Michael Gibbs

Employee Innovation During Office Work, Work from Home and Hybrid Work
Date Posted:Wed, 31 Jul 2024 15:15:39 -0500
The Covid-19 pandemic forced firms globally to shift workforces to working from home [WFH]. Firms are now struggling to implement a return to working from the office [WFO], as employees enjoy the significant benefits of WFH for their work-life balance. Therefore many firms are adopting a hybrid model in which employees work partly from the office and partly from home. We use unique and detailed data from an Indian IT services firm which contains a precise measure of innovation activity of over 48,000 employees in these three work environments. Our key outcomes are the quantity and quality of ideas submitted by employees. Based on an event study design, the quantity of ideas did not change during the WFH period as compared to WFO, but the quality of ideas suffered. During the later hybrid period, the quantity of submitted ideas fell. In the hybrid phase innovation suffered particularly in teams which were not well coordinated in terms of when they worked at the office or from home. Our findings suggest that remote and hybrid work modes may inhibit collaboration and innovation.

Employee Innovation During Office Work, Work from Home and Hybrid Work
Date Posted:Wed, 10 Jul 2024 09:24:33 -0500
The Covid-19 pandemic forced firms globally to shift workforces to working from home [WFH]. Firms are now struggling to implement a return to working from the office [WFO], as employees enjoy the significant benefits of WFH for their work-life balance. Therefore many firms are adopting a hybrid model in which employees work partly from the office and partly from home. We use unique and detailed data from an Indian IT services firm which contains a precise measure of innovation activity of over 48,000 employees in these three work environments. Our key outcomes are the quantity and quality of ideas submitted by employees. Based on an event study design, the quantity of ideas did not change during the WFH period as compared to WFO, but the quality of ideas suffered. During the later hybrid period, the quantity of submitted ideas fell. In the hybrid phase innovation suffered particularly in teams which were not well coordinated in terms of when they worked at the office or from home. Our findings suggest that remote and hybrid work modes may inhibit collaboration and innovation.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Mon, 11 Apr 2022 12:26:24 -0500
We study employee productivity (output per hour worked) before and during the working from home [WFH] period of the Covid-19 pandemic, using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company. Hours worked increased, including a rise of 18% outside normal business hours. Average output declined slightly and employee productivity fell 8-19%. We then analyze determinants of changes in productivity. An important source is higher communication costs. Time spent on coordination activities and meetings increased, while uninterrupted work hours shrank considerably. Employees networked with fewer individuals and business units, both inside and outside the firm. They received less coaching and 1:1 meetings with supervisors. The findings suggest key issues for firms to address in implementing WFH policies.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Mon, 22 Nov 2021 20:57:18 -0600
We study employee productivity (output per hour worked) before and during the working from home [WFH] period of the Covid-19 pandemic, using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company. Hours worked increased, including a rise of 18% outside normal business hours. Average output declined slightly and employee productivity fell 8-19%. We then analyze determinants of changes in productivity. An important source is higher communication costs. Time spent on coordination activities and meetings increased, while uninterrupted work hours shrank considerably. Employees networked with fewer individuals and business units, both inside and outside the firm. They received less coaching and 1:1 meetings with supervisors. The findings suggest key issues for firms to address in implementing WFH policies.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Mon, 22 Nov 2021 20:47:40 -0600
We study employee productivity (output per hour worked) before and during the working from home [WFH] period of the Covid-19 pandemic, using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company. Hours worked increased, including a rise of 18% outside normal business hours. Average output declined slightly and employee productivity fell 8-19%. We then analyze determinants of changes in productivity. An important source is higher communication costs. Time spent on coordination activities and meetings increased, while uninterrupted work hours shrank considerably. Employees networked with fewer individuals and business units, both inside and outside the firm. They received less coaching and 1:1 meetings with supervisors. The findings suggest key issues for firms to address in implementing WFH policies.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Mon, 22 Nov 2021 20:47:38 -0600
We study employee productivity (output per hour worked) before and during the working from home [WFH] period of the Covid-19 pandemic, using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company. Hours worked increased, including a rise of 18% outside normal business hours. Average output declined slightly and employee productivity fell 8-19%. We then analyze determinants of changes in productivity. An important source is higher communication costs. Time spent on coordination activities and meetings increased, while uninterrupted work hours shrank considerably. Employees networked with fewer individuals and business units, both inside and outside the firm. They received less coaching and 1:1 meetings with supervisors. The findings suggest key issues for firms to address in implementing WFH policies.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Sun, 21 Nov 2021 18:34:59 -0600
We study employee productivity (output per hour worked) before and during the working from home [WFH] period of the Covid-19 pandemic, using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company. Hours worked increased, including a rise of 18% outside normal business hours. Average output declined slightly and employee productivity fell 8-19%. We then analyze determinants of changes in productivity. An important source is higher communication costs. Time spent on coordination activities and meetings increased, while uninterrupted work hours shrank considerably. Employees networked with fewer individuals and business units, both inside and outside the firm. They received less coaching and 1:1 meetings with supervisors. The findings suggest key issues for firms to address in implementing WFH policies.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Wed, 04 Aug 2021 07:43:22 -0500
We study productivity before and during the working from home [WFH] period of the Covid-19 pandemic, using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company. Hours worked increased, including a rise of 18% outside normal business hours. Average output declined slightly, thus productivity fell 8-19%. We then analyze determinants of changes in productivity. Employees with children at home increased work hours more and had a larger decline in productivity than those without children. Women had a larger decline in productivity, while those with longer company tenure fared better. An important source of changes in WFH productivity is higher communication and coordination costs. Time spent on coordination activities and meetings increased, while uninterrupted work hours shrank considerably. Employees communicated with fewer individuals and business units, both inside and outside the firm. They also received less coaching and 1:1 ...

