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on Human Capital and Human Resource Management |
| By: | Bryan Hong (New York University (NYU) - Leonard N. Stern School of Business); Lorenz Kueng (University of Lugano - Faculty of Economics; Swiss Finance Institute; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); Northwestern University - Kellogg School of Management); Mu-Jeung Yang (University of Washington - Department of Economics) |
| Abstract: | Complementarity between performance pay and other organizational design elements has been argued to be one potential explanation for stark differences in the observed productivity gains from performance pay adoption. Using detailed data on internal organization for a nationally representative sample of firms, we empirically test for the existence of complementarity between performance pay incentives and decentralization of decision-making authority for tasks. To address endogeneity concerns, we exploit regional variation in income tax progressivity as an instrument for the adoption of performance pay. We find systematic evidence of complementarity between performance pay and decentralization of decision-making from principals to employees. However, adopting performance pay also leads to centralization of decision-making authority from non-managerial to managerial employees. The findings suggest that performance pay adoption leads to a concentration of decision-making control at the managerial employee level, as opposed to a general movement towards more decentralization throughout the organization. |
| Keywords: | performance pay, decentralization, management practices |
| JEL: | D2 G29 H32 J33 L2 M1 M5 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2031&r=all |
| By: | Kristina Reineke (University of Paderborn); Holger Steinmetz (Leibniz Institute for Psychology Information); Rodrigo Isidor (University of Bayreuth); Rüdiger Kabst (University of Paderborn) |
| Abstract: | Despite substantial research, evidence regarding the relationship between the proportion of women on top management teams (TMTs) and firm performance is still inconclusive. Building on upper echelons theory, this paper expands the discussion of potential moderating effects in this regard by applying a complementary perspective to the commonly studied organization-oriented factors. Applying a person-oriented perspective to the composition of TMTs, this study argues that the recruiting source of TMT members – whether members were recruited from the owner’s family, from the internal job market or the external job market – leads to differences in the job-relevant characteristics of TMT members. Consequently, the recruiting source should moderate the relationship between TMT gender composition and performance. Our analysis of 1025 German medium-sized enterprises (MEs) shows that there is no main effect of the proportion of women on firm performance. However, recruiting from the owner’s family and the internal labor market have a significant negative moderating influence on the relationship between the proportion of women on TMTs and firm performance. Conversely, hiring externally exerts a significant positive effect.(abstract of the paper) |
| Keywords: | top management team; gender; proportion of women; performance; person-oriented moderators; recruiting |
| JEL: | J16 L25 M12 M14 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:dispap:60&r=all |
| By: | Ganguli, Ina (Stockholm School of Economics); Hausmann, Ricardo (Harvard Kennedy School); Viarengo, Martina (Graduate Institute of International and Development Studies, Geneva) |
| Abstract: | We examine gender gaps in career dynamics in the legal sector using rich panel data from one of the largest global law firms in the world. The law firm studied is representative of multinational law firms and operates in 23 countries. The sample includes countries at different stages of development. We document the cross-country variation in gender gaps and how these gaps have changed over time. We show that while there is gender parity at the entry level in most countries by the end of the period examined, there are persistent raw gender gaps at the top of the organization across all countries. We observe significant heterogeneity among countries in terms of gender gaps in promotions and wages, but the gaps that exist appear to be declining over the period studied. We also observe that women are more likely to report exiting the firm for family and work-life balance reasons, while men report leaving for career advancement. Finally, we show that various measures of national institutions and culture appear to play a role in the differential labor-market outcomes of men and women. |
| Keywords: | gender gaps, human capital, job mobility, promotion, culture, legal sector |
| JEL: | I26 J16 J62 M51 Z1 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13174&r=all |
| By: | Matthias Stefan; Jürgen Huber; Michael Kirchler; Matthias Stefan; Markus Walzl |
| Abstract: | Rankings are prevalent information and incentive tools in labor markets with strong competition for talent. In a dynamic model of multi-tasking and an accompanying experiment with financial professionals, we identify hidden ranking costs when performance in one task is incentivized and ranked while another prosocial task is not: (i) a ranking influences behavior if individuals lag behind: they spend more total effort and substitute effort in the prosocial task with effort in the ranked task; (ii) those ahead in the ranking spend less total effort and lower relative effort in the ranked task. Implications for incentive schemes are discussed. |
