Employee selection as a control system
By: Dennis Campbell
Contributors: Harvard Business School
Edition: Rev.
Series: Working paper / Harvard Business School -- 11-021; Working paper (Harvard Business School) -- 11-021.
Publisher: Harvard Business School
Published: 2010
Place of publication: [Boston]
Language: eng
Number of pages: 53
Description: Theories from the economics, management control, and organizational behavior literatures predict that when it is difficult to align incentives by contracting on output, aligning preferences via employee selection may provide a useful alternative. This study investigates this idea empirically using personnel and lending data from a financial services organization that implemented a highly decentralized business model. I exploit variation in this organization in whether or not employees are selected via channels that are likely to sort on the alignment of their preferences with organizational objectives. I find that employees selected through such channels are more likely to use decision-making authority in the granting and structuring of consumer loans than those who are not. Conditional on using decision-making authority, their decisions are also less risky ex post. These findings demonstrate employee selection as an important, but understudied, element of organizational control systems.
Notes: "August 2010, revised September 2010"--Publisher's website.

"Current draft: August 2010"--added t.p.

Includes bibliographical references.