Human Resources →
- 08 Sep 2014
- Research & Ideas
The Strategic Way To Hire a Sales Team
The equivalent of an entire sales force is replaced at many firms every four years, so it's critical that go-to-market initiatives remain tied to strategic goals. Frank Cespedes explains how in his book, Aligning Strategy and Sales. Closed for comment; 0 Comments.
- 12 Jun 2014
- Working Paper Summaries
The Triumph of the Humble Chief Risk Officer
How do senior risk officers strike a balance between the twin roles of "compliance champion" and "business partner"? Understanding what role risk officers may play in organizational life is especially important in the wake of the 2007-2009 financial crisis, continuing corporate debacles, and ongoing corporate governance calls for the appointment of chief risk officers (CROs) and risk-management committees. This paper tracked the evolution of the role of two highly acclaimed chief risk officers (CROs), and the tools and processes they implemented in their respective organizations. While the companies are from very different industries (one is a power company, the other is a toy manufacturer), they both embraced the concepts and tools of Enterprise Risk Management. Over a number of years, at both firms, risk management transformed from a collection of "off-the-shelf," acquired tools and practices into a seemingly inevitable and tailored control process. The paper investigated the role of the CRO in making these transformations happen and discusses implications for managers. Key concepts include: The role of the CRO may be less about the packaging and marketing of risk management tools to business managers, but instead, the facilitation of the creation and internalization of a specific type of "risk talk" as a legitimate, cross-functional language of business. The risk-management function may be most successful when it resists conventional and conflicting demands to be either close to, or independent from, business managers. By acting as a facilitator of risk talk, the CRO can enable the real work of risk management to take place - not in her own function, but in the business lines. The facilitation of risk talk may involve a significant degree of humility on the part of the CRO, manifest in limited formal authority and meagre resources. Calls for increasing investments in risk management, and for the formal inclusion of senior risk officers in the C-suite, might be, in many cases, misguided. Rather, risk managers need first and foremost commitment from others in the organization to accept a relevant and situationally contingent version of risk management, tailored to their needs. Closed for comment; 0 Comments.
- 10 Jun 2014
- Working Paper Summaries
Cohort Turnover and Productivity: The July Phenomenon in Teaching Hospitals
The authors focus on the effects of turnover in a particularly high-stakes setting: teaching hospitals. Specifically, the authors examine the effects on productivity of cohort turnover, in this case, medical residents and fellows-and a similarly sized entry of new residents and fellows. Closed for comment; 0 Comments.
- 05 Jun 2014
- Research & Ideas
Fixing the ‘I Hate Work’ Blues
Many employees report they are overworked and not engaged—a recent New York Times article on the phenomenon was titled, "Why You Hate Work." The problem, says Bill George, is that the way we design work stifles engagement. Here's the fix. Closed for comment; 0 Comments.
- 04 Feb 2014
- Working Paper Summaries
From Crowds to Collaborators: Initiating Effort and Catalyzing Interactions Among Online Creative Workers
Online "organizations" are becoming a major engine for knowledge development in a variety of domains such as Wikipedia and open source software development. Many online platforms involve collaboration and coordination among members to reach common goals. In this sense, they are collaborative communities. This paper asks: What factors most inspire online teams to begin to collaborate and to do so creatively and effectively? The authors analyze a data set of 260 individuals randomly assigned to 52 teams tasked with developing working solutions to a complex innovation problem over 10 days, with varying cash incentives. Findings showed that although cash incentives stimulated a significant boost of effort per se, cash incentives did not transform the nature of the work process or affect the level of collaboration. In addition, at a basic yet striking level, the likelihood that an individual chooses to participate depended on whether teammates were themselves active. Moreover, communications among teammates led to more communications, and communications among teammates also stimulated greater continuous levels of effort. Overall, the study sheds light on how perspectives on incentives, predominant in economics, and perspectives on social processes and interactions, predominant in research on organizational behavior and teams, can be better understood. Key concepts include: An individual's likelihood of being active in online collaboration increases by about 41 percent with each additional active teammate. Management could provide communications channels to make the efforts of other members more visible. This is important in the design of systems for online work as it helps members to confirm that others are actively contributing. Closed for comment; 0 Comments.
