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Employee Screening: Theory and Evidence

Author

Listed:
  • Fali Huang

    (School of Economics, Singapore Management University)

  • Peter Cappelli

    (The Wharton School, University of Pennsylvania)

Abstract
Arguably the fundamental problem faced by employers is how to elicit effort from employees. Most models suggest that employers meet this challenge by monitoring employees carefully to prevent shirking. But there is another option that relies on heterogeneity across employees, and that is to screen job candidates to find workers with a stronger work ethic who require less monitoring. This should be especially useful in work systems where monitoring by supervisors is more difficult, such as teamwork systems. We analyze the relationship between screening and monitoring in the context of a principal-agent model and test the theoretical results using a national sample of U.S. establishments, which includes information on employee selection. We find that employers screen applicants more intensively for work ethic where they make greater use of systems such as teamwork where monitoring is more difficult. This screening is also associated with higher wages, as predicted by the theory: The synergies between reduced monitoring costs and high performance work systems enable the firm to pay higher wages to attract and retain such workers. Screening for other attributes, such as work experiences and academic performance, does not produce these results.

Suggested Citation

  • Fali Huang & Peter Cappelli, 2007. "Employee Screening: Theory and Evidence," Working Papers 09-2007, Singapore Management University, School of Economics.
    • Handle: RePEc:siu:wpaper:09-2007
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    References listed on IDEAS

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    3. Julia Rushchenko & Ihor Rushchenko & Olena Plakhova, 2020. "Mitigating hiring risks through pre-employment background screening: Methodology based on the personnel security approach," Technium Social Sciences Journal, Technium Science, vol. 9(1), pages 577-587, July.

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    More about this item

    Keywords

    Employee Screening; Monitoring; Work Ethic; High Performance Work Practices; Principal-Agent Model.;
    All these keywords.

    JEL classification:

    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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