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CM N66 - Personnel Economics* (1st. Quarter) "NOT ESTABLISHED"

Faculty
Steffen Brenner
Course Coordinator
Steffen Brenner
Prerequisite/progression of the course
Prior training in economics is helpful but not necessary. We make occasional use of mathematics on a non-advanced level. The focus is on the interpretation of the results.
Course content, structure and teaching
One of the central tasks of corporate managers is to create an environment that attracts potential employees, and that motivates the current work force to contribute their effort, skills and passion to achieve the corporate goals. Personnel Economics deals with typical problems faced by Human Resource Managers associated with these tasks.
The course covers three broad topics:
1) Recruitment strategies & managing turnover
2) Organization & job design
3) Paying for performance
The course will cover a careful analysis of job markets, compensation schemes, hiring practices, training, teamwork, job design, organizational structure, job evaluation, and institutional arrangements. Typical questions that we will address in this course are: Why should pay vary within organizations? Can a substantial spread between high and low earners be detrimental to achieving corporate goals? What motivational implications can we expect from different compensation schemes? Should employees be compensated relative to their performance, their abilities, or the hours they work? How should teams be structured, and how should team members be incentivized in order to work efficiently? What negative impact on the performance of group tasks do high-powered individual incentive schemes entail? How should an organization be structured in order to provide optimal life-time incentives? What role does performance evaluation play for employee motivation and labor allocation?
In this course, the problems associated with Human Resource Management are tackled from an economist’s perspective. It thus complements treatments typically based on theoretical approaches from industrial psychology and sociology. The main advantage of using the economics approach is to provide a formal structure to analyze and solve problems in a rigorous fashion. We will learn and apply ideas from microeconomics, such as incentive theory and human capital, and we will make ourselves familiar with economic concepts such as asymmetric information, investment, contracting, and signaling. At the same time, we will use illustrating examples and case studies in order to complement the theoretical perspective.
The course's development of personal competences
To critically assess compensation structures, the organization of work in teams and labor training programs with respect to their costs and benefits related to employee motivation and labor allocation, and to be able to purposefully design compensation schemes that are appropriate within the given organizational context.
Learning Objectives
After having attended the course, the students:
  • have developed an understanding of challenges faced by an HR manager with regard to employee selection, employee training, work organization, and motivation of employees within larger companies,
  • are familar with a class of economic models that help to think about problems of employee selection, employee training, organization of work in teams, and the compensation of employees in a structured way,
  • are able to critically reflect on these models,
  • use the insight provided by these models to address the challenges faced by an HR manager by creating appropriate selection procedures, by optimally structuring the organization of work, and by designing compensation schemes that are beneficial with respect to the motivation of employees.
Type of examination, exam aids and assessment
4-hour individual written exam, closed book. Calculators are allowed, “written aid” is not allowed. Re-examination will be organized as a 30 min. oral examination.
Recommended literature
  • The textbook by Lazear and Gibbs (2009) represents the core literature for this course. Case studies and some academic articles complement this material
  • Lazear, E. and M. Gibbs (2009). Personnel Economics in Practice, Wiley
  • Kelly, Bedard. (2001), Human Capital versus Signalling Models: University Access and High School Dropouts, Journal of Political Economy, 109(4): 749-775.
  • Bertrand, M. and S. Mullainathan (2004), Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination, American Economic Review, 94, 911-1013.
  • Barton, H., J.A. Nickerson, and H. Owan (2003), Team Incentives and Worker Hetergeneity: An Empirical Analysis of the Impact of Teams on Productivity and Participation, Journal of Political Economy, 111: 465-497.
  • Ichniowski, C., K. Shaw, and G. Prennushi (1997), The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines, American Economic Review, 87(3), 291-313.
  • Lazear, E.P. (2000): Pay, Performance and Productivity, American Economic Review, 90(5), 1346-1361.
  • Case studies: Lincoln Inc., Assuming Control at Altex AviationMotorola U.: When Training Becomes an Education

Last updated by Electives Secretariat 06/08/2010