nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2019‒09‒23
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. The Power of Public: Recognition and Reputation as Drivers of Open Source Success By Erina Ytsma; Jana Gallus
  2. Disagreement and Informal Delegation in Organizations By Emre Ekinci; Nikolaos Theodoropoulos
  3. Performance Pay and Productivity in Health Care: Evidence from Community Health Centers By Cadena, Brian C.; Smith, Austin C.
  4. Why Join a Team? By Cooper, David J.; Saral, Krista; Villeval, Marie Claire
  5. A Structural Model of a Multitasking Salesforce: Job Task Allocation and Incentive Plan Design By Minkyung Kim; K. Sudhir; Kosuke Uetake
  6. Identifying the value of teamwork: Application to professional tennis By Devereux, Kevin
  7. Talent in Modern Management By Tinatin Zeragia
  8. Imperfect Competition, Compensating Differentials and Rent Sharing in the U.S. Labor Market By Thibaut Lamadon; Bradley Setzler; Magne Mogstad

  1. By: Erina Ytsma (Carnegie Mellon University); Jana Gallus (UCLA)
    Abstract: The Internet has brought forth fundamental changes in the nature and organization of work. Firms increasingly draw on online labor markets and communities for their production and innovation needs, which allows them to benefit from greater flexibility and innovation by drawing from a more diverse and changing human capital pool (Baldwin and von Hippel, 2011; Altman, Nagle, and Tushman, 2014). Yet, relying on resources beyond the traditional boundaries and organizational structure of the firm also poses challenges in terms of the coordination and motivation of these online “crowds”. Open source communities, a main focus of this paper, epitomize these difficulties as the workforce they rely on is not only external and possibly distributed, but also, to varying degrees, self-directed and not contracted or paid. This paper aims to add to our understanding of the optimal organization of open, collaborative knowledge work by studying and comparing the impact of non-financial and career incentives on innovative productivity through a randomized field experiment in the context of open, collaborative software development. In particular, we experimentally vary the salience and availability of peer feedback, and randomly vary the domain of people who can see the feedback on a large, international open source platform. We thus vary the informational content and degree of publicness of recognition for contributions to projects and, hence, the strength of reputational concerns. By doing so, we aim to analyze the effect of non-financial and career incentives on innovative effort, and how this differs across organizational settings (open source, closed source, inner-source). In this way, we aim to provide evidence-based insights into the effects of carefully designed recognition schemes on collaborative knowledge work.
    Date: 2019
  2. By: Emre Ekinci; Nikolaos Theodoropoulos
    Abstract: To investigate delegation decisions within organizations, we develop a principal-agent model in which the principal can only informally delegate authority to the agent and the parties openly disagree with each other in the sense of differing prior beliefs about the optimal course of action. Our main analysis shows that the degree of disagreement determines what kind of delegation policy the principal can commit to and this, in turn, alters the agent's effort for information acquisition. In an extension, we consider the principal's incentives to provide the agent with training, which reduces the cost of acquiring information. The analysis reveals that training provision is higher under delegation and that training facilitates delegation. We use a cross section of matched employer-employee data to examine the extent to which the empirical implications of this extension are consistent with data.
    Keywords: Delegation of authority; Differing priors
    JEL: L2 M0
    Date: 2019–09
  3. By: Cadena, Brian C. (University of Colorado, Boulder); Smith, Austin C. (Miami University)
    Abstract: Nearly half of high earning workers receive performance pay as part of their compensation, but we know strikingly little about the incentive effects of piece rate compensation on high-skilled workers. In this paper, we examine changes in medical providers' output in response to a piece rate compensation scheme. We use data from a Federally Qualified Health Center that changed from a salary-based plan to one that rewarded providers for seeing more patients on a monthly basis. Two key facts guide our empirical approach. First, the timing of the switch from salary to piece rates varied at the individual level depending on the provider's hire date, which allows us to control for other changes over time in patient demand for services. Second, most providers worked under both compensation schemes, which allows us to make within-person comparisons. We further address incomplete compliance by using providers' expected monthly compensation plan status as an instrument for their actual status. We find that providers working under the piece rate scheme see roughly 18 percent more patients monthly. Only a small portion of this difference is due to within-provider changes in output, and we find no evidence that the incentive scheme causes providers to become more productive. Instead, most of this difference derives from compositional changes in the workforce, likely due to increased retention of more productive providers.
    Keywords: piece rates, performance pay, medical providers, fee for service
    JEL: J22 J33
    Date: 2019–08
  4. By: Cooper, David J. (Florida State University); Saral, Krista (North Carolina State University); Villeval, Marie Claire (CNRS, GATE)
    Abstract: We present experiments exploring why high ability workers join teams with less able co-workers when there are no short-term financial benefits. We distinguish between two explanations: pro-social preferences and expected long-term financial gains from teaching future teammates. Participants perform a real-effort task and decide whether to work independently or join a two-person team. Treatments vary the payment scheme (piece rate or revenue sharing), whether teammates can communicate, and the role of teaching. High ability workers are more willing to join teams in the absence of revenue sharing and less willing to join teams when they cannot communicate. When communication is possible, the choice of high ability workers to join teams is driven by expected future financial gains from teaching rather than some variety of pro-social preferences. This result has important implications for the role of adverse selection in determining the productivity of teams.
