Question

a) A firm can decide to pay on the basis of either behaviour or outcomes. Discuss

the contribution of agency theory on the decision to pay on the basis of behaviour or outcomes.

(b) Discuss the relationship between fairness and pay satisfaction using insights from equity theory and justice theory.

Answer 1

Answer a- Agency theory could be a principle that's accustomed justify and resolve problems within the relationship between business principals and their agents. most typically, that relationship is that the one between shareholders, as principals, and company executives, as agents.

An agency, in broad terms, is any relationship between 2 parties during which one, the agent, represents the opposite, the principal, in every day transactions. The principal or principals have employed the agent to perform a service on their behalf.
Principals delegate decision-making authority to agents. as a result of many choices that have an effect on the principal financially area unit created by the agent, variations of opinion, and even variations in priorities and interests, can arise. Agency theory assumes that the interests of a principal Associate in Nursingd an agent aren't continually in alignment. this can be generally stated because the principal-agent downside.
Financial planners and portfolio managers area unit agents on behalf of their principals and area unit given responsibility for the principals' assets. A renter could also be to blame of protective and safeguarding assets that don't belong to them. despite the fact that the renter is tasked with the work of taking care of the assets, the renter has less interest in protective the products than the particular homeowners.
Findings from structure behavior analysis area unit utilized by executives and human relations professionals to raised perceive a business’s culture, however that culture helps or hinders productivity and worker retention, and the way to guage candidates' skills and temperament throughout the hiring method.

Organizational behavior theories inform real-world analysis and management of teams of individuals. There area unit variety of components:

Personality plays an outsized role within the method someone interacts with teams and produces work. Understanding a candidate's temperament, either through tests or through speech communication, helps confirm whether or not they area unit an honest suited a company.
Leadership, what it's like and wherever it comes from, could be a wealthy topic of dialogue and study inside the sphere of structure behavior. Leadership is broad, focused, centralized or de-centralized, decision-oriented, intrinsic during a person’s temperament, or just a results of a foothold of authority.
Power, authority, and politics all operate inter-dependently during a geographic point. Understanding the suitable ways in which these components area unit exhibited and used, as prearranged by geographic point rules and moral pointers, area unit key parts to running a cohesive business.

Answer b : Fairness Perceptions and Satisfaction with elements of Pay satisfactionAlthough the perception of fairness is very important to all or any human resource selections and processes it's significantly vital to compensation selections, like pay, pay raises and edges. Indeed, perceived fairness of compensation, the procedures accustomed create compensation-related selections, and also the manner during which compensation-related info is communicated play associate integral role in shaping reactions to crucial parts of the compensation system. Yet, the literatures on attitudinal reactions relating compensation and fairness perceptions have evolved severally. despite the fact that most would promptly acknowledge that fairness is very important to compensation selections, analysis examining however fairness perceptions relate to reactions to elements of pay is comparatively scarce. Pay and satisfaction with pay is of nice importance to workers and to organizations . Pay satisfaction may be a flat construct. Pay level refers to the individual’s current direct compensation in terms of wages and remuneration. Raises talk to modification in pay level. edges mirror indirect pay to the individual within the kind of health, retirement and payment for time not worked, and different non-financial returns. Pay structure and administration refers to the graded relationships created among pay rates for various jobs among the organization and procedures by that the pay system is run. incorporation of structure justice into the study of pay satisfaction though many researchers have speculated regarding the relations between justice perceptions and pay satisfaction the role of justice constructs as antecedents or consequences of pay satisfaction has not been clearly delineated . However, the preponderance of analysis on pay satisfaction has centered on pay level satisfaction to the exclusion of satisfaction with the opposite dimensions of pay satisfaction: satisfaction with edges, satisfaction with raises, and satisfaction with structure and administration. Consequently, a recent meta-analysis of pay satisfaction. was restricted to only 1 dimension of pay satisfaction, satisfaction with pay level. additionally, previous analysis has connected one or 2 dimensions of justice perceptions, however not all four, to 1 or 2 dimensions of pay satisfaction to the exclusion of different dimensions. analysis has shown the four dimensions of pay satisfaction square measure correlate with one another Therefore, Williams et al cautioned that tests of models together with only 1 or 2, however not all dimensions of pay satisfaction could be misspecified and consequently, their results suspect. as a result of the four justice dimensions also are correlate with one another (Colquitt et al., 2001), constant criticism is applicable to studies that examined relationships between justice constructs and pay satisfaction however didn't embrace all four dimensions of justice. Against this background, our study makes a vital contribution because it enclosed all four dimensions of justice perceptions and every one four dimensions of pay satisfaction. Specifically, this can be the primary study to look at the connection between the four types of justice perceptions, specifically distributive justice, procedural justice, social justice and informational justice and also the four dimensions of pay satisfaction, specifically satisfaction with pay level, benefits, raises, and structure
5and administration. additionally, it responds to needs additional primary studies linking interactive justice perceptions to pay satisfaction (Williams et al., 2006, p. 406). The article is organized as follows. First, a quick summary of the various types of fairness perceptions is bestowed. Second, relevant analysis on fairness and elements of the pay system square measure integrated to develop specific, so far untested, hypotheses. Third, results of a study conducted to check these hypotheses square measure mentioned. Lastly, implications of results for practitioners square measure mentioned and directions for future analysis square measure offered.