nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2018‒11‒12
ten papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Production and Learning in Teams By Kyle Herkenhoff; Jeremy Lise; Guido Menzio; Gordon M. Phillips
  2. Optimal Incentive Contract with Endogenous Monitoring Technology By Anqi Li; Ming Yang
  3. Performance Pay and Prior Learning: Evidence from a Retail Chain By Manthei, Kathrin; Sliwka, Dirk; Vogelsang, Timo
  4. Clawback Provisions, Executive Pay, and Accounting Manipulation By Alvaro Remesal
  5. The Human Sustainability of ICT and Management Changes: Evidence for the French Public and Private Sectors By Maëlezig Bigi; Nathalie Greenan; Sylvie Hamon-Cholet; Joseph Lanfranchi
  6. How Important are Dismissals in CEO Incentives? Evidence from a Dynamic Agency Model By Alvaro Remesal
  7. The ''Good Workplace'': The Role of Joint Consultative Committees, Unions and HR policies in Employee Ratings of Workplaces in Britain By Michael Barry; Alex Bryson; Rafael Gomez; Bruce Kaufman; Guenther Lomas; Adrian Wilkinson
  8. The German minimum wage: Effects on business expectations, profitability, and investments By Bossler, Mario; Gürtzgen, Nicole; Lochner, Benjamin; Betzl, Ute; Feist, Lisa
  9. Structural Analysis of Influences on Workplace Productivity Loss By Martin Stepanek; Kaveh Jahanshahi
  10. CEO Performance in Severe Crises: The Role of Newcomers By Amador, José; Sazedj, Sharmin; Tavares, José

  1. By: Kyle Herkenhoff; Jeremy Lise; Guido Menzio; Gordon M. Phillips
    Abstract: The effect of coworkers on the learning and the productivity of an individual is measured combining theory and data. The theory is a frictional equilibrium model of the labor market in which production and the accumulation of human capital of an individual are allowed to depend on the human capital of coworkers. The data is a matched employer-employee dataset of US firms and workers. The measured production function is supermodular. The measured human capital function is non-linear: Workers catch-up to more knowledgeable coworkers, but are not dragged-down by less knowledgeable ones. The market equilibrium features a pattern of sorting of coworkers across teams that is inefficiently positive. This inefficiency results in low human capital individuals having too few chances to learn from more knowledgeable coworkers and, in turn, in a stock of human capital and a flow of output that are inefficiently low.
    JEL: E24 J24
    Date: 2018–10
  2. By: Anqi Li; Ming Yang
    Abstract: Recent technology advances have given firms the flexibility to process and analyze sophisticated employee performance data at a reduced and yet significant cost. We develop a theory of optimal incentive contracting where the monitoring technology that governs the above described procedure is part of the designer's strategic planning. In otherwise standard principal-agent models with moral hazard, we allow the principal to partition agents' performance data into any finite categories and to pay for the amount of information that the output signal carries. Through analysis of the trade-off between giving incentives to agents and saving the cost of data processing and analysis, we obtain characterizations of optimal monitoring technologies such as information aggregation, strict MLRP, likelihood ratio-convex performance classification, group evaluation in response to high monitoring costs, and assessing the various task performances according to agents' endogenous tendencies to shirk. We examine the implications of these results for workforce management and firms' internal organizations.
    Date: 2018–10
  3. By: Manthei, Kathrin (University of Cologne); Sliwka, Dirk (University of Cologne); Vogelsang, Timo (University of Cologne)
    Abstract: We run two field experiments within a large retail chain showing that the effectiveness of performance pay crucially hinges on prior job experience. Introducing sales-based performance pay for district- and later for store-managers, we find negligible average treatment effects. Based on surveys and interviews, we develop a formal model demonstrating that the effect of performance pay decreases with experience and may even vanish in the limit. We provide empirical evidence in line with this hypothesis, for instance, finding positive treatment effects (only) in stores with low job experience.
    Keywords: performance pay, incentives, learning, experience, insider econometrics, field experiment, randomized control trial (RCT)
    JEL: J33 M52 C93
    Date: 2018–09
  4. By: Alvaro Remesal (CUNEF)
    Abstract: Clawback provisions allow shareholders to recover previously-awarded compensation from managers involved in accounting manipulation or misconduct. I assess theoretically and empirically the effects of clawback provisions on the structure of managerial compensation and the frequency of accounting manipulation. In a principal-agent model I show how, in the presence of clawback enforcement frictions, clawback adoption can tilt the optimal compensation schedule towards the long-term. I test the empirical relevance of the theoretical implication using data from U.S. public firms in the 2002-2016 period. The identification deals with the endogenous timing of adoption and measurement error by exploiting variation in clawback adoption across a firm's board interlock. I find that, in those firms with fewer pre-adoption independent directors, clawback adoption increases the wealthperformance sensitivity of unvested (long-term) compensation, while reduces the frequency of earnings manipulation. The results suggest that enforcement frictions are relevant, particularly for firms where managers face weak monitoring by shareholders.
