Avoiding Labor Shortages by Employer Signaling - On the Importance of Good Work Climate and Labor Relations

Abstract

Avoiding labor shortages for skilled employees is one of the major challenges for highly competitive firms acting in tight labor markets. The ability to avoid labor shortages on the company level, for example measured by the share of vacant jobs, is distributed very unevenly and cannot in general be explained by differences in wages and compensation packages as standard economic theory would suggest. In our paper we present a theoretical explanation for large and persisting inter-firm differences in job vacancy rates. Many psychological studies show that unobservable job and company characteristics such as work atmosphere or individual self determination are crucial for employees' job choices. However,

Nonunion Employee Representation: Theory and the German Experience With Mandated Works Councils

“…, Pfeifer ), foster internal labor markets (Heywood et al. , Zwick ) and help avoid labor shortages (Backes‐Gellner and Tuor ). They increase the probability of adopting family friendly practices (Heywood and Jirjahn ), flexible working time arrangements (Dilger , Ellguth and Promberger ) and performance‐related payment schemes such as piece rates and profit sharing (Heywood et al.…”

Let them go? How losing employees to competitors can enhance firm status

“…As a result, firms often invest considerably in signaling to potential employees that the firm is a good place to work (Backes‐Gellner and Tuor, ; Chatman, ). Firms invest directly in developing employees' human capital and encourage employees to make firm‐specific investments so that they stay, allowing firms to capture returns on human capital investments (e.g., Hashimoto, ).…”

“…From this perspective, the effects of increased departure rates on potential future employees' perceptions of a firm are likely to be negative: potential employees should be less eager to work for a firm when current employees appear increasingly eager to leave. Therefore, firms interested in signaling their appealing work climate (e.g., Backes‐Gellner and Tuor, ) face incentives to retain employees so as to avoid increased departure rates.…”

“…Hiring a competitor's employees can help firms develop new products (e.g., Boeker, ; Rao and Drazin, ), access technical knowledge (e.g., Rosenkopf and Almeida, ), form relationships (e.g., Dokko and Rosenkopf, ), and expand geographic scope (e.g., Song, Almeida, and Wu, ). Conversely, losing employees to competitors can diminish service quality (e.g., Hausknecht, Trevor, and Howard, ), lead to a loss of client business (e.g., Batt, ; Broschak, ; Rogan, ; Somaya, Williamson, and Lorinkova, ), encourage “talent wars” (e.g., Gardner, , ; Somaya and Williamson, ), disrupt intrafirm coordination (Briscoe and Rogan, ), increase firm failure risks (e.g., Phillips, ; Wezel, Cattani, and Pennings, ), increase recruiting and training costs, and signal to potential employees that the firm is not a good employer (e.g., Backes‐Gellner and Tuor, ).…”

Poaching and Firm‐Sponsored Training

“…Some theoretical models analyse further mechanisms that prevent systematic poaching: Training firms can get a reputation for training quality and credibly offer long‐term contracts (Moen and Rosen 2004; Sadowski ). Firms may use training investments as a commitment device to reduce turnover (Backes‐Gellner and Tuor ). Both approaches propose mechanisms that lead to a selected, more loyal workforce that might resist external offers.…”