nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2018‒07‒30
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Paying for what kind of performance? Performance pay and multitasking in mission-oriented jobs By Daniel Jones; Mirco Tonin; Michael Vlassopoulos
  2. Multitasking and Subjective Performance Evaluations: Theory and Evidence from a Field Experiment in a Bank By Manthei, Kathrin; Sliwka, Dirk
  3. All in the family? CEO choice and firm organization By Lemos, Renata; Scur, Daniela
  4. How do bonus cap and malus affect risk and effort choice Insight from a lab experiment By Harris, Qun; Mercieca, Analise; Soane, Emma; Tanaka, Misa
  5. Wages and Employment: The Role of Occupational Skills By Esther Mirjam Girsberger; Miriam Rinawi; Matthias Krapf
  6. The Timing of Discretionary Bonuses: Effort, Signals, and Reciprocity By Boosey, Luke; Goerg, Sebastian J.
  7. Rank Concerns, Peer Effects, and Ability Tracking in University. Evidence from a Randomized Experiment By Marco Bertoni; Roberto Nisticò
  8. The effect of women directors on innovation activity and performance of corporate firms: Evidence from China By Töpfer, Marina

  1. By: Daniel Jones (University of Pittsburgh, Graduate School of Public and International Affairs); Mirco Tonin (Free University of Bolzano‐Bozen, Faculty of Economics and Management); Michael Vlassopoulos (University of Southampton)
    Abstract: How does pay-for-performance (P4P) impact productivity, multitasking, and the composition of workers in mission-oriented jobs? These are central issues in sectors like education or healthcare. We conduct a laboratory experiment, manipulating compensation and mission, to answer these questions. We find that P4P has positive effects on productivity on the incentivized dimension of effort and negative effects on the non-incentivized dimension for workers in non-mission-oriented treatments. In mission-oriented treatments, P4P generates minimal change on either dimension. Participants in the non-mission sector – but not in the mission-oriented treatments – sort on ability, with lower ability workers opting out of the P4P scheme.
    Keywords: Prosocial motivation, Performance pay, Multitasking, Sorting
    JEL: C91 M52 J45
    Date: 2018–07
  2. By: Manthei, Kathrin (University of Cologne); Sliwka, Dirk (University of Cologne)
    Abstract: We study the incentive effects of grating supervisors access to objective performance information when agents work on multiple tasks. We first analyze a formal model showing that incentives are lower powered when supervisors have no access to objective measures but assess performance subjectively by gathering information. This incentive loss is more pronounced when the span of control is larger and incentives are distorted towards more profitable tasks. We then investigate a field experiment conducted in a bank. In the treatment group managers obtained access to objective performance measures which raised efforts and profits. We find that the effects are driven by larger branches and lower margin products.
    Keywords: incentives, subjective performance evaluation, multitasking, field experiment, bank
    JEL: M52 J33 D23
    Date: 2018–06
  3. By: Lemos, Renata; Scur, Daniela
    Abstract: Family firms are the most prevalent firm type in the world, particularly in emerging economies. Dynastic family firms tend to have lower productivity, though what explains their underperformance is still an open question. We collect new data on CEO successions for over 800 firms in Latin America and Europe to document their corporate governance choices and, crucially, provide causal evidence on the effect of dynastic CEO successions on the adoption of managerial best practices tied to improved productivity. Specifically, we establish two key results. First, there is a preference for male heirs: when the founding CEO steps down they are 30pp more likely to keep control within the family when they have a son. Second, instrumenting with the gender of the founder’s children, we estimate dynastic CEO successions lead to 0.8 standard deviations lower adoption of managerial best practices, suggesting an implied productivity decrease of 5 to 10%. To guide our discussion on mechanisms, we build a model with two types of CEOs (family and professional) who decide whether to invest in better management practices. Family CEOs cannot credibly commit to firing employees without incurring reputation costs. This induces lower worker effort and reduces the returns to investing in better management. We find empirical evidence that, controlling for lower skill levels of managers, reputational costs constrain investment in better management.