    Keywords: Clawback, executives, governance, compensation, accounting manipulation.
    JEL: D86 G34 J33
    Date: 2018–09
  5. By: Maëlezig Bigi (CEET - Centre d'études de l'emploi et du travail - CNAM - Conservatoire National des Arts et Métiers [CNAM] - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé); Nathalie Greenan (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, CEET - Centre d'études de l'emploi et du travail - CNAM - Conservatoire National des Arts et Métiers [CNAM] - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé, LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM]); Sylvie Hamon-Cholet (TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique, CEET - Centre d'études de l'emploi et du travail - CNAM - Conservatoire National des Arts et Métiers [CNAM] - M.E.N.E.S.R. - Ministère de l'Éducation nationale, de l’Enseignement supérieur et de la Recherche - Ministère du Travail, de l'Emploi et de la Santé, LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM]); Joseph Lanfranchi (LEMMA - Laboratoire d'économie mathématique et de microéconomie appliquée - UP2 - Université Panthéon-Assas - Sorbonne Universités)
    Abstract: We investigate the human sustainability of Information and Communication Technology (ICT) and management changes using a French linked employer-employee survey on organizational changes and computerization. We approach the human sustainability of changes through the evolutions of work intensity, skills utilization, and the subjective relationship to work. We compare in the private sector and the state civil service the impacts of ICT and management changes on the evolution of these three dimensions of work experience. We find that intense ICT and management changes are associated, in the public sector, with work intensification and knowledge increase. In the private sector, ICT and management changes increase the use of skills, but at a rate decreasing with their intensity and without favoring the accumulation of new knowledge. However, their impacts on the subjective relationship to work are much stronger, with public sector employees expressing discouragement, as well as the feeling of an increased effort-reward imbalance when private sector employees become more committed. We find that this divergence is neither explained by the self-selection of employees in the two sectors nor by implementation of performance pay. We identify two partial explanations: one is related to employee turnover in the private sector, the other to the role of trade unions. These results suggest that the human sustainability of ICT and management changes depends on their intensity and on how their implementation takes into account the institutional context of the organization.
    Keywords: Organizational changes,ICT,Management tools,Work experience,Employee outcomes,Comparison of public and private sectors,Linked employer-employee survey
    Date: 2018–10
  6. By: Alvaro Remesal (CUNEF)
    Abstract: I estimate a dynamic agency model to quantify the importance of dismissals in CEO incentives vis-à-vis pecuniary compensation. The model features endogenous dynamics in deferred and ow compensation, as well as exogenous departures, and endogenous dismissals after poor firm performance. Thus, the model functions as a classification device for CEO turnover events that exploits information from all the departures in the data. I estimate the model via the Simulated Method of Moments, using data for CEOs in U.S. public firms appointed from 1993 to 2013. The estimated CEO dismissal rate is 1.2 percent, and the CEO replacement cost represents 3.4 percent of firm assets, 64 million in 2015 U.S. dollars for the median firm. Poor governance, proxied by director independence, increases the replacement costs in big firms. The relationship reverses in small firms, so board independence must also capture better hiring policies or career concerns of directors. The results confirm that CEO dismissals are infrequent. However, changes in the cost of replacements that generate small increases in the underlying dismissal rate lead to substantial reductions in the size of incentive compensation.
    Keywords: Executives, CEO turnover, CEO compensation, governance, dismissal, SMM.
