On the folly of principal's power: Managerial psychology as a cause of bad incentives

Faulty and dysfunctional incentive systems have long interested, and frustrated, managers and organizational scholars alike. In this analysis, we pick up where Kerr (1975) left off and advance an explanation for why bad incentive systems are so prevalent in organizations. We propose that one contributing factor lies in the psychology of people who occupy managerial roles. Although designing effective incentive systems is a challenge wrought with perils for anyone, we believe the psychological consequences and correlates of higher rank within organizations make the challenge more severe for managers. Patterns of promotion and hiring typically yield managers that are more competent than their employees, and ascending to management positions increases individuals’ workload and power. In turn, these factors make managers more egocentrically anchored and cognitively abstract, while also reducing their available cognitive capacity for any given task, all of which we argue limits their ability to design effective incentives for employees. Thus, ironically, those with the power to design incentives may be those least able to effectively do so. We discuss four specific types of bad incentive systems that can arise from these psychological tendencies in managers: those that over-emphasize compensation, generate weak motivation, offer perverse motivation, or are misaligned with organizational culture.

“There is no doubt that in our society the superior/subordinate relationship—the hierarchy itself—is crucial in terms of motivation.” (Lawler, 1973, p. 7)

     

Diversity as a Basis for Shared Organizational Identity: The Norm Congruity Principle

Although the social identity approach is generally used to explain the negative consequences of diversity for the formation of a common identity within organizations, we propose that social identity processes can also lead employees to evaluate their differences in a positive way. We propose norm‐congruency as a central principle to understand these issues. We argue that when differences among team members in organizations are congruent with norms and expectations, diversity can become a basis for organizational identification.     

Organizational identification and workplace behavior: More than meets the eye

Organizational identification is a theoretically profound and practically important construct. It fundamentally transforms the relationship between employees and their work organizations, because highly identified employees integrate their organizational memberships with their sense of who they are. This transformation enhances highly identified employees’ work performance and contributions to the organization. However, despite considerable research on the benefits of organizational identification for employee behavior, theorizing about this effect and its underlying mechanisms remains underdeveloped. In particular, there has not been sufficient theoretical development regarding the specific types of work behaviors that follow from organizational identification, the psychological mechanisms that underlie these behavioral consequences, or observers’ evaluations of these behaviors and those enacting them. To address these issues, we present a framework of the behavioral consequences of organizational identification as well as observers’ reactions to them. Our framework highlights two distinct motivational orientations that underlie organizational identification, one that reliably leads to conformist work behaviors and one that may lead to deviant work behaviors that violate the status quo to advance organizational interests. Moreover, our framework highlights that reactions to these behaviors will differ depending on the organization’s emphasis on means versus ends. Overall, we emphasize that the benefits of organizational identification for work behavior are not as straightforward or as widely recognized as implied in prior research.     

The economic evaluation of time: Organizational causes and individual consequences

People acquire ways of thinking about time partly in and from work organizations, where the control and measurement of time use is a prominent feature of modern management—an inevitable consequence of employees selling their time for money. In this paper, we theorize about the role organizational practices play in promoting an economic evaluation of time and time use—where time is thought of primarily in monetary terms and viewed as a scarce resource that should be used as efficiently as possible. While people usually make decisions about time and money differently, we argue that management practices that make the connection between time and money salient can heighten the economic evaluation of time. We consider both the organizational causes of economic evaluation as well as its personal and societal consequences.     

Determinants and effects of formal target agreements: an empirical investigation of German firms

We investigate organizational determinants and performance effects of formal target agreements for employees based on the IAB establishment panel, a representative panel of German establishments. The results show that establishments with a high employee turnover rate, a large proportion of temporary workers, and a highly qualified workforce are significantly more likely to implement target agreements. Also, establishments with works councils installed are more likely to do so, controlling, among others, for firm size. Concerning organizational performance, we apply a first-difference and a fixed effects approach and find that establishments that implement target agreements achieve around 5 % higher total sales compared to firms that did not introduce this practice. Hence, organizations seem to benefit from the implementation of formal target agreements for employees.     

The Voluntary Redundancy Option: Carrot or Stick?

