nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2019‒09‒02
six papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. How Costly is Turnover? Evidence from Retail By Peter J. Kuhn; Lizi Yu
  2. Motivating employees through career paths By Bar-Isaac, Heski; Levy, Raphaël
  3. Back to the Future - Changing Job Profiles in the Digital Age By Stephany, Fabian; Lorenz, Hanno
  4. The ties that bind: implicit contracts and management practices in family-run firms By Lemos, Renata; Scur, Daniela
  5. Building a productive workforce: the role of structured management By Cornwell, Christopher; Schmutte, Ian M.; Scur, Daniela
  6. Do board structure and compensation matter for bank stability and bank performance? Evidence from European banks By Mavrakana, Christina; Psillaki, Maria

  1. By: Peter J. Kuhn; Lizi Yu
    Abstract: Identifying the causal effects of turnover on organizational productivity is challenging, due to data constraints and endogeneity issues. We address these challenges by using day-to-day variation in the composition and performance of small retail sales teams, and by exploiting an advance notice requirement for quits. We find robust and statistically significant productivity losses at four distinct times during the departure process: after the worker gives notice, before she departs, after she leaves, and after a new worker starts. We attribute the first two effects to a combination of recruitment activities by incumbent workers and reductions in morale, and the last two to short-staffing and on-boarding costs. Almost two thirds (63 percent) of these productivity losses occur before the departing worker leaves, and only 24 percent result from operating with an unfilled vacancy. Overall, we estimate that the costs of a ten percent increase in turnover are equivalent to a 0.6 percent wage increase; wage hikes will therefore pay for themselves (in turnover cost savings) only if the elasticity of quits to wages exceeds 16.8 in absolute value.
    JEL: J31 J63 J64
    Date: 2019–08
  2. By: Bar-Isaac, Heski; Levy, Raphaël
    Abstract: Firms have discretion over task allocations, which may dampen employees' career prospects, and, hence, motivation. Task assignments and worker motivation interact through the extent of labor market competition; that is, the possibility of moving to another firm. More competition enhances motivation but decreases firms' incentives to assign workers to informative tasks. One consequence is that competitive firms sometimes choose strategies that lead to intermediate competition. When the employee pool is heterogeneous, firms might choose different human resources practices that attract different kinds of workers, and differentiate themselves through the career opportunities within and beyond the firms that they offer.
    Keywords: career concerns; Labour market competition; professional service firms; task assignments
    JEL: J32 J33 M12 M5
    Date: 2019–06
  3. By: Stephany, Fabian; Lorenz, Hanno
    Abstract: The uniqueness of human labour is at question in times of smart technologies. The 250 years-old discussion on technological unemployment reawakens. Frey and Osborne (2013) estimate that half of US employment will be automated by algorithms within the next 20 years. Other follow-up studies conclude that only a small fraction of workers will be replaced by digital technologies. The main contribution of our work is to show that the diversity of previous findings regarding the degree of job automation is, to a large extent, driven by model selection and not by controlling for personal characteristics or tasks. For our case study, we consult Austrian experts in machine learning and industry professionals on the susceptibility to digital technologies in the Austrian labour market. Our results indicate that, while clerical computer-based routine jobs are likely to change in the next decade, professional activities, such as the processing of complex information, are less prone to digital change.
    Keywords: Classification,Employment,GLM,Technological Change
    JEL: E24 J24 J31 J62 O33
    Date: 2019
  4. By: Lemos, Renata; Scur, Daniela
    Abstract: This paper investigates the impact of family CEOs on firm organizational choices and the causes and consequences of these decisions. We focus on second-generation (dynastic) family firms, collect new data on CEO successions for over 900 firms in Latin America and Europe and merge it with unique data on organizational choices, specifically, structured management practices. We use variation in the gender composition of the outgoing CEOs' children for identification. There is clear preference for male heirs: conditional on number of children, having at least one son is correlated with a 30pp higher likelihood of dynastic family succession. As the gender composition of the outgoing CEO's children is unlikely to affect decisions on mid-level managerial practices, we use it as an instrumental variable for family succession. Dynastic CEO successions lead to almost one standard deviation lower adoption of structured management practices, with an implied productivity decrease of about 10%. We rationalize this finding with a new conceptual framework that accounts for the importance of implicit employment commitments to employees of dynastic firms in determining the adoption of monitoring technologies. We find empirical evidence that, controlling for lower levels of knowledge and skills of family CEOs, concerns for reputation and ''family name'' can play a role in constraining investment in structured management practices. Overall, our empirical results shed new light on dynastic firms' persistent performance deficit and apparent lag in the adoption of structured management practices.
    JEL: D22 M11 M12
    Date: 2019–06
  5. By: Cornwell, Christopher; Schmutte, Ian M.; Scur, Daniela
    Abstract: Firms' hiring and firing decisions affect the entire labor market. Managers often make these decisions, yet the effects of management on labor allocation remains largely unexplored. To study the relationship between a firm's management practices and how it recruits, retains and dismisses its employees, we link a survey of firm-level management practices to production and employee records from Brazil. We find that firms using structured management practices consistently hire and retain better workers, and fire more selectively. Good production workers match with firms using structured personnel management practices. By contrast, better managers match with firms using structured operations management practices.
    Keywords: labor allocation; Management Practices; Managers; productivity
    JEL: D22 J31 M11
    Date: 2019–08
  6. By: Mavrakana, Christina; Psillaki, Maria
    Abstract: This paper investigates the impact of bank governance on European bank performance and risk- taking. More precisely, using a sample of 75 banks from 18 European countries over the 2004-2016 period, we examine the relationship between bank governance variables namely board size, age of directors, financial experience, board independency, gender diversity, governance system and compensation on bank performance and risk-taking. Our empirical analysis shows that experienced directors increase bank performance and reduce risk-taking. Moreover, female directors have a positive impact on bank performance but the results are mixed for risk-taking. We also find that the one-tier system improves bank performance and reduces credit risk. Moreover, compensation is positively related with bank performance. The empirical findings are inconclusive regarding risk-taking. In addition, the impact of board size and age on bank performance differs, depending on the measure. We find that older members increase risk-taking. Finally, equity linked wealth leads to better bank performance but it also increases risk-taking. Our results differ according to time period and location criteria.
    Keywords: Bank governance, financial crises, corporate governance, bank performance, executive compensation
    JEL: G01 G21 G28 G34
    Date: 2019

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