Faculty & Research

• HBS Book

When we think of leaders, we often imagine lone, inspirational figures lauded for their behaviors, attributes, and personal decisions, and leadership books often reinforce that view. However, this approach ignores a leader’s mission to empower others. Applying decades of behavioral science research, we offer a passionate corrective to this view, casting today’s organizations as decision factories in which effective leaders are decision architects, enabling those around them to make wise, ethical choices consistent with their own interests and the organization’s highest values.

• Journal of Financial Economics 145, no. 1 (July 2022): 85-104.

Using new employer-employee matched data, this paper investigates the impact of uncertainty, as measured by idiosyncratic stock market volatility, on individual outcomes. We find that firms provide at best partial insurance to their workers. An increase in firm-level uncertainty is associated with a decline in total compensation, especially in variable pay. In turn, individuals reduce their durable goods consumption in response to these uncertainty shocks. These shocks also lead to greater financial fragility among lower-income earners.

• Social Enterprise Initiative

In December 2021, more than a decade after its founding, Goldman Sachs’s 10,000 Small Businesses program was still going strong — and the firm now needed to evaluate potential program modifications to reach a wider group of small business owners. Launched in the aftermath of the Global Financial Crisis, 10,000 Small Businesses provided business education, a wide network, and access to capital to U.S. small business owners through more than a dozen city- and state-based programs and a National Cohort model. By 2020, Goldman Sachs achieved its goal of graduating 10,000 small business owners from the program, and the firm decided to renew the program with the goal of reaching another 10,000.

• Featured Case

In late 2021, Mastercard CEO Michael Miebach and Chairman and former CEO Ajaypal “Ajay” Banga considered how Mastercard could best position itself for continued success in the years to come. Since Mastercard’s initial public offering in 2006, the company had grown and transformed, driven in part by a core strategy of “Grow-Diversify-Build” and vision of a “World Beyond Cash.” During Banga’s recent tenure as CEO, Mastercard had invested in creating a strong culture, recruiting top talent, driving innovation, partnering with would-be competitors, and launching new services. Now, with Miebach at the helm as Mastercard’s CEO, the payments landscape was experiencing increasing democratization of the banking system, the rise of blockchain and cryptocurrency, and increasing nationalism, among other shifts.

• Featured Case

In April 2020, Rachel Jarrett, President and COO of wedding technology company Zola, called a meeting with the organization’s key decision-makers. The company had previously launched three business expansions: a vendor marketplace, a wedding apparel division, and a honeymoon-planning service. However, the March 2020 onset of COVID-19 had prompted many couples to delay or cancel their weddings, and it was unclear how long the pandemic would last. As a result, Jarrett and Zola CEO Shan-Lyn Ma knew that they could only fully invest in one of the three new businesses, while they could pursue a second business with limited funding. To decide the appropriate path forward, Jarrett and Ma sought the perspectives of the company’s leadership team through a four-step decision-making process that Jarrett had developed.

• HBS Working Paper

Critics of “outrage culture” allege that “virtue signaling” drives people to punish alleged wrongdoers without due consideration. But do people actually “punish without looking” for reputational gain? And if so, is this because unquestioning punishment looks particularly virtuous? We examined punishment without looking across three studies of Americans (total n = 7,952), in which “Actors” chose whether to sign real punitive petitions about politicized issues (“punishment”), after deciding whether to read articles opposing these petitions (“looking”). To manipulate reputation, we paired Actors with co-partisan “Evaluators”, varying whether Evaluators observed (i) nothing about Actors’ behavior, (ii) (only) whether Actors punished, or (iii) whether Actors punished and whether they looked. We found that Evaluators financially rewarded Actors who did (vs. did not) punish.

• HBS Working Paper

Currently the accounting system records employee wages as an expense in the income statement. However, paying below living wages can expose an organization to reputational and operational risks. In this paper, we offer an alternative conceptualization of the issue of low wages and in particular wages that are below the local living wage. We propose a simple double entry bookkeeping approach to account for wages paid below a local living wage level through a firm’s balance sheet, where wages below the living wage threshold create a leverage effect as the organization borrows from society.