Research On The Incentive And Restrictive Mechanism For The Project Manager Of LY Company Based On The Principal-Agent Theory

With the development of desulfurization industry, as a important enterprise of the market, LY company strives to improve the overall competitiveness by strengthening management of project quality, and targets at "do a project, establish a banner". LY Company's project widely used EPC (Engineering Procurement Construction) general contracting model, and this kind of project generally has the characteristics of long construction period, many influence factors and higher professional requirements. Therefore to establish a project "banner", it largely depends on the efforts of the project team with the core of project manager. With the observation in recent years, it is found that project managers commonly have the phenomenon of poor job responsibility, low loyalty to the company and higher turnover rate etc. Based on these problems, the analysis of incentive and restrictive mechanism of this corporate was carried out and the satisfaction survey of incentive and restrictive mechanism for project manager was implemented in this paper, which focused on fully exposing the problems of the exiting human resource management mechanism. Therefore, it has become one of the most important work of human resources management that how to inspire the initiative, creativity and sense of responsibility of the project managers, so as to improve the level of effect and excavating, utilization, developing the potential and creative of project manager.In this paper, the current state of the incentive and restrictive mechanism was investigated through analysis the characteristics of exiting management system. And the shortcomings and problems were analysis by survey. At the same time, the principal-agent theory was used to design compensation incentive model and analysis the factors of influence the incentive effect. Then the incentive and constraint mechanism for project manager was targeted optimized.Through the analysis of the current state of the incentive and constraint mechanism and the investigation and research on project manager, it was found there are five problems on the incentive and constraint mechanism:Firstly, the salary is decided lack of scientific basis, obviously unfair and unreasonable in the structure. Secondly, the role of performance appraisal is lack adequate awareness and the system of performance appraisal is not perfected which is lack of quantitative index. Thirdly, the method of allocating resources hinders the incentive function. Fourthly, the supervision is weakening. Fifthly, the incentive and constraint structure unbalance.Through analysis of causes of the project manager's moral risk and countermeasures, incentive and restraint mechanism model for the project manager is built. Known from this model, in order to effectively play the role of incentive and restraint mechanisms, it is necessary to consider the project manager's effort, effort cost and risk aversion, at the same time, to strengthen the supervision and punishment constraint on project manager, in the establishment of incentive and restraint mechanisms for the project manager.It comes to realize that the relationship between LY Company and the project manager is principal-agent relation. So based on the analysis of the exiting incentive and restraint mechanisms of LY Company, an incentive mechanism with the main content of salary, post consumption, reputation and training is built, using the basic principles and methods of the incentive theory and principal-agent theory.