Incentive Conflicts and Contracts

¶ … stock options and benefits and flexible benefits. It determines that stock options and benefits, tied directly to organizational performance, are good for the organization, however, they may have been a contributing factor to recent corporate scandals. And, the paper will discuss how my organization utilizes flexible benefits, and the rewards the organization has reaped, as such.

Incentive Conflicts and Contracts

Stock options and bonuses tied to company performance are effective in motivating executives to work for the good of the organization. It allows these employees to "participate from an equity point-of-view" (Roberts, 1999). This tie with the employee financial incentive to organizational success is now not only a perk top-level management receives, but is also increasingly being offered to employees at all levels within the organization.

This inclusion of all employees is a strong strategic move for many organizations. As Tony Plath, a professor of banking and corporate finance at the University of North Carolina at Charlotte noted, "It binds the interest of the employee to the interest of the shareholders directly. The people who are at the lower level are the ones who will execute the company's plans, and having a direct stake in the outcome will encourage a better execution of the strategy" (as cited in Roberts, 1999).

I do think that stock options and bonuses tied to organizational performance were a factor in some of the recent corporate accounting and related scandals. Although they may not be the primary reason these scandals occurred, they definitely added additional incentive to conduct unscrupulous activities. These may have still occurred without such incentives in place, as even without stock options and bonuses, an employee's financial welfare is tied to the organization's success in the form of salary and job security, but it added just one more motivation for these actions.

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