    Keywords: CEO; family firms; organisation; emerging economies
    JEL: L2 M11
    Date: 2018–01–01
  4. By: Harris, Qun (Bank of England); Mercieca, Analise (Bank of England); Soane, Emma (Bank of England); Tanaka, Misa (Bank of England)
    Abstract: We conducted a lab experiment to examine how bonus caps and malus affect individuals’ choices of risk and effort. We find that a bonus structure that rewards individuals proportionally to realised investment returns, but does not penalise negative returns, encourages risk-taking; while a bonus cap and malus mitigate risk-taking. However, the difference in risk-taking between the bonus cap and malus treatment groups and the proportional bonus group weakened significantly when the participants’ bonus was conditional on hitting an absolute or relative performance target. We also find some evidence that the bonus cap discourages project search effort relative to the proportional bonus, whereas the difference in the levels of effort between the malus treatment group and the proportional bonus group was not statistically significant.
    Keywords: Bonus cap; bonus regulation; incentive pay
    JEL: C91 G28 J33 M52
    Date: 2018–07–06
  5. By: Esther Mirjam Girsberger; Miriam Rinawi; Matthias Krapf
    Abstract: How skills acquired in vocational education and training (VET) affect wages and employment is not clear. We develop and estimate a search and matching model for workers with a VET degree. Workers differ in interpersonal, cognitive and manual skills, while firms require and value different combinations of these skills. Assuming that match productivity exhibits worker-job complementarity, we estimate how interpersonal, cognitive and manual skills map into job offers, unemployment and wages. We find that firms value cognitive skills on average almost twice as much as interpersonal and manual skills, and they prize complementarity in cognitive and interpersonal skills. The average return to VET skills in hourly wages is 9%, similar to the returns to schooling. Furthermore, VET appears to improve labour market opportunities through higher job arrival rate and lower job destruction. Workers thus have large benefits from acquiring a VET degree.
    Keywords: occupational training, vocational education, labor market search, sorting, multidimensional skills
    JEL: E24 J23 J24 J64
    Date: 2018
  6. By: Boosey, Luke (Florida State University); Goerg, Sebastian J. (Technische Universität München)
    Abstract: In a real-effort experiment, we investigate how the timing of discretionary bonuses affects the relationship between workers and managers. Average output is substantially higher if bonuses are paid in the middle rather than upfront or at the end, as workers increase first-period output to signal trustworthiness. In contrast, average output does not differ when the decision is made at the beginning or end. When the decision is made upfront, output increases after receiving a bonus but decreases substantially, if the bonus is not paid. This is consistent with negative reciprocity by workers who anticipate, but do not receive a bonus.
    Keywords: experiment, timing, discretionary bonuses, reciprocity
    JEL: M5
    Date: 2018–06
  7. By: Marco Bertoni (Università di Padova); Roberto Nisticò (Università di Napoli Federico II and CSEF)
    Abstract: If relative rank within classes enhances student achievement, tracking will help low-ability students and may harm high achievers. Using data from a randomized experiment generating a wide range of support of group ability composition, we show that students with higher ordinal ability rank within groups have better academic outcomes. We use our flexible education production function and the ample support of the data to predict the effects of alternative grouping polices. When we unpack the mechanisms behind ability tracking, we show that rank and peer effects work in opposite directions in generating outcomes for low- and high-ability students.
    Keywords: ability tracking, rank concerns, peer effects.
    JEL: I21 I24 J24
    Date: 2018–07–27
  8. By: Töpfer, Marina
    Abstract: This paper elaborates whether women bringing their diversity, cross-cultural awareness and transformational leadership skills to corporate boards offer strategic advantages for firms. In the analysis the effect of women in the board room on innovation activity and corporate firm performance as well as the joint consequences of female directors and innovation activity on the firm's success are examined. The latter may be particularly important in the context of gender diversity as more gender-diverse boards allow for higher levels of creativity and hence innovation. In order to account for endogeneity issues, different model specifications are employed (two-way fixed effects models and linear dynamic panel data models). Unconditional quantile regressions are used in order to go beyond the mean. The analysis is conducted using Chinese firm-level data from 2006-2015. The results suggest positive effects of gender diversity in corporate boards and patenting activities on firm performance. Women directors are found to have statistically significant effects on both input-(positive) and output-oriented (negative) innovation activity.
    Keywords: Women Directors,Innovation Activity,Firm Performance,Gender-diverse Boards,Unconditional Quantile Regression
    JEL: G30 J16
    Date: 2018

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