nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2017‒10‒08
fifteen papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Team Incentives, Task Assignment, and Performance: A Field Experiment By Josse (J.) Delfgaauw; Robert (A.J.) Dur; Michiel Souverijn
  2. Incentivizing Complex Problem Solving in Teams - Evidence from a Field Experiment By Englmaier, Florian; Grimm, Stefan; Schindler, David; Schudy, Simeon
  3. Team incentives and performance: Evidence from a retail chain By Friebel, Guido; Heinz, Matthias; Krueger, Miriam; Zubanov, Nikolay
  4. "Examine the Effect of Organizational Justice on Job Satisfaction and Employee Performance " By Lusia Adinda Dua Nurak
  5. Quantity, Quality and Originality: The Effects of Incentives on Creativity By Laske, Katharina; Schröder, Marina
  6. Formal search and referrals from a firm's perspective By Rebien, Martina; Stops, Michael; Zaharieva, Anna
  7. The Role of the Working Environment on the Employee Morale By Purnamie Titisari
  8. Gift exchange vs. repeated interaction as a source of reciprocal behavior By Fahn, Matthias; Schade, Anne; Schüßler, Katharina
  9. Managerial investment in mutual funds: Determinants and performance implications By Abigail S. Hornstein; James Hounsell
  10. "Effect of Work Environment, Work Satisfaction and Work Motivation on The Performance of Accounting Lecturers " By Novi Damayanti
  11. Envy in Mission-Oriented Organizations By F. Barigozzi; E. Manna
  12. Paying Gig Workers By Butschek, Sebastian; Kampkötter, Patrick; Sliwka, Dirk
  13. Healthy Business? Managerial Education and Management in Healthcare By Nicholas Bloom; Renata Lemos; Raffaella Sadun; John Van Reenen
  14. On-the-job-training as a signal: Why low-educated workers invest less in further training By Meshcheriakova, Olga; Vermeulen, Stan
  15. Takeovers and (Excess) CEO Compensation By Feito Ruiz, Isabel; Renneboog, Luc

  1. By: Josse (J.) Delfgaauw (Erasmus University Rotterdam; Tinbergen Institute, The Netherlands); Robert (A.J.) Dur (Erasmus University Rotterdam, CESifo Munich, and IZA Bonn); Michiel Souverijn (Erasmus University Rotterdam)
    Abstract: The performance of a work team commonly depends on the effort exerted by the team members as well as on the division of tasks among them. However, when leaders assign tasks to team members, performance is usually not the only consideration. Favouritism, employees' seniority, employees' preferences over tasks, and fairness considerations often play a role as well. Team incentives have the potential to curtail the role of these factors in favor of performance -- in particular when the incentive plan includes both the leader and the team members. This paper presents the results of a field experiment designed to study the effects of such team incentives on task assignment and performance. We introduce team incentives in a random subsets of 108 stores of a Dutch retail chain. We find no effect of the incentive, neither on task assignment nor on performance.
    Keywords: Team incentives; Task assignment; Field experiment
    JEL: C93 M12 M52
    Date: 2017–09–22
  2. By: Englmaier, Florian; Grimm, Stefan; Schindler, David; Schudy, Simeon
    Abstract: We study the role of bonuses, framed as gains and losses, in a unique environment that closely resembles many features of modern working environments: team work, knowledge re-combination and creative problem solving. We conduct a field experiment in cooperation with a provider of real life escape games. Bonuses significantly increase team performance in the field experiment whereas framing the bonus as a loss does not yield additional benefits as compared to the gain frame. We qualitatively replicate these findings with student participants in a lab-in-the field experiment that allows to study potential mechanisms underlying the productivity increase. Our findings suggest that the productivity increase among student participants result from two sources: First, single team members tend to become more dominant and to take more offten the initiative. Second, bonuses induce ”cutting corners” behavior among student participants. In contrast, teams in field experiment, who self-selected into the task, improve performance under bonus incentives without cutting corners more frequently. We discuss the implications of our findings for managers and firms designing contract structures in modern working environments.
