Essays on behavioral aspects of the design and disclosure of compensation contracts

This thesis consists of four essays on the design and disclosure of compensation contracts. Essays 1, 2 and 3 focus on behavioral aspects of mandatory compensation disclosure rules and of contract negotiations in agency relationships. The three experimental studies develop psychology- based theory and present results that deviate from standard economic predictions. Furthermore, the results of Essay 1 and 2 also have implications for firms’ discretion in how to communicate their top management’s incentives to the capital market. Essay 4 analyzes the role of fairness perceptions for the evaluation of executive compensation. For this purpose, two surveys targeting representative eligible voters as well as investment professionals were conducted. Essay 1 investigates the role of the detailed ‘Compensation Discussion and Analysis’, which is part of the Security and Exchange Commission’s 2006 regulation, on investors’ evaluations of executive performance. Compensation disclosure complying with this regulation clarifies the relationship between realized reported compensation and the underlying performance measures and their target achievement levels. The experimental findings suggest that the salient presentation of executives’ incentives inherent in the ‘Compensation Discussion and Analysis’ makes investors’ performance evaluations less outcome dependent. Therefore, investors’ judgment and investment decisions might be less affected by noisy environmental factors that drive financial performance. The results also suggest that fairness perceptions of compensation contracts are essential for investors’ performance evaluations in that more transparent disclosure increases the perceived fairness of compensation and the performance evaluation of managers who are not responsible for a bad financial performance. These results have important practical implications as firms might choose to communicate their top management’s incentive compensation more transparently in order to benefit from less volatile expectations about their future performance. Similar to the first experiment, the experiment described in Essay 2 addresses the question of more transparent compensation disclosure. However, other than the first experiment, the second experiment does not analyze the effect of a more salient presentation of contract information but the informational effect of contract information itself. For this purpose, the experiment tests two conditions in which the assessment of the compensation contracts’ incentive compatibility, which determines executive effort, is either possible or not. On the one hand, the results suggest that the quality of investors’ expectations about executive effort is improved, but on the other hand investors might over-adjust their prior expectations about executive effort if being confronted with an unexpected financial performance and under-adjust if the financial performance confirms their prior expectations. Therefore, in the experiment, more transparent compensation disclosure does not lead to more correct overall judgments of executive effort and to even lower processing quality of outcome information. These results add to the literature on disclosure which predominantly advocates more transparency. The findings of the experiment however, identify decreased information processing quality as a relevant disclosure cost category. Firms might therefore carefully evaluate the additional costs and benefits of more transparent compensation disclosure. Together with the results from the experiment in Essay 1, the two experiments on compensation disclosure imply that firms should rather focus on their discretion how to present their compensation disclosure to benefit from investors’ improved fairness perceptions and their spill-over on performance evaluation. Essay 3 studies the behavioral effects of contextual factors in recruitment processes that do not affect the employer’s or the applicant’s bargaining power from a standard economic perspective. In particular, the experiment studies two common characteristics of recruitment processes: Pre-contractual competition among job applicants and job applicants’ non-binding effort announcements as they might be made during job interviews. Despite the standard economic irrelevance of these factors, the experiment develops theory regarding the behavioral effects on employees’ subsequent effort provision and the employers’ contract design choices. The experimental findings largely support the predictions. More specifically, the results suggest that firms can benefit from increased effort and, therefore, may generate higher profits. Further, firms may seize a larger share of the employment relationship’s profit by highlighting the competitive aspects of the recruitment process and by requiring applicants to make announcements about their future effort. Finally, Essay 4 studies the role of fairness perceptions for the public evaluation of executive compensation. Although economic criteria for the design of incentive compensation generally do not make restrictive recommendations with regard to the amount of compensation, fairness perceptions might be relevant from the perspective of firms and standard setters. This is because behavioral theory has identified fairness as an important determinant of individuals’ judgment and decisions. However, although fairness concerns about executive compensation are often stated in the popular media and even in the literature, evidence on the meaning of fairness in the context of executive compensation is scarce and ambiguous. In order to inform practitioners and standard setters whether fairness concerns are exclusive to non-professionals or relevant for investment professionals as well, the two surveys presented in Essay 4 aim to find commonalities in the opinions of representative eligible voters and investments professionals. The results suggest that fairness is an important criterion for both groups. Especially, exposure to risk in the form of the variable compensation share is an important criterion shared by both groups. The higher the assumed variable share, the higher is the compensation amount to be perceived as fair. However, to a large extent, opinions on executive compensation depend on personality characteristics, and to some extent, investment professionals’ perceptions deviate systematically from those of non-professionals. The findings imply that firms might benefit from emphasizing the riskiness of their managers’ variable pay components and, therefore, the findings are also in line with those of Essay 1.

