Employees Might Work Harder When They Have A Say In Their Pay


Three economics researchers recently laid claim to fresh statistical evidence in the case for worker empowerment. Philip Mellizo at the College of Wooster, and Jeffrey Carpenter and Peter Hans Matthews at Middlebury College tested whether workplace performance is responsive to giving employees a vote in meaningful decisions, namely the determination of compensation schemes.

The authors contend that a vote on compensation structure acts like an incentive without altering the amount of compensation. For getting a choice between two earnings schemes with the same bottom line for the company, workers will express thanks by working harder, according to “Workplace Democracy in the Lab.” (It was published in January  by the Institute for the Study of labour, a think tank based in Bonn, Germany.)

How much harder? Having a say hiked output by 7% and, better yet, effective output – meaning improvement in quality, not just volume — rose by 9%.

As a proxy for real jobs, one hundred 80 participants in the study solved simple maths problems in teams of three over fifteen 45-minute sessions during a three-week period.

Right answers earned 10 “experimental money units.” Winnings were paid out according to one of two contracts. A rank-based tournament scheme paid 60% to the person in each group with the most right answers, 30% for second place and 10% for third place. Alternatively, a more egalitarian revenue sharing scheme distributed identical winnings three ways evenly.

In some sessions each group chose a pay scheme by simple majority. In other sessions a computer decided how to split the purse.

Best results were seen when workers voted, with an extra edge for workers who chose the tournament scheme. Average winners took home, in real money, $14.

Although very different from everyday work, the artificial environment featured useful advantages for testing purposes. It eliminated monitoring, punishment, threats and other forms of coercion that accompany many types of systems in the real world. Moreover, individual performance did not depend on trust, reciprocity, reputation or other team factors that produce extraneous conflict. This reduced influences to choice or no choice as the only variable affecting performance.

Short of handing workers the keys to company coffers, results sound instructive. Senior managers faced with decisions about compensation policy might leverage alternatives just by inviting workers to cast a vote. It’s a form of workplace democracy that companies can take to the bank.

This post originally appeared at BNET.