    Keywords: team work,bonus,incentives,loss,gain,framing,creative
    JEL: C92 C93 J33 D03 M52
    Date: 2017
  3. By: Friebel, Guido; Heinz, Matthias; Krueger, Miriam; Zubanov, Nikolay
    Abstract: In a field experiment with a retail chain (1,300 employees, 193 shops), randomly selected sales teams received a bonus. The bonus increases both sales and number of customers dealt with by 3%. Each dollar spent on the bonus generates $3.80 in sales, and $2.10 in profit. Wages increase by 2.2% while inequality rises only moderately. The analysis suggests effort complementarities to be important, and the effectiveness of peer pressure in overcoming free-riding to be limited. After rolling out the bonus, treatment and control shops’ performance converge, suggesting long-term stability of the treatment effect.
    Keywords: management practices,randomized controlled trial (RCT),field experiment,insider econometrics,wage inequality
    JEL: J3 L2 M5
    Date: 2017
  4. By: Lusia Adinda Dua Nurak (Faculty of Economic and Business, Brawijaya University, Indonesia Author-2-Name: I Gede Riana Author-2-Workplace-Name: Udayana University, Bali, Indonesia)
    Abstract: "Objective – This study is aimed to analyze the effect of organizational justice on job satisfaction and employee performance. Methodology/Technique – The respondents are 104 employees who work in the Governor’s office in East Nusa Tenggara Province by using the questionnaires. The data are analyzed using Partial Least Square (PLS). Findings – The results show that organizational justice has significant effect on job satisfaction, but has not significant effect on employee performance. Furthermore, job satisfaction has significant effect on employee performance. Novelty – The implications of this study emphasize the important role of job satisfaction in improve the employee performance. Therefore, the organization should have an attention on interactional and informational justice to improve the employee performance, so that the employee is satisfied and try to provide an optimal contribution to the organization. "
    Keywords: Organizational Justice; Job Satisfaction; Employee Performance.
    JEL: J24 J28
    Date: 2017–06–05
  5. By: Laske, Katharina; Schröder, Marina
    Abstract: We introduce a novel experimental design in which creativity is incentivized and measured along three dimensions: quantity, quality and originality of ideas. We implement piece rate incentives for quantity alone, quantity in combination with quality and quantity in combination with originality and compare the results to a baseline with a fixed wage. Studying the effect of incentives on performance in the separate dimensions of creativity, we find that incentives significantly affect the quantity and average quality of ideas, but not the average originality. We show that incentives have both positive direct and negative spillover effects on performance in these dimensions and that organizations, therefore, face tradeoffs when introducing incentives for creative performance. When investigating the effect of incentives on a combined measure of innovation, i.e., the number of creative ideas that are at the same time of high quality and original, we find that incentives for both quantity and originality perform best.
    Keywords: creativity,multitasking,laboratory experiment,real-effort,incentives
    JEL: C91 J33 M52 O30
    Date: 2017
  6. By: Rebien, Martina (Center for Mathematical Economics, Bielefeld University); Stops, Michael (Center for Mathematical Economics, Bielefeld University); Zaharieva, Anna (Center for Mathematical Economics, Bielefeld University)
    Abstract: This study explores the relationship between firms’ characteristics and their recruitment strategies. We propose a model based on a search and matching framework with two search channels: a formal channel which is costly for firms and a costless informal channel, i.e. referrals. There is a continuum of heterogeneous vacancies in our model where every firm with an open vacancy chooses an optimal search effort in order to attract job candidates. This search effort depends on the productivity of the firm and, contrary to the previous literature, workers send simultaneous applications to open vacancies. We assess the model predictions by using the IAB Job Vacancy Survey, a representative survey among human resource managers in Germany reporting information about their most recent recruitment case. Based on the finding that firm size and productivity are positively correlated we show that: (1) Larger firms invest more effort into formal search activities; (2) Firms invest more formal search effort in labour markets for more educated workers; (3) The positive relationship between firm’s size and formal search intensity can also be observed for firms that don’t use referrals; (4) Firms that use referrals as a search channel invest less effort into formal search compared to firms that don’t use referrals; (5) Larger firms are less likely to hire an applicant by referral than smaller firms, and (6) More intensive search effort leads to a larger number of applications.
