Line manager
Belief in the unstructured interview: The persistence of an illusion
Jason Dana, Robyn Dawes & Nathanial Peterson
Judgment and Decision Making, September 2013, Pages 512–520
Abstract:
Unstructured interviews are a ubiquitous tool for making screening decisions despite a vast literature suggesting that they have little validity. We sought to establish reasons why people might persist in the illusion that unstructured interviews are valid and what features about them actually lead to poor predictive accuracy. In three studies, we investigated the propensity for “sensemaking” — the ability for interviewers to make sense of virtually anything the interviewee says — and “dilution” — the tendency for available but non-diagnostic information to weaken the predictive value of quality information. In Study 1, participants predicted two fellow students’ semester GPAs from valid background information like prior GPA and, for one of them, an unstructured interview. In one condition, the interview was essentially nonsense in that the interviewee was actually answering questions using a random response system. Consistent with sensemaking, participants formed interview impressions just as confidently after getting random responses as they did after real responses. Consistent with dilution, interviews actually led participants to make worse predictions. Study 2 showed that watching a random interview, rather than personally conducting it, did little to mitigate sensemaking. Study 3 showed that participants believe unstructured interviews will help accuracy, so much so that they would rather have random interviews than no interview. People form confident impressions even interviews are defined to be invalid, like our random interview, and these impressions can interfere with the use of valid information. Our simple recommendation for those making screening decisions is not to use them.
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Cleaning House: The Impact of Information Technology Monitoring on Employee Theft and Productivity
Lamar Pierce, Daniel Snow & Andrew McAfee
Washington University Working Paper, August 2013
Abstract:
In this paper, we study how firm investments in technology-based employee monitoring impact both misconduct and productivity. We use unique and detailed theft and sales data from 392 restaurant locations from five different chains that adopt a theft monitoring information technology (IT) product. Since the specific timing of individual locations’ technology adoption is plausibly exogenous, we can use difference-in-differences models to estimate the treatment effect of IT monitoring on theft and productivity within each location for all employees. We find significant treatment effects in reduced theft and improved productivity that appear to be driven by changing the behavior of individual workers rather than selection effects. These findings suggest multitasking by employees under a pay-for-performance system, as they increase effort toward sales following monitoring implementation in order to compensate for lost theft income. In addition to substantial financial benefits to the firms in our sample, the average worker enjoys increased tip-based earnings of $0.58 per hour. Our results suggest that employee misconduct is primarily a result of managerial policies rather than individual differences in ethics or morality, and that policies that reduce misconduct can benefit both firms and employees.
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M.A. Roach
Applied Economics Letters, Fall 2013, Pages 1553-1556
Abstract:
Just as firms must consider the impact of changes in management, sports teams must consider whether a coaching change will improve the team's on-field performance. I examine the effects of coaching changes for National Football League (NFL) teams between the 1995 and 2012 seasons. A variety of factors contribute to an NFL team's performance reverting towards league-average levels between seasons. Thus, a nominal improvement in team performance could be due to improved management or it could simply be mean reversion. I find that, after accounting for the highly significant mean reversion effect during this time period, firing a coach reduces a team's expected performance during the next season and the team's average performance over the next two seasons. This effect is present when wins are used to measure performance, but also when performance is measured by point differential and playoff appearances, two variables that avoid some shortcomings of using team wins as a measure of performance. I conclude that teams are firing coaches an inefficiently high percentage of the time.
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Does Lean Capability Building Improve Labor Standards? Evidence from the Nike Supply Chain
Greg Distelhorst, Jens Hainmueller & Richard Locke
MIT Working Paper, October 2013
Abstract:
This paper offers the first empirical analysis of the introduction of lean manufacturing as a “capability building” strategy for improving labor standards in global supply chains. Buyer interventions to improve supplier management systems have been proposed to augment existing, and widely deemed insufficient, private regulation of labor standards, but these claims have yet to be systematically investigated. We examine Nike Inc.’s multiyear effort to promote lean manufacturing and its associated high-performance work systems in its apparel supply base across eleven developing countries. Adoption of lean manufacturing techniques produces a 15 percentage point reduction in serious labor violations, an effect that is robust to alternative specifications and an examination of pre-trends in the treatment group. Our finding contradicts previous suggestions that pressing suppliers to adopt process improvements has deleterious effects on labor conditions and highlights the importance of relational contracting and commitment-oriented approaches to improving labor standards in the developing world.
