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Thursday, November 8, 2012

As your employer

 

Fatherhood and Managerial Style: How a Male CEO's Children Affect the Wages of His Employees

Michael Dahl, Cristian Dezső & David Gaddis Ross
Administrative Science Quarterly, forthcoming

Abstract:
Motivated by a growing literature in the social sciences suggesting that the transition to fatherhood has a profound effect on men's values, we study how the wages of employees change after a male chief executive officer (CEO) has children, using comprehensive panel data on the employees, CEOs, and families of CEOs in all but the smallest Danish firms between 1996 and 2006. We find that (a) a male CEO generally pays his employees less generously after fathering a child, (b) the birth of a daughter has a less negative influence on wages than does the birth of a son and has a positive influence if the daughter is the CEO's first, and (c) the wages of female employees are less adversely affected than are those of male employees and positively affected by the CEO's first child of either gender. We also find that male CEOs pay themselves more after fathering a child, especially after fathering a son. These results are consistent with a desire by the CEO to husband more resources for his family after fathering a child and the psychological priming of the CEO's generosity after the birth of his first daughter and specifically toward women after the birth of his first child of either gender.

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The generalist bias

Long Wang & Keith Murnighan
Organizational Behavior and Human Decision Processes, January 2013, Pages 47-61

Abstract:
This research introduces the generalist bias - a tendency to reward and select people with general skills when complementary, specialized skills are needed. Five studies investigated its effects. Study 1 confirmed the existence of the bias in a context-free experiment. Study 2 showed that the compensation of players in NBA teams was related to their two- rather than their three-point scoring. Study 3 showed that basketball fans favored all-around players even when three-point shooters would better complement a team's needs. Study 4 showed that the generalist bias occurred in HR recruiting, and Study 5 showed that companies often recruited specialists to handle multiple, unrelated jobs. In addition, studies 3 and 4 also showed that joint evaluations (comparing specialists and generalists side-by-side) strengthened the generalist bias, whereas separate evaluations weakened it.

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Guilt by Design: Structuring Organizations to Elicit Guilt as an Affective Reaction to Failure

Vanessa Bohns & Francis Flynn
Organization Science, forthcoming

Abstract:
In this article, we outline a model of how organizations can effectively shape employees' affective reactions to failure. We do not suggest that organizations eliminate the experience of negative affect following performance failures - instead, we propose that they encourage a more constructive form of negative affect (guilt) instead of a destructive one (shame). We argue that guilt responses prompt employees to take corrective action in response to mistakes, whereas shame responses are likely to elicit more detrimental effects of negative affect. Furthermore, we suggest that organizations can play a role in influencing employees' discrete emotional reactions to the benefit of both employees and the organization. We describe the necessary antecedents for encouraging guilt responses without simultaneously eliciting shame. In essence, employees are more likely to experience guilt (but not shame) if they feel they had control over a specific negative event and the event resulted in a negative outcome for others. Given these necessary preconditions, we identify a set of organizational characteristics - autonomy, specificity of performance feedback, and outcome interdependence - that can be modified to make the experience of guilt more likely than that of shame in the workplace. The ethical and practical limits of shaping employees' emotional experiences within a negative affective domain are also addressed.

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Political Values, Culture, and Corporate Litigation

Irena Hutton, Danling Jiang & Alok Kumar
University of Miami Working Paper, March 2012

Abstract:
Using one of the largest samples of litigation data to date, we examine whether the political culture of a firm determines its propensity for corporate misconduct. Our measure of political culture is based on the political contributions of individuals within a firm and the local neighborhood. We find that, consistent with the Democratic ideology that places greater value on equal opportunity, humanitarianism, and protection of the environment, firms with Democratic culture are less likely to be the subject of environmental, labor, or civil rights-related litigation. In contrast, consistent with core Republican value of self-reliance that supports business, property rights, market discipline, and limited government regulation, firms with Republican culture are less likely to be the subject of litigation related to securities fraud and intellectual property rights violations. Upon litigation filing, regardless of the domain, firms with Republican culture experience more negative market reaction. Collectively, our results indicate that the ethical boundaries of firms are domain-specific but this heterogeneity is not fully recognized by stock market participants.

