Managed
Timothy Besley, Jose Montalvo & Marta Reynal-Querol
Economic Journal, August 2011, Pages F205-227
Abstract:
This article uses data on more than 1,000 political leaders between 1875 and 2004 to investigate whether having a more educated leader affects the rate of economic growth. We use an expanded set of random leadership transitions because of natural death or terminal illness to show, following an earlier paper by Jones and Olken (2005), that leaders matter for growth. We then provide evidence supporting the view that heterogeneity among leaders' educational attainment is important with growth being higher by having leaders who are more highly educated.
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Getting More Work for Nothing? Symbolic Awards and Worker Performance
Michael Kosfeld & Susanne Neckermann
American Economic Journal: Microeconomics, August 2011, Pages 86-99
Abstract:
We study the impact of status and social recognition on worker performance in a field experiment. In collaboration with an international non-governmental organization, we hired students to work on a database project. Students in the award treatment were offered a congratulatory card honoring the best performance. The award was purely symbolic to ensure that any behavioral effect is driven by non-material benefits. Our results show that the award increases performance by about 12 percent on average. The results provide strong evidence for the motivating power of status and social recognition in labor relations.
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Labor-Friendly Corporate Practices: Is What is Good for Employees Good for Shareholders?
Olubunmi Faleye & Emery Trahan
Journal of Business Ethics, June 2011, Pages 1-27
Abstract:
As corporate managers interact with non-shareholder stakeholders, potential tradeoffs emerge and questions arise as to how these interactions impact shareholder value. We argue that this shareholder-stakeholder debate is an important issue within the overall corporate governance and corporate policy domain and examine one such stakeholder group - employees - by studying labor-friendly corporate practices. We find that announcements of labor-friendly policies are associated with positive abnormal stock returns. Labor-friendly firms also outperform otherwise similar firms, both in terms of long-run stock market returns and operating results. In addition, we find that the probability and benefits of labor-friendliness increase with the demand for highly skilled labor. Our analysis of excess executive compensation suggests that top management derives no pecuniary benefits from labor-friendly practices. We interpret our results as consistent with a genuine concern for employees translating into higher productivity and profitability, which in turn facilitate value creation. It appears that the benefits of labor-friendly practices significantly outweigh the costs and that what is good for employees is good for shareholders.
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Sreedhari Desai, Harris Sondak & Kristina Diekmann
Organizational Behavior and Human Decision Processes, forthcoming
Abstract:
It is widely acknowledged that procedural justice has many positive effects. However, some evidence suggests that procedural justice may not always have positive effects and may even have negative effects. We present three studies that vary in method and participant populations, including an archival study, a field study, and an experiment, using data provided by the general American population, Indian software engineers, and undergraduate students in the US. We demonstrate that key work-related variables such as people's job satisfaction and performance depend on procedural justice, perceived uncertainty, and risk aversion such that risk seeking people react less positively and at times negatively to the same fair procedures that appeal to risk averse people. Our results suggest that one possible reason for these effects is that being treated fairly reduces people's perception of uncertainty in the environment and while risk averse people find low uncertainty desirable and react positively to it, risk seeking people do not. We discuss the implications of our findings for theories of procedural justice including the uncertainty management model of fairness, the fair process effect, and fairness heuristic theory.
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Thomas Timmerman
Journal of Quantitative Analysis in Sports, 2011
Abstract:
The purpose of this study was to examine the relationship between leader experience and team performance. Major League Baseball managers from 1903 to 2006 provided the context within which the relationships were studied. Experience was conceptualized in terms of games managed and seasons managed at the occupational and organizational levels. Cross-sectional analyses revealed a small but significant positive relationship between all types of experience and team performance after controlling for team ability. Analyzing the data longitudinally with random coefficient modeling, however, revealed only one significant experience-performance relationship. After controlling for team ability, there is evidence that managers improve team performance until a peak at about 1200 games. There is no evidence of a positive linear relationship of any kind or that this improvement transfers to other teams.
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Usefulness of Dismissing and Changing the Coach in Professional Soccer
Andreas Heuer et al.
PLoS ONE, March 2011, e17664
Abstract:
Whether a coach dismissal during the mid-season has an impact on the subsequent team performance has long been a subject of controversial scientific discussion. Here we find a clear-cut answer to this question by using a recently developed statistical framework for the team fitness and by analyzing the first two moments of the effect of a coach dismissal. We can show with an unprecedented small statistical error for the German soccer league that dismissing the coach within the season has basically no effect on the subsequent performance of a team. Changing the coach between two seasons has no effect either. Furthermore, an upper bound for the actual influence of the coach on the team fitness can be estimated. Beyond the immediate relevance of this result, this study may lead the way to analogous studies for exploring the effect of managerial changes, e.g., in economic terms.
