Employee Compensation: Research and Practice

[Excerpt] An organization has the potential to remain viable only so long as its members choose to participate and engage in necessary role behaviors (March & Simon, 1958; Katz & Kahn, 1966). To elicit these contributions, an organization must provide inducements that are of value to its members. This exchange or transaction process is at the core of the employment relationship and can be viewed as a type of contract, explicit or implicit, that imposes reciprocal obligations on the parties (Barnard, 1936; Simon, 1951; Williamson, 1975; Rousseau, 1990). At the heart of that exchange are decisions by employers and employees regarding compensation

Back to the Future: A Century of Compensation

What were the hot compensation issues and practices over the past century? Does history offer any lessons that may inform our compensation decisions in the future? To answer these questions, we reviewed newspapers and business publications from the past 100 years. To highlight changes in compensation systems during that time, we selected four topics to examine in detail in this paper: compensation\u27s role in the changing nature of the deal; the evolution of pay-for-performance; the emergence of benefits; and the bellwethers of compensation systems. Four lessons for the future are drawn. These include: End the search for the one right compensation strategy; Understand what in the context matters; Continue pragmatic experimentation, and Support continuous learning about compensation. Readers are invited to delve into the history of compensation to discover what they take away for the future

Risk Sharing and Transactions Costs in Producer-Processor Supply Chains

Industrial Organization,

Solar+Storage for Low-and Moderate-Income Communities: A Guide for States and Municipalities

The Clean Energy States Alliance (CESA) has produced a new report for states and municipalities on solar+storage for low- and moderate-income (LMI) communities. The report explains how solar+storage can benefit LMI residents and describes a variety of policy tools for doing so, including grants, rebates, utility procurement standards, financing support, opening markets, and soft cost reduction

Cross border banking supervision : incentive conflicts in supervisory information sharing between home and host supervisors

The global financial crisis has uncovered a number of weaknesses in the supervision and regulation of cross border banks. One such weakness was the lack of effective cooperation among banking supervisors. Since then, international bodies, such as the G-20, the Financial Stability Board and the Basel Committee have actively promoted the use of supervisory colleges. The objective of this paper is to explore the obstacles to effective cross border supervisory information sharing. More specifically, a schematic presentation illustrating the misalignments in incentives for information sharing between home and host supervisors under the current supervisory task-sharing anchored in the Basel Concordat is developed. This paper finds that in the absence of an ex ante agreed upon resolution and burden-sharing mechanism and deteriorating health of the bank, incentive conflicts escalate and supervisory cooperation breaks down. The promotion of good practices for cooperation in supervisory colleges is thus not sufficient to address the existing incentive conflicts. What is needed is a rigorous analysis and review of the supervisory task-sharing framework, so that the right incentives are secured during all stages of the supervisory process. For this purpose, it is essential that policy makers integrate and harmonize the current debates on crisis management, resolution policy and good supervisory practices for cross border banking supervision.Banks&Banking Reform,Emerging Markets,Labor Policies,Financial Intermediation,Debt Markets

Demystifying hedge funds: a design primer

Die Abhandlung ist eine überarbeitete und erweiterte Fassung der vom Institute for Monetary and Financial Stability am 19. Juni 2006 veranstalteten Guest Lecture des Autors zum Thema "Demystifying Hedge Funds

Bilateral Information Sharing in Oligopoly

We study the problem of information sharing in oligopoly, when sharing decisions are taken before the realization of private signals. Using the general model developed by Raith (1996), we show that if firms are allowed to make bilateral exclusive sharing agreements, then some degree of information sharing is consistent with equilibrium, and is a constant feature of equilibrium when the number of firms is not too small. Our result is to be contrasted with the traditional conclusion that no information is shared in common values situations with strategic substitutes - such as Cournot competition with demand shocks - when firms can only make industry-wide sharing contracts (e.g., a trade association).Networks, Information sharing, oligopoly, networks, Bayesian equilibrium

Pay, Performance, and Participation

Our chapter identifies key dimensions on which organizations make employee compensation decisions and examines the emerging research evidence on the consequences of such decisions for attitudes, behaviors, and organization performance. We provide some general suggestions that may prove helpful in future research. First, there is increased recognition that pay decisions take place in the context of implicit or explicit contracts between employees and specific organizations. As a result, we encourage researchers to continue to give greater attention to the role of organization differences in compensation. Second, because pay is multidimensional, attention should not be restricted to organization differences in pay level. Organization differences in benefits, structure, and means of recognizing individual employees contributions also warrant attention. As an example of how the focus can be expanded, we provide new empirical evidence on organization differences in the market sensitivity of pay structures. Third, we note that the success of pay programs depends not only on decisions about pay per se, but also the process used in making communicating, and administering such decisions. More broadly, the influence of contextual factors, such as the nature of other employee relations practices (e.g., staffmg, development, employment security), needs to be considered to a greater extent in compensation research. In addition to these broad suggestions, we provide specific ideas on future research directions throughout the chapter

Law Firms, Ethics, and Equity Capital: A Conversation

The correspondence collected here represents an effort to start a conversation. Pending legislation in the United Kingdom, based on what is known as the Clementi Report, would permit non-lawyer equity investment in law firms, subject to regulatory oversight. In other words, UK law firms could become publicly-traded businesses. This legislation has been proposed as part of reforms heralded as improving the delivery of legal services to consumers. By contrast, such investment in law firms is forbidden by ethical rules in the United States. What will happen when the two countries with the most dominant global law firms begin to move along such different paths? Australia already allows such investment, but the prospect of major UK firms raising capital in the equity markets has the potential to produce seismic shifts in the global market for legal services. It also could have far-reaching implications for the legal profession that we can only dimly anticipate. Until now, there has been remarkably little discussion -- especially in the United States -- about the possible effects of the UK legislation. This paper attempts to redress that situation. It consists of an exchange among Bruce MacEwen, an expert on law firm economics and editor of the on-line publication Adam Smith, Esq.; Mitt Regan, a Professor at Georgetown University Law Center, an expert on the legal profession; and Larry Ribstein, a Professor at the University of Illinois College of Law, an expert on partnership law