The company chosen for the paper is Apple Inc. Apple is an American multinational that designs, builds and sells consumer electronics including iPads, Mac personal computers, iPod, Apple TV, Apple Watch and digital camera among other devices. Apple Inc. is also involved in development of computer software and other online services (Apple, 2017). Apple has hierarchical organizational structure. This is the structure that was developed by Steve Jobs the founding CEO of the company. Hierarchical structure was developed to ensure that the company could realize the innovative vision and ideas that Steve Jobs had for the company. However, since his death, the structure has been slightly modified by Tim Cook. Under Cook’s management, there has been decentralization of some services in order to encourage innovation among the workforce (Hill, Schilling & Jones, 2016).
Agency problem within Apple
The agency problem is a conflict of interest issue that arises due to separation of functions between managers and shareholders. The shareholders are the owners of the company but the managers are involved with the day-to-day management of the company. At Apple, the management led by Steve Cook has been investing resources in ‘green energy’ and ‘green operations’ in order to fight global warming and climate change. This has created conflict with some shareholders who have asked the management to determine the value of these projects to the shareholders. Steve Cook has been advised to discontinue such projects if the projects are not profitable and sustainable. The shareholders would like to realize maximum value from the money they have invested in the company (Chaffin, 2014).
The cause of this problem is that the shareholders feel that they are not consulted when the money is being invested in green operations. Since the shareholders are investors, they want to realize maximum value for their investments. The other cause of the problem is the misunderstanding between the managers and shareholders. The managers believe that investment in green energy will finally result in increased value for the shareholders. This has not been effectively communicated to the shareholders and they believe that some projects are not profitable. The agency problem can be solved by proper communication between management and shareholders. This will make the shareholders clearly understand the objectives of implementing the projects and make them wait since some of the projects may take some time before they produce intended returns for the shareholders (Chaffin, 2014).
Job dimensions at Apple
At Apple, jobs are divided into different tasks and responsibilities. Some of the functions have been outsourced to third party providers. Employees are given clear descriptions for their tasks and this makes it easy for them to complete their tasks. Apple employees are allowed to work at the global offices, to work offline or to work from home. There is specialization and division of labor within the workforce. This job design is appropriate for the firm because it encourages innovation within the company. The job design can be improved by focusing more on a hybrid grouping by product and geographical region. This is because Apple designs, develops and markets different products in different geographical regions. These regions may require different strategies in order for the company to penetrate the markets.
Compensation package at Apple
The managers and employees at Apple are offered competitive remuneration packages. Employees at Apple are among the best in the industry and are offered salaries and allowances that are slightly higher than the industry average. For example, according to Glassdoor, a software engineer makes an average of $76,000 per annum. On the other hand, Apple pays software engineers more than $120,000 per year and this is dependent on the level of experience of the engineer. The compensation package is effective because it is measurable to the level of experience of the employees at Apple. This has worked to motivate the employees at reduce employee turnover at Apple. The compensation package can be improved by including and improving other perks like employee share program and providing more commissions for innovations and product success.
- Apple. (2017). Apple. Retrieved from https://www.apple.com/
- Chaffin, B. (2014 February 28). Tim Cook soundly rejects politics of the NCPPR, suggests group
sell Apple’s stock. Retrieved from https://www.macobserver.com/tmo/article/tim-cook-soundly-rejects-politics-of-the-ncppr-suggests-group-sell-apples-s
- Glassdorr. (2017). Apple salaries. Retrieved from https://www.glassdoor.com/Salary/Apple-Salaries-E1138.htm?filter.jobTitleFTS=software+engineer
- Hill, C.W.L., Schilling, M.A., & Jones, G.R. (2016). Strategic management theory: An
integrated approach. New York: Cengage Learning.