Engaging employees in health care can contain costs and improve quality

Employers need to do much more to change some of the deep-seated employee attitudes and behaviors that are driving health care costs. This article debunks common employer misconceptions about employees' attitudes and behaviors with regard to health care. It then discusses the results employers can obtain by taking specific initiatives that provide employees with the motivation and resources they need to effectively manage health risks and make informed health care decisions.     

Working with monsters: counting the costs of workplace psychopaths and other toxic employees

We explore the role of ‘Workplace Monsters’ in the global burden of disease, including the $US1.15 trillion annual cost of depressive and anxiety disorders. We propose the productivity drain created by these individuals is a wicked problem, integrating several disciplines to position workplace monsters as significant corporate governance issues for organisations. Our discussion covers Monster prevalence, impacts on fellow workers and estimates of the costs incurred to business. We classify Monsters as ‘appreciating liabilities’ and call for future research to develop means of accounting for their inherent organisational costs in an effort to prompt action to address their destructive impacts.     

Single sampling inspection plans with specified acceptance probability and minimum average costs. Part I

Abstract

The main purpose of the present paper is to give a tabulation and discussion of properties of a system of single sampling attribute plans obtained by minimizing average costs under the restriction that a point on the OC-curve has been fixed.     

Credit stimulus and corporate excess employees

This study examines how the large and unexpected Chinese credit stimulus in 2008 affects firms' labor decision. Using a large sample of industrial firms, we find that state-owned enterprises tend to hire more employment than their counterparts after the credit stimulus. Mechanism analysis shows that the credit stimulus package is followed by lower financing costs and more bank loans for the state-owned enterprises, enhancing the degree of their excess employment compared with their counterparts. Moderating effect tests suggest that the overemployment effect is stronger in provinces with a high unemployment level, where the political leaders have stronger promotion incentives, in industries that are selected as the key stimulating industry, and in provinces with higher bank competition level, but weaker in provinces with higher marketization level. Finally, we find that the firm's overemployment caused by the credit stimulus plans decreases firm labor productivity. Overall, our findings shed light on how credit policy influence firms' labor decision and offer important implications for regulators.     

把握历史机遇 承担做市使命

国际金融危机以来,央行抓住历史机遇适时启动人民币国际化进程,推出跨境贸易人民币结算试点及新兴市场货币挂牌工作。在央行指引下,中国银行全行统一部署,充分发挥各项优势,两项业务均取得可喜成果。同时,中国银行俄罗斯子行在莫斯科银行间货币交易所也应邀成为卢布兑人民币市场的做市商,实现了国内海外的同时做市。未来中国银行将一如既往地积极参与人民币国际化进程,脚踏实地地推动新兴市场货币做市业务发展,承担历史赋予的使命。     

How to cultivate engaged employees

Everybody knows that an empowered team enhances everyone's performance, including the manager's. Vlachoutsicos, of the Athens University of Economics and Business, argues that the vital, particular ingredient in buoying employees is fostering a sense of mutual dependence, or "mutuality," every time you interact with subordinates. He offers six lessons in achieving mutuality: 1. Be modest. Specifically, avoid talking about your track record and instead focus on your people's present needs. 2. Listen seriously--and show it. Don't assume that folks recognize how attentive you are. Make sure the outward signs reflect it. 3. Invite disagreement. But deliver the invitation artfully so that people really do pipe up. 4. Focus the agenda. Don't let discussion run amok in the name of openness. Streamline it so that the progress is palpable to all participants. 5. Don't try to have all the answers. See yourself more as a catalyst for problem solving than as a problem solver per se. 6. Don't insist that a decision must be made. Give the decision-making process time to breathe, even if that sometimes means delaying a conclusion. The author richly illustrates each of these lessons with a compelling story from his lifelong experience.     

Managerial ownership with rent-seeking employees

In some cases, the incentives of the manager will affect the behavior of the firm’s employees. A manager with low-powered incentives will discourage employees from engaging in destructive rent-seeking activities. Union members will need to cooperate with this poorly compensated manager if the firm will have any chance to succeed. The elimination of rent-seeking costs can increase the value of owners’ stakes in the firm. Thus, value can be maximized by giving control to a CEO with an ownership stake strictly less than 100 percent.     