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Wed, 14 Jul 2021 11:42:05 -0500
Using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company, we compare productivity before and during the work from home [WFH] period of the Covid-19 pandemic. Total hours worked increased by roughly 30%, including a rise of 18% in working after normal business hours. Average output did not significantly change. Therefore, productivity fell by about 20%. Time spent on coordination activities and meetings increased, but uninterrupted work hours shrank considerably. Employees also spent less time networking, and received less coaching and 1:1 meetings with supervisors. These findings suggest that communication and coordination costs increased substantially during WFH, and constituted an important source of the decline in productivity. Employees with children living at home increased hours worked more than those without children at home, and suffered a bigger decline in productivity than those without children.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Wed, 14 Jul 2021 11:41:18 -0500
Using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company, we compare productivity before and during the work from home [WFH] period of the Covid-19 pandemic. Total hours worked increased by roughly 30%, including a rise of 18% in working after normal business hours. Average output did not significantly change. Therefore, productivity fell by about 20%. Time spent on coordination activities and meetings increased, but uninterrupted work hours shrank considerably. Employees also spent less time networking, and received less coaching and 1:1 meetings with supervisors. These findings suggest that communication and coordination costs increased substantially during WFH, and constituted an important source of the decline in productivity. Employees with children living at home increased hours worked more than those without children at home, and suffered a bigger decline in productivity than those without children.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Wed, 14 Jul 2021 07:13:27 -0500
We study productivity before and during the working from home [WFH] period of the COVID-19 pandemic, using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company. Hours worked increased, including a rise of 18% outside normal business hours. Average output declined slightly, thus productivity fell 8-19%. We then analyze determinants of changes in productivity. Employees with children at home increased work hours more and had a larger decline in productivity than those without children. Women had a larger decline in productivity, while those with longer company tenure fared better. An important source of changes in WFH productivity is higher communication and coordination costs. Time spent on coordination activities and meetings increased, while uninterrupted work hours shrank considerably. Employees communicated with fewer individuals and business units, both inside and outside the firm. They also received less coaching and 1:1 ...

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Wed, 26 May 2021 14:10:38 -0500
Using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company, we compare productivity before and during the work from home [WFH] period of the Covid-19 pandemic. Across a variety of measures we find that hours worked increased, including a rise of 18% in working after normal business hours. Average output did not significantly change. Therefore, productivity fell by 10-25%. Time spent on coordination activities and meetings increased, but uninterrupted work hours shrank considerably. Employees also spent less time networking, and received less coaching and 1:1 meetings with supervisors. These findings suggest that communication and coordination costs increased substantially during WFH, and constituted an important source of the decline in productivity. Employees with children living at home increased hours worked more than those without children at home, and suffered a bigger decline in productivity than those without children.

Work from Home & Productivity: Evidence from Personnel & Analytics Data on it Professionals
Date Posted:Sat, 15 May 2021 04:22:12 -0500
Using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company, we compare productivity before and during the work from home [WFH] period of the Covid-19 pandemic. Total hours worked increased by roughly 30%, including a rise of 18% in working after normal business hours. Average output did not significantly change. Therefore, productivity fell by about 20%. Time spent on coordination activities and meetings increased, but uninterrupted work hours shrank considerably. Employees also spent less time networking, and received less coaching and 1:1 meetings with supervisors. These findings suggest that communication and coordination costs increased substantially during WFH, and constituted an important source of the decline in productivity. Employees with children living at home increased hours worked more than those without children at home, and suffered a bigger decline in productivity than those without children.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Wed, 12 May 2021 10:33:01 -0500
Using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company, we compare productivity before and during the work from home [WFH] period of the Covid-19 pandemic. Across a variety of measures we find that hours worked increased, including a rise of 18% in working after normal business hours. Average output did not significantly change. Therefore, productivity fell by 10-25%. Time spent on coordination activities and meetings increased, but uninterrupted work hours shrank considerably. Employees also spent less time networking, and received less coaching and 1:1 meetings with supervisors. These findings suggest that communication and coordination costs increased substantially during WFH, and constituted an important source of the decline in productivity. Employees with children living at home increased hours worked more than those without children at home, and suffered a bigger decline in productivity than those without children.

Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Tue, 11 May 2021 14:11:32 -0500
We study employee productivity (output per hour worked) before and during the working from home [WFH] period of the Covid-19 pandemic, using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company. Hours worked increased, including a rise of 18% outside normal business hours. Average output declined slightly and employee productivity fell 8-19%. We then analyze determinants of changes in productivity. An important source is higher communication costs. Time spent on coordination activities and meetings increased, while uninterrupted work hours shrank considerably. Employees networked with fewer individuals and business units, both inside and outside the firm. They received less coaching and 1:1 meetings with supervisors. The findings suggest key issues for firms to address in implementing WFH policies.

Work from Home and Productivity: Evidence from Personnel and Analytics Data on Information Technology Professionals
Date Posted:Fri, 07 May 2021 17:16:42 -0500
We study employee productivity (output per hour worked) before and during the working from home [WFH] period of the Covid-19 pandemic, using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company. Hours worked increased, including a rise of 18% outside normal business hours. Average output declined slightly and employee productivity fell 8-19%. We then analyze determinants of changes in productivity. An important source is higher communication costs. Time spent on coordination activities and meetings increased, while uninterrupted work hours shrank considerably. Employees networked with fewer individuals and business units, both inside and outside the firm. They received less coaching and 1:1 meetings with supervisors. The findings suggest key issues for firms to address in implementing WFH policies.

Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Fri, 07 May 2021 16:10:24 -0500
We study employee productivity (output per hour worked) before and during the working from home [WFH] period of the Covid-19 pandemic, using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company. Hours worked increased, including a rise of 18% outside normal business hours. Average output declined slightly and employee productivity fell 8-19%. We then analyze determinants of changes in productivity. An important source is higher communication costs. Time spent on coordination activities and meetings increased, while uninterrupted work hours shrank considerably. Employees networked with fewer individuals and business units, both inside and outside the firm. They received less coaching and 1:1 meetings with supervisors. The findings suggest key issues for firms to address in implementing WFH policies.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Fri, 07 May 2021 08:20:18 -0500
Using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company, we compare productivity before and during the work from home [WFH] period of the COVID-19 pandemic. Total hours worked increased by roughly 30%, including a rise of 18% in working after normal business hours. Average output did not significantly change. Therefore, productivity fell by about 20%. Time spent on coordination activities and meetings increased, but uninterrupted work hours shrank considerably. Employees also spent less time networking, and received less coaching and 1:1 meetings with supervisors. These findings suggest that communication and coordination costs increased substantially during WFH, and constituted an important source of the decline in productivity. Employees with children living at home increased hours worked more than those without children at home, and suffered a bigger decline in productivity than those without children.

REVISION: Work from Home & Productivity: Evidence from Personnel & Analytics Data on IT Professionals
Date Posted:Fri, 07 May 2021 07:14:01 -0500
Using personnel and analytics data from over 10,000 skilled professionals at a large Asian IT services company, we compare productivity before and during the work from home [WFH] period of the Covid-19 pandemic. Total hours worked increased by roughly 30%, including a rise of 18% in working after normal business hours. Average output did not significantly change. Therefore, productivity fell by about 20%. Time spent on coordination activities and meetings increased, but uninterrupted work hours shrank considerably. Employees also spent less time networking, and received less coaching and 1:1 meetings with supervisors. These findings suggest that communication and coordination costs increased substantially during WFH, and constituted an important source of the decline in productivity. Employees with children living at home increased hours worked more than those without children at home, and suffered a bigger decline in productivity than those without children.

Dodging a Draft: Gary Becker's Lost Paper on Conscription
Date Posted:Thu, 22 Apr 2021 16:24:00 -0500
Gary Becker wrote what may be the first economic analysis of conscription. Less than a decade later, economists played a key role in an important public policy debate during the Vietnam War, which eventually led to abolishment of the military draft. Becker had connections to many of those economists who studied the economics of conscription, and his paper foreshadowed many of the ideas in that literature. Despite this, none cited his paper on conscription. We discuss this history and speculate on this puzzle.

New: Dodging a Draft: Gary Becker's Lost Paper on Conscription
Date Posted:Thu, 22 Apr 2021 07:27:28 -0500
Gary Becker wrote what may be the first economic analysis of conscription. Less than a decade later, economists played a key role in an important public policy debate during the Vietnam War, which eventually led to abolishment of the military draft. Becker had connections to many of those economists who studied the economics of conscription, and his paper foreshadowed many of the ideas in that literature. Despite this, none cited his paper on conscription. We discuss this history and speculate on this puzzle.

Job Design, Learning & Intrinsic Motivation
Date Posted:Sat, 17 Apr 2021 04:35:22 -0500
According to psychologists and neuroscientists, a key source of intrinsic motivation is learning. An economic model of this is presented. Learning may make work less onerous, or the employee may value it in and of itself. Multitasking generates learning: performing one task increases productivity on related tasks. Intrinsic motivation generates a new multitask incentive problem if the rate of learning varies across tasks. With no incentive pay, employee autonomy complements learning because expected output increases as the employee uses his or her knowledge to enhance learning. The second part of the paper adds a simple incentive. Incentive pay does not "crowd out" intrinsic motivation, but it does rebalance effort away from learning and towards output. Learning has complex interactions with performance measurement. A higher rate of learning tends to reduce performance measure distortion, especially for a very distorted measure. It also tends to reduce the potential for manipulation, as does multitasking. However, if job design is strongly imbalanced towards a few key tasks, or learning varies significantly across tasks, a higher rate of learning may increase the employee's ability to manipulate the measure. In that case the firm might prefer an incentive with no autonomy, or autonomy with no incentive.

Dodging a Draft: Gary Becker's Lost Paper on Conscription
Date Posted:Sat, 17 Apr 2021 04:35:18 -0500
Gary Becker wrote what may be the first economic analysis of conscription. Less than a decade later, economists played a key role in an important public policy debate during the Vietnam War, which eventually led to abolishment of the military draft. Becker had connections to many of those economists who studied the economics of conscription, and his paper foreshadowed many of the ideas in that literature. Despite this, none cited his paper on conscription. We discuss this history and speculate on this puzzle.

REVISION: Job Design, Learning & Intrinsic Motivation
Date Posted:Fri, 16 Apr 2021 11:28:26 -0500
According to psychologists and neuroscientists, a key source of intrinsic motivation is learning. An economic model of this is presented. Learning may make work less onerous, or the employee may value it in and of itself. Multitasking generates learning: performing one task increases productivity on related tasks. Intrinsic motivation generates a new multitask incentive problem if the rate of learning varies across tasks. With no incentive pay, employee autonomy complements learning because expected output increases as the employee uses his or her knowledge to enhance learning. The second part of the paper adds a simple incentive. Incentive pay does not “crowd out” intrinsic motivation, but it does rebalance effort away from learning and towards output. Learning has complex interactions with performance measurement. A higher rate of learning tends to reduce performance measure distortion, especially for a very distorted measure. It also tends to reduce the potential for manipulation, ...

