Managing
The Paradox of Meritocracy in Organizations
Emilio Castilla & Stephen Benard
Administrative Science Quarterly, December 2010, Pages 543-576
Abstract:
In this article, we develop and empirically test the theoretical argument that when an organizational culture promotes meritocracy (compared with when it does not), managers in that organization may ironically show greater bias in favor of men over equally performing women in translating employee performance evaluations into rewards and other key career outcomes; we call this the "paradox of meritocracy." To assess this effect, we conducted three experiments with a total of 445 participants with managerial experience who were asked to make bonus, promotion, and termination recommendations for several employee profiles. We manipulated both the gender of the employees being evaluated and whether the company's core values emphasized meritocracy in evaluations and compensation. The main finding is consistent across the three studies: when an organization is explicitly presented as meritocratic, individuals in managerial positions favor a male employee over an equally qualified female employee by awarding him a larger monetary reward. This finding demonstrates that the pursuit of meritocracy at the workplace may be more difficult than it first appears and that there may be unrecognized risks behind certain organizational efforts used to reward merit. We discuss possible underlying mechanisms leading to the paradox of meritocracy effect as well as the scope conditions under which we expect the effect to occur.
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Alessandro Bucciol, Daniel Houser & Marco Piovesan
Harvard Working Paper, February 2011
Abstract:
To encourage worker productivity offices prohibit Internet use. Consequently, many employees delay Internet activity to the end of the workday. Recent work in social psychology, however, suggests that using willpower to delay gratification can negatively impact performance. We report data from an experiment where subjects in a Willpower Treatment are asked to resist the temptation to join others in watching a humorous video for 10 minutes. In relation to a baseline treatment that does not require willpower, we show that resisting this temptation detrimentally impacts economic productivity on a subsequent task.
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When a Nudge Isn't Enough: Defaults and Saving Among Low-Income Tax Filers
Erin Todd Bronchetti et al.
NBER Working Paper, March 2011
Abstract:
Recent evidence suggests that the default options implicit in economic choices (e.g., 401(k) savings by white-collar workers) have extraordinarily large effects on decision-making. This study presents a field experiment that evaluates the effect of defaults on savings among a highly policy-relevant population: low-income tax filers. In the control condition, tax filers could choose (i.e., opt in) to receive some of their federal tax refund in the form of U.S. Savings Bonds. In the treatment condition, a fraction of the tax refund was automatically directed to U.S. Savings Bonds unless tax filers actively chose another allocation. We find that the opt-out default had no impact on savings behavior. Furthermore, our treatment estimate is sufficiently precise to reject effects as small as one-fifth of the participation effects found in the 401(k) literature. Ancillary evidence suggests that this "nudge" was ineffective in part because the low-income tax filers in our study had targeted plans to spend their refunds. These results suggest that choice architecture based on defaults may be less effective in certain policy-relevant settings, particularly where intentions are strong.
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Neil Longley & Glenn Wong
Managerial and Decision Economics, forthcoming
Abstract:
Using a data set of well over 1200 different pitchers covering an almost 20-year time period, this paper reveals that the process of human capital formation for professional baseball pitchers is relatively slow, rendering minor league statistics to be of limited value when projecting major league performance. This indicates that a considerable amount of the performance differences across pitchers at the major league level are revealed only after they reach the majors, and hence is unforeseen given their minor league statistics. These findings illustrate just how difficult it is for all organizations to predict the future success of their apprentice-level employees. Even in an industry such as baseball - where employee output is easily measurable and highly quantifiable, and where the nature of the work at the developmental level is identical to that at the advanced level (i.e. pitching a baseball) - apprentice-level performance only provides modest insights into how that employee will ultimately perform at the advanced level. Thus, firms that erroneously overestimate the importance of apprentice-level performance are at risk of making systematic errors in personnel decisions.
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The costs of intense board monitoring
Olubunmi Faleye, Rani Hoitash & Udi Hoitash
Journal of Financial Economics, forthcoming
Abstract:
We study the effects of the intensity of board monitoring on directors' effectiveness in performing their monitoring and advising duties. We find that monitoring quality improves when a majority of independent directors serve on at least two of the three principal monitoring committees. These firms exhibit greater sensitivity of CEO turnover to firm performance, lower excess executive compensation, and reduced earnings management. The improvement in monitoring quality comes at the significant cost of weaker strategic advising and greater managerial myopia. Firms with boards that monitor intensely exhibit worse acquisition performance and diminished corporate innovation. Firm value results suggest that the negative advising effects outweigh the benefits of improved monitoring, especially when acquisitions or corporate innovation are significant value drivers or the firm's operations are complex.
