Showing papers on "Remuneration published in 1995"

Taking Care of Business: Executive Compensation in the United Kingdom

Abstract: The compensation of top executives is a subject that generates heated debate. This has been especially so in Britain in recent years, where many commentators have been critical of the large increases in compensation received by directors of leading companies, and of the methods used to set pay and other components of compensation.' It has thus become an extremely topical policy issue to consider how compensation is set for top directors. Much of the evidence from empirical work on the determinants of compensation received by top executives has concluded that there is only a very weak statistical link between direct compensation (i.e. excluding shareholdings and options) and the stock market performance of their companies. Even where a link has been identified its magnitude seems to be extremely small (seeJensen and Murphy, I990, for evidence from the United States and Gregg, Machin and Szymanski, I 993 a, for the United Kingdom). This has been widely interpreted as reflecting a misalignment of incentives between top directors and shareholders and, as such, providing little support for principal-agent models where the top executive acts as an agent for the owners of the company. Several commentators have suggested that one needs to tighten the link between compensation and performance and various policy reforms have been suggested. The best known examples are the recommendations by the Cadbury committee (I992) and Institutional Shareholders Committee (I99I) which prescribe standards for the governance of boardroom pay (e.g. by the establishment of remuneration committees). In this paper we consider the issues, evidence and outline possible ways in which one may wish to reform pay setting practices for top executives in Britain. We begin in the next Section by presenting some descriptive data on what has happened to executive pay in recent years, discuss the information that is currently available on executive compensation and then briefly review the empirical work on the link between compensation and corporate performance. In Section III we consider corporate governance mechanisms in UK companies. Finally, in Section IV we consider some appropriate policy options, focusing on three main issues, information disclosure, the reform of governance mechanisms and the potential for introducing regulatory mechanisms that set out enforceable guidelines.

Safety in numbers: A model of managerial herd behavior

Abstract: This paper provides a formalization of managerial herd behavior that is based on the principle of safety in numbers. The explanation is completely independent of the information signalling approach to herd behavior (Scharfstein and Stein, 1990, Banerjee, 1992), and fully captures popular explanations of the phenomenon. The key assumptions are that managers are individually risk averse, and that their remuneration be partly based on relative performance.

Simply a question of cultural barriers? the search for new perspectives in the transfer of japanese management practices

Abstract: This paper discusses the transfer of management practices from parent companies in Japan into the operations of overseas subsidiaries of Japanese enterprises. the literature reviewed as well as the findings of case studies on human resource management practices in Japanese manufacturing firms in Australia suggest that key but rather high-cost practices associated with Japanese management including tenured employment, seniority-based remuneration and the provision of extensive welfare benefits are absent in overseas Japanese firms. On the other hand, relatively low-cost practices such as internal training, internal promotion and job rotation have been generally introduced into the firms researched. It appears, therefore, that the transfer of Japanese management practices is primarily affected by economic considerations rather than socio-cultural constraints as it has frequently been argued in the literature. Thus, the development of new theoretical frameworks explaining the transfer (or its absence) of Japanese management practices is essential. the paper takes a small step in this direction by suggesting that the overseas expansion of Japanese subcontracting networks including large-scale corporations as well as smaller size firms, produces conditions leading to the marginalization of segments of the local labour force and the emergence of the core-peripheral workforce dichotomy at the international level.

Executive Compensation and Agency Effects

Abstract: The separation of ownership from control in large corporations can cause agency problems. This study analyzes the effects of the dispersion of corporate ownership on the compensation of the top executives of Fortune 500 companies. The effects are estimated across the executive hierarchy and for different components of the compensation package in contrast to more limited previous studies. The results indicate that there is a significant agency effect on executive pay, though the magnitude is small relative to company size. The effects are greatest for the most liquid form of remuneration, salaries, and are nonuniform across executive categories, with the strongest effect found for the Chairman of the Board.

