nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒04‒23
twelve papers chosen by
Patrick Kampkötter
Universität zu Köln

  1. Biases in Subjective Performance Evaluation By KAWAGUCHI Daiji; OWAN Hideo; TAKAHASHI Kazuteru
  2. Leadership Style and Organization Performance By Khan, Dr. Rahul
  3. Managerial Compensation under Privately-Observed Hedging By Sun, Bo; Liu, Qi
  4. Locus of Control and Performance Appraisal By John S. Heywood; Uwe Jirjahn; Cornelia Struewing
  5. Firms and Labor Market Inequality: Evidence and Some Theory By Card, David; Cardoso, Ana Rute; Heining, Jörg; Kline, Patrick
  6. Money, Social Capital and Materialism. Evidence from Happiness Data By Piekalkiewicz, Marcin
  7. Faculty Preferences over Unionization: Evidence from Open Letters at Two Research Universities By Joel Waldfogel
  8. What you don't know... Can't hurt you? A field experiment on relative performance feedback in higher education By Azmat, Ghazala; Bagues, Manuel; Cabrales, Antonio; Iriberri, Nagore
  9. Pre-CEO Executive Skill Accumulation and Firm-CEO Matching with Pay Limits By Seungjin Han
  10. Making Work Pay More: Recent Initiatives By Savage, Michael; Colgan, Brian; Callan, Tim; Walsh, John R.
  11. Work Hour Mismatch and Job Mobility: Adjustment Channels and Resolution Rates By Michael C. Knaus; Steffen Otterbach
  12. Does gender-balancing the board reduce firm value? By Eckbo, B Espen; Nygaard, Knut; Thorburn, Karin S

  1. By: KAWAGUCHI Daiji; OWAN Hideo; TAKAHASHI Kazuteru
    Abstract: We develop a theoretical model of subjective performance evaluation by the supervisor with possible discriminatory taste against the subordinate and imperfect observability of the latter's output. We assume that characteristic differences between the supervisor and the subordinate affect the precision of information that the former acquires through workplace interactions. We test the empirical predictions of the model using personnel data of a large manufacturing company in Japan. The following three findings corroborate the supervisor's learning of the subordinate's true ability: (1) supervisors give more candid evaluation of their subordinates whose job tenure in the current position is longer; (2) supervisors tend to give more candid evaluation of their subordinates who share the same demographic characteristics such as family structure, education, and age; and (3) supervisors' learning of worker ability seems to be slower for female workers than for males. We do not find any noticeable tendency that supervisors give more favorable evaluation to subordinates in the same social category.
    Date: 2016–03
  2. By: Khan, Dr. Rahul
    Abstract: Organizations face many challenges, but one of the greatest ones is ensuring the wellbeing of its employees. Understanding association between job satisfaction, employee organizational commitment, organizational culture, and leadership is important because it assists in creating an efficient and motivated workforce and allows for an organization to achieve overall goals & objectives (Amburgey, 2005). Effective Leadership, employee job satisfaction, and organizational commitment are the three important facets for organizational success. The effective leader provides guidance to employees, gives them direction towards the achievement of desired goals, as a result employee with high job satisfaction exert more effort in the completion of work [or achieving success and thus are more committed towards organization (Voong, Lo, Ngui, & Ayob, 2010). Many aspects of leadership style and organizational commitment have been studied in the paper
    Keywords: Transformation Leadership, Transaction Leadership, Organization Performance
    JEL: M0 M00 M1
    Date: 2016–02–15
  3. By: Sun, Bo; Liu, Qi
    Abstract: This paper studies how private information in hedging outcomes affects the design of managerial compensation when hedging instruments serve as a double-edged sword in that they may be used for both corporate hedging and earnings management. On the one hand, financial vehicles can offer customized contracts that are closely tailored to manage specific risk and improve hedging efficiency. On the other hand, involvement in hedging may give rise to manipulation through misstatement of the value estimates. We show that the use of privately-observed hedging may actually require greater pay-for-performance in managerial compensation. The cross-sectional variations in managerial compensation lend support to our model.
