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and how the performance of a university lecturer can be measured?
Theory explaining the relationship between principals, such as a shareholders, and agents, such as a company's executives. In this relationship the principal delegates or hires an agent to perform work. The theory attempts to deal with two specific problems: first, that the goals of the principal and agent are not in conflict (agency problem), and second, that the principal and agent reconcile different tolerances for risk.
A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving problems that can exist in agency relationships; that is, between principals (such as shareholders) and agents of the principals (for example, company executives). The two problems that agency theory addresses are:1.) the problems that arise when the desires or goals of the principal and agent are in conflict, and the principal is unable to verify (because it difficult and/or expensive to do so) what the agent is actually doing; and2.) the problems that arise when the principal and agent have different attitudes towards risk. Because of different risk tolerances, the principal and agent may each be inclined to take different actions.
According to "Agency Theory":
- Organization Owners are "Principal"
- Employees are the "Agents of the Principals"
- "Agents" may not have their goals inline with the goals of the Organization/ Principals
- "Principals" need to adopt measures to keep the goals and performance of the "Agents" inline with that of the Organization
I agree With Mr, Hafiz Amjad Mehmood Answer .
Agree with Hafiz.................................
Agency Theory explains how to best organize relationships in which one party determines the work while another party does the work. In this relationship, the principal hires an agent to do the work, or to perform a task the principal is unable or unwilling to do.