    JEL: G34 J33 J63
    Date: 2018–09
  7. By: Michael Barry (Griffith University); Alex Bryson (University College London, National Institute of Social and Economic Research and Institute for the Study of Labor); Rafael Gomez (University of Toronto); Bruce Kaufman (Georgia State University and Griffith Business School); Guenther Lomas (University of Toronto); Adrian Wilkinson (Griffith Business School)
    Abstract: Using new, rich data on a representative sample of British workers, we examine the relationship between joint consultation systems at the workplace and employee satisfaction, accounting for possible interactions with union and management-led high-commitment strategies. We focus on non-union employee representation at the workplace, in the form of joint consultative committees (JCCs), and the potential moderating effects of union representation and high-involvement human resource (HIHR) practices. Our findings suggest a re-evaluation of the role that JCCs play in the subjective well-being of workers even after controlling for unions and HIHR policies. There is no evidence in our estimates of negative interaction effects (i.e., that unions or HIHR negatively influence the functioning of JCCs with respect to employee satisfaction) or full mediation (i.e., that unions or HIHR are substitutes for JCCs when it comes to improving self-reported worker well-being). If anything, there is a significant and positive three-way moderating effect when JCCs are interacted with union representation and high-involvement management. This is the first time -- to the authors' knowledge -- that comprehensive measures of subjective employee well-being have been estimated with respect to the presence of a JCC at the workplace, whilst controlling for workplace institutions that are themselves designed to involve and communicate with workers.
    Keywords: worker representation; unions; joint consultative committees; HRM; job satisfaction
    JEL: J53 J58 J83
    Date: 2018–10–01
  8. By: Bossler, Mario; Gürtzgen, Nicole; Lochner, Benjamin; Betzl, Ute; Feist, Lisa
    Abstract: In this article, we analyze the effects of the introduction of the German minimum wage using difference-in-differences estimations applied to the IAB Establishment Panel. The treatment effects on the treated establishments show a slight reduction in the employers' expected development of business volume. When we analyze the effects of the minimum wage on the net sales of intermediates and wages costs, we observe a reduction, which is fully explained by the increase in wage costs induced by the minimum wage. The results do not point to effects on establishment-level productivity or capital investments. Looking at investments in human capital, we do not observe any effects on apprenticeship offers or the placement of apprentices. If anything, the results point at a slight reduction in the provision of further training.
    Keywords: Minimum Wage,Business Expectations,Profitability,Training
    JEL: C23 J38
    Date: 2018
  9. By: Martin Stepanek (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic; RAND Europe, Cambridge, UK); Kaveh Jahanshahi (University of Cambridge, Cambridge, UK)
    Abstract: This study investigates systematically and simultaneously a wide range of influences on workplace productivity loss. Workplace productivity has been widely discussed in literature for many years, yet most of the existing studies focus on a narrow pathway of effects; this can potentially result in overestimating the examined influences due to capturing unobserved effects of omitted variables. In this study we examine various productivity determinants (workers' characteristics, lifestyle, commuting, health and wellbeing, and job and workplace environment) in a single combined model, after investigating their interrelations, to re-assess some of the previous findings and provide new insights into the subject. This is made possible through utilising a unique and extensive dataset of nearly 30,000 employees in the UK collected in 2017 and developing a comprehensive Structural Equation Model (SEM). Our results generally confirm the previous findings but also highlight the necessity to consider a broad range of factors as some of the initially strong influences (e.g. of work engagement) become statistically insignificant once additional variables are introduced into the model. Overall, personal characteristics, particularly physical and mental health, as well as job characteristics such as stress at work explain most of the variance in productivity loss, while lifestyle or working patterns are less important.
    Keywords: SEM, productivity, absenteeism, presenteeism
    JEL: C38 J24
    Date: 2018–10
  10. By: Amador, José; Sazedj, Sharmin; Tavares, José
    Abstract: A firm's optimal choice of a CEO involves a trade-off between hiring newcomers - who take time to profit from learning by doing - and avoiding CEO turnover or opting for internal successions - risking that the old guard fall prey to an experience trap, repeating the same old business practices. When firms are hit by an aggregate economic shock, exogenous, unexpected, and unprecedented in nature, reach, magnitude and persistence, conducting 'business as usual' no longer applies and having in office a newcomer - a CEO hired recently from another firm - may turn out to be particularly valuable to efficiently abandon old management practices. We use a unique matched firm-employee dataset for Portuguese firms in the wake of the last economic crisis, to estimate the value of a newcomer CEO, who is by nature prone to avoid the experience trap. During the crisis, firms run by newcomer CEOs outperform those run by high tenured and/or internally promoted CEOs in terms of both value added (GVA) and sales. We estimate a performance gap of approximately 18%, and confirm that no such gap exists prior to the crisis. Firms managed by newcomers are also less likely to fail during the crisis. Propensity core matching confirms our difference-in-differences results. Our findings are robust to different measures of firm performance, across different samples and specifications, and to the inclusion of several CEO and firm controls, including fixed effects. Finally, we show that newcomer CEOs make different decisions in terms of personnel, expenditure, investment and international trade, attaining higher productivity levels.
    Keywords: CEO tenure; firm performance; great recession
    JEL: G34 J24 L25
    Date: 2018–11

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