Susanna Gallani - Faculty & Research - Harvard Business School

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Susanna Gallani

Assistant Professor of Business Administration

Accounting and Management
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Susanna Gallani is an assistant professor of business administration in the Accounting and Management unit. She teaches Financial Reporting and Control in the MBA required curriculum, and in focused executive education programs.

In her research, Professor Gallani focuses on issues related to the design and effectiveness of monetary and non-monetary incentives. While these issues are relevant for a broad set of industries, she is currently exploring the particular challenges and opportunities associated with designing incentive systems in healthcare organizations. In recent work she has studied the effectiveness of feedback, recognition, and relative performance information on team performance in hospitals, as well as the implications of subjectivity in performance assessments within forced-ranking performance evaluation systems. In her current work, she is exploring how public and commercial payers can contribute to fostering a culture of value-based healthcare by setting appropriate incentives for healthcare providers through innovative reimbursement programs. Her broader research interests also include studies of the role of external influencers, such as proxy advisory firms, compensation consultants, and institutional investors, on the design of executive compensation contracts in public firms based in the United States.

Professor Gallani holds a Ph.D. in accounting from Michigan State University, and a Master in Business Administration from Central Michigan University. Her undergraduate degree in Business Economics is from the University of Trieste, Italy. Before pursuing her doctorate, Professor Gallani was a senior manager at Honeywell, where she was involved in business transformation initiatives.



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Journal Articles

  1. Article | NEJM Catalyst Innovations in Care Delivery | Forthcoming

    How to Protect Vulnerable Older Patients during the Pandemic: Lessons from Innovative Primary Care Organizations That Serve These High-Risk Patients

    Umar Ikram, Susanna Gallani, Jose F. Figueroa and Thomas W. Feeley

    Older people (70 years and older) with multiple chronic conditions have the highest risk of being hospitalized and dying from COVID-19. The recent COVID-19 pandemic has highlighted how a strong primary care system can play an important role in protecting this group of people. How innovative primary care organizations adapted their approach to the pandemic may offer important lessons not only for future health crises, but also for redesigning post-pandemic healthcare delivery. We studied Iora Health, Oak Street Health, ChenMed and Landmark Health, which specialize in vulnerable older patients. From analysing their responses to the COVID- 19 crisis, we identify three key lessons for healthcare systems: 1) The importance of fostering trusted relationships with vulnerable older patients to timely identify and address their clinical and non-clinical needs; 2) a rapid implementation of a comprehensive virtual care approach to facilitate frequent touchpoints between the patient and care team; and 3) delivery of home-based healthcare services to ensure access during the pandemic.

    Citation:

    Ikram, Umar, Susanna Gallani, Jose F. Figueroa, and Thomas W. Feeley. "How to Protect Vulnerable Older Patients during the Pandemic: Lessons from Innovative Primary Care Organizations That Serve These High-Risk Patients." NEJM Catalyst Innovations in Care Delivery (forthcoming).  View Details
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  2. Article | International Journal of Health Economics and Management | Forthcoming

    Value of New Performance Information in Healthcare: Evidence from Japan

    Susanna Gallani, Takehisa Kajiwara and Ranjani Krishnan

    Mandatory measurement and disclosure of outcome measures are commonly used policy tools in healthcare. The effectiveness of such disclosures relies on the extent to which the new information produced by the mandatory system is internalized by the healthcare organization and influences its operations and decision-making processes. We use panel data from the Japanese National Hospital Organization to analyze performance improvements following regulation mandating standardized measurement and peer disclosure of patient satisfaction performance. Drawing on value of information theory, we document the absolute value and the benchmarking value of new information for future performance. Controlling for ceiling effects in the opportunities for improvement, we find that the new patient satisfaction measurement system introduced positive, significant, and persistent mean shifts in performance (absolute value of information) with larger improvements for poorly performing hospitals (benchmarking value of information). Our setting allows us to explore these effects in the absence of confounding factors such as incentive compensation or demand pressures. The largest positive effects occur in the initial period, and improvements diminish over time, especially for hospitals with poorer baseline performance. Our study provides empirical evidence that disclosure of patient satisfaction performance information has value to hospital decision makers.

    Keywords: value of information; feedback; patient satisfaction; healthcare; Health Care and Treatment; Satisfaction; Information; Measurement and Metrics; Performance Improvement;

    Citation:

    Gallani, Susanna, Takehisa Kajiwara, and Ranjani Krishnan. "Value of New Performance Information in Healthcare: Evidence from Japan." International Journal of Health Economics and Management (forthcoming).  View Details
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  3. Article | Management Science

    Budgeting, Psychological Contracts, and Budgetary Misreporting

    Susanna Gallani, Ranjani Krishnan, Eric J. Marinich and Michael D. Shields

    This study examines the effect of psychological contract breach on budgetary misreporting. Psychological contracts are mental models or schemas that govern how employees understand their exchange relationships with their employers. Psychological contract breach leads to feelings of violation and can occur even when employees’ economic contracts are fulfilled. We study the effects of psychological contract breach on three common types of employee participation in budgeting that differ in the degree of employees’ influence over their approved budgets. These include affirmative budgeting (full influence), consultative budgeting (moderate influence), and authoritative budgeting (low influence). When organizations communicate that employees will be involved in budgeting, employees develop psychological contracts of affirmative budgeting. If employees subsequently experience authoritative or consultative budgeting, their psychological contracts are breached. Employees who experience psychological contract breach seek redress through budgetary misreporting. Experimental results indicate that psychological contract breach partially mediates the relation between budgeting type and budgetary misreporting. Results also indicate asymmetry in the effects of psychological contract breach versus repair. Effects of breach on budgetary misreporting persist even after the breach no longer occurs.

