chapter 14: compensation
Agency theory
A theory of motivation that depicts exchange relationships in terms of two parties: agents and principals. According to this theory, both sides of the exchange will seek the most favorable exchange possible and will act opportunistically if given a chance. As applied to executive compensation, agency theory would place part of the executive's pay at risk to motivate the executive (agent) to act in the best interests of the shareholders (principals) rather than in the executive's own self-interests.
Maturity curves
a plot of the empirical relationship between current pay and years since a professional has last received a degree (YSLD), thus allowing organizations to determine a competitive wage level for specific professional employees with varying levels of experience
Professionals
an employee who has specialized training of a scientific or intellectual nature and whose major duties do not entail the supervision of people
Pooled commissions
commissions based on rates of a sales team
Declining commissions
offer rate up to a target level, then lesser rates thereafter
Ramped commissions
one rate up to a target level, then a higher rate tied to more difficult above target sales
Dual-career ladder
presence of two different ways to progress in an organization, each reflecting different types of contribution to the organization's mission
Flat commissions
same rate for each unit sold