From individual incentives to an organization‐wide gainsharing plan: Effects on teamwork and product quality

Abstract

AbstractDespite the widespread use of incentive systems in manufacturing organizations, few studies have used a standard, quasi‐experimental research design to directly compare the effects of different plans on employee perceptions and work outcomes. In this study, multiple methods were used to assess changes at a company which ended an individually‐oriented piecework plan and subsequently began a high‐involvement gainsharing plan. This piecework‐to‐gainsharing transition involved (a) terminating individual incentives, (b) paying plant‐wide bonuses for performance improvements, and (c) developing a highly structured ‘idea’ system which allowed employees limited participation in work decisions. Survey responses obtained two months before the transition and again 15 months later revealed improvements in perceptions of teamwork and concern for performance. Interrupted time series analysis of over four years of objective data showed a significant decrease in grievances and a significant increase in product quality occurring at the time of the intervention. Concerning the latter, defective products per 1000 shipped decreased from 20.93 under piecework to 2.31 under gainsharing. The results are discussed within the framework of Deutsch's (1949a) theory of cooperation and competition.