    Keywords: Budgeting; psychological contracts; misreporting; Budgets and Budgeting; Employees; Trust;

    Citation:

    Gallani, Susanna, Ranjani Krishnan, Eric J. Marinich, and Michael D. Shields. "Budgeting, Psychological Contracts, and Budgetary Misreporting." Management Science 65, no. 6 (June 2019): 2924–2945.  View Details
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Working Papers

  1. Working Paper | HBS Working Paper Series | 2020

    Nominal and Opportunity Effects of Managerial Discretion

    Wei Cai, Susanna Gallani and Jee Eun Shin

    We examine the performance consequences of managerial discretion when compensation payoffs are interdependent; that is, when rewards or penalties given to some employees cause others not to get them. Using proprietary data from a company that gives monthly rewards and penalties based on a combination of objective metrics and subjective performance assessments, we document both a nominal and an opportunity effect of managerial discretion. The former refers to performance consequences associated with workers who receive rewards or penalties due to managerial discretion (actual recipients). The latter refers to performance consequences associated with workers who would have received rewards or penalties had there been no managerial discretion (would-be recipients). Our study is, to our knowledge, the first to provide empirical evidence of performance consequences associated with the opportunity effect of managerial discretion. In additional tests, we explore theory-consistent explanations of our results. Our findings contribute to the literature on subjectivity in performance evaluations and have important practical implications for the design of incentive systems.

    Keywords: compensation interdependence; nominal and opportunity effects; Managerial Discretion; performance measurement; Employees; Compensation and Benefits; Management; Decisions; Performance; Measurement and Metrics;

    Citation:

    Cai, Wei, Susanna Gallani, and Jee Eun Shin. "Nominal and Opportunity Effects of Managerial Discretion." Harvard Business School Working Paper, No. 20-075, January 2020.  View Details
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  2. Working Paper | HBS Working Paper Series | 2019

    The Effect of Systems of Management Controls on Misreporting

    Aishwarrya Deore, Susanna Gallani and Ranjani Krishnan

    Organizations use systems of controls to encourage goal congruent employee behavior. Some control instruments within the system (e.g., cultural controls) guide employees and align their behavioral choices with organizational values, while other instruments (e.g., budgetary controls) facilitate resource allocation in the presence of asymmetric information. We explore how a system of controls comprising of cultural controls (i.e., mission statements) and budgetary controls influence budgetary misreporting. Experimental results indicate that a mission statement that emphasizes integrity results in lower misreporting when combined with budgetary controls that assume self-interested managers relative to its combination with budgetary controls that assume honest managers. Mission statements that emphasize financial performance do not reduce misreporting when combined with either type of budgetary controls. Organizational stewardship partially mediates the effect of systems of controls on misreporting. Our study contributes to the literature on systems of controls by providing evidence that certain combinations of control instruments are more effective than others in achieving important organizational objectives such as reducing budgetary misreporting.

    Keywords: directing controls; misreporting; mission statements; participative budgeting; stewardship theory; systems of management controls; Management Systems; Governance Controls; Mission and Purpose; Financial Reporting;

    Citation:

    Deore, Aishwarrya, Susanna Gallani, and Ranjani Krishnan. "The Effect of Systems of Management Controls on Misreporting." Harvard Business School Working Paper, No. 20-053, October 2019.  View Details
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  3. Working Paper | HBS Working Paper Series | 2020

    Are ISS Recommendations Informative? Evidence from Assessments of Compensation Practices

    Ana Albuquerque, Mary Ellen Carter and Susanna Gallani

    Using detailed information from the largest proxy advisor in the U.S., Institutional Shareholder Services (ISS), we examine whether proxy advisors’ assessments of firms’ compensation practices are able to identify poor compensation practices as measured by subsequent performance. While prior research provides consistent evidence of an association between shareholder voting outcomes and proxy advisors’ Say-on-Pay recommendations, the evidence is mixed over whether their recommendations are informative about the quality of firms’ compensation practices. We find that ISS “Against” recommendations and negative assessments are associated with worse future accounting performance, consistent with ISS being able to detect low quality compensation packages. However, workload compression has an effect, as we find that the relation between assessments and future performance only occurs during the off season (i.e. for firms with non- December fiscal year ends).

