Labor vs. management?

Question

what does it mean? Define, explain, and/or examplify "labor vs. management"! thx

Answer 1

Most small companies are owned by only a few people, sometimes only by a single person. The owners usually hire additional workers, who usually get paid a fixed wage. The owners are the "residual claimants", they keep all the profits of their firms (that is, the money that's left over after all others are paid: workers, suppliers, taxes, etc.) If the owners would pay higher wages (without the workers working harder in response), their profits would decrease, while the workers would be better off. This is a common conflict between "owners vs. labor".

Most large companies are owned by many people, sometimes thousands of people. These owners hire managers who usually receive a fraction of the profits they generate for the owners. "Labor vs. management" refers to the conflicts that often arises between workers with fixed wages ("labor") and workers whose incentives are alligned with the owners through profit-sharing ("management").