| Keywords: | multi-tasking decision problem, rank incentives, framed field experiment, finance professionals |
| JEL: | C93 D02 D91 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:inn:wpaper:2020-06&r=all |
| By: | Alex Bryson; Babatunde Buraimo; Alex Farnell; Rob Simmons |
| Abstract: | That football Head Coaches will be dismissed for poor performance and will quit when they have better outside options seems obvious. But owners may find it hard to distinguish poor performance from bad luck and may find it difficult to identify and attract talented Head Coaches from other clubs even if their current Head Coach is performing below expectations. Equally, Head Coaches may have few options to move to better clubs even when they are performing well. Using rich data on Head Coach characteristics we identify determinants of quits and dismissals across four professional football leagues over the period 2002-2015. We find that Head Coaches’ probabilities of dismissal are significantly lower when the team is performing above expectations, with the effect strongest for recent games. However, in contrast to earlier studies, we find that performing above expectations also reduces the probability of Head Coach quits. Head Coach success in the past, as well as Head Coach experience, reduce the probability of being dismissed, even when conditioning on team performance, suggesting Head Coach human capital has some ‘protective’ effect in managerial careers. Past experience has little effect on quit probabilities – with the exception of tenure at the current employer, which is associated with lower quit rates. We test the robustness of our results by confining estimates to first exits, within-season departures and by dealing with unobserved Head Coach heterogeneity. |
| Keywords: | quits, dismissals, managerial performance, team performance, football, competing risks |
| JEL: | J23 J24 J63 J64 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:liv:livedp:202011&r=all |
| By: | Casoria, Fortuna; Riedl, Arno (RS: GSBE Theme Human Decisions and Policy Design, General Economics 1 (Micro)); Werner, Peter (RS: GSBE Theme Human Decisions and Policy Design, General Economics 1 (Micro)) |
| Abstract: | This paper reviews experimental studies that investigate the effects of communication on behavior in organizational settings. Two main classes of studies are identified: (a) studies on coordination and competition, which include experimental research that tests whether communication can help to overcome coordination failure within organizations, and (b) studies that analyze the role of communication in alleviating problems arising from information asymmetries at the workplace. The evidence from these studies indicates that communication is suited to improve efficient coordination within firms and to mitigate information problems in employer-employee relationships. In addition, studies are presented that focus on the interaction between communication and monetary incentive schemes in companies. |
| JEL: | C90 D82 D83 J53 |
| Date: | 2020–03–19 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2020010&r=all |
| By: | Filippo Belloc; Gabriel Burdin; Fabio Landini |
| Abstract: | This paper analyzes whether labor institutions affect the design of firm hierarchies. We rationalize the role of workplace employee representation (ER) within an otherwise standard knowledgebased model of hierarchies as developed by Garicano (2000), where the firm’s optimal choice of hierarchical layers depends on the trade-off between communication and knowledge acquisition costs. To explore the empirical validity of our framework, we rely on establishment-level data on a sample of more than 18000 private-sector workplaces in Europe. We uncover a set of novel descriptive facts regarding the structure and change in corporate hierarchies under the presence of employee representatives. In particular, ER is positively correlated with the depth of hierarchy (number of vertical layers), while there is no significant association between ER and delayering. These relationships appear to be mediated by firm size. We also document that delayering does not translate into greater worker empowerment, although the presence of ER reduces the probability of functional centralization among delayered establishments. Moreover, the presence of ER correlates with the frequency of staff meetings and the accumulation of noncodifiable productive knowledge through job training and skill development. The analysis of managers’ perceptions suggests the higher frequency of meetings in firms with ER does not lead to more delays in the implementation of organizational changes. Taken together, our findings indicate that the effect of ER on the firm hierarchy is driven by a reduction in communication costs rather by an increase in knowledge acquisition costs, facilitating the flow of information to top decision makers possibly through skip-level reporting. |
| Keywords: | Firm hierarchy, Delayering, Employee representation, European Company Survey |
| JEL: | J51 L23 M11 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:usi:wpaper:827&r=all |