Executive Compensation Schemes in Corporate Governance Research Paper

Executive Compensation Schemes in Corporate Governance - Research Paper Example The HR specialist has a difficult task of fixing wages and wage differentials acceptable to an employee and their leaders. Executive remuneration has assumed considerable importance in recent years. Salaries and perks paid to highest decision-makers in organizations are skyrocketing, and this sudden spurt in managerial remuneration was the result of economic deregulation and the consequent entry of MNC's into the various regions. The expectancy model has its roots in the cognitive, concept of pioneer psychologists Kurt Lenin and Edward Tolman. However, the first to formulate an expectancy theory, directly aimed at work motivation, was Victor H. Vroom. Expectancy theory is based on the idea that work effort is directed towards behaviors that people believe will lead to desired outcomes. Despite its general appeal, the expectancy model has some problems. It is important to discover what kinds of behavior the model explains and to which situation it does not very well apply. Contrary to the assumption of the expectancy theory the individuals make decisions consciously; there are numerous instances, where decisions are made with no conscious thought. It is complex, and thus its validity is difficult to test in its entirety. Limitations apart the expectancy model is useful in as much as it serves as a heuristics decision tool to guide managers in dealing with the complexity of motivation in organizations. Motivat ion principles such as encouraging employees' performance and matching rewards to performance can be drawn from the theory. These principles can be used to guide managers in designing organizational rewards, work systems, Management by objectives, and goal setting.