Human Resource
1. Introduction
Traditionally, labor economics focused on the labor market rather than looking inside the “black box” of firms. Industrial sociologists and psychologists made the running in Human Resource Management (HRM). This has changed dramatically in last two decades. Human Resource Management (HRM) is now a major field in labor economics. The hallmark of this work is to use standard economic tools applied to the special circumstances of managing employees within companies. HRM economics has a major effect on the world through teaching in business schools, and ultimately what gets practiced in many organizations.
HRM covers a wide range of activities. The main area of study we will focus on will be incentives and work organization. Incentives include remuneration systems (e.g. individuals or group incentive/contingent pay) and also the system of appraisal, promotion and career advancement. By work organization we mean the distribution of decision rights (autonomy/decentralization) between managers and workers, job design (e.g. flexibility of working, job rotation), team-working (e.g. who works with whom) and information provision.
Space limitations mean we do not cover matching (see Oyer and Schaffer, this Volume) or skill development/training. Second, we will only devote a small amount of space to employee representation such as labor unions (see Farber, this Volume). Third, we should also mention that we focus on empirical work rather than theory (for recent surveys see Gibbons and Roberts, 2008, and in particular Lazear and Oyer, 2008) and micro-econometric work rather than macro or qualitative studies. Fourth, we focus on HRM over employees rather than CEOs, which is the subject of a vast literature (see Murphy, 1999, or Edmans, Gabaix and Landier, 2008, for surveys).
Where we depart from several of the existing surveys in the field is to put HRM more broadly in the context of the economics of management. To do this we also look in detail at the
Traditionally, labor economics focused on the labor market rather than looking inside the “black box” of firms. Industrial sociologists and psychologists made the running in Human Resource Management (HRM). This has changed dramatically in last two decades. Human Resource Management (HRM) is now a major field in labor economics. The hallmark of this work is to use standard economic tools applied to the special circumstances of managing employees within companies. HRM economics has a major effect on the world through teaching in business schools, and ultimately what gets practiced in many organizations.
HRM covers a wide range of activities. The main area of study we will focus on will be incentives and work organization. Incentives include remuneration systems (e.g. individuals or group incentive/contingent pay) and also the system of appraisal, promotion and career advancement. By work organization we mean the distribution of decision rights (autonomy/decentralization) between managers and workers, job design (e.g. flexibility of working, job rotation), team-working (e.g. who works with whom) and information provision.
Space limitations mean we do not cover matching (see Oyer and Schaffer, this Volume) or skill development/training. Second, we will only devote a small amount of space to employee representation such as labor unions (see Farber, this Volume). Third, we should also mention that we focus on empirical work rather than theory (for recent surveys see Gibbons and Roberts, 2008, and in particular Lazear and Oyer, 2008) and micro-econometric work rather than macro or qualitative studies. Fourth, we focus on HRM over employees rather than CEOs, which is the subject of a vast literature (see Murphy, 1999, or Edmans, Gabaix and Landier, 2008, for surveys).
Where we depart from several of the existing surveys in the field is to put HRM more broadly in the context of the economics of management. To do this we also look in detail at the