    Keywords: Proxy Advisors; CEO compensation; Say-on-Pay; Institutional Shareholder voting; Executive Compensation; Performance;

    Citation:

    Albuquerque, Ana, Mary Ellen Carter, and Susanna Gallani. "Are ISS Recommendations Informative? Evidence from Assessments of Compensation Practices." Harvard Business School Working Paper, No. 19-085, February 2019. (Revised March 2020.)  View Details
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  4. Working Paper | HBS Working Paper Series | 2018

    Incentives and Employee-Initiated Innovation: Evidence from the Field

    Wei Cai, Susanna Gallani and Jee-Eun Shin

    Organizations often struggle with motivating employees to develop innovative ideas that may benefit the firm, especially when the standard tasks for which employees are measured and incentivized do not explicitly include innovation. Prior analytical research posits that low-powered incentives can motivate employees to generate creative ideas by diverting their attention away from fixating on performance measures associated with their standard tasks included in the incentive contract. Using data from a company that underwent an exogenous change in its employee incentive contract design towards low-powered incentives, we examine whether the design of incentive contracts for the standard tasks influences employee-initiated innovation activities. We find that employees under fixed-pay contracts are more likely to pursue innovation ideas that are valuable to the firm relative to employees under variable-pay contracts. Moreover, such efforts are concentrated on innovation ideas that are not specific to the standard task performed by the proposing employee but are applicable to issues of greater breadth for the firm and/or with a long-term view. Our findings contribute to the literature on incentives for innovation by showing how contract structure can motivate unplanned employee-initiated innovation activities that are difficult to contract upon ex ante.

    Keywords: employee driven innovation; innovation appropriability; Contract Design; creativity; low-powered incentives; Employees; Innovation and Invention; Motivation and Incentives; Creativity;

    Citation:

    Cai, Wei, Susanna Gallani, and Jee-Eun Shin. "Incentives and Employee-Initiated Innovation: Evidence from the Field." Harvard Business School Working Paper, No. 19-015, August 2018.  View Details
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  5. Working Paper | HBS Working Paper Series | 2019

    Compensation Interdependence and Performance Consequences of Managerial Discretion

    Wei Cai, Susanna Gallani and Jee-Eun Shin

    We examine the performance consequences of managerial discretion when compensation payoffs are interdependent; that is, when rewards or penalties given to some employees cause others not to get them. Using proprietary data from a company that gives monthly rewards and penalties, we find evidence of both a nominal and an opportunity effect when managerial discretion overrides objective performance measures. The former refers to performance consequences associated with workers who received rewards or penalties due to managerial discretion (actual recipients). The latter refers to performance consequences associated with workers who would have received rewards or penalties had there been no managerial discretion (would-be recipients). In further tests, we show that these performance effects likely stem from a combination of economics-based and psychology-based reasons. Our findings provide important insights for the design of incentive systems involving managerial discretion.

    Keywords: Informativeness; Managerial Discretion; Performance Effects; motivation; reciprocity; Rewards and Penalties; Performance Evaluation; Motivation and Incentives;

    Citation:

    Cai, Wei, Susanna Gallani, and Jee-Eun Shin. "Compensation Interdependence and Performance Consequences of Managerial Discretion." Harvard Business School Working Paper, No. 18-070, January 2018. (Revised October 2019.)  View Details
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  6. Working Paper | HBS Working Paper Series | 2019

    In Search of Organizational Alignment Using a 360-Degree Assessment System: A Field Experiment in a Retail Chain

    Carolyn Deller, Susanna Gallani and Tatiana Sandino

    We analyze the effects of a field experiment introducing a values-based 360-degree assessment system at an Indian retailer. The director intended to encourage store managers, rewarded based on high-powered incentives linked to financial results, to behave according to the organization’s long term values and goals. Surprisingly, we find that the intervention drove even higher effort on performance associated with pre-existing monetary incentives but, on average, did not affect nonfinancial performance dimensions linked to long-term goals. We integrate our statistical results with qualitative information from interviews, which highlighted the importance of reinforcing the organizational goals’ message and providing support for their attainment. We also show more favorable effects for stores with tenured managers and higher availability of inventory (a proxy for support). Our findings highlight important factors for successful implementations of 360-degree systems as complements to explicit incentives. Finally, we share some lessons learned with respect to performing field experiments.

    Keywords: 360-degree assessments; corporate values; organizational identity; implicit incentives; multitasking; goal clarity; field experiment; Performance Evaluation; Values and Beliefs; Organizational Culture; Goals and Objectives;

    Citation:

    Deller, Carolyn, Susanna Gallani, and Tatiana Sandino. "In Search of Organizational Alignment Using a 360-Degree Assessment System: A Field Experiment in a Retail Chain." Harvard Business School Working Paper, No. 18-069, January 2018. (Revised March 2019.)  View Details
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  7. Working Paper | HBS Working Paper Series | 2017

    Incentives, Peer Pressure, and Behavior Persistence

    Susanna Gallani

    Organizations often introduce temporary incentive programs with a view of establishing long lasting behaviors. Monetary payoffs are awarded upon achievement of team goals, which measure the success of the initiative. In this study I explore whether and how organizational behavior modifications introduced via temporary incentive programs persist beyond the incentive period. In many cases, achieving team goals requires the cooperation of members of the organization external to the team and not eligible to receive the monetary award. In this study I compare the persistence of behavior modifications between subjects rewarded with a monetary award with subjects that are exposed uniquely to peer pressure. Using hand hygiene performance data from a California hospital, I find that monetary incentives are associated with higher likelihood and greater magnitude of performance improvements during the incentive period, but are relatively short lived, while implicit incentives facilitate a longer persistence of the organizational behavior modification.