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Organizational Citizenship Behavior and Career Outcomes: The Cost of Being a Good Citizen
Diane Bergeron et al.
Journal of Management, forthcoming
Abstract:
Existing research suggests that relationships among organizational citizenship behavior (OCB), task performance, and individual career outcomes are necessarily positive. The authors question this assumption and hypothesize that in organizations with outcome-based control systems, time spent on OCB comes at a cost to task performance. Building on this idea, the authors propose not only that time spent on task performance is more important than time spent on OCB in determining career outcomes (i.e., performance evaluation, salary increase, advancement speed, promotion) in an outcome-based control system but also that time spent on OCB may negatively impact career outcomes. Results based on archival data from 3,680 employees in a professional services firm lend some support for these ideas. Specifically, time spent on task performance was more important than OCB in determining all four career outcomes. Further, controlling for time spent on task performance, employees who spent more time on OCB had lower salary increases and advanced more slowly than employees who spent less time on OCB. These findings suggest that relationships between OCB and outcomes are more complex than originally thought and that boundary conditions may apply to conclusions drawn about the outcomes of OCB.
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The Uniqueness Effect in Selection Interviews
Nicolas Roulin, Adrian Bangerter & Elise Yerly
Journal of Personnel Psychology, Spring 2011, Pages 43-47
Abstract:
Today's job market is competitive, leading applicants to try and "stand out from the crowd." The job interview is an ideal situation for doing so, for instance by preparing original or unique answers to traditional interview questions. This study tested empirically how an applicant providing a unique answer was evaluated relative to applicants providing qualitatively equivalent but nonunique answers. Applicants providing unique answers obtained higher evaluations and improved their chances to get a job offer. Our results suggest that interviewers may be influenced by the uniqueness of applicants' answers, irrespective of applicants' true abilities to perform on the job.
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Wen-Dong Li, Richard Arvey & Zhaoli Song
Leadership Quarterly, June 2011, Pages 520-534
Abstract:
We examined the influence of general mental ability, self-esteem and family socioeconomic status on leadership role occupancy and leader advancement (defined as the increase in supervisory scope via the number of employees supervised), as well as the moderating role of gender in these relationships. Using a nationally representative sample from the U.S. with 1747 working individuals across a time span of 10 years, we found that 1) self-esteem had a significant and positive influence on leadership role occupancy for both males and females and on leadership advancement in terms of supervisory scope over time for females; and 2) family socioeconomic status exerted an adverse effect on female leadership advancement. The influence of general mental ability on the two leadership variables was not significant for either males or females, but the difference in its effect on the initial status of supervisory scope for males and females was significant. These results suggest that self-esteem plays an important role in leadership role occupancy and leader advancement and that the influence of family socioeconomic status on leader advancement is contingent on gender.
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The Consequences of Mandatory Corporate Sustainability Reporting
Ioannis Ioannou & George Serafeim
Harvard Working Paper, March 2011
Abstract:
We examine the effect of mandatory sustainability reporting on several measures of socially responsible management practices. Using data for 58 countries, we show that after the adoption of mandatory sustainability reporting laws and regulations, the social responsibility of business leaders increases. We also document that both sustainable development and employee training become a higher priority for companies, and that corporate governance improves. Furthermore, we find that companies implement more ethical practices, reduce bribery and corruption, and that managerial credibility increases. These effects are larger for countries with stronger law enforcement and more widespread assurance of sustainability reports. We conclude with thoughts about mandatory sustainability and integrated reporting.
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Corporate governance when founders are directors
Feng Li & Suraj Srinivasan
Journal of Financial Economics, forthcoming
Abstract:
We examine chief executive officer (CEO) compensation, CEO retention policies, and mergers and acquisition (M&A) decisions in firms in which founders serve as a director with a nonfounder CEO (founder-director firms). We find that founder-director firms offer a different mix of incentives to their CEOs than other firms. Pay-for-performance sensitivity for nonfounder CEOs in founder-director firms is higher and the level of pay is lower than that of other CEOs. CEO turnover sensitivity to firm performance is also significantly higher in founder-director firms compared with nonfounder firms. Overall, the evidence suggests that boards with founder-directors provide more high-powered incentives in the form of pay and retention policies than the average US board. Stock returns around M&A announcements and board attendance are also higher in founder-director firms compared with nonfounder firms.
