David Faro - On campus Room S218

MARKETING

Speaker: David Faro - Associate Professor of Marketing (with Tenure)

Business School of London

Abstract:

How does a bottom-line mentality in an organization affect the tendency of its employees to take risks?
Organizations differ in how they evaluate the performance of their employees. Some emphasize high-quality decision-making while others adopt a results-oriented approach that holds employees responsible for the bottom line. For instance, Amazon underlines decision-making processes and apparently spends little time discussing financial results. On the other hand, Netflix places emphasis on results over process, further noting that good performance will be rewarded with higher pay and greater responsibility, even if that performance comes with minimal effort. In three online studies and a field study we show that evaluating employees’ decisions based on results (versus process) tends to reduce their risk-taking. However, focusing on results can also lead employees to take more risk if this can offset losses they made in the past.