Personnel Economics in Practice
3rd Edition
Published on 11. April 2017
Book
Paperback/Softback
416 pages
978-1-119-42736-0 (ISBN)
Description
Personnel Economics in Practice, 3rd Edition by Edward Lazear and Michael Gibbs gives readers a rigorous framework for understanding organizational design and the management of employees. Economics has proven to be a powerful approach in the changing study of organizations and human resources by adding rigor and structure and clarifying many important issues. Not only will readers learn and apply ideas from microeconomics, they will also learn principles that will be valuable in their future careers.
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Content
ABOUT THE AUTHORS
PREFACE
ACKNOWLEDGMENTS
PART ONE SORTING AND INVESTING IN EMPLOYEES
CHAPTER 1 SETTING HIRING STANDARDS
An Example: Hiring Risky Workers
New Hires as Options
Analysis
A Counterargument
Setting Hiring Standards
Balancing Benefits Against Costs
Foreign Competition
The Method of Production
How Many Workers to Hire?
Other Factors
Making Decisions with Imperfect Information
Make a Decision Independent of Analysis
Estimate the Relevant Information
Experiment
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 2 RECRUITMENT
Introduction
Screening Job Applicants
Credentials
Learning a Worker's Productivity
Is Screening Profitable? For Whom?
Probation
Signaling
Who Pays, and Who Benefits?
Examples
Signaling More Formally: Separating and Pooling Equilibria
Which Type of Firm is More Likely to use Signaling?
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 3 INVESTMENT IN SKILLS
Introduction
Matching
Investments in Education
Effects of Costs and Benefits
Was Benjamin Franklin Correct?
Investments in On the Job Training
General vs. Firm-Specific Human Capital
Who Should Pay for Training?
Implications of On the Job Training
Rent Sharing and Compensation
Implicit Contracting
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 4 MANAGING TURNOVER
Introduction
Is Turnover Good or Bad?
Importance of Sorting
Technical Change
Organizational Change
Hierarchical Structure
Specific Human Capital
Retention Strategies
Reducing Costs of Losing Key Employees
Embracing Turnover
Bidding for Employees
Raiding Other Firms: Benefits and Pitfalls
Offer Matching
Layoffs and Buyouts
Who to Target for Layoffs
Buyouts
Summary
Study Questions
References
Further Reading
Appendix (available online)
PART TWO ORGANIZATIONAL AND JOB DESIGN
CHAPTER 5 DECISION MAKING
Introduction
The Organization of an Economy
Markets as Information Systems
Markets as Incentive Systems
Markets and Innovation
Benefits of Central Planning
The Market as Metaphor for Organizational Design
Benefits of Centralization
Economies of Scale or Public Goods
Better Use of Central Knowledge
Coordination
Benefits of Decentralization
Specific vs. General Knowledge
Other Benefits of Decentralization
Authority and Responsibility
Decision Making as a Multistage Process
Flat vs. Hierarchical Structures
Investing in Better Quality Decision Making
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 6 ORGANIZATIONAL STRUCTURE
Introduction
Types of Organizational Structures
Hierarchy
Functional Structure
Divisional Structure
Matrix or Project Structure
Network Structure
Which Structure Should a Firm Use?
Coordination
Two Types of Coordination Problems
Coordination Mechanisms
Implementation
Span of Control and Number of Levels in a Hierarchy
Skills, Pay, and Structure
Evolution of a Firm's Structure
Summary
Study Questions
References
Further Reading
CHAPTER 7 JOB DESIGN
Introduction
Patterns of Job Design
Optimal Job Design: Skills, Tasks, and Decisions
Multiskilling and Multitasking
Decisions
Complementarity and Job Design
When to Use Different Job Designs
Taylorism
Factors Pushing Toward Taylorism or Continuous Improvement
Intrinsic Motivation
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 8 ADVANCED JOB DESIGN
Introduction
Teams
Group Decision Making
Free Rider Effects
When to Use Teams
Other Benefits of Team Production
Implementation of Teams
Team Composition
Worker-Owned Firms
Effects of Information Technology
Effects on Organizational Structure
Effects on Job Design
High Reliability Organizations
Summary
Study Questions
References
Further Reading
Appendix (available online)
PART THREE PAYING FOR PERFORMANCE
CHAPTER 9 PERFORMANCE EVALUATION
Introduction
Purposes of Performance Evaluation
Ways to Evaluate Performance
Quantitative Performance Measurement
Risk Profile
Risk vs. Distortion: Performance Measure Scope
Match of the Performance Measure to Job Design
Manipulation
Subjective Evaluation
Why Use Subjective Evaluations?
