Newsroom

Hayley LeatherIn 10 years, Hayley Leather would like to own a zoo.

With this professional aspiration in mind, the 22-year-old Fox School of Business student has focused her efforts on attaining the business expertise every zookeeper requires, while studying within Fox’s Risk, Insurance and Healthcare Management department.

Leather’s research paper in a related area – into the 2010 British Petroleum (BP) oil spill that devastated animal habitats in the Gulf of Mexico – won the 2015 American Association of Managing General Agents (AAMGA) White Paper contest.

Her essay, titled Why the BP Macondo Gulf Blowout is Important…and It’s Not What You Think, explores the complexities and uses of additional insured status and contractual indemnity in the oil industry, and the potential effects of restrictions. Leather synthesized legal precedent and interviewed experts in the field to uncover how unusual anti-indemnity strategies could change the face of risk contracting in the oil industry.

“This wasn’t anything that had been done before,” said Leather, a Risk Management and Insurance major. “Previously companies just did as they assumed, but BP really challenged all that.”

Winning essays were deemed to have communicated the significance of risk management in the future of wholesale, excess or surplus insurance lines in the manner of previous White Paper winners. Leather, one of two winners nationally, received $2,000 for her award-winning paper and an expenses-paid trip to Washington D.C. in May 2015 to attend the AAMGA Annual Meeting. While there, a mentor from the risk industry will be paired with Leather.

“I’ll be able to hear what’s going on in the industry and have a contact to talk to the whole time to explain it to me,” Leather said.

Leather credits Storm Wilkins, Assistant Professor of Risk, Insurance, and Healthcare Management, with encouraging her to enter the contest. Wilkins also serves as faculty advisor for Temple’s Sigma Chapter of the risk management fraternity, Gamma Iota Sigma, of which Leather is a member. Leather, who had written previously on the BP crisis, knew that expanding upon the topic for the contest made sense, given her interest in animal welfare and risk management.

“Hayley researched the issues thoroughly, and even reached out to an industry expert to ensure that her work was first-rate,” Wilkins said. “I encourage my students to enter competitions such as the AAMGA White Paper contest because it allows them showcase their abilities beyond Temple University.”

Leather, who transferred into the Fox School in Summer 2014, said her brother, Jonathan, FOX ’09, pushed her into the Risk Management field. Previously, she had been a science major.

“I wasn’t happy with the idea of staring at a computer or microscope all day. I didn’t want to do that,” Leather said. “I love business in general and something that is important to all business is managing the risks.”

Merging her love of animals with her penchant for business, Leather has interned with the Navy Marine Mammals Program in San Diego. Somewhat closer to home, the native of Cheltenham, Pa., also has interned as a zookeeper at the Wild World of Animals in Eighty Four, Pa. Leather hopes to one day work for SeaWorld Entertainment, managing risks for one of the organization’s seven parks, before applying her business savvy when opening her own zoo.

If annual shareholder meetings are held far away from home headquarters, earnings results may not be as up to par as companies want them to be.

A new study by Yuanzhi “Lily” Li of the Fox School of Business at Temple University, and David Yermack of New York University, titled Evasive Shareholder Meetings, found that companies tend to schedule meetings in remote locations when managers have information about future performance they want to keep private to avoid scrutiny by shareholders, activists and media.

The research team gathered data including location, days of the week, and the start time of 9,616 annual meetings between 2006 and 2010. Their findings indicate a systematic pattern of poor company performance, which followed annual meetings that are, moved a great distance away from headquarters.

“If managers don’t want to answer questions, they’ll make it harder for shareholders to attend,” Li said.

The paper cites an example using meeting locations of TRW Automotive Holdings, an auto parts manufacturer. The company held its 2007 annual meeting in McAllen, Texas, over 1,400 miles away from its headquarter located just outside Detroit, and more than 300 miles from the nearest major airport. In 2006 and 2008 to 2010, the company held its meetings in New York City. Coincidentally, in 2007, the company’s stock price fell from $38.97 to $25.90.

“We’re surprised by just how far managers are going to avoid activists and shareholders,” Li said.

Company bylaws may specify that meetings must take place with a recurring date or location, but often times, the board of directors are given the flexibility in choosing the site of the meeting.

Li and Yermack found that seventy-one percent of shareholder meetings take place within five miles of the what the managers would refer to as the “home office,” while sixteen percent occur between five and fifty miles away. They also noticed that twenty-nine percent of annual meetings take place more than fifty miles from a major airport.

Li believes companies and managers should change their practices, making it easier for shareholders to attend these annual meetings, allowing voting to take place with a higher quorum.

“Companies should be holding annual meetings closer to home,” Li said. “ We will be glad to see a law coming that says companies should always hold meetings in a close proximity to its headquarters so that local shareholders and analysts can easily attend.”

