Who Should Select New Employees in Geographically Dispersed Organizations: Headquarters or the Unit Manager? Consequences of Centralizing Hiring at a Retail Chain

50 Pages Posted: 23 Feb 2016 Last revised: 3 Mar 2019

See all articles by Carolyn Deller

Carolyn Deller

University of Pennsylvania - The Wharton School

Tatiana Sandino

Harvard Business School - Accounting and Control

Date Written: February 7, 2019

Abstract

We examine how changing the allocation of hiring decision rights in a multiunit organization affects employee-firm match quality, contingent on a unit’s local circumstances. Our research site switched from its traditional decentralized hiring model (hiring by business unit managers—in our case, store managers of a US retail chain) to centralized hiring (in this study, by the head office). While centralized hiring can ensure that enough resources are invested in hiring people aligned with company values, it can also neglect the unit managers’ local knowledge. Using difference-in-differences analyses, we find that the switch is associated with relatively higher employee departure rates (poorer matches) if the business unit manager has a local advantage; that is, if the store serves repeat customers, serves a demographically atypical market, or poses higher information-gathering costs for headquarters. In these cases, the unit manager may be more informed than headquarters about which candidates would best match local conditions.

Keywords: Control; selection; organizational design; decentralization; company values; retail chains.

Suggested Citation

Deller, Carolyn and Sandino, Tatiana, Who Should Select New Employees in Geographically Dispersed Organizations: Headquarters or the Unit Manager? Consequences of Centralizing Hiring at a Retail Chain (February 7, 2019). Harvard Business School Accounting & Management Unit Working Paper No. 16-088. Available at SSRN: https://ssrn.com/abstract=2736317 or http://dx.doi.org/10.2139/ssrn.2736317

Carolyn Deller

University of Pennsylvania - The Wharton School ( email )

1311 Steinberg Hall - Dietrich Hall
3620 Locust Walk
Philadelphia, PA 19104-6365
United States

Tatiana Sandino (Contact Author)

Harvard Business School - Accounting and Control ( email )

367 Morgan Hall
Soldiers Field
Boston, MA 02163
United States
617-495-0625 (Phone)

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