Shirking (business administration)

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Shirking is a term adopted from English (shirking: shirking ). It can be related to business administration and deals with the conscious reluctance to perform in the workplace.

Causes of Shirking

There are many reasons for the reduced willingness to perform. First of all, employers can only imperfectly control many services. This means that it is difficult to assess the activity in certain fields of work, as employees often have the opportunity to create freedom in their everyday work in which they do not use their full potential. A constant and complete control ( monitoring ) of the performance intensity of the employees, which is necessary for the prevention, is associated with very high costs, which are often not worthwhile for the entrepreneur. The execution of random samples represents a manageable risk for the employee, which increases the probability of shirking.

Furthermore, only the proven abilities of an employee can be determined, but not his physical and psychological willingness to perform. Another reason why workers decrease their activity is that the lack of economic incentives reduces motivation and responsibility for the tasks. Models that are actually intended to achieve positive effects can also have a negative impact on performance. For example, one would like to achieve an increase in performance through competition from colleagues with tournament pay. The problem here is that it not only results in “winners” with a higher position in the company and the associated better pay, but the model inevitably also includes “losers” or less capable people who are demotivated and therefore less willing to make full use of their working hours and resources.

This collection of aspects that are the cause of shirking also includes a lack of work motivation due to job dissatisfaction. The decisive factor for this is a lack of emotional connection with your employer, as this affects important competitive factors such as absenteeism, productivity, profitability and quality. Employees who do not feel emotionally attached to their employer show less initiative, willingness to perform and a sense of responsibility. The changed situation on the labor market is also a not inconsiderable factor. Since there is currently a shortage of skilled workers, the situation for the workforce has changed. The fear of losing a job has fallen sharply because companies are now looking for qualified applicants and no longer skilled workers for vacancies. This change leads to a high fluctuation in a low-tied workforce. The right work task, a challenging, varied and sensible job as well as a good relationship with colleagues and direct supervisors are important for motivating employees. Companies often underestimate these aspects and rely on job security, remuneration, social benefits, flexible working hours or the number of vacation days. Although these are important, they do not lead to a stronger emotional bond and thus a greater willingness to perform.

In many cases, managers are complicit in the poor motivation of employees. The reason for this is the lack of leadership quality, which the management does not perceive as a deficit. One problem is that many do not attend further training courses that improve the way they deal with their employees. The most important thing is the feedback from one another. But the continuous exchange is often not carried out or not carried out enough. The strengths and weaknesses of the individual should be recognized through employee appraisals in order to increase performance in the long term.

Information asymmetry

Another perspective on the search for causes is the consideration of asymmetrical information. If one relates this to the employer-employee relationship, it becomes apparent that the employer lacks information for a sufficient assessment of the employee's performance. This principle is also conveyed in the principal-agent theory . Various problems can be derived from this. The boss can either not judge the behavior of his employees due to a lack of specialist knowledge ( hidden information ) or for practical reasons he cannot observe ( hidden actions ). The entrepreneur knows the result that was achieved after work, but he does not know what proportion is attributable to the employee and thus to his personal performance and what exogenous (environmental) influences. This information asymmetry results, on the one hand, in the danger for shirking and, on the other hand, in the moral risk , because the employee can use this leeway for his / her benefit.

Expressions of Shirking

The conscious reluctance to perform in the workplace can take many forms. In the narrower sense, the focus here is on all actions that minimize the employee's performance. All reductions in performance that are prescribed by company management are excluded. This includes, for example, common breakfast times to improve the working atmosphere . Examples of the distraction from actual work through private activities are the use of the smartphone, surfing the Internet for private purposes or the active use of social media . In addition to private shirking at work, shirking is also carried out in the work environment and in the staff. Examples of this are consciously extending breaks, talking to colleagues who are not work-related or performance-enhancing, and pretending to be sick. A higher risk of shirking is to be expected in the case of lone workers with few or no monitoring options. One example of this are courier and mail drivers who are on their own after loading the vehicles. Without a monitoring model, it is difficult for the employer to understand whether the service provided is optimal. The reasons for this are diverse determinants of the journey: special cases due to traffic events such as traffic jams, ignorance of the exact course of the route or the like.

