The dynamic systems view of voluntary turnover rates advocated in context-emergent turnover theory is used to explore how and why human capital flows impact unit performance over time. We examine ...hiring rates and employee transfer rates as distinct system components that work alongside voluntary turnover rates to affect job demands, and ultimately patient satisfaction. Our work explores this dynamic system of interrelated constructs, and explains and compares their mutual causality over time. The sample examined consists of 12 nursing units in a large hospital over 72 monthly observations, with patient satisfaction as the measure of unit performance.
Although pay-for-performance’s potential effect on employee performance is a compelling issue, understanding this dynamic has been constrained by narrow approaches to pay-for-performance ...conceptualization, measurement, and surrounding conditions. In response, we take a more nuanced perspective by integrating fundamental principles of economics and psychology to identify and incorporate employee characteristics, job characteristics, pay system characteristics, and pay system experience into a contingency model of the pay-for-performance–future performance relationship. We test the role that these four key contextual factors play in pay-for-performance effectiveness using 11,939 employees over a 5-year period. We find that merit and bonus pay, as well as their multiyear trends, are positively associated with future employee performance. Furthermore, our findings indicate that, contrary to what traditional economic perspectives would predict, bonus pay may have a stronger effect on future performance than merit pay. Our results also support a contingency approach to pay-for-performance’s impact on future employee performance, as we find that merit pay and bonus pay can substitute for each other and that the strength of pay-for-performance’s effect is a function of employee tenure, the pay-for-performance trend over time, and job type (presumably due to differences in the measurability of employee performance across jobs).
Agency theory suggests that managerial mischief may occur when the interests of owners and managers diverge and that a solution to this agency problem is alignment of owner and agent interests ...through agent compensation and equity ownership. We develop the theoretical concept of CEO return and measure and estimate financial alignment as the relationship between CEO and shareholder returns. Our results, based on this new conceptualization and corresponding measurement, suggest stronger alignment than reported in previous work. The magnitude of this alignment is associated with subsequent firm performance, but in ways not clearly articulated or tested in prior research.
During the past 10 years, the field of human capital resources (HCR), often referred to as strategic human capital (SHC), has gained interest in both micro and macro disciplines. This increase in ...attention from a diverse set of researchers has shifted the focus of the field to topics such as identifying different types of HCR, HCR emergence, and links between collective HCR and higher level outcomes. The first decade of dedicated HCR research led to the growth of distinct research streams and forged its own robust and growing literature. However, after a decade of progress, the field is splintered. To unite the field and create a solid foundation for building future research, we provide a cohesive perspective of lessons learned in the first decade of dedicated HCR research, which has primarily focused on collective HCR. This review examines 194 articles, revealing several themes that have emerged, an integrated model that flows from the review, and rich opportunities for future research to both integrate and expand the growing HCR field for the next decade and beyond.
The papers compiled in this symposium bridge human capital ideas across research domains (economics, entrepreneurship, human resources, industrial-organizational psychology, labor economics, ...organizational theory, and strategy) and research levels (macro and micro). These articles draw on conversations that took place during a human capital conference held in the spring of 2014 at the Darla Moore School of Business. The articles address the role of value capturing, networking, firm-specific human capital, micro contributions to strategy, the missing role of context, the role of the practitioner, and the processes that may be helpful for advancing science through pulling knowledge from across disciplines. In combination, the articles reveal ample opportunity for cross-discipline collaboration to extend knowledge by working in concert with researchers who hold different perspectives. However, these articles (and the lessons learned through the conference) show that differences in terminology, assumptions, and focus are deeply held; hence, overcoming the substantive challenges will require great effort and an enthusiastic willingness to learn.
