Self‐managed work teams: An efficiency rationale for pay compression

Adrian, Nana; Möller, Marc (2020). Self‐managed work teams: An efficiency rationale for pay compression. Journal of economics & management strategy, 29(2), pp. 315-334. Wiley 10.1111/jems.12339

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This paper uncovers a novel mechanism through which pay dispersion can have a negative effect on firm performance, even in the absence of equity or fairness considerations. We use a stylized model of a self‐managed work team to show that, when team‐work involves heterogeneous tasks, the provision of incentives to exert effort conflicts with the provision of incentives to share information relevant for decision‐making. Pay dispersion deteriorates information sharing as it induces workers to conceal “bad news” to maintain their coworkers motivation. The practical implications of our theory are that team empowerment should go hand in hand with pay compression and that empowerment should be avoided when team production involves strongly heterogeneous tasks.

Item Type:

Journal Article (Original Article)

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Möller, Marc

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

ISSN:

1058-6407

Publisher:

Wiley

Language:

English

Submitter:

Dino Collalti

Date Deposited:

05 May 2020 11:17

Last Modified:

05 May 2020 11:17

Publisher DOI:

10.1111/jems.12339

BORIS DOI:

10.7892/boris.142265

URI:

https://boris.unibe.ch/id/eprint/142265

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