6 Pay and Performance: Individuals,Groups, and Executives

Abstract

In this chapter, we address three pay for performance (PFP) questions. First, what are the conceptual mechanisms by which PFP influences performance? Second, what programs do organizations use to implement PFP and what is the empirical evidence on their effectiveness? Third, what perils and pitfalls arise on the way from PFP theory to its execution in organizations? We address these questions in general terms, but also highlight unique issues that arise in PFP for teams and for executives. We highlight the fact that research and practice in the area of PFP requires one to deal with a number of trade‐offs. For example, strengthening PFP links can generate powerful motivation effects, but sometimes these are in unintended and unanticipated directions, resulting in undesirable effects. In addition, there are also trade‐offs in deciding the degree of emphasis to give to individual versus team performance and to results versus behaviors in PFP plans. What all this means is that, as in other areas of management, “one best way” advice (e.g., do or do not use individual PFP plans) or “sound‐bite” conclusions (e.g., PFP does not exist; PFP does or does not motivate) are rarely valid, but rather depend on the circumstances and the organization. In the realm of executive pay, we question the current conventional wisdom in the management literature that there is little or no PFP. We close the chapter with a discussion of our key conclusions and suggestions for what we think would be the most interesting and useful future research areas. We encourage the management literature, which has increasingly become interested in the concept of evidence‐based management, to execute this concept more effectively in its research and when talking or writing about pay.     

Stress,Task, and Relationship Orientations of Vietnamese Working Adults: Do Age,Gender, and Government Work Experience Make a Difference?

Adult people are always structured diversely based on their gender, age, and work experience in the government versus private enterprises. To investigate the task, relationship and stress orientations of Vietnamese adults, this research examined 294 Vietnamese people living in three main cities in Vietnam including Hanoi (the capital) in the north, Vinh in the middle and Ho Chi Minh in the south. It found that they have different mean scores on task and relationship orientations. Gender, age and government work experience seem to be essential factors in leadership orientation and overload stress perception. Additionally, older people appear to be more task-oriented than their younger counterparts. In summary, the Vietnamese respondents confirmed a moderate stress perception regardless of age, gender and government work experience.

     

Directors’ human capital,firm strategy,and firm performance

Ideally, corporations are directed by boards whose directors provide valuable human capital that match the firms’ strategy. We investigate how directors’ human capital (international experience, industrial know-how, CEO experience, and financial know-how) affects firm performance including the firm’s strategy (diversification and internationalization) and how human capital is related to acquisition strategies (non-diversifying and international acquisitions). Our sample consists of 560 firm-year observations in Switzerland. We find empirical evidence that directors’ human capital affects firm performance and that this relationship depends on the firm’s strategy. Furthermore, human capital is also correlated with acquisition strategy. The study shows that focusing on board independence and compliance issues may be unrewarding in board research and practice.     

Exploring work- and organization-based resources as moderators between work–family conflict,well-being,and job attitudes

Abstract

In modern Western life it is difficult to avoid work–family conflict. Therefore the resources that might reduce its negative outcomes on well-being and job attitudes come into focus. Our study contributes to the work–family conflict literature by exploring the indirect (moderator) and direct role of three work- and organization-related resources, i.e., job control, family supportive climate, organization-based self-esteem (OBSE), in the work-to-family conflict and well-being/job attitude relationship. Theoretically, the study tested the recently developed Job Demands–Resources (JD-R) model in the Scandinavian context. Data for the study were gathered from three differing Finnish organizations (health care district, ICT company, Cardboard mill; n=1252). In line with the predictions of the JD-R model, job demands (time- and strain-based work-to-family conflict) were more robustly associated with strain-based outcomes (physical symptoms), whereas job resources (job control, family supportive climate, OBSE) were more strongly linked to motivational-based outcomes (job satisfaction, organizational commitment). Both job control and family supportive climate moderated the relationships studied; high job control and family supportive climate buffered against the aversive effects of work-to-family conflict on well-being and job attitudes. These indirect effects also varied in relation to the independent, moderator, and dependent variables. However, OBSE did not operate as a buffering factor, although it showed significant direct effects. From a practical viewpoint, our findings suggest that job control and family supportive climate are resources that help employees to reduce the negative effects related to work–family conflict.     

