To prepare for this Discussion, think about a time in your professional experien

Question

To prepare for this Discussion, think about a time in your professional experience when a decision was made that seemed to benefit a specific manager or small group of managers and not the overall corporation. If you do not have professional experience directly related to this topic, research a situation in the news where this theme is demonstrated. Consider the outcomes of such an imbalance between manager and stockholder interests, and research how to avoid such a situation. Describe the situation from either your professional experience or your research. Explain two or more motivational tools that can aid in aligning stockholder and management interests. Explain how your selected tools are effective in resolving potential conflicts among managers and stockholders.

Explanation / Answer

In my professional experience, there was a scenario when a particular decision related to the business development was benefitting more to another firm w.r.t. the favourable terms and conditions. Here, the another firm had the close association with one of the top managers of the organization. So, indirectly the particular top manager was getting benefitted due to the business decisions as terms and conditions were not favorable to the his organization of employment. In this condition, there should be prescribed guidelines of building tie ups with other entities and rules should be strictly followed. Besides, any deal should be carefully examined and evaluated by more than one group of team in the organization so that the interest of the stockholders are taken care off. Further, the organization should make policies to prevent the agency conflict (as evident in the given case). Here, the best interest of the organization and the interest of the managers should be mapped in the same direction. For this purpose, the top managers or executives with decision making authority, should be awarded shares under employee stock option plans, cash benefits as a share from the profit earned by the organization among the other options. It will prevent the agency conflict in the organization.
There are different motivational tools that can be applied in the organization to align the interest of management with the interest of the stockholders. The first tool is reward program offered at the different level. It will encourage the employees at different levels to come out with the best performance to achieve the organizational goals. The second motivational tool is offering delegation of authority as an intrinsic motivational tool. A sense of responsibility and ownership, will make the team to take right decisions and deliver their best. It will help to bring managers and owners at the same platform.

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