    Keywords: organizational behavior modification; peer monitoring; persistence of performance improvements; crowding out; implicit incentives; compensation; healthcare; Motivation and Incentives; Compensation and Benefits; Performance Improvement; Organizational Change and Adaptation; Health Care and Treatment; Health Industry; California;

    Citation:

    Gallani, Susanna. "Incentives, Peer Pressure, and Behavior Persistence." Harvard Business School Working Paper, No. 17-070, January 2017.  View Details
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  8. Working Paper | HBS Working Paper Series | 2016

    Through the Grapevine: Network Effects on the Design of Executive Compensation Contracts

    Susanna Gallani

    Effective design of executive compensation contracts involves choosing and weighting performance measures, as well as defining the mix between fixed and incentive-based pay components, with a view to fostering talent retention and goal congruence. The variability in compensation design observed in practice is significantly lower than it would be predicted by contracting theory. This is likely due to indirect constraining pressures, which cannot be completely explained by industry affiliation or peer group membership. I posit that network connections involving corporate boards operate as a conduit for these pressures. Using information disclosed in proxy statements of publicly traded companies, and a vectorial approach to measure compensation similarity, I predict and find that firms that are connected by board interlocks, hiring the same compensation consulting firm, or sharing a blockholder, exhibit a higher degree of similarity in the design of executive compensation contracts than what would be predicted by similarities in organizational characteristics. The relative prominence of the connectors within the respective networks moderates the network effects on the degree of compensation similarity. Finally, I show that the market responds positively to compensation similarity, although it is associated with excess CEO compensation.

    Keywords: compensation design; board interlocks; Compensation Consultants; network centrality; homophily; Quadratic Assignment Procedure; Blockholders; Executive Compensation;

    Citation:

    Gallani, Susanna. "Through the Grapevine: Network Effects on the Design of Executive Compensation Contracts." Harvard Business School Working Paper, No. 16-019, August 2015. (Revised December, 2016.)  View Details
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  9. Working Paper | HBS Working Paper Series | 2017

    Does Mandatory Measurement and Peer Reporting Improve Performance?

    Susanna Gallani, Takehisa Kajiwara and Ranjani Krishnan

    We examine the effect of mandated measurement and peer disclosure of new information on the persistence of performance improvements in a setting without performance incentives. Value of information (VOI) theory posits that information can improve the accuracy of posterior beliefs and thereby have a decision facilitating effect. These effects are more pronounced when the information is new versus an update. Using data from the Japanese National Hospital Organization, we analyze performance trends following regulation requiring standardized measurement and peer disclosure of absolute and relative patient satisfaction performance. After controlling for ceiling effects and regression to the mean, mandatory patient satisfaction measurement and peer disclosure introduce positive and significant mean shifts in performance with larger improvements for poorly performing hospitals. The largest positive effects occur when the information is new. Our study provides empirical evidence of the decision facilitating value of information without confound from its decision influencing value.

    Keywords: value of information; patient satisfaction; mandatory performance measurement; health care; Information; Health Care and Treatment; Performance Evaluation; Health Industry;

    Citation:

    Gallani, Susanna, Takehisa Kajiwara, and Ranjani Krishnan. "Does Mandatory Measurement and Peer Reporting Improve Performance?" Harvard Business School Working Paper, No. 16-018, August 2015. (Revised March 2017.)  View Details
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  10. Working Paper | HBS Working Paper Series | 2016

    Applying the Fractional Response Model to Survey Research in Accounting

    Susanna Gallani and Ranjani Krishnan

    Survey research studies make extensive use of rating scales to measure constructs of interest. The bounded nature of such scales presents econometric estimation challenges. Linear estimation methods (e.g. OLS) often produce predicted values that lie outside the rating scales, and fail to account for nonconstant effects of the predictors. Established nonlinear approaches such as logit and probit transformations attenuate many shortcomings of linear methods. However, these nonlinear approaches are challenged by corner solutions, for which they require ad hoc transformations. Censored and truncated regressions alter the composition of the sample, while Tobit methods rely on distributional assumptions that are frequently not reflected in survey data, especially when observations fall at one extreme of the scale owing to surveyor and respondent characteristics. The fractional response model (FRM) (Papke and Wooldridge 1996, 2008) overcomes many limitations of established linear and non-linear econometric solutions in the study of bounded data. In this study, we first review the econometric characteristics of the FRM and discuss its applicability to survey-based studies in accounting. Second, we present results from Monte Carlo simulations to highlight the advantages of using the FRM relative to conventional models. Finally, we use data from a hospital patient satisfaction survey, compare the estimation results from a traditional OLS method and the FRM, and conclude that the FRM provides an improved methodological approach to the study of bounded dependent variables.