Contracts as Modular Mechanisms: Some Propositions for the Study of "Hybrid Forms"

Abstract: This paper proposes a “morphological grammar” intended to describe any type of contract between two economic agents. A contract is considered as a combination of coordination mechanisms that ensure the creation of a quasi-rent and its sharing between contractors. Three types of mechanism are distinguished: those that ensure the technical governance of transactions (compatibility of actions), those that guarantee the enforcement of promises, and those that operate the remuneration of participants. In addition only a few options are available to design each mechanism. Therefore any coordination process can be described through a limited collection of mechanisms that have a limited number of possible designs. Although the grammar proposed here is open to discussion, the methodology supported by the modular conception of contracts seems particularly powerful. At the empirical level it enables scholars to describe contracts precisely and to compare actual coordination mechanisms. At the theoretical level, it is a way to simplify the analysis of complex decisions (i.e. contract design) and of complex phenomena (i.e. the contracts’ properties). The “grammar” is used for an applied study of the impact of Information and Communications Technologies on coordination processes among firms to illustrate its analytical potential.

Directors Pay in the Privatized Utilities

Abstract: This exploratory paper examines the relationship between the remuneration of the highest paid director and company performance in the privatized utilities. Four conclusions regarding the structure of top directors' pay emerge from the analysis. First, the salary plus bonus remuneration of top directors in the privatized utilities has increased by 12 per cent per annum since 1990. Second, average employee pay in these utilities has grown by about 3.1 per cent per annum over the same period. This suggests that top pay growth in the privatized utilities has outstripped that of the average worker since 1990. Third, the analysis cannot isolate a robust statistical relationship between directors' compensation and measures of pre-dated company performance. Finally, directors' share option dealings can sometimes considerably inflate their overall compensation. Taken together, these findings implicitly question the current efficacy of remuneration committees for determining boardroom pay in the privatized utilities. One solution, which may enable shareholders more accurately to assess executive performance, is for complete disclosure of all components of directors' pay in the company accounts.

Reward Management: Employee Performance, Motivation and Pay

Abstract: 1. Employee and Organizational Performance. 2. Theories of Motivation. 3. Performance Management. 4. Remuneration and Motivation. 5. Developments in Payment Systems. 6. Establishing Remuneration Systems. 7. Job Evaluation. 8. Equal Pay. 9. Remuneration Benefits. 10. Pension Schemes. 11. Systems of Performance Related Remuneration. 12. Remuneration in an International Context. 13. Managing the Reward System. Bibliography. Acknowledgements. Glossary.

Labour law and industrial relations in Germany

Abstract: Labour Law and Industrial Relations in Germany gives the reader a broad understanding of German labour law covering all importantaspects. The book deals with the sources of labour law, individual employment relationships, collective bargaining, remuneration, working conditions, and dispute settlement.It provides advocates, administrators, management, and especially students, with an overview of all aspects of German labour law, and, to some extent, of its social, economic, and political context. The fourth edition is a revised version and all the latest developments are covered.

Workers' financial participation : East-West experiences

Abstract: This work focuses on pay schemes which provide, in addition to fixed pay, a variable portion of remuneration linked to some measure of enterprise performance. The authors describe the experience of ten countries, discussing advantages and disadvantages of different schemes, the economic, institutional and organizational contexts which encourage their development, and the characteristics of schemes that make them more or less favourable to workers.

The remuneration of non-owner managers in UK unquoted and Unlisted Securities Market enterprises: An empirical analysis of firm specific, human capital and job history influences

Abstract: This paper examines the extent to which the remuneration levels of non-owner managers employed by UK small and medium size enterprises (SME) can be explained empirically by a number of firm specific, human capital and job history characteristics. The UK SME sector is very heterogeneous and we test for possible differences in the determinants of remuneration for two distinct groups of firms. One group consists of high-growth firms that achieved an Unlisted Securities Market (USM) listing within 10 years of start-up. The second group consists of similar firms, matched with the USM firms in terms of age, sector and location, that have remained unquoted businesses. The empirical analysis, based upon data obtained from interviews with non-owner managers and the published financial records of their employing firms lodged at Companies House, focuses on comparing the separately estimated remuneration equations for the two groups of managers.

