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Opportunity Counts: Teams and the Effectiveness of Production Incentives

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  • Brent Boning
  • Casey Ichniowski
  • Kathryn Shaw

Abstract

Using unique panel data on production lines in U.S. minimills, we analyze the adoption of problem-solving teams and group incentive pay and their effects on productivity. Almost every line ultimately adopts group incentives. However, problem-solving teams are found almost exclusively in lines with more complex production processes. Consistent with these patterns, fixed-effects models reveal increased productivity under group incentives in all lines, while teams raise productivity in lines with more complex production processes. This evidence indicates that teams give workers a valuable opportunity to solve problems in more complex production processes, while standard operating procedures appear to suffice elsewhere.

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Labor Economics.

Volume (Year): 25 (2007)
Issue (Month): ()
Pages: 613-650

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Handle: RePEc:ucp:jlabec:v:25:y:2007:p:613-650

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Web page: http://www.journals.uchicago.edu/JOLE/

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