Risk, Hiring, and Organizational Performance: Essays on the Management of Human Capital

This dissertation collects three papers on the relationship between hiring and performance in human capital management. The first chapter presents a theoretical framework for the study of human capital. Human capital management occurs in three stages: acquisition, improvement, and maintenance. The drivers of human capital value (knowledge and skills, formal and informal structure, strategic fit, and culture) differentially affect the risks in each stage. This paper explores those risks.;The second chapter examines how the interaction between a manager's area of expertise and the firm's balance of capabilities affects performance. Firm performance is rooted in a combination of capabilities in which firms have different levels of proficiency. Part of strategic fit in human capital is the link between a manager's expertise and the balance of firm capabilities. Thus, some executives are hired as "builders" (competent in a weak firm capability), while others are hired as "caretakers" (competent in a strong firm capability). I hypothesize that the two types have different managerial orientations---caretakers focus on maintaining the firm's strength; builders, on improving the weakness---with significant performance consequences for the firm. Examining the records of NFL teams following the hiring of new head coaches, I find that those that hire builders significantly underperform those that hire caretakers.;The third chapter, co-authored with David Thomas, explores how prior firm performance affects the hiring of minority candidates at different levels of the organization's hierarchy. Prior research on the hiring of minorities has found that lower status/worse performing organizations are more likely to hire minority candidates, but has not examined the moderating impact of the legitimacy constraints that affect these decisions. We argue that hiring a minority into a high risk, high visibility job (from which minorities have historically been excluded) constitutes a form of divergent change. We therefore hypothesize that legitimacy-seeking organizations (which we equate with poor prior performance) are more likely to hire minorities into positions where legitimacy concerns are less salient, but less likely to hire minorities to fill jobs with significant legitimacy constraints. Examining hiring practices on NFL coaching staffs from 1970-2009, we find strong confirmation for this hypothesis.