Market Based Management
The Market-Based Management philosophy was developed by Charles Koch and is employed by Koch Industries, the largest privately-held company in the world, according to Forbes magazine. MBM is based on rules of just conduct, economic thinking, and sound mental models which harnesses the dispersed knowledge of employees, just as markets harness knowledge in society. Market-Based Management enables an organization to succeed long term by applying the principles that cause a free society to prosper. Market-Based Management applies concepts and tools posed in the application problems, it allows you to learn experientially by changing input values to see how different situations impact performance, and also teaches to perform …show more content…
When employees perform based only on what their incentive specifies, it only handles immediate problem areas for the company, and does not focus futuristic goals of the organization.
Personal Profit and Losses Within organizations, no aspect of motivation generates as much controversy as the issue of rewards. Some people think of incentives in a very mechanical and superficial way, assuming that people are naturally lazy and that financial and material rewards are the main things that motivate them. The motivation issue then simply becomes a question of discovering the "right" amount of pay and perks to elicit the "right" amount of effort. (Gable, W., and Ellig, J ) When an employee feels like they are just working and have no value or trust within the organization, regardless of the incentives being given the performance will be poor. Most employees have to feel some type of drive, meaning the company has created value for them and vice versa to provide extraordinary performance.
In contrast to the two methods listed above, Market-Based Management offers a third way for employees to receive incentives in addition to motivation. The Market-Based Management theory believes that most employees want to produce good results and perform their job duties to the best of their ability. (Gable, W., and Ellig, J ) The goal of a market-based company should be to create a motivation and