    Keywords: Managerial compensation ; Corporate hedging
    JEL: D82 D86 G38 J31
    Date: 2016–03
  4. By: John S. Heywood; Uwe Jirjahn; Cornelia Struewing
    Abstract: This work contributes to the literature demonstrating an important role for psychological traits in labor market decisions. We show that West German workers with an internal locus of control sort into jobs with performance appraisals. Appraisals provide workers who believe they control their environment a tool to demonstrate their value and achieve their goals. We confirm that workers who are risk tolerant also sort into jobs with performance appraisals but explain why the influence of the locus of control and risk tolerance should not be additive. We demonstrate this by estimating a routinely large and significantly negative interaction in our sorting equations. We also show that important patterns of sorting are revealed only when taking into account the interaction of locus of control and risk tolerance.
    Keywords: Locus of control, risk attitude, performance appraisal, performance pay, sorting, extrinsic rewards, intrinsic motivation
    JEL: D03 J33 M52
    Date: 2016
  5. By: Card, David (University of California, Berkeley); Cardoso, Ana Rute (IAE Barcelona (CSIC)); Heining, Jörg (Institute for Employment Research (IAB), Nuremberg); Kline, Patrick (University of California, Berkeley)
    Abstract: We review the literature on firm-level drivers of labor market inequality. There is strong evidence from a variety of fields that standard measures of productivity – like output per worker or total factor productivity – vary substantially across firms, even within narrowly-defined industries. Several recent studies note that rising trends in the dispersion of productivity across firms mirror the trends in the wage inequality across workers. Two distinct literatures have searched for a more direct link between these two phenomena. The first examines how wages are affected by differences in employer productivity. Studies that focus on firm-specific productivity shocks and control for the non-random sorting of workers to more and less productive firms typically find that a 10% increase in value-added per worker leads to somewhere between a 0.5% and 1.5% increase in wages. A second literature focuses on firm-specific wage premiums, using the wage outcomes of job changers. This literature also concludes that firm pay setting is important for wage inequality, with many studies finding that firm wage effects contribute approximately 20% of the overall variance of wages. To interpret these findings, we develop a model where workplace environments are viewed as imperfect substitutes by workers, and firms set wages with some degree of market power. We show that simple versions of this model can readily match the stylized empirical findings in the literature regarding rent-sharing elasticities and the structure of firm-specific pay premiums.
    Keywords: wage distribution, rent sharing, monopsony, job mobility, linked employer-employee data
    JEL: D22 J31 J42
    Date: 2016–03
  6. By: Piekalkiewicz, Marcin
    Abstract: Are unhappiness, high concern for money and scarcity of social capital different faces of the same phenomenon? Economists tend to treat these variables as distinct correlates of well-being. On the contrary, positive psychologists argue that they all relate to materialism, a system of personal values ascribing great importance in life to extrinsic motivations and low priority to intrinsic motivations. Using data from two European cross-sectional surveys and the German Socio-Economic Panel, I test the hypothesis that material interests, proxied by the effects of individual and reference income on well-being, are associated with low levels of social capital. The results suggest that people with scarce social capital tend to have greater material interests, whereas the negative effect of income comparisons on well-being is eliminated for individuals exhibiting the highest levels of social capital. The implication of such finding is that promoting social capital reduces people's material concerns and has positive impact on their well-being. The results from a country-level analysis additionally show that, since social capital moderates the importance of income for well-being on individual level, the well-being gap between income groups is significantly smaller in countries with higher social capital.
    Keywords: subjective well-being, life satisfaction, social capital, materialism, relative income, social comparisons, happiness inequality
    JEL: D31 I31 Z13
    Date: 2016–03–23
  7. By: Joel Waldfogel
    Abstract: What determines employee preferences for unionizing their workplaces? A substantial literature addresses this question with surveys on worker attitudes and pay. Unionization drives at the Universities of Minnesota and Washington have given rise to open letters of support or opposition from over 1,000 faculty at Washington and support from over 200 at Minnesota. Combining these expressions with publicly available data on salary, job titles, department affiliation, research productivity, teaching success, and political contributions from over 5,000 faculty, we provide new estimates of the determinants of faculty preferences for unionization at research universities. We find that faculty with higher pay and greater research productivity are less supportive of unionization, even after controlling for job title and department. Attitudes matter as well: after accounting for pay and productivity, faculty in fields documented elsewhere to have more politically liberal participants are more likely to support unionization.