Voluntary redundancy is a relatively new form of retrenchment that has become a popular means of reducing workforce numbers in downsizing organizations. Voluntary redundancy involves the offer of a financial incentive to encourage employees to 'volunteer' for redundancy. Using the findings of a small study of individuals who had taken voluntary redundancy, this paper explores the voluntary nature of voluntary redundancy and suggests that both organizational change and the financial incentive are contributors to the redundancy decision. From an organizational perspective voluntary redundancy does appear to smooth the downsizing process but at the same time tends to mask underlying issues of morale and commitment.     

Exploring the Predictors of Organizational Preparedness for Natural Disasters

There is an extensive body of research on the determinants of disaster preparedness at the individual and household levels. The same cannot be said for the organizational level. Hence, the purpose of this study is to shed light on the predictors of organizational preparedness for natural disasters. Since leaders of organizations have an incentive to overstate their level of preparedness and because surveys of organizational leaders suffer from selection bias and low response rates, we take the novel approach of interviewing employees about the organizations that employ them. Using an online survey, we collected information from a national sample of 2,008 U.S. employees and estimated the predictors of preparedness at the organizational level. We find, among other results, that organization size (facility level) is a consistent predictor of preparedness at the organizational level. We conclude with policy recommendations and outline an agenda for future research on organizational preparedness for natural disasters.     

Individual and organizational strategies for coping with organizational change

Abstract

During times of significant change to organizations in strategies and structures, employees can experience high levels of stress as their jobs, areas of responsibility and roles also change. Yet research is curiously silent about how people react to organizational change, especially towards promoting healthy responses to change. As a first step to outlining areas for future research this paper considers a range of individual and organizational strategies that may be effective in reducing employee stress and related problems. Prior to the implementation of these strategies, however, organizations must empower employees to adopt the role of change agent and encourage them to take action to solve the problems that stress them. At the individual level, employees can respond to the stress created by organizational change by using problem- and emotion-focused strategies. Also important in coping with change are the personal resources of employees, including a sense of hardiness, beliefs about having control over their work environment, and the availability of social supports within and outside the organization. Although few organizations fully acknowledge their role in helping employees cope with change, there are a number of initiatives that organizations can pursue. Several strategies are discussed in relation to communication, leadership, job-related tasks and stress management programmes.     

Family Status and Work Attitudes: An Investigation in a Professional Services Firm

To help employees better balance work and family responsibilities, organizations are increasingly offering a variety of work–family programmes. However, anecdotal reports suggest that employees without spouses or children perceive that they receive fewer organizational benefits and bear greater burdens than their married or parent counterparts. By providing a more ‘family‐friendly’ work environment, organizations may foster perceptions of inequity in people without families (single adults without dependent children, SAWDCs), possibly resulting in lower job satisfaction and other work‐related outcomes. Using a sample of 454 employees of a professional services firm, we examined attitudinal differences between individuals with and without families. Findings suggest that SAWDCs and non‐SAWDCS differed in terms of age, organizational level, use of flexible work arrangements and firm tenure. However, we found no differences in hours worked, job involvement, job satisfaction or organizational commitment. Interestingly, SAWDCs had more favourable perceptions of the organization's work–family culture than non‐SAWDCs, suggesting that those who do not utilize family‐friendly benefits view them more favourably than those who actually need or use the benefits. In addition to identifying directions for future research, we offer suggestions for organizations, including taking a more universal approach to benefits to the advantage of all employees.     

论职务晋升的激励作用与公正原则

本文分析了职务晋升作为人力资源管理中的激励措施的积极作用与负面效果,提出了晋升决策的公正原则,指出晋升决策的结果公正性、程序公正性与交往公正性是发挥职务晋升的激励作用、消除晋升可能带来的消极影响的重要措施.     

Individual and organizational strategies for coping with organizational change

During times of significant change to organizations in strategies and structures, employees can experience high levels of stress as their jobs, areas of responsibility and roles also change. Yet research is curiously silent about how people react to organizational change, especially towards promoting healthy responses to change. As a first step to outlining areas for future research this paper considers a range of individual and organizational strategies that may be effective in reducing employee stress and related problems. Prior to the implementation of these strategies, however, organizations must empower employees to adopt the role of change agent and encourage them to take action to solve the problems that stress them. At the individual level, employees can respond to the stress created by organizational change by using problem- and emotion-focused strategies. Also important in coping with change are the personal resources of employees, including a sense of hardiness, beliefs about having control over their work environment, and the availability of social supports within and outside the organization. Although few organizations fully acknowledge their role in helping employees cope with change, there are a number of initiatives that organizations can pursue. Several strategies are discussed in relation to communication, leadership, job-related tasks and stress management programmes.     

