes in Oticon, and argues that a strong liability of the spaghetti organization was the above incentive problem. Motivation in Oticon was strongly harmed by selective intervention on the part of top-management Changing the organizational structure was one means of repairing these motivational problems. Refutable implications are developed, both for the understanding of efficient design of internal hybrids, and for the more general issue of the distinction between firms and markets, as well as the choice between internal and external hybrids.Internal hybrids, organizational change, delegation, managerial commitment problems, new organizational forms

Layoffs as Part of an Optimal Incentive Mix: Theory and Evidence

Firms offer highly complex contracts to their employees. These contracts contain a mix of various incentives, such as fixed wages, bonuses, promise of promotion, and threat of firing. This paper aims at explaining the reason why this incentive- mix arises. In particular, the model focuses on why firms are combining promotions and bonuses with firing. The theoretical model proposed is a job-assignment model with heterogeneous employees. In this model the firm is concerned about job assignment, because the overall productivity of the firm depends upon the quality of the employees and their allocation to jobs. The model shows that firing has a dual role. Firing creates incentives for the employees, and it is used as a sorting device that allows the firm to improve workforce quality. Thus, quality-concerned firms might want to combine cost-efficient incentives such as promotions and bonuses with firing. To comply with the Gibbons and Waldman critique, a large set of the model’s broader predictions is stated explicitly and tested on the personnel records from a large pharmaceutical company. The model’s predictions are shown to be consistent with the data.personnel economics, incentive mix, layoffs.

Motivating Organizational Search

This paper investigates the value of high-powered incentives for motivating search for novelty in business organizations. While organizational search critically depends on the individual efforts of employees, motivating search effort is challenged by problems of unobservable behavior and the misalignment of individual and organizational interests. Prior work on organizational design thus suggests that stronger incentives can overcome these problems and make organizations more innovative. To address this conjecture, we develop a computational model of organizational search that rests on two opposing effects of high-powered incentives: On the one hand, they promote higher effort by increasing the potential rewards from search; on the other hand, they increase the competition among ideas, as the ability of an organization to implement and remunerate good ideas is limited by its resource base. Our results indicate that low-powered incentives are effective in generating a sufficient stream of incremental innovations, but that they also result in a shortage of more radical innovations. Stronger incentives, in contrast, do not systematically foster radical innovations either, but instead create a costly oversupply of good ideas. Nonetheless, higher-powered incentives can still be effective in small firms and if strong persistence is required to develop a new idea. Based on the analysis of our model, we develop a set of propositions that appear to be consistent with extant evidence and point to new avenues for empirical research.Organizational search, incentives, innovation, agent-based simulation

HRM in Chile : the impact of organisational culture

Purpose: This paper provides insight on the influence of organisational culture on HRM practices in Chile by exploring shared meanings (basic assumptions and beliefs) and organisational models that can be identified from activities, dynamics, social relationships and behaviours. Design/methodology/approach: The paper is based on research conducted in Chile where a combination of self-completion questionnaires, semi-structured interviews and non-participant observation was carried out in a non-probabilistic sample of 46 organisations. Findings: Findings suggest that there is a shared definition of work characterised by five elements; namely, the existence of great work pressure exerted by managers; a sustained focus of upper levels on organisational efficiency as an isolated element that does not include HRM; the inexistence of worker autonomy and empowerment; the use of administrative jargon and understandings of loyalty, dedication, compliance and professionalism as desired qualities in workers. The paper argues that there are three distinct categories of cultural discourse in Chilean organisations: pessimistic/fatalistic, optimistic/maniac and pragmatic/bureaucratic. Research limitations/implications: Due to the type of sampling used, findings cannot be taken to represent the whole of Chilean organisations.Practical implications: Data presented in this paper helps to understand many of the behaviours observed in Chilean organisations, which provides HR policy-makers and practitioners with sounder foundations for designing organisational programs, policies and action plans. Originality/value: The paper presents new evidence to increase empirical body of work addressing the relationship between organisational culture and HRM in developing countries, particularly in Latin America