Social, Political, and Economic Determinants of Chief Executive Compensation

Abstract: For more than a decade, as pressures for managerial accountability have increased, researchers in a variety of disciplines have studied questions associated with the compensation of top level corporate executives. The battle between corporate reformers who would curb chief executive compensation levels and those who believe that current levels of executive pay are appropriate has been intense. In fact, the battle has expanded beyond simple issues of compensation to include discussions of the mechanisms that exist to oversee and control corporate executives including the role and functioning of the board of directors (Kerr and Bettis, 1987; Colvin, 1992; Stewart, 1993). While disagreement still exists on the exact role and responsibilities of the board, it is widely accepted that the board is the formal representative of a firm's shareholders. The board exists to monitor and reward top management while protecting the rights and interests of shareholders (American Law Institute, 1982; Hoskisson and Turk, 1990; Kosnik, 1990; Kosnik, 1987; Lorsch, 1989; Mace, 1971; Mallette and Fowler, 1992; Vance, 1983). However, corporate governance critics allege that boards are unwilling or unable to challenge or constrain management (Townsend, 1984). Too many directors act as part of management rather than as monitors of management activity who are able and willing to penalize management for poor performance (Patton, 1985; Vance, 1983). Boards have been accused of granting automatic pay increases to CEOs regardless of their performance (Geneen, 1984) and of enhancing their personal well-being at the expense of the company's shareholders (Colvin, 1992; Muckley, 1984; Vance, 1983). We agree with Kerr and Bettis (1987) that the compensation decisions of boards can be viewed as a surrogate test of their governing effectiveness. When CEO compensation fails to correlate with performance, boards can be viewed as forsaking their obligations to shareholders or, at the very least, failing to use compensation as a mechanism of control. Researchers have sought to determine the correlates, or causes, of the variation that exists in executive compensation from one company to another. Previous studies have identified several rational/economic determinants of executive compensation. These studies have examined factors such as firm size (Ciscel and Carroll, 1980; Fox, 1983; Gomez-Mejia et al., 1987; Lewellen and Huntsman, 1970: O'Reilly et al., 1988), company performance (Baker et al., 1988; Finkelstein and Hambrick, 1989; Kerr and Bettis, 1987; Jensen and Murphy, 1990; Murphy, 1985), and company diversification (Berg, 1969; Finkelstein and Hambrick, 1989; Kerr, 1985; Lorsch and Allen, 1973; Napier and Smith, 1987: Pitts, 1974). Of these economic variables, only size has consistently predicted CEO remuneration. Although organization theorists have long recognized that political processes can influence organizational action (Pfeffer, 1981; Thompson, 1967), the relationships between social and political forces and CEO compensation have not been examined fully in previous research. Of the studies incorporating behavioral variables, most have concentrated on linkages between executive pay and relatively apolitical factors. The development and testing of human capital models (Becker, 1964; Mincer, 1970) represents one research thrust. These models rely on personal attributes like age, experience, education (Deckop, 1988, Finkelstein and Hambrick, 1989; Foster, 1980), and level in the management hierarchy (Lawler and Porter, 1966; Mahoney, 1979; Rajagopalan and Prescott, 1990) to help explain compensation variation. Findings are clearly mixed, with human capital variables often explaining little or no variation in executive pay. Such factors as organizational power and politics, board member attributes and social processes, and group phenomena have not been subjected to similar scrutiny. But, the effect of social and political factors are becoming more apparent as boards of directors have more openly acknowledged the influence that CEOs exert over compensation decisions. …

The remuneration of school teachers: time series and cross-section evidence*

Abstract: This paper investigates movements in teachers' relative wage, focusing particularly on the role of market forces within a highly 'administered' labor market. The study draws on time-series data, covering the period between 1949 and 1990, together with evidence from surveys of 1960, 1970, and 1980 graduate cohorts to estimate the impact of market conditions on relative wage adjustment and individual teacher remuneration. In each case, the level of excess demand is shown to exert a strongly significant influence, working in conjunction with other factors such as trade union strength, character of salary negotiation mechanism, and individual teacher attributes. Copyright 1995 by Blackwell Publishers Ltd and The Victoria University of Manchester

The transformation of nurses' work?

Abstract: This paper offers a critical discussion of how current and planned changes in the labour process within the National Health Service (NHS), with particular reference to nursing as an occupational group, are likely to influence the industrial relations aspects of nursing management. An attempt is made to apply concepts developed within the wider sociology of work, to the reality of latter day nurses' experience. In this respect, the question will be addressed: do management approaches to the reorganization of work in health care settings constitute, or herald, an actual ‘transformation’ of nurses' work? The approach adopted places concern over the introduction of productivity or performance related pay, or the implementation of nursing skill-mix reviews within an analytic context which considers issues of control over working practices. As such, management and unions' responses to NHS Executive calls for increasing reorganization of nurses' work and remuneration structures may be illuminated by an understanding of this issue of control. This would entail a departure from simplistic analyses, focused solely upon narrowly defined efficiency concerns.

