nep-hrm New Economics Papers
on Human Capital and Human Resource Management
Issue of 2023‒11‒27
eleven papers chosen by
Patrick Kampkötter, Eberhard Karls Universität Tübingen

  1. Incentive Complexity, Bounded Rationality and Effort Provision By Johannes Abeler; David Huffman; Colin Raymond
  2. Peer pressure and manager pressure in organisations By Diego Battiston; Jordi Blanes i Vidal; Tom Kirchmaier; Katalin Szemeredi
  3. The role of self-confidence in teamwork: Experimental evidence By Bruhin, Adrian; Petros, Fidel; Santos-Pinto, Luís
  4. How hybrid working from home works out By Nicholas Bloom; Ruobing Han; James Liang
  5. CEO compensation: evidence from the field By Edmans, Alex; Gosling, Tom; Jenter, Dirk
  6. Mechanisms Underlying the Effects of Work From Home on Careers in the Post-Covid Context By Anna Matysiak; Agnieszka Kasperska; Ewa Cukrowska-Torzewska
  7. Vacancy Duration and Wages By Ihsaan Bassier; Alan Manning; Barbara Petrongolo
  8. Making the invisible hand visible: Managers and the allocation of workers to jobs By Virginia Minni
  9. Disclosure and Incentives in Teams By Paula Onuchic; João Ramos
  10. The role of shortlisting in shifting gender beliefs on performance: experimental evidence By Miguel A. Fonseca; Ashley McCrea
  11. The impact of Covid-19 on productivity By Nicholas Bloom; Philip Bunn; Paul Mizen; Pawel Smietanka; Gregory Thwaites

  1. By: Johannes Abeler; David Huffman; Colin Raymond
    Abstract: Using field and laboratory experiments, we demonstrate that the complexity of incentive schemes and worker bounded rationality can affect effort provision, by shrouding attributes of the incentives. In our setting, complexity leads workers to over-provide effort relative to a fully rational benchmark, and improves efficiency. We identify con tract features, and facets of worker cognitive ability, that matter for shrouding. We find that even relatively small degrees of shrouding can cause large shifts in behavior. Our results illustrate important implications of complexity for designing and regulating workplace incentive contracts.
    Date: 2023–06–07
  2. By: Diego Battiston; Jordi Blanes i Vidal; Tom Kirchmaier; Katalin Szemeredi
    Abstract: We study the interaction between horizontal (peer) and vertical (manager) social factors in workers' motivation. In our setting, individuals work using open-plan desks. Using a natural experiment, we identify a sharp increase in workers' productivity following the occupation of adjacent desks. We link this peer pressure effect to two key aspects of the worker-manager relation. First, we find stronger peer pressure when managers monitor workers less. Second, we find stronger peer pressure among workers performance-evaluated by the same manager. In a set of counterfactual exercises, we illustrate how organisations could take advantage of these interdependencies to increase worker productivity.
    Keywords: social incentives, teamwork, peer pressure, monitoring, managers, peer effects, organisations, productivity
    Date: 2023–06–01
  3. By: Bruhin, Adrian; Petros, Fidel; Santos-Pinto, Luís
    Abstract: Teamwork has become increasingly important in modern organizations and the labor market. Yet little is known about the role of self-confidence in teamwork. In this paper, we present evidence from a laboratory experiment using a team effort task. Effort and ability are complements and there are synergies between teammates' efforts. We exogenously manipulate subjects' self-confidence in their ability using easy and hard general knowledge quizzes. We find that overconfidence leads to more effort, less free riding, and higher team revenue. These findings suggest that organizations could improve team performance by hiring overconfident workers.