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Rainmakers: Why Bad Weather Means Good Productivity

Jooa Julia Lee, Francesca Gino & Bradley Staats
Harvard Working Paper, July 2012

Abstract:
People believe that weather conditions influence their everyday work life, but to date, little is known about how weather affects individual productivity. Most people believe that bad weather conditions reduce productivity. In this research, we predict and find just the opposite. Drawing on cognitive psychology research, we propose that bad weather increases individual productivity by eliminating potential cognitive distractions resulting from good weather. When the weather is bad, individuals may focus more on their work rather than thinking about activities they could engage in outside of work. We tested our hypotheses using both field and lab data. First, we use field data on employees' productivity from a mid-size bank in Japan, which we then match with daily weather data to investigate the effect of bad weather conditions (in terms of precipitation, visibility, and temperature) on productivity. Second, we use a laboratory experiment to examine the psychological mechanism explaining the relationship between bad weather and increased productivity. Our findings support our proposed model and suggest that worker productivity is higher on bad rather than good weather days. We discuss the implications of our findings for workers and managers.

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Performance Ratings and Career Advancement in the US Federal Civil Service

Seong Soo Oh & Gregory Lewis
Public Management Review, forthcoming

Abstract:
A strong link between performance and rewards in the U.S. federal civil service could raise top performers to positions of power and responsibility and motivate employees to greater productivity. Federal employees, the general population and scholars all express doubts about the strength of that link, however, though few have estimated it empirically. Using random-effects panel data models on a one per cent sample of federal personnel records for 1988-2003, we examine whether performance ratings meaningfully influence promotion probabilities and annual salary increases. With an average annual promotion rate of 17.8 per cent over this period, we estimate that employees with ‘outstanding' and ‘less than fully successful' ratings were one-fourth more likely and one-fifth less likely, respectively, to receive promotions than those with ‘fully successful' ratings. Average salary impacts were smaller but still significant. Patterns held up across agencies and stages of the federal careers. Performance ratings continued to affect career advancement one or two years later. We speculate on whether these links are strong enough to motivate performance and advance the most qualified federal employees.

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Pushing "Reset": The Conditional Effects of Coaching Replacements on College Football Performance

Scott Adler, Michael Berry & David Doherty
Social Science Quarterly, forthcoming

Objectives: We assess the effects of coaching replacements on college football team performance.

Methods: Using data from 1997 to 2010, we use matching techniques to compare the performance of football programs that replaced their head coach to those where the coach was retained. The analysis has two major innovations over existing literature. First, we consider how entry conditions moderate the effects of coaching replacements. Second, we examine team performance for several years following the replacement to assess its effects.

Results: We find that for particularly poorly performing teams, coach replacements have little effect on team performance as measured against comparable teams that did not replace their coach. However, for teams with middling records - that is, teams where entry conditions for a new coach appear to be more favorable - replacing the head coach appears to result in worse performance over subsequent years than comparable teams who retained their coach.

Conclusions: The findings have important implications for our understanding of how entry conditions moderate the effects of leadership succession on team performance, and suggest that the relatively common decision to fire head college football coaches for poor team performance may be ill advised.

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Evaluating Six Common Stereotypes about Older Workers with Meta-Analytical Data

Thomas Ng & Daniel Feldman
Personnel Psychology, Winter 2012, Pages 821-858

Abstract:
The current study evaluates the cumulated empirical evidence on six common age stereotypes. These stereotypes suggest that older workers are: (1) less motivated, (2) generally less willing to participate in training and career development, (3) more resistant and less willing to change, (4) less trusting, (5) less healthy, and (6) more vulnerable to work-family imbalance. The meta-analysis included 418 empirical studies (N = 208,204) and examined the relationships of age to 39 variables representing the content domain of age stereotypes. The only stereotype consistent with empirical evidence is that older workers are less willing to participate in training and career development activities. The article concludes with implications for future theory development and management practice.

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Competitive Incentives: Working Harder or Working Smarter?

Anat Bracha & Chaim Fershtman
Management Science, forthcoming

Abstract:
Almost all jobs require a combination of cognitive effort and labor effort. This paper focuses on the effect that competitive incentive schemes have on the chosen combination of these two types of efforts. We use an experimental approach to show that competitive incentives may induce agents to work harder but not necessarily smarter. This effect was stronger for women.

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Sabotage in Tournaments: Evidence from a Natural Experiment

Loukas Balafoutas, Florian Lindner & Matthias Sutter
Kyklos, November 2012, Pages 425-441

Abstract:
Many tournaments are plagued by sabotage among competitors. Typically, sabotage is welfare-reducing, but from an individual's perspective an attractive alternative to exerting positive effort. Yet, given its illegal and often immoral nature, sabotage is typically hidden, making it difficult to assess its extent and its victims. Therefore, we use data from Judo World Championships, where a rule change in 2009 basically constituted a natural experiment that introduced one costless opportunity for sabotage. In Judo, competitors can break an opponent's attack in an unsportsmanlike manner; these are seen as acts of sabotage. Based on a unique dataset of 1,422 fights, we find that the rule change in 2009 has led to a large increase in the use of sabotage. Moreover, sabotage is more likely to be employed by relatively less qualified individuals, and to be targeted at more qualified ones. From a survey among spectators, we show that sabotage is welfare reducing.