The Benefits of Subjective Evaluations
Practical Considerations
Summary
Study Questions
References
Further Reading
CHAPTER 10 REWARDING PERFORMANCE
Introduction
How Strong Should Incentives Be?
Intuition
Imperfect Evaluations and Optimal Incentives
Summary: How Strong Should Incentives Be?
Paying for Performance: Common Examples
Rewards or Penalties?
Lump Sums, Demotions, or Promotions
Caps on Rewards
Applications
Profit Sharing and ESOPs
Organizational Form and Contracting
Motivating Creativity
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 11 CAREER-BASED INCENTIVES
Introduction
Promotions and Incentives
Should Promotions be Used as an Incentive System?
Promotion Rule: Tournament or Standard?
How Do Promotions Generate Incentives?
Advanced Issues
Turnover
Evidence
Career Concerns
Seniority Pay and Incentives
Practical Considerations
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 12 OPTIONS AND EXECUTIVE PAY
Introduction
Employee Stock Options
Stock Options-A Brief Overview
Should Firms Grant Employees Options?
Options as Incentive Pay
Executive Pay
What is the Most Important Question?
Executive Pay for Performance
Other Incentives & Controls
Do Executive Incentives Matter?
Summary
Employee Stock Options
Executive Pay
Study Questions
References
Further Reading
Appendix (available online)
PART FOUR APPLICATIONS
CHAPTER 13 BENEFITS
Introduction
Wages vs. Benefits
Why Offer Benefits?
Cost Advantage
Value Advantage
Government Mandate
Implementation of Benefits
Improving Employee Sorting
Cafeteria Plans
Pensions
Paid Time Off
Summary
Study Questions
References
Further Reading
CHAPTER 14 ENTREPRENEURSHIP AND INTRAPRENEURSHIP
Introduction
Entrepreneurship
The Choice to become an Entrepreneur
Intrapreneurship
Internal Markets
Creativity vs. Control
Speed of Decision Making
Reducing Bureaucracy
Continuous Improvement
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 15 THE EMPLOYMENT RELATIONSHIP
Introduction
Employment as an Economic Transaction
Perfect Competition
Imperfect Competition
Complex Contracting
Summary
Communication between Management and Workers
Communication from Management to Workers
Communication from Workers to Management
The Decision to Empower Workers
Improving Cooperation
From the Prisoner's Dilemma to Employment
Reputation and the Employment Relationship
Investing in Reputation
Summary
Personnel Economics in Practice
Study Questions
References
Further Reading
Appendix (available online)
GLOSSARY
INDEX
PREFACE
ACKNOWLEDGMENTS
PART ONE SORTING AND INVESTING IN EMPLOYEES
CHAPTER 1 SETTING HIRING STANDARDS
An Example: Hiring Risky Workers
New Hires as Options
Analysis
A Counterargument
Setting Hiring Standards
Balancing Benefits Against Costs
Foreign Competition
The Method of Production
How Many Workers to Hire?
Other Factors
Making Decisions with Imperfect Information
Make a Decision Independent of Analysis
Estimate the Relevant Information
Experiment
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 2 RECRUITMENT
Introduction
Screening Job Applicants
Credentials
Learning a Worker's Productivity
Is Screening Profitable? For Whom?
Probation
Signaling
Who Pays, and Who Benefits?
Examples
Signaling More Formally: Separating and Pooling Equilibria
Which Type of Firm is More Likely to use Signaling?
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 3 INVESTMENT IN SKILLS
Introduction
Matching
Investments in Education
Effects of Costs and Benefits
Was Benjamin Franklin Correct?
Investments in On the Job Training
General vs. Firm-Specific Human Capital
Who Should Pay for Training?
Implications of On the Job Training
Rent Sharing and Compensation
Implicit Contracting
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 4 MANAGING TURNOVER
Introduction
Is Turnover Good or Bad?
Importance of Sorting
Technical Change
Organizational Change
Hierarchical Structure
Specific Human Capital
Retention Strategies
Reducing Costs of Losing Key Employees
Embracing Turnover
Bidding for Employees
Raiding Other Firms: Benefits and Pitfalls
Offer Matching
Layoffs and Buyouts
Who to Target for Layoffs
Buyouts
Summary
Study Questions
References
Further Reading
Appendix (available online)
PART TWO ORGANIZATIONAL AND JOB DESIGN
CHAPTER 5 DECISION MAKING
Introduction
The Organization of an Economy
Markets as Information Systems
Markets as Incentive Systems
Markets and Innovation
Benefits of Central Planning
The Market as Metaphor for Organizational Design
Benefits of Centralization
Economies of Scale or Public Goods
Better Use of Central Knowledge
Coordination
Benefits of Decentralization
Specific vs. General Knowledge
Other Benefits of Decentralization
Authority and Responsibility
Decision Making as a Multistage Process
Flat vs. Hierarchical Structures
Investing in Better Quality Decision Making
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 6 ORGANIZATIONAL STRUCTURE
Introduction
Types of Organizational Structures
Hierarchy
Functional Structure
Divisional Structure
Matrix or Project Structure
Network Structure
Which Structure Should a Firm Use?
