Redesigning Teams and Incentives: A Real Effort Experiment with Managers of a Merged Company

Claude Montmarquette, Jean-Louis Rullière (), Marie Claire Villeval and Romain Zeiliger

CIRANO Working Papers from CIRANO

Abstract: After a merger, company officials face the challenge of making compensation schemes uniform and of redesigning teams with managers originating from companies with different incentives and working habits. In this paper, we offer a new way to investigate the relationship between executive pay and performance, after a merger, that allows us to dissociate the respective influence of shifts occurring both in compensation incentives and in team composition. The results of a real effort experiment conducted with managers within a large pharmaceutical company show that not only changes in compensation incentives affect performance but also that both managers' past compensation schemes and company cultures matter for cooperation. The efficiency of a new compensation package is conditional on the reshuffling of teams and on the influence of the past of incentives within the new teams Suite à une fusion, les dirigeants de la nouvelle compagnie doivent relever le défi d'uniformiser les modes de rémunération et de former de nouvelles équipes avec des gestionnaires provenant d'entreprises aux incitatifs et habitudes de travail différents. Dans le cadre du présent article, nous proposons une nouvelle manière d'étudier le lien existant entre la rémunération et la performance des cadres suite à une fusion qui permet de dissocier l'influence respective des modifications aux niveaux des modes de rémunération et de la composition des équipes. Les résultats d'une expérience à effort réel menée auprès des gestionnaires d'une grande entreprise pharmaceutique démontrent non seulement que les changements au mode de rémunération influent sur la performance mais encore que la coopération varie en fonction du mode de rémunération antérieure des gestionnaires et de la culture de leur ancienne entreprise. L'efficacité d'un nouveau mode de rémunération repose à la fois sur la refonte des équipes et sur l'influence des modes de rémunération antérieurs au sein de ces mêmes équipes.

Keywords: Real effort experiments; Executive and team-based compensation; Past incentives and firms' culture; Mergers; Expérience à effort réel; Rémunération des gestionnaires et des équipes; Habitudes passées et culture d'entreprises; Fusions (search for similar items in EconPapers)
JEL-codes: C81 C92 J33 M52 (search for similar items in EconPapers)
Date: 2002-11-01
New Economics Papers: this item is included in nep-cbe, nep-com, nep-exp and nep-lab
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Downloads: (external link)
https://cirano.qc.ca/files/publications/2002s-86.pdf

Related works:
Working Paper: Redesigning Teams and Incentives: A Real Effort Experiment with Managers of a Merged Company (2003)
Working Paper: Redesigning Teams and Incentives: A Real Effort Experiment with Managers of a Merged Company (2003)
Working Paper: Redesigning Teams and Incentives: A Real Effort Experiment with Managers of a Merged Company (2003)
Working Paper: Redesigning Teams and Incentives: A Real Effort Experiment with Managers of a Merged Company (2003)
Working Paper: Redesigning Teams and Incentives: A Real Effort Experiment with Managers of a Merged Company (2003)
Working Paper: Redesigning Teams and Incentives: A Real Effort Experiment with Managers of a Merged Company (2002)
Working Paper: Redesigning Teams and Incentives:A Real Effort Experiment with Managers of a Merged Company (2002)
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