    Keywords: firm size, productivity heterogeneity, search effort, referrals, recruitment strategies
    Date: 2017–10–02
  7. By: Purnamie Titisari (University of Jember, Indonesia Author-2-Name: Putri Kusuma Rini Author-2-Workplace-Name: University of Jember, Indonesia Author-3-Name: Agus Priono Author-3-Workplace-Name: University of Jember, Indonesia)
    Abstract: "Objective – The research aims to know the effect of forming aspects of the work environment consisting of the employee’s service, the work condition and the relationship among employees towards employee morale at Limited Liability Company of Bank Tabungan Negara Branch Jember, whether simultaneously or partially, and to know the forming aspects of the work environment that dominantly influence towards employee morale at Limited Liability Company of Bank Tabungan Negara Branch Jember. The population of this research is all of the employees at Limited Liability Company of Bank Tabungan Negara Branch Jember. Methodology/Technique – The applied method of census is multiple linear regressions. Findings – The result shows that the forming aspects of the work environment simultaneously have significant influence towards employee morale at Limited Liability Company of Bank Tabungan Negara Branch Jember. While the result of the test shows that the three forming aspects of the work environment partially have significant influence towards employee morale at Limited Liability Company of Bank Tabungan Negara Branch Jember. Novelty – The implication of this study is that there are many things to increase the employee morale, one of them is providing a good and comfortable work environment. At least, the company should pay attention to the three forming aspects of the work environment, such as giving employee services, working conditions, and employee relationship with the work place."
    Keywords: "Employee Morale; Employee Service; Work Condition; Employee Relationship. "
    JEL: J21 J28 J81
    Date: 2017–05–20
  8. By: Fahn, Matthias; Schade, Anne; Schüßler, Katharina
    Abstract: Humans reciprocate. We want to return favors we have received, but also respond appropriately to behavior that we regard as unfair against us. Whereas previous research has typically tried to isolate the most prominent explanations for reciprocal behavior - inherent preferences for reciprocity and repeated interaction - the present paper addresses the question if and how those interact. Developing a theoretical model of a long-term employment relationship, we first show that reciprocal preferences are more important when an employee is close to retirement. At earlier stages, repeated interaction is more important because more future rents (which increase players’ commitment in this case) can be used to provide incentives. Preferences for reciprocity still affect the structure of an employment relationship early on, though, because of two reasons. First, preferences for reciprocity effectively reduce the employee’s effort costs. Second, they allow to relax the enforceability constraint that determines the principal’s commitment in the repeated interaction. We test our main predictions using data from the German Socio-Economic Panel (SOEP) and find cross-sectional evidence for a stronger positive effect of positive reciprocity on effort and wages for older workers.
    Keywords: reciprocity,relational contracts,dynamic incentives
    JEL: C73 D03 D21 D22 D86
    Date: 2017
  9. By: Abigail S. Hornstein (Department of Economics, Wesleyan University); James Hounsell (Centerstone Investors, New York)
    Abstract: We examine the determinants of managerial investments in mutual funds and the subsequent impacts of these investments on fund performance. By using panel data we show thatinvestment levels fluctuate within funds over time, contrary to the common assumptionthat cross-sectional data are representative. Managerial investments reflect personal portfolio considerations while also signaling incentive alignment with investors. The impactof managerial investment on performance varies by whether the fund is solo- or team-managed. Fund performance is higher for solo-managed funds and lower for team-managedfunds when managers invest more. These results are consistent with the higher visibility ofsolo managers, and less extreme investment returns of team-managed funds. Our resultssuggest investors may not benefit from all managerial signals of incentive alignment asmanagerial investments also reflect personal portfolio considerations.
    Keywords: Mutual funds, Managerial ownership, Fund performance,Team management
    JEL: G29 G32
    Date: 2016–06
  10. By: Novi Damayanti (Islamic University of Darul Ulum Lamongan, Indonesia)
    Abstract: "Objective – The purpose of this paper is to investigate whether work environment, job satisfaction and work motivation influences the performance of accounting lecturers. Methodology/Technique – This paper is based on a questionnaire survey of lecturers in three universities, UNISDA, UNISLA, STIE situated in Dahlan Lamongan, Indonesia. Findings – The findings indicate that work motivation is the dominant factor affecting the performance of the accounting lecturers. Work environment, job satisfaction and work motivation jointly, have a positive influence on the performance of the accounting lecturers. Novelty – The study provides ways to increase the performance of accounting lecturers so that they will be able to produce reliable scholar graduates."
    Keywords: Work Environment; Work Satisfaction; Work Motivation; Indonesia.