- 22 Jan 2014
- Research & Ideas
High-Tech Immigrant Workers Don’t Cost US Jobs
Hiring skilled immigrants by United States high-tech firms not only doesn't push out existing workers, it creates job opportunities for all, argues William Kerr. Closed for comment; 0 Comments.
- 27 Nov 2013
- Working Paper Summaries
Skilled Immigration and the Employment Structures of US Firms
The immigration of skilled workers is of deep importance to the United States, particularly in occupations closely linked to innovation and technology commercialization. Appropriate policies and admissions levels for skilled workers remain bitterly debated in the popular press. The authors analyze how the hiring of skilled immigrants affects the employment structures of US firms. This focus on the firm is both rare and important, since economists typically study immigration through the conceptual framework of shifts in the supply of workers to a labor market; yet substantial portions of the US immigration framework have been designed to allow American firms to choose the immigrants that they want to hire. Young workers account for a large portion of such skilled immigrants; for example, 90 percent of H-1B workers are under the age of 40. Given this context, the authors look specifically at the role of young skilled immigrants within more than 300 large employers and major patenting firms over the 1995-2008 period. The evidence suggests that increased employment of young skilled immigrants 1) raises the overall employment of skilled workers in the firm, 2) increases the immigrant share of these workers, and 3) reduces the older worker share of skilled employees. The latter effect is evident even among natives only. Overall, these results provide a multifaceted view of how young skilled immigration shapes the employment structures of US firms. There are significant implications for the competitiveness of American firms, the job opportunities of natives and immigrants employed by these firms, the larger national innovative capacity of the United States, and much beyond. Key concepts include: Many parts of the US immigration process for skilled workers operate outside of formal markets and provide a central role to firms (e.g., sponsorship of H-1B workers). As such, firms need to take a much bigger role in immigration research going forward. Consistent evidence links the hiring of young skilled immigrants to greater employment of skilled workers by the firm, a greater share of the firm's workforce being skilled, a higher share of skilled workers being immigrants, and a lower share of skilled workers being over the age of 40. The results on whether total firm size increases or not are mixed. Employment expansion is greater for younger natives than their older counterparts. This tilting of the age structure of the firm (even in relative sense among skilled natives) with immigration is underexplored by economists. Departure rates for older workers appear higher for those in STEM (science, technology, engineering, and mathematics) occupations compared to younger workers. These results do not align with any single popular account and suggest that greater caution in public discourse is warranted. Closed for comment; 0 Comments.
- 25 Nov 2013
- Research & Ideas
Hiding From Managers Can Increase Your Productivity
Harvard Business School Assistant Professor Ethan S. Bernstein explains why decreasing workplace transparency can increase productivity. Open for comment; 0 Comments.
- 29 Oct 2013
- Research & Ideas
Do Employees Work Harder for Higher Pay?
In a recent field study, Duncan Gilchrist, Michael Luca, and Deepak Malhotra set out to answer a basic question: "Do employees work harder when they are paid more?" Closed for comment; 0 Comments.
- 24 Oct 2013
- Working Paper Summaries
When $3+$1 > $4: The Effect of Gift Salience on Employee Effort in an Online Labor Market
Do employees work harder when they are paid more? This study shows that paying above-market wages, per se, does not have an effect on effort. The authors offered an experiment in a field setting that allowed them to test for the conditions under which higher wages elicit higher effort. They hired three groups of workers for a data entry task on the online labor market oDesk.com, telling them all that this was a one-time job. Group one ("3") was hired at $3 per hour. Group two ("3+1") was also hired at $3 per hour, but before starting work, people in group two were told that there was unexpectedly extra money in the budget and they would instead be paid $4 per hour. Group three ("4") was hired directly at $4 per hour, so that the "extra" money would not signal a salient "gift" from the employer. Our findings show that higher wages in which the gift was salient (3+1) led to higher and more persistent effort. However, higher wages by themselves (4) had no effect on effort compared to the lower wage (3) condition. Moreover, higher effort in the 3+1 group was strongest for employees with the most experience on oDesk, and those who had worked most recently on oDesk-exactly the kind of workers for whom our $1 additional payment was likely to be most salient (e.g., because it is not common in this labor market). Key concepts include: An employer has the ability to set an employee's reference point, and giving a surprise gift can be more impactful than simply paying higher wages. Targeted gifts-aimed at those who are most likely to interpret the additional reward as a gift-can be a cost-effective mechanism to reward employees, improve morale and increase productivity. However, reciprocity and gift giving are unlikely to explain all types of "efficiency wages" (i.e., "above market" wages) as we see them in the world around us because high wages that are baked into the hiring wage contract do not elicit the same productivity increase, but may induce greater effort by increasing the desire to keep a high-paying job if continued employment is possible. Closed for comment; 0 Comments.