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Cheating in the workplace: An experimental study of the impact of bonuses and productivity
David Gill, Victoria Prowse & Michael Vlassopoulos
Journal of Economic Behavior & Organization, forthcoming
Abstract:
We use an online real-effort experiment to investigate how bonus-based pay and worker productivity interact with workplace cheating. Firms often use bonus-based compensation plans, such as group bonuses and firm-wide profit sharing, that induce considerable uncertainty in how much workers are paid. Exposing workers to a compensation scheme based on random bonuses makes them cheat more but has no effect on their productivity. We also find that more productive workers behave more dishonestly. These results are consistent with workers’ cheating behavior responding to the perceived fairness of their employer's compensation scheme.
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Duncan Gilchrist, Michael Luca & Deepak Malhotra
Harvard Working Paper, September 2013
Abstract:
Behavioral economists argue that above-market wages elicit reciprocity, causing employees to work harder – even in the absence of repeated interactions or strategic career concerns. In a field experiment with 266 employees, we show that paying above-market wages, per se, does not have an effect on effort. However, structuring a portion of the wage as a clear and unexpected gift (by hiring at a given wage, and then offering a raise with no further conditions after the employee has accepted the contract) does lead to persistently higher effort. Consistent with the idea that the recipient’s interpretation of the wage as a gift is an important factor, we find that effects are strongest for employees with the most experience and those who have worked most recently – precisely the individuals who would recognize that this is a gift.
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Private Equity, Jobs, and Productivity
Steven Davis et al.
NBER Working Paper, September 2013
Abstract:
Private equity critics claim that leveraged buyouts bring huge job losses and few gains in operating performance. To evaluate these claims, we construct and analyze a new dataset that covers U.S. buyouts from 1980 to 2005. We track 3,200 target firms and their 150,000 establishments before and after acquisition, comparing them to controls defined by industry, size, age, and prior growth. Relative to controls, employment at target establishments falls 3 percent over two years post buyout and 6 percent over five years. However, target firms also create more new jobs at new establishments, and they acquire and divest establishments more rapidly. Considering all adjustment margins, relative net job loss at target firms is a modest one percent of employment over two years post buyout. In contrast, the sum of gross job creation and destruction at target firms exceeds that of controls by 14 percent of employment over two years. Buyouts also bring TFP gains at target firms and reductions in earnings per worker. Productivity gains arise mainly from an accelerated exit of less productive establishments and greater entry of more productive ones – that is, from a directed reallocation of jobs within target firms.
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The Wage and Employment Consequences of Ownership Change
Kevin Amess, Sourafel Girma & Mike Wright
Managerial and Decision Economics, forthcoming
Abstract:
This paper provides a comparative examination of the consequences of leveraged buyouts (LBOs) and corporate takeovers on employment growth and wage growth. Employing both difference-in-differences combined with propensity score matching and the control function approach, we find evidence that (i) wages remain unchanged after either a private equity (PE)-backed or non-PE-backed LBO, (ii) wages remain unchanged after an unrelated takeover and (iii) related takeovers have negative employment consequences, possibly because of rationalisation. Our evidence does not find strong support for intervention in the market for corporate control on the grounds of protecting employees' welfare.
