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on Human Capital and Human Resource Management |
| By: | Czura, Kristina (University of Groningen); Englmaier, Florian (University of Munich); Ho, Hoa (LMU Munich); Spantig, Lisa (RWTH Aachen University) |
| Abstract: | The positive role of transformational leadership for productivity and mental wellbeing 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 the benefits of different leadership styles depend on the environment: Employees of more transactional managers outperform those of more transformational leaders before the onset of the pandemic. During the pandemic, however, more transformational managers lead employees to better performance and mental well-being. We discuss potential explanations and implications. |
| Keywords: | leadership, frontline managers, labor-management relations, organizational behavior, crisis, COVID-19 |
| JEL: | M54 M12 J53 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17350 |
| By: | Matthias Efing; Stefanie Ehmann; Patrick Kampkötter; Raphael Moritz |
| Abstract: | This paper examines the integration of ESG performance metrics into executive compensation using a detailed panel dataset of European executives. Despite becoming more widespread, most ESG metrics are largely discretionary, carry immaterial weights in payout calculations, and contribute little to executive pay risk. Such ESG metrics with arguably weak incentive power are common in financial firms and large companies, particularly for their most visible executives, which seems consistent with greenwashing. In contrast, binding ESG metrics with significant weights, which have potential to influence incentives, are only found in sectors with a large environmental footprint. |
| Keywords: | executive compensation, ESG, ESG metrics, ESG contracting, CSR contracting, sustainability, incentive contracting, optimal contracts |
| JEL: | G30 G35 J33 M12 M52 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11407 |
| By: | Abdelrahman Amer; Ashley C. Craig; Clémentine Van Effenterre; Ashley Craig |
| Abstract: | Subjective performance evaluation is an important part of hiring and promotion decisions. We combine experiments with administrative data to understand what drives gender bias in such evaluations in the technology industry. Our results highlight the role of personal interaction. Leveraging 60, 000 mock video interviews on a platform for software engineers, we find that average ratings for code quality and problem solving are 12 percent of a standard deviation lower for women. We use two field experiments to study what drives these gaps. Our first experiment shows that providing evaluators with automated performance measures does not reduce gender gaps. Our second experiment compares blind to non-blind evaluations without video interaction: There is no gender gap in either case. These results rule out traditional models of discrimination. Instead, we show that gender gaps widen with extended personal interaction, and are larger for evaluators from regions where implicit association test scores are higher. This dependence on personal interaction provides a potential reason why audit studies often fail to detect gender bias. |
| Keywords: | discrimination, gender, coding, experiment, information |
| JEL: | C93 D83 J16 J71 M51 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11268 |
| By: | Richard Audoly; Manudeep Bhuller; Tore Adam Reiremo |
| Abstract: | How informative are job ads about the actual pay and amenities offered by employers? Using a comprehensive database of job ads posted by Norwegian employers, we develop a methodology to systematically classify the information on both pay and non-pay job attributes advertised in vacancy texts. We link this information to measures of employer attractiveness, which we derive from a job search model estimated on observed wages and worker mobility flows. About 55 percent of job ads provide information related to pay and nearly all ads feature information on non-pay attributes. We show that publicly advertised job attributes are meaningful predictors of employer attractiveness, and non-pay attributes are about as predictive as pay-related attributes. High-pay employers mention pay-related attributes more often, while high-amenity employers are more likely to advertise flexible working hours and contract duration. |
| Keywords: | amenities; non-pecuniary job attributes; compensating differentials; worker mobility; information frictions; pay transparency; job ads; text analysis; vacancy duration |
| JEL: | J23 J32 J33 J62 J63 |
| Date: | 2024–09–01 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednsr:98925 |
| By: | Weidmann, Ben (Harvard Kennedy School); Vecci, Joseph (Department of Economics, University of Gothenburg); Said, Farah (Lahore University of Management Sciences); Deming, David (Harvard Kennedy School and NBER); Bhalotra, Sonia (University of Warwick, IFS, CESifo, CEPR, IZA) |
| Abstract: | This paper develops a novel method to identify the causal contribution of managers to team performance. The method requires repeated random assignment of managers to multiple teams and controls for individual skills. A good manager is someone who consistently causes their team to produce more than the sum of their parts. In a large pre-registered lab experiment, we find that good managers have roughly twice the impact on team performance as good workers do. People who nominate themselves to be in charge perform worse than managers appointed by lottery. This appears to be partly because self-promoted managers are overconfident, especially about their social skills. Managerial performance is positively predicted by economic decision-making skill and fluid intelligence – but not gender, age, or ethnicity. Selecting managers on skills rather than demographics or preferences for leadership could substantially increase organizational productivity. |
| Keywords: | Management, Teamwork, Skills, Measurement, Experiment JEL Classification: M54, J24, C90, C92 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:715 |
| By: | DeVaro, Jed (California State University, East Bay); Fung, Scott (California State University) |
| Abstract: | We empirically test whether executives' increases in base salary when promoted to CEO result from the wage bids of competing firms (i.e., "market-based tournaments") or from the strategic choices of the firm's board of directors to elicit optimal executive incentives (i.e., "classic tournaments"). Our test emphasizes the effect of the "importance of luck" (i.e., the variance of luck) on the pay raises that accompany promotion. Specifically, we focus on how that effect differs between the two types of tournaments. An estimated negative relationship between the importance of luck and the executive salary spread supports market-based tournaments, whereas a positive relationship supports classic tournaments. The results are non-monotonic in firm size. Executive tournaments in both the bottom 13% of firms (i.e., total assets below $376 million) and the top 2.5% of firms (i.e., total assets above $112 billion) are more consistent with classic tournaments, whereas the nearly 85% in the middle of the distribution of firm size are more consistent with market-based tournaments. Also, controlling for firm size, highly concentrated product markets are more consistent with market-based tournaments. Extending market-based tournament theory to allow executives to choose the luck variance reveals that executives infuse their tournaments with a high luck variance, which lowers the expected pay differential and depresses incentives. |
| Keywords: | executive compensation, promotion tournaments, importance of luck, uncertainty in promotion contests, classic and market-based tournaments, vertical pay disparity, firm size, market structure |
| JEL: | G32 G39 J31 M12 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17327 |
| By: | Mühlemann, Samuel (University of Munich) |
| Abstract: | This paper investigates the impact of artificial intelligence (AI) adoption in production processes on workplace training practices, using firm-level data from the BIBB establishment panel on training and competence development (2019-2021). The findings reveal that AI adoption reduces the provision of continuing training for incumbent workers while increasing the share of high-skilled new hires and decreasing medium-skilled hires, thereby contributing to skill polarization. However, AI adoption also increases the number of apprenticeship contracts, particularly in small and medium-sized enterprises (SMEs), underscoring the ongoing importance of apprenticeships in preparing future workers with the skills needed to apply AI in production. |
| Keywords: | artificial intelligence, technological change, automation, apprenticeship training, human capital |
| JEL: | J23 J24 M53 O33 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17367 |