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Work-report formats and overbilling: How unit-reporting vs. cost-reporting increases accountability and decreases overbilling

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Abstract

The current paper examines how asking for a report of units of work completed versus cost of the same work can influence overbilling. We suggest that something as simple as asking for a report of units of work completed (for instance, reporting either the time spent or number of units of work completed) as opposed to the cost of the work completed can drive different unethical behaviors. We argue that unit-reporting makes providers feel accountable for their actions, and this induced accountability, in turn, impacts actual billing behaviors. We present seven studies, including a field experiment in the auto-repair industry that demonstrate the effect of different work-report formats on overbilling and provide evidence for our proposed underlying mechanism.

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... As always, generalization of experimental findings should be cautious, and subject to the accumulation of research that offers replications of the effect as well as identifying boundary conditions. For example, Desai and Kouchaki (2015) recently reported a study that seemed to favor the one-by-one policy over the all-at-once policy. In this study, an experimenter contacted garage mechanics to obtain an estimate for changing the brake pads of a car. ...
... On a theoretical level, one-by-one and all-at-once reporting procedures can be used to test possible interactions between accountability (e.g., Tetlock, 1992;Lerner and Tetlock, 1999;Desai and Kouchaki, 2015) and lie aversion (e.g., Gneezy, 2005;Lundquist et al., 2009;Shalvi et al., 2011b;Hilbig and Hessler, 2013). The two constructs could probably be combined to work in the same direction and encourage honesty. ...
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Organizational monitoring relies frequently on self-reports (e.g., work hours, progress reports, travel expenses). A “one-by-one” policy requires employees to submit a series of reports (e.g., daily or itemized reports). An “all-at-once” policy requires an overall report (e.g., an annual or an overview report). Both policies use people's self-reports to determine their pay, and both allow people to inflate their reports to get higher incentives, that is, to cheat. Objectively, people can cheat to the same extent under both reporting policies. However, the two policies differ in that the segmented one-by-one policy signals closer monitoring than the all-at-once policy. We suggest here that lie aversion may have a paradoxical effect on closer monitoring and lead people to cheat more. Specifically, reporting a series of segmented units of performance (allowing small lies) should lead to more cheating than a one-shot report of overall performance (that require one larger lie). Two surveys indicated that while people perceive the all-at-once policy as more trusting, they still expected people would be equally likely to cheat in both policies. An experiment tested the effects of the two reporting policies on cheating. The findings showed that contrary to the participants' intuition, but in line with research on lie aversion, the one-by-one policy resulted in more cheating than the all-at-once policy. Implications for future research and organization policy are discussed.
... Accountability is a governance mechanism (Garcia et al., 2019) embedded within the organization's social structure (Tetlock, 1985) that, we suggest, fits the category of being a potentially strong situational influence. Accountability is a perceptual state that can be explicitly identified or implicitly felt (Desai and Kouchaki, 2015), and occurs when individuals believe they may be called to answer for, or otherwise justify, their performance (Mero et al., 2007(Mero et al., , 2014. The effectiveness of accountability stems from the principle that answerability for a decision, action or outcome links the individual to the social system to which they belong (Tetlock, 1985). ...
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Purpose With increasing competition in the marketplace, there is a greater push for exceeding customer expectations and delivering customer delight to ensure firm’s success. The main reason for this push is the beneficial outcomes for the firm. More recently, hidden benefits have been identified (i.e. elevated customer emotions can positively impact other customers and employees in the service environment). Adding to this developing literature, the current research develops a model that links antecedents and outcomes to employee perceptions of customer delight. Design/methodology/approach Both field and panel data, as well as multiple statistical methods, were utilized to test the hypothesized relationships. The field data were collected from employees of a national specialty retailer. Findings Service climate and interpersonal influence have a positive impact on customer delight and employee perceptions of customer delight. In turn, employee perceptions of customer delight positively impact harmonious passion and job dedication. In addition, accountability for pleasing customers is a significant moderator of the relationship between employee perceptions of customer delight and harmonious passion, but not between employee perceptions of customer delight and job dedication. Research limitations/implications This research contributes to the ongoing debate on the viability of customer delight as a service standard by investigating the under-studied perspective of the frontline employee. Practical implications This research contributes to the debate on the value of customer delight as a service standard by investigating the under-studied perspective of the frontline employee. A key takeaway for practitioners is how to create and manage the delight spirals that can occur when customers are delighted. Originality/value This is the first study that evaluates antecedents and outcomes of employee-perceived customer delight in a single model. This is also the first study to measure the impact of employee perceptions of customer delight with field data.
