Doris Weichselbaumer
Firm Organization and Personnel
Economics
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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
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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/
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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.
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Theoretic style
• Business or Economics Students have
different requirements in terms of theory:
Verbal vs. Algebra
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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)
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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.
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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
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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?
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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?
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„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!
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