- 25 Jul 2013
- Research & Ideas
Why Unqualified Candidates Get Hired Anyway
Why do businesses evaluate candidates solely on past job performance, failing to consider the job's difficulty? Why do university admissions officers focus on high GPAs, discounting influence of easy grading standards? Francesca Gino and colleagues investigate the phenomenon of the "fundamental attribution error." Closed for comment; 0 Comments.
- 24 Jul 2013
- Op-Ed
Detroit Files for Bankruptcy: HBS Faculty Weigh In
After a long period of economic decline, the city of Detroit filed for bankruptcy protection last week. John Macomber, Robert Pozen, Eric Werker, and Benjamin Kennedy offer their views on some down-the-road scenarios. Closed for comment; 0 Comments.
- 04 Jun 2013
- Working Paper Summaries
Prosocial Bonuses Increase Employee Satisfaction and Team Performance
Designing effective incentive schemes is a central challenge for a wide range of organizations, from multinational corporations to academic departments. In pursuit of identifying the most effective strategies, organizations have devised an impressive variety of such bonuses, from fixed salaries to pay-per-performance, from commissions to end-of-year bonuses. In this paper, the authors suggest that the wide variety in such schemes masks a shared assumption: That the best way to motivate employees is to reward them with money that they then spend on themselves. The authors—Lalin Anik, Lara B. Aknin, Michael I. Norton, Elizabeth W. Dunn, and Jordi Quoidbach—propose an alternative means of incentivizing employees—what they term "prosocial bonuses"—in which organizations provide employees with bonuses used to engage in positive actions towards charities and coworkers, from donating money to remote countries to taking a coworker to lunch. The authors examine the impact of these prosocial bonuses on employee satisfaction and team performance, by reporting results from field experiments in settings ranging from bank employees in Australia to pharmaceutical sales representatives in Belgium to dodgeball teams in Canada. Overall, results suggest that a minor adjustment to employee bonuses—shifting the focus from the self to others—can produce measurable benefits for employees and organizations. Key concepts include: When organizations give employees the opportunity to spend money on others—whether their coworkers or those in need—both the employees and the company can benefit, with increased happiness and job satisfaction and even improved team performance. Prosocial bonuses can benefit both individuals and teams, on both psychological and "bottom line" indicators, in both the short and long-term. Prosocial bonuses could backfire if companies introduce them as a replacement for more standard bonuses, rather than as an additional incentive. Closed for comment; 0 Comments.
- 08 Apr 2013
- Research & Ideas
How to Demotivate Your Best Employees
Many companies hand out awards such as "employee of the month," but do they work to motivate performance? Not really, says professor Ian Larkin. In fact, they may turn off your best employees altogether. Closed for comment; 0 Comments.
- 01 Apr 2013
- Research & Ideas
First Minutes are Critical in New-Employee Orientation
Employee orientation programs ought to be less about the company and more about the employee, according to new research by Daniel M. Cable, Francesca Gino, and Bradley R. Staats. Closed for comment; 0 Comments.
