nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2023‒07‒10
five papers chosen by
Patrick Kampkötter
Eberhard Karls Universität Tübingen

  1. Non-Common Priors, Incentives, and Promotions: The Role of Learning By Matthias Fahn; Nicolas Klein
  2. Helping and Antisocial Behavior in the Workplace By Haylock, Michael; Kampkötter, Patrick; Kosfeld, Michael; von Siemens, Ferdinand
  3. The Career Effects of Union Membership By Dodini, Samuel; Salvanes, Kjell G.; Willén, Alexander; Zhu, Li
  4. Employee Performance and Mental Well-Being: The Mitigating Effects of Transformational Leadership during Crisis By Kristina Czura; Florian Englmaier; Hoa Ho; Lisa Spantig
  5. Power Play, Because of Pay? How Pay Transparency Affects Counterproductive Work Behaviors By Andrew Millin

  1. By: Matthias Fahn; Nicolas Klein
    Abstract: We analyze a repeated principal-agent setting in which the principal cares about the agent’s verifiable effort as well as an extra profit that can be generated only if the agent is talented. The agent is overconfident about his talent and updates beliefs using Bayes’ rule. An exploitation contract in which the agent is only compensated for his effort if the extra profit materializes maximizes the principal’s profits. In this optimal contract, the agent's principal-expected compensation decreases over time and learning exacerbates his exploitation, unless he has been revealed to be talented. Therefore, the principal’s profits may increase with failures, and the agent may only be employed if his perceived talent is sufficiently low. As an application of these results, we analyse a firm’s optimal promotion policy, and show that promotion to a new job may optimally be based on the agent being successful in a previous job, even if the agent's talent across jobs is entirely uncorrelated. This provides a novel explanation for the so-called “Peter Principle”, for which Benson et al., 2019 have recently provided evidence in a setting with verifiable performance and highly confident workers.
    Keywords: overconfidence, experimentation, dynamic incentives, Peter Principle
    JEL: C73 D83 D86 D91 M51
    Date: 2023
  2. By: Haylock, Michael (University of Tübingen); Kampkötter, Patrick (University of Tübingen); Kosfeld, Michael (Goethe University Frankfurt); von Siemens, Ferdinand (University of Amsterdam)
    Abstract: We offer a comprehensive analysis of the organizational and behavioral foundations of employees' helping and antisocial behavior as an integral part of a firm's workplace culture and working climate. Using representative employer-employee panel data of larger German private-sector firms, we document a large variation in helping and antisocial behavior across firms. Our regression results show that differences in supervisors' people skills, as well as workforce trust, social preferences, and personality traits explain these firm-level differences in helping and antisocial behavior in the workplace. Our measures are derived from established survey constructs and include preference items that have been behaviorally validated in experimental games by prior research. Together, the results corroborate the importance of both leadership quality and workforce composition for the manifestation of helpful and hostile workplace cultures.
    Keywords: helping, antisocial behavior, leadership, social preferences, trust, personality, human resource management practices
    JEL: D01 M14 M21 M50
    Date: 2023–05
  3. By: Dodini, Samuel (Norwegian School of Economics); Salvanes, Kjell G. (Norwegian School of Economics); Willén, Alexander (Norwegian School of Economics); Zhu, Li (Norwegian School of Economics)
    Abstract: We combine exogenous variation in union membership with detailed administrative data and a novel field survey to estimate the career effects of labor union membership. In the survey, we show how workers perceive the role of unions in setting wages and determining work amenities. In the administrative data, we causally examine through which channels unions influence worker outcomes, whether unions influence workers differently across their careers, and what the overall long-run effects of individual union membership are. Our results highlight that the career effect of union membership differs greatly depending on the age at which workers enroll. In addition, we show that focusing on a restricted set of outcomes, such as wages and employment, generates a fractionalized understanding of the multidimensional career effect that union membership has on workers.
    Keywords: unions, wage premiums, job protection, work environment
    JEL: J51 J31 J32 J16 J63 J65 J81
    Date: 2023–05
  4. By: Kristina Czura; Florian Englmaier; Hoa Ho; Lisa Spantig
    Abstract: The positive role of transformational leadership on productivity and mental well-being has long been established. Transformational leadership behavior may be particularly suited to navigate times of crisis which are characterized by high levels of complexity and uncertainty. We exploit quasi-random assignment of employees to managers and study the role of frontline managers’ leadership styles on employees’ performance, work style, and mental well-being in times of crisis. Using longitudinal administrative data and panel survey data from before and during the Covid-19 pandemic, we find that frontline managers who were perceived as having a more transformational leadership style before the onset of the pandemic, led employees to better performance and mental well-being during the pandemic.
    Keywords: leadership, frontline managers, labor-management relations, organizational behavior, crisis
    JEL: M54 M12 J53
    Date: 2023
  5. By: Andrew Millin (Florida International University, FL, USA)
    Abstract: With social comparison theory as our theoretical foundation, how employees target one another based on the presentation of information that they see and evaluate, we explain how process pay transparency and outcome pay transparency affect the probability of counterproductive work behaviors from employees toward individuals (CWB-I) and organizations (CWB-O). We utilize field study data courtesy of Mendeley (“Pay Communication, Justice and Affect: The Asymmetric Effects of Process and Outcome Pay Transparency on Counterproductive Workplace Behavior, †2020) and select methods from SimanTov-Nachlieli and Bamberger (2021, 235) using SmartPLS. While three hypotheses failed to produce significant results, and the only hypothesis that produced significant results was not supported (process pay transparency negatively, not positively, related to counterproductive work behaviors directed at the organization), our final bootstrapped SEM fit our data for our saturated model. Implications are discussed.
    Keywords: social comparison, pay communication, pay transparency, process pay transparency, outcome pay transparency, counterproductive work behaviors
    Date: 2022–06

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