B-School Research Takes on Office Politics

A fresh roundup of interesting and practical research from top business schools has one thing in common: It is all about getting companies to run more smoothly. From determining how pay is doled out to chief executive officers in different geographical areas to recognizing the natural checks and balances of an office, the research is meant to help managers better understand how to operate in times of financial strain, as well as in more promising periods. Here's a rundown of some of the unique research coming out of business schools.

Are U.S. CEOs Underpaid?

All eyes have been on the paychecks of America's top CEOs, who were criticized in the wake of the financial crisis for enjoying bloated salaries while the rest of the country suffered. Such criticism is misguided, says Nuno Fernandes, a researcher and professor of finance at IMD Business School (IMD Full-Time MBA Profile) in Lausanne, Switzerland. Collecting data from the annual reports of companies in 14 countries that mandate pay disclosure, Fernandes and his team found that CEOs in the U.K. are paid slightly more than those in the U.S. , which ranks No. 2.

"U.S. CEOs are not overpaid in comparison to foreign CEOs in similar firms," he adds.

Having standardized the data for characteristics such as company size, the team also learned that the board structure and its influence on decisionmaking had a big impact on pay. In addition, companies investing in the global marketplace and competing for talent internationally tend to have similar pay structures.

Discussions of CEO pay, says Fernandes, lead to discussions of salary regulation. Based on his findings, Fernandes says that there should be no regulations; shareholders should be left to self-regulate. As an example of regulation gone wrong, he cites the million-dollar rule, which prohibits companies from deducting more than $1 million of an executive's salary. Fernandes says that rule encouraged a shift to stock options, which are exempt from the cap.

"Regulation drives up CEO pay and creates more inefficient pay structures," he concludes.

Par for the Course

Inspired by watching Tiger Woods at the height of his golf game, Emily T. Amanatullah, assistant management professor at University of Texas, Austin's McCombs School of Business (McCombs Full-Time MBA Profile), and Francis J.Flynn, professor of organizational behavior at the Stanford Graduate School of Business (Stanford Full-Time MBA Profile), conducted field studies and lab experiments to determine if star golfers (or office mates) motivate or psyche out those paired against them. They discovered that those with reputations as great performers—on the golf course and in the office—motivate others who are working alongside them on independent tasks but psych them out when they are in direct competition.

To see if the results on the golf course match those in the office, the team conducted lab experiments that had people work on individual tasks such as computer games alongside one another and then pitted them against one another in direct competition. The results were the same as those on the golf course. She hopes managers take away from this research how much influence people have on one another.

"The presence of others can affect a person's performance on tasks, even individual tasks," says Amanatullah, whose research was published online in the Journal of Organizational Behavior and Human Processes last summer. "The layout of the office—who is sitting next to whom—can make a difference."

Share Your Wisdom

Much has been made in the corporate world about knowledge-sharing systems—technology, such as a shared database or Intranet, that allows colleagues to swap tips on best practices. Despite the convenience of the technology and the benefits that knowledge-sharing may offer companies employees rarely participate, says David Zweig, associate professor of organizational behavior at the University of Toronto Rotman School of Business (Rotman Full-Time MBA Profile).

Motivated by complaints from those responsible for knowledge-sharing systems, Zweig and his fellow researchers conducted four different studies of companies operating around the world in various industries. They determined that employees not only refrain from sharing knowledge but actively hide it. Workers would ignore or evade requests for knowledge-sharing. They played dumb and acted as if they did not have any of the information—and even rationalized that they could not share data because it was privileged or confidential.

Published in the Journal of Organizational Behavior in 2010, the research also showed that people wanted to hide knowledge from colleagues because they failed to trust one another and because the culture lacked both the climate and rewards that encourage sharing. It is necessary to remove the barriers to knowledge-sharing by making it worth employees' time to participate and focus on interpersonal relationships, says Zweig.

"When you're trying to promote knowledge-sharing," he adds, "you must focus on more than technology."

Revenge of the Employees

While there is a lot of research into what motivates people to work harder, there is little information about what drives people to sabotage their bosses. That's the mystery that David I. Levine, a professor at the University of California, Berkeley Haas School of Business (Haas Full-Time MBA Profile), and co-author Gary Charness, an economics professor at UC, Santa Barbara, wanted to solve. To tap into the wisdom of Bay Area office workers, the team canvassed train commuters during rush hour about work behavior. They found that when employees retaliate against managers, it's not necessarily a bad thing, says Levine.

The kind of revenge taken is what matters to people. For example, if a misbehaving boss needs a file to complete a job and an employee knows where it is, people prefer that the employee simply refrain from divulging its whereabouts, rather than actually hide it from the boss. While passive resistance is deemed acceptable, active revenge bothers people, says Levine.

What Levine and Charness found is that employees who take revenge serve as a check on misbehaving managers. Some sabotage even plays a role in keeping a boss from becoming an office dictator.

"The main lesson," says Levine, "is that being a great manager is partly what you learned in elementary school about getting along with others."

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