The Hidden Costs of High Performance Work Practices: Evidence from a Large German Steel Company

Posted: 22 Feb 2013

See all articles by Bernd Frick

Bernd Frick

University of Paderborn - Faculty of Business Administration, Economics and Business Computing

Ute Goetzen

Volkswagen AG / Autouni

Robert Simmons

Lancaster University

Date Written: 2013

Abstract

The authors use monthly data from 25 production units in a German steel plant over the period 1992 to 2001 to test for impacts of teamwork and performance-related pay on productivity, accidents and absence rates. They find that teamwork and performance pay incentivize workers to increase quantity at the expense of quality and to run the machines for long hours instead of spending time on maintenance. Absenteeism increases when a combination of teamwork and performance pay is applied to production units that previously had neither. The results suggest that teamwork and performance pay can create hidden costs for manufacturers and do not necessarily help to raise worker productivity

Keywords: Teamwork, Performance Pay, Productivity, Absenteeism, Workplace Accidents

JEL Classification: J24, J28

Suggested Citation

Frick, Bernd and Goetzen, Ute and Simmons, Robert, The Hidden Costs of High Performance Work Practices: Evidence from a Large German Steel Company (2013). Industrial and Labor Relations Review, Vol. 66, No. 1, 2013, Available at SSRN: https://ssrn.com/abstract=2221963

Bernd Frick (Contact Author)

University of Paderborn - Faculty of Business Administration, Economics and Business Computing ( email )

Warburger Str. 100
D-33098 Paderborn
Germany

Ute Goetzen

Volkswagen AG / Autouni ( email )

D-38436 Wolfsburg
Germany

Robert Simmons

Lancaster University ( email )

Lancaster LA1 4YX, LA1 4YX
United Kingdom

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