Economics of Human Resources

1. Economics of Human Resources Nick Bloom (Stanford Economics) Lecture 3: Targets Management

2. Targets management Today we will run through 5 dimensions on targets management (questions 8 to 12) The concept is around the setting of stretching targets 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 2

3. (8) Target balance

4. Press “GO” Then slowly press “0” and then “5” (channel is “05”) Then slowly press “GO” again A green light should appear signaling the clicker worked Setting up your clicker

5. (8) Target balance

6. The survey scores to question (8), target balance – all countries, manufacturing Average 2.89 All countries, manufacturing firms (100 to 5000 employees), 9824 observations

7. The survey scores to question (8), target balance – India, manufacturing Average 2.44 India, manufacturing firms (100 to 5000 employees),1136 observations

8. The survey scores to question (8), target balance – US, Canada and UK, retail Average 2.74 All countries, retail firms (100 to 5000 employees)661 observations

9. The survey scores to question (8), target balance: developed countries, hospitals Average 2.73 Hospitals, Canada, France, Germany, Italy, Sweden, UK, US, 1183 observations

10. The survey scores to question (8), target balance: developed countries, schools Average 2.70 Schools in Canada, Germany, Sweden, UK, US777 observations

11. (9) Target interconnection

12. (9) Target interconnection

13. Target interconnection (9):all countries, manufacturing Average 3.01 All countries, manufacturing firms (100 to 5000 employees), 9813 observations

14. (10) Target time horizon

15. (10) Target time horizon

16. Target time horizon (10):all countries, manufacturing Average 2.99 All countries, manufacturing firms (100 to 5000 employees), 9814 observations

17. (11) Targets are stretching

18. (11) Targets are stretching

19. Targets are stretching (11):all countries, manufacturing Average 3.00 All countries, manufacturing firms (100 to 5000 employees), 9819 observations

20. (12) Performance clarity

21. (12) Performance clarity

22. Performance clarity (12):all countries, manufacturing Average 2.67 All countries, manufacturing firms (100 to 5000 employees), 9821 observations

23. My favourite quotes The difficulties of defining ownership in Europe Production Manager: “We’re owned by the Mafia” Interviewer: “I think that’s the “Other” category……..although I guess I could put you down as an “Italian multinational” ?” Americans on geography Interviewer: “How many production sites do you have abroad? Manager in Indiana, US: “Well…we have one in Texas…”

24. Wrap up 1) Large variation in targets practices – best organizations set broad, clear and balanced targets which are tough but feasible 2) Variation common across all industries we have looked at – manufacturing, retail, schools, hospitals, clinics and charities 3) As with monitoring potential for improvement is extensive, especially in smaller organizations and developing countries Next lecture we will focus on incentives – hiring, firing pay and promotions 24