The Influence of Incentive Structure on Group Performance in Assembly Lines and Teams

Abstract

ABSTRACT: Modern manufacturing settings increasingly rely upon workgroups; however, evidence concerning the best fit among incentive structure, production environment, and group performance has been mixed. Young et al. (1993) examine the effect of group incentives on group performance in cooperative and noncooperative environments. Although theory and evidence from practice indicate that group incentives combined with cooperation should result in higher group performance, their results were contrary to this prediction. To further explore this issue, we examine the effect of individual, group, and mixed incentive structures on group performance in assembly lines and teams. We find no difference in group performance depending on incentive structure for assembly lines; however, group performance is higher under group incentives for teams. Supplemental analysis indicates group incentives support the teams’ ability to implement beneficial task strategies and although mixed incentives are theoretically appealing, they may send confusing signals to employees about where to direct their effort.