Equity incentives boost teamwork across companies

If businesses want to get managers helping each other across divisions, they'll give them equity in the company as well, according to new research by the University of Toronto's Rotman School of Management. The use of company shares as part of executive compensation is nothing new, but it has increasingly filtered down to middle managers, mainly in "new economy", tech-based companies. There has been little research examining changing practices, especially as they relate to cooperation across different business units and divisions. Researchers developed a theoretical model where business unit managers were given an incentive package built on combinations of firm equity, unit profits and firm-wide profits. Managers put themselves out more when company shares were included in the mix, exerting more effort towards their own unit's tasks as well as towards helping managers of other units. The model predicts that shifts to more equity-based incentives would be likeliest in places where short-term profits were uncertain but long-term growth looked good.