Does Pay-For-Performance Strain the Employment Relationship? The Effect of Manager Bonus Eligibility on Non-Management Employee Turnover

Employment Relations Strategic HRM

Are performance incentives a good or a bad thing for employees and organizations? We find evidence that managerial eligibility for bonuses may strain the employment relationship and increase nonmanagemnet employee turnover, unless there are also HR practices that train and incentivize managers to treat employees well.

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Does Pay-For-Performance Strain the Employment Relationship? The Effect of Manager Bonus Eligibility on Non-Management Employee Turnover

We tested the organization-level effects of manager pay-for-performance practices on nonmanagement employee turnover within the context of agency theory and equity theory—two frameworks commonly applied to understand compensation policy and practice. We also propose an alternative theoretical perspective that predicts that managerial pay-for-performance policies may strain the employment relationship and increase nonmanagement employee turnover, unless there are HR practices that train and incentivize managers to treat employees well. We compare these alternative models to establish how well each framework explains the observed effects. Agency theory and equity theory receive limited empirical support in our lagged panel data set of organizations, whereas broader empirical support is established for the strain effect of manager pay-for-performance on the employment relationship. We discuss the implications of our findings for compensation theory, research, and practice.

Are performance incentives a good or a bad thing for employees and organizations? We find evidence that managerial eligibility for bonuses may strain the employment relationship and increase nonmanagemnet employee turnover, unless there are also HR practices that train and incentivize managers to treat employees well.

2017-10-31 17:17:13

Strategic HR System Differentiation between Jobs: The Effects on Firm Performance and Employee Outcomes

Inequality HR Practices Strategic HRM

Does treating employees differently based on the job they perform affect firm performance and employee attitudes? We found that while organizations may benefit from treating employees differently, employees who were recipients of lower HR investments perceived the organization to be less fair and were more likely to leave.

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Strategic HR System Differentiation between Jobs: The Effects on Firm Performance and Employee Outcomes

Schmidt, J., Pohler, D., & Willness, C. (accepted) Strategic HR System Differentiation between Jobs: The Effects on Firm Performance and Employee Outcomes. Human Resource Management.

The purpose of this research was to understand whether firms apply different human resource management systems to different occupations within the same organization (HR differentiation) and how the extent to which they do so may influence firm and employee outcomes. We conducted two studies pertaining to these questions. The first study was based on data collected from managers, and the results suggest that firms differentiate their HR investments based on the strategic value of occupations to the firm, which was further associated with the human capital of those occupations. Differentiation in human capital was also associated with firm performance. The second study was based on data obtained from nonmanagement employees. The findings indicated that employees who were recipients of less HR system investment had lower fairness perceptions, which were further associated with higher turnover intentions and lower organizational citizenship behavior. Although the evidence from these studies suggests that firms may realize benefits from strategic HR system differentiation, managers should carefully consider how to balance the effects of differentiation on firm performance and employee well-being before implementing such systems.

Does treating employees differently based on the job they perform affect firm performance and employee attitudes? We found that while organizations may benefit from treating employees differently, employees who were recipients of lower HR investments perceived the organization to be less fair and were more likely to leave.

2017-01-24 21:56:24

The Merit of a Points-Based Merit System at the Edwards School of Business

Employment Relations Unions HR Practices Strategic HRM

A case study of the challenges in implementing a points-based merit system at a business school.

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The Merit of a Points-Based Merit System at the Edwards School of Business

A new faculty member is engaged in a decision-making process surrounding the development of a points-based system designed to allocate merit pay at a business school. The process is forcing her to evaluate how she is structuring the allocation of her work, which is directly affecting her motivation toward coaching a student case competition team. Edwards has historically used a judgment-based approach to the allocation of merit. The case outlines the rationale used in the design of the new points-based system, discusses the potential advantages and disadvantages, and highlights the perspectives of different stakeholders throughout the process, including the union, the faculty, and senior administration. The union is opposed to merit, so has outlined fairly stringent criteria for the awarding of merit in the new collective agreement. Faculty opinion is mixed surrounding merit more generally, and the implementation of a points-based system versus a judgment-based system in particular. Senior university administration is committed to the continuation of the merit system at the university as a tool to reward outstanding performance and to retain star faculty. The individual departments at Edwards are in the midst of finalizing the standards and procedures for allocation of merit-based pay. The protagonist is uncertain about how her department will proceed in the design and allocation of points, and how it will result in her re-allocating her work tasks.

