Employees should ultimately be paid for performance, not for working hours, says Kathryn Shaw (Stanford University and IZA) in a video interview. If hourly wages are paid, that entails choosing high-performing employees carefully. While wage inequality within firms serves to boost performance, equality of opportunity is what really matters, says Shaw.
Her research finds that the performance of bosses has a substantial impact on firm productivity. Ideally, “they train, they motivate, they inspire, they employ,” she says.
Kathryn Shaw is the subject editor for Behavioral and Personnel Economics at the IZA World of Labor.