Profit sharing and the quality of relations with the boss

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 UK data on satisfaction with the boss, we show in both cross-section and panel estimates that workers under profit sharing tend to have lower satisfaction with their supervisor. This result persists even as profit sharing has no or a positive influence on other dimensions of job satisfaction. Additional estimates show that lower satisfaction with the supervisor is largely generated by women, who may be less able to respond to peer pressure, and by non-union workers, who may have more to lose by failing to respond to peer pressure.