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Credit-Card Autopay Can Benefit Consumers (a Little)

Nudging consumers to use autopay might seem like a straightforward way to help them pay down their credit card debt, but the reality is more complex. Recent studies suggest that while autopay can encourage some cardholders to make more than the minimum payment, the impact on overall debt reduction is minimal. For instance, many consumers set their autopay amounts only slightly above the minimum, leading to little progress in reducing their balances.

“We hoped nudging cardholders to adopt autopay would help them passively repay a bigger portion of their outstanding balance and this would reduce their debt, but that’s not what happened,” says Benedict Guttman-Kenney, assistant professor of finance.

“Repaying credit-card debt is hard for consumers, as is designing policies to try to help them do so,” says Guttman-Kenney. “A key reason for this is consumers frequently have little spare cash available to pay down their debt even when nudged to do so.” So, he adds, even when enrollment choices change, “it’s not sufficient to change the desired outcome —reducing credit-card debt.”

Aug. 7, 2024 | Lisa Ward

Safety Should Be A Performance Driver

Safety is viewed as a fundamental right, yet many companies mismanage it, treating it as a compliance issue rather than a strategic priority. Despite significant investments in safety measures and regulatory oversight, workplace accidents and product recalls remain frequent. In 2023 alone, the U.S. saw 3,300 product recalls and 5,486 fatal work injuries.

Safety mismanagement occurs because executives frequently view it as a cost to be minimized, rather than as an opportunity to enhance performance and competitiveness. New research by Rice Business professors Vikas Mittal and Alessandro Piazza shows that when companies integrate safety into their core strategy, it can drive customer satisfaction, employee welfare and even financial returns. In one of their studies, 11,451 customers across 1,785 companies in 65 industries found that safety is associated with a 9% increase in overall customer satisfaction.

This satisfaction, in turn, drives a 13% increase in sales. By shifting their mindset and treating safety as a driver of value rather than a constraint, companies can not only protect their employees and customers but also gain a significant competitive advantage, turning safety into a key component of their success.

Sept–Oct, 2024 | Vikas Mittal, Alessandro Piazza and Sonam Singh

The 4 Questions You Should Ask Yourself Before Saying ‘Yes’ To A Job Offer

Ask yourself whether you’ll enjoy crafting the new role ... Obviously, enjoying your job or role is important for life satisfaction and growth. Ask the following question from the decluttering guru Marie Kondo and Rice Business professor Scott Sonenshein — does this (part of the) role “spark joy”? Now to be clear, there will be parts of the role that are less “joy sparking” than others. Can you automate these less desirable tasks, using AI or similar tools?

In short, you can “craft” the role in a way that sparks more joy. Scale-ups and fast-growing startups are perfect places for job crafting. Many times, scale-up leaders only have a prototype conceptualization of your job. As one scale-up executive put it to me, “you really need to ask lots of questions to make sure what you think the role is matches what the scale-up thinks the role is. There is also a lot of room for negotiation.”

You might be asking yourself, do I have to completely love the new role? The answer is — it depends. If some answers are a clear no, then you know what to do. Just remember that these questions may inspire negotiation and “job crafting,” which in turn allows for the role to create hyper-growth for you, your career, and the organization.

May 10, 2024 | David Sluss

Could a Change to the Goodwill Rule Boost Private Equity?

Accountants have been wringing their hands for decades over how to treat a business’s goodwill — the value of customer loyalty, human capital and synergies — when a company changes hands. Should it be allowed to sit on the books perhaps indefinitely, or should an acquirer write it off over a defined period of time?

Changing the rules to require that buyers amortize, or gradually expense, goodwill over 10 years would slash buyout prices, dramatically shrink the $1.6 trillion-a-year U.S. mergers and acquisitions market, and push more businesses into the arms of private-equity buyers, according to Rice Business’ Stefan J. Huber and Chicago Booth’s Charles McClure.

“Such changes in the makeup of winners can influence the ownership of a substantial portion of the economy,” the researchers write. “Adopting an accounting standard that amortizes goodwill reduces the relative strength of strategic bidders” but “does not affect financial bidders’ values.”

They estimate that such a shift would increase the likelihood of a financial bidder winning the takeover from nearly 30 percent to about 37 percent.

June 7, 2024 | Francine McKenna

Texas Stock Exchange Proposal Raises Profile Of Texas MBA Programs

The proposed Texas Stock Exchange in Dallas is a step to secure Texas’ position as an economic powerhouse. The business-friendly air of Texas, which is now home to more Fortune 500 companies than any other state, extends to the TXSE. MBA programs in the state may see new opportunities to attract top talent and keep people in Texas.

Peter Rodriguez, dean of Rice Business, said it is a little early to tell. But pointed to the boom in financial institutions in Texas.

“MBA applicants typically target schools near where they would like to work,” Rodriguez said in a phone interview. “An exchange in Texas would move the balance toward us. We would expect to see more hiring directly into Texas-based institutions and corporations from Texas MBA programs.”

“We are looking to expand our finance programs in anticipation of what we hope will be continued growth in the finance industry in Texas,” Rodriguez adds.

The new stock exchange boosts opportunities for ambitious people to train in state, work in state and grow the economy of the state of Texas.

Updated June 10, 2024 | Dr. Marlena Corcoran