Job Design, Learning & Intrinsic Motivation
Date Posted:Tue, 13 Apr 2021 15:30:13 -0500
According to psychologists and neuroscientists, a key source of intrinsic motivation is learning. An economic model of this is presented. Learning may make work less onerous, or the employee may value it in and of itself. Multitasking generates learning: performing one task increases productivity on related tasks. Intrinsic motivation generates a new multitask incentive problem if the rate of learning varies across tasks. With no incentive pay, employee autonomy complements learning because expected output increases as the employee uses his or her knowledge to enhance learning. The second part of the paper adds a simple incentive. Incentive pay does not ?crowd out? intrinsic motivation, but it does rebalance effort away from learning and towards output. Learning has complex interactions with performance measurement. A higher rate of learning tends to reduce performance measure distortion, especially for a very distorted measure. It also tends to reduce the potential for manipulation, as does multitasking. However, if job design is strongly imbalanced towards a few key tasks, or learning varies significantly across tasks, a higher rate of learning may increase the employee?s ability to manipulate the measure. In that case the firm might prefer an incentive with no autonomy, or autonomy with no incentive.

Job Design, Learning & Intrinsic Motivation
Date Posted:Mon, 12 Apr 2021 16:06:30 -0500
According to psychologists and neuroscientists, a key source of intrinsic motivation is learning. An economic model of this is presented. Learning may make work less onerous, or the employee may value it in and of itself. Multitasking generates learning: performing one task increases productivity on related tasks. Intrinsic motivation generates a new multitask incentive problem if the rate of learning varies across tasks. With no incentive pay, employee autonomy complements learning because expected output increases as the employee uses his or her knowledge to enhance learning. The second part of the paper adds a simple incentive. Incentive pay does not ?crowd out? intrinsic motivation, but it does rebalance effort away from learning and towards output. Learning has complex interactions with performance measurement. A higher rate of learning tends to reduce performance measure distortion, especially for a very distorted measure. It also tends to reduce the potential for manipulation, as does multitasking. However, if job design is strongly imbalanced towards a few key tasks, or learning varies significantly across tasks, a higher rate of learning may increase the employee?s ability to manipulate the measure. In that case the firm might prefer an incentive with no autonomy, or autonomy with no incentive.

REVISION: Dodging a Draft: Gary Becker's Lost Paper on Conscription
Date Posted:Tue, 12 May 2020 03:39:44 -0500
Gary Becker wrote what may be the first economic analysis of conscription. Less than a decade later, economists played a key role in an important public policy debate during the Vietnam War, which eventually led to abolishment of the military draft. Becker had connections to many of those economists who studied the economics of conscription, and his paper foreshadowed many of the ideas in that literature. Despite this, none cited his paper on conscription. We discuss this history and speculate on this puzzle.

Dodging a Draft: Gary Becker's Lost Paper on Conscription
Date Posted:Mon, 11 May 2020 15:42:11 -0500
Gary Becker wrote what may be the first economic analysis of conscription. Less than a decade later, economists played a key role in an important public policy debate during the Vietnam War, which eventually led to abolishment of the military draft. Becker had connections to many of those economists who studied the economics of conscription, and his paper foreshadowed many of the ideas in that literature. Despite this, none cited his paper on conscription. We discuss this history and speculate on this puzzle.

REVISION: Dodging a Draft: Gary Becker's Lost Paper on Conscription
Date Posted:Mon, 11 May 2020 06:42:11 -0500
Gary Becker wrote what may be the first economic analysis of conscription. Less than a decade later, economists played a key role in an important public policy debate during the Vietnam War, which eventually led to abolishment of the military draft. Becker had connections to many of those economists who studied the economics of conscription, and his paper foreshadowed many of the ideas in that literature. Despite this, none cited his paper on conscription. We discuss this history and speculate on this puzzle.

Past, Present and Future Compensation Research: Economist Perspectives
Date Posted:Mon, 10 Apr 2017 15:11:58 -0500
At the 2016 Academy of Management Conference, a group of distinguished compensation researchers held a panel discussion on the future of compensation research. Their remarks were compiled into an article published in this issue. Soon after the panel, Charles Fay commissioned a similar discussion by leading economists (Michael Gibbs, Kevin Hallock, Edward Lazear, Kevin J. Murphy & Canice Prendergast) doing compensation research; this article is the result.

REVISION: A Field Experiment in Motivating Employee Ideas
Date Posted:Sat, 09 Jul 2016 06:53:41 -0500
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ...

Update: A Field Experiment in Motivating Employee Ideas
Date Posted:Sun, 10 Jan 2016 23:30:07 -0600
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ...
New PDF Uploaded

REVISION: A Field Experiment in Motivating Employee Ideas
Date Posted:Fri, 18 Dec 2015 07:28:48 -0600
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ...

A Field Experiment in Motivating Employee Ideas
Date Posted:Thu, 04 Dec 2014 22:20:07 -0600
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ideas.

New: A Field Experiment in Motivating Employee Ideas
Date Posted:Thu, 04 Dec 2014 12:20:07 -0600
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ...

REVISION: A Field Experiment in Motivating Employee Ideas
Date Posted:Tue, 28 Oct 2014 13:06:55 -0500
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ...

