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Profit Sharing and the Quality of Relations with the Boss

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Author Info
John S Heywood
Colin Green

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Abstract

Profit sharing generates conflicting changes in the relationship between supervisors and workers. It may increase cooperation and helping effort. At the same time it can increase direct monitoring and pressure by the supervisor, and mutual monitoring and peer pressure from other workers that is transmitted through the supervisor. Using data on satisfaction with the boss, we initially show that workers under profit sharing tend to have lower satisfaction with their supervisor. Additional estimates show this is largely generated by groups of workers who would be least likely to respond to increased supervisory pressure with increase effort: women, those with dependents and those with health limitations. Despite this finding, profit sharing seems to have little or no influence on overall job satisfaction as the reduction in satisfaction with the boss is offset with increased satisfaction with earnings, a finding consistent with profit sharing enhancing productivity and earnings.

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Paper provided by Lancaster University Management School, Economics Department in its series Working Papers with number 005698.

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Date of creation: 2008
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Handle: RePEc:lan:wpaper:005698

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Related research
Keywords: Mutual Monitoring; Job Satisfaction; Supervision JEL CODES: J28; J33; J53.;

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  1. Thomas Lemieux & W. Bentley MacLeod & Daniel Parent, 2007. "Performance Pay and Wage Inequality," IZA Discussion Papers 2850, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Heywood, John S. & Wei, Xiangdong, 1997. "Piece-Rate Payment Schemes and the Employment of Women: The Case of Hong Kong," Journal of Comparative Economics, Elsevier, vol. 25(2), pages 237-255, October. [Downloadable!] (restricted)
  3. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September. [Downloadable!] (restricted)
    Other versions:
  4. John S. Heywood & Uwe Jirjahn & Georgi Tsertsvadze, 2005. "Getting along with Colleagues - Does Profit Sharing Help or Hurt?," Kyklos, Blackwell Publishing, vol. 58(4), pages 557-573, November. [Downloadable!] (restricted)
  5. John S Heywood & Colin Green, 2007. "Does profit sharing increase training by reducing turnover?," Working Papers 005113, Lancaster University Management School, Economics Department. [Downloadable!]
  6. Barron, John M & Gjerde, Kathy Paulson, 1997. "Peer Pressure in an Agency Relationship," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 234-54, April. [Downloadable!] (restricted)
  7. McNabb, Robert & Whitfield, Keith, 1998. "The Impact of Financial Participation and Employee Involvement on Financial Performance," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(2), pages 171-87, May. [Downloadable!] (restricted)
  8. Clark, Andrew E. & Oswald, Andrew J. & Warr, Peter B., 1994. "Is job satisfaction u-shaped in age ?," CEPREMAP Working Papers (Couverture Orange) 9407, CEPREMAP.
  9. Drago, Robert & Garvey, Gerald T, 1998. "Incentives for Helping on the Job: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 1-25, January. [Downloadable!] (restricted)
  10. Goldin, Claudia, 1986. "Monitoring Costs and Occupational Segregation by Sex: A Historical Analysis," Journal of Labor Economics, University of Chicago Press, vol. 4(1), pages 1-27, January. [Downloadable!] (restricted)
  11. John Heywood & Uwe Jirjahn & Georgi Tsertsvadze, 2005. "Does profit sharing reduce conflict with the boss? Evidence from Germany," International Economic Journal, Korean International Economic Association, vol. 19(2), pages 235-250, June. [Downloadable!] (restricted)
  12. Omar Azfar & Stephan Danninger, 2001. "Profit sharing, employment stability, and wage growth," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 54(3), pages 619-630, April.
  13. Richard Freeman & Douglas Kruse & Joseph Blasi, 2008. "Worker Responses To Shirking Under Shared Capitalism," NBER Working Papers 14227, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Drago, Robert & Turnbull, Geoffrey K., 1988. "Individual versus group piece rates under team technologies," Journal of the Japanese and International Economies, Elsevier, vol. 2(1), pages 1-10, March. [Downloadable!] (restricted)
  15. Colin Green & John S. Heywood, 2008. "Does Performance Pay Increase Job Satisfaction?," Economica, London School of Economics and Political Science, vol. 75(300), pages 710-728, November. [Downloadable!] (restricted)
  16. Prendergast, Canice & Topel, Robert, 1993. "Discretion and bias in performance evaluation," European Economic Review, Elsevier, vol. 37(2-3), pages 355-365, April. [Downloadable!] (restricted)
  17. Kandel, Eugene & Lazear, Edward P, 1992. "Peer Pressure and Partnerships," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 801-17, August. [Downloadable!] (restricted)
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  18. Orr, Shepley W, 2001. "The Economics of Shame in Work Groups: How Mutual Monitoring Can Decrease Cooperation in Teams," Kyklos, Blackwell Publishing, vol. 54(1), pages 49-66.
  19. Clark, Andrew E., 1997. "Job satisfaction and gender: Why are women so happy at work?," Labour Economics, Elsevier, vol. 4(4), pages 341-372, December. [Downloadable!] (restricted)
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  20. John S. Heywood & Uwe Jirjahn, 2004. "Teams, Teamwork and Absence," Scandinavian Journal of Economics, Blackwell Publishing, vol. 106(4), pages 765-782, December. [Downloadable!] (restricted)
  21. Booth, Alison L & Frank, Jeff, 1999. "Earnings, Productivity, and Performance-Related Pay," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 447-63, July. [Downloadable!] (restricted)
  22. Rotemberg, Julio J, 1994. "Human Relations in the Workplace," Journal of Political Economy, University of Chicago Press, vol. 102(4), pages 684-717, August. [Downloadable!] (restricted)
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