Ignoring Leaders who Break Promises or Following God: How Depersonalization and Religious Faith Inform Employees’ Timely Work Efforts

This study investigates the relationship between employees’ perceptions of psychological contract breaches and their failure to meet work-related deadlines, with a particular focus on the mediating role of the depersonalization they assign to organizational authorities and the moderating role of their religious faith. Results based on multisource data, collected among employees and their supervisors in Pakistani organizations, show that an important factor that underpins the connection between beliefs about broken organizational promises and a diminished propensity to finish work on time is that employees depersonalize organizational leaders. This mediating effect is mitigated by employees’ religious faith. For organizations, this study thus identifies a key mechanism – exhibiting indifference to the people in charge – by which employees’ frustrations about resource-depleting contract breaches may inadvertently escalate into ineffective time management, and it identifies some workers among whom this counterproductive dynamic is less likely, namely, employees who can draw from their religious faith.     

Darwinism,organizational evolution and survival: key challenges for future research

How do social organizations evolve? How do they adapt to environmental pressures? What resources and capabilities determine their survival within dynamic competition? Charles Darwin’s seminal work The Origin of Species (1859) has provided a significant impact on the development of the management and organization theory literatures on organizational evolution. This article introduces the JMG Special Issue focused on Darwinism, organizational evolution and survival. We discuss key themes in the organizational evolution research that have emerged in recent years. These include the increasing adoption of the co-evolutionary approach, with a particular focus on the definition of appropriate units of analysis, such as routines, and related challenges associated with exploring the relationship between co-evolution, re-use of knowledge, adaptation, and exaptation processes. We then introduce the three articles that we have finally accepted in this Special Issue after an extensive, multi-round, triple blind-review process. We briefly outline how each of these articles contributes to understanding among scholars, practitioners and policy makers of the continuous evolutionary processes within and among social organizations and systems.     

7 Getting There from Here: Research on the Effects of Work–Family Initiatives on Work–Family Conflict and Business Outcomes

Abstract

Many employing organizations have adopted work–family policies, programs, and benefits. Yet managers in employing organizations simply do not know what organizational initiatives actually reduce work–family conflict and how these changes are likely to impact employees and the organization. We examine scholarship that addresses two broad questions: first, do work–family initiatives reduce employees’ work–family conflict and/or improve work–family enrichment? Second, does reduced work–family conflict improve employees’ work outcomes and, especially, business outcomes at the organizational level? We review over 150 peer‐reviewed studies from a number of disciplines in order to summarize this rich literature and identify promising avenues for research and conceptualization. We propose a research agenda based on four primary conclusions: the need for more multi‐level research, the necessity of an interdisciplinary approach, the benefits of longitudinal studies that employ quasi‐experimental or experimental designs and the challenges of translating research into practice in effective ways.     

The effectiveness and specificity of change management in a public organization: Transformational leadership and a bureaucratic organizational structure

There is an extensive private sector literature on organizational change management. However, recent studies have suggested that the specific context of public organizations may have consequences for the management organizational change. This study examines to what extent different change approaches and transformational leadership of direct supervisors contribute to the effective implementation of organizational change in public organizations, and to what extent the bureaucratic structure of public organizations makes the implementation of organizational change s3pecific. The implementation of an organizational change in a Dutch public organization is studied using quantitative methods and techniques. The results indicate that bureaucratic organizations may effectively implement organizational change with both planned and emergent change approaches. The contribution of transformational leadership depends on the type of change approach and organizational structure. Transformational leadership behavior of direct supervisors contributes little to planned processes of change, but is crucial in emergent processes of change in a non-bureaucratic context. Although the literature on change management mostly emphasizes the leadership of senior managers, the leadership role of direct supervisors should not be overlooked during organizational change in public organizations.     

