2. Nick Bloom, 147, 2011 Economics of Human Resources Nick Bloom (Stanford Economics) Lecture 4: Incentives management 1

3. Nick Bloom, 147, 2011 2 Incentives (people) management Today we will run through 6 dimensions on incentives management (part of HR and talent management) The concept is around the management and motivation of people As before, while the data is mainly for manufacturing, these questions have been used in retail, hospitals, schools, healthcare clinics, tax collection agencies, charities, PPPs and law firms

4. Nick Bloom, 147, 2011 Score(1): Poor performers are rarely removed from their positions (3): Suspected poor performers stay in a position for a few years before action is taken (5): We move poor performers out of the company or to less critical roles as soon as a weakness is identified (15) Removing poor performers

5. Nick Bloom, 147, 2011 (15) Removing poor performers (1): Poor performers are rarely removed from their positions (3): Suspected poor performers stay in a position for a few years before action is taken (5): We move poor performers out of the company or to less critical roles as soon as a weakness is identified 1. 2. 3. 4. 5.

6. Nick Bloom, 147, 2011 The survey scores to question (15), removing poor performers – all countries, manufacturing 5 All countries, manufacturing firms (100 to 5000 employees), 9820 observations Average 3.11

7. Nick Bloom, 147, 2011 The survey scores to question (15), removing poor performers – USA, manufacturing 6 Manufacturing firms (100 to 5000 employees), 1291 observations Average 3.73

8. Nick Bloom, 147, 2011 The survey scores to question (15), removing poor performers – Japan, manufacturing 7 Manufacturing firms (100 to 5000 employees), 176 observations Average 2.78

9. Nick Bloom, 147, 2011 The survey scores to question (15), removing poor performers – France, manufacturing 8 Manufacturing firms (100 to 5000 employees), 605 observations Average 2.90

10. Nick Bloom, 147, 2011 The survey scores to question (15), removing poor performers – India, manufacturing 9 Manufacturing firms (100 to 5000 employees), 1135 observations Average 2.81

11. Nick Bloom, 147, 2011 The survey scores to question (15), removing poor performers – US, Canada and UK, retail 10 All countries, retail firms (100 to 5000 employees) 660 observations Average 3.03

12. Nick Bloom, 147, 2011 The survey scores to question (15), removing poor performers: developed countries, hospitals 11 Hospitals, Canada, France, Germany, Italy, Sweden, UK, US, 1183 observations Average 2.56

13. Nick Bloom, 147, 2011 The survey scores to question (15), removing poor performers: developed countries, schools 12 Schools in Canada, Germany, Sweden, UK, US 777 observations Average 2.50

14. Nick Bloom, 147, 2011 Score(1): People within our firm are rewarded equally irrespective of performance level (3): Our company has an evaluation system for the awarding of performance related rewards (5): We strive to outperform the competitors by providing ambitious stretch targets with clear performance related accountability and rewards (14) Rewarding high-performance

15. Nick Bloom, 147, 2011 (14) Rewarding high performance (1): People within our firm are rewarded equally irrespective of performance level (3): Our company has an evaluation system for the awarding of performance related rewards (5): We strive to outperform the competitors by providing ambitious stretch targets with clear performance related accountability and rewards 1. 2. 3. 4. 5.

16. Nick Bloom, 147, 2011 The survey scores to question (14), rewarding high performance – all countries, manufacturing 15 All countries, manufacturing firms (100 to 5000 employees), 9820 observations Average 2.61

17. Nick Bloom, 147, 2011 The survey scores to question (14), rewarding high performance: developed countries, hospitals 16 Hospitals, Canada, France, Germany, Italy, Sweden, UK, US, 1183 observations Average 2.31

18. Nick Bloom, 147, 2011 The survey scores to question (14), rewarding high performance: developed countries, schools 17 Schools in Canada, Germany, Sweden, UK, US 777 observations Average 2.18

19. Nick Bloom, 147, 2011 Score(1): People are promoted primarily upon the basis of tenure (3): People are promoted upon the basis of performance (5): We actively identify, develop and promote our top performers (16) Promoting high performers

20. Nick Bloom, 147, 2011 (16) Promoting high performers (1): People are promoted primarily upon the basis of tenure (3): People are promoted upon the basis of performance (5): We actively identify, develop and promote our top performers 1. 2. 3. 4. 5.