... Another way an AFE can vary the input into a process, is to change how an input is framed. For example, Desai and Kouchaki (2015) hypothesized that framing a price request in terms of "units" (versus just an overall cost estimate) increases accountability to report more honestly, ultimately leading to lower (and more accurate) quoted prices. To test this hypothesis, research assistants (who were blind to the hypotheses) called up car garages to ask for an estimate for a repair on their car: when the request was framed by asking first about the costs for labor and parts and second about a good-faith estimate, the quoted price was significantly lower compared to a control condition, in which the request order was reversed -first asking a goodfaith estimate, then for parts and labor. ...
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Organizational scholarship centers on understanding organizational context, usually captured through field studies, as well as determining causality, typically with laboratory experiments. We argue that field experiments can bridge these approaches, bringing causality to field research and developing organizational theory in novel ways. We present a taxonomy that proposes when to use an audit field experiment (AFE), procedural field experiment (PFE) or innovation field experiment (IFE) in organizational research and argue that field experiments are more feasible than ever before. With advances in technology, behavioral data has become more available and randomized changes are easier to implement, allowing field experiments to more easily create value—and impact—for scholars and organizations alike.
... In light of meta-analytic findings that the presence of a code of conduct (something intended to directly influence ethical behavior in a positive way) has no effect on employees' ethical behavior (Kish-Gephart et al. 2010), the fact that a subtle change in the way someone's tasks are ordered (something completely unrelated to ethical behavior) has any effect on rule breaking behavior is important. The magnitude of this effect is consistent with other experimental research that focuses on interventions that can shift morally relevant organizational behaviors, such as conflicts of interest (Sah and Loewenstein 2014) and overbilling (Desai and Kouchaki 2015). ...
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In this paper we argue that task design affects rule breaking in the workplace. Specifically, we propose that task variety activates deliberative (Type 2) processes as opposed to automatic/intuitive (Type 1) processes, which, in turn, helps prevent individuals from breaking rules in order to serve their own hedonic self-interest. We use data from the home loan application processing operations of a Japanese bank to establish the phenomenon in the field. We document that increased task variety at a daily level is associated with lower levels of rule breaking in the form of violating corporate break time policies (Study 1). We further explore the relationship between task variety and rule breaking in three lab experiments, using different operationalizations of rule breaking (Studies 2, 3a, and 3b) and provide direct evidence for the mediating effect of deliberative thinking in this relationship (Studies 3a and 3b). We discuss implications for rule compliance in organizations, behavioral ethics, and work design.
... Therefore, felt accountability for impression management motives, identified as the motives of good actors, is an appropriate concept for self-serving motives. The self-serving motive is the implicit or explicit expectation that one's decisions or actions will be subject to evaluation by some salient audience(s), and it is the belief in the potential for either rewards or sanctions based on this expected evaluation (Desai & Kouchaki, 2015;Hall, Frink, Ferris, Hochwarter, Kacmar & Bowen, 2003). According to definition, individuals are likely to speak out because they expect to gain rewards or sanctions after making a good impression, and individuals use these perceived role expectations to shape their attitudes and guide their behavior. ...
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This paper aims to develop a model delineating the relationship between altruistic concern for prosocial motives/felt accountability for impression management motives of voice behavior and employees' career success. The model proposed in this study argues that the relationship between motives and career success depends on the voice behavior mediating mechanism and the moderating effect of supervisor-attributed motives on the relationship between voice behavior and career success. The results stress the importance of the context of supervisor attribution motives in linked voice behavior and career success. Overall, our model attempts to address these concerns by highlighting in particular the role of the perspective of supervisor attribution motives to advance the body of knowledge about voice behavior and career success. Practical and theoretical implications are addressed on the basis of the research findings as well as suggestions for future research in the employee voice behavior field.
