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on Human Capital and Human Resource Management |
| By: | Jeffrey A. Flory; Andreas Leibbrandt; John A. List |
| Abstract: | Workplace misbehaviors are often governed by explicit monitoring and strict punishment. Such enforcement activities can serve to lessen worker productivity and harm worker morale. We take a different approach to curbing worker misbehavior—bonuses. Examining more than 6500 donor phone calls across more than 80 workers, we use a natural field experiment to investigate how different wage contracts influence workers’ propensity to cheat and sabotage one another. Our findings show that even though standard relative performance pay contracts, relative to a fixed wage scheme, increase productivity, they have a dark side: they cause considerable cheating and sabotage of co-workers. Yet, even in such environments, by including an unexpected bonus, the employer can substantially curb worker misbehavior. In this manner, our findings reveal how employers can effectively leverage bonuses to eliminate undesired behaviors induced by performance pay contracts. |
| JEL: | C9 C93 J3 J41 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22342&r=hrm |
| By: | Chatain, Olivier; Meyer-Doyle, Philipp |
| Abstract: | Research summary We examine how human-capital-intensive firms deploy their human assets and how firm-specific human capital interacts with incentives to influence this deployment. Our empirical context is the UK M&A legal market, where micro-data enable us to observe the allocation of lawyers to M&A mandates under different incentive regimes. We find that law firms actively equalize the workload among their lawyers to seek efficiency gains while ‘stretching’ lawyers with high firmspecific capital to a greater extent. However, lawyers with high firm-specific capital also appear to influence the staffing process in their favor, leading to unbalanced allocations and less sharing of projects and clients. Paradoxically, law firms may adopt a seniority-based rent-sharing system that weakens individual incentives to mitigate the impact of incentive conflicts on resource deployment. Managerial summary The study highlights the dilemmas when professional service firms allocate their key individuals to incoming projects and the role that monetary incentives play in aggravating or alleviating these dilemmas. In the context of UK M&A law firms we find that partners have a tendency to be attached to too many projects and not to share enough work, which is exacerbated when individual monetary incentives are stronger. Firms adopting a seniority based incentive system (lockstep system) are able to alleviate this effect. This implies that there is a tradeoff between rewarding personal performance versus balancing workloads and fostering collaboration among professionals. |
| Keywords: | Human-Capital-Intensive Firms; Human Capital; Managerial Dilemmas; Incentives; Capabilities; Micro-foundations; Mergers and Acquisitions; Law firms |
| Date: | 2015–09–27 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1120&r=hrm |
| By: | Christiane Bradler (ZEW Centre for European Economic Research, Mannheim, Germany); Susanne Neckermann (Erasmus University Rotterdam, the Netherlands, and ZEW Centre for European Economic Research, Mannheim, Germany) |
| Abstract: | This paper makes use of two field experiments to explore individual effort responses to gifts. We extend the literature by looking at nonfinancial gifts and gifts that combine financial and nonfinancial elements with or without adding a ``personal touch.'' We find that non-pecuniary gifts that signal worker appreciation induce reciprocity. Most importantly, we find that there are interaction effects between money and appreciation. While money and appreciation are individually effective, they only work well together when they are combined with a personal touch. This points to the importance of interpersonal elements in gift giving and has important implications for how to effectively elicit worker effort. |
| Keywords: | gift exchange; reciprocity; personnel economics; gratitude; personal touch; field experiment |
| JEL: | C93 M52 |
| Date: | 2016–06–06 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20160045&r=hrm |
| By: | Mario Lackner; Rudi Stracke; Uwe Sunde; Rudolf Winter-Ebmer |
| Abstract: | This paper investigates empirically whether decision makers are forward looking in dynamic strategic interactions. In particular, we test whether decision makers in multi-stage tournaments take heterogeneity induced changes of continuation values and the ability of their immediate opponent into account when choosing effort. Using data from professional and semi-professional basketball tournaments, we find that effort is negatively affected by the ability of the current opponent, consistent with the theoretical prediction and previous evidence. More importantly, the results indicate that the expected relative strength in future interactions does affect behavior in earlier stages, which provides support for the ‘standard’ view that decision makers are forward looking in dynamic strategic interactions. |
| Keywords: | Promotion tournament; multi-stage contest; elimination; forward-looking behavior; heterogeneity |
| JEL: | D84 D90 M51 J33 |
| Date: | 2015–11 |
| URL: | http://d.repec.org/n?u=RePEc:jku:cdlwps:wp1509&r=hrm |
| By: | Claude Diebolt (BETA, University of Strasbourg Strasbourg, France); Ralph Hippe (London School of Economics and Political Science, Grantham Research Institute on Climate Change and the Environment) |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:afc:wpaper:08-16&r=hrm |
| By: | Christos Bilanakos; John S. Heywood; John Sessions; Nikolaos Theodoropoulos |
| Abstract: | This paper models a principal-firm offering training to its agent-worker under alternative organizational structures: integration, where the principal retains authority to overrule the investment project recommended by the worker; and delegation, where the principal cannot overrule the worker’s preferred investment project. We identify the conditions under which delegation increases the profit-maximizing training intensity. Empirical estimates from matched employer-employee data show that workplaces delegating authority do provide more worker training. This result persists in two cross sections, in panel fixed effect estimates and across many robustness checks including an instrumental variable exercise that also controls for establishment fixed effects. |
| Keywords: | Agency Theory; Delegation of Worker Authority; Training |
| JEL: | D21 D22 D23 M53 M54 |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:06-2016&r=hrm |
| By: | Becker , Sebastian D; Mahlendorf , Matthias D; Schäffer , Utz; Thaten , Mario |
| Abstract: | This paper examines how corporate reliance on budgets is affected by major changes in the economic environment. We combine survey and archival data from the economic crisis that began in 2008. The results indicate that, as a result of the economic crisis, budgeting became more important for planning and resource allocation but less important for performance evaluation. Additional evidence from interviews and data gathered in a focus group further illustrate these results and show the changes organizations have introduced to respond to the economic crisis. Taken together, and contrary to more general conclusions from the literature such as an overall increase or decrease in the importance of budgeting, we find that companies emphasize certain budgeting functions over others during economic crises. |
| Keywords: | Budgeting; budgeting functions; economic crisis; crisis management |
| JEL: | M40 M41 |
| Date: | 2015–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:ebg:heccah:1122&r=hrm |
| By: | Nicholas Bloom; Ali Choudhary; Renata Lemos; John Van Reenen |
| Abstract: | For more than a decade, CEP economists have been leading efforts to get measures of management incorporated into the statistical infrastructure used by governments and researchers. The authors report on the latest initiative, assessing the use of performance monitoring, targets and incentives in firms in Pakistan. |
| Keywords: | Firms, Pakistan, management, productivity |
| Date: | 2016–06 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepcnp:475&r=hrm |