Employee Mobility, Performance, and the Allocation of Decision Rights: Field Evidence from Internal Labor Markets

Abstract

In this dissertation, I utilize proprietary field data to examine how organizational design choices regarding employee mobility and decision rights influence performance within internal labor markets. While traditional management control systems often rely on centralized allocation, a unifying theme across my three studies is the strategic advantage of decentralization. I explore how aligning decision authority with local information allows organizations to harness the private knowledge held by employees, thereby improving job matching, team coordination, and overall productivity. Empowering employees to navigate these allocations not only reduces turnover and elevates individual performance, but also alleviates operational bottlenecks that marginal increases in financial incentives alone fail to resolve. Importantly, this research also highlights the inherent trade-offs of these dynamic structures, introducing short-term frictions as employees require time to explore new assignments and adapt to complex tasks. These initial costs, however, are ultimately offset by profound long-term gains in job match quality, operational stability, and employee development. Collectively, the findings demonstrate that moving beyond static, ex ante selection to dynamically manage talent and decision authority post-hire is a critical lever for workforce optimization.