Coordination
Two Types of Coordination Problems
Coordination Mechanisms
Implementation
Span of Control and Number of Levels in a Hierarchy
Skills, Pay, and Structure
Evolution of a Firm's Structure
Summary
Study Questions
References
Further Reading
CHAPTER 7 JOB DESIGN
Introduction
Patterns of Job Design
Optimal Job Design: Skills, Tasks, and Decisions
Multiskilling and Multitasking
Decisions
Complementarity and Job Design
When to Use Different Job Designs
Taylorism
Factors Pushing Toward Taylorism or Continuous Improvement
Intrinsic Motivation
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 8 ADVANCED JOB DESIGN
Introduction
Teams
Group Decision Making
Free Rider Effects
When to Use Teams
Other Benefits of Team Production
Implementation of Teams
Team Composition
Worker-Owned Firms
Effects of Information Technology
Effects on Organizational Structure
Effects on Job Design
High Reliability Organizations
Summary
Study Questions
References
Further Reading
Appendix (available online)
PART THREE PAYING FOR PERFORMANCE
CHAPTER 9 PERFORMANCE EVALUATION
Introduction
Purposes of Performance Evaluation
Ways to Evaluate Performance
Quantitative Performance Measurement
Risk Profile
Risk vs. Distortion: Performance Measure Scope
Match of the Performance Measure to Job Design
Manipulation
Subjective Evaluation
Why Use Subjective Evaluations?
The Benefits of Subjective Evaluations
Practical Considerations
Summary
Study Questions
References
Further Reading
CHAPTER 10 REWARDING PERFORMANCE
Introduction
How Strong Should Incentives Be?
Intuition
Imperfect Evaluations and Optimal Incentives
Summary: How Strong Should Incentives Be?
Paying for Performance: Common Examples
Rewards or Penalties?
Lump Sums, Demotions, or Promotions
Caps on Rewards
Applications
Profit Sharing and ESOPs
Organizational Form and Contracting
Motivating Creativity
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 11 CAREER-BASED INCENTIVES
Introduction
Promotions and Incentives
Should Promotions be Used as an Incentive System?
Promotion Rule: Tournament or Standard?
How Do Promotions Generate Incentives?
Advanced Issues
Turnover
Evidence
Career Concerns
Seniority Pay and Incentives
Practical Considerations
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 12 OPTIONS AND EXECUTIVE PAY
Introduction
Employee Stock Options
Stock Options-A Brief Overview
Should Firms Grant Employees Options?
Options as Incentive Pay
Executive Pay
What is the Most Important Question?
Executive Pay for Performance
Other Incentives & Controls
Do Executive Incentives Matter?
Summary
Employee Stock Options
Executive Pay
Study Questions
References
Further Reading
Appendix (available online)
PART FOUR APPLICATIONS
CHAPTER 13 BENEFITS
Introduction
Wages vs. Benefits
Why Offer Benefits?
Cost Advantage
Value Advantage
Government Mandate
Implementation of Benefits
Improving Employee Sorting
Cafeteria Plans
Pensions
Paid Time Off
Summary
Study Questions
References
Further Reading
CHAPTER 14 ENTREPRENEURSHIP AND INTRAPRENEURSHIP
Introduction
Entrepreneurship
The Choice to become an Entrepreneur
Intrapreneurship
Internal Markets
Creativity vs. Control
Speed of Decision Making
Reducing Bureaucracy
Continuous Improvement
Summary
Study Questions
References
Further Reading
Appendix (available online)
CHAPTER 15 THE EMPLOYMENT RELATIONSHIP
Introduction
Employment as an Economic Transaction
Perfect Competition
Imperfect Competition
Complex Contracting
Summary
Communication between Management and Workers
Communication from Management to Workers
Communication from Workers to Management
The Decision to Empower Workers
Improving Cooperation
From the Prisoner's Dilemma to Employment
Reputation and the Employment Relationship
Investing in Reputation
Summary
Personnel Economics in Practice
Study Questions
References
Further Reading
Appendix (available online)
GLOSSARY
INDEX