nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2022‒09‒12
eight papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Work from Home Arrangements and Organizational Performance in Italian SMEs: Evidence from the COVID-19 Pandemic By Abrardi, Laura; Grinza, Elena; Manello, Alessandro; Porta, Flavio
  2. Performance Pay and Work Hours: US Survey Evidence By Artz, Benjamin; Heywood, John S.
  3. Rank-and-File Accounting Employee Incentives and Financial Reporting Quality By Armstrong, Chris; Kepler, John D.; Larcker, David F.; Shi, Shawn
  4. Time Pressure Preferences By Thomas Buser; Roel van Veldhuizen; Yang Zhong
  5. Cracks in the Boards: The Opportunity Cost of Governance Homogeneity By Helene Maghin
  6. Pitfalls of pay transparency: Evidence from the lab and the field By Katharina Brütt; Huaiping Yuan
  7. Revolution in Progress? The Rise of Remote Work in the UK By Draca, Mirko; Duchini,Emma; Rathelot, Roland; Arthur Turrell; Giulia Vattuone
  8. Competition and Risk-Taking By Oliver Gürtler; Lennart Struth; Max Thon

  1. By: Abrardi, Laura; Grinza, Elena; Manello, Alessandro; Porta, Flavio
    Abstract: We use survey data on Italian small- and medium-sized enterprises (SMEs) collected during the COVID-19 pandemic to explore the relationship between the adoption of work from home (WFH) practices and organizational performance. In so doing, we investigate the possible underlying mechanisms, including measures of labor productivity and workers’ concentration and motivation, the level of absenteeism, the organization of work through management by objectives (MBO), and the presence of coordination and communication costs. We obtain several results. First, we find a significantly enhanced capability of firms that adopted WFH during the pandemic to sustain the overall organizational performance, particularly when such work practice is used intensively. Second, increased labor productivity and workers’ concentration and motivation, decreased absenteeism, and a substantial rise in the adoption of MBO seem to be the main drivers behind the detected benefits related to WFH. Third, when WFH is used at medium levels of intensity, it is associated with augmented coordi- nation and communication costs, which nonetheless do not appear to overcome the benefits associated with WFH.
    Keywords: Work from home (WFH), teleworking, agile working, smart working, organizational performance, labor productivity, management by objectives (MBO), COVID-19, small- and medium-sized enterprises (SMEs), survey data.
    JEL: D23 D24 M54
    Date: 2022
  2. By: Artz, Benjamin (University of Wisconsin, Oshkosh); Heywood, John S. (University of Wisconsin, Milwaukee)
    Abstract: We examine the hypothesis that performance pay increases work hours. If performance pay incentivizes greater hours, this could cause the demonstrated link between performance pay and poorer worker health. Using US survey data, we confirm greater work hours and an increased likelihood of long working hours for performance pay workers. This remains in worker fixed effect estimates and in worker with employer fixed effect estimates. The magnitudes remain sufficiently large to support the potential role of long hours as an intermediary between performance pay and reduced worker health. Despite managers being the most likely to both receive performance pay and work long hours, we show this association largely reflects sorting and not the behavioral response evident for other workers.
    Keywords: performance related pay, hours worked
    JEL: J22 J33
    Date: 2022–07
  3. By: Armstrong, Chris (Stanford Graduate School of Business); Kepler, John D. (Stanford Graduate School of Business); Larcker, David F. (Stanford Graduate School of Business); Shi, Shawn (Stanford Graduate School of Business and University of Washington)
    Abstract: An extensive literature examines whether senior executives’ contractual incentives influence their financial reporting decisions. However, little is known about whether— and how—the incentives of lower-level (or “rank-and-file†) employees, who are perhaps even more directly involved in the financial reporting process, influence their behavior. We use a proprietary database with detailed, employee-specific information about these employees’ incentive-compensation plans and find that although firms with relatively well-paid accounting employees tend to issue higher quality financial reports, their reports tend to be of lower quality when these employees’ compensation is contingent rather than fixed. We also find that these relationships are more pronounced at firms whose senior executives have stronger contractual incentives to misreport, which sheds light on when lower-level accounting employees have incentives to promote, discourage, or thwart financial misreporting.
