In Module 2, we introduced the need for employee management by describing the agency problems inherent in organizations. We presented a large variety of management controls used within organizations to motivate employees and direct their effort toward the achievement of organizational objectives. One of the controls that was discussed is linking employee compensation to performance through an incentive system. A firm’s incentive system encompasses its methods of capturing, evaluating, and rewarding employee performance. As discussed in chapters 9 and 10, employees are influenced by financial as well as feelings-based ...
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