Employee Screening: Theory and Evidence

34 Pages Posted: 10 May 2006 Last revised: 27 Jun 2010

See all articles by Fali Huang

Fali Huang

Singapore Management University - School of Social Sciences

Peter Cappelli

University of Pennsylvania Wharton School - Center for Human Resources; National Bureau of Economic Research (NBER); University of Pennsylvania - Management Department

Multiple version iconThere are 2 versions of this paper

Date Written: March 2006

Abstract

Arguably the fundamental problem faced by employers is how to elicit effort from employees. Most models suggest that employers meet this challenge by monitoring employees carefully to prevent shirking. But there is another option that relies on heterogeneity across employees, and that is to screen job candidates to find workers with a stronger work ethic who require less monitoring. This should be especially useful in work systems where monitoring by supervisors is more difficult, such as teamwork systems. We analyze the relationship between screening and monitoring in the context of a principal-agent model and test the theoretical results using a national sample of U.S. establishments, which includes information on employee selection. We find that employers screen applicants more intensively for work ethic where they make greater use of systems such as teamwork where monitoring is more difficult. This screening is also associated with higher productivity and higher wages and benefits, as predicted by the theory: The synergies between reduced monitoring costs and high performance work systems enable the firm to pay higher wages to attract and retain such workers. Screening for other attributes, such as cognitive ability, does not produce these results.

Suggested Citation

Huang, Fali and Cappelli, Peter, Employee Screening: Theory and Evidence (March 2006). NBER Working Paper No. w12071. Available at SSRN: https://ssrn.com/abstract=888273

Fali Huang

Singapore Management University - School of Social Sciences ( email )

90 Stamford Road
Singapore, 178903
Singapore
65-68280859 (Phone)
65-68280833 (Fax)

Peter Cappelli (Contact Author)

University of Pennsylvania Wharton School - Center for Human Resources ( email )

3733 Spruce Street, Vance Hall
Philadelphia, PA 19104-6358
United States

HOME PAGE: http://www.wharton.upenn.edu/faculty/cappelli.html

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Pennsylvania - Management Department ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
40
Abstract Views
514
PlumX Metrics