Research On Manager Selection And Incentive Based On Ability

The value of manager human capital has become more and more important nowadays. How to select manager with competency matching with the managerial position and induce them to exert ability, that is problems of manager selection and incentive attract more research interests and concerns. In China at present, there is a lack of effective mechanism of manger ability identification and selection; on the other hand, deficiency of manager incentive is a general existence, particularly the long-term manager incentive. Under guidance of the existing research results, although problems of the two aspects got some improvements, fundamental solution is still a lack. Starting from this, after reviewing and making reference to previous research results, this paper develops innovative and explorative study on problems of manager selection and incentive from the angle of heterogeneous of manager ability. Through making up the present research missing, this paper provides some innovatively theoretical supporting to manager selection and incentive practice. The main research contents are:1. Putting forward the heterogeneous of manager ability based on differentiation between firm human resource and human capital. Defining the heterogeneous of manager ability and opening up the "black box" of manager ability on base of analyzing the components and interrelations of manager human capital. Constructing a production model upon manager's human capital input. Revealing the nature of relation between human capital input and output by establishing relations between human capital input and firm performance,2. Introducing ability heterogeneous to manager ability identification and selection. When external market fails to identify manager ability, the principal can reveal the hidden parts of information by turning to design a internal incentive scheme. The generally proving of the feasibility of revealing the hidden information by internal incentive scheme provides theoretical guidance to firm practice on manager ability identification and selection. Innovatively studying TMT ability identification by using approach of system management, revealing the interrelation between TMT ability and reliability of organizational decision system, and providing theoretical foundation and explanation to TMT ability identification. Establishing connection between cost of manager ability information identification and signaling validity, and expanding the existing information signaling model.3. Synergizing the latest development of human capital theory and manager incentive, developing study on manager incentive on ability upon two conditions:ability is variable, and efforts is multi-dimensional. Discussing and comparing manager's action selection under three different incentive schemes:single explicit incentive, combined explicit incentive and implicit incentive. Aimed at development of manager ability, introducing long-term explicit incentive and ability implicit incentive to firm manager incentive, and integrating manager ability to distribution system. In this case, manager can participate the income distribution not only by his/her productive efforts, but also by ability improving. This provides theoretical supporting and explanation to manager incentive practice. Compared with previous incentive mechanism upon efforts, the incentive mechanism upon manager ability development can better measure manager's contribution to firm value creation, and improve present manager incentive and constraint mechanism, reducing agency cost, solve problem of manager long-term incentive and realize the "two-win" for manager and firm owner.4. In a three-level hierarchy structure, expanding game player's single dimensional decision to a two-dimensional decision vector, and discussing manager incentive decisions under characteristic of multi-dimensional game. Extending the hierarchy to more than three levels, analyzing manager incentive game and differentiation pricing on different level by locating human capital ability and efforts inside the hierarchical structure. A model solution is developed to solve the incentive problems of all employees at different level. Comparing centralization contracting arid decentralizing contracting from the view of information advantage of middle-level manager, and discussing the influence factors to decentralizing contracting. The results provide theoretical base for principal to make optimal incentive decision. Through constructing vertical and horizontal game relations between manager and leader, manager and subordinates, paths and approaches are found to solve manger incentive problem. The results can help principal design a kind of incentive scheme by matching manager ability with the managerial position.Generally speaking, the research on firm manager selection and incentive based on ability has the features of heterogeneity, dynamics, long-term and complexity. It accords with the feature of knowledge economic times that human capital has become the core resource. It also meets the needs of firm's continuous development, and can display the nature of manager selection and incentive mechanism much better. This research have strong theoretical guidance significance for China's firm to solve the present difficulties of manager selection and incentive in the context of knowledge and information economy.