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Peaking at the right time: Perceptions, expectations, and effects

Brian Murtha
Organizational Behavior and Human Decision Processes, January 2013, Pages 62-72

Abstract:
We explore the concept of peaking at the right time. Study 1 is a content analysis of 325 National Football League articles identifying four key triggers that prompt proclamations of peaking at the right time: turnarounds, impressive prior events, winning streaks, and out-ofs. Study 2 experimental results reveal that turnarounds most strongly impact perceptions of peaking at the right time, anticipated performance, and expectations faced. However, nuanced differences occur across two time periods during the season. Studies 1 and 2 also indicate that observers expect teams to win their next games more often than actually happens. Study 3 demonstrates that teams prepare harder and make riskier game plans when their next opponent is peaking at the right time. Study 4 suggests that individuals more strongly desiring to peak at the right time than others will value various factors differently at different time points when envisioning upcoming seasons.

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Multitasking

Thomas Buser & Noemi Peter
Experimental Economics, December 2012, Pages 641-655

Abstract:
We examine how multitasking affects performance. We also examine whether individuals optimally choose their degree of multitasking or whether they perform better under an externally imposed schedule. Subjects in our experiment perform two different tasks according to one of three treatments: one where they perform the tasks sequentially, one where they are forced to multitask, and one where they can freely organize their work. Subjects who are forced to multitask perform significantly worse than those forced to work sequentially. Surprisingly, subjects who can freely organize their own schedule also perform significantly worse. These results suggest that scheduling is a significant determinant of productivity. Finally, our results do not support the stereotype that women are better at multitasking. Women suffer as much as men when forced to multitask and are actually less inclined to multitask when being free to choose.

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The Effects of Six Sigma on Corporate Performance: An Empirical Investigation

Scott Shafer & Sara Moeller
Journal of Operations Management, forthcoming

Abstract:
The purpose of this study is to investigate the impact of adopting Six Sigma on corporate performance. Although there is fairly large and growing body of anecdotal evidence associated with the benefits of implementing Six Sigma, there is very little systematic and rigorous research investigating these benefits. This research extends previous research in several important ways including utilizing a sample of 84 Six Sigma firms that represent a wide variety of industries and firm characteristics, utilizing rigorously constructed control groups to ensure the validity of our comparisons and conclusions, and investigating the impact of adopting Six Sigma on corporate performance over a ten year period. To carry out this investigation, the event study methodology is employed. The ten year period consists of three years prior to Six Sigma implementation, the event year corresponding to the year Six Sigma is adopted, and six years post Six Sigma implementation. To assess the impact of adopting Six Sigma on corporate performance we utilize commonly used measures including Operating Income/Total Assets (OI/A), Operating Income/Sales (OI/S), Operating Income/Number of Employees (OI/E), Sales/Assets (S/A), and Sales/Number of Employees (S/E). The sample Six Sigma firms are compared to different benchmarks including the overall industry performance and to the performance of carefully selected portfolios of control firms. The results of the study indicate that adopting Six Sigma positively impacts organizational performance primarily through the efficiency with which employees are deployed. More specifically, enhanced employee productivity results were observed in both static analyses that assessed the performance of the sample Six Sigma firms relative to their control groups at discrete points in time and dynamic analyses of the Six Sigma firms' rate of improvement relative to the rate of improvement of their control groups. Benefits in terms of improved asset efficiency were not observed. Finally, there was no evidence that Six Sigma negatively impacts corporate performance.

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Producer co-operatives and economic efficiency: Evidence from the nineteenth-century cotton textile industry

Steven Toms
Business History, October 2012, Pages 855-882

Abstract:
The relative efficiency of producer co-operatives is investigated through an examination of the financial performance of a group of cotton spinning firms that emerged from the spread of co-operative ideals after the mid-nineteenth century. Reflecting such influences these firms adopted two particularly important aspects of democratic governance: use of low denomination partly paid shares to encourage wide share ownership among local working class operatives, and the use of a one shareholder one vote rule at company meetings. Prior literature, much of which predicts the failure of producer co-operatives due to incentive problems, has not specifically examined these aspects of democratic control. Moreover because the case study utilises samples of stock market quoted companies, there is an opportunity to quantify the financial performance effects of these governance mechanisms. The case study therefore offers a unique insight and important contribution to the wider literature. The results show that both aspects of democratic governance contributed to the economic success of the companies that adopted them, enabling them to satisfy the high demand for cash dividends that characterised investor requirements. However, the cyclical nature of the cotton industry and the stock market booms and slumps that resulted led to redistributions of wealth through time that in the long run undermined the co-operative project.