    Keywords: Fractional response model; bounded variables; simulation; compensation mix; Mathematical Methods; Accounting;

    Citation:

    Gallani, Susanna, and Ranjani Krishnan. "Applying the Fractional Response Model to Survey Research in Accounting." Harvard Business School Working Paper, No. 16-016, August 2015. (Revised January 2017.)  View Details
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Cases and Teaching Materials

  13. Supplement | HBS Case Collection | September 2019

    Cooking Down a Storm: Changing Culture at Pasta Serafina (B)

    Susanna Gallani, Francesca Gino and Raffaella Sadun

    The case complements Pasta Serafina (A) by describing the aftermath of a town hall meeting in which management had publicly denounced the absenteeism problem and challenged the employees to find a solution. In spite of the initial mistrust against management, the fear of an imminent plant closure coupled with the relief associated with finally being able to be heard by management, pushes the employees to act to contain the problem themselves. Within a short time, absenteeism hits record lows. Management, however, is left wondering about the sustainability of the new culture.

    Keywords: absenteeism; Employees; Behavior; Organizational Culture; Organizational Change and Adaptation;

    Citation:

    Gallani, Susanna, Francesca Gino, and Raffaella Sadun. "Cooking Down a Storm: Changing Culture at Pasta Serafina (B)." Harvard Business School Supplement 120-014, September 2019.  View Details
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  14. Case | HBS Case Collection | September 2019

    Cooking Down a Storm: Changing Culture at Pasta Serafina (A)

    Susanna Gallani, Francesca Gino and Raffaella Sadun

    Plant management at Pasta Serafina, a pasta producer in the south of Italy, is struggling to contain employee absenteeism. While the misbehavior is concentrated in a minority of the workers, its effects impact not only the plant’s performance, but also the climate and work environment. Embedded in an institutional and legal environment that allows very little room for corrective action, and already dealing with persistent low margins, management decides to address the issue by asking the employees themselves to find a solution to the problem. The case exposes students to managerial challenges associated with curbing moral hazard and changing the company culture in a setting where standard legal and contractual tools, such as firing workers for performance or using incentives to influence behaviors, are not available.

    Keywords: absenteeism; moral hazard; Employees; Behavior; Problems and Challenges; Organizational Culture; Organizational Change and Adaptation;

    Citation:

    Gallani, Susanna, Francesca Gino, and Raffaella Sadun. "Cooking Down a Storm: Changing Culture at Pasta Serafina (A)." Harvard Business School Case 120-013, September 2019.  View Details
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  17. Case | HBS Case Collection | August 2019

    Bark Gift Shop Ltd.

    Susanna Gallani, Jan Bouwens and Peter Kroos

    This case describes a setting in which the CFO of Bark Gift Shop Ltd., a gift items retailer, discovers an undesired pattern in the performance data suggesting that her shop managers that perform well during the first part of the year, purposely reduce their effort in the later part of the year. This pattern drives the CFO to reflect on the process by which she sets annual targets for shop managers and how those targets relate to various aspects of their compensation contract. Challenging targets, however, appear to be motivating for a sizeable amount of shop managers. In fact, many shop managers that repeatedly fail to meet the target appear not to be giving up and keep trying to achieve their challenging targets. Therefore, the CFO needs to strike the right balance between providing motivating targets and curbing the undesired behaviors that she just discovered. The case lends itself to a rich discussion of common performance management issues, such as target setting, performance metrics selection, and performance-based compensation design. In particular, the case exposes the students to the issue of target ratcheting. As the case includes a dataset, it provides ample opportunities for students to practice their analytical skills (producing and discussing descriptive statistics, regressions and interactions).

    Keywords: Data Analytics; Employees; Behavior; Performance; Management; Goals and Objectives; Motivation and Incentives; Analysis;

    Citation:

    Gallani, Susanna, Jan Bouwens, and Peter Kroos. "Bark Gift Shop Ltd." Harvard Business School Case 120-008, August 2019.  View Details
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  20. Case | HBS Case Collection | July 2019

    Christmas Inc. (A)

    Susanna Gallani, Gregory Sabin, Lexor Adams and Nicholas Haberling

    Santa Claus is facing increasing pressures to contain costs. The economic model that has worked for centuries is starting to show some cracks, to the point that he is considering outsourcing part of its toy production. Evaluating the bids his team collected from potential subcontractors, he realizes that it is not at all clear how much producing toys in house costs them. He then instructs his team to perform an analysis using different costing approaches, so that he could then make an informed decision about the future production process at Christmas, Inc. This case exposes students to alternative costing methods and stimulates a discussion of their appropriateness to different situations. Additionally, although the case is set in a fictional world, it proposes a setting where students can learn about make-or-buy decisions and practice the analytical tools that are required to support such a strategic decision.