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Organizing Contests for Status: The Matthew Effect vs. the Mark Effect
Matthew Bothner, Joel Podolny & Edward Bishop Smith
Management Science, March 2011, Pages 439-457
Abstract:
What is the best way to design tournaments for status, in which individuals labor primarily for the esteem of their peers? What process, in other words, should organizers of status-based contests impose upon those who covet peer recognition? We propose a formal model of status-based competition that contrasts two competing alternatives. The first, following Merton, is the "Matthew Effect," according to which a tournament's architect directs slack resources to elite actors and thus widens the distribution of rewards by favoring cumulative advantage. The second is the "Mark Effect," under which a tournament's designer instead pushes slack resources to marginal actors and thus tightens the distribution of rewards. Our results suggest that although the Mark Effect is better for the social welfare of most tournaments, the Matthew Effect is preferable in two distinct contexts: in small tournaments where variation in underlying ability translates into acute advantages for the most capable contestants; and in large tournaments whose contestants face constant, rather than rising, marginal costs-a condition we relate to contestants' perception of their work as intrinsically valuable. Our contributions are twofold: We find, counter to the thrust of Merton's work, that cumulative advantage is not invariably optimal for the functioning of status contests; and we identify circumstances in which the production of superstars is likely to make contests for status better off in aggregate. Implications for future research on status and management are discussed.
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Star Wars: Exclusive Talent and Collusive Outcomes in Labor Markets
Arijit Mukherjee & Luís Vasconcelos
Journal of Law, Economics, & Organization, forthcoming
Abstract:
Exclusive employment contracts and collusion on wages are alternative mechanisms that firms may use to extract surplus from highly productive workers ("stars"). Exclusive employment contracts (i.e., "covenant not to compete") are common in many industries, but the Courts often refrain from enforcing them, citing harm to workers due to restricted turnover. We analyze the interaction between these two channels of surplus extraction and argue that in the presence of collusion, enforcement of exclusive contracts can, in fact, benefit the workers: Although a strong enforcement of exclusivity restricts labor turnover, it can also hinder the firms' ability to sustain collusion in the labor market. We characterize the optimal level of enforcement and find that both perfect enforcement and no enforcement can be socially suboptimal. Moreover, a stronger enforcement can improve matching efficiency by rendering collusion unsustainable and may lead to a more equitable surplus distribution between the firms and the workers.
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How important is pro-social behaviour in the delivery of public services?
Paul Gregg et al.
Journal of Public Economics, forthcoming
Abstract:
A number of papers have suggested that pro-social behaviour in the workplace may be sensitive to the institutional environment, but there is little empirical research that attempts to test this directly using data on worker behaviour. This is the aim of this paper. We show that individuals in the non-profit sector are significantly more likely to do unpaid overtime than those in the for-profit sector. However, we find no evidence of adjustment along either the extensive or intensive margins when individuals change sectors. The results of our analysis therefore point to selection and we find supporting evidence that individuals do self-select on the basis of their propensity to donate labour.
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Andrew Cooke et al.
Biological Psychology, March 2011, Pages 370-378
Abstract:
Competition can influence performance, however, the underlying psychological and physiological mechanisms are poorly understood. To address this issue we tested mechanisms underlying the competition-performance relationship. Measures of anxiety, effort, enjoyment, autonomic activity and muscle activity were obtained from 94 participants during a handgrip endurance task completed in individual and competition conditions. Competition improved endurance performance, increased anxiety, effort, enjoyment, heart rate and muscle activity, and decreased heart rate variability, R-wave to pulse interval and pulse amplitude. Enjoyment fully mediated whereas effort and heart rate variability partially mediated the effects of competition on performance. In addition, anxiety moderated the competition-performance relationship; those with lower anxiety performed better in competition. We confirm that competition elicits effects on performance through psychological and physiological pathways, and identify mechanisms that underlie improved endurance performance during competition.
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Erik Bijleveld, Ruud Custers & Henk Aarts
Journal of Experimental Social Psychology, forthcoming
Abstract:
Monetary rewards facilitate performance on behavioral and cognitive tasks, even when these rewards are perceived without conscious awareness. Also, recent research suggests that consciously (vs. unconsciously) perceived rewards may prompt people to more strongly concentrate on task stimuli and details. Here we propose that the latter is sometimes dysfunctional, in that it prevents improvements in task performance. We used an Attentional Blink paradigm, in which such enhanced concentration on task stimuli is detrimental to performance. Participants were consciously (supraliminally) or unconsciously (subliminally) exposed to a high-value or low-value coin that they could earn by performing well on an Attentional Blink trial. As hypothesized, high-value rewards increased performance when they were presented subliminally, while this performance benefit vanished when high-value rewards were presented consciously. We discuss this finding in the context of recent research on unconscious goal pursuit.
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Exploring touch as a positive workplace behavior
Bryan Fuller et al.