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James Sesil & Yu Peng Lin
Industrial Relations, July 2011, Pages 514-534
Abstract:
This paper examines the productivity effect of broad-based and executive stock option programs in adoption year and five subsequent years. The findings include a positive impact on productivity, which is maintained over a five-year period after adoption for executive plans but diminishes immediately for broad-based plans. We interpret these findings as evidence of stock option usage being of benefit to organizations. However, to sustain the impact of broad-based plans options, grants may need to be made with the same frequency as executive option grants.
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Jamie Mulligan & Rebecca Bull Schaefer
Journal of Leadership & Organizational Studies, August 2011, Pages 385-396
Abstract:
Using simulations to study the effects of performance appraisal format on workforce performance potential, the authors explore modifications of force distributional rating systems that terminate poor performers each evaluation period. Findings suggest that systems with probationary periods before termination may realize some of the gains in workforce performance potential that traditional "rank and yank" systems pose, while also having the potential to increase fairness perceptions and, in turn, reduce voluntary turnover. Despite perceptions in practice, results show that temporary use of "rank and yank" may do more harm than good in that levels of workforce performance potential may not be maintained.
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Former CEO Directors: Lingering CEOs or Valuable Resources?
Rüdiger Fahlenbrach, Bernadette Minton & Carrie Pan
Review of Financial Studies, forthcoming
Abstract:
We investigate corporate governance experts' claim that it is detrimental to a firm to reappoint former CEOs as directors after they step down as CEOs. We find that more successful and more powerful former CEOs are more likely to be reappointed to the board multiple times after they step down as CEOs. Firms benefit, on average, from the presence of former CEOs on their boards. Firms with former CEO directors have better accounting performance, have higher relative turnover-performance sensitivity of the successor CEO, and can rehire their former CEO directors as CEOs after extremely poor firm performance under the successor CEOs.
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Diana Wright Guerin et al.
Leadership Quarterly, June 2011, Pages 482-494
Abstract:
This is the first study examining the developmental roots of leadership potential in a longitudinal framework from age 2 to 29 years. Data are derived from the Fullerton Longitudinal Study. Using structural equation modeling (N = 106), the direct and indirect effects of adolescent personality (extraversion) and intelligence (IQ) on adult social skills and leadership potential were investigated. In addition, we examined their joint effect on leadership potential using both a variable and a pattern approach. The relation between adolescent extraversion and adult leadership potential was completely mediated by adult social skills. Adolescent IQ had neither a direct nor an indirect relationship with adult leadership potential, nor did it interact with extraversion in predicting adult leadership potential. Utilizing longitudinal data from early childhood through adulthood, we delineated a specific developmental pathway to adult leadership potential spanning the first three decades of life. A pathway beginning in early childhood with temperamental approach/withdrawal shows stability throughout childhood and leads to extraversion in adolescence, which in turn relates to leadership potential in adulthood via adult social skills.
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Networking or Not Working: A Model of Social Procrastination from Communication
Uliana Makarov
Journal of Economic Behavior & Organization, forthcoming
Abstract:
This paper provides an explanation for why many organizations are concerned with "e-mail overload" and implement policies to restrict the use of e-mail in the office. In a theoretical model we formalize the tradeoff between increased productivity from high priority communication and reduced productivity due to distractions caused by low priority e-mails. We consider employees with present-biased preferences as well as time consistent employees. All present-biased employees ex-ante are motivated to read only important e-mail, but in the interim some agents find the temptation to read all e-mail in their inbox too high, and as a result suffer from productivity losses. A unique aspect of this paper is the social nature of procrastination, which is a key to the e-mail overload phenomenon. In considering the firm's policies to reduce the impact of e-mail overload we conclude that a firm is more likely to restrict e-mail in the case of employees with hyperbolic preferences than in the case of time-consistent employees.
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Do Firms Use Time-Vested Stock-Based Pay to Keep Research and Development Investments Secret?
David Erkens
Journal of Accounting Research, September 2011, Pages 861-894
Abstract:
I find that executives' unvested equity holdings are larger when executives are employed by R&D-intensive firms in industries that rely more on secrecy to profit from R&D. Moreover, I find that this relation is more pronounced for executives with a greater ability to exploit R&D-related information and also holds for nonexecutive employees. In addition, I find that these firms use option grants with longer vesting periods and that unvested equity holdings reduce the likelihood that their executives leave to find employment elsewhere. Overall, my findings are consistent with firms using time-vested stock-based pay to reduce the leakage of R&D-related information to competitors through employee mobility.