Framework for Developing a Total Reward Strategy

Abstract: Remuneration costs are a significant component of any public or private sector organization's operating budget. However, traditional approaches to remuneration planning and management are under increasing criticism for their failure to meet current economic and business environment. A deliberate and systematically designed remuneration strategy can provide an important tool for supporting and reinforcing the link between the organization's philosophy, values and objectives and employee performance. This paper reviews the current challenges and opportunities promoting change in remuneration practices and provides a framework for developing a total reward strategy. The objective is to define the design and delivery of a reward structure that directly supports the enterprise's business objectives and its cultural values.

[Survey of blood donors on the topic of "reimbursement for blood donors"].

Abstract: BACKGROUND Remuneration for blood donors, in the way as presently handled by governmental and communal blood transfusion services in Germany, is not generally accepted It is feared that donors are recruited with increased risk to transmit infectious diseases, especially AIDS Alternative incentives are discussed After the so-called AIDS scandal in Germany, a change in the donor motivation was to be expected, associated with an increased willingness to renounce remuneration Therefore, we performed the present survey, in which we evaluated the donor's willingness to renounce remuneration, possibilities of cashless remuneration and other alternative incentives MATERIAL AND METHODS During March and April 1994, a total of 1,157 blood donors of the University Blood Bank Marburg were questioned anonymously by a questionnaire in the framework of whole-blood donations Beside the above-mentioned aspects demoscopic data were included (age, sex, profession, journey) RESULTS Cutting of remuneration without any other compensation was refused by 861% of the donors, 77% would not want to further donate blood in this case Transfer of money to a bank account instead of cash payment was accepted by 786%, the use of non-negotiable cheques by 687% Alternative compensation by tickets for theater, concert, cinema or coupons for restaurants met with the approval of only 273%; under these circumstances, 369% would be willing to continue blood donation With increasing age and number of donations, but largely independent of social status, donors attached greater importance to retention of remuneration DISCUSSION Cutting of remuneration would result in a considerable reduction of the willingness to donate blood within the population of donors of the governmental and communal blood transfusion services However, an increase of virus safety of the blood products would not be reached in this way, since especially the long-term donors would be driven away Considerable bottlenecks, particularly in the specific blood supply of hospital-integrated blood transfusion services, would have to be expected

Open the Black Box: Paradoxes and Lacunas in Swedish Health Care Reforms

Abstract: The idea of using contracting-out as a means for improving public administration dates back to the 1850s, but was then found to be infeasible. The same idea has now become a major building-block in Sweden's health care reforms. Driven by a productivity-focused political discourse and the premises of neoclassical economics, these reforms ignore motivational structures among health care staff. The result may be a delegitimizing of the welfare state from within—either through the extinction of care rationality and its replacement by wage rationality, or, at worst, through the spread of a commercial spirit among health care staff and/or staff frustration at the unavoidable downward adjustments in remuneration rates. The author points to three strategic choices that arise when insights from a labor-process perspective are taken into consideration.

The future for engineering education: faculty rewards and incentives

Abstract: Several groups share responsibility for the quality of engineering education: students, faculty, and the administration. A faculty that is diverse in cultural and professional experiences, that is committed to life-long learning and scholarship, and that places primary emphasis on the education of engineering professionals determine in a crucial way, the quality of engineering education. As such, the rewards and incentives become important for promoting the contributions of all faculty. The reward system should recognize appropriate contributions including those that in the past may have received less recognition and remuneration. The reward system is the driving force which encourages faculty to invest the energy to make the changes necessary to reform engineering education; thus, changing the faculty reward system becomes a critical task. The traditional role for college and university faculty includes a balance of teaching, research, and public service among their activities. However, conventional wisdom has become, increasingly, that the one role for faculty that counts is research-research that brings grants and results and publications. This view has brought greater attention to graduate study and research and lesser attention to undergraduate study in our nation's colleges of engineering.

Valuation and Remuneration of Countryside Stewardship Performed by Agriculture and Forestry

Abstract: The scope of this paper is to clarify the concept of countryside stewardship. Attention is focused on Western Europe, where the concept has political, legal and economic connotations, and where ethical and cultural values are also important. The economic nature and value of stewardship are examined, and the policy instruments aimed at inducing countryside stewardship are probed. This paper refers to the benefits of stewardship, defined as the production of positive environmental effects or safeguards from negative effects. Agricultural practices which may cause negative externalities are not considered.