REVISION: A Field Experiment in Motivating Employee Ideas
Date Posted:Fri, 30 May 2014 23:38:03 -0500
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ...

A Field Experiment in Motivating Employee Ideas
Date Posted:Sat, 19 Apr 2014 13:33:30 -0500
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams.Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ideas.

REVISION: A Field Experiment in Motivating Employee Ideas
Date Posted:Thu, 10 Apr 2014 12:51:32 -0500
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ...

A Field Experiment in Motivating Employee Ideas
Date Posted:Mon, 07 Apr 2014 12:54:18 -0500
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ideas.

REVISION: A Field Experiment in Motivating Employee Ideas
Date Posted:Mon, 07 Apr 2014 03:54:20 -0500
We study the effects of a field experiment designed to motivate employee ideas, at a large technology company. Employees were encouraged to submit ideas on process and product improvements via an online system. In the experiment, the company randomized 19 account teams into treatment and control groups. Employees in treatment teams received rewards if their ideas were approved. Nothing changed for employees in control teams. Our main finding is that rewards substantially increased the quality of ideas submitted. Further, rewards increased participation in the suggestion system, but decreased the number of ideas per participating employee, with zero net effect on the total quantity of ideas. The broader participation base persisted even after the reward was discontinued, suggesting habituation. We find no evidence for motivational crowding out. Our findings suggest that rewards can improve innovation and creativity, and that there may be a tradeoff between the quantity and quality of ...

Design and Implementation of Pay for Performance
Date Posted:Sun, 12 Feb 2012 16:01:59 -0600
A large, mature and robust economic literature on pay for performance now exists, which provides a useful framework for thinking about pay for performance systems. I use the lessons of the literature to discuss how to design and implement pay for performance in practice.

REVISION: Design and Implementation of Pay for Performance
Date Posted:Tue, 07 Feb 2012 18:34:53 -0600
A large, mature and robust literature now provides a useful framework for designing and implementing pay for performance. Several excellent surveys of this research are available. The purpose of this chapter is not to provide yet another survey, but to use the lessons of the economic literature on incentives to discuss how to design and implement pay for performance in practice.

REVISION: Design and Implementation of Pay for Performance
Date Posted:Mon, 30 Jan 2012 08:17:55 -0600
A large, mature and robust literature now provides a useful framework for designing and implementing pay for performance. Several excellent surveys of this research are available. The purpose of this chapter is not to provide yet another survey, but to use the lessons of the economic literature on incentives to discuss how to design and implement pay for performance in practice.

Design and Implementation of Pay for Performance
Date Posted:Mon, 30 Jan 2012 00:00:00 -0600
A large, mature and robust literature now provides a useful framework for designing and implementing pay for performance. Several excellent surveys of this research are available. The purpose of this chapter is not to provide yet another survey, but to use the lessons of the economic literature on incentives to discuss how to design and implement pay for performance in practice.

Optimizing Incentive Plan Design: A Case Study
Date Posted:Sun, 25 Sep 2011 09:48:39 -0500
We study effects of a firm's attempt to optimize an existing incentive scheme to increase sales growth for direct store delivery workers. Before optimization workers reported Ratchet Effects that lowered productivity. The altered incentive plan offered higher compensation for increased sales relative to a sales growth target, and lower compensation for failing to meet the target. We gathered data on performance and attitudes at pilot and control sites before and after the change. Relative to control sites, sales growth increased in the pilot sites by two percent, a meaningful contribution to firm profits. We find no change in distortion of effort or manipulation of the performance measure. Workers did not substantially change number of hours worked, though allocation of time across tasks changed slightly. Despite increased productivity, workers continued to report Ratchet Effects after the change. We also find that an unplanned price increase midway through a fiscal year affected the extent of Ratchet Effects that year.

New: Optimizing Incentive Plan Design: A Case Study
Date Posted:Mon, 12 Sep 2011 17:57:48 -0500
We study effects of a firm’s attempt to optimize an existing incentive scheme to increase sales growth for direct store delivery workers. Before optimization workers reported Ratchet Effects that lowered productivity. The altered incentive plan offered higher compensation for increased sales relative to a sales growth target, and lower compensation for failing to meet the target. We gathered data on performance and attitudes at pilot and control sites before and after the change. Relative to ...

Optimizing Incentive Plan Design: A Case Study
Date Posted:Mon, 12 Sep 2011 00:00:00 -0500
We study effects of a firm?s attempt to optimize an existing incentive scheme to increase sales growth for direct store delivery workers. Before optimization workers reported Ratchet Effects that lowered productivity. The altered incentive plan offered higher compensation for increased sales relative to a sales growth target, and lower compensation for failing to meet the target. We gathered data on performance and attitudes at pilot and control sites before and after the change. Relative to control sites, sales growth increased in the pilot sites by two percent, a meaningful contribution to firm profits. We find no change in distortion of effort or manipulation of the performance measure. Workers did not substantially change number of hours worked, though allocation of time across tasks changed slightly. Despite increased productivity, workers continued to report Ratchet Effects after the change. We also find that an unplanned price increase midway through a fiscal year affected the extent of Ratchet Effects that year.

New: Performance Measure Properties and Incentive System Design
Date Posted:Mon, 15 Jun 2009 22:50:21 -0500
We analyze effects of performance measure properties (controllable and uncontrollable risk, distortion, and manipulation) on incentive plan design, using data from auto dealership manager incentive systems. Dealerships put the most weight on measures that are "better" with respect to these properties. Additional measures are more likely to be used for a second or third bonus if they can mitigate distortion or manipulation in the first performance measure. Implicit incentives are used to ...