Relationship between nurse leader emotional intelligence and registered nurse job satisfaction

Aim: To determine the relationship between nurse leader emotional intelligence and registered nurse job satisfaction. ^ Background: Nurse leaders influence the work environments of nurses working at the bedside. Nursing leadership plays an important role in fostering work environments that attract and retain nurses. ^ Methods: A non-experimental, predictive design study conducted in 5 hospitals evaluated relationships between 31 nurse leaders and 799 registered nurses. The nurse leaders were administered the MSCEIT and MBTI. The registered nurses participated in the 2010 NDNQI RN Job Satisfaction Survey. ^ Measurements and Results: The sample population completed two online instruments, the Mayer-Salovey-Caruso Emotional Intelligence Test (MSCEIT) and the Myers Brigg Trait Inventory (MBTI). Nurse leader demographic data was collected consisting of age, sex, race, educational level, certification status and years in the profession of nursing. The relationships among characteristics of the nurse leader and staff nurses were examined using regression analysis and stepwise deletion. The results from the MBTI were obtained electronically from CPP. Inc. and the results of MSCEIT were obtained electronically from MHS, Inc. The nurse leader response rate was 46% and the NDNQI RN Job Satisfaction response rate was 62%. The sample of 31 nurse leaders were 65 percent female and 67.7% were White, 12.9% Black, and 19.4% Hispanic. The most prevalent MBTI type was ESTJ (19.35%), followed by ENFJ and ISFJ (9.68% each). The nurse leader sample was primarily extroverts (n=20), sensing (n=18), thinking (n=16) and judging (n=19). The nurse leaders' overall MSCEIT scores ranged from 69 to 111 (implying a range from those who should consider development to competent) with a mean score of 89.84 (consider improvement). The nurse leaders scored highest in the MSCEIT Facilitating subscale with scores ranging from 69 to 121 (consider development to strength) and a mean score of 95.19 (low average score). The overall mean MSCEIT mean scores for the entire sample ranged from 89.90 to 95.19 (consider emotional intelligence improvement to low average score) Overall, staff nurse participants in the NDNQI RN Job Satisfaction Survey were moderately satisfied with the nurse leaders as noted by a mean t score of 55.03 of 60 and this score was consistent with the comparison hospitals that participated in the 2010 NDNQI RN Job Satisfaction Survey (American Nurses Association, 2010). Staff nurses gave nurse leaders a mean score of 4.50 for patient assignments appropriate, and rated a mean score of 4.35 and moderately agreeing to recommend the hospital to a friend. ^ Conclusions: Future research is needed to determine if there is a relationship between nurse leader emotional intelligence ability and registered nurse job satisfaction. Additional research is also needed to determine what to measure in regards to nurse leader emotional intelligence, ability or behavior. Another issue that emerged in the examination of EI is the moderating relationship between the nurse leaders span of control and staff nurse satisfaction on the NDNQI. ^

WORKLOAD AND PERFORMANCE FACTORS ASSOCIATED WITH MULTIMEDIA JOB AIDS FOR COMMUNITY HEALTH WORKERS

This dissertation focuses on factors of multimedia job aids that modify workload, protocol adherence and clinical errors in community health workers. Literature shows that community health workers performance is not acceptable even with support of paper job aids. There are cognitive theories that try to explain reasons why the performance of community health workers is poor regardless of the access to paper based-job aid. Based on cognitive science and multimedia design theories an intervention was designed to compare alternative representations for the information contained on paper job aids and the capability of this new designed job aids to enhance community health workers performance. The dissertation is divided in 5 main parts: 1. identification and description of the problem, 2. a methodological approach to create and evaluate an intervention, 3. Presentation of results of the intervention evaluation, 4. Discussion of findings and 5. Conclusions

Industry Professionals Who Attain Leadership in Energy and Environmental Design (LEED) Accreditation: An Examination of Motivations in Human Resource (HR) Training and Development

Despite the economy, the green building industry continues to grow and drive the demand for environmentally conscious, highly skilled professionals (USGBC 2009). LEED Accredited Professionals (APs) have the knowledge and skills to meet such demand; however, information is limited regarding LEED APs or their motivations and expectations toward prospective employers. The author surveyed a sample of LEED Accredited architects and found a combination of job and personal factors motivated them to attain accreditation. LEED APs value both a competitive salary and commitment to sustainability in prospective employers. To attract, retain, and utilize LEED APs, executives in this industry must reexamine corporate culture, their willingness to pay for credentialing, and the alignment of their reputation with the desires of potential applicants.

