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Research on human capital income distribution model based on EVA

Author: LiuXiaoYing From: www.yourpaper.net Posted: 2010-06-03 05:33:28 Read:
[Abstract] the human capital as a factor of production continuously for enterprises to create new value, has the capital attribute of human capital should share the enterprise ownership with the material capital, participate in the distribution of enterprise residual income.Based on the review of the current income distribution model of human capital, human capital sharing the enterprise to determine the residual is economic value added (Economic Value Added), and the EVA as the income distribution model of human capital participating in the distribution of the foundation, in order to provide new ideas and inspiration to the practice of enterprises in china.
[keyword] human capital economic value added income distribution bonus plan virtual stock option

From the traditional income distribution theory, the main distribution of surplus earnings of enterprise is the enterprise's financial capital (or capital), with the coming of knowledge economy, human capital by virtue of its unique "assets" characteristics of its participation in the distribution of enterprise's residual returns become inevitable.The transaction cost theory of Kos, Williamson's human asset specificity theory and Jansen and Mclean of the principal-agent theory and human capital theory, from the aspects of the establishment of human capital property rights can make the optimal benefit of enterprise.In order to realize the distribution of human capital to the enterprise residual income right, there must be adapted to the distribution mode and the specific method of measurement.Domestic and foreign scholars have put forward a series of human capital participating in the distribution of residual income model in practice, such as the executive stock option (ESO), employee stock ownership plan (ESOPs), stock, stock appreciation rights, virtual stock share form.The basis of this study at home and abroad, construct the value added EVA for income distribution mode of human capital participating in the distribution of the economy, in order to provide new ideas and inspiration to the practice of enterprises in china.

1 the existing human capital participating in income distribution in enterprise main model of

1.1 annual salary system
The annual salary system is the year for the units decide salary system, and its operating results the risk income wage system.China's annual salary system is generally the operators' income is divided into base salary and risk income of two parts, mainly determined according to the factors of economic benefits of the enterprise level, business scale, local and enterprise staff average income level; risk income with basic salary as the base, hook and enterprise performance.The annual salary system has two important functions: to the interests of operators is independent from the funders and laborer, is conducive to the protection of the investors "interests; secondly, the annual salary system has the incentive to managers, which is favorable for the formation of the entrepreneurial team and grow.But the annual salary system also has some problems: one is the salary cap at the end of the practice, the annual salary system incentive effectiveness.In addition, performance index, is the main method of longitudinal contrast, easy to produce "whipping fast cattle" phenomenon; two is the long-term incentive measures are not matching, short-term cause operator's behavior, and the lack of strict examination system, the operators to increase their income through the manipulation of profit index.

1.2 of equity incentive
Managerial ownership incentive is to allow the operator to hold the stock, to become shareholders, the operator's personal interests and the interests of the enterprise together, to stimulate the operators to be able to enhance the long-term benefits of enterprises increase their wealth, this is a kind of long-term incentive to managers.The equity incentive has the following functions: equity incentive to reduce agency cost, so that the operators become shareholders or inspired him to become a shareholder of the enterprise; the equity incentive to reduce the operator's short-term behavior, enhance the enterprise long-term benefit; equity incentive to enable operators to long-term gains access to the enterprise growing, is conducive to better retain talent, attract the best talent.This is mainly in the major business enterprises to create or change, often by a company employee stock.

1.3 stock option
Stock option is to give the operator in the next period of time at a predetermined price (price authority) to buy shares of company stock rights.Stock option has the following characteristics: stock option is a right but not the obligation, the stock option is only less than the company's share price in the exercise price is valuable, the stock option is the donation of the company.Executive stock option incentive, attract and retain the three role.Specifically, the incentive effect of stock option as follows: to reduce agency costs, incentive to work hard, to pursue long-term revenue.But the defects of the system of stock option: from stock option and enterprise operating performance, stock option is a measure of the absolute performance of enterprise management, rather than the more relative performance.Without the comparison of relative performance, it will lose the incentive and significance.Option to complete the stock market as the external conditions, the stock market there is a big noise, the stock price is affected by many factors, of which only a few and enterprise managers behavior.Option in the assets of closed and no market price case is difficult to implement.Therefore the operation process of the stock option is easy to produce "information asymmetry" phenomenon, the operation performance of the stock option system is poor.

Based on 2 revenue of human capital distribution -- EVA

Whether the annual salary system and stock, option incentive, all only is a realization mode of income distribution, model portfolio companies can solve the agency cost, operator's short and long term interests, right to manage the size of the problem, before the practical application of different levels of human capital by different combination of patterns, a a fundamental problem need to be solved, i.e. distribution measurement.The distribution mode of the distribution above or to enterprises to achieve net profit or to the stock price, because of the profit manipulation and the stock market "noise", are not fair reflects the human capital contribution value.And the United States of America Stern Steward management consulting company raises the economic value added (Economic Value Added) is got rid of all the cost of capital (material capital and human capital) after the surplus, surplus income of generally accepted accounting principles (GAAP) based on according to the influence on Accounting Conservatism adjustment, prevent the occurrence of earnings management, the elimination of the past product accounting error objective adjusted.The following formula:
Economic value added (EVA) = net operating profit after tax (NOPAT) - all capital cost of
The net operating profit after tax = (total interest cost profit) * (1-T) accounting adjustments, T as the income tax rate; all the cost of equity capital cost of capital = after-tax cost of debt accounting adjustments (equivalent cost of equity); weighted average cost of capital (WACC) weighted average cost = debt capital and equity capital.
The biggest feature as the income distribution of human capital measurement based on the EVA one is the enterprise after deducting the owner of human capital necessary to return on capital (fixed income) and the owner of material capital (capital necessary to return the necessary return) residual income available two types of capital allocation, is the enterprise added value, the human capital owners, economic value added there are no and economic value added size reflects how much human capital contribution and value.The second is the manager's human capital and the interests of the owners tend to be consistent, making the business operators think standing in the owner's point of view, human capital only by virtue of their own efforts to constantly create new value, its itself will get its contribution to earnings.

3 construction of income distribution model of human capital based on EVA
The need for balance in the following construction target mode: one is the human capital and material capital interest coordination.To make the human capital compensation vary with the number of its wealth creation.The two is the wealth of leverage effect, the human capital incentive to have a large enough elasticity, encourage the enterprise for a long time, risk.Three is the controlling shareholder of cost, the management compensation cost control in the current shareholder wealth maximization within the scope of.The main modes:

3.1 EVA bonus plan
3.1.1 XY bonus plan
A bonus of =x * EVAt (Y กม EVA) (0 the program applies to slow growth, into the enterprise life cycle of recession of the industry, such as textile industry enterprises is particularly suitable for, because this kind of enterprise under normal circumstances can only obtain the industry average profit, EVA means has been hovering around 0.The programme aims to fully mobilize the enthusiasm such as the textile industry management of these enterprises', the EVA is greater than 0, and rising year by year.The EVA value is positive in the enterprise, the plan of the Y value can create powerful incentive effect, and the X coefficient in the formula can provide competitive salary level for the enterprise.In addition
, the scheme also give full consideration to the enterprise for EVA negative circumstances, with improved EVA to measure management performance, therefore, even if the enterprise is in deficit condition, but as long as managers continue to reduce the degree of loss, but also will be rewarded, this is undoubtedly has a positive meaning for the poor efficiency of enterprises speaking.But it will make the enterprise incentive cost increase.
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