Attracting and Retaining Core Competency: Evidence from Cost Stickiness in the Trucking Industry

• In Event: Paper Dialogue Session I

Abstract

We examine how firms use compensation mechanisms to attract and retain employees whose behavior is consistent with the firm’s strategic goals. We adopt the setting of supplemental retirement benefits in the long-haul trucking industry, and suggest that firms that offer pension plans attract and retain safer drivers. First, we examine the effects of these compensation practices on the stability of a firm’s workforce. We find that offering (not offering) a pension plan results in sticky (anti-sticky) labor costs, consistent with low (high) labor turnover. Second, we examine the effects of pension benefits on firm’s profitability and find a positive association between offering pension benefits and return on assets. These findings indicate that firms can use pension benefits as a screening and retention device, resulting in retaining employees whose behaviors are supportive of the firms’ goals and strategies.

Authors

• Arthur J Francia, University of Houston

• Christian Sobngwi Kuiate, University of Houston

• Thomas R Noland, University of Houston

• Mattie C Porter, University of Houston–Clear Lake