The issue of forming a mutual relationship between achieving organization strategic needs and the satisfaction of individual employee needs is gaining an increasing importance in today’s business world. It is believed that taking care of the needs and satisfaction of the individual employees is pivotal to achieving strategic goals and objectives of any organization.
If an organization does not take great deal of care about the needs and wants of the employees, it won’t be able to be successful and viable for the long period of time.
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Though, from the short term perspective it may be expensive for the company to satisfy the needs of each individual employee and keep them happy, but in the long term such a company is bound to be more successful than the one which does not care about the needs of its staff. For instance, it must be ensured that the workplace conditions are adequate enough to provide satisfaction to the employees.
Organizations that see the value of their employees are prepared to bare the extra cost in return for the high performance by the employees at all levels. Where as, on the other hand, companies who do not value their employees a great deal suffer from a high employee turnover and lower performance levels. (Callaway.L.P). However, it must be noted that not all the needs of employees can be fulfilled especially when such needs are at the cost of company’s strategic aims and objectives.
There must be a balance between the fulfillment of employee needs and strategic needs of the company. This balance can be achieved by aligning the strategic needs of the company with that of individual employee’s to create common objectives. Organizations are continuously focusing on aligning the individual employee needs and objectives with that of the organization. The process of aligning individual needs of employees and organization’s strategic objectives is called goal congruence.
The agency theory is mostly commonly used by organizations for forming goal congruence between the individuals and overall strategic goals and objectives of the company.
Agency theory assumes employees of organization, including managers as agents acting within an organization each pursuing his own set of objectives. For instance, within a particular department of an organization, there are departmental objective. If achieving these departmental goals and objectives lead to the achievement of the overall strategic objectives of the organization, then these is believed to be goal congruence between the two. (opm.gov).
The relationship between an organization and employees is referred to as agency relationship, in which managers and employees act as agents for the owners of a company. The conflict in this relationship arises when the agents do not act in the best interests of their principles.
The agency problem arises due to the separation of ownership and management of the business. Mostly managers purse their own personal objectives like giving themselves high salaries and perks, and taking a short term profitability perspective rather than focusing on the long term success of the business.
This is particularly the case where they don’t have any or very little stake in the equity shares of the company. However, this agency problem can be resolved by what is called an ‘agency theory’. Agency theory tries to bridge the gap between the objectives of organization and personal objectives and needs of employees and managers alike.
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