let us discuss below The principal-agent problem is characterized among the specific circumstances where ownership is separated from control. In other words, the owner (principal) is faced with the opportunity or dilemma to strategize ways or incentives to motivate the manager (agent) to do what is in their best interests. The textbook boils it down even further by focusing "the essence of the problem is that the manager likes to earn income, but he also likes to consume leisure" (Baye pg. 189). When the owner is not present to be attentive to the performance, let alone the presence, of the manager, they are unable to benefit from the reduced transaction costs due to delegating duties.

Being in the accounting industry, I've mentioned before that productivity is the measure of "output". As such, time and attendance in the office is crucial to observe and assess performance. The majority of my manager experience oversaw two employees. However, in my current role, I have eleven direct reports. The level of "control" definitely shifted in a big way as I gained a larger team. Tasked with various aspects of "accounting" (i.e. accounts payable and receivable, cash management, expense management), my team are their own "islands" of expertise with routine, cyclical and repetitive responsibilities. Therefore, fostering self-motivation among employees seems to be the key focus for accounting firms. According to the Jetpack Workflow article, recognizing good work at a constant level is one of their twelve effective tactics to motivate accountants. They contend that "a pat on the back is nice, every once in a while, but a pat on the back in front of the team with the partner doing the patting means way more. Make it a point to recognize a different team member, each week on something they've done or accomplished. The highly sought-after recognition from a partner means way more than a $10 Starbucks gift card." Appreciation and praise will motivate accountants to produce quality work.

As a manager, should the incentives that you offer differ whether you oversee 1 or 10 employees?

Baye, M. R., & Prince, J. (2017). Chapter 6: The Organization of the Firm. In Managerial Economics and Business Strategy (pp. 189). essay, McGraw-Hill Education.

Jetpack Workflow. (2021, July 6). 12 effective & genuine techniques to motivate accountants. Jetpack Workflow. Retrieved April 6, 2023, from https://jetpackworkflow.com/blog/12-effective-genuine-techniques-motivate-accountants/