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  • July 2020
  • Article
  • Accounting Review

Who Should Select New Employees, Headquarters or the Unit Manager? Consequences of Centralizing Hiring at a Retail Chain

By: Carolyn Deller and Tatiana Sandino
  • Format:Print
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Abstract

We examine how changing the allocation of hiring decision rights in a multiunit organization affects employee-firm match quality, contingent on a unit’s circumstances. Our research site, a U.S. retail chain, switched from a decentralized hiring model (hiring by business unit managers—in our case, store managers) to centralized hiring (in this study, by the head office). While centralized hiring can ensure that enough resources are invested in hiring people aligned with company values, it can also neglect the unit managers’ local knowledge. Using difference-in-differences analyses, we find that the switch is associated with relatively higher employee departure rates and thus poorer matches if the business unit manager has a local advantage; that is, if the store serves repeat customers, serves a demographically atypical market, or poses higher information-gathering costs for headquarters. In these cases, the unit manager may be more informed than headquarters about which candidates best match local conditions.

Keywords

Control; Selection; Decentralization; Company Values; Retail Chains; Employees; Selection and Staffing; Local Range; Business Headquarters; Decision Making

Citation

Deller, Carolyn, and Tatiana Sandino. "Who Should Select New Employees, Headquarters or the Unit Manager? Consequences of Centralizing Hiring at a Retail Chain." Accounting Review 95, no. 4 (July 2020): 173–198.
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About The Author

Tatiana Sandino

Accounting and Management
→More Publications

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  • Buurtzorg By: Ethan Bernstein, Tatiana Sandino, Joost Minnaar and Annelena Lobb
  • From Online Content to Offline Results: Effects of a Best Practices Initiative on an Enterprise Social Network By: Shelley Xin Li and Tatiana Sandino
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