A case study of the challenges in implementing a points-based merit system at a business school.

2017-01-24 20:24:50

Employee Inclusivity and Inequality in America: The Promises and Perils of Shared Capitalism

Inequality HR Practices Public Policy Strategic HRM

Do shared capitalism practices that give employees an “ownership” stake in the companies for which they work—through profit sharing, gain sharing, share grants, or stock options—present a viable solution to address inclusivity and income and wealth inequality issues in America? Or is shared capitalism simply "old wine in new bottles"?

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Employee Inclusivity and Inequality in America: The Promises and Perils of Shared Capitalism

Pohler, D. (2015) Employee Inclusivity and Inequality in America. Perspectives on Work, 19: 18-21; 76--77.

There has been increasing interest in the promise of shared capitalism to improve firm performance, increase employee productivity, enhance employee well-being, increase employee voice and participation, and reduce wealth and income inequality. Recent research has found correlations between shared capitalism practices and many of these outcomes, particularly firm performance. However, shared-capitalism practices that increase employee financial ownership of the organizations for which they work do not usually fundamentally alter the governance structure and power dynamics inside the firm that really matter for ensuring employee inclusivity and reducing inequality at the firm level. To do so requires greater employee participation and influence over the decisions that determine the distribution of organizational benefits than is currently the norm in the United States.

Do shared capitalism practices that give employees an “ownership” stake in the companies for which they work—through profit sharing, gain sharing, share grants, or stock options—present a viable solution to address inclusivity and income and wealth inequality issues in America? Or is shared capitalism simply "old wine in new bottles"?

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2017-01-24 02:49:00

Co-operative Innovation Project

Governance Co-ops Public Policy Development

We need to take the co-operative business model more seriously as an economic and social development tool for rural and Indigenous communities in Western Canada.

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Co-operative Innovation Project

Fulton, M., Pohler., D., Massie, M., Overlander, D., & Wu, H. (2016) Co-operative Innovation Project. Centre for the Study of Co-operatives: University of Saskatchewan.

Pohler, D., & Fulton, M. (Nov 8, 2013) Why we should take the co-operative business model more seriously. Saskatoon StarPhoenix.

Fulton, M., & Pohler, D. (2014) Co-operative Development in Rural and Aboriginal Communities. Saskatchewan Business Magazine, April/May.

We visited communities from British Columbia to Manitoba, spoke with over two thousand people by phone, had over 350 community administrators answer a web-based survey about their community, and had a chance to learn from co-op developers on the ground about the intricacies and challenges of co-operative development in rural and Indigenous communities.

We need to take the co-operative business model more seriously as an economic and social development tool for rural and Indigenous communities in Western Canada.

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2017-01-24 02:46:21

Governance and Managerial Effort in Consumer-Owned Enterprises

Governance Co-ops Public Policy

What is different about the relationship between boards in CEOs in co-operatives than in investor-owned firms, and how should we think differently about governance in consumer-owned enterprises?

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Governance and Managerial Effort in Consumer-Owned Enterprises

Fulton, M., & Pohler, D. (2015) Governance and Managerial Effort in Consumer-Owned Enterprises. European Review of Agricultural Economics, 42(5): 713-737.

This article develops a political economy model of the board–manager relationship in consumer-owned enterprises (COEs), illustrating how the governance structure plays a key role in determining managerial power. The key conclusion of the article is that managerial remuneration and the resources devoted to governance are strategic choices for the COE and that their determination involves a trade-off. This trade-off depends on factors external to the COE, such as the COE's time horizon (as captured in the discount rate) and the manager's opportunity cost outside the COE (e.g. the remuneration paid in investor-owned firms). The trade-off also is influenced by the degree of complementarity between remuneration and governance resources, and by the sensitivity of managerial utility to financial remuneration and to governance.

What is different about the relationship between boards in CEOs in co-operatives than in investor-owned firms, and how should we think differently about governance in consumer-owned enterprises?

2017-01-05 22:33:19