The Managerial Theories Essay Example | Topics and Well Written Essays - 1750 words

The Managerial Theories - Essay Example This paper covers the inherent conflict between providing costly incentives to motivate managers to perform well, against the overall profit motive of the firm. In analysing this conundrum, the author will call on the different kinds of motivational tools available to the Managing Director and the Board of Directors of a firm, and how those tools are regarded both by the managers whose incentives are affected, and the shareholders of the firm, who are presumably trying to maximise their gain (Griffith 2000).  As income taxes have risen over the past historical era, the outright impact of salary or bonus increases has been moderated somewhat. The incremental tax on income in the UK and the US is at about 50%, hen all local and national income taxes are taken into account. Thus the standard supply and demand relationship demonstrates a curve, as shown below. Since taxes climb with income, the curve’s change in slope is more pronounced:  As compared to the turn of the last ce ntury, when income taxes were less than 10%, the total impact of increases in wages has therefore moderated. The second influence on this moderation has been the increase in the value of leisure time (Kokoski 1987). As the value of leisure hours has increased, the amount which needs to be paid to offset the value of leisure time has also increased, all else being equal.  Group incentives can take the form of income increases (salary and bonus) or non-monetary rewards, such as additional vacation days. From a microeconomics standpoint, there is no difference between group pay incentives and individual pay incentives. There are psychological differences which can be substantial, however, depending on the type of performance being rewarded.   An extreme example of the point above is an individual whose personal rewards far exceed those of the group.