Economic Analysis, Corporate Personnel Incentives

The research of economics has opened the "Black Box" ( includes organization inside enterprises, property right and transaction cost etc.) in the Market Economics, since the paper The nature of the firm written by R.H. Coase was published. So one of these viewpoints was the enterprise became a substitute of price institution, and a union of contracts. Then, it was more deeply to understand the efficiency of resource allocation in economics, and the new explanation was given to the allocation of most important resource-human resource. Inside enterprise, the stabilization of contract between labor and capital impacts directly on special human capital investment, and more impacts on firm's long-terna stratagem. How to stimulate the efforts and decrease the turnover of employees is a question for discussion.As to this question, traditional economics can not give a satisfied answer, it ignores the incentive problems in personnel management Usually, the wage of firm does not equal to clearing wage. For achieving incentive effect, the firm gives employees effective wages, or postponed wages, sequentially establishes a long-term relationship. In accordance with different human capital and information, work team has a very important effect on firm's compensation incentive. Furthermore, the promotion avoids the errors of objective performance to employees, and makes compensation relate with job position, stimulates employees to a higher position. In the whole, firms do not pay wages according to marginal productivity at all. So, the basic suppose of traditional economics has not adapted to the factual needs.This paper analyses the relationship between compensation and promotion in firm, and optimizes human resource allocation, using relative theories, such as trust-agency model, transaction cost theory, human capital theory etc.. There were not so many literatures researching the personnel incentive, most of these literatures lay particular stress on compensation incentive or promotion incentive. The innovation of this article is researching personnel incentive by analyzing the...