More from the Author

• Working Paper | HBS Working Paper Series | 2013

  Monitoring and the Portability of Soft Information

  Dennis Campbell and Maria Loumioti

  We study the portability of soft information in a decentralized financial institution. Theories from a variety of literatures suggest that difficulties in capturing, storing, and communicating soft information can inhibit its portability over time and across individuals within the organization. Using unique data on lending decisions made by employees in a highly decentralized financial services organization, we show that a monitoring system which captures soft information for vertical communication (to superiors) purposes also facilitates the horizontal communication of soft information (across employees) for decision-making purposes. Contrary to prevailing views on the limited portability of soft information, our results provide evidence that the "stock" of soft information accumulated in this system has persistent effects on the lending decisions of employees. We show that employees rely on this information to increase access to credit for borrowers, provide more favorable pricing terms, and reduce the ex post risk of their lending decisions. These effects remain even when this information was acquired by employees other than the decision-maker, and they are not diminished by the physical separation of employees working in different business units.

  Citation:

  Campbell, Dennis, and Maria Loumioti. "Monitoring and the Portability of Soft Information." Harvard Business School Working Paper, No. 13–077, March 2013.

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• Case | HBS Case Collection | 2012 (Revised from original 2008 version)

  Affinity Plus (A)

  Dennis Campbell and Peter Tufano

  The executive team at Affinity Plus Federal Credit Union has pushed the concept of members first deeply throughout the organization, empowering employees to put member-owners' interests ahead of either the organization's interests or their own interests. As a result of this focus, the credit union must determine what to do with its profitable indirect auto lending business, which some see as inconsistent with the strategic direction set by the management team.

  Keywords: Customer Relationship Management; Financial Institutions; Financing and Loans; Profit; Cooperative Ownership; Conflict of Interests; Strategy;

  Citation:

  Campbell, Dennis, and Peter Tufano. "Affinity Plus (A)." Harvard Business School Case 209-026, October 2012. (Revised from original July 2008 version.)

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• Article | Journal of Accounting Research | September, 2012

  Employee Selection as a Control System

  Dennis Campbell

  Theories from the economics, management control, and organizational behavior literatures predict that when it is difficult to align incentives by contracting on output, aligning preferences via employee selection may provide a useful alternative. This study investigates this idea empirically using personnel and lending data from a financial services organization that implemented a highly decentralized business model. I exploit variation in this organization in whether or not employees are selected via channels that are likely to sort on the alignment of their preferences with organizational objectives. I find that employees selected through such channels are more likely to use decision-making authority in the granting and structuring of consumer loans than those who are not. Conditional on using decision-making authority, their decisions are also less risky ex post. These findings demonstrate employee selection as an important, but understudied, element of organizational control systems.

  Keywords: Management Systems; Governance Controls; Employees; Selection and Staffing; Motivation and Incentives; Decision Making; Business Model;

  Citation:

  Campbell, Dennis. "Employee Selection as a Control System." Journal of Accounting Research 50, no. 4 (September, 2012): 931–966.

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