It's What You Say Not What You Pay. An Experimental Study of Manager-Employee Relationship in Overcoming Coordination Failure

David Cooper () and Jordi Brandts

No 162, Working Papers from Barcelona School of Economics

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: experiments; incentives; Coordination; organizations; Change; Communications (search for similar items in EconPapers)
JEL-codes: C92 D23 J31 L23 M52 (search for similar items in EconPapers)
Date: 2015-09
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Citations: View citations in EconPapers (5)

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