    JEL: J51 K31
    Date: 2016–04
  8. By: Azmat, Ghazala; Bagues, Manuel; Cabrales, Antonio; Iriberri, Nagore
    Abstract: This paper studies the effect of providing feedback to college students on their position in the grade distribution by using a randomized control experiment. This information was updated every six months during a three-year period. In the absence of treatment, students'; underestimate their position in the grade distribution. The treatment significantly improves the students'; self-assessment. We find that treated students experience a significant decrease in their educational performance, as measured by their accumulated GPA and number of exams passed, and a significant improvement in their self-reported satisfaction, as measured by survey responses obtained after information is provided but before students take their exams. Those effects, however, are short lived, as students catch up in subsequent periods. Moreover, the negative effect on performance is driven by those students who underestimate their position in the absence of feedback. Those students who overestimate initially their position, if anything, respond positively.
    Keywords: randomized field experiment; ranking; Relative performance feedback; school performance.
    Date: 2016–03
  9. By: Seungjin Han
    Abstract: CEO jobs have increasingly emphasized general executive rather than firm-specific skill. Executives therefore have high stakes riding on executive skill accumulated in their non-CEO executive positions in order to establish themselves as talented before being on the competitive CEO market. This paper shows the far-reaching impact of CEO pay limits in an assignment model augmented by costly pre-CEO executive skill accumulation on the job. If the CEO pay limit is so severe that the minimum pay cut required for the highest-paid CEO is more than the lowest-paid CEO's expected pay net of her cost of working as a CEO, then it induces an equilibrium CEO pay function discontinuous at the top. This distorts high ability executives' equilibrium skill accumulation and results in a discontinuous bunching even prior to being on the CEO market. It may redistribute earnings from CEOs to shareholders only at the low-end of firm-CEO matches, given the distorted executive skill distribution.
    Keywords: Pre-CEO Executive Skill Accumulation, CEO Pay Limits, Firm-CEO matching
    JEL: G32 M12 M52
    Date: 2016–03
  10. By: Savage, Michael; Colgan, Brian; Callan, Tim; Walsh, John R.
    Date: 2015–06
  11. By: Michael C. Knaus; Steffen Otterbach
    Abstract: This paper analyses the role of job changes in overcoming work hour constraints and the work hour mismatches resulting from these constraints (i.e., differences between actual and desired work hours). Building on previous findings that job change increases the flexibility of actual work hours, the study addresses two as yet neglected questions in the context: (i) How do changes in desired work hours, in addition to changes in actual work hours, contribute to the resolution of thesemismatches? (ii) Does the increased flexibility help actually to resolve work hour mismatches? We exploit information about the magnitude of the prevailing mismatch to improve both the credibility and interpretation of the results. We find that job change increases the probability of resolving work hour mismatches, but far less than expected with free choice of hours across jobs. Instead, large fractions of workers either stay or switch into overemployment. We thoroughly investigate the robustness and heterogeneity of our results.
    Keywords: Work hour constraints, work hour mismatch, job mobility, desired work hours, Germany
    JEL: J21 J22
    Date: 2016
  12. By: Eckbo, B Espen; Nygaard, Knut; Thorburn, Karin S
    Abstract: A board gender quota reduces firm value if it forces the appointment of under-qualified female directors. We examine this costly constraint hypothesis using the natural experiment created by Norway's 2005 board gender-quota law. This law drove the average fraction of female directors from 5% in 2001 to 40% by 2008, producing a large exogenous shock to director experience and independence. However, statistically robust analyses of quota-induced shareholder announcement returns, and of long-run stock and accounting performance, fail to reject the hypothesis of a zero valuation effect of this shock to board composition. Moreover, firms did not expand board size, nor is there significant evidence of quota-induced corporate conversions to a (non-public) legal form exempted from the quota law. Finally, our evidence on female director turnover and a novel network-based measure of director gender-power gap also fails to suggest that qualified female directors were in short supply.
    Keywords: ;ong-run performance; busy directors; corporate conversion; director independence; director network power; Gender quota; valuation effect
    JEL: G34 G35
    Date: 2016–03

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