1. Personnel Economics 1 1 Doris Weichselbaumer Firm Organization and Personnel Economics

2. Personnel Economics 1 2 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

3. Personnel Economics 1 3 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/

4. Personnel Economics 1 4 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.

5. Personnel Economics 1 5 Theoretic style Business or Economics Students have different requirements in terms of theory: Verbal vs. Algebra

6. Personnel Economics 1 6 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)

7. Personnel Economics 1 7 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.

8. Personnel Economics 1 8 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

9. Personnel Economics 1 9 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?

10. Personnel Economics 1 10 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?

11. Personnel Economics 1 11 „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!