Influence factors for operational control and compensation in professional service firms

Abstract

Professional service firms have distinct operational challenges due to the type of work that is transacted by the employees of these firms, and due to the nature of the employees themselves. In this paper, we develop and present factors that influence professional service operations in firms and compensation structures for professional service providers. We establish professional service influence factors, which we posit will impact agency relationships in professional service firms. That is, we hypothesize that professional service influence factors (PSIFs) will moderate the effect of task programmability and outcome measurability in predicting the use of behavior-or outcome-based compensation schemes (control strategy). Logistic regression is used on data provided by 192 professional service providers in order to examine the impact of the agency variables and moderating factors on control strategies. The results indicate that company-and profession-based factors have moderating effects on task programmability when predicting control strategy. We discuss the implications of our findings. Published by Elsevier B.V.

Operations management and corporate entrepreneurship: The moderating effect of operations control on the antecedents of corporate entrepreneurial activity in relation to innovation performance

“…This is because such controls often limit the latitude of action available to lower-level organizational members through the centralization of organizational structure and decision-making. According to agency theory, the centralization of organizational structure and decision-making promotes monitoring, behavior-based compensation, and policy-and procedure-driven behavior among organizational employees (Goodale et al, 2008). Consistent with Morris et al (2006), the restriction in range of the entrepreneurial opportunities recognized and pursued may limit the ability of the firm to achieve its desired innovation objectives because the best opportunities may be systematically weeded out by organizational architecture elements that limit individual discretion.…”

“…The presence of process control formality would suggest that innovative behaviors and initiatives that are rewarded by the firm are subject to a disciplined approach to their management, with knowledge of how those initiatives are best supported and facilitated embedded in the structure and processes of the firm (Bisbe and Otley, 2004;Goodale et al, 2008). In other words, process control formality is a mechanism through which prior knowledge pertaining to innovative operations can be leveraged within the innovation process.…”

Servitization: Disentangling the Impact of Service Business Model Innovation on Manufacturing Firm Performance

“…Researchers have been particularly interested in the operational phenomena occurring in 'pure' service sectors such as retail and e-retail (Boyer and Hult, 2005;Davis-Sramek et al, 2008;Rabinovich et al, 2008;Rosenzweig et al, 2011), healthcare (Hyer et al, 2009), professional services (Goodale et al, 2008) and hospitality (Kimes and Thompson, 2005), while services in a manufacturing context have been afforded relatively less study.…”

Work after work: The impact of new service delivery models on work hours

“…Prior literature in operations management has focused on various aspects of managing PSOs such as server collaboration (Senot, Chandrasekaran, & Ward, ), the impact of task variety on learning and productivity (Avgerinos & Gokpinar, ), and compensation structures (Goodale, Kuratko, & Hornsby, ). In this article, we detail the unique challenges faced by professional primary care servers (physicians) in a multichannel setting.…”