REVISION: Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industr
Date Posted:Wed, 25 Mar 2009 05:51:35 -0500
We develop a simple model of the effects of reputation on wine prices. An increasing fraction of consumers who are "naive" (less well informed about wine quality) results in a stronger sensitivity of wine prices to ratings of quality. We then use data on prices and Robert Parker's ratings of wines, to show that prices have become more related to Parker ratings over time. In addition, we find that a change in Parker rating has a stronger effect on price, the stronger is the wine's reputation.

REVISION: Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industr
Date Posted:Sun, 15 Feb 2009 17:13:44 -0600
We develop a simple model of the effects of reputation on wine prices. An increasing fraction of consumers who are "naive" (less well informed about wine quality) results in a stronger sensitivity of wine prices to ratings of quality. We then use data on prices and Robert Parker's ratings of wines, to show that prices have become more related to Parker ratings over time. In addition, we find that a change in Parker rating has a stronger effect on price, the stronger is the wine's reputation.

Globalization, Superstars, and the Importance of Reputation: Theory & Evidence from the Wine Industry
Date Posted:Sun, 15 Feb 2009 00:00:00 -0600
We develop a simple model of the effects of reputation on wine prices. An increasing fraction of consumers who are "naive" (less well informed about wine quality) results in a stronger sensitivity of wine prices to ratings of quality. We then use data on prices and Robert Parker's ratings of wines, to show that prices have become more related to Parker ratings over time. In addition, we find that a change in Parker rating has a stronger effect on price, the stronger is the wine's reputation.

New: Returns to Skills and Personnel Management: U.S. Department of Defense Scientists and Engineers
Date Posted:Thu, 29 Mar 2007 20:47:17 -0500
Personnel records are used to examine compensation, recruitment, and retention of a group of highly skilled workers: civilian scientists and engineers in U.S. Department of Defense laboratories. In contrast to those of the private sector, returns to skills were largely flat for this group from 1982 to 1996. Despite this, quality and performance of recruits relative to earlier cohorts, and of those retained relative to those who left, remained stable. One explanation is the importance of ...

New: Mergers of Equals and Unequals
Date Posted:Sun, 26 Nov 2006 11:41:21 -0600
We examine the dynamics of post-merger organizational integration. Our basic question is whether there is evidence of conflict between employees from the two merging firms. Such conflict can arise for several reasons, including firm-specific human capital, corporate culture, power, or favoritism. We examine this issue using a sample of Danish mergers. Controlling for other effects, employees from the acquirer fare better than employees from the acquired firm, suggesting that they have greater ...

Mergers of Equals and Unequals
Date Posted:Sun, 26 Nov 2006 00:00:00 -0600
We examine the dynamics of post-merger organizational integration. Our basic question is whether there is evidence of conflict between employees from the two merging firms. Such conflict can arise for several reasons, including firm-specific human capital, corporate culture, power, or favoritism. We examine this issue using a sample of Danish mergers. Controlling for other effects, employees from the acquirer fare better than employees from the acquired firm, suggesting that they have greater power in the newly merged hierarchy. As a separate effect, the more that either firm dominates the other in terms of number of employees, the better do its employees fare compared to employees from the other firm. This suggests that majority/minority status is also important to assimilation of workers, much as in ethnic conflicts. Finally, greater overlap of pre-merger operations decreases turnover. This finding is inconsistent with the view that workers of the two firms substitute for each other, creating efficiencies from merger. However, that result and our other findings are consistent with the view that more similar workers (in terms of either firm- or industry-specific human capital) are easier to integrate post merger.

REVISION: Determinants and Effects of Subjectivity in Incentives
Date Posted:Tue, 28 Mar 2006 08:21:29 -0600
This study examines two questions: when do firms make greater use of subjectivity in awarding bonuses, and what are the effects of subjectivity on employee pay satisfaction and firm performance? We examine these questions using data from a sample of 526 department managers in 250 car dealerships. First, the findings suggest that subjective bonuses are used to complement perceived weaknesses in quantitative performance measures and to provide employees insurance against downside risk in their ...

REVISION: Determinants and Effects of Subjectivity in Incentives
Date Posted:Sat, 25 Mar 2006 14:28:12 -0600
This study examines two questions: when do firms make greater use of subjectivity in awarding bonuses, and what are the effects of subjectivity on employee pay satisfaction and firm performance? We examine these questions using data from a sample of 526 department managers in 250 car dealerships. First, the findings suggest that subjective bonuses are used to complement perceived weaknesses in quantitative performance measures and to provide employees insurance against downside risk in their ...

Determinants and Effects of Subjectivity in Incentives
Date Posted:Sat, 25 Mar 2006 00:00:00 -0600
This study examines two questions: when do firms make greater use of subjectivity in awarding bonuses, and what are the effects of subjectivity on employee pay satisfaction and firm performance? We examine these questions using data from a sample of 526 department managers in 250 car dealerships. First, the findings suggest that subjective bonuses are used to complement perceived weaknesses in quantitative performance measures and to provide employees insurance against downside risk in their pay. Specifically, use of subjective bonuses is positively related to: (1) the extent of long-term investments in intangibles; (2) the extent of organizational interdependencies; (3) the extent to which the achievability of the formula bonus target is both difficult and leads to significant consequences if not met; and (4) the presence of an operating loss. Second, we find that the effects of subjective bonuses on pay satisfaction, productivity, and profitability are larger the greater the manager's tenure, consistent with the idea that subjectivity improves incentive contracting when there is greater trust between the subordinate and supervisor.