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Safety risks associated with helping others
Christopher Burt, Matthew Banks & Skye Williams
Safety Science, February 2014, Pages 136–144
Abstract:
Two studies investigated the safety risks associated with engaging in helping type organizational citizenship behaviors (OCBs). A model is outlined which postulates that the job context in which OCBs are performed has important safety implications. Study 1 sampled 222 employees, and Study 2 sampled 79 employees, engaged in jobs that had a degree of safety risk. Both studies found evidence that helping co-workers can result in safety risks for both the helper and helped employee. Evidence was found to support four mechanisms through which helping can lead to safety issues, labelled the forgetting, unknown, unexpected and the time pressure mechanisms. Study 1 also found evidence that poor communication about helping could be particularly responsible for safety issues. Study 2 investigated the factors which might explain employees’ failure to communicate helping efforts and the safety risks resulting from helping efforts. Results suggest that work related time pressure restricts communication about helping, while a desire not to seem ungrateful restricts communication about helping attempts which have lead to safety risks. Implications of the findings for promoting employee citizenship behavior and safety are outlined.
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Tamar Walfisch, Dina Van Dijk & Ronit Kark
Journal of Applied Social Psychology, July 2013, Pages 1446–1458
Abstract:
We examine the effectiveness of apology following a workplace offense, as influenced by the achieved or ascribed status (i.e., professional status or gender) of the parties involved. A total of 780 undergraduates participated in a scenario experiment. The results demonstrate that apologizing is more effective than not apologizing. Yet apology is most effective when the apologizer is a male, a manager or is a male apologizing to a female. Moreover, apology expectancy mediates the relationships between the apologizer's status and the apology's effectiveness: Apologies are less expected from managers and males than from subordinates and females, and the less expected they are, the greater their effectiveness. Apology expectancy has a unique effect unrelated to the apologizer's sincerity and perceived motive.
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Nathanael Fast, Ethan Burris & Caroline Bartel
Academy of Management Journal, forthcoming
Abstract:
Soliciting and incorporating employee voice is essential to organizational performance, yet some managers display a strong aversion to improvement-oriented input from subordinates. To help explain this maladaptive tendency, we tested the hypothesis that managers with low managerial self-efficacy (i.e., low perceived ability to meet the elevated competence expectations associated with managerial roles) seek to minimize voice as a way of compensating for a threatened ego. The results of two studies support this idea. In a field study, managers with low managerial self-efficacy were less likely than others to solicit voice, leading to lower levels of employee voice (Study 1). A follow-up experimental study showed that (a) manipulating low managerial self-efficacy led to voice aversion (i.e., decreased voice solicitation, negative evaluations of an employee who spoke up, and reduced implementation of voice), and (b) the observed voice aversion associated with low managerial self-efficacy was driven by ego defensiveness (Study 2). We discuss the theoretical and practical implications of these findings as well as highlight directions for future research on voice, management, and leadership.
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Kenneth Aupperle, William Acar & Debmalya Mukherjee
Business History, forthcoming
Abstract:
This study revisits Chandler's seminal work Strategy and Structure (1962) empirically. This work helped fashion the notion of strategic fit as well as the need for new organisational forms. Chandler's fit–performance thesis proposes that firms which match structure to their strategy will become economically more efficient than mismatched firms. The very same firms Chandler studied are analysed financially as their structure evolves through successive phases of being matched to their strategy, mismatched, and then finally matched again. Over 70 longitudinal tests are performed, yielding mostly statistically significant results. These tests surprisingly suggest that mismatched firms generally outperform firms that match structure to strategy. Such results matter in light of new conceptual approaches being introduced on the subject of ‘fit’; novel plausible explanations are provided for this apparent theoretical paradox.
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Compensation Matters: Incentives for Multitasking in a Law Firm
Ann Bartel, Brianna Cardiff-Hicks & Kathryn Shaw
NBER Working Paper, September 2013
Abstract:
Due to the limited availability of firm-level compensation data, there is little empirical evidence on the impact of compensation plans on personal productivity. We study an international law firm that moves from high-powered individual incentives towards incentives for “leadership" activities that contribute to the firm's long run profitability. The effect of this change on the task allocation of the firm's team leaders is large and robust; team leaders increase their non-billable hours and shift billable hours to team members. Although the motivation for the change in the compensation plan was the multitasking problem, this change also impacted the way tasks were allocated within each team, resulting in greater teamwork.
