Distorted Performance Measures and Dynamic Incentives

Incentive contracts must typically be based on performance measures that do not exactly match the agents' true contribution to the principals' objectives. Such misalignment may pose difficulties for effective incentive design. We analyze the extent to which implicit dynamic incentives, such as career concerns and ratchet effects, alleviate or aggfravate these problems. Our analysis demonstrates that the interplay between distorted performance measures and implicit incentives implies that career and ratchet effects have real effects in that stronger ratchet effects or greater distortion may increase optimal monetary incentives, and that distortion affects the optimality of different promotion rules.     

There is no ‘I’ in team: Career concerns,risk‐taking incentives,and team outcomes

The National Basketball Association contracting rules provide plausibly exogenous variation in career concerns near contract end. We use this setting to study how individual career concerns affect risk‐taking behavior and can sabotage team performance. Using the frequency and duration of player injuries from 1991 to 2013 we measure individual risk‐taking behavior. We find that the average player's likelihood of missing a game due to injury falls by 0.06 percentage points (or over 100% relative to the mean injury rate) in the final 3 months of his contract, and when missing games due to injury is unavoidable, his recovery time drops by 22 days. However, “elite” players with virtually no career concerns actually miss more games due to injury. Finally, we find that elite players missing too many games and “average” players playing before healthy, combine to hurt team performance. For each additional player in the last 3 months on contract, the win probability for that team falls by over 2.6%.     

One job,one deal…or not: do generations respond differently to psychological contract fulfillment?

This paper investigates generational differences in the relations between psychological contract fulfillment and work attitudes. Data were collected from a sample of 909 employees in the Dutch service sector. Structural equation modeling analyses were used to test the moderating effects of generational differences on the influence of psychological contract fulfillment on affective commitment and turnover intention. The relationship between psychological contract fulfillment and these work outcomes was moderated by generational differences. Furthermore, results indicate that different generations respond differently to different aspects of psychological contract fulfillment, such as career development, job content, organizational policies, social atmosphere and rewards. The study provides evidence that generational differences impact the reciprocal relationship between employer and employee. Results from this study suggest that Baby Boomers and Generation X may be more motivated by social atmosphere, whereas Generation Y may be more motivated by job content and career development. Fair organizational policies are particularly motivating to Generation X, and providing rewards, though more important to Generation Y, seem mostly unrelated to work outcomes. This article is the first to study the moderation of generational differences in the relationships between psychological contract fulfillment and work outcomes.     

An investigation of ingratiation as a career management strategy: evidence from Singapore

In spite of the recognition that career politics, and therefore ingratiation, is widely used to manage careers, there is a dearth of empirical studies on ingratiation as a career management strategy. Consistent with Ferris and Kacmar's (1988) suggestion, the study reported here investigated the conditions (defined by situational variables, career concerns and personality variables) under which ingratiation is used as a career management strategy. Data were obtained through a structured questionnaire from professional employees (N = 214) in public and private sector organizations in Singapore.

Factor analysis of the 21-item career concerns scale revealed four solutions representing internal and external career concerns. The results of the hierarchical regression revealed that situational variables explained most of the variance in ingratiation, followed by career concerns and personality variables. Among the individual variables, task ambiguity, supervisor reward power, managerial responsibility and need for achievement were significant while personal success approached significance. Internal career concern of autonomy development was unrelated to ingratiation. Of the interaction terms, only supervisor reward power and Machiavellianism approached significance. Directions for future studies are suggested.     

Recruitment,Training, and Career Concerns

We examine training and recruitment policies in a two‐period model that nests two forms of production, “routine” work where ability and effort are substitutes and “creative” work where they are complements. Alternative ways of improving average ability have opposite implications for agents' career concerns. Although teaching to the top (training complementary to ability) or identifying star performers increases agents' career concerns, teaching to the bottom has the opposite effect. The paper also makes more general comments relating to models of reputation.     

Evolutionary dynamics of supervision-compliance game on optimal pre-positioning strategies in relief supply chain management

