Team-Based Pay and Worker Productivity: A Study on Equal Sharing and Incentives

Workers in industries such as sales, fruit picking, and manufacturing often follow a team-based pay structure, where bonus compensation or increased pay is based on performance and goal completion. However, there is limited research on how different team incentives impact productivity, particularly among lower-ability workers. A study conducted by Bryant University's Xiaofei Pan, Ph.D., alongside outside researchers, explored how team incentives affect worker productivity in a lab setting with 248 participants.

Key Takeaways:

• The study found that teams had higher output under the equal sharing model, with lower-ability workers generating the highest effort.
• Lower-ability workers increased productivity under equal sharing due to guilt aversion, not wanting to let their partner down.
• Without a team threshold, participants preferred individual piece-rate over other incentives, but with the presence of a threshold, more participants preferred equal sharing.
• The study suggests that managers should be attentive to lower-ability worker performance, as their responsiveness to sharing rewards can be critical to team performance.

Statistics:

• 248 participants were randomly paired into two-person teams and independently engaged in tasks to show individual contributions.
• 3 different team incentives were examined: equal sharing (individuals work together and equally share earnings), winner-takes-all (whoever is more productive gets all the earnings), and individual piece-rate (individual earnings are based upon individual contributions).
• With a team threshold, 51% of participants preferred equal sharing, while 49% preferred individual piece-rate.
• Without a team threshold, 62% of participants preferred individual piece-rate, while 38% preferred equal sharing.

Sources:

• Xiaofei Pan, Ph.D., Bryant University
• Journal of Economic Behavior and Organization
• News.bryant.edu