Interests: Management Accounting, Behavioral and Experimental Economics.
Topics: Fairness, Reciprocity, Managerial Discretion, Knowledge Sharing, Favoritism, Influence Activities, Motivated Reasoning.
Working Papers:
Fabien Ize. How decision-making transparency and managerial discretion affect managers’ reliance on employee insights, bonus decisions, and employee sabotage. (Job Market Paper)
The diffusion of knowledge is critical to organizational success. Using two experiments, I first find that managers consult employee insights less frequently when employees can observe whether they do. Female managers act strategically: they do this when they oversee employee compensation to avoid reciprocal obligations toward their employee. Contrastingly, male managers consult employee insights less when they do not oversee employee compensation, seemingly to appear self-sufficient. Second, as theorized, granting managers discretion over employee compensation leads to sabotage by employees dissatisfied with their bonuses, but less so if decision-making is transparent. This is because transparency increases the bonus managers grant employees for their insights but also improves employees’ understanding of a low bonus when managers do not consult their insights. The same combination of controls thus impacts both the behavior of managers and of the employees that they manage.
Fabien Ize and Eddy Cardinaels. The Effect of Transparent Bonuses: Amplifying Managerial Sensitivity to Influence Activities While Reducing Ingroup Favoritism.
We study the effect of bonus transparency on how managers allocate a bonus pool among employees of a team. Results of our experiment suggest that managers reward both the productive and influence activities of their employees in their bonus allocations. However, we find that managers increasingly reward employees’ influence activities when bonuses become transparent instead of opaque, at the expense of employees' productive activities. Additional analysis suggests that employees engage in influence activities to apply pressure on managers who are sensitive to it, and more so when bonuses are transparent. Last, our results suggest that when employees have heterogeneous identities, bonus transparency reduces managers’ ingroup favoritism. Since employees cannot change their identities, managers may thus be reluctant to openly favor their ingroups as bonus transparency increases.
Eddy Cardinaels and Fabien Ize. Beyond transparency: tempering managers’ motivated reasoning to improve the promotion process.
Most organizations face challenges in retaining their top talents. In organizations where competition for top positions is intense, managers may hinder the promotion of their best-performing employees if they expect their employees to compete with them for resources and positions in the future. Although managers have the authority to promote their best employee and give them a fair chance to succeed, most managers in our tournament experiment choose not to recommend their best employee for promotion in order to face an easier competition at later stages. Besides, we find that a transparent promotion process is more likely to increase the promotion chances of the best employees when managers first face a decision prompt confronting their tendency to engage in motivated reasoning than when they do not. Our results are relevant to practice for improving both promotion decisions and talent retention.