Introduction
AIG Company has initiated the retention bonus plan for employees to enable the employee retention and efficiency in the workplace. The compensation controversy emerges when organizational interests are different from the interest of employees. AIG is looking to revise its compensation plan for both, executives and employees.
1-What types of work behaviors did AIG intend to encourage through its retention bonus plan?
AIG Company intends to retain its employees through an effective approach. For Instance, the retention bonus plan was designed by the company management to make the employees loyal. It is a fact that the financial unit of the company was closing, and instead of leaving the company, employees want to stay with the company to gain the big rerun at the end. The retention bonus plan shapes the behavior of employees in the company. Even without any job or tasks in the financial unit, employees were motivated to get the surprising return from the company. The retention shapes the work behavior regarding assertiveness and loyalty, which is in the best interest of the company (Nica, 2016).
2-Which needs seem to be important to the employees of AIG’s Financial Products unit?
Well, due to impairment of the financial unit of the company, there is a perception that employees have contributed to this huge financial loss. Thus, the most important thing for employees in this company is the security and safety. Employees need compensation according to their rights and contracts, and on the other hand, the company is responsible for it. Even in the crises in the financial products unit, employees should be facilitated to support their families. It can help them to stay with the company and help it to regain its sustainability (Schwartz, 2015).
3-Using the model of the individual-organizational exchange relationship, explain the relationship that employees of AIG’s Financial Products unit believed they had with the company. How was this exchange relationship violated?
Relative to the individual-organizational exchange relationship, employees contain the perception that they will have the effect and attractive compensation due to their commitments and contributions. According to this model, the management of the company has to come up with returns from employees against their loyalty and commitments. Even with the stressful job and complex working environment, the relations can be violated if the company does not give bonuses to employees. Without motivation, the relationship cannot be sustained, and it seems the main consideration of the company in this particular situation. Individual-organizational exchange relationship is integrated with the employee’s contribution and returns (Welsh, Ganegoda, Arvey, Wiley, & Budd, 2012).
4-Which motivation theory do you think has the most relevance for understanding the responses of the Financial Product employees to the implementation and unraveling of the retention bonus plan? Explain the reasoning behind your answer.
Social Exchange and Equity Theory
According to the social exchange and equity theory, the management of the company intends to reduce the cost of the processor employee’s input and maximize the benefits for them. As far as the retention bonus plan is concerned, the management has to provide the social response to employees; the purpose is to retain employees despite having worse business conditions. Interestingly, the social processes create a positive impact on the motivation, and it increases the employee’s willingness to work for the company and stay according to expectations. This motivational theory is good to contain the emotional and sentimental attachments with employees (Nica, 2016).
5-The amount of compensation earned by executives—as well as by professional athletes and famous actors/ actresses and musicians—often spark emotionally-charged debate. Do you believe the $1 million plus retention bonuses received by 73 employees of AIG’s Financial Products was excessive? Why or why not?
One million plus dollar retention bonuses received by 73 employees of AIG’s Financial as products were almost excessive. The company has faced difficult business situations in the financial products sector. People in the company had to work in a stressful environment. The amount does not look excessive because employees compromised many things for the company (Welsh, Ganegoda, Arvey, Wiley, & Budd, 2012). By keeping the employee’s struggle in mind, the retention plan of the company can be justified by this amount. People faced different negative consequences due to financial crises, and $1 million plus retention bonuses for 73 employees were the best decision to strengthen their families.
6-Do you think that the various decisions made by Kenneth Feinberg with respect to executive compensation at AIG were justified? Explain the reasoning behind your answer.
Kenneth Feinberg came up with the effective approach. He intended to revisit the salary and bonus structure for executives in the company. AIG faced financial problems due to inappropriate investments. According to his approach, attractive salaries are to be offered to executives if they ensure the performance and results according to the company’s expectations. It is necessary to keep the balance between executive and employee compensation, which can help to improve the financial condition of the company.
Conclusion
In the end, it is to conclude that it is good for the AIG to implement this approach fairly. Salaries and business are to be triggered b commitments of stakeholders, which can help to keep the balance. AIG can enhance the visibility of several benefits for employees and executives. It can drive the employee retention, satisfaction, loyalty, and positive behavior in the company.
References
Nica, E. (2016). Employee Voluntary Turnover As A Negative Indicator Of Organizational Effectiveness. Psychosociological Issues in Human Resource Management; Woodside, 4(2), 220-226.
Schwartz, B. (2015). Why We Work. Simon and Schuster.
Welsh, E. T., Ganegoda, D. B., Arvey, R. D., Wiley, J. W., & Budd, J. W. (2012). Is there fire? Executive compensation and employee attitudes. Personnel Review; Farnborough, 41(3), 260-282.
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