Human Relations, February 2011, Pages 231-256
Abstract:
Whereas most research has focused on the negative aspects of touch in the workplace (i.e. sexual harassment), this study focuses upon the positive use of touch. In an effort to explain individual differences in the use of workplace touch, three sequential studies are used to introduce the concepts of workplace touch self-efficacy and workplace touch initiation anxiety. In Study 1 we develop scales to assess the constructs. Study 2 provides an initial examination of the construct validity of the measures developed in Study 1. Results of Study 3 indicate that supervisor reports of touch self-efficacy and physiological touch anxiety are related to subordinate reports of supervisor touch. Additionally, results show that supervisor use of touch is related to several indicators of supervisor social effectiveness. Finally, sex of the supervisor appears to play a role in workplace touch as female supervisors report less touch anxiety, greater touch self-efficacy and more use of touch than male supervisors.
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Taking the reins: The effects of new leader status and leadership style on team performance
Stephen Sauer
Journal of Applied Psychology, forthcoming
Abstract:
New leaders face a challenging task when they take charge of their teams. They have to determine how best to guide the work process, and they must understand how their behaviors will affect the members of their team. This research examines how a newly assigned team leader's status moderates subordinates' reactions to different leadership styles to affect assessments of the leader's self-confidence and effectiveness, and how this impacts team performance. Across 2 experimental studies, results demonstrate that low-status leaders are rated as more effective when they use a directive style, whereas high-status leaders are viewed as more effective when they use a participative style, and this relationship is mediated by perceptions of self-confidence. In addition, teams whose leaders are viewed more favorably perform better on a complex group task. These findings imply that low-status individuals are able to enhance their level of personal power by drawing on whatever positional power they hold, whereas high-status individuals are better off relying solely on their personal power to influence others. This research also provides a clear demonstration that assessments of new leaders' behaviors are subject to an appraisal that is clouded by observers' status perceptions and attributions.
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Relative Wealth Concerns and Entrepreneurship
Manoj Atolia & Kislaya Prasad
Economica, April 2011, Pages 294-316
Abstract:
We develop a model of entrepreneurship in which market frictions limit the possibilities for diversifying entrepreneurial risk. A concern for relative standing arises even though individuals consume only standard commodities. In contrast to complete markets, an increase in sector-specific aggregate risk increases entrepreneurship due to relative wealth concerns. A change in the profile of the economy to include more risk-averse people results in an even greater increase in entrepreneurship. Thus relative wealth concerns mitigate the reduction in entrepreneurship arising from the non-diversifiability of entrepreneurial risk. We examine the effects of uncertainty about economic policies such as market-based reforms on entrepreneurship.
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Emily Haisley & George Loewenstein
Journal of Marketing Research, February 2011, Pages 103-115
Abstract:
The authors examine the impact of gifts on deposit balances and customer satisfaction in a longitudinal field experiment conducted at a commercial bank. They find that gifts increased deposit balances, survey response rates, and customer satisfaction compared with the no-gift control. They manipulated several factors within the gift treatment: gift type, the accompanying message, and the sequence of gift value, which improved ($35 then $100 gift), worsened ($100 then $35 gift), or was a single gift. A highly detrimental effect of decreasing gift value occurred on deposit balances. This "deterioration aversion" persisted in a long-term follow-up analysis of deposit balances. A vignette experiment replicates deterioration aversion and extends the results, demonstrating increased effectiveness of improving gifts over constant gift sequences and indicating that the mechanism underlying deterioration aversion involves the violation of expectations.
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John Seiter, Garett Brownlee & Matthew Sanders
Journal of Applied Social Psychology, January 2011, Pages 150-159
Abstract:
This study examined the role of gratuity guidelines on tipping behavior in restaurants. When diners were finished with their meals, they were given checks that either did or did not include calculated examples informing them what various percentages of their bill would amount to. Results indicated that parties who received the gratuity examples left significantly higher tips than did those receiving no examples. These results and their implications are discussed.
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Russell Crook et al.
Journal of Applied Psychology, forthcoming
Abstract:
Theory at both the micro and macro level predicts that investments in superior human capital generate better firm-level performance. However, human capital takes time and money to develop or acquire, which potentially offsets its positive benefits. Indeed, extant tests appear equivocal regarding its impact. To clarify what is known, we meta-analyzed effects drawn from 66 studies of the human capital-firm performance relationship and investigated 3 moderators suggested by resource-based theory. We found that human capital relates strongly to performance, especially when the human capital in question is not readily tradable in labor markets and when researchers use operational performance measures that are not subject to profit appropriation. Our results suggest that managers should invest in programs that increase and retain firm-specific human capital.
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Does Performance Management Affect Job Turnover Intention in the Federal Government?
Geon Lee & Benedict Jimenez
American Review of Public Administration, March 2011, Pages 168-184
Abstract:
From a reform strategy that promises to restore citizen confidence in government, to a hydra-headed monster that has produced unintended negative consequences, performance management has indeed been a controversial topic in the field of public administration. This study examines how performance-based management practices shape organizational behavior, specifically employee job turnover intention. Using data from the 2005 Merit Principles Survey, the authors find that performance-based reward system and performance-supporting supervision are associated with a decrease in the likelihood that federal employees will leave their agencies. The implications of the findings are discussed in the study.