Profit Sharing, Interconnected Autonomous Teams, and Employee Productivity

Abstract

Interconnected autonomous teams (IAT) reflect a human resources policy of organizing employees into a network of autonomous teams and allowing individuals to work on more than one of those teams. This paper studies how such a policy influences the productivity effects of profit sharing (PS). We first argue that the presence of IAT could mitigate the “free rider” problem in each team of the network. Next, using the European Working Conditions Survey, we document a positive relationship between employee productivity and the interaction between PS and IAT. We interpret this result as a confirmation that IAT might indeed alleviate the “free rider” problem associated with profit sharing schemes.