nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2016‒10‒16
nine papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. The Impact of Job-Specific Training on Short-Term Worker Performance: Evidence from a Field Experiment By Elizabeth Lyons
  2. The Contingent Effect of Management Practices By Andrea Prat; Claudine Gartenberg; Steven Blader
  3. Valuing Alternative Work Arrangements By Alexandre Mas; Amanda Pallais
  4. Does say on pay matter? Evidence from the German natural experiment By Troeger, Tobias H.; Walz, Uwe
  5. Bureaucrats as successor CEOs By Dang, Tri Vi; He, Qing
  6. Non-standard work and workers : organizational implications By George, Elizabeth.; Chattopadhyay, Prithviraj.
  7. Can overtime premium flexibility promote employment? Firm-and worker-level evidence from a labour law reform By Pedro S. Martins
  8. Interfirm Relationships and Business Performance By Adam Szeidl; Jing Cai
  9. Returns to on-the-job search and the dispersion of wages By Axel Gottfries; Coen N. Teulings

  1. By: Elizabeth Lyons
    Abstract: Remote and short-term work arrangements are increasingly common despite the limited incentives they provide for acquiring firm-specific knowledge. This paper examines the importance and cost-effectiveness of firm-specific training for remote contract workers using evidence from a field experiment conducted in an East African insurance firm that offers two-month employment contracts for its salespeople. Findings show that firm-specific training significantly increases firm revenue, but that this effect is concentrated among higher ability workers. Training has no impact on worker retention, and offering workers financial or competitive input-based incentives has no impact on these findings, or on observed worker investment in firm-specific training. These results demonstrate that high ability temporary workers may be willing to invest in firm-specific human capital without additional incentives, and that firm performance is significantly improved as a result. Implications for temporary work contracts are discussed.
    Date: 2016
  2. By: Andrea Prat; Claudine Gartenberg; Steven Blader
    Abstract: This paper investigates how the success of a management practice depends on the nature of the long-term relationship between the firm and its employees. A large US transportation company is in the process of fitting its trucks with an electronic on-board recorder (EOBR), which provide drivers with information on their driving performance. In this setting, a natural question is whether the optimal managerial practice consists of: (1) Letting each driver know his or her individual performance only; or (2) Also providing drivers with information about their ranking with respect to other drivers. The company is also in the first phase of a multi-year initiative to remake its internal operations. This first phase corresponds to an overhaul of the relational contract with its employees, focusing exclusively on changing values toward a greater emphasis on teamwork and empowerment. The main result of our randomized experiment is that (2) leads to better performance than (1) in a particular site if and only if the site has not yet received the values intervention, and worse performance if it has. The result is consistent with the presence of a conflict between competition-based managerial practices and a cooperation-based relational contract. More broadly, it highlights the role of intangible relational factors in determining the optimal set of managerial practices.
    Date: 2016
  3. By: Alexandre Mas; Amanda Pallais
    Abstract: We use a field experiment to study how workers value alternative work arrangements. During the application process to staff a national call center, we randomly offered applicants choices between traditional M-F 9 am – 5 pm office positions and alternatives. These alternatives include flexible scheduling, working from home, and positions that give the employer discretion over scheduling. We randomly varied the wage difference between the traditional option and the alternative, allowing us to estimate the entire distribution of willingness to pay (WTP) for these alternatives. We validate our results using a nationally-representative survey. The great majority of workers are not willing to pay for flexible scheduling relative to a traditional schedule: either the ability to choose the days and times of work or the number of hours they work. However, the average worker is willing to give up 20% of wages to avoid a schedule set by an employer on a week’s notice. This largely represents workers’ aversion to evening and weekend work, not scheduling unpredictability. Traditional M-F 9 am – 5 pm schedules are preferred by most jobseekers. Despite the fact that the average worker isn’t willing to pay for scheduling flexibility, a tail of workers with high WTP allows for sizable compensating differentials. Of the worker-friendly options we test, workers are willing to pay the most (8% of wages) for the option of working from home. Women, particularly those with young children, have higher WTP for work from home and to avoid employer scheduling discretion. They are slightly more likely to be in jobs with these amenities, but the differences are not large enough to explain any wage gaps.
    JEL: J16 J24 J31 J38 M50
    Date: 2016–09
  4. By: Troeger, Tobias H.; Walz, Uwe
    Abstract: We analyze a hand-collected dataset of 1669 executive compensation packages at 34 firms included in the main German stock market index (DAX) for the years 2006- 2014 in order to investigate the impact of the 2009 say on pay legislation. First, we observe that the compensation packages of management board members of Germany's DAX30-firms are closely linked to key performance measures such as return-onassets and EBIT. Second, our analysis indicates that ownership concentration has no significant effect on compensation, which can be read as support of the view that managerial self-serving by usurping the payroll is largely absent even where companies exhibit dispersed share ownership. Third, and most important for our topic, our findings suggest that it pays a lot to take a closer look to the contractual set-up of the compensation schemes. When considering only the overall board members' compensation, the hypothesis of lower remuneration in case of low shareholder support for compensation packages in say on pay-votes can be rejected. Our findings do not support this view, which is not at all surprising given the rather rigid contractual framework for the compensation of management board members. However, we find that the supervisory board seems to be responsive to say on pay-votes when it comes to the design of newly entering candidates.
