Workplace Organisation and Incentives in the New Industrial Revolution

The world of work is undergoing significant changes thanks to technological progress and the internationalization of production. Previous work by Chentouf and Ernst (2014) considered differences in workplace organisation related to training, production and incentive complementarities across different jobs that were affected by a country’s institutional setting and would explain how workplace management practices differ in terms of companies’ training policies, incentive systems and production methods. Extending this approach, in this paper we consider how the recent technological changes affect the optimal arrangements for workplace organisation and employee incentives. In order to consider the current transformations, we introduce task and job matching frictions in the otherwise unchanged model of workplace organisation. In particular, we consider differences in matching cost between tasks across different firms, on the one hand, and workers joining the same company, on the other. We analyse how the current technological trends, notably the emergence of task platforms such as Uber or MTurk, affect these relative matching costs and hence the incentives for firms to move away from hiring additional workers towards hiring additional tasks (from a workforce not formally attached to the firm). We analyse how these shifts in task and workplace organisation affects the hiring of tasks relative to hiring of workers. In particular, we analyse the role of the three different types of complementarities in shaping the extent to which companies prefer to hire individual tasks rather than workers. For instance, when training complementarities are present in the way jobs are being set up, lowering the matching costs for tasks will lead to a smaller share of jobs being disintegrated in comparison to a situation where production complementarities are present. We also look into the type of incentive structures that companies deploy when hiring different tasks in order to ensure that the task provision corresponds to their quality standard. Here, we identify a new signalling mechanism that was not relevant in the earlier paper and that relates to reputation effects, which have a strong network character and are present in particular on (some) task platforms. Finally, the paper links these consideration to institutional settings in four major economies (United States, Japan, Germany, Sweden) to show the extent to which the current technological changes are likely to impact on the workplace organisation in these countries given the current production arrangements.