...it is worthwhile to analyze the effects this trend and the workplace theories that correspond to it. The purpose of the paper is to show not only how forms of shared capitalism in the workplace can increase overall employee compensation, but how several labor theories relate and support the outcomes of shared capitalism. More specifically, three theories will be extrapolated and the outcomes of shared capitalism will follow each theory. First, expectancy theory will be explained and followed by its correlation to motivation and increased compensation. Second, equity theory will be explained and followed by the results of ESOPs. Finally, an explanation of efficiency wage theory will be provided and followed by the outcome of pay on shirking. Expectancy theory hypothesizes that a person decides to act in a certain way due to their motivation to choose a certain behavior rather than another behavior because of what they expect the outcome of their chosen behavior will be. Hence, an individual will choose the behavior with the most desirable result. Expectancy theory is a type of pay-for-performance theory that focuses on the needs for institutions to reward employees based off of their performance and to ensure that those rewards are desired by the employees. The motivational force of the employee is theorized to be a function that is multiple of three factors: expectancy (the perceived link between effort and behaviors), instrumentality (the perceived link between behaviors...
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...On 5th January 1914 the Ford Motor company announced that it would more than double the wages of its workers. Briefly describe the history of this decision and relate to the theory of incentives and efficiency wages. When Henry Ford introduced the five-dollar day on the 12th of January 1914, many of his competitors might have questioned the success of this policy. Today, it is well established that Ford’s strategy was a key reason for the company’s early success and is often documented as an exemplary application of the efficiency-wage theory. This essay will briefly outline the history and implications that have led to the five-dollar day and relate it to the theory of incentives and efficiency wages. Henry Ford founded the Ford Motor Company in 1903. During the first few years the company remained relatively small and it was only with the introduction of the T-Model in 1908 and the transformation to assembly line production that Ford could expand his market share and increase the company’s profitability. However, as Raff and Summers noted, assembly line production resulted in a high degree of specialisation of the different production steps. Work at Ford’s became more and more menial, leading to dissatisfaction among the workforce, which reflected in a significant annual turnover of 370% in 1913. Although there was no evidence that Ford had problems filling his vacancies, the absenteeism and high turnover undoubtedly resulted in costs that Ford had aimed to reduce. It...
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...Microeconomics * Elasticity * Price Elasticity of Demand * a measure of the responsiveness of quantity demanded to changes in price * addresses the percentage change in quantity demanded for a given percentage change in price * Coefficient of price elasticity of demand (E sub d) = Percentage Change in Quantity Demanded/ Percentage change in price * From Perfectly Elastic to Perfectly Inelastic Demand * Ed > 1 = Elastic * Ed <1 = Inelastic * Ed = 1 = Unit Elastic * Ed = Infinity = Perfectly Elastic * Ed = 0 = Perfectly Inelastic * Elastic Demand and Inelastic Demand * Elastic Demand: If the numerator (percentage change in quantity demanded) is greater than the denominator (percentage change in price), the elasticity coefficient is greater than 1 and demand is elastic * Inelastic Demand: If the numerator (percentage change in quantity demanded) is less than the denominator (percentage change in price), the elasticity coefficient is less than 1 and demand is inelastic * Unit Elastic Demand and Perfectly Elastic Demand * Unit Elastic Demand: If the numerator (percentage change in quantity demanded) equals the denominator (percentage change in price), the elasticity coefficient is 1 * Perfectly Elastic Demand: If quantity demanded is extremely responsive to changes in price, the result is perfectly elastic demand * Perfectly Inelastic Demand * Perfectly Inelastic...
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...benefits. It is also related to adverse selection problem which is a situation in which insiders, with inside information, earn more profits at the expense of outside investors. Similarly, corporate fraud involves deception to make personal/firm profits at the cost of others. Corporate fraud can happen in all organizations, regardless of their size, type (private or public corporation), industry (production or services) in any country. Corporate fraud could be either for personal gains, where managers use earnings management for their own benefits to maximize their utility while shirking, or to bail out a firm which performance is not up to par. The likelihood of fraud is increased in economic downturn and recession. As companies downsize in recession, cutbacks and cost control measures will often find employees with less than expected earnings, that will result in lowered utility and shirking. “Fraud is often explained in terms of the fraud triangle which describes that fraud is most likely to occur when there is an overlap of an incentive or pressure to commit fraud, the opportunity to commit fraud, and arationalisation therefore. Surveys are regularly carried out to estimate the true scale and cost of fraud to business and society. While findings vary and it is difficult to ascertain the full extent of fraud, all surveys indicate that fraud is prevalent within organisations and remains a serious and costly problem. Fraud may even be increasing due to greater globalisation...