    Keywords: executive compensation,say on pay,Germany
    JEL: D23 G30 G34 J33 K22
    Date: 2016
  5. By: Dang, Tri Vi; He, Qing
    Abstract: Chinese companies sometimes appoint a government official (bureaucrat) as CEO on the expectation of benefiting from the political connections of the new hire. Based on a sample of 2,454 CEO transitions our empirical findings are consistent with the implications of a simple contract model in oligopolistic markets. Firms that appoint a bureaucrat as CEO obtain more credit and subsidies. They have positive abnormal announcement returns, negative abnormal long-run returns and larger variance of long-run returns. Furthermore, they experience a deterioration in operating performances, increased rent-seeking behavior of the management and weakening of corporate governance. The results from the split share structure reform in 2005 corroborate the supportive findings for the preferential treatment hypothesis.
    Keywords: bureaucrat, corporate political connections, CEO successions in China, governance
    JEL: G32 G34 M13
    Date: 2016–09–28
  6. By: George, Elizabeth.; Chattopadhyay, Prithviraj.
    Abstract: In this paper we provide an overview of the research on nonstandard work with a view to answering the following questions: (i) why do organizations use nonstandard workers, (ii) how has the practice of using nonstandard workers affected human resource management practices in organizations, and (iii) how has the use of nonstandard workers affected the profitability, productivity and sustainability of organizations. We build on previous reviews of nonstandard work arrangements (Ashford, George, & Blatt, 2008; Connolly & Gallagher, 2004; George & Ng, 2010) that focused largely on the individual worker’s experience of this practice. Our point of departure from these reviews is that we also focus our attention on the organizational implications of using nonstandard work and nonstandard workers. In addition, this review will consider updates to the literature since the most recent review by George & Ng (2010).
    Keywords: labour flexibility, human resources management, organization behaviour, working conditions, temporary employment, profitability, productivity, sustainable enterprise, flexibilité du travail, gestion des ressources humaines, comportement organisationnel, conditions de travail, emploi temporaire, rentabilité, productivité, entreprise durable, flexibilidad del trabajo, administración de recursos humanos, conducta organizacional, condiciones de trabajo, empleo temporal, rentabilidad, productividad, empresa sostenible
    Date: 2015
  7. By: Pedro S. Martins
    Abstract: In 2012, in the midst of a recession, a labour law reform in Portugal allowed firms to reduce the overtime premium paid to their workers by 50% or more. Until then, overtime premiums were set by law at a relatively high level and could not be cut unilaterally. We analyse matched employer-employee panel data, including worker-level base and overtime hours and pay, to shed light on the effects of the resulting greater flexibility in overtime pay setting. We find that half of the firms using overtime in 2011 did reduce their overtime premiums in a manner consistent with the reform, in particular those firms making greater use of overtime and paying higher premiums. Moreover, using difference-in-differences matching and a long list of covariates, we find that those firms that cut overtime premiums exhibit significant relative increases in overtime usage, employment and sales following the reform. Overall, our results highlight the important but not exclusive role of legal restrictions behind downward nominal pay rigidity. Our findings also suggest a significant potential of overtime pay flexibility to promote employment, even during a downturn.JEL codes: J22, J23, J38
    Keywords: working time, wage rigidity, employment resilience, labour reforms
    Date: 2016
  8. By: Adam Szeidl; Jing Cai
    Abstract: We organize regular business meetings for randomly selected managers of young Chinese firms to study the effect of business networks on firm performance. We randomize 2,800 managers into several groups that hold monthly meetings for one year, and a "no-meetings" control group. We find that: (1) The meetings increase firm revenue by 7.8 percentage points, and also significantly increase profit, a management score, employment, and the number of business partners; (2) These effects persist one year after the conclusion of the meetings; and (3) Firms randomized to have better peers exhibit higher growth. We exploit additional interventions to document concrete channels: (4) Peers share exogenous business-relevant information, particularly when they are not competitors, showing that the meetings facilitate learning; (5) Managers create more business partnerships in the regular than in other one-time meetings, showing that the meetings improve firm-to-firm matching.
    Date: 2016
  9. By: Axel Gottfries (University of Cambridge); Coen N. Teulings (Centre for Macroeconomics (CFM); University of Cambridge)
    Abstract: A wide class of models with On-the-Job Search (OJS) predicts that workers gradually select into better paying jobs, until lay-off occurs, when this selection process starts over from scratch. We develop a simple methodology to test these predictions. Our inference uses two sources of identification to distinguish between returns to experience and the gains from OJS: (i) time-variation in job-finding rates and (ii) the time since last lay-off. Conditional on the termination date of the job, job duration should be distributed uniformly. Using extreme value theory, we can infer the shape of the wage-offer distribution from the effect of the time since last lay-off on wages. This methodology is applied to the NLSY 79. We find remarkably strong support for all implications. The offer distribution is Gummbel, which has an unbounded support, which is inconsistent with pure sorting models. The standard deviation of wage offers is 7 to 15% (depending on educational level and urbanisation). OJS accounts for 30% of the experience profile and 9% of total wage dispersion. The average wage loss after pay-off is 11%.
    Keywords: On-the-job search, wage dispersion, job duration
    JEL: J31 J63 J64
    Date: 2016–09

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