nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2012‒06‒05
eight papers chosen by
Tommaso Reggiani
Universita' di Bologna

  1. Competition in the workplace: An experimental investigation By Benndorf, Volker; Rau, Holger A.
  2. In brief: UK chief executives: paid for performance? By Brian Bell; John Van Reenen
  3. Does Work Place Sexual Harassment Matter? By Subhani, Dr. Muhammad Imtiaz
  4. Learning for a bonus: How financial incentives interact with preferences By Uschi Backes-Gellner; Yvonne Oswald
  5. The effect of socialization on employees efficiency: moderating role of perceived organizational support By Abdul, Razzaq; Malik , Asif
  6. Pay-for-Luck in CEO Compensation: Matching and Efficient Contracting By Pierre Chaigneau; Nicolas Sahuguet
  7. A Theory of Expert Leadership By Goodall, Amanda H.
  8. Aging and Attitudes Towards Strategic Uncertainty and Competition: An Artefactual Field Experiment in a Swiss Bank By Thierry Madiès; Marie-Claire Villeval; Malgorzata Wasmer

  1. By: Benndorf, Volker; Rau, Holger A.
    Abstract: We analyze competition between workers in a gift-exchange experiment where two workers are hired by the same employer. In the competition treatment the two employees simultaneously choose their effort whereas in the baseline treatment competition cannot occur since there is only one employee per employer. We find that in the competition treatment employers implicitly set tournament incentives by rewarding employees who choose higher effort levels than their co-workers. Here, employees' effort levels increase significantly faster, which can be explained by imitation learning. Furthermore we find that employers decrease their wage payments per unit of effort exerted over time when employing two workers. --
    Keywords: Gift Exchange,Competition,Internal Organization,Multiple Employees
    JEL: C91 J41 L22 M52
    Date: 2012
  2. By: Brian Bell; John Van Reenen
    Abstract: Does it matter whether you work for a successful company? And if so, does it matter who you are? To answer these questions we construct a unique panel dataset covering the pay of all CEOs, senior managers and a fully representative sample of workers for a large group of publicly-listed companies covering just under 90% of the market capitalization of the UK stock market. We show that senior management appear to have pay that is strongly associated with various measures of firm performance (such as shareholder returns and quasi-rents), while workers' pay is only weakly associated with such measures. A 10% increase in firm value is associated with an increase of 3% in CEO pay but only 0.2% in average workers' pay. Falls in firm performance are also followed by CEO pay cuts and significantly more CEO firings. This is essentially a result of the responsiveness of flexible pay to performance and only senior executives have a large enough share of pay in bonuses to generate a sizeable overall effect on pay. External control matters for pay - firms with lower levels of institutional ownership have smaller pay-performance elasticities for CEOs and do not cut their pay when performance is poor.
    Keywords: CEO, performance pay, executive pay, firms, management
    Date: 2012–05
  3. By: Subhani, Dr. Muhammad Imtiaz
    Abstract: Today's workplace is diverseand constantly altering. The conventional employer/employee relationship of past has been turned upside down. Employees are living in a diverse and growing economy and have almost unlimited job opportunities but they face the bad times of recession too. The overall work environment and global economy are rapidly changing that leaves no space for definite forecasting. These factors have created an environment where the business is in need of its employees more and not the employees in need of job opportunities. For this reason, managers at workplace face several ethical issues; sexual harassment is one of the majors. This paper examines the relationships between survey-based reports of sexual harassment at work places and its impact on job performance. The findings of this paper revealed that sexual harassment is the most rated violence in organizations. The findings further revealed that gestures of sexual nature of opposite sex are associated with sexually offensive comments, invitation of dates and sexual involvements.
    Keywords: Workplace; Sexual harassment; Sexual aggression; Offensive comments; Job performance
    JEL: O1
    Date: 2012
  4. By: Uschi Backes-Gellner (Department of Business Administration, University of Zurich); Yvonne Oswald (Department of Business Administration, University of Zurich)