    Keywords: Teamwork, Self-Confidence, Effort, Free Riding
    JEL: C71 C92 D91 D83
    Date: 2023
  4. By: Nicholas Bloom; Ruobing Han; James Liang
    Abstract: Hybrid working from home (WFH), whereby employees work a mix of days at home and at work each week, has become dominant for graduate employees in the US. This paper evaluates a randomized control trial on 1612 engineers, marketing and finance employees of a large technology firm that allowed odd birthday employees to WFH on Wednesday and Friday and kept even birthday employees full time in the office. There are four key results. First, WFH reduced attrition rates by 35% and improved self-reported work satisfaction scores, highlighting how employees place a considerable value on this amenity. Second, WFH reduced hours worked on home days but increased it on other work days and the weekend, highlighting how home-working alters the structure of the working week. Third, WFH employees increased individual messaging and group video call communication, even when in the office, reflecting the impact of remote work on working patterns. Finally, while there was no significant impact of WFH on performance ratings or promotions, lines of code written increased by 8%, and employees' self-assessed productivity was up 1.8%, suggesting a small positive impact. Given these benefits for retention, job satisfaction, and productivity, after the experiment ended the firm extended hybrid WFH to the entire company.
    Keywords: hybrid working from home, graduate employees, job retention, job satisfaction
    Date: 2023–06–01
  5. By: Edmans, Alex; Gosling, Tom; Jenter, Dirk
    Abstract: We survey directors and investors on the objectives, constraints, and determinants of CEO pay. We find that directors face constraints beyond participation and incentives, and that pay matters not to finance consumption but to address CEOs’ fairness concerns. 67% of directors would sacrifice shareholder value to avoid controversy, leading to lower levels and one-size-fits-all structures. Shareholders are the main source of constraints, suggesting directors and investors disagree on how to maximize value. Intrinsic motivation and reputation are seen as stronger motivators than incentive pay. Even with strong portfolio incentives, flow pay responds to performance to fairly recognize the CEO's contribution.
    Keywords: CEO incentives; contract theory; executive compensation; fairness; survey; STICERD grant
    JEL: J1 F3 G3 J50
    Date: 2023–12–01
  6. By: Anna Matysiak (University of Warsaw, Faculty of Economic Sciences); Agnieszka Kasperska (University of Warsaw, Faculty of Economic Sciences); Ewa Cukrowska-Torzewska (University of Warsaw, Faculty of Economic Sciences)
    Abstract: This article explores how Work From Home (WFH) affects workers’ career progression in the post-pandemic context of the United Kingdom, elucidating the mechanisms that drive these outcomes. Using data from the discrete choice experiment fielded between July and December 2022 among 1, 000 managers, we show that teleworkers, whether in hybrid or full-time WFH arrangements, face a disadvantageous evaluation by managers compared to their office-based counterparts. The adverse effect of hybrid teleworking is due to the fact that employers consider hybrid workers are less productive than onsite workers. Full-time teleworkers are penalized even if they display the same performance at work as onsite workers. We demonstrate this penalty to be driven by the fact that managers consider full-time teleworkers to be less committed to work than onsite workers. Consistently with past research, we also find that WFH affects workers’ careers differently depending on their gender and parental obligations and that managers’ assumptions about workers’ performance and commitment allow to explain at least some of these differences.
    Keywords: career, experiment, family, gender, promotion, work from home
    JEL: J12 J13 J16 J21
    Date: 2023
  7. By: Ihsaan Bassier; Alan Manning; Barbara Petrongolo
    Abstract: We estimate the elasticity of vacancy duration with respect to posted wages, using data from the near-universe of online job adverts in the United Kingdom. Our research design identifies duration elasticities by leveraging firm-level wage policies that are plausibly exogenous to hiring difficulties on specific job vacancies, and control for job and market-level fixed-effects. Wage policies are defined based on external information on pay settlements, or on sharp, internally-defined, firm-level changes. In our preferred specifications, we estimate duration elasticities in the range -3 to -5, which are substantially larger than the few existing estimates.