    Keywords: Costing; Production; Cost; Analysis; Decision Making; Strategy;

    Citation:

    Gallani, Susanna, Gregory Sabin, Lexor Adams, and Nicholas Haberling. "Christmas Inc. (A)." Harvard Business School Case 120-009, July 2019.  View Details
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  21. Case | HBS Case Collection | June 2019 (Revised July 2019)

    Building a Meritocracy at Alghanim Industries

    Paul M. Healy, Susanna Gallani and Esel Çekin

    Building on his father’s legacy, Omar Alghanim (MBA 2002) had been working on strengthening a performance-driven culture based on meritocracy in the family business, Alghanim Industries. The task had been particularly challenging because of traditional Middle East practice of relying on relationships and influence to conduct business. Omar’s vision attracted and empowered like-minded employees who were rewarded on merit and who delivered on the firm’s mission of providing excellent service to its customers. Together, they revamped the company’s performance and compensation system and established a well-structured control and compliance mechanism. The next challenge for Omar was to transform the workforce from a mono-culture, male-dominant expat community to a diverse mix of people, cultures, backgrounds, and viewpoints. In particular, he needed to find a way to attract talented women and local Kuwaitis to become part of his organization.

    Keywords: meritocracy; Social Norms; Family Business; Organizational Culture; Performance; Diversity; Organizational Change and Adaptation; Middle East; Kuwait;

    Citation:

    Healy, Paul M., Susanna Gallani, and Esel Çekin. "Building a Meritocracy at Alghanim Industries." Harvard Business School Case 119-019, June 2019. (Revised July 2019.)  View Details
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  22. Technical Note | HBS Case Collection | January 2019 (Revised June 2019)

    U.S. Commercial Health Insurance Industry

    Susanna Gallani, Mary Witkowski and Harry B. Wolberg

    This note describes the role of commercial payers in the U.S. healthcare industry. We begin with a review of the historical evolution of commercial payers and their role in the market, from the beginning to the Affordable Care Act and beyond. Every wave of reforms in the healthcare industry has impacted commercial payers and forced them to adapt and evolve. The note then provides a quick overview of the main service lines where commercial payers have traditionally operated. An overview of the main players in 2017–2018 follows and describes the main strategic frameworks applied by these organizations. The note concludes with a detailed section on the new trends and challenges that threat the very existence of commercial payers in the future and provides insights into potential future strategic choices that will likely affect once again how commercial payers adapt and operate in the future.

    Keywords: Health Care and Treatment; Insurance; Governing Rules, Regulations, and Reforms; Organizational Change and Adaptation; Health Industry; Insurance Industry; United States;

    Citation:

    Gallani, Susanna, Mary Witkowski, and Harry B. Wolberg. "U.S. Commercial Health Insurance Industry." Harvard Business School Technical Note 119-064, January 2019. (Revised June 2019.)  View Details
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  23. Case | HBS Case Collection | August 2018

    Tapping Growth at Lord Hobo Brewing Company

    Ethan Rouen and Susanna Gallani

    Lord Hobo Brewing Company accounts for its inventory process as it prepares to create its first set of professional financial statements for investors.

    Keywords: Inventory; start-ups; craft brewing; Investing; GAAP; brand management; Accounting; Working Capital; Entrepreneurship; Private Equity; Business Startups; Business and Shareholder Relations; Food and Beverage Industry; Boston; New England; United States;

    Citation:

    Rouen, Ethan, and Susanna Gallani. "Tapping Growth at Lord Hobo Brewing Company." Harvard Business School Case 119-028, August 2018.  View Details
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  25. Case | HBS Case Collection | July 2018 (Revised November 2018)

    The Robin Hood Army

    Susanna Gallani

    In 2014, Neel Ghose and a handful of friends spent one evening distributing excess food they had collected from local restaurants to the less fortunate people living under the Hauz Khas flyover in South Delhi. Four years later, this initiative had developed into The Robin Hood Army, an organization entirely based on volunteer work that used food redistribution as a medium to bring out the best in humanity. By the end of 2019, the Robin Hood Army was present in twelve countries, was serving over 500,000 meals per month, and had helped more than 750 children enroll in public schools. All of it without raising a single rupee, in line with their “golden rule” of being a zero-funds organization. This case explores the challenges and opportunities associated with fast growth and international expansion of a start-up organization that operates with no monetary assets. The discussion of this case offers the opportunity to explore factors related to attraction, retention, and motivation of talent in organizations.