In—Credible Government: Legitimacy, Democracy, and Non-Governmental Organizations

This article analyses emerging trans-global networks of governance that are coming to light within a post-democratic form of governance that relies upon specific technologies of credibility building, as opposed to universalistic mechanisms of representation. Using the NGO sector as a model, and using examples from fieldwork conducted in the unraveled contexts of Bosnia and Croatia, and the unraveling context of Ecuador over the past decade, we show how intervention within the global south and post conflict realms, although often couched using such master terms as democracy, development and freedom, are in fact geared towards the generation of political legitimacy and influence through relationships based upon the exchange of credibility.

Challenges Facing Public Sector Management in an Era of Downsizing,Devolution, Dispersion and Empowerment—and Accountability?

Agencies at all levels of government are facing strong ideological pressures to downsize, devolve, dispense, and empower both employees and recipients of services. These ideological pressures provide many performance advantages, but collectively they threaten historic notions of achieving economy, efficiency, and effectiveness, along with accountability. It has been widely assumed in recent years that advancements in information technology and performance measurement provide adequate replacements for the historic notion that accountability flows up-the-hierarchy to elected officials and the sovereignty. These technologies, however, are not yet able to ensure responsible administration or accountability in many areas of domestic government services. Today's public managers can play leading roles in developing alternative approaches for achieving accountability if they are supported by forward-looking human resources management (HRM) agencies.     

CEO political liberalism,stakeholders, and firms’ support for LGBT employees

We argue that CEO political liberalism, or the extent to which CEOs are more liberal rather than conservative, affects firms’ support for LGBT employees. Specifically, compared to conservative CEOs, liberal CEOs will be more likely to support LGBT employees by implementing LGBT-friendly policies. We furthermore posit that the presence of certain internal and external stakeholders—including boards, top management teams, and employees, as well as transient institutional investors and LGBT advocacy organizations—alter the proposed effect. Results based on a sample of Fortune 500 firms support our arguments. Our findings contribute to the literatures on leadership, stakeholders, and workplace diversity.     

Banks and Discrimination: How Far Can We Go with Competition? A Reply to Block,Snow, and Stringham

This article discusses competition theory and how advancements from the fields of economics, cognitive science, decision sciences, and management urge us to stop using the same recipe for all different kinds of illnesses. The issue of discrimination in the banking industry offers an interesting platform for this argument, which is developed as an antithesis to what Block, Snow, and Stringham (2008) proposed in their article published in a recent issue of the Business and Society Review. Foundational concepts for a behavioral model of discrimination are presented.     

Working mothers’ emotional exhaustion from work and care: The role of core self-evaluations,mental health,and control

This research examined the direct and indirect relationships between core self-evaluations (via mental health) and emotional exhaustion originating from both the work and caregiving domains. The extent to which these relationships were moderated by control over work and care also was examined. Data came from 142 employed mothers in Australia who completed surveys at three measurement points each separated by four weeks. Results showed that core self-evaluations related positively to mental health which, in turn, related negatively to emotional exhaustion originating from work, but only when work control was high. Moreover, core self-evaluations related negatively to emotional exhaustion originating from care through improvements in mental health, but care control did not moderate this relationship. Overall, these findings contribute to a better understanding of how working mothers’ personal and work resources mitigate emotional exhaustion.     

Fast and Furious or Slow and Cautious? The Joint Impact of Age at Internationalization,Speed, and Risk Diversity on the Survival of Exporting Firms

This article examines the effect of age at internationalization and pace of internationalization on the survival of small and medium-sized enterprises. Two sets of hypotheses are developed on the basis of the sequential expansion and international new venture approaches. These hypotheses are tested using an event-history method and panel data on French SMEs that exported for the first time between 2003 and 2012 (547 firm-year observations). The results show that the failure rate for firms adopting the late, slow, and cautious sequential expansion approach is significantly lower than in small firms adopting other paths to internationalization.     

Academic Autonomy and Freedom under Pressure: Severely Limited,or Alive and Kicking?

Academic freedom and the autonomy of academic institutions (their freedom from outside interference) are core values in contemporary academic life. This article outlines changes that have taken place in the last few decades that impact academic freedom and autonomy to at least some degree. These include the increasing catering by universities to stake-holders in the environment, increasing professionalization of university administrations, an evolving pattern of broadening authority over internal university decision-making, and an increasing attention to student (i.e. customer) needs. Two case studies -- one of recent decisions in the University of California system and the other at the University of Oslo -- illustrate the theoretical points in the article and point to the need to know a lot more about academic autonomy and academic freedom, especially in an environment of changing management practices and scarce resource bases for many institutions. The cases were selected because of the authors’ familiarity with them and are examples meant to illuminate some of the challenges and complexities inherent in the phenomena and to inspire further research on academic freedom and autonomy utilizing the instrumental and institutional perspectives from organization theory that are the core of our theoretical analysis.     

