WSB Research: Now You Know
Q: Can employee performance and satisfaction be predicted by confidence?
Leaders in organizations typically focus on employee skills and motivation to predict performance, but there is another, often-overlooked factor: confidence.
Alex Stajkovic, M. Keith Weikel Distinguished Chair in Leadership at the Wisconsin School of Business, studied the relationship of confidence with employee performance as well as job and life satisfaction.
Stajkovic originally proposed that confidence resides at a higher level of abstraction and manifests itself in daily life through hope, resilience, efficacy, and optimism. Then Stajkovic and his co-authors studied sales personnel of a retail auto group over one month. Those with higher confidence sold more, earned more, and were more satisfied with job and life, despite daily work fluctuations. These results also supported core confidence as a relatively stable individual characteristic, unlikely to change much over time.
Confident employees focus on handling the task instead of ruminating about doubt. That’s useful knowledge for leaders, who should consider not only employees’ skill and will but also their confidence to handle new challenges to get a sense if they bring confidence or harbor doubt. This is important to distinguish in today’s hypercompetitive organizations because, as Stajkovic claims, “If you believe you achieve, and if you doubt you go without.”
Q: Why do companies outsource the internal audit function?
The internal audit function can be considered as “the window inside a company,” and sometimes the view through that window comes from third-party service providers.
Dereck Barr-Pulliam, assistant professor of accounting and information systems at the WSB, explored global data to find out why companies use third-party internal audit service providers and whether such use varies around the world.
U.S. companies typically have relatively strong corporate governance and operate under strong legal oversight such as that created by the Sarbanes-Oxley Act in 2002. Data show that North American companies have the highest rate of use of an outsourced internal audit function. Developing countries typically emulate the U.S. model and bolster their capital markets by increasing corporate governance such that they also use third-party auditors when the expertise is unavailable in-house.
Companies with an in-house internal audit function that lack the breadth of expertise in a particular area might supplement staff with third-party providers. Smaller companies might lack the breadth and depth of expertise necessary to address all the significant risks in their company and rely even more on third-party service providers. Third parties can also help during a staffing shortage.
With no foreseeable decline in outsourcing auditing functions, Barr-Pulliam’s research suggests companies need to understand the related benefits and emerging risks in the future.
Q: Do private prisons distort justice?
Private prisons made the news last summer when the Justice Department decided to end its use of them. Research by Anita Mukherjee, assistant professor of risk and insurance, and Michael E. Lehman, Distinguished Chair for Inspired Learning in Business, reviewed data from private prisons in Mississippi and found that prisoners in private facilities serve more time and cost more money. Private prisons are a $5 billion industry in that state, which uses them in an effort to reduce costs.
Mukherjee’s research showed that compared to public prisons, prisoners in private facilities saw an increase to their sentence from 4 to 7 percent. That averages out 60 to 90 days in additional time served, which pays a private prison operator an average of $50 a day per occupied bed. Conduct violations, which drove the additional time, were doubled across all demographics for prisoners in private facilities. The added expense offsets the costs savings offered by the state’s private prisons.
Despite the Justice Department’s plan, private prison use remains unchanged at the state level, where prisoners are randomly assigned to a private or public prison. The increase in days served, lack of reduction in recidivism (the rate at which a prisoner reoffends after release), and reduced cost savings counter the incentives for private prison use, and create a fairness issue for prisoners serving time in them.
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