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2020/2021  KAN-CCMVV5038U  Personnel Economics for Managers

English Title
Personnel Economics for Managers

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Quarter
Start time of the course First Quarter, Third Quarter
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 80
Study board
Study Board for MSc in Economics and Business Administration
Course coordinator
  • Niels Westergård-Nielsen - Department of Accounting (AA)
Main academic disciplines
  • Corporate governance
  • Human resource management
  • Organisation
Teaching methods
  • Blended learning
Last updated on 17-02-2021

Relevant links

Learning objectives
Personnel economics provides concepts and tools for managers to deal with personnel and leadership issues. The course will provide a foundation for managers to choose between various performance measurement systems, performance reward systems and other incentive systems in hiring and in investments in human capital. These principles apply to wages and wage structure of all organizations. The course will also provide an understanding of how different types of businesses will call for different types of decision making and how this affects the optimal job design.
The course will give the general management student an understanding of how to include personnel management methods in an overall frame for the development of an organization. Thus, the course is not competing with courses in HR but can stand alone or can be considered as a supplement.
Course prerequisites
HA or equivalent
Personnel Economics for Managers:
Exam ECTS 7,5
Examination form Home assignment - written product
Individual or group exam Individual exam
Size of written product Max. 10 pages
Students have 4 hours to complete the exam
Assignment type Written assignment
Duration Written product to be submitted on specified date and time.
Grading scale 7-point grading scale
Examiner(s) One internal examiner
Exam period Autumn and Spring
Make-up exam/re-exam
Same examination form as the ordinary exam
If the number of registered candidates for the make-up examination/re-take examination warrants that it may most appropriately be held as an oral examination, the programme office will inform the students that the make-up examination/re-take examination will be held as an oral examination instead.
Course content, structure and pedagogical approach

Personnel economics applies economics to human resources management issues such as recruitment, compensation, promotions, worker turnover, performance evaluation, selection, and training. Personnel economics has been developed over the last 20 years and is now taught at leading business schools (Stanford and Chicago Booth School and many other places) all over the world. Furthermore, Personnel Economics is the foundation for the modern trend of measuring effects of HR together with the human resources of the employees.
The course provides a theoretical framework needed to analyse human resources policies under varying institutional and competitive environments. It highlights the importance of information and incentives in the modern economy. Issues covered include the following issues: Should pay vary across workers within firms? How are pay and promotions structured across jobs to induce optimal effort from employees? Why do firms use teams and how are they used most effectively? Does CEO pay reflect competitive markets and efficient contracting? How important is discrimination? What makes an entrepreneur? How should human resource management practices be combined within firms?
Thus the course will cover issues around pay and investment in human capital seen from the perspective of both workers and employees. The course will also look at turnover and factors which limit or increase turnover.  Principal-agent theory is used to explain optimal wage packages for different groups of employees and for other management issues. Wages and incentive pay in the form of bonus and shares are central here. Free-rider problems are discussed in the context of organizing work in teams. 
The full list of content :
Part One: Sorting and Investing in Employees.
Chapter 1: Setting Hiring Standards.
Chapter 2: Recruitment.
Chapter 3: Investment In Skills.
Chapter 4: Managing Turnover.
Part Two: Organizational and Job Design.
Chapter 5: Decision Making.
Chapter 6: Organizational Structure.
Chapter 7: Job Design.
Chapter 8: Advanced Job Design.
Part Three: Paying for Performance.
Chapter 9: Performance Evaluation.
Chapter 10: Rewarding Performance.
Chapter 11: Career-Based Incentives.
Chapter 12: Options and Executive Pay.
Part Four: Applications.
Chapter 13: Benefits.
Chapter 14: Entrepreneurship and Intrapreneurship.
Chapter 15: The Employment Relationship.

Description of the teaching methods
Lectures with groupwork around cases
Feedback during the teaching period
Office hours for feedback
Student workload
lectures 33 hours
preparation and exam 170 hours
Expected literature

Edward P. Lazear Michael Gibbs: Personnel Economics in Practice, 2nd Edition, Wiley 2009
supplemented with articles and cases on the different topics.

Last updated on 17-02-2021