Redesigning Teams and Incentives:A Real Effort Experiment with Managers of a Merged Company
AbstractAfter a merger, company officials face the challenge to uniform compensation schemes and to redesign teams with managers originating from different incentives and working habits. In this paper, we offer a new way to investigate in post-merger the relationship between executive pay and performance, allowing 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 the past of incentives within the new teams.
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Date of creation: Dec 2002
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executive compensation; real effort experiments; team-based compensation;
Other versions of this item:
- Claude Montmarquette & Jean-Louis Rullière & Marie-Claire Villeval & Romain Zeiliger, 2002. "Redesigning Teams and Incentives: A Real Effort Experiment with Managers of a Merged Company," CIRANO Working Papers 2002s-86, CIRANO.
- C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- M52 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
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