Transaction costs and crowding

We use industry data to determine whether crowding of the investment space is caused by portfolio construction processes typical to the investment community. In particular, this paper examines the extent that transaction cost models cause crowding of the investment space, even when the investment models are completely unrelated to one another. We find that as transaction costs become more significant in the portfolio creation process as portfolios increase in size from $500 million to $5 billion, crowding actually declines for long-only portfolios and mainly declines, but sometimes increases for market neutral portfolios. This research sheds more light on how crowding develops through actions by players within the financial system.     

Robust stock option plans

The main purpose of this paper is to address the issue of robustness of stock option plans, which is essential for reliable accounting valuations. The introduction of the accounting standards SFAS 123R and IFRS 2 for executive stock options has led to an important change. As companies are now forced to value their stock options at grant date for accounting purposes, the robustness of prices against the choice of certain valuation models and input parameters has become a very important issue. We address this issue by first analyzing certain building blocks of existing stock option plans with regard to their robustness properties. Based on our analysis, we then show how robustness of stock option plans can be achieved. The resulting stock option plans are both transparent in structure and reasonable in respect to the incentives they provide in order to increase shareholder value. We therefore conclude that stock options can be reliably expensed, if the corresponding plans are properly designed.     

The best-laid incentive plans

Hiram Phillips couldn't have been in better spirits. The CFO and chief administrative officer of Rainbarrel Products, a diversified consumer-durables manufacturer, Phillips felt he'd single-handedly turned the company's performance around. He'd only been at Rainbarrel a year, but the company's numbers had, according to his measures, already improved by leaps and bounds. Now the day had come for Hiram to share the positive results of his new performance management system with his colleagues. The corporate executive council was meeting, and even CEO Keith Randall was applauding the CFO's work: "Hiram's going to give us some very good news about cost reductions and operating efficiencies, all due to the changes he's designed and implemented this year." Everything looked positively rosy--until some questionable information began to trickle in from other meeting participants. It came to light, for instance, that R&D had developed a breakthrough product that was not being brought to market as quickly as it should have been--thanks to Hiram's inflexible budgeting process. Then, too, an employee survey showed that workers were demoralized. And customers were complaining about Rainbarrel's service. The general message? The new performance metrics and incentives had indeed been affecting overall performance--but not for the better. Should Rainbarrel revisit its approach to performance management? Commentators Stephen Kaufman, a senior lecturer at Harvard Business School; compensation consultant Steven Gross; retired U.S. Navy vice admiral and management consultant Diego Hernandez; and Barry Leskin, a consultant and former chief learning officer for Chevron Texaco, offer their advice in this fictional case study.     

The residual claim of rank and file employees

This paper estimates the intensity of the value-maximization incentives for average employees generated through the combination of wage, salary, and bonus mechanisms. This is accomplished through estimation of the elasticity of average employee hourly compensation with respect to changes in firm performance. This performance elasticity indicates the degree of alignment between employee and shareholder objectives, and it can also be interpreted as an incomplete residual income claim for employees. The estimated performance elasticity for the full sample of firms is not significantly different from a CEO salary-plus-bonus performance elasticity of 0.1 published in Coughlan and Schmidt [Journal of Accounting and Economics 7 (1985) 43]. Jensen and Murphy [Journal of Political Economy 98 (1990) 225] find that CEOs received approximately US$3.25 for each US$1000 increase in shareholder wealth. This translates to an elasticity of just over 57, but most of these payments come through channels other than salaries and bonuses. Jensen and Murphy report a performance sensitivity of salary and bonus payments for CEOs that is equivalent to analogous elasticities for rank and file workers reported in this paper. While the rewards CEOs receive through salary and bonus channels are larger than those of average employees in absolute terms, these rewards represent comparable fractions of income. This paper also finds differences in the pay-performance link based on firm size. The estimated performance elasticity is 0.197 in small firms and is indistinguishable from zero in large firms. The results indicate that firms use wage, salary and bonus adjustments to direct approximately 5.3% of firm value increases to employees. Although the precise link between pay and performance is not visible with this data, these results indicate that average employees benefit when the firm performs well.