Statistics from Statista show the versatility of distraction. In 2011, out of 500 interviewed workers over the age of 20, the following information was given about distraction in the workplace.

Cost of shirking

If shirking occurs, there is a cost to the company. These costs are, for example, the lack of productivity due to the lack of working hours. Gains from a reduction in performance are for example the positive atmosphere due to the tolerance of Shirking. These costs and profits are heavily dependent on the degree of reluctance to perform. The behavior is influenced by many factors. Depending on the quality of the design of the individual determinants, they have an intensifying or weakening effect on shirking and its costs:

  • Visibility of the results: If the results are clearly recognizable or if deficits due to shirking are easy to identify, these have a shirking-weakening effect.
  • Monitoring : Control and monitoring mechanisms have a shirking-weakening effect.
  • Informal organizational structure: In groups and companies, in addition to the given organizational structure, relationship patterns develop between the individuals. On the one hand, this informal organizational structure can have a weakening effect on shirking, since effective monitoring models can arise here. On the other hand, this can have a shirking-reinforcing effect. This is especially the case when the department's norms control and influence the group's performance limitation. If, for example, coffee breaks are consciously extended by everyone in the community and this is established as a rule, such a measure has a shirking-reinforcing effect.
  • Reward structures: The performance-oriented remuneration of employees has a shirking-weakening effect.
  • Self-control : This factor has a shirking-debilitating effect.
  • Organizational characteristics: If factors such as the size of the company and horizontal or vertical hierarchies increase, they have a shirking effect.

The costs and gains of shirking are always offset by the costs and gains of countermeasures. Monitoring or similar measures, for example, have a negative effect on job satisfaction. This has a direct effect on the employee's performance. So the trade-off between tolerating Shirking and taking countermeasures remains.

Countermeasures

There are various countermeasures or solution mechanisms for the problem of conscious reluctance to perform on the part of employees. The aim of the measures is to increase the expected opportunity costs for employees from reduced work performance and to reduce the employer's risk. In the literature, monitoring and the use of incentive systems are primarily discussed as solution mechanisms. In addition to the mechanisms mentioned, there are a number of other institutional and organizational approaches. Avoiding shirking in an employment relationship usually requires a combination of different mechanisms.

Incentive systems

The scientific basis of the incentive systems are the incentive-contribution theory from a behavioral point of view and the principal-agent theory from an economic point of view. The use of selective incentives is one way of increasing the work intensity of workers and consequently reducing shirking. The theoretical basis for the design of incentives to overcome reluctance to perform is the alignment of the interests of company management and employees. A results-based incentive system that provides for variable remuneration (see: performance-based remuneration ) or the payment of bonuses depending on the company's success has proven to be particularly suitable . The preferences of both parties can be linked to one another by such a contract, whereby the employee receives an incentive to meet corresponding targets and external influencing factors have less of an impact on performance behavior. One of the limits of this measure is the attributability of individual performance to the company's overall results. When designing dynamic incentive contracts, choosing a benchmark that is influenced by the level of effort on the part of the employee is therefore of central importance. Depending on the employee's field of activity, variables such as B. contribution margin , cost reductions or quality increases are used when structuring the variable remuneration.

Another way to design an incentive is internal promotion. On the basis of observations and empirical values ​​of the performance behavior, especially in exceptional situations, a promotion is promised. Shirking is restricted in this mechanism by making promotion dependent on performance and wages being position-based.

Monitoring

Monitoring , another approach to avoiding shirking, involves overcoming information asymmetries with regard to the level of effort on the part of employees. In the context of personnel risk, monitoring describes the constant and extensive monitoring of employees through the introduction of control and planning systems (see: Planning systems and control systems ), which results in a reduction in information asymmetries and an improvement in information systems. The increasing information content about the performance behavior reduces the opportunities for employees to exploit the employer in an opportunistic way.