Emergency supply reserves are indispensable material bases in relief supply chain management. However, limited in-kind relief resources stockpiled in government-managed depositories may fail to meet the surging demand following the disaster. This paper develops an optimal pre-positioning strategy for emergency supplies with pre-purchasing contracts between local governments (LGs) and emergency supply manufacturers (ESMs) to properly address demand uncertainty in different disaster scenarios. Physical materials and production capacity are integrated into a holistic and hybrid reserve model to mitigate overstock or stock-out risks. Applying an evolutionary game-theoretic framework, contract enforcement has been extensively analyzed to avoid LGs dereliction of duty and ESMs’ breach of contract. A novel dynamic penalty mechanism is proposed to control the fluctuations in strategy choices and effectively improve ESMs’ compliance without LGs’ excessive inputs on supervision. The numerical simulation results, along with sensitivity analyses on major cost-accounting, demand characteristics, and environmental parameters, show that safety stock is the primary guarantee in most cases, while reactive stock acts as an important supplement for disasters with long-term consequences. The joint reserve policy (except for no action strategy) outperforms the price-only contract on the total reserved quantity of emergency supplies at a lower long-term average cost. The initial state and cost-benefit structures dominate the complex interplay and periodical fluctuations in the supervision-compliance game. The doomed cycle of order, disorder, and reorder in contract performance management can be well managed under the proposed dynamic penalty mechanism, which appears much more efficient and incentive-compatible in promoting both parties to fulfill their obligations.     

Career Concerns and Product Market Competition

This paper studies the effect of increased competition in the product market on managerial incentives. I propose a simple model of career concerns where firms are willing to pay for managerial talent to reduce production costs, but also to subtract talented executives from competitors. This second effect is privately valuable to firms, but is socially wasteful. As a result, equilibrium pay for talent can be inefficiently high and career concerns too strong. Explicit incentive contracts do not solve the problem, but equilibrium pay is reduced if managerial skills have firm‐specific components, or if firms are heterogeneous. In this second case, managers are efficiently assigned to firms, but equilibrium pay reflects the profitability of talent outside the efficient allocation. The effect of increased competition is ambiguous in general, and depends on the profit sensitivity to cost reductions. This ambiguity is illustrated in two examples of commonly used models of imperfect competition.     

Exploring supportive and developmental career management through business strategies and coaching

The shift toward individualistic career management requires a supportive and developmental career approach. Using coaching practices as a manifestation of such an approach, this study reports on coaching and other career practices that are part of supportive and developmental career management in a Belgium sample (n = 154). Three other types of career management were identified as well. Supportive and developmental career management was most present in organizations that had a past or current prospector strategy, and was the least present in past or current defenders. The type of business strategy organizations indicated to pursue in the future did not have an influence on the type of career management they currently had. © 2012 Wiley Periodicals, Inc.     

How Do Developmental and Accommodative HRM Enhance Employee Engagement and Commitment? The Role of Psychological Contract and SOC Strategies

In the context of the changing workforce, this study introduced two perspectives on HRM and distinguished universalistic developmental HRM from contingent accommodative HRM. We predicted two separate pathways for the effects on two employee outcomes: work engagement and affective commitment. We expected that developmental HRM would universally relate to employee outcomes by rebalancing the psychological contract between the employee and organization into a less transactional to a more relational contract. We also predicted that accommodative HRM would relate to outcomes only when fulfilling specific needs of employees, associated with their selecting, optimizing, and compensating strategies. Results of a multilevel study among 1058 employees in 17 healthcare units fully supported our expectations regarding the role of the psychological contract. Additionally, we found support for the expected roles of selection and compensation, but not for optimization strategy. This study contributes to the literature by demonstrating that HRM relates to employee outcomes through multiple pathways, which can be either universal or contingent.     

Career Tournaments

This paper studies a model of career concerns where (besides agents having different ability levels) principals are heterogeneous. Two types of heterogeneity are considered: principals can differ in their productivities, and in the visibility of the agents working for them. Productivity differences result in convex wage profiles and generate assortative matching between principals and agents. Visibility differences, on the other hand, affect the mobility and career prospects of agents, and can generate nonassortative matching. We characterize the equilibrium in this market, derive implications for the behavior of agents, and examine the incentives to invest in increasing productivity and visibility.     

Estimating capacity utilization of Chinese manufacturing industries

This study investigates the capacity utilization (CU) of Chinese manufacturing industries, using a CU indicator based on data envelopment analysis and directional distance functions (DDFs). The inputs are separated into variable inputs and a quasi-fixed input to measure the gap of DDFs, which indicated either under-utilization of inputs or overcapacity. Moreover, we define an indicator for CU change over time and introduced the corresponding decomposition. We note that, during the study time period (2007–2010), the CU of Chinese manufacturing industries improved, which implies that Chinese manufacturing industries expanded their production and got closer to their capacity during the examined period. The driving force of this improvement is technical changes. The higher average CU values of light manufacturing industries than that of the heavy industries and the extremely high CU values of two light industries reveal a severe overcapacity problem in the light industries. We also provided the methods and conduct analysis on determining optimal variable inputs and the type of the overcapacity on specific DMUs. The bootstrap regression procedures are employed to test the influence of environmental variables on CU values. Finally, we provide policy implications and suggestions for policymakers who oversee the development of Chinese manufacturing industries.     

