ORGANIZATIONAL CONTROL AND WORK TEAM EMPOWERMENT: AN EMPIRICAL ANALYSIS

Simons (1995b) suggests that most writing on empowerment often fails to recognize that empowerment requires greater control. Accordingly, we investigate the type of control via rewards and punishment systems, which fits best in the context of empowered work teams. Specifically, we hypothesized that empowerment will lead to improvement in manufacturing performance only when rewards are based on group performance, i.e. a situation where the collective benefit of both individual team members and those of the firm are maximized. Utilizing a survey methodology, four compensation types were examined, including fixed pay, fixed+non-monetary incentives, individual-based incentives, and group-based incentives. Results show that the favorable effect of work team empowerment was not observed under fixed-pay, fixed+non-monetary incentives, or individual-based incentives. In many instances, fixed-pay or individual-based incentives interact with work team empowerment to produce a negative effect on manufacturing cost, manufacturing lead time, or non-value-added-activities. On the other hand, manufacturing plants which use group-based incentives were able to reap the benefit of work team empowerment and translate that into enhanced performance.