Question

Discuss how the management managing their managers to solve the problem between agency and the owner.

Answer 1

Management, in order to manage its managers in an optimal manner, takes various actionable steps so as to ensure that any problems between agency and the owner are resolved systematically and tangibly.

First of all management undertake a proper monitoring of the managers to ensure that their interests do not deviate from the interests for which they were hired in the first place to push. Secondly the management provides contractual incentives to managers as and when they seek it necessary and appropriate. Management can often solicit the assistance of third parties to mitigate and then completely remove the conflict and even rely on some other price system mechanisms to manage their managers.

Thus management, in order to manage their managers, undertake several initiatives, in order to ensure that the problem between agency and the owner remains manageable and does not come in the way of creating value for the shareholders and in the way of enabling the organization to achieve its vision and purpose.