"The Good News about Bad News": Information about Past Organisational Failure and its Impact on Worker Productivity
Sabrina Jeworrek, Vanessa Mertins, Michael Vlassopoulos
Abstract
Failure in organisations is a very common phenomenon. Little is known about whether past failure affects workers’ subsequent performance. We conduct a field experiment in which we follow up a failed mail campaign to attract new volunteers with a phone campaign pursuing the same goal. We recruit temporary workers to carry out the phone campaign and randomly assign them to either receive or not receive information about the previous failure and measure their performance. We find that informed workers perform better – in terms of both numbers dialed (about 14% improvement) and completed interviews (about 20% improvement) – regardless of whether they had previously worked on the failed mail campaign. Evidence from a second experiment with student volunteers asked to support a campaign to reduce food waste suggests that the mechanism behind our finding relates to contextual inference: Informing workers/volunteers that they are pursuing a goal that is hard to attain seems to add meaning to the work involved, leading them to exert more effort.
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Measuring Indirect Effects of Unfair Employer Behavior on Worker Productivity – A Field Experiment
Matthias Heinz, Sabrina Jeworrek, Vanessa Mertins, Heiner Schumacher, Matthias Sutter
Abstract
We present a field experiment in which we set up a call-center to study how the productivity of workers is affected if managers treat their co-workers in an unfair way. This question cannot be studied in long-lived organizations since workers may change their career expectations (and hence effort) when managers behave unfairly towards co-workers. In order to rule out such confounds and to measure productivity changes of unaffected workers in a clean way, we create an environment where employees work for two shifts. In one treatment, we lay off parts of the workforce before the second shift. Compared to two different control treatments, we find that, in the layoff treatment, the productivity of the remaining, unaffected workers drops by 12 percent. We show that this result is not driven by peer effects or altered beliefs about the job or the managers’ competence, but rather related to the workers’ perception of unfair behavior of employers towards co-workers. The latter interpretation is confirmed in a survey among professional HR managers. We also show that the effect of unfair behavior on the productivity of unaffected workers is close to the upper bound of the direct effects of wage cuts on the productivity of affected workers. This suggests that the price of an employer’s unfair behavior goes well beyond the potential tit-for-tat of directly affected workers.
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26.09.2017 • 34/2017
Meaningless Work Threatens Employees’ Job Performance
Employees show a significant decline in exerted effort when they are informed about the futility of a task already done. As the results of an experiment conducted by Sabrina Jeworrek from the Halle Institute for Economic Research (IWH) and co-authors show, meaningless work causes anger and disappointment, and can negatively affect employees' later motivation. However, employees seem to “forgive” their employer for cancelling a project if another and still valid purpose is credibly communicated.
Sabrina Jeworrek
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Meaningless Work Threatens Job Performance
Adrian Chadi, Sabrina Jeworrek, Vanessa Mertins
LSE Business Review,
2017
Abstract
Open, transparent communication across the organisation is generally associated with improved employee motivation and organisational outcomes. For supervisors, the question arises how to deal with rather inconvenient information, such as in the case of a project failure. Informing employees after significant investments of time and effort might lead to negative effects on subsequent work motivation, one could argue. To identify a causal relationship between the meaning of previously completed work and workers’ subsequent work performance, we exploited a natural working environment in which the loss of the job’s meaning occurred as a matter of fact. At the same time, it was possible to credibly guide only part of the workforce to believe in the sudden loss of meaning by conducting a controlled experiment.
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When the Meaning of Work Has Disappeared: Experimental Evidence on Employees’ Performance and Emotions
Adrian Chadi, Sabrina Jeworrek, Vanessa Mertins
Management Science,
No. 6,
2017
Abstract
This experiment tests for a causal relationship between the meaning of work and employees’ motivation to perform well. The study builds on an existing employer–employee relationship, adding realism to the ongoing research of task meaning. Owing to an unexpected project cancelation, we are able to study how varying the information provided about the meaning of previously conducted work — without the use of deception, but still maintaining a high level of control — affects subsequent performance. We observe a strong decline in exerted effort when we inform workers about the meaninglessness of a job already done. Our data also suggests that providing a supplemental alternative meaning perfectly compensates for this negative performance effect. Individual characteristics such as reciprocal inclinations and trust prompt different reactions. The data also show that the meaning of work affects workers’ emotions, but we cannot establish a clear relationship between emotional responses and performance.
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Skills, Earnings, and Employment: Exploring Causality in the Estimation of Returns to Skills
Franziska Hampf, Simon Wiederhold, Ludger Woessmann
Large-scale Assessments in Education,
No. 12,
2017
Abstract
Ample evidence indicates that a person’s human capital is important for success on the labor market in terms of both wages and employment prospects. However, unlike the efforts to identify the impact of school attainment on labor-market outcomes, the literature on returns to cognitive skills has not yet provided convincing evidence that the estimated returns can be causally interpreted. Using the PIAAC Survey of Adult Skills, this paper explores several approaches that aim to address potential threats to causal identification of returns to skills, in terms of both higher wages and better employment chances. We address measurement error by exploiting the fact that PIAAC measures skills in several domains. Furthermore, we estimate instrumental-variable models that use skill variation stemming from school attainment and parental education to circumvent reverse causation. Results show a strikingly similar pattern across the diverse set of countries in our sample. In fact, the instrumental-variable estimates are consistently larger than those found in standard least-squares estimations. The same is true in two “natural experiments,” one of which exploits variation in skills from changes in compulsory-schooling laws across U.S. states. The other one identifies technologically induced variation in broadband Internet availability that gives rise to variation in ICT skills across German municipalities. Together, the results suggest that least-squares estimates may provide a lower bound of the true returns to skills in the labor market.