    JEL: G34 M12
    Date: 2022–05
  4. By: Thomas Buser (University of Amsterdam); Roel van Veldhuizen (Lund University); Yang Zhong (University of Amsterdam)
    Abstract: Many professional and educational settings require individuals to be willing and able to perform under time pressure. We use a lab experiment to elicit preferences for working under time pressure in an incentivized way by eliciting the minimum additional payment participants require to complete a cognitive task under various levels of time pressure versus completing it without pressure. We make three main contributions. First, we document that participants are averse to working under time pressure on aggregate. Second, we show that there is substantial heterogeneity in the degree of time pressure aversion across individuals and that these individual preferences can be partially captured by simple survey questions. Third, we include these questions in a survey of bachelor students and show that time pressure preferences correlate with future career plans. Our results indicate that individual differences in time pressure aversion could be an influential factor in determining labor market outcomes.
    JEL: J24 D9 C91
    Date: 2022–08–22
  5. By: Helene Maghin
    Abstract: Does the composition of governance affect firm outcomes? We exploit the timings and thresholds of a gender quota in boards of directors and supervisory boards to causally determine the impact of a change in leadership on performance. Using a novel design and data on boards, we find that firms forced to comply with the 2011 gender quota in France increased their profit margin by 5.4 percent relative to firms with unchanged boards thereby limiting diminishing profitability. We identify a shift in their cost structure away from purchasing of services such as out-sourcing and sub-contracting. In particular, we find evidence that firms change the type and the amount of external short-contract workers they hire. The decision to employ a lower amount of more qualified temporary workers is optimal as the firms’ revenue grows. This in part reflects the importance of using domestic labour outsourcing to flexibly adjust to demand changes. We show that our effects are nearly entirely explained by the first newcomer in the board. The persistence of our estimates provide evidence for its role in updating knowledge. We find that the law is associated with the diversification of boards in terms of gender but also of nationality, age and links with other firms. The added value of within-board and network diversity suggest a sizable opportunity cost of governance homogeneity for performance.
    Date: 2022
  6. By: Katharina Brütt (University of Amsterdam); Huaiping Yuan (University of Amsterdam)
    Abstract: Wage transparency regulation is widely considered and adopted as a tool to reduce the gender wage gap. We combine field and laboratory evidence to address how and when wage transparency can be effective and explore the role of belief adjustments as a mechanism. In the field, this paper studies a German wage transparency policy that allows employees to request wage information of comparable employees. Exploiting variation across firm size and time, we first provide causal evidence that this regulation does not affect the gender wage gap. In an online laboratory experiment, we study whether the failure of this policy hinges on two aspects: (1) the endogenous availability of wage information, and (2) the absence of performance information. Our data underline the importance of both factors. In contrast to endogenously acquired wage information, exogenously provided wage information does increase overall wages. So does the provision of performance information. However, none of these types of information reduce the gender wage gap. Wage information even deters women from entering negotiations.
    Keywords: Gender pay gap, Negotiations, Transparency
    JEL: J08 J16 J31 C91
    Date: 2022–08–23
  7. By: Draca, Mirko (University of Warwick); Duchini,Emma (University of Essex); Rathelot, Roland (Institut Polytechnique de Paris); Arthur Turrell (Office for National Statistics); Giulia Vattuone (University of Warwick)
    Abstract: The pandemic was accompanied by a wave of adoption of remote work practices. This paper uses online job vacancy data to study how UK firms have adopted remote work. Overall, remote work increased by 300%. Our analysis finds little evidence that occupations have fundamentally changed to better accommodate remote work tasks, nor evidence of changes in the occupational composition of jobs. We find that the overall increase in remote working is driven by the increasing use of remote work at the firm level, especially among firms that were less likely to use remote work before the pandemic. This is consistent with changes in organisational practices or updated information about the viability of large-scale remote working. JEL codes: J23 ; J32 ;
    Keywords: vacancies ; remote working ; pandemic
    Date: 2022
  8. By: Oliver Gürtler (University of Cologne); Lennart Struth (University of Cologne); Max Thon (University of Cologne)
    Abstract: In many situations, agents take risks by choosing an action that increases their performance immediately, but that potentially leads to a large loss. The current paper studies how such risk-taking behavior depends on the level of competition that the agents face. We study a tournament model and we find that more intense competition, measured by the number of competitors as well as their relative standing, induces agents to take higher risks. We use a rich panel data set on professional biathlon competitions as well as survey data from professional biathletes to confirm the model predictions. Finally, we discuss managerial implications.
    Keywords: Risk-taking, competition, tournament, incentives, biathlon
    JEL: M51 M52 Z22
    Date: 2022–08

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