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9.3 Performance evaluation of the members of the management of a company

In a capitalist private company all employed workers (including employees and executives) have a supervisor with whom they can negotiate their performance evaluation and thus their wages (at least their classification). Only the top manager has no supervisor with whom to negotiate its performance evaluation and its wages. In capitalism the problem is simply solved. The top manager owns the business and the profit is this person's income. That sounds plausible and practical. But therefore we all have to deal with the problems of the capitalist market economy.

As a socialist, I believe that personal income must result essentially from personal work and not from property. So I also have to think about how the work of the management is judged fairly.

Managing director can be seen as a profession like any other. In terms of the model of self-optimization of the wage relations between the professions one could assume that the principal amount of the manager's wages is given depending on the size of the company. In order to continue to motivate the manager in its daily work part of its wages must be performance-related. Its performance can only be measured by the company's success. No one is allowed to subjectively assess success here, but rather it has to be done using previously selected success indicators. Such indicators can only be determined much later after the actions that caused them. The actions of the managing directors are not only important for current success, but also have an effect far into the future in the form of strategic decisions. In order to increase the manager's interest in the future of the company a pay mode should be found that ties a considerable portion of the performance-related wage component to future success which of course means that this wage is paid much later. This principle should be socially acceptable for managing directors because it can be assumed that managing directors belong to the upper salary groups even in a social market economy and do not immediately depend on full wages. This can then mean that they still receive income from their work after they have finished their work. But this makes sense if the old managing director is significantly involved in the selection and training of the new managing director and thus creates the conditions for the future success of the company even when the person leaves. In this way, a reliable interest in the success of the company could be generated even without being the owner. This principle could also be applied in stages to other managerial staff or to employees who work in development. Such forms of wages and corresponding experiences with them already exist. This is the case, for example, for the remuneration of inventions made in capitalist companies according to the employee remuneration scheme. However, they only play a very subordinate role in the overall wage volume.

There is still some creative thinking to be done in this area. My model of the labor market is too simplified to contribute to an increase in knowledge in this area. At the moment I have no idea how one could incorporate such important considerations into the modelling.

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