Introduction to the Symposium on Tournaments,Contests, and Relative Performance Evaluation

The papers in this symposium reflect several of the directions taken by current research on tournaments, contests and relative performance evaluation. The papers help us understand the implications of agent heterogeneity on the incentives of agents to perform or self‐select the offers designed for them. They encompass various issues such as career concerns and promotion incentives, interim disclosure of information obtained by the principal about agent performance, exposure to risk choices, and competing for talent.     

标准成本法、工作地轮换与动态激励

不对称信息下，公司总部不确定组织内各工作地的内在产品成本是高（低效率）还是低（高效率），高效率工作地管理者有机会和动机掩饰其内在能力，因为一旦能力变得已知，生产单元可能面临更加严苛的下期标准成本方案。为避免总部提高成本控制绩效要求，生产通过付出低努力和实现高成本来应对，棘轮效应出现。实施工作地轮换，抑制棘轮效应的同时，损害经验曲线效应。本研究通过构建两期博弈模型，设计最优支付方案，提出有效的工作地轮换条件。     

基于DEA的我国高校财务绩效评价研究

财务绩效是指企业策略的实施和执行为最终的经营业绩做出的贡献。随着国家对于教育行业的大力的财政支持,对于高校的财务绩效评价也提上日程。利用DEA模型,同时考虑了教育行业特点,建立高校财务绩效评价模型。通过计算高校的投入冗余率和产出不足率,得出待测高校财务绩效的合理性与否,为以后高校的财务绩效评价提供参考方法。     

专业课实训教学中学生职业能力的培养

中职学校培养的目的是输送生产第一线的技术工人,而中职生职业能力的高低决定其就业之路,因此,培养中职生的职业能力是职业教育可持续发展的必由之路。文章以机电一体化设备的组装与调试课程的实训教学实践为例,探讨在实训教学中培养、提升和强化学生职业能力的方法和具体措施。     

Does Managerial Ability Really Drive Cost Efficiency? Evidence from Broiler Businesses

This paper ascertains whether managerial ability really drives cost efficiency of broiler businesses. Data was collected from 354 broiler businesses in Ghana and analysed using a modified stochastic Cobb–Douglas cost frontier and inefficiency effect models in a single‐stage maximum likelihood estimation procedure. Results indicate that managerial abilities such as technical advice, age and experience acquired through full‐time farming and increased batches significantly drive cost efficiency. This highlights the need to provide more technical advice and implement periodic capacity building programmes to develop the managerial ability and competences of broiler producers. The youth should also be encouraged and supported through skills development fund to go into full‐time broiler business to produce more batches. Copyright © 2016 John Wiley & Sons, Ltd.     

浅析内地企业员工激励性管理

要提高内地企业的激励性,就要突出公平,保持物资激励与非物资激励结合,组织目标和个人目标相结合,约束与激励结合。具体来说,内地企业需要扩大员工职业生涯发展空间,强化绩效考核的反馈面谈,严格实行合同化管理,实施全面薪酬战略,加强员工培训,注重内部晋升。     

Franchisee Associations as Sources of Bargaining Power? Some Evidence

The empirical literature in economics and strategy on contract structure, including on franchise contract structure, has been largely based on agency and transaction cost theories. The effects of bargaining power have been much less studied. This paper considers the role of independent franchisee associations in franchising relationships as a means to test for the presence of bargaining power effects. We find that the presence or absence of a franchisee association is significantly related to each of three key contractual and relationship characteristics: contract duration, noncompete stringency, and terminations/nonrenewals. This suggests that bargaining power should be accounted for in studies of contract structure and relationship outcomes.     

Profit,productivity, and profit-sharing

This study is an investigation of the effect of profit-sharing on labor productivity. When monitoring labor performance is costly for management, a regular wage/salary contract is insufficient to induce profit-maximizing behavior from the worker. The authors demonstrate that when this profit-maximizing behavior can be induced only through profit-sharing, a linear profit-sharing program will increase productivity and the welfare of both management and labor. The benefit from profit-sharing is increasing up to the point where the utility of additional income is offset by the negative utility of extraordinary effort (working harder or providing higher quality work). The income effect, i.e., the change in negative utility of extraordinary effort given a change in income, can potentially either increase or decrease the point at which the income-effort tradeoff-reaches zero.     

Equity and Adverse Selection

We introduce concerns with inequity into the canonical adverse selection model. We find that aversion to ex post inequity is not constraining for the principal if the two agents are identical ex ante, but generally is constraining when the agents differ ex ante. Constraining equity concerns can lead to output levels that are either above or below standard levels, and can result in only one agent experiencing systematic inequity in equilibrium.