‘Clock-watching and box-ticking’: British local authority planners,professionalism and performance targets

The speed of the statutory planning system has concerned UK Governments for decades. The Labour Government of 1997–2010 placed particular emphasis on increasing the efficiency of public services through performance targets. Whilst the subsequent Coalition Government of 2010–2015 removed many targets, those measuring the speed of planning application processing were kept. These performance targets have important potential implications in terms of the autonomy and space for discretionary judgement traditionally seen as intrinsic to the professional nature of planning. Empirical material exploring how British local authority planners responded to these targets suggests they have both restricted and empowered professionals and, whilst changes to practice have occurred, professional identities have remained more resilient. This contradictory picture highlights the importance of considering the role of frontline professionals in implementing reforms.     

Who decides? The connecting thread of euthanasia,eugenics, and doctor-assisted suicide

Throughout recorded history, a series of seemingly unrelated ideas have been consistently intertwined: suicide, euthanasia, infanticide, eugenics, genocide and, most recently, the practice termed physician-assisted suicide. From Plato and Hippocrates to a pair of twentieth-century American physicians named Haiselden and Kevorkian, an examination of history shows these disparate notions always involve two troublesome questions: Which lives are not worth living? And who will decide? The same examination of history teaches that separating the worthy from the not worthy is a very dangerous proposition, especially for those whose lives are deemed marginal.     

Globalization,greed, and exploitation. How to break the baleful path?

During the last decades, a globalized and free market economy has become the worldwide accepted paradigm for organizing economic affairs. Indeed many positive effects of globalization have materialized and improved the wellbeing of humans, particularly in the poorer parts of the world. However, there is a dark side to globalization—negative external effects, e.g. the exploitation and destruction of natural resources—that is causing growing discontent (e.g. Stiglitz, Globalization and its discontents. Penguin, London, 2002). Different initiatives have been taken in order to deal with the deficits of globalization but have not yet resulted in a resounding success. This paper deals with the downsides of globalization and is not telling a “success story”. For this reason, it is a scholarly article and an essay at the same time, dealing with its subject sometimes from a personal point of view. After presenting some examples for negative side effects of our current economic system, it is argued that capitalism is not only promoting growth through innovation, but that it follows a path of greed and exploitation. Building on path dependence theory, self-reinforcing mechanisms are identified that lead into a lock-in of the current path and make it hard to alter its course. Against this background, three suggestions to tackle the deficits of globalization are presented and critically discussed—the Principles for Responsible Education (PRME), the attempt to restrict globalization (e.g. Steingart), and the implementation of a global governance system (e.g. Homann). Finally, a careful conclusion is drawn: A sequenced approach of education, sanction, and institution building might be the best solution to fasten up the slow moving process of fixing the shortcomings of globalization. It has to be clearly understood that this is not a contribution aimed against globalization and global competition. However, the issues raised in this article urgently need to be addressed. It logically follows that further research is needed in time.     

Charismatic,ideological, and pragmatic leaders: An examination of leader–leader interactions

Although a number of researchers have examined and demonstrated the unique relationships different types of leaders develop with their followers (Dansereau, F., Graen, G.B., & Haga, W.J. (1975). A vertical dyad linkage approach to leadership within formal organizations: A longitudinal investigation of the role making process. Organizational Behavior and Human Performance, 13, 46–78.; Dienesh & Liden, 1986; Mumford, 2006), relatively little is known regarding how outstanding leaders interact or work together (Hunter, Bedell-Avers, Mumford, 2009-this issue). Given the particular importance of such questions, especially when considering leaders who have the potential to influence national and worldwide developments, the intent of the present study was to examine the leader–leader exchange relationships of charismatic, ideological, and pragmatic leaders. Due to the difficulty associated with examining high-level leader–leader exchanges, a hybrid qualitative–quantitative approach was taken to assess the interactions of Frederick Douglas, W.E.B. Dubois, and Booker T. Washington – three high-level leaders who responded to the same crisis, in the same time period, in the same region of the world. The results provide preliminary evidence regarding the interactions of charismatic, ideological, and pragmatic leaders; in fact, they indicate that leaders interact in a manner consistent with their mental model.