Excerpt from Power in Profit Maximizing Organizations Organizations provide their members with a great variety of non-pecuniary sources of utility. The problem is that, unless the organization makes a superhuman effort at homogeneity, preferences differ across members. So, decisions that give a great deal of utility to some members often give less utility to others. While all members might agree that it would be nice to expand a building or install new carpets, preferences over the details differ. Even when it comes ...
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Excerpt from Power in Profit Maximizing Organizations Organizations provide their members with a great variety of non-pecuniary sources of utility. The problem is that, unless the organization makes a superhuman effort at homogeneity, preferences differ across members. So, decisions that give a great deal of utility to some members often give less utility to others. While all members might agree that it would be nice to expand a building or install new carpets, preferences over the details differ. Even when it comes to decisions that affect the long term success of the organizations, such as personnel decisions, people differ in the kind of person they would like to be surrounded with. Employees are thus willing to pay to affect the firm's decisions. This implies that, when profit maximizing firms take decisions they should take into account the reductions in employee compensation that are possible as a result of these decisions. In particular, confronted with a choice of two decisions which produce the same revenues, a profit maximizing firm ought to choose that decision which allows it to reduces employee compensation the most. These considerations suggest that firms would benefit from schemes that ask employees for contributions and which pick that decision for which employees are willing to contribute the most. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at ... This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
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