Valuation and Remuneration of Countryside Stewardship Performed by Agriculture and Forestry

Abstract: The scope of this paper is to clarify the concept of countryside stewardship. Attention is focused on Western Europe, where the concept has political, legal and economic connotations, and where ethical and cultural values are also important. The economic nature and value of stewardship are examined, and the policy instruments aimed at inducing countryside stewardship are probed. This paper refers to the benefits of stewardship, defined as the production of positive environmental effects or safeguards from negative effects. Agricultural practices which may cause negative externalities are not considered.

Hospital in the home units. Early issues for GP involvement.

Abstract: This paper reviews the early challenges for Hospital in the Home units which choose to utilise general practitioner skills. A model is described. Issues surrounding GP selection, remuneration, responsibility, leadership, and other hurdles are described. Since alternatives to GP involvement exist, GPs should be prepared to seize this important opportunity.

The Ethics of Australian Executive Remuneration Packages

Abstract: This article raises the issue of growing inequalities in remuneration in Australia at a time of severe economic recession. The salary packages of the CEOs and senior managers of large Australian companies have been increased substantially in recent years often in spite of poor performance of the companies. At the same time real wages have either stagnated or, according to some researchers, have fallen in the same period. In addition unemployment has risen to unprecedented high levels (above 11%).

Street Vendors, Pedlars, Shop-Owners and Domestics

Abstract: In this article, I will try to show the active participation and importance of women in the lower sectors of retail, in domestic work, and in the food selling and entertainment establishments and how plantation history has traditionally disregarded economic participation by women in the nineteenth century. In an urban context, the services provided by these women, the majority of them poor and coloured, played a crucial role in the city’s economic life. Domestic work, food preparation and small retailing were important components of San Juan’s ‘service’ economy. I also want to explore the repeated attempts by the state to regulate the economic activities of women, particularly those connected with what we would call today the informal sector. Women had to fight the efforts by local authorities to control various aspects related to their work and lives: prices, mobility, gatherings, housing, sexuality and family. Another topic I want to discuss is the heterogeneity found among economic sectors — like domestic work — traditionally associated with women. Not all domestic work was the same, and there were some important differences in the status, remuneration and quality of life associated with some domestic employment. Both the solidarities and the differences among working women need to be studied if their lives are to be truly understood from a historical perspective.

Who Is in Charge? Investigator and Sponsor Alliances

Abstract: Collaboration between clinical trial investigators and their sponsors must pay attention to certain guidelines if clinical standards are to be maintained and the interests of the patient safeguarded. At issue are questions of remuneration, record-keeping and competence as well as outcome measures and post-hoc trial analysis. It is suggested that remuneration for clinical trial involvement should not be set at such a high level that other aspects of patient care may be jeopardized. Trials should be conducted in recognised centres involving experienced trialists with the accuracy of patient records monitored by random audits. The design, data collection and analysis should be the responsibility of a Steering Committee which represents all trial participants. The primary outcome measures in acute stroke trials should assess degree of disability or handicap and surrogate end-points should be treated with caution. The use of sub-group analysis should be limited and any such sub-groups should be defined before the trial commences.

Productivity Changes and Shifts in the Income Distribution

Abstract: This paper contains a theoretical and empirical analysis of the relation between productivity changes by industry and shifts in the income distribution by household group. These developments are connected through changes in the employment and remuneration rate of primary inputs in production, including several labour categories.

Academic staff salaries: equity and exploitation

Abstract: Utilizing existing survey data and calculated salary means for academic staff, an examination of two aspects of remuneration is undertaken. First, salary differentials between academic staff and second, the value of work undertaken outside office hours. Findings indicate that only a small proportion of existing salary differentials can be attributed to the number of hours worked. Second, a measure of exploitation by universities is calculated indicating that approximately one-third of salaries are ‘earned’ outside normal working hours.

As time goes by: reflections on 40 years of academic medicine and biomedical research.

Abstract: Professor Firkin of the Department of Medicine at Melbourne's Monash University says that, despite considerable advances, many unanswered questions remain in modern medicine. The bright medical minds that may answer these questions are being lost to the cause because of rigid postgraduate training schemes and inadequate remuneration.