Managerial Economics

Introduction

In an organization, it is right to give the right compensation for the performance of the employees. The compensation is not a reward or incentive but the obligation of the organization to give such credit in the efforts exerted by the individuals. For the past years, the employment is centered in different issues and concerns. As an example, the employment issue is focused in the increase of compensation or allowances and perks. The common people who demanded for the increase are the managers because they consider the stressful environment in their workplace. In this paper, however, we will discuss the negative effects that may arise as a result of increasing manager’s allowances and perks.

Manager’s Roles and Responsibilities

In the investigation of the increase of allowances and perks, it is important to firstly recognize the roles and responsibilities of the managers in different environment. The manager’s performance can be the most important factor in the success of a department because of the manager’s ability to weigh the facts, judge, create decisions, and strategic solutions. Within the global competition, the managers are expected to work even in a complex workplace. The managers can work domestically or in international workplace wherein both offer the challenges and risks.

The competition within or outside the country were influenced by the wide globalization. The effects of the rapid change can be the main reason for the manager to generate the strategic approach possible for the organization (Skordoulis, and Dawson, 2007). Managers’, however, do not influence the decision of the people above their position but prepare the possible options in which the superiors can choose. The contribution of the managers is also recognized through their approach in managing, controlling, and strengthening the employer-employee relationship and customer-organization relationship. Aside from those, the managers are often sent into different business affairs that might be consider as leisure and business travel. The organization is the one that provides the needs and allowances of the managers. However, due to growing number of stress, pressures, and other challenges that the managers receive in their position, the increase in allowances and perks are proposed.

Allowances and Perks

Allowances (e.g. travel allowances) and perks (e.g. bonuses, reimbursements) are allowed in every organization as long as all the expenses are made for the business transactions and/or with the knowledge of the superiors. The manager’s performance can be the reference of the organizational leaders to allow them participates in the meetings, business travels like convention, and others. Same is true when it arrives in giving the bonuses or to increase their compensation, the performance of the managers is the basis. The reimbursement, on the other hand, can be obtained from the medical or health concerns, gas, or other expenses but with a condition that it should be related with the business matters. The increase in the business needs of the organizations creates an impact in the allowances and perks that the organization provides (Gilbert, Geisler, & Morris, 1995).

Since all the expenses that can be appear in the account of the managers are subjected into the organizational funds, there are limitations that the manager should acknowledge. However, because of the conflict of interests coming from both parties, the managers are demanding that there should be an increase in their allowances and perks to provide the appropriate services and performance that the organization wants. There are instances that the organizations also cover the education of the manager’s children or support the family of the manager just to provide to gain the loyalty and job commitment. The negative effects in the organization may result to the sudden drop of profit. There are uncertainties and economic downturn that may affect the organization and they might discontinue the program on allowances and perks or affect the retirement and other benefits if there is an increase of demands coming from the managers. Also, the other managers might not experience the same treatment because the allowances and perks that should be allocated for the new managers are already saturated (Gupta, 2009).

Conclusion

It is not wrong to demand for the increase in the allowances and perks, as long as the managers are doing the right thing and providing the performance for the organizations. The effects will only carried by the organization if there is a sudden demand coming from the managers. The increase in allowances and perks will give more drawbacks if the managers do not use the privilege in the right way.

References:

Gilbert, D.T., Geisler, R.B., & Morris, K.A., (1995) When Comparisons Arise, Journal of Personality and Social Psychology, 69(2) [Online] Available at: http://www.wjh.harvard.edu/~dtg/Gilbert%20et%20al%20%28COMPARISONS%29.pdf [Accessed 10 August 2010].

Gupta, V.K., (2009) Demand Relating to Perks Prerequisites and other Allowances: Perspectives of Mr. Vikas Kumar Gupta, Member, Wage Revision Committee for Wage Revision on Behalf of TTAs [Online] Available at: http://www.snatta.org/main_demands/perks.doc [Accessed 10 August 2010].

Skordoulis, R., & Dawson, P., (2007) Reflective Decisions: The Use of Socratic Dialogue in Managing Organizational Change, Management Decision, 45(6): 992