    Keywords: teams, teaching, revenue sharing, social preferences, self-selection, experiment
    JEL: C92 D23 M52 M53 J24
    Date: 2019–09
  5. By: Minkyung Kim (School of Management, Yale University); K. Sudhir (Cowles Foundation & School of Management, Yale University); Kosuke Uetake (School of Management, Yale University)
    Abstract: We develop the first structural model of a multitasking salesforce to address questions of job design and incentive compensation design. The model incorporates three novel features: (i) multitasking effort choice given a multidimensional incentive plan; (ii) salesperson’s private information about customers and (iii) dynamic intertemporal tradeoffs in effort choice across the tasks. The empirical application uses data from a micro nance bank where loan officers are jointly responsible and incentivized for both loan acquisition repayment but has broad relevance for salesforce management in CRM settings involving customer acquisition and retention. We extend two-step estimation methods used for unidimensional compensation plans for the multitasking model with private information and intertemporal incentives by combining flexible machine learning (random forest) for the inference of private information and the first-stage multitasking policy function estimation. Estimates reveal two latent segments of salespeople-a “hunter” segment that is more efficient in loan acquisition and a “farmer” segment that is more efficient in loan collection. We use counterfactuals to assess how (1) multi-tasking versus specialization in job design; (ii) performance combination across tasks (multiplicative versus additive); and (iii) job transfers that impact private information impact firm profits and specific segment behaviors.
    Keywords: Salesforce compensation, Multitasking, Multi-dimensional incentives, Private information, Adverse selection, Moral hazard
    JEL: C61 J33 L11 L23 L14 M31 M52 M55
    Date: 2019–09
  6. By: Devereux, Kevin
    Abstract: Do workers vary in their ability to work with others? I compare a given worker's productivity in solitary production to their value-added to team production to identify team skills: a worker's contribution to team production above and beyond that given by general skills. The identifying assumption is that workers use general skills in both production functions, but team skills only in team production. Professional men's tennis provides a useful setting to compare solo work (singles) to teamwork (doubles). I find that around 50% of variation in team output is explained by team skills. This is robust to a variety of specifications, including nonlinearities in player inputs. Players sort positively-assortatively along both skill dimensions, yielding indirect returns to skills of about half the magnitude of the direct returns.
    Keywords: skills,human capital,teamwork,sorting,non-partite matching,assortative matching
    JEL: C33 D31 J24 J31
    Date: 2018
  7. By: Tinatin Zeragia (Georgian American University, Tbilisi, Georgia)
    Abstract: Research covers the sphere of talent management, which plays an important role among strategic HR issues. More and more organizations pay their attention on attracting, managing and retaining talented employees with them. During the last decade business owners have recognized the significance of talent in achieving business results and exceeding performance standards. Talent management as the important strategic tool has left the boundaries of HR department and has become the concern of the whole organization. Despite these statements, in reality, not many managers have practical knowledge of how to discover and manage people with exceptional talent and what to do to keep them inside their companies. The labor market is quite dynamic and people often move from one organization to another, while organizations continue to fight to attract the best available talents. My research explores what are the methods and tools to find, manage and retain best people. I will explore the theoretical background of the topic, find out some practical tools and discuss how can scientific literature available for the given moment help business owner and managers to make right decisions.
    Keywords: talent, organization, management
    Date: 2019–04
  8. By: Thibaut Lamadon (University of Chicago); Bradley Setzler (University of Chicago); Magne Mogstad (University of Chicago)
    Abstract: The goal of this paper is to quantify the importance of imperfect competition in the U.S. labor market by estimating the size of rents earned by American employers and workers from ongoing employment relationships. To this end, we construct matched employer-employee data by combining the universe of U.S. business and worker tax records for the period 2001-2015. Using this panel data, we provide two empirical findings on the role that firms play in the wage determination in the U.S. The first finding is that idiosyncratic productivity shocks to a firm transmit significantly to the earnings of its workers. Controlling for time-invariant firm and worker heterogeneity through a difference-in-differences strategy, we estimate that a 10 percent increase in the value added of a firm leads to a 1.4 percent increase in the earnings of incumbent workers. The second finding is that little of the variation in earnings is due to workers being employed in different firms. Estimating a two-way (worker and firm) fixed effect model, we find that firm effects explain no more than 3 percent of the variation in workers’ earnings. To interpret these two findings, we develop a model of the labor market where multiple employers compete with one another for workers who have heterogeneous preferences over non-wage job characteristics or amenities. These heterogeneous preferences give rise to imperfect competition and rents. The model suggests a significant amount of rents and imperfect competition in the U.S. labor market. Workers are, on average, willing to pay 14 percent of their wage to stay in the current jobs. Comparing these worker rents to those earned by employers suggests that total rents are divided relatively equally between firms and workers. The model also reveals that the finding of small firm effects do not imply that labor markets are competitive or that rents are negligible. Instead, firm effects are small because productive firms tend to have good amenities, which pushes down the wages that these firms have to pay. As a result, firms contribute much less to earnings inequality than what is predicted by the variance of firm productivity only.
    Date: 2019

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