Part I Key concepts of the article: How to Fix Executive Compensation, by Alex Edmunds
The article centres on the concept of managerial control at the executive level. The author begins by noting the fact that managers at the executive level deserve to be compensated. Through this, the author shows his appreciation of the role of compensation in employment circles. However, the author cautions that the centrality of compensation in terms of the send of packages or retirement perks should be appreciative of the long and short term interests of the company. In that vein, the author suggest that firms should leverage on the compensation package to the executives for purposes of demonstrating lessons to other employees, motivating the executive and enabling the forward progress of the company. He notes the current practise where compensation has been misused by executives without any measure of control and a helpless reaction from the shareholders. He asserts that while the managers play an essential stewardship role, they should and ought to be subjected to thorough control and regulation. This control, the author narrates, should assume different characters.
The financial character of managerial control entails the evaluation of the compensation package. The author makes the assumption that as the current position stands, compensation packages have been abused and need to be reformed with due interest of the company in consideration. What the author advocates for is an approach that solves both the interests of the company and the interest of the executives. Striking a balance between two contrasting and equally important factors is difficult and the firm must remain cautious and steadfast in the pursuit of its long term objectives without infringing on anyone’s rights.
Part II Relation of concepts to control processes and systems
The concepts enunciated in the article have a direct relationship to control processes and systems. The bigger topic relates to how management can entertain control processes and systems within the workplace. What the author suggests is a manner in which the management can entertain financial control. From the author’s perspective, it is evident that control not only relates to the junior personnel under the supervision of the management. Control is necessary everywhere as long as discretion and some of degree of choice and independence are present. The author brings out the fact that control is, therefore, something that even the management needs. This illustrates the topic’s position that control has no limits and needs to be embraced. In addition, the author’s tone is positive. He does not cast aspersions on the character and demeanour of the management. What he advances is the need to exercise control where discretion exists and the delicate requirement to strike a compromise between the interests of the controller and that of the controlled. As the author well puts, the two parties often need each other and need definite structures of operation to avoid unnecessary occurrences of disorder and abuse of responsibility and trust. This should be related directly to the overall objectives of control processes and systems in the managerial set up. Often, the control processes in put in place to develop a conceptual framework from which accountability and responsibility can be demonstrated by the persons in charge. As the author suggests, the long term interests of the parties need to be considered in laying down the control infrastructure.
At the same time, the goals and aspirations of the controlled also need consideration. The author demonstrates that character through his elaborate exposition. He gives a tripartite approach that is sensitive and accommodative of the divergent interests. This should be related to the long term approach of most control processes and systems. In the development of a control system, the management is often cautioned and informed to assume an approach that does not lean on only one side of the parties. Often, the overriding objective that should inform decision making is the long term goals of the organization. Control processes and systems must not be used for selfish advancements or settling scores, rather it should be applied for the overall advocacy of the company’s long term objectives.
Another direct relation should be seen in light of the comprehensive and realistic approach to implementing controls in the organization. The position by the topic is that control processes and systems should and ought to entertain only comprehensive and realistic approaches that would have the final impact that is constructive and reasonable. This school of thought is intended for the elimination of unrealistic and inadequate approaches in control that would not only fail to address the problem but would in addition lead to some more problems. The control process and systems must be able to tackle and address the fundamental concerns inherent in the respective environment so that it does not occasion additional problems. The proposals by the author in connect to the managerial set up would be able to effectively reduce financial expenditures and enable a culture of financial effectiveness which was the main objective of the proposed control process.
Part III Critical thought, importance and personal impact
The concepts enunciated in the article occasion a critical thought that is rare in common managerial assignments and discourses. For starters, the author appears to suggest that management too need control. The irony lies in the fact that management due to their position and influence often find ways of going about control. In that vein, one approaches the article with some reservations and cynicism. The traditional managerial control processes and system often is intended to contain the employee against misuse of resources, discretion and authority. The article provokes one into taking a further step and considering another dimension that would address the managerial discretion. In addition, the author advances a strong case in support of financial prudence. This comes in the wake of financial crisis occasioned by managerial abuse of office, privilege and authority. Cases like Enron Scandal in California and the recent collapse of Lehman Brothers in Europe resurface in the background. In addition, the financial crisis that has crippled the world and led to the bankruptcy in Greece comes into perspective. The role of the manager in the crises appears and the need for control is justified. The author looks for a middle point that is not a down-dressing of the managers. It looks for an approach that ultimately raises the bar high for the management and confers responsibility on them to practise financial accountability, prudence and effectively. This approach is appreciated for its role in providing a facilitating environment for consistent and considerable interaction.
While the article provokes critical thought, it also advocates for objectivity and absolute maintenance of the overall managerial and company objectives. It advances a middle ground that is important in striking a balance between two contrasting interests. It is for that reason that it is important for the overall managerial practise and learning. It introduces innovative and dynamic models and approaches to solving the day to day problems in the management and their attendant consequences. It also proposes modern systems of control processes and systems that are effective as well as non-confrontational. This informs the centrality of the article and its relevance in modern day management.
The concepts proposed by the author have a fundamental impact to me. For starters, the author reminds me to approach control processes and systems and indeed the larger managerial discipline with an open mind. It has promoted in me an appreciation of dynamism and openness in management. In addition, I have gained an appreciation of the positive nature of control with its strengths and consequences. It enables an appreciation of the place of control in management and the fact that in the long run, it is the long term interests of the company that should be considered in any decision making process. It in the same vein, it advances a responsive approach to management in which all personal and collective decisions should be mirrored to reflect the overall managerial and firm interests. From this analysis I am much obliged to subject myself to control processes and systems and appreciate their efforts in promoting order, enabling financial prudence and advancing the long term interests of the firm. In conclusion, I find the literature appropriate and a good exposure to the practical aspects of the control process and systems.
Edmans, A. (2012, February 27). How to Fix Executive Compensation. The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB10001424052970203462304577138691466777460.html?mod=hp_jrmodule
McAfee, A., & Brynjolfsson, E. (2012). Big Data: The Management Revolution. Havard Business Review, 2(2).