Doris Weichselbaumer Firm Organization and Personnel Economics Personnel Economics 1 1 Who should attend this course? • Business economists – interested in Human Resources Management (maybe from „Personalwesen“ or „Organisation“) – who like to think analytically • Economists interested in new developments in labor, firm organization, contract design • You, if you want to read and discuss interesting issues by top-economists but don‘t have the money to go to Stanford Personnel Economics 1 2 Preliminaries • Exercises • English Language • Attendance • Final exam: 28.11.08, 15.30-17.00, HS 16 – Second chance for final exam: Multiple Choice • Web-site for infos, slides of lectures, exercises: – http://www.econ.jku.at/1121/ Personnel Economics 1 3 Textbooks • Main text: Edward Lazear: Personnel Economics for Managers, Wiley, 1998 – Reader available from Ms. Derntl – List of misprints collected by Ben Kriechel • Background readings: – James Baron, David Kreps: Strategic Human Resources, Wiley, 1999: more broad and inter-disciplinary text – Paul Milgrom, John Roberts: Economics, Organization and Management, Prentice Hall, 1992: more on firm organization – William S. Neilson: Personnel Economics, Pearson, 2007. Personnel Economics 1 4 Theoretic style • Business or Economics Students have different requirements in terms of theory: Verbal vs. Algebra Personnel Economics 1 5 Economic approach: complementary to other approaches • Case studies „it all depends...“ Generalization? • Economic approach generally: – Individuals maximize (profits, utility) – Equilibrium Economics makes predictions which are testable and refutable by data. • Economic approach - personnel economics: Rigorous analysis, what actions are best in workers‘ and firms‘ own interest (human factors not ignored) Personnel Economics 1 6 Personnel and Human Resource decisions are crucial to firms Human resources are key to organizational success or failure! Management has to make important HR decisions: Choice of compensation methods, hiring and firing etc. Personnel – science that provides detailed and unambiguous answers to issues troubling managers. Personnel Economics 1 7 Issues I • Recruitment and hiring – Whom should you hire? – How to get the best applicants? – How to choose among the applicants? • Motivating through pay systems and benefits – Choice of compensation system – How to structure promotion decisions? – Importance of non-cash benefits Personnel Economics 1 8 Issues II • Teams – When is it profitable to form teams? – Specific motivational issues in teams • Work-life considerations – What should be the life-cycle path of wages? • Training – Should workers or employers pay for workers‘ training? Personnel Economics 1 9 Issues III • Turnover – How to reduce turnover? – Which workers should the firm retain? – How does compensation policy interact w. turnover • Downsizing – What to do in bad times? Personnel Economics 1 10 „Non-Issues“ that we won‘t cover! • Many practical issue will NOT be covered – – – – Legal issues How to negotiate with workers Organizing HR department ... • Other disciplines than Economics have more to say here! Personnel Economics 1 11
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