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The value of top-down communication for organizational performance


Brandes, Leif; Darai, Donja (2014). The value of top-down communication for organizational performance. Working paper series / Department of Economics 157, University of Zurich.

Abstract

We design a laboratory experiment to identify causal performance effects of top-down communication between managers and their subordinates. Our focus lies on communication that resolves uncertainty about the work environment but does not provide task-specific knowledge. Recent articles in the business press report a lack of such communication in real-world organizations and associate it with reduced organizational performance. Our results confirm this observation. We find that top-down communication is a profitable way for managers to increase employee performance in the presence of uncertainty. Specifically, we show that non-communication is the worst option for managers. However, 50 percent of our experimental managers use top-down communication too restrictively. Overall, managers forego 30 percent of their potential profits through non-communication. We show that organizations can overcome this problem by adopting automated information procedures, which are equally effective.

Abstract

We design a laboratory experiment to identify causal performance effects of top-down communication between managers and their subordinates. Our focus lies on communication that resolves uncertainty about the work environment but does not provide task-specific knowledge. Recent articles in the business press report a lack of such communication in real-world organizations and associate it with reduced organizational performance. Our results confirm this observation. We find that top-down communication is a profitable way for managers to increase employee performance in the presence of uncertainty. Specifically, we show that non-communication is the worst option for managers. However, 50 percent of our experimental managers use top-down communication too restrictively. Overall, managers forego 30 percent of their potential profits through non-communication. We show that organizations can overcome this problem by adopting automated information procedures, which are equally effective.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C92, D23, D83, M54
Uncontrolled Keywords:Communication procedures, non-instrumental-information, employee motivation
Language:English
Date:May 2014
Deposited On:26 May 2014 14:29
Last Modified:08 Dec 2017 05:51
Series Name:Working paper series / Department of Economics
Number of Pages:36
ISSN:1664-7041 (P) 1664-705X (E)
Free access at:Official URL. An embargo period may apply.
Official URL:http://www.econ.uzh.ch/static/wp/econwp157.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers.php

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