... It is possible that when superiors form moral attributions regarding a subordinate due to exposure to moral symbols, they likely imagine how such an ethical employee would judge them if he or she were to find out how unethical the request was. Previous work has demonstrated that accountability modifies thought processes such that people become more critical of their future actions (Desai & Kouchaki, 2015;Lerner & Tetlock, 1999). Thus, feelings of accountability may make unethical superiors avoid issuing the directive to an employee perceived as high moral character. ...
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Hypotheses involving mediation are common in the behavioral sciences. Mediation exists when a predictor affects a dependent variable indirectly through at least one intervening variable, or mediator. Methods to assess mediation involving multiple simultaneous mediators have received little attention in the methodological literature despite a clear need. We provide an overview of simple and multiple mediation and explore three approaches that can be used to investigate indirect processes, as well as methods for contrasting two or more mediators within a single model. We present an illustrative example, assessing and contrasting potential mediators of the relationship between the helpfulness of socialization agents and job satisfaction. We also provide SAS and SPSS macros, as well as Mplus and LISREL syntax, to facilitate the use of these methods in applications.
Researchers often conduct mediation analysis in order to indirectly assess the effect of a proposed cause on some outcome through a proposed mediator. The utility of mediation analysis stems from its ability to go beyond the merely descriptive to a more functional understanding of the relationships among variables. A necessary component of mediation is a statistically and practically significant indirect effect. Although mediation hypotheses are frequently explored in psychological research, formal significance tests of indirect effects are rarely conducted. After a brief overview of mediation, we argue the importance of directly testing the significance of indirect effects and provide SPSS and SAS macros that facilitate estimation of the indirect effect with a normal theory approach and a bootstrap approach to obtaining confidence intervals, as well as the traditional approach advocated by Baron and Kenny (1986). We hope that this discussion and the macros will enhance the frequency of formal mediation tests in the psychology literature. Electronic copies of these macros may be downloaded from the Psychonomic Society's Web archive at www.psychonomic.org/archive/.
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Individuals are said to be accountable whenever their performance is monitored and there are consequences (either tangible or intangible) associated with that evaluation. We propose that there are at least two distinct types of accountability. One focuses on justification of the procedure used to arrive at an action (procedural accountability, or PA); the other focuses on the quality of the outcomes of that action (outcome accountability, or OA). In three experiments, subjects judged the likelihood that each of a set of individuals held a particular attitude on the basis of background information about those individuals. Results from Experiments 1 and 2 suggested that PA encourages people to take more of the available information into account. Whether or not this effect was beneficial, however, depended on how relevant that information was to the target judgment. OA had only detrimental effects, increasing the amount of noise (or “scatter”) in subjects' judgments and thus leading to lower accuracy overall. Experiment 3 extended the work on PA, focusing on its relationship to the effects of outcome feedback. Results indicated that PA significantly reduced the tendency to be overly responsive to such feedback by reducing the variability in judgment unrelated to the target event. Practical and theoretical implications are discussed.
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This study examined the effects of felt accountability, political skill, and job tension on job performance ratings. Specifically, we hypothesized that felt accountability would lead to higher (lower) job performance ratings when coupled with high (low) levels of political skill, and that these relationships would be mediated by job tension. Data were gathered at multiple times over a one-year period (i.e., baseline performance, attitudinal variables one month later, supervisor reports of subordinate performance six months and one year after baseline performance was measured). Strong support was shown for the total effects model, whereby political skill moderated felt accountability—job performance ratings, felt accountability—job tension, and job tension—job performance ratings relationships. However, more focused analyses demonstrated that political skill most strongly moderated the job tension—job performance ratings linkage. Implications, strengths and limitations, and directions for future research are provided.