The Impact of Forward-Looking Metrics on Employee Decision-Making: The Case of Customer Lifetime Value

• 成果类型: Article
• 署名作者: Casas-Arce, Pablo; Martinez-Jerez, F. Asis; Narayanan, V. G.
• 署名单位: Arizona State University; Arizona State University-Tempe; University of Notre Dame; Harvard University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51554
• 发表日期: 2017
• 页码: 31-56
• 关键词: Information technology; performance-measures; KNOWLEDGE; management; MODEL; incentives; settings; JUDGMENT; FIRMS

摘要

This paper analyzes the effects of forward-looking metrics on employee decision-making. We use data from a bank that started providing branch managers with the customer lifetime value (CLV)-an estimate of the future value of the customer relationship-of mortgage applicants. The data allow us to gauge the effects of enriching the employees' information set in an environment where explicit incentives and decision rights remained unchanged. On average, customer value increased 5 percent after the metric's introduction. The metric's availability resulted in a significant shift in attention toward more profitable client segments and some improvement in cross-selling. However, the use of CLV did not negatively impact pricing or default risk, as the literature predicts. Finally, branch managers with shorter tenure displayed a stronger response, consistent with information substituting for experience.