    Keywords: volunteer-based organization; food redistribution; Nonprofit Organizations; Food; Human Needs; Expansion; Global Range; Growth and Development;

    Citation:

    Gallani, Susanna. "The Robin Hood Army." Harvard Business School Case 119-007, July 2018. (Revised November 2018.)  View Details
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  26. Case | HBS Case Collection | June 2017

    Sales Misconduct at Wells Fargo Community Bank

    Suraj Srinivasan, Dennis W. Campbell, Susanna Gallani and Amram Migdal

    Set in early 2017, this case examines widespread sales misconduct at Wells Fargo Community Bank. Wells Fargo's governance and controls are described in the lead up to the September 2016 announcement that Wells Fargo had settled with regulators for $185 million in relation to the years-long period of misconduct in sales. Subsequent investigations, terminations, compensation clawbacks, and other consequences are described.

    Keywords: Corporate Governance; Governance Controls; Governing Rules, Regulations, and Reforms; Governing and Advisory Boards; Executive Compensation; Lawsuits and Litigation; Crisis Management; Mission and Purpose; Organizational Design; Business and Community Relations; Business and Government Relations; Crime and Corruption; Business Organization; Business Model; Ethics; Corporate Accountability; Governance Compliance; Policy; Compensation and Benefits; Resignation and Termination; Laws and Statutes; Legal Liability; Business or Company Management; Risk Management; Business Processes; Organizational Culture; Organizational Structure; Failure; Agency Theory; Business and Shareholder Relations; Business and Stakeholder Relations; Risk and Uncertainty; Salesforce Management; Public Opinion; Banking Industry; North and Central America;

    Citation:

    Srinivasan, Suraj, Dennis W. Campbell, Susanna Gallani, and Amram Migdal. "Sales Misconduct at Wells Fargo Community Bank." Harvard Business School Case 118-009, June 2017.  View Details
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  28. Supplement | HBS Case Collection | May 2017

    Buffer.com (B)

    Susanna Gallani, Tiffany Y. Chang, Brian J. Hall and Jee Eun Shin

    Buffer decided to release its salaries and compensation calculation formula to the public, and the public reaction was greater and more positive than they would have imagined. The company experienced both an increase in volume and a change in the kinds of inbound applications they received. As the company continued to grow, Buffer's senior leaders continued to revise the compensation formula based on feedback both internally and from the public. Particularly, they hoped to strengthen the link between pay and performance, which in the current version of the formula was incorporated using a loosely defined "experience level" component. However, defining clear performance metrics and experience levels was not an easy task.

    Keywords: compensation; compensation design; company values; culture; transparency; attraction; selection; performance measurement; performance measures; performance metrics; startup management; Compensation and Benefits; Organizational Culture; Values and Beliefs; Performance Evaluation; Measurement and Metrics;

    Citation:

    Gallani, Susanna, Tiffany Y. Chang, Brian J. Hall, and Jee Eun Shin. "Buffer.com (B)." Harvard Business School Supplement 917-020, May 2017.  View Details
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  29. Case | HBS Case Collection | May 2017

    Buffer.com

    Susanna Gallani, Tiffany Y. Chang, Brian J. Hall and Jee Eun Shin

    Social media company Buffer wanted to establish clear company values early in its growth. One of these values was a commitment to transparency in its company practices. Buffer openly shared its business strategies and fundraising decks, among lots of other information. Even when they were hacked, the company live-blogged updates to keep their users informed as the situation unfolded. Having internally released each employee's salary and equity details with no pushback, the company now contemplated sharing compensation information transparently with the general public.

    Keywords: compensation; compensation design; company values; culture; transparency; Compensation and Benefits; Organizational Culture; Values and Beliefs;

    Citation:

    Gallani, Susanna, Tiffany Y. Chang, Brian J. Hall, and Jee Eun Shin. "Buffer.com." Harvard Business School Case 917-019, May 2017.  View Details
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  30. Background Note | HBS Case Collection | October 2016 (Revised October 2018)

    Cost Variance Analysis

    Robert S. Kaplan and Susanna Gallani

    This note was written to provide students with fundamental concepts and methods for the analysis of cost variances. It focuses on the decomposition of cost variances into price, quantity, and mix variance components, an approach that allows students to identify the root causes of differences between expected and actual costs.

    Keywords: Cost Accounting;

    Citation:

    Kaplan, Robert S., and Susanna Gallani. "Cost Variance Analysis." Harvard Business School Background Note 117-006, October 2016. (Revised October 2018.)  View Details
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  31. Case | HBS Case Collection | September 2016 (Revised October 2018)

    Springfield Hospital

    Susanna Gallani and Robert Kaplan

    One of the key roles of costing systems is to support the evaluation of performance and facilitate appropriate resource allocations. Through participation in a comparative cost study, management at Springfield Hospital, known for its heavy focus on operational excellence, become aware of opportunities for further improvement. Analysis of the differences in costs, uses, and allocations of resources will inform management in the decision and implementation of strategic plans. This case stimulates reflections on the importance of costing systems, in particular Time-Driven Activity Based Costing, and variance analysis as decision support mechanisms.

