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| Author: | Brandts, J. Cooper, D.J. |
| Title: | It's what you say, not what you pay: an experimental study of manager-employee relationships in overcoming coordination failure |
| Journal: | Journal of the European Economic Association
2007 : DEC, VOL. 5:6, p. 1223-1268 |
| Index terms: | coordination employee communication WORKER PARTICIPATION organizational communication |
| Language: | eng |
| Abstract: | This study explores 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. Synthesizing methods drawn from psychology and economics, the impact of specific types of communication on workers" effort levels and manager's profits is quantified. This methodology allows rigorous comparing of the efficacy of communication and direct incentives in an environment where both are available. It is found that communication is a more effective tool than incentive changes for leading organizations out of performance traps. |
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