We know little about the effect of organizational performance on personnel decisions, especially for those whose contribution to organizational performance is limited. This paper empirically examines whether an organization’s performance affects decisions to promote or dismiss highranking employees in the organization and explores potential moderators of the relationship. In a sample of 4,657 employee-years in a Korean conglomerate, I find that (1) the likelihood of promotions (dismissals) is positively (negatively) associated with corporate and segment return on assets, (2) the association exists only when promotions involve a pay grade advancement, (3) it is significant only for high-ranking employees at lower ranks or with lower managerial responsibility, and (4) it is stronger when there are greater inter-organizational knowledge compatibilities. The findings suggest probable mechanisms that help large decentralized organizations with slow organic growth mitigate promotion-related costs and vacancy dependency and retain the intensity of promotion-based incentives for organizational performance.

Relationships between Organizational Performance and Personnel Decisions

KIM, JONGHWAN
2015

Abstract

We know little about the effect of organizational performance on personnel decisions, especially for those whose contribution to organizational performance is limited. This paper empirically examines whether an organization’s performance affects decisions to promote or dismiss highranking employees in the organization and explores potential moderators of the relationship. In a sample of 4,657 employee-years in a Korean conglomerate, I find that (1) the likelihood of promotions (dismissals) is positively (negatively) associated with corporate and segment return on assets, (2) the association exists only when promotions involve a pay grade advancement, (3) it is significant only for high-ranking employees at lower ranks or with lower managerial responsibility, and (4) it is stronger when there are greater inter-organizational knowledge compatibilities. The findings suggest probable mechanisms that help large decentralized organizations with slow organic growth mitigate promotion-related costs and vacancy dependency and retain the intensity of promotion-based incentives for organizational performance.
Kim, Jonghwan
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/3987059
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