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Team Incentives: Evidence from a Firm Level Experiment
Oriana Bandiera, Iwan Barankay & Imran Rasul
Journal of the European Economic Association, October 2013, Pages 1079–1114
Abstract:
Many organizations rely on teamwork, and yet field evidence on the impacts of team-based incentives remains scarce. Compared to individual incentives, team incentives can affect productivity by changing both workers’ effort and team composition. We present evidence from a field experiment designed to evaluate the impact of rank incentives and tournaments on the productivity and composition of teams. Strengthening incentives, either through rankings or tournaments, makes workers more likely to form teams with others of similar ability instead of with their friends. Introducing rank incentives however reduces average productivity by 14%, whereas introducing a tournament increases it by 24%. Both effects are heterogeneous: rank incentives only reduce the productivity of teams at the bottom of the productivity distribution, and monetary prize tournaments only increase the productivity of teams at the top. We interpret these results through a theoretical framework that makes precise when the provision of team-based incentives crowds out the productivity-enhancing effect of social connections under team production.
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Dean Shepherd et al.
Journal of Management Studies, forthcoming
Abstract:
Although extant studies have increased our understanding of the decision of when to terminate a project and its organizational implications, they do not explore the contextual mechanisms underlying the link between the speed at which a project is terminated and the learning of those directly working on the project. This is surprising because perceptions of project failure likely differ between those who own the option (i.e., the decision maker) and those who are the option (i.e., project team members). In this multiple case study, we explored research and development (R&D) subsidiaries within a large multinational parent organization and generated several new insights: (1) rather than alleviate negative emotions, delayed termination was perceived as creeping death thwarting new career opportunities and generating negative emotions; (2) rather than obstructing learning from project experience, negative emotions motivated sensemaking efforts; and (3) rather than emphasizing learning after project termination, in the context of rapid redeployment of team members after project termination, delayed termination provided employees the time to reflect on, articulate, and codify lessons learned. We discuss the implications of these findings.
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The effect of an agent’s expertise on National Football League contract structure
Michael Conlin, Joe Orsini & Meng-Chi Tang
Economics Letters, November 2013, Pages 275–281
Abstract:
There is extensive theoretical research focusing on the ways in which principal–agent interactions vary depending on the agent’s expertise or knowledge. While the empirical research testing the implications of these models involves a broad array of experts ranging from lawyers to physicians to real estate agents, we are not aware of any empirical research that focuses on how the level of an agent’s expertise affects outcomes. This paper contributes to the empirical research on delegation to experts by considering agents representing football players in contract negotiations with National Football League (NFL) teams. Using whether and for how long an agent is certified with the NFL Players’ Association as a proxy for expertise, we find that the monetary terms of the contract do not vary with an agent’s expertise, conditional on the contract structure. However, we do find that an agent’s expertise does affect the contract structure – specifically, contract duration and incentive clauses. These results suggest that while minimal expertise is required to understand the appropriate monetary compensation associated with a given contract structure, expertise is required to fully grasp the tradeoffs when negotiating the contract structure.
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Ioannis Ioannou
Organization Science, forthcoming
Abstract:
Spinouts — entrepreneurial ventures founded by ex-employees of incumbent firms within the same industry — have emerged in numerous industries. Some existing literature argues that they typically have a negative association with their parents' performance because of the loss of human capital, the disruption of organizational routines, and subsequent adverse competitive effects. More recent work, however, suggests that such negative effects may have been overstated and argues that there are conditions under which spinouts may be linked to enhanced performance of the parent. I contribute to this literature by theorizing about and empirically testing for such conditions. In particular, using data from the U.S. automobile industry spanning 1890 to 1986, I find evidence that spinouts are associated with enhanced parent performance when they increase the parent's corporate coherence either through (a) the core competencies and capabilities domain by refocusing the parent's resources on the core or (b) the cognitive path by resolving a conflict at the top level of the parent's hierarchy. I discuss implications for both research and practice.