The classic form of monitoring includes direct monitoring by supervisory or management personnel. In this form, shirking can be actively restricted by coordinating the work effort of the employees and by observing the execution of work. The use of digital work equipment provides further options for monitoring performance. All work steps can be recorded using software programs and analyzed qualitatively and quantitatively according to key figures.

The limits of monitoring include, on the one hand, the feasibility and, on the other hand, the costs ( monitoring costs ). In the context of stable, homogeneous and frequently repeated tasks, monitoring and control of employees can be carried out well. In contrast, in a dynamic environment with heterogeneous task areas, control is much more difficult. In addition, monitoring, in particular in the form of direct monitoring, represents a very cost-intensive solution. Only when the losses of shirking can be avoided by the monitoring, the monitoring can be classified as efficient.

Monitoring can also be used as a supplement to the incentive system to overcome shirking. This constellation enables the efficiency of the incentive system to be checked on the one hand and compliance with the agreed performance targets to be monitored on the other. When paying efficiency wages , the opportunity costs of employees rise with increasing monitoring intensity. This is based on the assumption that if Shirking is discovered, there is a risk of dismissal, which would result in unemployment or lower wages in an alternative company.

values ​​and standards

Another approach of Shirking includes the establishment of action-relevant values ​​and norms in the company. These offer the possibility to motivate the employees to a desired performance behavior without the active intervention of the company management. Shirking can be avoided if the company management succeeds in conveying values ​​that place the corporate goal above individual interests. However, the use of values ​​and norms has some problems. On the one hand, they are subject to individual interpretation and, on the other hand, they cannot fully determine the behavior of individuals.

Working time and workplace organization

The design of the workplace and the working hours serve as a further measure to counter the problem of shirking. For example, a study showed that working from home can have a positive effect on employee performance. The increase in performance is attributed to the organization of breaks (fewer breaks and more efficient use of breaks) and a quieter work environment.

The working time factor can also influence employee performance. For example, there are working time models in corporate practice that provide for working hours of 5 or 6 hours per day. Using practical examples, it was possible to show that the same workload can be achieved within the shorter working hours. The space for shirking is severely restricted by the shortage of working hours and by checking the performance of the service.

Empirical verification of the Shirking hypothesis

The Shirking hypocrisy is derived from a moral hazard problem between employees and employers. The employee has an information advantage over the employer with regard to his own work performance, which is due to the lack of control on the part of the employer.

The employee thus aligns his work performance with maximum benefit. The loss of benefit is being caught shirking as well as increased work exertion. The employer can additionally increase the loss of utility through more effective controls and wage bonuses and thus counteract shirking. For companies, this creates a cost minimization problem between the costs for more effective controls and those for wage bonuses. Oliver Lang examined this problem from a scientific point of view in his empirical analysis “Wage premiums and willingness to perform: A latent structural model for the empirical verification of the Shirking hypothesis”. In particular, the effect of wage and control policies, with which companies try to keep their employees from shirking, is examined.

Optimal employee behavior

The optimal behavior of the employee is based on the assumption that the employee can only make his decision dependent on the work exertion of the respective job in the case of short-term inelastic job offers.

Period utility function of an employee:

  • : Stands for the individual degree of benefit reduction through work effort. The mean is taken as 1.
  • : Wage variable
  • : Intensity of control
  • : Work effort

The likelihood that an employee will be fired for shirking depends on the likelihood that they will engage in shirking given the control effort and the likelihood that they will be caught during a random check.

  • : Overall likelihood of being controlled while shirking
  • : Probability of shirking at a certain control intensity
  • : Probability of shirking during a sample check

Assuming the employer and employee agree on a minimum work performance in the employment contract, the employee can be sure that he will not be dismissed. The optimal work performance of an employee would then be exactly the agreed minimum work performance. Then it would also apply that the relative proportion of shirking is during working hours.