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...Case Study MEMO to: | Audrey Redford, BECO 4310--002 | from: | Lauren Estrada | date: | February 13, 2015 | RE: | Enterprise Rent-A-car | | | There is an industry motto that states, “there are two types of car rental companies. Those who lose money and Enterprise”. Enterprise Rent-A-Car was started in 1957 in St. Louis, Missouri by Jack Taylor. Taylor founded the company offices in neighborhoods, and not at airports, because he believed that the Americans would welcome local option for rental cars when their vehicles were repaired. In 2010, the company had more than 6,000 rental locations in the United States and 850,000 fleet vehicles in operation. Enterprise Holdings (including Enterprise, National and Alamo brands) account for almost half of the car rental market and was more than twice as Hertz, the number two competitor. The competitive advantage of the company was the result of the combination of its practices in hiring, training, compensation, organization, customer service, IT and fleet management, among others. In the seemingly flawless company this case presents, the only thing that struck me as a problem was that they have relatively high turnover considering they put so much time, effort, and funds into training their employees. Of the entrants in their training program, 25 percent of new hires left within the first six months, and an additional 25 percent left within two years- that's just about 45 percent of their new hires gone. Based on how...
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...Economics 314 Coursebook, 2010 Jeffrey Parker 14 MODELS OF UNEMPLOYMENT Chapter 14 Contents A. Topics and Tools ............................................................................ 2 B. Defining Unemployment .................................................................. 3 The statistical definition ................................................................................................3 Problems with the statistical measures ............................................................................4 Natural and cyclical unemployment ...............................................................................6 C. Introduction to Theories of Unemployment........................................... 7 D. Minimum Wages and Unemployment ................................................. 10 A simple minimum-wage model .................................................................................. 10 Minimum-wage effects on skilled and unskilled labor ..................................................... 11 E. Unemployment Insurance and the Length of Job Search .......................... 13 A simple model of job search ........................................................................................ 13 Unemployment benefits and search duration ................................................................. 15 Optimal search duration ...........................................................................................
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...Literature Review The impact of human resource management (HRM) policies and practices on firm performance is an important topic in the field of human resource management, industrial relations, and industrial and organisational. A number of texts have appeared in recent years promoting the advantages of using high involvement human resource practices, which can improve the knowledge, skills, and abilities of a firm's current and potential employees, increase their motivation, reduce shirking, and enhance retention of quality employees. In the existing literature, focus on the issue that human resource management practices is developing rapidly as it helps to create a source of sustained competitive advantage, especially when they are aligned with a firm's competitive strategy. In India, the rapid development in this sunrise sector accelerates the need for the right kind of employees who can take care of retail operations. The success of any player in this lucrative sector depends not only on understanding target market and implementing marketing mix strategies but also on how effectively a retailer develops systems of high performance work practices including comprehensive employee recruitment and selection procedures, incentive compensation and performance management systems, and extensive employee involvement and training. An increasing body of work evaluated the links between systems of High Performance Work Practices and firm performance. In India, sudden and unprecedented...
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...advertisements work. The communications policy which are portrayed in the essence towards the end of the case opening: 'Internet promoting strategies, include paid review advertising, instinctive ads on openings, email encounters and site design improvement'. The secondary and web crawler showcasing methodologies are portrayed before in the article. Explain what distinguishes Amazon in its uses of technology for competitive advantage. The accompanying are normal for Amazon's utilization of innovation: Utilization of in-house advances for personalization; Early adopter – Rapid selection of new systems, for instance, Jeff Bezos has discussed the merits of Web 2.0. Broad testing and enhancement to locate the best approach. Shirking of solid activities, with centered groups handling particular issues. Base adaptable to manage quickly expanding request. Approaches created for one item should be extensible to others. How does the Amazon ‘culture of metrics’ differ from that in other organizations from your experience? This...
