Search results

This paper is an investigation of the pay-for-performance link in executive compensation. In particular, we document main issues in the pay–performance debate and explain practical issues in setting pay as well as data issues including how pay is disclosed and how that has changed over time. We also provide a summary of the state of CEO pay levels and pay mix in 2009 using a sample of over 2,000 companies and describe main data sources for researchers. We also investigate what we believe to be at the root of fundamental confusion in the literature across disciplines – methodological issues. In exploring methodological issues, we focus on empirical specifications, causality, fixed-effects, first-differencing, and instrumental variable issues. We then discuss two important but not yet well-explored areas, international issues, and compensation in non-profits. We conclude by examining a series of research areas where further work can be done, within and across disciplines.

This paper uses data on over 4,600 layoff announcements in the U.S., covering each firm that ever existed in the Fortune 500 between 1970 and 2000, along with 40 interviews of senior managers in 2001 and 2002 to describe layoffs in large U.S. firms over this period. In order to motivate further work in the area, I investigate six main issues related to layoffs: timing of layoffs, reasons for layoffs, the actual execution of layoffs, international workers, labor unions, and the types of workers by occupation and compensation categories. The paper draws on literature from many fields to help further understand these issues.

Although the nonprofit sector is enormous, we know little about how workers there are compensated. This may be due, in part, to the fact that the literature is scattered across many fields including Human Resources Management, Accounting, Economics, Finance, Organizational Behavior, Political Science, and Sociology. This chapter aims to synthesize the research on nonprofits from an economics point of view, while carefully considering the work in the many other areas. In addition to using data from the U.S. census to provide a description of employment and wages in the nonprofit sector as well as a comparison with the for-profit sector, this study describes institutional details in nonprofits, considers why organizations form as nonprofits, reviews possible theories for a for-profit/nonprofit wage gap, performance pay in nonprofits, management compensation in nonprofits, gender issues, and international research.

We evaluate potential determinants of enrollment in an early retirement incentive program for non-tenure-track employees at a large university. Using administrative records on the eligible population of employees not covered by collective bargaining agreements, historical employee count and layoff data by budget units, and public information on unit budgets, we find dips in per-employee finances in a budget unit during the application year, and higher recent per employee layoffs were associated with increased probabilities of eligible employee program enrollment. Our results also suggest that, on average, employees whose salaries are lower than we would predict given their personal characteristics and job titles were more likely to enroll in the early retirement program. To the extent that employees’ compensation reflect their productivity, as it should under a pay system in which annual salary increases are based on merit, this finding suggests that adverse selection was not a problem with the program. That is, we find no evidence that on average the “most productive” employees took the incentive.

M. Ronald Buckley holds the JC Penney Company Chair of Business Leadership and is a professor of management and a professor of psychology in the Michael F. Price College of Business at the University of Oklahoma. He earned his Ph.D. in industrial/organizational psychology from Auburn University. His research interests include, among others, work motivation, racial and gender issues in performance evaluation, business ethics, interview issues, and organizational socialization. His work has been published in journals such as the Academy of Management Review, Personnel Psychology, Journal of Applied Psychology, Organizational Behavior and Human Decision Processes, and the Journal of Management.

Pay varies across individuals. Some variation is endemic to a country's institutions including a country's level of development and its technological infrastructure. Some variation is based on differences in individual attributes, particularly an individual's ability to acquire human capital. Finally, some variation is based on incentives instigated by the government, by one's employer, or by one's family. These incentives often operate indirectly by influencing educational choices, labor force participation, and even cohabitation and marital arrangements. This volume contains eight articles on aspects of the distribution of income. One deals with technology change and the distribution of earnings, two deal with internal labor markets, four deal with incentives that motivate work related behavior, and finally one deals with immigrant labor market success.

Bradley J. Alge is an associate professor of Management at Purdue University's Krannert School of Management. He received his Ph.D. in business administration from The Ohio State University, and an MBA from Kent State University. Professor Alge received his BBA from the University of Notre Dame, where he majored in MIS and was also a member of the 1988 Division I NCAA National Championship football team. Prior to entering academia, he worked as a consultant for Accenture. Professor Alge studies issues of human–technology interaction (e.g., electronic monitoring, virtual teams) and the effects of technology on individual and group attitudes and behaviors on the job. He has published in leading management and psychology journals including the Journal of Applied Psychology, Personnel Psychology, and Organizational Behavior and Human Decision Processes.