Compensation and Benefits →
- 30 Jun 2019
- Working Paper Summaries
The Comprehensive Effects of Sales Force Management: A Dynamic Structural Analysis of Selection, Compensation, and Training
When sales forces are well managed, firms can induce greater performance from them. For this study, the authors collaborated with a major multinational firm to develop and estimate a dynamic structural model of sales employee responses to various management instruments like compensation, training, and recruiting/termination policies.
- 21 May 2019
- Working Paper Summaries
rTSR: When Do Relative Performance Metrics Capture Relative Performance?
Managers are increasingly evaluated based on relative performance metrics, particularly relative total shareholder returns (rTSR). This paper finds that the majority of firms that tie CEO performance-based contracts to rTSR do a remarkable job of filtering out the systematic risk in TSR. However, a significant portion of firms make relatively poor choices in the design and selection of rTSR, a result of weak governance and an overreliance on compensation consultants.
- 28 Jan 2019
- Research & Ideas
Forget Cash. Here Are Better Ways to Motivate Employees
In today's tight job market, employers must focus on how to attract and keep top talent. Giving away stacks of money may not always be the best incentive, warns Ashley Whillans. Open for comment; 0 Comments.
- 17 Jan 2019
- Research & Ideas
Why Business Should Support Employees Who Are Caregivers
Shifting demographics are causing an increasing number of people to act as caregivers for family and friends—but employers seem hardly to notice the trend. Joseph Fuller discusses why companies should support them. Open for comment; 0 Comments.
- 05 Dec 2018
- Working Paper Summaries
The Salary Taboo: Privacy Norms and the Diffusion of Information
Barriers to the diffusion of salary information have implications for a wide range of labor market phenomena. This study of employees of a real organization shows that individuals significantly misinterpret their peers’ salaries, partly due to pervasive preferences for concealing own salary, and a potentially strategic decision of high earners to withhold their personal information.
- 08 Oct 2018
- Research & Ideas
Knowing What Your Boss Earns Can Make You Work Harder
Learning what your co-worker earns can make you less productive, but knowing your manager's paycheck can motivate you to work harder. Research by Zoë Cullen. Open for comment; 0 Comments.
- 29 Aug 2018
- Working Paper Summaries
How Much Does Your Boss Make? The Effects of Salary Comparisons
This study of more than 2,000 employees at a multibillion dollar firm explores how perceptions about peers’ and managers’ salaries affect employee behaviors and preferences for equity. Employees exhibit a high tolerance for inequality when job titles differ, which may explain why incentives are granted through promotions, and gender pay differences are most pronounced across positions.
- 16 Jul 2018
- Research & Ideas
Kids of Working Moms Grow into Happy Adults
In earlier research, Kathleen McGinn and colleagues discovered that adult kids of working moms are high achievers at work. Now it turns out they are happy, too. Open for comment; 0 Comments.
- 29 Apr 2018
- Working Paper Summaries
Analyzing the Aftermath of a Compensation Reduction
This study of the effects of compensation cuts in a large sales organization provides a unique lens for analyzing the link between compensation schemes, worker performance, and turnover.
- 05 Feb 2018
- What Do You Think?
Should Companies Disclose Employee Compensation?
SUMMING UP Do you want your salary broadcast on the company website? James Heskett's readers debate the value of corporate transparency on compensation. Open for comment; 0 Comments.
- 17 Jan 2018
- Research & Ideas
If the CEO’s High Salary Isn't Justified to Employees, Firm Performance May Suffer
Researcher Ethan Rouen discovers that rank-and-file employees understand the boss deserves a big salary, but only when the number is fully explained. Open for comment; 0 Comments.
- 06 Dec 2017
- Working Paper Summaries
Does Financial Misconduct Affect the Future Compensation of Alumni Managers?
Analyzing data from an executive search firm, this paper explains how former employees who are free from wrongdoing still pay a price in stigma after incidents of corporate financial misconduct. The finding is potentially disquieting for all managers, because it suggests that one’s human capital can be impaired even long after one moves on and suggests the need for developing a human capital strategy for reacting to misconduct of past employers.
- 11 Aug 2017
- Working Paper Summaries
Rethinking Measurement of Pay Disparity and Its Relation to Firm Performance
Among this paper’s contributions is evidence that different types of pay disparity matter in different ways to firm employees, and that disparity created by pay that is unrelated to the economics of the firm negatively impacts employee satisfaction, with consequences for firm performance. The paper also gives investors and proxy advisors a roadmap to interpret pay ratios and pay disparity. This roadmap may help regulators and firms to, respectively, mandate and prepare more informative disclosures.
- 12 May 2017
- Working Paper Summaries
Equality and Equity in Compensation
Why do some firms such as technology startups offer the same equity compensation packages to all new employees despite very different cash salaries? This paper presents evidence that workers dislike inequality in equity compensation more than salary compensation because of the perceived scarcity of equity.
- 22 Mar 2017
- Research & Ideas
What's the Ideal Frequency for a Sales Quota?
Sales reps feed on two forms of compensation: salary, and a bonus tied to achieving a periodic quota. Would a more frequent quota incentivize better numbers? Doug Chung and Das Narayandas offer some answers. Open for comment; 0 Comments.
- 26 Jan 2017
- Working Paper Summaries
Relative Performance Benchmarks: Do Boards Get It Right?
Use of relative performance based (RPE) grants has been steadily increasing. Common wisdom is that such grants help induce costly effort from the CEO by shielding them from performance shocks that are outside of their control. This study raises questions about the use of index-based benchmarks in lieu of a narrower set of specific peers.
- 25 Jan 2017
- Working Paper Summaries
The Effects of Quota Frequency on Sales Force Performance: Evidence from a Field Experiment
This study of different sales quotas and their effect on sales performance at a major retail chain in Sweden finds that changing from a monthly to a daily quota plan increases performance mainly for low-performing salespeople.
- 30 Nov 2016
- Working Paper Summaries
The Stock Market and Bank Risk-Taking
It is clear that risk-taking by financial institutions is one of the main causes of financial crises and severe recessions. Yet we know relatively little about what gives rise to such risk-taking in the first place. This paper presents evidence that a focus on short-term stock prices induces publicly-traded banks to increase risk relative to privately-held banks. The findings provide support for the view that compensation schemes should require management to hold stock for longer periods to mitigate their incentives to pump up short-term earnings and the short-term stock price.
- 17 Oct 2016
- Working Paper Summaries
Self-Employment Dynamics and the Returns to Entrepreneurship
Why do workers turn to entrepreneurship when many entrepreneurs appear to earn less than what they could earn in paid employment? This is the first paper to characterize how the value of resolving uncertainty about entrepreneurial earnings varies over the lifecycle after adjusting for tax differences between entrepreneurs and paid workers. Findings suggest that helping people learn about their potential earnings in entrepreneurship, either by learning from other's experiences in self-employment or by experimenting themselves, can improve the efficiency of sorting workers across sectors.
Corporate Purpose and Firm Ownership
This study shows that corporate purpose varies greatly according to the nature of firm ownership, and these differences can be least partly explained by the choices and compensation of the CEOs. The greater the pay gap between CEOs and employees, the lower the sense of corporate purpose within the organization.