An analysis of relational complexity in an air traffic control conflict detection task

Theoretical analyses of air traffic complexity were carried out using the Method for the Analysis of Relational Complexity. Twenty-two air traffic controllers examined static air traffic displays and were required to detect and resolve conflicts. Objective measures of performance included conflict detection time and accuracy. Subjective perceptions of mental workload were assessed by a complexity-sorting task and subjective ratings of the difficulty of different aspects of the task. A metric quantifying the complexity of pair-wise relations among aircraft was able to account for a substantial portion of the variance in the perceived complexity and difficulty of conflict detection problems, as well as reaction time. Other variables that influenced performance included the mean minimum separation between aircraft pairs and the amount of time that aircraft spent in conflict.

A design pattern for efficient retrieval of large data sets from remote data sources

Retrieving large amounts of information over wide area networks, including the Internet, is problematic due to issues arising from latency of response, lack of direct memory access to data serving resources, and fault tolerance. This paper describes a design pattern for solving the issues of handling results from queries that return large amounts of data. Typically these queries would be made by a client process across a wide area network (or Internet), with one or more middle-tiers, to a relational database residing on a remote server. The solution involves implementing a combination of data retrieval strategies, including the use of iterators for traversing data sets and providing an appropriate level of abstraction to the client, double-buffering of data subsets, multi-threaded data retrieval, and query slicing. This design has recently been implemented and incorporated into the framework of a commercial software product developed at Oracle Corporation.

Aspects of design for a spare parts provisioning system

This thesis describes an investigation by the author into the spares operation of compare BroomWade Ltd. Whilst the complete system, including the warehousing and distribution functions, was investigated, the thesis concentrates on the provisioning aspect of the spares supply problem. Analysis of the historical data showed the presence of significant fluctuations in all the measures of system performance. Two Industrial Dynamics simulation models were developed to study this phenomena. The models showed that any fluctuation in end customer demand would be amplified as it passed through the distributor and warehouse stock control systems. The evidence from the historical data available supported this view of the system's operation. The models were utilised to determine which parts of the total system could be expected to exert a critical influence on its performance. The lead time parameters of the supply sector were found to be critical and further study showed that the manner in which the lead time changed with work in progress levels was also an important factor. The problem therefore resolved into the design of a spares manufacturing system. Which exhibited the appropriate dynamic performance characteristics. The gross level of entity presentation, inherent in the Industrial Dynamics methodology, was found to limit the value of these models in the development of detail design proposals. Accordingly, an interacting job shop simulation package was developed to allow detailed evaluation of organisational factors on the performance characteristics of a manufacturing system. The package was used to develop a design for a pilot spares production unit. The need for a manufacturing system to perform successfully under conditions of fluctuating demand is not limited to the spares field. Thus, although the spares exercise provides an example of the approach, the concepts and techniques developed can be considered to have broad application throughout batch manufacturing industry.

Integrated manufacturing systems design in a multi-product company

Using a hydraulic equipment manufacturing plant as the case study, this work explores the problems of systems integration in manufacturing systems design, stressing the behavioural aspects of motivation and participation, and the constraints involved in the proper consideration of the human sub-system. The need for a simple manageable modular organisation structure is illustrated, where it is shown, by reference to systems theory, how a business can be split into semi-autonomous operating units. The theme is the development of a manufacturing system based on an analysis of the business, its market, product, technology and constraints, coupled with a critical survey of modern management literature to develop an integrated systems design to suit a specific company in the current social environment. Society currently moves through a socio-technical revolution with man seeking higher levels of motivation. The transitory environment from an autocratic/paternalistic to a participative operating mode demands systems parameters only found to a limited extent in manufacturing systems today. It is claimed, that modern manufacturing systems design needs to be based on group working, job enrichment, delegation of decision making and reduced job monotony. The analysis shows how negative aspects of cellular manufacture such as lack of flexibility and poor fixed asset utilisation are relatively irrelevant and misleading in the broader context of the need to come to terms with the social stresses imposed on a company operating in the industrial environment of the present and the immediate future.

