Most commonly, employers employ their employees to work for the employers' interests; however, in many case, employees and their employers do not share the same interests. Once the two sides are not working for the same goals, problems can come out within the companies and eventually bring down the companies. Such conflict occurs because of several reasons.
Firstly, employers cannot observe their employees' contribution to the companies fairly. Although some certain jobs' outputs can be evaluated directly and numerically, many jobs cannot be evaluated directly or numerically; therefore, employers cannot have full information about the perfectly appropriate paid out wage levels. Secondly, the interests of employers are almost entirely monetary interests while the interests of their employees are not completely monetary. Thirdly, individuals' actions have greater impacts on individuals than on their employers. For example, one individual takes an aggressive and risky action in one of his business projects. If the project succeeds, the individual will be rewarded a bonus which is significant compared with his normal income. If the project fails, it can cost the individual's job. As most people are risk averse, such risky action is not preferred by most individuals. The consequence of the project is much less significant especially in a large organisation; moreover, in most cases, trying such strategy is more preferred in terms of the entire organisation's interest, as though the organisation is also likely to be risk averse, the large size of the organisation ensures more risks than individuals in absolute terms. However, organisation cannot encourage all individuals to take radical business actions.
The slow growth rate of a company is often caused by the conflict between the employer and its employees.
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