Redesigning Teams and Incentives:A Real Effort Experiment with Managers of a Merged Company
After 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.
|Date of creation:||Dec 2002|
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