- 12 Feb 2013
- Working Paper Summaries
Do Bonuses Enhance Sales Productivity? A Dynamic Structural Analysis of Bonus-Based Compensation Plans
Personal selling is a primary marketing mix tool for most B2B firms to generate sales. Yet there is little research on how the compensation plan motivates a sales force and affects performance. This paper develops and estimates a dynamic structural model of sales force response to a compensation plan with various components: salary, commissions, lump-sum bonus for achieving quotas, and different commission rates beyond achieving quotas. Overall, the analysis helps assess the impact of (1) different components of compensation and (2) the differential importance of periodic bonuses on performance on different segments of sales people. Key concepts include: A quota-bonus scheme used by a firm increases performance of the sales force by serving as intermediary goals and pushing employees to meet targets. Features such as overachievement compensation reduce the problems associated with sales agents slacking off when they get close to achieving their quota. Quarterly bonuses serve as a continuous evaluation scheme to keep sales agents within striking distance of their annual quotas. In the absence of quarterly bonuses, failure in the early periods to accomplish targets causes agents to fall behind more often than in the presence of quarterly bonuses. Thus, a quarterly bonus serves as a valuable sub-goal that helps the sales force stay on track in achieving their overall goal. Quarterly bonuses are especially valuable to low performers. Overachievement commissions increase performance among the highest performers. Closed for comment; 0 Comments.
- 28 Nov 2012
- What Do You Think?
Should Pay-for-Performance Compensation be Replaced?
Summing up: In spite of its naysayers, pay for performance compensation still makes sense to most of us, according to those responding to Jim Heskett's column on the subject. But there is a difference of opinion of about when and how it works and how it should be structured. Closed for comment; 0 Comments.
- 27 Nov 2012
- Working Paper Summaries
No Margin, No Mission? A Field Experiment on Incentives for Pro-Social Tasks
Organizations from large corporations to NGOs use a range of nonfinancial performance rewards to motivate their employees, and these rewards are highly valued. While theory has suggested mechanisms through which nonfinancial incentives can elicit employee effort, evidence on the mechanisms, and on their effectiveness relative to financial incentives, remains scarce. This paper helps to fill this gap by providing evidence from a collaboration with a public health organization based in Lusaka, Zambia, that recruits and trains hairdressers and barbers to sell condoms in their shops. This setting is representative of many health delivery programs in developing countries where embedded community agents are called upon to deliver services and products, but finding an effective way to motivate them remains a significant challenge. Findings show the effectiveness of financial and nonfinancial rewards for increasing sales of condoms. Agents who are offered nonfinancial rewards ("stars" in this setting) exert more effort than either those offered financial margins or those offered volunteer contracts. Key concepts include: Nonfinancial rewards can motivate agents in settings where there are limits to the use of financial incentives. Nonfinancial rewards elicit effort by leveraging the agents' pro-social motivation and by facilitating social comparisons among agents. Closed for comment; 0 Comments.
- 20 Nov 2012
- Working Paper Summaries
Pay Harmony: Peer Comparison and Executive Compensation
This paper demonstrates how horizontal wage comparisons within firms and concerns for "pay harmony" affect firm policies in setting pay for executives. Using a rich dataset of pay practices for the senior-most executives within divisions, Gartenberg and Wulf ask whether horizontal comparisons between managers in similar jobs affect pay. The authors also evaluate evidence in support of a tradeoff between pay harmony and performance pay. Findings are consistent with the presence of peer effects in influencing pay policies for executives inside firms. These results contribute to the ongoing policy debate on the consequences of transparency and mandatory information disclosure and potential ratchet-effects in executive pay. For practitioners involved in designing the structure of executive compensation and pay disclosure policies for firms -- including compensation committee directors, senior human resource executives, and compensation consultants -- it is important to recognize the tradeoff between the incentive effects of performance-based pay and costs of peer comparison that arise from unequal pay when designing executive wage contracts. The research also raises questions on the costs of pay disclosure and on labor markets more generally. Key concepts include: Pay policies of firms respond to concerns about internal equity. An SEC ruling in 1992 led to greater awareness of pay and greater peer comparison throughout all managerial ranks, particularly in geographically-dispersed firms that had natural information barriers prior to the ruling, as well as in firms with less ex ante pay disclosure. From the perspective of firms, the consequences of increased pay disclosure may range from pay ratcheting to aggregate shifts in worker effort or firm-specific investments and turnover. From the perspective of employees, increased pay disclosure may influence decisions to join firms and shift the relative importance of internal and external benchmarks, thereby having larger labor market consequences. Closed for comment; 0 Comments.
Are the Most Talented Employees the Highest Paid? Yes—If They’re Bankers
A recent study by Claire Célérier and Boris Vallée finds that the French finance industry compensates employees largely according to how talented they are. Other high-paying industries? Not so much. Closed for comment; 0 Comments.