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Carrots that Look Like Sticks: Toward an Understanding of Multitasking Incentive Schemes

Omar Al-Ubaydli et al.
NBER Working Paper, October 2012

Abstract:
Constructing compensation schemes for effort in multi-dimensional tasks is complex, particularly when some dimensions are not easily observable. When incentive schemes contractually reward workers for easily observed measures, such as quantity produced, the standard model predicts that unrewarded dimensions, such as quality, will be neglected. Yet, there remains mixed empirical evidence in favor of this standard principal-agent model prediction. This paper reconciles the literature by using both theory and empirical evidence. The theory outlines conditions under which principals can use a piece rate scheme to induce higher quantity and quality levels than analogous fixed wage schemes. Making use of a series of complementary laboratory and field experiments we show that this effect occurs because the agent is uncertain about the principal's monitoring ability and the principal's choice of a piece rate signals to the agent that she is efficient at monitoring.

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Do Professional Golf Tour Caddies Improve Player Scoring?

Douglas Coate & Michael Toomey
Journal of Sports Economics, forthcoming

Abstract:
In this article, we compare daily scoring from the 1980s in periods when professional golfers were required to use local caddies at the Western Open professional golf tournament at Butler National and at the Masters professional golf tournament at Augusta National with daily scoring in adjoining periods when golfers could use their tour caddies in these tournaments. We have found daily scoring to be approximately one stroke lower in the tour caddy periods after controlling for player quality, weather, tournament round, and course changes.

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On the Virtues of Hiring Lemons

Oliver Gürtler & Matthias Kräkel
Managerial and Decision Economics, October-December 2012, Pages 475-484

Abstract:
Recruiting high-ability workers and implementing optimal efforts are among the key objectives of a firm's personnel policy. We show that, if the firm applies a tournament scheme - that is, a competitive career system - selection and incentive issues are strictly interrelated, thus leading to a fundamental conflict: if the firm is primarily interested in balanced worker competition, there will be a rationale for hiring low-ability workers (‘lemons').

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Do serial entrepreneurs run successively better-performing businesses?

Simon Parker
Journal of Business Venturing, forthcoming

Abstract:
This paper investigates whether - consistent with theories of entrepreneurial learning by doing and resource acquisition - serial entrepreneurs' performance follows a rising trajectory over successive venturing spells. Or whether - consistent with theories of selective learning from failure and hubris - serial entrepreneurs perform better after experiencing a bad spell (and worse after experiencing a good spell). We test competing hypotheses about serial entrepreneurs' performance trajectories using Panel Study of Income Dynamics (PSID) data, which track the dynamic performance of a sample of American serial entrepreneurs for up to one-quarter of a century. The findings show that serial entrepreneurs obtain temporary benefits from spells of venturing which eventually die away. This implies that venturing generates benefits which spill over from one venture into subsequent ones, and it can provide a rationale for public policies which encourage re-entries by entrepreneurs, even if those entrepreneurs performed poorly in their first ventures.

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Information Technology, Productivity, and Asset Ownership: Evidence from Taxicab Fleets

Evan Rawley & Timothy Simcoe
Organization Science, forthcoming

Abstract:
We develop a simple model that links the adoption of a productivity-enhancing technology to increased vertical integration and a less skilled workforce. We test the model's key prediction using novel microdata on vehicle ownership patterns from the Economic Census during a period when computerized dispatching systems were first adopted by taxicab firms. Controlling for time-invariant firm-specific effects, firms increase the proportion of taxicabs under fleet ownership by 12% when they adopt new computerized dispatching systems. An instrumental variables analysis suggests that the link between dispatching technology and vertical integration is causal. These findings suggest that increasing a firm's productivity can lead to increased vertical integration, even in the absence of asset specificity.