Advanced manufacturing technology, work design, and performance:a change study

Two alternative work designs are identified for operators of stand-alone advanced manufacturing technology (AMT). In the case of specialist control, operators are limited to running and monitoring the technology, with operating problems handled by specialists, such as engineers. In the case of operator control, operators are given much broader responsibilities and deal directly with the majority of operating problems encountered. The hypothesis that operator control would promote better performance and psychological well-being than would specialist control (which is more prevalent) was tested in a longitudinal field study involving work redesign for operators of computer-controlled assembly machines. Change from specialist to operator control reduced downtime, especially for high-variance systems, and was associated with greater intrinsic job satisfaction and less perceived work pressure. The implications of these findings for both small and large-scale applications of AMT are discussed.

A computational model of intonation for yorùbá text-to-speech synthesis:design and analysis

In this paper we present the design and analysis of an intonation model for text-to-speech (TTS) synthesis applications using a combination of Relational Tree (RT) and Fuzzy Logic (FL) technologies. The model is demonstrated using the Standard Yorùbá (SY) language. In the proposed intonation model, phonological information extracted from text is converted into an RT. RT is a sophisticated data structure that represents the peaks and valleys as well as the spatial structure of a waveform symbolically in the form of trees. An initial approximation to the RT, called Skeletal Tree (ST), is first generated algorithmically. The exact numerical values of the peaks and valleys on the ST is then computed using FL. Quantitative analysis of the result gives RMSE of 0.56 and 0.71 for peak and valley respectively. Mean Opinion Scores (MOS) of 9.5 and 6.8, on a scale of 1 - -10, was obtained for intelligibility and naturalness respectively.

Design principles of semantic binary database management systems

The Semantic Binary Data Model (SBM) is a viable alternative to the now-dominant relational data model. SBM would be especially advantageous for applications dealing with complex interrelated networks of objects provided that a robust efficient implementation can be achieved. This dissertation presents an implementation design method for SBM, algorithms, and their analytical and empirical evaluation. Our method allows building a robust and flexible database engine with a wider applicability range and improved performance. ^ Extensions to SBM are introduced and an implementation of these extensions is proposed that allows the database engine to efficiently support applications with a predefined set of queries. A New Record data structure is proposed. Trade-offs of employing Fact, Record and Bitmap Data structures for storing information in a semantic database are analyzed. ^ A clustering ID distribution algorithm and an efficient algorithm for object ID encoding are proposed. Mapping to an XML data model is analyzed and a new XML-based XSDL language facilitating interoperability of the system is defined. Solutions to issues associated with making the database engine multi-platform are presented. An improvement to the atomic update algorithm suitable for certain scenarios of database recovery is proposed. ^ Specific guidelines are devised for implementing a robust and well-performing database engine based on the extended Semantic Data Model. ^

A quantitative approach to the organizational design problem

The span of control is the most discussed single concept in classical and modern management theory. In specifying conditions for organizational effectiveness, the span of control has generally been regarded as a critical factor. Existing research work has focused mainly on qualitative methods to analyze this concept, for example heuristic rules based on experiences and/or intuition. This research takes a quantitative approach to this problem and formulates it as a binary integer model, which is used as a tool to study the organizational design issue. This model considers a range of requirements affecting management and supervision of a given set of jobs in a company. These decision variables include allocation of jobs to workers, considering complexity and compatibility of each job with respect to workers, and the requirement of management for planning, execution, training, and control activities in a hierarchical organization. The objective of the model is minimal operations cost, which is the sum of supervision costs at each level of the hierarchy, and the costs of workers assigned to jobs. The model is intended for application in the make-to-order industries as a design tool. It could also be applied to make-to-stock companies as an evaluation tool, to assess the optimality of their current organizational structure. Extensive experiments were conducted to validate the model, to study its behavior, and to evaluate the impact of changing parameters with practical problems. This research proposes a meta-heuristic approach to solving large-size problems, based on the concept of greedy algorithms and the Meta-RaPS algorithm. The proposed heuristic was evaluated with two measures of performance: solution quality and computational speed. The quality is assessed by comparing the obtained objective function value to the one achieved by the optimal solution. The computational efficiency is assessed by comparing the computer time used by the proposed heuristic to the time taken by a commercial software system. Test results show the proposed heuristic procedure generates good solutions in a time-efficient manner.