—Alexis Wright-Whitley

 

The longer CEOs stay in the power – and a new study suggests most of them do, exceeding the optimal tenure length by about three years – the more likely chief executives are to limit outside sources of market and customer information, ultimately hurting firm performance.

Research titled, How does CEO tenure matter? The mediating role of firm-employee and firm-customer relationships, examines why a longer CEO tenure may not always produce positive results for firm performance.

The researchers — Charles Gilliland Professor of Marketing Xueming Luo and PhD candidate Michelle Andrews of the Fox School of Business at Temple University and PhD candidate Vamsi K. Kanuri of Robert J. Trulaske, Sr. College of Business at the University of Missouri — explored two primary stakeholders, employees and customers, who are influenced by CEO tenure.

From studying 365 U.S. companies over a decade (2000-10), measuring CEO tenure, and calculating the strength of both firm-employee and firm-customer relationships, researchers found that the longer a CEO serves, the stronger the firm-employee relationship becomes. However, an extended period with the same CEO results in a weakened firm-customer relationship over time.

According to the study, the average CEO holds office for 7.6 years, but the optimal tenure length is 4.8 years.

“As CEOs accumulate knowledge and become entrenched, they rely more on their internal networks – employees – for information, growing less attuned to market conditions and customers,” Luo said. “And because these longer-tenured CEOs have more invested in the firm, they favor avoiding losses over pursuing gains. Their attachment to the status quo makes them less responsive to vacillating consumer preferences.”

There are two types of learning styles CEOs adopt during their tenure: explorative and exploitive learning via external and internal information sources.

In the early stages of tenure, CEOs demonstrate a desire for a diverse flow of information and engage in receiving information from both external and internal company sources. Therefore, firm relationship between employees and customers is positive.

However, as CEOs become more knowledgeable and serve for a longer period, they begin to focus on the flow of information from internal sources versus what comes from outside markets. This is in large part due to longer-tenured CEOs becoming more risk averse because of all they have invested in their firm. This leads chief executives to resist challenging the status quo, further alienating them from market environments and weakening customer relations. Ultimately, this hurts firm performance.

“We’re not saying, ‘Fire your CEOs after 4.8 years,’” Andrews said in regard to the weakened relationship with customers after what researchers found to be the optimal tenure length. “But if company boards restructure CEO packages to cater to consumers more, you may find yourself with better results.”

If boards develop incentive plans for longer-tenured CEOs to encourage more reliance on external market trends and dynamics, customer relations – and therefore firm performance – could be enhanced.

“After all, you’re only a firm if you have customers,” Andrews said. “Without customers, no firm can prosper – or even survive.”

The full study appears online in the Strategic Management Journal.

—Alexis Wright-Whitley

 

Research on personnel psychology and organizational behavior has demonstrated how fairness and justice engender trust in the workplace. The relationship between the two has been believed to be reciprocal, where trust is a consequence of the perceived justice – as proposed by the classic formulation of social exchange theory – and gradually expands through positive interactions. For instance, employees will trust their supervisor’s decisions more or less from evaluating the fairness of previous interactions with the supervisor.

Assistant Professor of Human Resource Management Brian Holtz takes this notion one step further and proposes the trust primacy model: a new theoretical framework that maintains that trust is formed prior to the direct interaction with others, hence exerting significant influence on employee perceptions of justice. This suggests that an opinion is formulated before the interactions among the players involved and continues to evolve and grow over time.

For his model, Holtz brings together principles of evolutionary theory, neuroscientific research, and psychological perspectives to build a strong case for the rapid development of trust and its influence on perception, resulting inevitably in preceding direct fairness experiences at the inception of relationships.

In his most recent article published in the Journal of Management, Holtz states that we determine trust through biological and sociocultural cues that can drive inferences of trustworthiness. Some of the biological cues may include facial expressions, eye contact and tone of voice. Sociocultural cues may include clothing, tattoos, credentials and socioeconomic status. Both have an effect on how we build trust toward others. His research supports neuroscientific perspectives in that people’s judgments are quick cognitions that are formed in milliseconds and through as little as a single glance, which help us infer a wide variety of information, such as the intentions of others.

Holtz has built a substantial research record founded on the principles of justice and fairness and their application to the workplace. His previous research provides a strong foundation for his proposed model, which extends existing frameworks and offers a more complete integration of the trust and justice literatures.

Holtz’s trust primacy model is the first theoretical framework to propose specific cognitive processes underlying the effect of trust on perception of justice events. Besides implications for further research, this new model brings awareness to managers and challenges organizations to strive for developing trust through clear signals right at the outset of employment relationships.