    JEL: J81 J83
    Date: 2016–12–19
  11. By: F. Barigozzi; E. Manna
    Abstract: According to the labor donation theory, workers adhering to their firms' mission are willing to donate a portion of their paid labor. In this paper, we study how workers' fairness concerns limit the firm's ability to extract labor donation from its employees. We find that, in sectors where the firm's mission is important, optimal contracts are such that high-ability employees perceive their wage as less fair than low-ability employees and they must be rewarded with an “envy rent". The opposite is true in sectors where the firm's mission does not play a relevant role. We empirically test the predictions of the model using the German Socio-Economic Panel finding support for our theoretical results.
    JEL: D03 D82 M54
    Date: 2017–10
  12. By: Butschek, Sebastian; Kampkötter, Patrick; Sliwka, Dirk
    Abstract: We study the compensation of gig workers in a natural field experiment. To derive testable predictions, this paper presents a formal model capturing a central feature of online freelance work: gig work- ers' ability to choose both how much to work and how big an e¤ort to make. We analyse the set-up in a principal-agent model, showing that the optimal contract includes a sales-based commission and uses a gig-based piece rate to insure a risk-averse agent. This piece rate is in- creasing in her risk aversion, intrinsic motivation and ability. We then predict the e¤ects of introducing a gig piece rate while reducing the commission rate. The effects on the agents' choices of quantity and quality are heterogeneous in their risk aversion, intrinsic motivation and ability.
    Keywords: Incentives,Risk Aversion,Intrinsic Motivation,Sales Compensation,Multitasking,Field Experiment
    JEL: M52 J33 D23
    Date: 2017
  13. By: Nicholas Bloom; Renata Lemos; Raffaella Sadun; John Van Reenen
    Abstract: We investigate the link between hospital performance and managerial education by collecting a large database of management practices and skills in hospitals across nine countries. We find that hospitals that are closer to universities offering both medical education and business education have higher management quality, more MBA trained managers and lower mortality rates. This is true compared to the distance to universities that offer only business or medical education (or neither). We argue that supplying joint MBA-healthcare courses may be a channel through which universities increase medical business skills and raise clinical performance.
    Keywords: management, hospitals, mortality, education
    JEL: M1 I1
    Date: 2017–09
  14. By: Meshcheriakova, Olga (General Economics 2 (Macro)); Vermeulen, Stan (General Economics 2 (Macro))
    Abstract: Studies of on-the-job training have found that low skilled workers participate less in further training. In this paper, we develop a signalling model of training where training can increase productivity when workers’ prior ability matches the level of the training course. Consequently, employers can use observed training participation as information about the quality of their employees when job performance is unobservable. As a result, programs aimed at low ability workers will be underutilized because of the negative signal participation conveys about their initial ability. We show that offering training has spillover effects: introducing high-level courses to a choice set of only low-level courses increases participation in low-level courses, and improves sorting efficiency. We discuss the implications of these results for optimal training provision, and make several testable predictions for assessing the validity of our model.
    Keywords: training, human capital, signaling
    JEL: J24 J45 M53
    Date: 2017–09–26
  15. By: Feito Ruiz, Isabel (Tilburg University, Center For Economic Research); Renneboog, Luc (Tilburg University, Center For Economic Research)
    Abstract: We study if a CEO’s equity-based compensation affects the expected value generation in takeovers. When the objectives of management and shareholders are more aligned, as proxied by the use of equity-based compensation, more value-maximizing acquisitions are expected. Whereas in widely-held firms the decision power is with the management, in firms with concentrated ownership the decision power may be with major blockholders. This may entail that ownership concentration and equity-based pay are substitutes. We find a strongly positive relation between equity-based compensation and cumulative abnormal announcement returns at take-overs, but this relation is eroded when dominant share blocks are held by corporations, which confirms the substitution effect. Powerful CEOs in companies with weak boards and without actively monitoring shareholders may set their own pay which could lead to excesses. We relate excess pay to how takeover decisions are received by the market, and demonstrate that excess compensation negatively affects the acquirer’s stock valuation at a takeover announcement. The market is thus able to identify firms with agency problems and is cautious in its expectations about potential value creation by means of acquisitions.
    Keywords: equity-based compensation; Mergers and acquisitions (M&As); takeover; shareholder protection; ownership concentration
    JEL: G30 G32 G34 F30
    Date: 2017

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