Minimizing makespan for hybrid flowshops with batch, discrete processing machines and arbitrary job sizes

This research aims at a study of the hybrid flow shop problem which has parallel batch-processing machines in one stage and discrete-processing machines in other stages to process jobs of arbitrary sizes. The objective is to minimize the makespan for a set of jobs. The problem is denoted as: FF: batch1,sj:Cmax. The problem is formulated as a mixed-integer linear program. The commercial solver, AMPL/CPLEX, is used to solve problem instances to their optimality. Experimental results show that AMPL/CPLEX requires considerable time to find the optimal solution for even a small size problem, i.e., a 6-job instance requires 2 hours in average. A bottleneck-first-decomposition heuristic (BFD) is proposed in this study to overcome the computational (time) problem encountered while using the commercial solver. The proposed BFD heuristic is inspired by the shifting bottleneck heuristic. It decomposes the entire problem into three sub-problems, and schedules the sub-problems one by one. The proposed BFD heuristic consists of four major steps: formulating sub-problems, prioritizing sub-problems, solving sub-problems and re-scheduling. For solving the sub-problems, two heuristic algorithms are proposed; one for scheduling a hybrid flow shop with discrete processing machines, and the other for scheduling parallel batching machines (single stage). Both consider job arrival and delivery times. An experiment design is conducted to evaluate the effectiveness of the proposed BFD, which is further evaluated against a set of common heuristics including a randomized greedy heuristic and five dispatching rules. The results show that the proposed BFD heuristic outperforms all these algorithms. To evaluate the quality of the heuristic solution, a procedure is developed to calculate a lower bound of makespan for the problem under study. The lower bound obtained is tighter than other bounds developed for related problems in literature. A meta-search approach based on the Genetic Algorithm concept is developed to evaluate the significance of further improving the solution obtained from the proposed BFD heuristic. The experiment indicates that it reduces the makespan by 1.93 % in average within a negligible time when problem size is less than 50 jobs.

Acceptable vs. marginal police officers' psychological ratings : a longitudinal comparison of job performance

Archival research was conducted on the inception of preemployment psychological testing, as part of the background screening process, to select police officers for a local police department. Various issues and incidents were analyzed to help explain why this police department progressed from an abbreviated version of a psychological battery, to a much more sophisticated and comprehensive set of instruments. While doubts about psychological exams do exist, research has shown that many are valid and reliable in predicting job performance of police candidates. During a three year period, a police department hired 162 candidates (133 males and 29 females) who received "acceptable" psychological ratings and 71 candidates (58 males and 13 females) who received "marginal" psychological ratings. A document analysis consisted of variables that have been identified as job performance indicators which police psychological testing tries to predict, and "screen in" or "screen out" appropriate applicants. The areas of focus comprised the 6-month police academy, the 4-month Field Training Officer (FTO) Program, the remaining probationary period, and yearly performance up to five years of employment. Specific job performance variables were the final academy grade average, supervisors' evaluation ratings, reprimands, commendations, awards, citizen complaints, time losses, sick time usage, reassignments, promotions, and separations. A causal-comparative research design was used to determine if there were significant statistical differences in these job performance variables between police officers with "acceptable" psychological ratings and police officers with "marginal" psychological ratings. The results of multivariate analyses of variance, t-tests, and chi-square procedures as applicable, showed no significant differences between the two groups on any of the job performance variables.

Dynamic job quoting system for printed circuit board fabrication

This research deals with the development of a dynamic job quotation system for printed circuit board (PCB) fabrication, which can estimate the price and completion time of a job based on customer preference and current capacity of the shop floor. The primary purpose of building a dynamic quotation system is to maximize the company's profit by quoting optimum lead-time and competitive price for the day-to-day orders received from different customers and original equipment manufacturers. The system was developed using MS-Access relational database. Evaluating the output of the system it was observed that the dynamic system provided more reliable estimation of the lead-time needed for fabricating new jobs. The overall price quoted by the system was competitive with higher profit margin when compared to traditional static systems. This system would therefore provide a vital link between the job quoting and scheduling system of the firm enabling better utilization of the available resources.