This research is reported in:

Holtz, Brian (2013).Trust primacy: a model of the reciprocal relations between trust and perceived justice. Journal of Management, 39 (7): 1891-1923, first published online on January 28, 2013.

Your work meetings are full of employees paying more attention to the text messages on their smart phones than to the individual speaking. You offer a suggestion and notice a coworker rolling his eyes in a condescending manner. You smile at a colleague in the hall who seemingly ignores you. Sound familiar? If so, you’re not alone. A recent poll suggests that 98% of North-American employees have experienced incivility in the workplace. Organizational researchers describe that incivility, synonymous with rudeness, can take many shapes or forms in the workplace: ignoring or excluding someone, eye-rolling, gossiping, making demeaning remarks to or about someone, or showing little interest in another’s opinion.

If you think that failing to hold the door open for a colleague or making a joke at another’s expense are relatively harmless, researchers at the Fox School of Business at Temple University would suggest that you should think again. In their paper The Effects of Passive Leadership on Workplace Incivility, Assistant Professor and Cigna Research Fellow Crystal Harold, and Assistant Professor Brian Holtz examine the role that managers play in fostering rude behavior.

“We were interested in studying workplace incivility, and more specifically, factors that might promote the occurrence of incivility because let’s face it, just about everyone has either been treated rudely at work, treated someone else rudely at work, or both,” Harold said. “There are people out there who likely think that these sorts of behaviors are fairly innocuous. But available data would suggest otherwise.”

In their research, Harold and Holtz draw from prior incivility research indicating that victims of incivility are significantly more likely to decrease the quality of their work, be absent from the office, and ultimately leave the organization. What’s more, addressing the fallout from workplace incivility is estimated to cost companies millions of dollars each year.

“Because incivility has negative psychological and physical effects on victims and is costly for organizations, it is important that we begin to understand why incivility occurs in the first place. What conditions foster an uncivil work environment?” Holtz continued, “It made sense to us that leadership would be an important and significant variable to consider.”

Harold and Holtz conducted two studies in which they surveyed employees, their supervisors, and their colleagues to determine the role of management in workplace incivility. “We were particularly interested in passive leadership. In literature and popular press, you read a lot about either these amazing transformational leaders at one extreme, or these tyrannical nightmare bosses on the other,” Harold noted. “However, there are many managers who fall somewhere in the middle; who aren’t particularly active, who try to ignore problems, who overlook employees’ bad behaviors, or who are just generally reticent to actually manage their employees.”

Holtz added, “If someone is rude to you at work and your manager does nothing in response, you’re likely to conclude that either no one cares, or that these types of behaviors are acceptable. It is the manager’s responsibility to intervene in the face of workplace incivility. When that doesn’t happen, it creates an environment in which future uncivil acts are more likely.”

Results of their research do in fact support that employees who work under passive managers are both more likely to experience rudeness, and more likely to behave rudely themselves.

“We found that the experience of being treated with incivility coupled with working for a passive manager significantly increased the likelihood that an employee would both behave with incivility him/herself, as well as engage in withdrawal behaviors such as showing up to work late, or even calling out when not actually sick” Holtz explained. “The bottom line is that in the process of doing nothing, these types of managers are actually doing a lot of damage.”

In light of these results, Harold and Holtz offer a number of practical suggestions for
organizations wanting to deter workplace incivility. “First, you have to educate your employees and management that these seemingly harmless behaviors are anything but. Training employees, and importantly managers, to recognize what incivility is, is an important first step” Harold noted.

Companies also need to set ground rules. “Make clear which behaviors constitute incivility, clarify the consequences for engaging in these behaviors, and adopt a zero-tolerance policy. This is where managerial training comes into play. Managers must learn to intervene when employees are behaving badly towards one another, and quickly take punitive action against offenders,” Holtz said.

Harold concluded “At the end of the day, managers have to be good role models. A company’s efforts to curb rudeness will be for naught, if the manager him/herself is the one instigating the incivility.”

Harold and Holtz’s study is in press at the Journal of Organizational Behavior.
—Alexis Wright-Whitley

Porath, C.L., Pearson, C.M. “The Price of Incivility.” Harvard Business Review Jan/Feb (2013).

Corporate Governance encompasses the mechanisms within a corporation that ensures the managers’ interests are aligned with those of the shareholders.  In doing so, he/she may be a risk-taker, but why?  How does a firm make a CEO accountable for his/her actions or the firm’s performance?  Research on Corporate Governance studies the correlation between a CEO’s compensation package as a motivator to take risks, benchmarking CEOs’ pay, and the optimal functionality of a Board of Directors.  The understanding of Corporate Governance has not just practical relevance for a firm, but also implications at the policy level.