Question

What can business schools do to address the issue of incentive pay and corporate governance

What role will you have as managers and how will you prepare for these roles given these traps? What role does HR play in preventing these issues? How does this all fit into the Pay Model discussed in chapter 1

Answer 1

1 .Business schools can start a new subject teaching incentive pay and corporate governance. Incentive pay is nothing but a type of bonus or commission given to the employees by the manager for their hard work like doing extra time in the office or completion of the work before due date. So schools can teach this subject to their students. Corporate governance is the processes or relations by which the corporations are controlled and directed. It focuses on the internal and external corporate structures like ethical behaviour, integrity, responsibilities, communication, etc. Introducing such subjects by business schools will help the students in learning new concepts.

2. As a manager there are many responsibilities towards their stakeholders. Communication is the key role between the manager and the employees. The manager should encourage the employees to work much harder and tell them that if they work for more hours they will get incentive pay. They can introduce the concept of attendance bonus through which the employees will be motivated to work without absence and work in the interest of the organization as well. Corporate governance is another important concept in a firm. Managers should respect the rights of the shareholders and help them to exercise those rights. He can help them by openly and effectively communicating with them in general meetings. He should also keep in mind the interest of other stakeholders which includes employees, investors, creditors, local communities, customers and the government. Integrity is one of the features the manager must possess. He should be loyal and faithful with his employees and give everyone equitable treatment. The organization should be transparent in disclosing the information to the stakeholders.

3. Human Resource Management plays a major role in corporate governance and incentive pay system. Trust plays a major role here. The department should be loyal in giving bonus to the employees based of fair practice and not do any type of discrimination based on caste, gender, colour, etc. HR executes whether what behaviour is going on between the employees and the managers. They have a moral responsibility towards the employees and to effectively fulfilling these responsibilities. Ethical behaviour is must amongst the management and also for achieving the objectives of the organisation.