More from the Author

• Working Paper | HBS Working Paper Series | 2013

  Pay Harmony: Peer Comparison and Executive Compensation

  Claudine Gartenberg and Julie Wulf

  Do horizontal wage comparisons affect firm policies on executive pay? This paper explores that question using a 1992 SEC proxy disclosure rule that mandated increased disclosure of executive pay. We argue that this rule differentially increased wage comparisons within firms with geographically-dispersed managers—firms with the greatest information frictions prior to the rule change. We report three changes related to compensation after 1992 for division managers. First, within firms with dispersed managers, division manager pay is less sensitive to individual performance and co-moves more with peer pay. Second, pay disparity between managers located in different states decreases relative to that of co-located managers. Third, division productivity falls in dispersed firms, with the effect driven by managers at the low end of the wage distribution. Taken together, our findings suggest that principals account for horizontal peer comparison when designing executive wage contracts and that they face a tradeoff between the incentive effects of performance-based pay and effects of peer comparison.

  Citation:

  Gartenberg, Claudine, and Julie Wulf. "Pay Harmony: Peer Comparison and Executive Compensation." Harvard Business School Working Paper, No. 13–041, November 2012.

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• Article | California Management Review | Fall 2012

  The Flattening Firm—Not As Advertised

  Julie Wulf

  For decades, management consultants and the popular business press have urged large firms to flatten their hierarchies. Flattening (or delayering, as it is also known) typically refers to the elimination of layers in a firm's organizational hierarchy and the broadening of managers' spans of control. The alleged benefits of flattening flow primarily from pushing decisions downward to enhance customer and market responsiveness and to improve accountability and morale. Has flattening delivered on its promise to push decisions downward? In this article, I present evidence suggesting that while firms have delayered, flattened firms can exhibit more control and decision making at the top. Managers take note. Flattening can lead to exactly the opposite effects from what it promises to do.

  Keywords: Organizational Structure; Governance Controls; Decision Making;

  Citation:

  Wulf, Julie. "The Flattening Firm—Not As Advertised." California Management Review 55, no. 1 (Fall 2012): 5–23.

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• Working Paper | HBS Working Paper Series | 2013

  Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management

  Maria Guadalupe, Hongyi Li and Julie Wulf

  Top management structures in large US firms have changed significantly since the mid-1980s. While the size of the executive team – the group of managers reporting directly to the CEO – doubled during this period, this growth was driven primarily by an increase in functional managers rather than general managers, a phenomenon we term "functional centralization." Using panel data on senior management positions, we show that changes in the structure of the executive team are tightly linked to changes in firm diversification and IT investments. These relationships depend crucially on the function involved: those closer to the product ("product" functions, e.g. marketing / R&D) behave differently from functions further from the product ("administrative" functions, e.g. finance / law / HR). We argue that this distinction is driven by differences in the information-processing activities associated with each function, and apply this insight to refine and extend existing theories of centralization. We also discuss the implications of our results for organizational forms beyond the executive team.

  Keywords: communication; organizational design; functions; centralization; M-form; hierarchy; top management team; C-Suite; information technology; activities; diversification; Business Headquarters; Change Management; Investment; Jobs and Positions; Wages; Management Style; Management Teams; Product; Organizational Structure; Diversification; Information Technology; United States;

  Citation:

  Guadalupe, Maria, Hongyi Li, and Julie Wulf. "Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management." Harvard Business School Working Paper, No. 12–059, January 2012. (Revised June 2012, March 2013.)

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