    Abstract: This paper investigates the effect of financial incentives on student performance and analyzes for the first time how the incentive effect in education is moderated by students’ risk and time preferences. To examine this interaction we use a natural experiment that we combine with data from surveys and economic experiments on risk and time preferences. We not only find that students who are offered financial incentives for better grades have on average better first- and second-year grade point averages, but more importantly, we find that highly impatient students respond more strongly to financial incentives than less impatient students. This finding suggests that financial incentives are most effective if they solve educational problems of myopic students.
    Keywords: Student performance; Financial incentive; Time preference; Risk preference
    JEL: I20 C91
    Date: 2012–05
  5. By: Abdul, Razzaq; Malik , Asif
    Abstract: The present study aims to investigate the effect of socialization on employee’s efficiency with moderating role of perceived organizational support. A field survey approach was used by selecting 30 employees from telecom sector. Pakistan study area was district Hyderabad. Multistage simple random sampling technique used to select employees. Structured questionnaire was used as data instrument. The result confirm that organizational socialization enhance organization commitment of employees, thus reducing cost of losing employees therefore, socialization program must be designed so which fulfills the expectation of employees. On the basis of result it is recommended that government, and non-government organization must enhance friendly environment in their organization to meet the market competition and more output with less input.
    Keywords: Employee; unfriendly environment; efficiency;socialization; commitment;resource management;Organization socialization
    JEL: D21
    Date: 2012–05–07
  6. By: Pierre Chaigneau; Nicolas Sahuguet
    Abstract: We develop a stylized model of efficient contracting with matching between firms and managers with state-contingent reservation utility. We show that the optimal contract is designed to retain and insure the manager. The retention motive explains pay-for-luck in executive compensation, while the insurance feature explains asymmetric pay-for-luck. This contract can be implemented with call options based on a single performance measure which generally does not filter out luck. When costs of involuntary managerial turnover differ across firms, and the abilities of different managers are more or less precisely estimated ex-ante, the model can also explain the observed association between pay-for-luck and bad corporate governance.
    Keywords: CEO pay, corporate governance, pay-for-luck, stock-options
    JEL: D86 G34 J33
    Date: 2012
  7. By: Goodall, Amanda H. (IZA)
    Abstract: How much knowledge should leaders have of their organization's core business? This is an important question but not one that has been addressed in the management literature. In a new 'theory of expert leadership' (TEL), this paper blends conceptual work with recent empirical evidence. It suggests that organizations perform more effectively when led by individuals who have a deep understanding of the core business of their organization. Being a capable general manager is not sufficient. Expert leaders are those with (1) inherent knowledge, acquired through technical expertise combined with high ability in the core-business activity; (2) industry experience, which stems from time and practice within the core-business industry; and (3) leadership capabilities, which include management skills and a leader's innate characteristics. This paper criticizes the rise of the professional manager and generalist CEO. It argues that expert leaders improve organizational performance through knowledge-based strategy, by acting as a standard bearer, by creating the right environment for core workers, and, finally, by adopting the long view. The paper concludes by identifying the potential boundaries of TEL.
    Keywords: expert leaders, CEOs, inherent knowledge, core business, organizational performance
    JEL: J24 M12 M51
    Date: 2012–05
  8. By: Thierry Madiès (University of Fribourg, Bd de Pérolles 90, CH-1700 Fribourg, Switzerland); Marie-Claire Villeval (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France); Malgorzata Wasmer (University of Fribourg, Bd de Pérolles 90, CH-1700 Fribourg, Switzerland)
    Abstract: We study the attitudes of junior and senior employees towards strategic uncertainty and competition, by means of a market entry game inspired by Camerer and Lovallo (1999). Seniors exhibit higher entry rates compared to juniors, especially when earnings depend on relative performance. This difference persists after controlling for attitudes towards non-strategic uncertainty and for beliefs on others’ competitiveness and ability. Social image matters, as evidenced by the fact that seniors enter more when they predict others enter more and when they are matched with a majority of juniors. This contradicts the stereotype of risk averse and less competitive older employees.
    Keywords: Aging, risk, ambiguity, competitiveness, self-image, confidence, experiment
    JEL: C91 D83 J14 J24 M5
    Date: 2012

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