Agency Issues in Organizational Management
Agency issues arise when the owner of an organization hires managers to run it, leading to conflicts of interest. This can result in situations like Ponzi schemes.
The dilemma lies in choosing between highly skilled yet potentially risky managers versus less capable but loyal ones. Chief Financial Officers (CFOs) face the challenge of balancing solvency and profitability while also serving as management doctors, aiding in organizational management beyond finance.
Professor ends the seepch with an exercise. We will put it into next steps.
Would you prioritize hiring a highly skilled manager despite the risk of conflicts of interest, or opt for a less talented but loyal one to mitigate potential risks? How would you strike a balance between competence and loyalty in organizational leadership?
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