Article ID: | iaor20081180 |
Country: | United States |
Volume: | 52 |
Issue: | 9 |
Start Page Number: | 1345 |
End Page Number: | 1358 |
Publication Date: | Sep 2006 |
Journal: | Management Science |
Authors: | Arya Anil, Mittendorf Brian |
Keywords: | personnel & manpower planning, project management |
This paper shows that rotation programs can be an effective response to concerns of employee budget padding. Rotation programs naturally create a ‘portfolio’ of assignments for each manager, and the resulting diversification can reduce the downside of resource rationing. In particular, the production versus rents trade-off linked with adverse selection problems can be more efficiently carried out when the firm faces two managers with average information advantages, rather than one with a large advantage and one with a small advantage. Roughly stated, rotation of project assignments is a way of smoothing information across managers. On the other hand, if a firm places a premium on treating different types of projects in distinct ways, specialized assignments can be preferred due to the ability to confine project types to individual managers.