Returns to Skills & Personnel Management: U.S. DOD Scientists and Engineers
Date Posted:Thu, 07 Apr 2005 09:03:59 -0500
Personnel records are used to examine compensation, recruitment, and retention of a group of very highly skilled workers: civilian scientists and engineers in U.S. Department of Defense laboratories. In contrast to the private sector, returns to skills were largely flat for this group from 1982-1996. Despite this, quality and performance of recruits relative to earlier cohorts, and of those retained relative to those who left, remained stable. One explanation is the importance of ...

Why Are Jobs Designed the Way They Are?
Date Posted:Mon, 14 Mar 2005 08:42:17 -0600
In this paper we study job design. Will an organization plan precisely how the job is to be done ex ante, or ask workers to determine the process as they go? We first model this decision and predict complementarity between these job attributes: multitasking, discretion, skills, and interdependence of tasks. We argue that characteristics of the firm and industry (e.g., product and technology, organizational change) can explain observed patterns and trends in job design. We then use novel data ...

Why are Jobs Designed the Way They are?
Date Posted:Mon, 14 Mar 2005 00:00:00 -0600
In this paper we study job design. Will an organization plan precisely how the job is to be done ex ante, or ask workers to determine the process as they go? We first model this decision and predict complementarity between these job attributes: multitasking, discretion, skills, and interdependence of tasks. We argue that characteristics of the firm and industry (e.g., product and technology, organizational change) can explain observed patterns and trends in job design. We then use novel data on these job attributes to examine these issues. As predicted, job designs tend to be "coherent" across these characteristics within the same job. Job designs also tend to follow similar patterns across jobs in the same firm, and especially in the same establishment: when one job is optimized ex ante, others are more likely to be also. There is some evidence that firms may segregate different types of job designs across different establishments.

Performance Measure Properties and Incentives
Date Posted:Mon, 25 Oct 2004 12:14:34 -0500
We examine the effects of performance measure properties on incentive system design, using data on incentive contracts for auto dealership managers. The data include information on five properties: two indicators of risk; two indicators of distortion; and one indicator of potential manipulation. We find that these properties have important effects on incentive system design. First, firms appear to choose the "best" performance measure available along these dimensions, and use it for the most ...

Do Formal Salary Systems Really Matter?
Date Posted:Sun, 03 Oct 2004 08:28:17 -0500
Drawing on a single large U.S. corporation's personnel records for the years 1989-93, the authors analyze an example of the kind of formal salary system used by most large firms. They find that this firm's practices were consistent with most of the important conclusions of prior empirical research on internal labor markets. The system was highly centralized, covering salary levels, salary ranges, raises, and bonuses. Supervisors had little discretion over pay other than through subjective ...

Do Formal Salary Systems Really Matter?
Date Posted:Sun, 03 Oct 2004 00:00:00 -0500
Drawing on a single large U.S. corporation's personnel records for the years 1989-93, the authors analyze an example of the kind of formal salary system used by most large firms. They find that this firm's practices were consistent with most of the important conclusions of prior empirical research on internal labor markets. The system was highly centralized, covering salary levels, salary ranges, raises, and bonuses. Supervisors had little discretion over pay other than through subjective performance ratings. The firm held fairly strictly to the salary rules, leading to observable constraints on pay for employees near the top of the salary range. These constraints, however, apparently did not impose important costs on the firm in the form of increased turnover. Although the system operated without any apparent connection to external factors, the authors conclude that it transmitted external labor market forces with little distortion.

Performance Measure Properties and Incentives
Date Posted:Mon, 15 Mar 2004 00:00:00 -0600
We examine the effects of performance measure properties on incentive system design, using data on incentive contracts for auto dealership managers. The data include information on five properties: two indicators of risk; two indicators of distortion; and one indicator of potential manipulation. We find that these properties have important effects on incentive system design. First, firms appear to choose the "best" performance measure available along these dimensions, and use it for the most important (primary) formula bonus. Second, the properties of this primary performance measure are important determinants of the weight placed on the measure for explicit. Third, firms appear to use other performance measures to balance multitask incentives relative to the primary performance measure. Specifically, we find evidence that second and third bonuses are used to provide better incentives for cooperation and to reduce incentives for manipulation. Fourth, we present evidence that subjectivity, through discretionary bonuses based on subjective performance evaluations, and also through implicit incentives for promotions and other rewards, also appear to play the same roles.

Causes and Effects of Subjectivity in Incentives
Date Posted:Thu, 28 Feb 2002 03:47:10 -0600
This study empirically examines two basic questions. First, where and why do firms make greater or lesser use of subjectivity in the performance evaluations that lead to annual bonuses? Second, what are the effects of greater or lesser use of subjectivity on employee pay satisfaction? We examine these questions using data collected from a sample of 526 department managers in 250 automobile dealerships. Our findings suggest that subjective bonuses are used to complement perceived weaknesses in ...

Causes and Effects of Subjectivity in Incentives
Date Posted:Wed, 13 Feb 2002 00:00:00 -0600
This study empirically examines two basic questions. First, where and why do firms make greater or lesser use of subjectivity in the performance evaluations that lead to annual bonuses? Second, what are the effects of greater or lesser use of subjectivity on employee pay satisfaction? We examine these questions using data collected from a sample of 526 department managers in 250 automobile dealerships. Our findings suggest that subjective bonuses are used to complement perceived weaknesses in bonus awards based on quantitative performance measures. Overall, we find that the use of subjective bonuses is positively related to: (1) the extent of departmental interdependencies; (2) the department reporting a net loss; (3) the manager's tenure; and (4) the extent that the achievability of the formula-based bonus is difficult and leads to significant consequences if not achieved. We also find that the use of subjective bonuses is negatively related to the degree to which the formula bonus exhibits a short-term focus. Competition significantly influences the level of subjective bonuses but not the frequency. We also show that the incremental economic effects of these determinants are highly significant. Our results regarding the effects of the use of subjective bonuses on employee pay satisfaction, however, are inconclusive.

