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Combination of the executive incentive compensation

Author: BaiYang From: www.yourpaper.net Posted: 2010-05-26 17:21:57 Read:
[Abstract] the scientific, reasonable and effective top management compensation incentive combination can attract, retain and motivate executives better, which is conducive to the achievement of organizational goals.But the design of the executive pay incentive combination is confined to a single enterprise or CEO combined cycle was analyzed, ignoring the dynamic analysis for the enterprise life cycle and CEO cycle, which is lack of pertinence.Incentive combination design of executive pay, must study the dynamic relations double cycle, in order to obtain valuable conclusions.This paper reviews the research on Incentive Theory in the pay of senior management personnel, establish executive incentive double life cycle model of supply and demand, discusses the enterprise at different stages of development, combined with the Executive Office assignment cycle, based on the characteristics of enterprises and executive needs, design 12 kinds of more reasonable and effective incentive combination.
[keyword] double top management; life cycle; compensation combination

"Key business excellence is not paid to the number of top management compensation is paid to anyone," a, or "CEO, incentive -- not to pay how much, but how to pay for" B.In the last 20 years, substantial salary level of top management to improve, but at the same time the shareholders are lower than the economic growth C, accompanied by senior management cycle, the relationship between executive pay and stock returns is more and more weak D.At present, different scholars from different angles on executive compensation to pay for the issues of research, Bruce R. Ellig, fan Lin list, Wang Liyao et al. (2006) according to the enterprise life cycle, the different development stages of enterprise salary strategy for the study, Charles W. L. Hill, Phillip Phan et al (1991) study found, with relationship between CEO compensation and cycle for its, Wang Shujian (2003) put forward in the development of the compensation incentive mechanism should be the life cycle of enterprise and entrepreneur's life cycle combination, but the lack of refinement and operability.
We hope by combining the concepts of CEO and the enterprise life cycle, analysis of the senior management of double cycle incentive mechanism, to explore and try to design a more reasonable and effective executive compensation combination.

1 Introduction to the theory of

1.1 senior management: the study of the top management refers to "by the board of directors of the company to appoint and dismiss, responsible to the board of directors, the board of directors within the scope of authorization" e engaged in enterprise strategic decision and directly to the business activities of enterprises and economic benefits manager responsible member.This concept is equivalent to the enterprise managers, President, general manager, CEO, not including the members of the board of directors and the party organizations responsible person.
1.2 CEO life cycle: CEO life cycle refers to the "in the process of management activities, along with the increase of service time, rise, its business performance shows early middle stable, change trend of late fall".F 1991, American scholar Hambrick and Fukutomi changes during the term of office of leadership on the operators to conduct in-depth study, presents the life cycle of CEO five g model, as shown in table 1.


Refer to the Hambrick and Fukutomi "CEO life cycle five seasonal model", and Li (1997) classification of leadership life cycle, we put the "office", to "reform" is defined as the stage of growth period, "style", "strengthen" the definition for mature, the "rigid block" stage is defined as the recession of I, can get the CEO life cycle model, as shown in figure 1.


Figure 1 CEO service life cycle
1.3 the life cycle of enterprise: enterprise life cycle is the enterprise production, growth and decline process.At present, the theory of enterprise life cycle influence the Steinmetz (1969) the four stage theory, Miller and Friesen (1984) of the five stage model, the management of our country scholar Chen Jiagui (1995) the six stage model and the United States of America scholar Issac ? EDIS (1997) according to the principles of biological evolution can be divided into ten life cycle stage, and points out that the enterprise life cycle will experience growth stage (enterprise incubation period, infancy and toddlerhood, adolescence, prime time) and aging stage (stable period, aristocratic stage, bureaucratic and deaths), as shown in figure 2j.The ten phase of the Adizes model was divided into several more specific, more guidance and operability.


Fig. 2 the enterprise life cycle model of
According to Adizes of the enterprise life cycle model, combined with the four stage model is the theory widely recognized, the enterprise life cycle is divided into four phases, as shown in Figure 3:


Fig. 3 the enterprise life cycle model of
Combination incentive compensation: "1.4 combination incentive design reasonable remuneration of senior executives. The aim is to attract, retain and motivate executives to" better K.According to Becker et al. (Baker, Jensen& Murphy, 1998) point of view, "the company's remuneration policies according to different analysis purposes can be divided into three aspects: the level of independent, function form, constitute a" L.Here, I will sum up its salary incentive combination.The salary incentive portfolio consists of compensation factors different weights, according to Liu Xin (2007), Conyon (2006) point of view, the salary incentive portfolio managers mainly includes four parts: basic salary, short-term incentive, long-term incentive and welfare.In total compensation of executives, "basic wage proportion is relatively small, short-term bonuses and long-term incentive proportion is relatively large" m, usually much higher than ordinary staff welfare.Short-term motivation mainly adopts the annual bonus program, usually the performance evaluation based on long-term incentive; the most common form of executive stock option is given; welfare benefits, including internal external benefits and individual benefits, including retirement benefits, more and more important, has the "golden parachute".N

Analysis of
incentive mechanism model under the condition of 2 double life cycle management salary

Different stages of the life cycle of
2.1 executives for salary requirements analysis
2.1.1 growth stage of the enterprise executives: for this stage of the executive pay incentive to both stable and resilient, stability is the need to maintain a harmonious family, elasticity is on work ability and special contribution to the recognition, reflected in the two element structure model as the compensation design should be.Because of short duration of executives, junior, so it can be appropriate to reduce the base salary; at the same time in order to encourage their pioneering spirit, should increase the proportion of short-term incentive for O.
2.1.2 mature enterprise executives: increases along with the enterprise executives period, mature period of executives in their own development, career success that they have higher requirements: basic salary salary would have higher and the holding company stock, make enterprise residual claims, share the profits of enterprises.At this time, the compensation incentive mainly adopts the annual salary system and the stock incentive plan.
The 2.1.3 recession executives: the rigid development stage, executive first think of the future security and personal reputation of P, therefore in the psychological development, most of them tend to maintain the status quo and stability.In addition, people at this stage because of the gradual approaching retirement, they more or less will do for living problems of their own future, higher requirements on welfare.Base salary of all this stage executives tend to a high level of risk, low income levels and high welfare.
2.2 different phases of enterprise life cycle the adaptable Salary Excitation
Incentive mechanism analysis of QR
2.2.1 primary stage of the enterprise: the newborn period, enterprises tighter liquidity, in order to reduce the financial burden of enterprises, the overall salary rigidity at this stage should be smaller.From the salary structure, basic wages and benefits the proportion to small, and performance bonus proportion to be big, long-term incentive compensation plan is the most important factor.The usual practice is: corporate commitments or agreements to employees, with stock or future benefits, long-term incentive form instead of the current salary.As we enter the growth stage, can help us carry out the long-term incentive company stock price growth potential, in order to retain talent.
Aiming at the primary stage of enterprise production and management of enterprises, the period for the operator salary incentive mechanism is:
Salary = (base salary benefits
) long-term incentive

A smaller proportion of
2.2.2 growth stage of the enterprise: due to the growth stage of the enterprise cash flow is more comfortable, and to achieve the external competitive salary.At this time, on one hand enterprises began to increase the basic wage salary and welfare, and according to the performance of the performance bonus account for a large proportion; on the other hand, because enterprises are in the active expansion of state, requires a large capital investment, long-term incentive plans are still dominant, equity incentive t focus of attention remains.
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