Dimensions of work–home culture and their relations with the use of work–home arrangements and work–home interaction

Abstract

This study examined the associations of work–home culture with (a) demographic and organizational characteristics, (b) the use of work–home arrangements, and (c) negative and positive work–home interaction, among 1,179 employees from one public and two private organizations. Substantial support was found for a 2-factor structure of a work–home culture measure differentiating between “support” (employees’ perceptions of organization's, supervisors’, and colleagues’ responsiveness to work–family issues and to the use of work–home arrangements) and “hindrance” (employees’ perceptions of career consequences and time demands that may prevent them from using work–home arrangements). This 2-factor structure appeared to be invariant across organizations, gender, and parental status. Significant relationships with organizational characteristics, the use of work–home arrangements, and work–home interaction supported the validity of these two cultural dimensions. It is concluded that if employers want to minimize work–home interference, to optimize positive work–home interaction, and to boost the use of work–home arrangements, they should create a work–home culture that is characterized by high support and low hindrance.     

Negative implications for the inclusion of citizenship performance in ratings

Although citizenship performance has been deemed important to organizational effectiveness, potential negative consequences related to including these behaviours in assessments of performance have received far less attention. Furthermore, although numerous researchers have demonstrated that performance ratings include task and citizenship performance, none have specifically examined the potential negative implications this has for performance ratings, employees, and organizations. This article conceptually explores the implications of including citizenship performance in formal ratings of performance. Specifically, the negative implications of including citizenship performance in the formal performance appraisal process are explored in terms of the consequences for the performance rating, including inaccurate appraisals; effects on employees, including reactions to the procedure; potential organizational outcomes, including performance and competitive advantage concerns; potential international and legal considerations.     

Workplace trust as a mechanism of employee (dis)advantage: The case of employee socioeconomic status

Early work on trust in social science highlighted how the lack of trust between individuals can cause social division, contribute to social stratification, and reduce economic opportunities for people from all social groups. We integrate this work with organizational research on antecedents of trust to generate predictions explaining when and why low employee socioeconomic status (SES) can be a barrier to trust. We discuss how this process can impair the success of both organizations as well as their lower-SES employees. We present a model, and data, suggesting that lower-SES employees will be both more distrusted as well as more distrustful relative to their higher-SES colleagues. This, in turn, locks them out of potentially advantageous social and economic exchanges. Our theory adds precision in detecting when and why lower-SES employees face barriers to success in organizations, as well as provides a blueprint for studying the impact of trust on socially disadvantaged groups in organizations.     

Organizational cynicism: Spillover effects on supervisor–subordinate relationships and performance

Organizational cynicism has grown in contemporary Western organizations. However, its impact on interpersonal relationships and consequently on organizational functioning remains understudied. The present study addresses these gaps by: a) exploring the spillover effect of organizational cynicism on supervisor–subordinate relationships, and b) examining if the spillover effect extends to employee performance. Specifically, it examines if affective commitment to the supervisor mediates the relationship between the PSS × organizational cynicism interaction effect and performance (i.e., mediated-moderation). Data were collected from both employees and supervisors (N = 274) from 45 organizations. Our results generally support our hypotheses. This study provides evidence that organizational cynicism interferes in the relationship employees develop with their supervisors, with consequences to performance. This study opens new avenues for research on organizational cynicism and carries implications for theory and practice.     

When do Public Managers Imitate Each Other? Mimetic Decision Making in Contracting Decisions of Danish Municipalities

Using organizational new institutional theory, this paper explores a core mechanism underlying contracting decisions in public organizations. A central proposition of this branch of institutional theory is that uncertainty leads to organizational isomorphism. The present study investigates this proposition by asking: When does perceived uncertainty lead public managers to imitative behavior in contracting out decisions? Contrary to most previous studies, we apply an individual level approach and relate different types of perceived uncertainty of decision makers to mimetic decision making. We define mimetic decision making as when decision makers deliberately obtain information about other organizations in order to possibly imitate them. In a survey of Danish municipal managers facing important and complex contracting decisions, we test our hypotheses about three types of perceived uncertainty and mimetic decision making. The results show that technological uncertainty is strongly related to mimetic decision making among public managers. However, we do not find significant results for either volume uncertainty or performance uncertainty. The paper illustrates how uncertainty, through mimetic decision making, is connected to organizational isomorphism. It further highlights that future studies should pay attention to the multidimensionality of uncertainty and its consequences.