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Performance Feedback with Career Concerns

Stephen Hansen
Journal of Law, Economics, and Organization, forthcoming

Abstract:
This article examines the incentive effects of interim performance evaluation when a worker has career concerns and effort is history dependent. Disclosure has two effects: it increases the variance of future effort, and it allows the worker to use current effort to influence his employer's belief about future effort, creating a ratchet effect. The article provides necessary and sufficient conditions for full disclosure to dominate no disclosure; shows that the optimal disclosure policy reveals output realizations in the center of the distribution, but not in the tails; and discusses the potential implications of the results for the analysis of performance appraisal systems.

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Performance Appraisals and the Impact of Forced Distribution - An Experimental Investigation

Johannes Berger, Christine Harbring & Dirk Sliwka
Management Science, forthcoming

Abstract:
A real-effort experiment is investigated in which supervisors have to rate the performance of individual workers who in turn receive a bonus payment based on these ratings. We compare a baseline treatment in which supervisors are not restricted in their rating behavior to a forced distribution system in which they have to assign differentiated grades. We find that productivity is significantly higher under a forced distribution by about 6% to 12%. However, the productivity effects are less clear cut when participants have prior experience with the baseline condition. Moreover, a forced distribution becomes detrimental when workers have access to a simple option to sabotage each other.

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Does High Involvement Management Improve Worker Wellbeing?

Petri Böckerman, Alex Bryson & Pekka Ilmakunnas
Journal of Economic Behavior & Organization, forthcoming

Abstract:
Employees exposed to high involvement management (HIM) practices have higher subjective wellbeing, fewer accidents but more short absence spells than "like" employees not exposed to HIM. These results are robust to extensive work, wage and sickness absence history controls. We highlight the possibility of higher short-term absence in the presence of HIM because it is more demanding than standard production and because multi-skilled HIM workers cover for one another's short absences thus reducing the cost of replacement labour faced by the employer. We find direct empirical support for this. In accordance with the theoretical framework we find also that long-term absences are independent of exposure to HIM, which is consistent with long-term absences entailing replacement labour costs and with short absences having a negative effect on longer absences.

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Motivation Through Goal Setting

Joaquín Gómez-Miñambres
Journal of Economic Psychology, December 2012, Pages 1223-1239

Abstract:
We study a principal agent model where agents derive a sense of pride from accomplishing production goals. As in classical models, the principal offers a pay-per-performance wage to the agent, determining the agent´s extrinsic incentives. However, in our model, the principal uses goal setting policies as a tool to manage agents´ intrinsic motivation. To capture the idea that different agents respond differently to different goals we introduce the concept of personal standards which determine what becomes challenging and rewarding to them, and hence the intensity of their intrinsic motivation to achieve goals. We show that, at the optimal contract, the agents' production, as well as the goals set by the principal, increase with the agents´ personal standards. Moreover, we show that an intrinsically motivated agent gets higher surplus than an agent with no intrinsic motivation in the form of informational rents but an agent with a mid-ranged standard (and hence productivity) could end up being the one most satisfied. Therefore, our model can be helpful to explain some empirical findings in the literature of job satisfaction like the so called "paradox of happiness".

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Pay satisfaction and work-family conflict across time

Devasheesh Bhave, Amit Kramer & Theresa Glomb
Journal of Organizational Behavior, forthcoming

Abstract:
On the basis of justice and exchange theories, the authors propose that employees offset their levels of work-family conflict (WFC) with their levels of pay satisfaction. Results based on two waves of data indicate that pay satisfaction has a negative relationship with WFC after controlling for actual pay and other work-related and family-related variables. Analysis of pay satisfaction dimensions reveals that satisfaction with benefits and pay structure are negatively related to WFC, whereas satisfaction with pay level and pay raise are not. Number of dependents and level of education moderate the relationship between pay satisfaction and WFC; specifically, having more dependents and higher education attenuates the relationship between pay satisfaction and WFC.

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Leaders as Planners and Movers: Supervisors' Regulatory Modes and Subordinates' Performance

Antonio Pierro et al.
Journal of Applied Social Psychology, October 2012, Pages 2564-2582

Abstract:
In three field studies, we found that leaders high in both locomotion and assessment tendencies (Studies 1 and 2: evaluated by subordinates; Study 3: evaluated by leaders themselves) elicited higher levels of performance from their subordinates (Studies 1 and 3: as assessed by the subordinates themselves; Study 2: as assessed by their supervisors) than leaders low in one or both of these tendencies. The research supports the notion that locomotion and assessment constitute critical regulatory functions whose conjunction is indispensible for successful performance, whether on the level of the individual (Kruglanski et al., 2000) or the group (Mauro et al., 2009).

By KEVIN LEWIS | 09:00:00 AM