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...STARE DECISIS. Formerly, the courts applies earning capacity in fashioning child support awards in limited situations where the record demonstrated that the parent was shirking parental responsibilities by refusing to accept or seek gainful employment. Philbin v. Philbin 19 Cal.App. 3d 115, 96 Cal.Rptr. 408 (1971) With enactment of the Agnos Child Support Standards Act of 1984, the Legislature observed , in former Civil Code section 4720 (a), California has no single standard to promote equitable, adequate child support awards. The current method of setting child support awards has led a substantial variation in these awards among families with similar circumstances and resources. Also, part of the 1984 Agnos Child Support Standards Act was the addition of the language “ the court shall also consider, to the extent consistent with the best interest of the child or children, the earning capacity of either or both parents. To break the complexity of the word earning capacity, in In re Marriage of Regnery, 214 Cal.App. 3d 1367, Cal.Rptr. (1989), the Regnery court announced a three-prong test before the capacity to earn standard may be applied. Capacity to earn composed of (1) ability to work, (2) willingness to work and (3) opportunity to work. However, Appellate courts have encountered that danger and complexity of earning capacity after the case of Regnery. After such complexity, the court recognized that the second element, willingness to work, should be taken for granted...
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...Lecture 4: The Rise of the Manorial System Western Europe after the Fall of Rome A. By the 4th Century, the crushing tax burdens had forced small farmers to cede their land to local tax-exempt lords and seek their protection, setting up the foundations of feudalism. 1. Review of conditions at end of Roman Empire. a. Taxes were imposed on the peasantry, but landed elite were tax exempt. b. When state revenues declined, the state went out and forcibly collected more taxes from the peasants. c. Peasants responded by fleeing land and seeking protection of tax-exempt lords (early manors). d. As peasants fled land, led to localized labor shortages and reduction in tax base. Population in towns and cities declined due to lack of provisions. 2. Futile Economic Reform Efforts a. Diocletian (284-305) * Established regular contributions to the state rather than uncertain obligations. * fixed wages and prices. b. Constantine (306-337) * Bound peasants to land. * Made offices (occupations) hereditary. c. Theodosian Code (Theodosius I, 379-395) sought to lock men into their places and organize population into hereditary classes. Reforms offered only temporary stability could not stop process of decline. Led to very different economic/social structure than that of classical world: Great estates (latifundia) became self-sufficient, self-contained economies. B. The constant invasions...
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...Principal-agent problems arise through the misalignment of interests between individuals or groups within an organisation. They can occur in various parts of an organisational structure, for instance in Labour; between an employer and an employee, Franchises; the franchisor and franchisee, Regulation; the regulator and the regulated company through to Investors; between the Shareholders and company Executives (Fingleton, J. 2012) The strength and alignment of these relationships are vital for the smooth successful operation of organisations, problems can occur in both the public sector in healthcare through doctor-patient-pharmaceutical company relationships and also in government, whilst more commonly known in the private sector through labour and investor related problems. This report will evaluate the effects of the principal-agent problem within firms by considering real world examples of where they may have occurred and what methods organisations use to address the issue. Empirical Evidence Empirical evidenceThere is however considerable empirical evidence of a positive effect of compensation on performance (although the studies usually involve “simple” jobs where aggregate measures of performance are available, which is where piece rates should be most effective). In one study, Lazear (1996) saw productivity rising by 44% (and wages by 10%) in a change from salary to piece rates, with a half of the productivity gain due to worker selection effects. Research shows...
