First Olin Award for research given to Nickerson, Zenger

Two professors at the Olin Business School are the winners of the first annual Olin Award: Recognizing Research That Transforms Business.

Jackson Nickerson, Ph.D., the Frahm Family Professor of Organization and Strategy, and Todd Zenger, Ph.D., the Robert and Barbara Frick Professor of Business Strategy, will share the $10,000 honorarium in recognition of their research that examined the negative impact that social comparison, or envy, causes in the workplace.

The Olin Award was initiated by Richard J. Mahoney, former chairman and CEO of Monsanto Co. and a current executive-in-residence at Olin.

Mahoney said creating an award that recognizes the link between academic research and business practice was motivated by his exposure to the variety and quality of work the Olin Business School professors produce.

In addition to showcasing Olin’s excellent research, the award is designed to remind researchers that the ultimate purpose of all business research is to improve results.

“Often the applied portion of research builds on highly theoretical basic research models. Both kinds of research — theoretical and applied — are highly valued and receive equal consideration for the Olin Award,” Mahoney said.

Olin professors have been recognized internationally for their prolific research. The Financial Times, for example, ranked the school 14th worldwide for research productivity.

“The Olin Award is designed to encourage the continuation of that great strength,” Mahoney said.

The competition’s winners, Nickerson and Zenger, succeeded in doing just that, according to the remarks made by members of the panel of 10 judges.

For example, James H. Quigley, Global CEO, Deloitte Touche Tohmatsu, said of the winning paper: “With respect to my first choice, I appreciated the discussion of ‘social comparison costs’ and agree that they should play a critical role in shaping the design of the work, employee rewards and the organization itself. The supporting examples are strong, and the arguments are financially significant to most businesses across all industries.”

Nickerson and Zenger’s research examined how firms design and structure their organizations to minimize what the researchers call “comparison costs,” the costs brought on when individuals feel slighted in their rewards.

“Comparison costs are incurred when people within a firm have the perception of being treated unfairly,” Zenger said.

“Workers begin to reduce their efforts or lobby management to change the distribution of rewards. They might actually try to sabotage the firm. Any of these actions becomes costly to the firm; these are comparison costs,” he said.

The professors contend that managers consistently underestimate and misunderstand comparison costs. Consequently, they make poorly informed decisions about such things as adopting incentive programs, acquiring another company and even outsourcing.

“Social comparison costs can cause all kinds of problems for organizations,” Nickerson said. “Despite sophisticated financial analyses, three-quarters of all mergers and acquisitions fail, and we believe social comparison is a prime culprit.

“Our theory helps managers figure out when and what to outsource, how to compensate employees and even where to locate them. This new theory improves our understanding of how social phenomena shape organizational choices,” Nickerson said.

Nickerson and Zenger foresee future applications of their research to predict when and how to make acquisitions successful.

“Be suspicious of claims an acquisition will be untouched because workers from the acquiring company may become dissatisfied,” Zenger said.

Nickerson and Zenger will be honored at the 2008 Distinguished Alumni Awards presentation April 24 at The Ritz-Carlton, St. Louis.

In addition to Quigley, the panel of judges included:

• Robert Dilenschneider, principal and founder, The Dilenschneider Group Inc.;

• Hugh Grant, CEO, chair-man and president, Monsanto Co.;

• Michael Heinz, president, MHH Systems Corp., and former vice president and general manager at Boeing Co.;

• Jean P.L. Montupet, executive vice president, Emerson;

• Joseph McCue, visiting professor, University of Edinburgh Management School in Scotland, and former director and executive vice president of Barclays Bank;

• David Peacock, executive vice president of marketing, Anheuser-Busch Cos.;

• James Weddle, managing partner, Edward Jones;

• Murray Weidenbaum, Ph.D., the Edward Mallinckrodt Distinguished Professor of Arts & Sciences and chairman of the Weidenbaum Center on the Economy, Government and Public Policy;

• Virginia Weldon, M.D., chairman of the board, Saint Louis Symphony, and former director for the Study of American Business at WUSTL.