Identifying, Measuring, and Communicating Employee Fit Through Formal Control Mechanisms: Evidence From the Field

Abstract

In this dissertation, I utilize proprietary field data to examine two different management control mechanisms used by organizations seeking to optimize fit in their personnel decisions. I also describe my experiences conducting field-based research in management accounting. In the first essay, “Beyond Performance: When Potential Matters to Employee Career Outcomes”, I examine how managers’ assessments of employee potential (i.e. promotion prospects) are related to employee career outcomes. I first document that (as intended) potential ratings play an important role in managers’ promotion decisions, above and beyond performance ratings, and that these ratings also play an incremental role in termination decisions. Next, I examine how potential ratings are related to employees’ voluntary separations. Amongst newly-hired employees, I find that the likelihood of an employee voluntarily leaving the organization is decreasing in rated potential, and that an upward revision in potential is associated with a reduced likelihood of leaving. Conversely, for longer-tenured employees, voluntary departures are unrelated to potential ratings, except that the likelihood of departure is greater following a downward revision in potential. Finally, I investigate how the aggregate potential of an organization’s employee base evolves over time. I find that with the passage of time the organization experienced an increase in the proportion of employees assessed as “high potential”, attributing this to both employee selection effects and motivational effects. In the second essay, “Who Should Select New Employees, the Head Office or the Unit Manager? Consequences of Centralizing Hiring at a Retail Chain”, co-authored with Tatiana Sandino, we examine the allocation of hiring rights in the employee selection process. Specifically, we examine whether centralized hiring (in our study, by the head office of a U.S. retail chain) or decentralized hiring (by store managers) leads to higher quality employee-company matches. In addition to examining the main effect of centralized hiring on match quality, we develop and test hypotheses pertaining to various store characteristics that may moderate the effect of centralized hiring – specifically, instances where headquarters may have a hiring advantage relative to store managers, and instances where store managers may possess an informational advantage relative to headquarters. While we find no evidence of a main effect of centralized hiring, we do find evidence consistent with our moderating hypotheses – specifically that centralized hiring leads to higher quality matches when store managers are overly busy, while centralized hiring leads to relatively lower quality matches when the store manager is at an informational advantage due to serving a divergent market or repeat customers. In the third essay, “Field Studies in Management Accounting”, I describe my experiences conducting field-based research in management accounting (focusing in particular on the studies featured in the abovementioned essays). In so doing, I provide an overview of each of the main phases involved in a typical field study, discuss lessons learnt, and share tips for other researchers considering conducting a field-based empirical research study.