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...plays a significant role in the issues developed in this article. Asymmetry affects the reliability of information that will be delivered to other people. The managers of Diamond Foods were providing information to some people that they were not willing to share with people on the outside of the organization and to some extent people on the inside as well. For example, Diamond Foods was moving grower payments into different periods, so the growers did not even know what they are being paid for. Also investors and the public always believed that the company way reaching its growth targets, managers were actually engaging in income manipulation. This embodies the idea of moral hazard, where the investor cannot determine whether a manager is shirking their role or acting with the investors' best interests in mind. Investors rely on financial information to tell them what is going on internally, and make decisions based on the good news or bad news presented by these statements, and other sources to information from the company. As demonstrated, an investor cannot learn everything there is to know about a company from the financials; as a result, investors will assess the firm with an amount of estimation risk, lowering the price they will pay for the stock. Diamond Foods' admission of incorrect accounting will mislead speculation of stock and the performance of the whole firm. The lack of reliable information provided to investors and the public over the last three years led to their...
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...Asset Management Contracts and Equilibrium Prices ANDREA M. BUFFA Boston University DIMITRI VAYANOS London School of Economics, CEPR and NBER PAUL WOOLLEY London School of Economics September 13, 2014∗ Abstract We study the joint determination of fund managers’ contracts and equilibrium asset prices. Because of agency frictions, investors make managers’ fees more sensitive to performance and benchmark performance against a market index. This makes managers unwilling to deviate from the index and exacerbates price distortions. Because trading against overvaluation exposes managers to greater risk of deviating from the index than trading against undervaluation, agency frictions bias the aggregate market upwards. They can also generate a negative relationship between risk and return because they raise the volatility of overvalued assets. Socially optimal contracts provide steeper performance incentives and cause larger pricing distortions than privately optimal contracts. buffa@bu.edu, d.vayanos@lse.ac.uk, p.k.woolley@lse.ac.uk. We thank Sergey Chernenko, Chris Darnell, Peter DeMarzo, Ken French, Jeremy Grantham, Zhiguo He, Ron Kaniel, seminar participants at Bocconi, Boston University, CEU, Cheung Kong, Dartmouth, LSE, Maryland, Stanford, and conference participants at AEA, BIS, CRETE, ESSFM Gerzenzee, FRIC, Jackson Hole, and LSE PWC for helpful comments. ∗ 1 Introduction Asset management is a large and growing industry. For example, individual investors...
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...Example Term Paper Format ECON 460 November 19, 2011 Abstract The following paper is an example of the appropriate stlyle, layout and format for an term paper or essay in an economics course. All papers should have a title page that contains the following: 1. Title of the Paper 2. Course Number and Instructor 3. Your name and student number 4. Date Any graphs should be on seperate pages that are not counted as part of the written page requirements. All graphs must be discussed and explained within the body of the text. Newspaper and magazine articles may be cited but do not count as part of the required references. 1 A REVIEW OF FRANCHISE THEORY INTRODUCTION In service based industries one of the fastest growing forms of market structure is that of franchise agreements. Certain aspects of franchise contracts tend to be idiosyncratic in nature thereby attracting a great deal of interest by academics and business analysts in recent years. Various explanations have been proposed for the widespread use of franchise contracts in certain industries. While a great deal of the franchise contract has been explained in the literature, there remains certain aspects of this form of arrangement that has yet to be addressed. This paper intends to address two of these issues as well as proposing an alternative modelling approach to franchise contracts. The second section of this paper describes the basic structure of franchise contracts. The third section discusses the various...
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...Example Term Paper Format ECON 460 November 19, 2011 Abstract The following paper is an example of the appropriate stlyle, layout and format for an term paper or essay in an economics course. All papers should have a title page that contains the following: 1. Title of the Paper 2. Course Number and Instructor 3. Your name and student number 4. Date Any graphs should be on seperate pages that are not counted as part of the written page requirements. All graphs must be discussed and explained within the body of the text. Newspaper and magazine articles may be cited but do not count as part of the required references. 1 A REVIEW OF FRANCHISE THEORY INTRODUCTION In service based industries one of the fastest growing forms of market structure is that of franchise agreements. Certain aspects of franchise contracts tend to be idiosyncratic in nature thereby attracting a great deal of interest by academics and business analysts in recent years. Various explanations have been proposed for the widespread use of franchise contracts in certain industries. While a great deal of the franchise contract has been explained in the literature, there remains certain aspects of this form of arrangement that has yet to be addressed. This paper intends to address two of these issues as well as proposing an alternative modelling approach to franchise contracts. The second section of this paper describes the basic structure of franchise con- tracts. The third section discusses...
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