It's What You Say Not What You Pay

Jordi Brandts and David Cooper ()

UFAE and IAE Working Papers from Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC)

Abstract: We study manager-employee interactions in experiments set in a corporate environment where payoffs depend on employees coordinating at high effort levels; the underlying game being played repeatedly by employees is a weak-link game. In the absence of managerial intervention subjects invariably slip into coordination failure. To overcome a history of coordination failure, managers have two instruments at their disposal, increasing employees' financial incentives to coordinate and communication with employees. We find that communication is a more effective tool than incentive changes for leading organizations out of performance traps. Examining the content of managers' communication, the most effective messages specifically request a high effort, point out the mutual benefits of high effort, and imply that employees are being paid well.

Keywords: Change; Incentives; Coordination; Communication; Experiments; Organizations (search for similar items in EconPapers)
JEL-codes: C92 D23 J31 L23 M52 (search for similar items in EconPapers)
Pages: 46
Date: 2005-02-18
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-exp and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:aub:autbar:643.05

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