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The Behavioral Impact of Non-Monetary Workplace Characteristics
Sabrina Jeworrek
Schriftenreihe innovative betriebswirtschaftliche Forschung und Praxis,
No. 465,
2016
Abstract
This book investigates the impact of non-monetary workplace characteristics ― i.e. employee voice, task characteristics, and the provision of information ― on workers’ individual decision making and workplace performance. Given the neoclassical assumption of purely self-interested and completely rational utility maximizing individuals, workplace characteristics should be of little interest as long as they are not directly related to payment issues, so that a worker’s utility maximizing effort choice given a fixed wage level remains unaffected. Recent empirical findings, however, suggest that the use of non-monetary incentives might even be the better option to increase work performance. Three out of the four experimental studies covered by this book extend the previous research by providing more reliable insights into field behavior than conventional laboratory experiments. Given e.g. the right to self-determine one’s wage, almost all participants in the laboratory opt for the highest possible wage. Within the context of an inventory taking with 140 assistants, we conducted a natural field experiment and show that most workers ask for rather moderate wages with women being particularly conservative in their demands. Notwithstanding, wage delegation causes workers’ performance to rise and, hence, stresses the relevance of voice at the workplace. Furthermore, we provide evidence that workers also care for the content and the meaningfulness of their tasks. Uselessly exerted effort, for instance, reduces work performance as regards a completely unrelated task in the future. Taken together, the field experimental evidence presented in this book indicates that if employees find a workplace which matches their preferences, it is quite likely to be a beneficial situation not only for the employee but also for the employer. Overall good working conditions can even help workers overlook unequal treatments within the workforce, at least in the short-run and as long as there is a plausible reason for it. An additional laboratory experiment, however, suggests that additional information, e.g. about potential coworkers, might be necessary to make reasonable decisions in accordance with individual preferences.
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Team Building and Hidden Costs of Control
Gerhard Riener, Simon Wiederhold
Journal of Economic Behavior and Organization,
March
2016
Abstract
In a laboratory experiment, we investigate the interaction of two prominent firm strategies to increase worker effort: team building and control. We compare a team-building treatment where subjects initially play a coordination game to gain common experience (CE) with an autarky treatment where subjects individually perform a task (NCE). In both treatments, subjects then play two-player control games where agents provide costly effort and principals can control to secure a minimum effort. CE agents always outperform NCE agents. Conditional on control, however, CE agents’ effort is crowded out more strongly, with the effect being most pronounced for agents who successfully coordinated in the team-building exercise. Differential reactions to control perceived as excessive is one explanation for our findings.
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Taking the First Step - What Determines German Laser Source Manufacturers' Entry into Innovation Networks?
Jutta Günther, Muhamed Kudic, Andreas Pyka
International Journal of Innovation Management,
No. 5,
2015
Abstract
Early access to technological knowledge embodied in the industry’s innovation network can provide an important competitive advantage to firms. While the literature provides much evidence on the positive effects of innovation networks on firms’ performance, not much is known about the determinants of firms’ initial entry into such networks. We analyze firms’ timing and propensity to enter the industry’s innovation network. More precisely, we seek to shed some light on the factors affecting the duration between firm founding and its first cooperation event. In doing so, we apply a unique longitudinal event history dataset based on the full population of German laser source manufacturers. Innovation network data stem from official databases providing detailed information on the organizations involved, subject of joint research and development (R&D) efforts as well as start and end times for all publically funded R&D projects between 1990 and 2010. Estimation results from a non-parametric event history model indicate that micro firms enter the network later than small-sized or large firms. An in-depth analysis of the size effects for medium-sized firms provides some unexpected findings. The choice of cooperation type makes no significant difference for the firms’ timing to enter the network. Finally, the analysis of geographical determinants shows that cluster membership can, but do not necessarily, affect a firm’s timing to cooperate.
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Financial Incentives and Loan Officer Behavior: Multitasking and Allocation of Effort Under an Incomplete Contract
Patrick Behr, Alejandro H. Drexler, Reint E. Gropp, Andre Guettler
Abstract
In this paper we investigate the implications of providing loan officers with a compensation structure that rewards loan volume and penalizes poor performance versus a fixed wage unrelated to performance. We study detailed transaction information for more than 45,000 loans issued by 240 loan officers of a large commercial bank in Europe. We examine the three main activities that loan officers perform: monitoring, originating, and screening. We find that when the performance of their portfolio deteriorates, loan officers increase their effort to monitor existing borrowers, reduce loan origination, and approve a higher fraction of loan applications. These loans, however, are of above-average quality. Consistent with the theoretical literature on multitasking in incomplete contracts, we show that loan officers neglect activities that are not directly rewarded under the contract, but are in the interest of the bank. In addition, while the response by loan officers constitutes a rational response to a time allocation problem, their reaction to incentives appears myopic in other dimensions.
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