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http://ssrn.com/abstract=1417683
 
 

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Managing Cost Salience and Procrastination in Projects: Compensation and Team Composition


Yaozhong Wu


National University of Singapore - Business School

Karthik Ramachandran


Georgia Institute of Technology

Vish Krishnan


University of California, San Diego (UCSD) - Rady School of Management

October 15, 2012


Abstract:     
The rising trend of projects with high-skilled and autonomous contributors increasingly exposes managers to the risk of idiosyncratic individual behaviors. In this paper, we examine the effects of an important behavioral factor, an individual's cost salience, the common behavioral tendency in inter-temporal decision-making wherein workers may attach greater salience and perceived cost to immediate effort than for future work. Cost salience, which may differ across individuals, often leads to procrastination in early stages of a project and backloaded effort over the course of the project. We model the problem confronting the manager of a project whose quality is adversely impacted by such distortion of individual effort over time, which also (indirectly) influences the effort allocation of other project contributors. Complementary to prior works focused on the planning and scheduling tasks of project management in the absence of human behavior, we find that a behaviorally focused manager should reward contributions made in earlier stages of a project. Our analytical results also yield interesting insights on the optimal constitution of project teams: project teams with diverse levels of cost salience will perform better than teams with similar cost salience. We also show that nuanced information exchange policies can help managers elicit smoothed effort, suggesting that the practice of creating fluid teams might have previously unrecognized benefits when behavioral aspects of projects are considered. We conclude this groundbreaking work on behavioral project management with insights and organizational implications for project managers.

Number of Pages in PDF File: 44

Keywords: Project Management, Procrastination, Cost Salience, Behavioral Operations Management

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Date posted: June 11, 2009 ; Last revised: December 26, 2012

Suggested Citation

Wu, Yaozhong and Ramachandran, Karthik and Krishnan, Vish, Managing Cost Salience and Procrastination in Projects: Compensation and Team Composition (October 15, 2012). Available at SSRN: http://ssrn.com/abstract=1417683 or http://dx.doi.org/10.2139/ssrn.1417683

Contact Information

Yaozhong Wu (Contact Author)
National University of Singapore - Business School ( email )
1 Business Link
Singapore, 117592
Singapore
Karthik Ramachandran
Georgia Institute of Technology ( email )
Scheller College of Business
800 West Peachtree NW
Atlanta, GA 30308
United States
HOME PAGE: http://scheller.gatech.edu/directory/faculty/ramachandran/index.html
Vish Krishnan
University of California, San Diego (UCSD) - Rady School of Management ( email )
9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States
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