Stars-employees with disproportionately high and prolonged (a) performance, (b) visibility, and (c) relevant social capital-have garnered attention in economics, sociology, and management. However, ...star research is often isolated within these research disciplines. Thus, 3 distinct star research streams are evolving, each disconnected from the others and each bringing siloed theoretical perspectives, terms, and assumptions. A conceptual review of these perspectives reveals a focus on the expost effects that stars exert in organizations with little explanation of who a star is and how one becomes a star. To synthesize the stars literature across these 3 disciplines, we apply psychological theories, specifically motivation theories, to create an integrative framework for stars research. Thus, we present a unified stars definition and extend theory on the making, managing, and mobility of stars. We extend research about how and why employees may be motivated to become stars, how best to manage stars and their relationships with colleagues, and how to motivate star retention. We then outline directions for future research.
We contribute to understanding the previously unrecognized consequences of individualized employment arrangements on the relationship between pay and performance. Increases in the application of ...pay-for-performance (PFP) idiosyncratic deals (PFP i-deals) raise questions about how individualized PFP arrangements affect the performance of peers who do not receive such customized deals. As pay systems become more individualized, understanding the economic ramifications of how PFP i-deals affect peer performance is essential for understanding the total unit effects of implementing PFP i-deals. To examine these peer effects, we explored peer responses to PFP i-deals and identified boundary conditions on broad theoretical assumptions underlying the conclusion that PFP increases unit performance. We tested our predictions by applying multilevel random-coefficient discontinuous growth models to a sample of 451 peers nested in 117 business units of a for-profit health-care organization. Immediately after PFP i-deal implementation in the unit, the performance level of peers was negatively affected. Additionally, peer performance trends after PFP i-deal implementation were lower than they were before the PFP i-deal implementation. Our study also identified contextual factors that influence peer responses to PFP i-deal implementation.
Research Summary
Extant research rarely explores the relationship between executive compensation and chief executive officer (CEO) succession planning, despite practitioner claims that executive pay ...disparities indicate succession planning (in)effectiveness. Leveraging signaling theory, we use 830 succession events from 2010 to 2017 to show that pay disparity between the CEO and the highest paid non‐CEO executive is positively related to the likelihood of outside CEO succession. Thus, boards need to be aware of the implications of possible unintentional signals sent via executive compensation decisions. We do not find evidence of an interactive effect when compensation and CEO succession are co‐managed using linking pin directors—directors with compensation and CEO succession responsibilities—but supplemental analyses suggest a positive main effect of linking pin directors on the likelihood of inside CEO succession.
Managerial Summary
Powerful watchdog agencies assert that high pay differences between a firm's CEO and its next highest paid executive (CEO–HPE pay disparity) indicate succession planning challenges. This assertion has profound implications for stakeholders, but evidence supporting it is unclear. Our study examines the relationship between CEO–HPE pay disparity and the board's choice of an outside CEO, an indicator of ineffective succession planning. We find evidence that higher pay disparity signals an increased likelihood of choosing an outside CEO successor. We also find that boards who co‐manage compensation and succession may be more likely to hire an inside CEO successor. Our findings suggest that boards need to understand how compensation decisions may be inadvertently signaling future CEO succession choices.
The amount and type of pay information made available by organizations to employees and between employees can have important effects on employee attitudes and behaviors as well as organizational ...performance. Although a large body of research on pay information exists, on topics ranging from pay transparency to pay secrecy, researchers have used inconsistent definitions (pay secrecy, openness, transparency, pay communications) and operationalizations that hinder knowledge development. In this paper, consistent with the theory of information asymmetry and based on research reviewed here, we promote a new integrative definition (“pay information disclosure”) that anchors both current and future research. We define the concept of pay information disclosure (PID) as the communication of relevant pay information between and among actors. By viewing pay information disclosure research in an information asymmetry context, with its focus on the causes and consequences of unequal access to information, we can synthesize research that examines motives for and outcomes of PID for individuals, organizations, and society. Based on our review, we outline a research agenda that identifies research questions and methods to stimulate studies to better understand the role of pay information in the workplace and in society.
Strategic human capital resources are a relatively new construct with a scholarly literature that is still evolving. Work in this area requires the integration of multiple theoretical perspectives ...and empirical approaches, but that integration rarely occurs. Within these pages, the editors have combined the voices of leading scholars from a wide range of disciplinary backgrounds to provide a comprehensive introduction to the current state of the field.
