Management Accounting Section Midyear Meeting

Managerial Discretion in Promotion Tournaments

• In Event: Transparency

Abstract

I design a real-effort experiment to analyze if tournament incentives lead managers to sabotage promotions of their subordinates to prevent future competition for themselves. Additionally, I explore the effectiveness of monitoring and self-reflection as control mechanisms to mitigate sabotage across hierarchy. I find that managers are driven by personal strategic motivations to sabotage promotions of productive subordinates. When subordinates are significantly different in abilities, asking managers to justify their promotion decision leads to a significant reduction in sabotage. However, when promotion candidates have similar abilities, sabotage exists but managers resort to casuistry by giving professional reasons to justify their promotion decisions. I also find that saboteurs take unjust credit for the work completed by their subordinates after sabotaging them regardless of the difference in abilities of promotion candidates.

Author

• Hashim Zaman, Harvard University Business School