    Date: 2023–08–03
  8. By: Virginia Minni
    Abstract: Why do managers matter for firm performance? This paper provides evidence of the critical role of managers in matching workers to jobs within the firm using the universe of personnel records from a large multinational firm. The data covers 200, 000 white-collar workers and 30, 000 managers over 10 years in 100 countries. I identify good managers as the top 30% by their speed of promotion and leverage exogenous variation induced by the rotation of managers across teams. I find that good managers cause workers to reallocate within the firm through lateral and vertical transfers. This leads to large and persistent gains in workers' career progression and productivity. Seven years after the manager transition, workers earn 30% more and perform better on objective performance measures. In terms of aggregate firm productivity, doubling the share of good managers would increase output per worker by 61% at the establishment level. My results imply that the visible hands of managers match workers' specific skills to specialized jobs, leading to an improvement in the productivity of existing workers that outlasts the managers' time at the firm.
    Keywords: managers, career trajectories, internal labor markets, productivity
    Date: 2023–10–09
  9. By: Paula Onuchic; João Ramos
    Abstract: We consider a team-production environment where all participants are motivated by career concerns, and where a team’s joint productive outcome may have different reputational implications for different team members. In this context, we characterize equilibrium disclosure of team-outcomes when team-disclosure choices aggregate individual decisions through some deliberation protocol. In contrast with individual disclosure problems, we show that equilibria often involve partial disclosure. Furthermore, we study the effort-incentive properties of equilibrium disclosure strategies implied by different deliberation protocols; and show that the partial disclosure of team outcomes may improve individuals’ incentives to contribute to the team. Finally, we study the design of deliberation protocols, and characterize productive environments where effort-incentives are maximized by unilateral decision protocols or more consensual deliberation procedures.
    Date: 2023–05–31
  10. By: Miguel A. Fonseca (Department of Economics, University of Exeter); Ashley McCrea (Department of Economics, University of Exeter)
    Abstract: In labour markets, women are often underrepresented relative to men. This underrepresentation may be due to inaccurate beliefs about ability across genders. Inaccurate beliefs might cause a sampling problem: to have accurate beliefs about a group, one must first collect information about that group. However, inaccurate beliefs may persist due to biased belief updating. We run a stylized hiring experiment to disentangle these two effects. We ask participants to create shortlists from a male and a female pool of workers and give them feedback on the skill of those they shortlist. Based on that information, participants hire workers, and provide us with their beliefs about the distribution of skills in the male and female pots. We study how recruiters update their beliefs as a function of their past shortlisting behaviour, and how they shortlist given their beliefs. As expected, participants were more likely to sample from the pool with the highest subjective mean quality (on average men) and lowest subject variance. Participants were not Bayesian updaters but there were no gender-specific biases in updating. Sampling more from a pool and, somewhat surprisingly, greater time spent engaging in sampling behaviour yield more accurate beliefs.
    Keywords: inaccurate statistical discrimination, belief updating, gender, shortlisting, chess
    JEL: C91 D83 J71 J78 M51
    Date: 2023–11–07
  11. By: Nicholas Bloom; Philip Bunn; Paul Mizen; Pawel Smietanka; Gregory Thwaites
    Abstract: We analyse the impact of Covid-19 on productivity using data from an innovative monthly firm survey panel that asks for quantitative impacts of Covid on inputs and outputs. We find total factor productivity (TFP) fell by up to 5% during 2020-21. The overall impact combined large reductions in 'within-firm' productivity, with an offsetting positive 'between-firm' effects as less productive sectors, and less productive firms within them, contracted. Despite these large pandemic effects, firms' post-Covid forecasts imply surprisingly little lasting impact on aggregate TFP. We also see significant heterogeneity over firms and sectors, with the greatest impacts in those requiring extensive in-person activity. We also ask about unmeasured inflation in the form of deteriorating product quality, finding an additional 1.4% negative impact on TFP.
    Keywords: Covid-19, Productivity
    Date: 2023–06–26

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