Working Paper: NBER ID: w14227
Authors: Richard Freeman; Douglas Kruse; Joseph Blasi
Abstract: Group incentive systems have to overcome the free rider or 1/N problem, which gives workers an incentive to shirk, if they are to succeed. This paper uses new questions on responses to shirking from the General Social Survey and a special NBER survey of workers at over 300 worksites in 14 companies that have some form of group incentive pay to examine how well workers can monitor their peers and what they do when the peers are not working up to speed. The paper finds that: 1) most workers say that they can detect fellow employees who shirk; 2) many report that they would speak to the shirker or report the behavior or a supervisor, and many report that they did so in the past; 3) the proportion that takes action against shirkers is greatest among workers paid under group incentive systems, in smaller companies, and in companies with good employee-management relations; 4) group incentives interact with high-performance human resource policies such as employee involvement teams, training, task variety, low levels of supervision, and good fixed wages to induce more workers to act against shirking; 5) workers in workplaces where there is more anti-shirking behavior report that co-workers work harder, encourage other workers more, and report that their workplace facility is more effective in ways that should raise productivity and profits.
Keywords: shared capitalism; worker responses; shirking; group incentives
JEL Codes: J33; J54; L23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| shared capitalism arrangements (P12) | peer monitoring (C92) |
| peer monitoring (C92) | antishirking behavior (P37) |
| shared capitalism arrangements (P12) | worker interventions against shirking (J22) |
| worker interventions against shirking (J22) | improved coworker performance (M54) |
| improved coworker performance (M54) | enhanced workplace effectiveness (J29) |
| enhanced workplace effectiveness (J29) | overall productivity and profits (O49) |
| detection capability (C52) | intervention against shirking (J52) |
| shared capitalist incentives (P12) | likelihood of worker intervention (J28) |
| group incentives + high-performance HR policies (M52) | likelihood of worker intervention (J28) |