Returns to Skills & Personnel Management: U.S. Dod Scientists and Engineers
Date Posted:Mon, 29 Oct 2001 00:00:00 -0600
Personnel records are used to examine compensation, recruitment, and retention of a group of very highly skilled workers: civilian scientists and engineers in U.S. Department of Defense laboratories. In contrast to the private sector, returns to skills were largely flat for this group from 1982-1996. Despite this, quality and performance of recruits relative to earlier cohorts, and of those retained relative to those who left, remained stable. One explanation is the importance of defense-industry-specific human capital. These results hold for three different pay plans, including the federal government's primary plan and two intended to introduce greater flexibility in personnel management.

The Economic Approach to Personnel Research
Date Posted:Wed, 25 Jul 2001 10:16:25 -0500
We compare the economic approach to research on personnel and organizational design to approaches from behavioral disciplines. Instead of a survey of the field, our emphasis is on topics which are important in organizational research outside of economics, yet have been little emphasized by economics. We contend that many of these topics hold great promise for insights from the economic approach. In some cases we sketch ways in which economists can approach these topics. We also briefly discuss ...

Incentive Compensation in a Corporate Hierarchy
Date Posted:Tue, 13 Feb 2001 08:43:30 -0600
A theoretical and empirical analysis of within-job and promotion-based incentives for middle managers is presented, using personnel data from a firm. Within-job incentives are stronger than implied by previous studies. Evidence is provided that promotions sort employees by ability, and also generate incentives. Promotions are associated with large increases in lifetime earnings, as long as performance is sustained in the future. There is little evidence that the firm trades-off within-job and ...

The Economic Approach to Personnel Research
Date Posted:Thu, 08 Feb 2001 00:00:00 -0600
We compare the economic approach to research on personnel and organizational design to approaches from behavioral disciplines. Instead of a survey of the field, our emphasis is on topics which are important in organizational research outside of economics, yet have been little emphasized by economics. We contend that many of these topics hold great promise for insights from the economic approach. In some cases we sketch ways in which economists can approach these topics. We also briefly discuss empirical methods in personnel economics.

The Economic Approach to Personnel Research
Date Posted:Tue, 03 Oct 2000 18:01:35 -0500
We compare the economic approach to research on personnel and organizational design to approaches from behavioral disciplines. Instead of a survey of the field, our emphasis is on topics which are important in organizational research outside of economics, yet have been little emphasized by economics. We contend that many of these topics hold great promise for insights from the economic approach. In some cases we sketch ways in which economists can approach these topics. We also briefly discuss empirical methods in personnel economics.

The Economic Approach to Personnel Research
Date Posted:Tue, 03 Oct 2000 09:01:35 -0500
We compare the economic approach to research on personnel and organizational design to approaches from behavioral disciplines. Instead of a survey of the field, our emphasis is on topics which are important in organizational research outside of economics, yet have been little emphasized by economics. We contend that many of these topics hold great promise for insights from the economic approach. In some cases we sketch ways in which economists can approach these topics. We also briefly discuss ...

Incentive Compensation in a Corporate Hierarchy
Date Posted:Sun, 20 Dec 1998 05:04:07 -0600
A theoretical and empirical analysis of within-job and promotion-based incentives for middle managers is presented, using personnel data from a firm. Within-job incentives are stronger than implied by previous studies. Evidence is provided that promotions sort employees by ability, and also generate incentives. Promotions are associated with large increases in lifetime earnings, as long as performance is sustained in the future. There is little evidence that the firm trades-off within-job and promotion-based incentives as predicted. Instead, it appears to use a simple incentive scheme, resulting in declining incentives for those passed over for promotion.

Are Administrative Pay Systems a Veil? Evidence from Within-firm Data
Date Posted:Thu, 10 Jul 1997 00:50:04 -0500
Using detailed personnel data from a firm, we analyze the real effects of the kind of compensation system that is used in many large firms--the Hay system. Such compensation systems are highly centralized and bureaucratic, with little ability for managers to adjust incentives for different job designs, individuals, and circumstances. We find that this system does appear to have real effects, particularly for those who are at the maximum salary in their allowable range. Such employees tend to ...

Are Administrative Pay Systems a Veil? Evidence from Within-Firm Data
Date Posted:Sat, 01 Feb 1997 10:28:54 -0600
Using detailed personnel data from a firm, we analyze the real effects of the kind of compensation system that is used in many large firms--the Hay system. Such compensation systems are highly centralized and bureaucratic, with little ability for managers to adjust incentives for different job designs, individuals, and circumstances. We find that this system does appear to have real effects, particularly for those who are at the maximum salary in their allowable range. Such employees tend to have falling performance ratings and salary growth, are less likely to win promotion, and are more likely to exit the firm. We interpret these facts as suggesting that such employees have lower motivation from the incentive system than other employees. Moreover, the firm's bonus system is not designed to mitigate these effects. These findings suggest that theories emphasizing such formal, bureaucratic pay systems (e.g., influence costs) may be very important in understanding actual incentive contracting schemes.