21. Nick Bloom, 147, 2011 The survey scores to question (16), promoting high performers – all countries, manufacturing 20 All countries, manufacturing firms (100 to 5000 employees), 9820 observations Average 3.02

22. Nick Bloom, 147, 2011 The survey scores to question (16), promoting high performers: developed countries, hospitals 21 Hospitals, Canada, France, Germany, Italy, Sweden, UK, US, 1183 observations Average 2.44

23. Nick Bloom, 147, 2011 The survey scores to question (16), promoting high performers : developed countries, schools 22 Schools in Canada, Germany, Sweden, UK, US 777 observations Average 2.41

24. Nick Bloom, 147, 2011 Score(1): Our competitors offer stronger reasons for talented people to join their companies (3): Our value proposition to those joining our company is comparable to those offered by others in the sector (5): We provide a unique value proposition to encourage talented people join our company above our competitors (17) Attracting human capital

25. Nick Bloom, 147, 2011 (17) Attracting human capital (1): Our competitors offer stronger reasons for talented people to join their companies (3): Our value proposition to those joining our company is comparable to those offered by others in the sector (5): We provide a unique value proposition to encourage talented people join our company above our competitors 1. 2. 3. 4. 5.

26. Nick Bloom, 147, 2011 The survey scores to question (17), attracting human capital – all countries, manufacturing 25 All countries, manufacturing firms (100 to 5000 employees), 9739 observations Average 3.06

27. Nick Bloom, 147, 2011 Score(1): We do little to try and keep our top talent. (3): We usually work hard to keep our top talent. (5): We do whatever it takes to retain our top talent. (18) Retaining human capital

28. Nick Bloom, 147, 2011 (18) Retaining human capital (1): We do little to try and keep our top talent. (3): We usually work hard to keep our top talent. (5): We do whatever it takes to retain our top talent. 1. 2. 3. 4. 5.

29. Nick Bloom, 147, 2011 The survey scores to question (18), retaining human capital – all countries, manufacturing 28 All countries, manufacturing firms (100 to 5000 employees), 9782 observations Average 2.55

30. Nick Bloom, 147, 2011 Score(1): Senior management do not communicate that attracting, retaining and developing talent throughout the organization is a top priority (3): Senior management believe and communicate that having top talent throughout the organization is a key way to win (5): Senior managers are evaluated and held accountable on the strength of the talent pool they actively build (13) Managing human capital

31. Nick Bloom, 147, 2011 (13) Managing human capital (1): Senior management do not communicate that attracting, retaining and developing talent throughout the organization is a top priority (3): Senior management believe and communicate that having top talent throughout the organization is a key way to win (5): Senior managers are evaluated and held accountable on the strength of the talent pool they actively build 1. 2. 3. 4. 5.

32. Nick Bloom, 147, 2011 The survey scores to question (13), managing human capital – all countries, manufacturing 31 All countries, manufacturing firms (100 to 5000 employees), 9806 observations Average 2.43

33. Nick Bloom, 147, 2011 Score(1): Failure to achieve agreed objectives does not carry any consequences (3): Failure to achieve agreed results is tolerated for a period before action is taken. (5): A failure to achieve agreed targets drives retraining in identified areas of weakness or moving individuals to where their skills are appropriate (7) Consequence management

34. Nick Bloom, 147, 2011 (7) Consequence management (1): Failure to achieve agreed objectives does not carry any consequences (3): Failure to achieve agreed results is tolerated for a period before action is taken. (5): A failure to achieve agreed targets drives retraining in identified areas of weakness or moving individuals to where their skills are appropriate 1. 2. 3. 4. 5.

35. Nick Bloom, 147, 2011 The survey scores to question (7), consequence management – all countries, manufacturing 34 All countries, manufacturing firms (100 to 5000 employees), 9820 observations Average 3.56

36. Nick Bloom, 147, 2011 My favourite quotes [Male manager speaking to an Australian female interviewer] Production Manager: “Your accent is really cute and I love the way you talk. Do you fancy meeting up near the factory?” Interviewer “Sorry, but I’m washing my hair every night for the next month….” The traditional British Chat-Up

37. Nick Bloom, 147, 2011 Production Manager: “Are you a Brahmin?’ Interviewer “Yes, why do you ask?” Production manager “And are you married?” Interviewer “No?” Production manager “Excellent, excellent, my son is looking for a bride and I think you could be perfect. I must contact your parents to discuss this” The traditional Indian Chat-Up My favourite quotes