    Keywords: Time-Driven Activity-Based Costing; Variance Analysis; Activity Based Costing and Management; Health Care and Treatment; Health Industry;

    Citation:

    Gallani, Susanna, and Robert Kaplan. "Springfield Hospital." Harvard Business School Case 117-025, September 2016. (Revised October 2018.)  View Details
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  32. Teaching Note | HBS Case Collection | August 2016 (Revised June 2018)

    VMD Medical Imaging Center

    Susanna Gallani and Eva Labro

    VMD Medical Imaging Center addresses a number of issues related to the role of costing systems in organizations and the challenges impacting their design and maintenance as the organization grows and develops over time. This teaching note begins by offering detailed suggestions for effective class discussions centered on the main issue addressed by the case (i.e. the need to revisit the costing system in light of a change in the demand mix for the services offered by the organization). In the second part of the teaching note, the authors provide suggestions for several additional avenues along which instructors can develop further discussion about the integration points between costing systems and other important activities, such as strategy definition and execution, transfer pricing, and cross-functional coordination.

    Keywords: Strategy; Cost Management; Management Systems;

    Citation:

    Gallani, Susanna, and Eva Labro. "VMD Medical Imaging Center." Harvard Business School Teaching Note 117-003, August 2016. (Revised June 2018.)  View Details
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  33. Case | HBS Case Collection | August 2016

    VMD Medical Imaging Center

    Susanna Gallani and Eva Labro

    VMD Medical Imaging Center, a local independent provider of medical imaging services, is facing some important challenges. Despite efficiency improvements and cost cutting initiatives carried out over the past few years, their profitability is shrinking; their prices are becoming uncompetitive; and their main customer, a large regional research and teaching hospital, is threatening to seek alternative, more cost-effective, suppliers. The case addresses a number of important challenges that firms typically face with respect to designing and maintaining their costing systems, including the need to keep the costing system in line with the business processes of the firm throughout its life cycle; the setting of transfer prices, which highlights the interdependencies between costing systems and pricing strategies; and the demand-induced death spiral, which is brought about by a shift in sales mix from labor intensive to technology intensive imaging services. In addition, this case offers an opportunity to develop the class discussion in multiple directions, at the discretion of the instructor, such as the role of costing systems in organizations, the relationship between costing and strategy, and the facilitating role of costing with respect to cross-functional coordination.

    Keywords: Costing; Death Spiral; Transfer Pricing; Activity Based Costing and Management; Competitive Strategy; Medical Specialties; Health Industry;

    Citation:

    Gallani, Susanna, and Eva Labro. "VMD Medical Imaging Center." Harvard Business School Case 117-002, August 2016.  View Details
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  35. Case | HBS Case Collection | May 2016

    RegionFly: Cutting Costs in the Airline Industry

    Susanna Gallani and Eva Labro

    RegionFly is a small, private airline specializing in ultra-premium services. Founded shortly after the "Golden Age of airline travel," RegionFly's financial performance had been strong for several decades. More recently, however, the results have taken a downward trend, due in part to the impact of the Great Recession on the entire airline industry. Not only were premium service providers affected more significantly, but the recent wave of mergers and acquisitions involving large airlines also leveraged new economies of scale, thereby reducing costs and increasing the competitive pressure on air travel prices. As a result of the deterioration in their financial performance, RegionFly was recently acquired by a larger provider, and several top managers were replaced. The new management team, supported by an external consulting firm, introduced a series of aggressive cost-cutting measures that resulted in a downsizing of the workforce, and impacted some distinctive features of the services provided by RegionFly that had been historically associated with the success of the company. Additionally, top management introduced a new product profitability criterion to be used in support of strategic decisions related to the composition of the product mix offering. The application of the new criterion led to the elimination of two of the seven routes included in RegionFly's portfolio. To the surprise of top management, however, the cost-cutting and product-cutting measures did not result in an improvement in the profitability of the company, which, in fact, deteriorated even further. As the profitability of another route falls under the threshold, management is faced with an important decision: should the product profitability criterion be enforced, thus eliminating yet another route from the portfolio? “RegionFly: Cutting Costs in the Airline Industry” provides an introduction to costs allocations, to the evaluation of product profitability, and to the impact of the methodology used to allocate fixed costs on strategic decisions, such as eliminating product lines or firm segments.

    Keywords: Cost Management; Profit; Air Transportation Industry;

    Citation:

    Gallani, Susanna, and Eva Labro. "RegionFly: Cutting Costs in the Airline Industry." Harvard Business School Case 116-047, May 2016.  View Details
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Other Publications and Materials

  2. Article | Harvard Business Review (website)

    Incentives Don't Help People Change, but Peer Pressure Does

    Susanna Gallani

    This article summarizes the findings of a research study that examined the effectiveness of monetary and non-monetary incentives in establishing persistent organizational behavior modifications. The results of the study highlight the interplay between monetary and non-monetary mechanisms of motivation and provide insights on the associated managerial implications.

    Keywords: Motivation and Incentives; Behavior; Change Management;

    Citation:

    Gallani, Susanna. "Incentives Don't Help People Change, but Peer Pressure Does." Harvard Business Review (website) (March 23, 2017).  View Details
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