  • : agreed minimum work performance
  • : optimal work performance of an employee

The higher a company assesses the control effort for shirking, the higher the probability that an employee will be caught shirking. The control costs for a company are based on size, area of ​​activity and organizational structure. Assuming that the controlled workplaces are always chosen randomly and that the control quality does not decrease with increasing control number, one can formulate as follows:

  • : is a company-specific coefficient which indicates the costs for information acquisition, which vary depending on the company

From the previous equations and a derivation according to, the necessary condition for maximum benefit work results as follows:

This results in the employer's optimal performance requirement:

Optimal employer behavior

In this model, the employer only has the option of counteracting shirking through controls and wage bonuses. The labor costs arise from wage and control costs per workplace:

: Labour costs

: Control costs

If the employer wants to achieve a certain level of performance, he minimizes the costs for wage premiums and controls, so that the marginal costs of control intensity match those for increasing the wage premium.

Database

Due to the fact that there are deviations between the observable variables and those described in the model due to operationalization problems, a latent structural model is used in this model. The latent endogenous variables of the model are the efficiency wage premium, willingness to perform and the intensity of control.

The database is the “Socio-Economic Panel” (SOEP), but the empirical analysis only refers to the fourth wave of the SOEP. The sample consists of 2044 people, whereby only Germans, full-time employees, regular part-time workers and salaried employees were taken into account from the above-mentioned source.

Variables of the empirical model

The wage variable is explained by the incentive wage components in the efficiency wage hypothesis (ELH). However, wage differences in the ELH cannot be attributed 100 percent to wage premiums. As an indicator for the incentive-effective wage components, therefore, only that part of the individual hourly wage is used that cannot be explained by a regression on human capital, demographic characteristics and working conditions of the employee. The intensity of the control can only be derived from the information provided by the employee himself as to the extent to which he perceives his work performance as strictly or loosely controlled. The indicators for the variable are, on the one hand, the size of a company and, on the other hand, the employee's statement as to whether he or she can predominantly organize his work independently. It is believed that the larger the company, the higher the cost of control. Based on this assumption, the company's costs for the control effort are subsumed under.

Results of the empirical analysis

It turned out that there is no connection between control intensity and work performance. Especially companies with high performance demands on their employees do not rely on more intensive controls. A connection between wage bonuses and increased willingness to perform was found, which is not significant , however. This is again much less pronounced for highly qualified employees. It can be concluded from this that wage premiums and controls are not substitute incentives. However, it was possible to show a connection between rising wage premiums and more intensive controls with the growing size of companies and capital intensity, as well as that self-responsible employees do not abuse this freedom to shirk. The effects of marital status, as well as whether one is a single-earner or living in a higher-income household, are not significant. Contrary to assumption, good job opportunities go hand in hand with high motivation, which gives companies no reason to pay higher wage premiums.

If the employee is aware that he will soon lose his job, this will reduce his work performance. The reaction of companies manifests itself more in lowering the wage premiums than in increasing the control intensity. Companies are increasingly placing employees on positions with wage bonuses, even if these tend to stay with the company for the long term. The assumption that an employee's behavior is determined by weighing up work performance and the risk of being caught shirking does not apply to highly qualified workers.

In contrast to the overall sample, a marginal increase in the wage premium leads to a greater, albeit insignificant, improvement in motivation. On the other hand, the wage premiums rise less sharply when the work requirement increases. For small companies, it is better to rely on more intensive controls than on wage premiums to avoid shirking, as this has the effect expected in the shirking model. Last but not least, it could be shown that the incentive effect to increase performance through wage bonuses is higher for employees when these are less controlled. This contradicts the Shirking model, because control reduces the performance-enhancing effect of wage bonuses.

In conclusion, it can be said that neither the interaction of wage and control policy according to the Shirking approach nor the connection between wage bonuses and willingness to perform can withstand an empirical examination.

Individual evidence

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