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Using panel data from a large sample of Canadian establishments, the authors examine whether there is any link between adoption of an employee profit-sharing plan and subsequent employee earnings. Overall, growth in employee earnings during the five-year period subsequent to adoption of profit sharing was significantly higher in establishments that had adopted profit sharing, as compared with those establishments that had not done so. Employees in establishments that paid high wages before profit sharing adoption appeared to benefit more than employees in other establishments, although employees in other establishments did eventually benefit from profit sharing.
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The purpose of this study is to contribute to knowledge of profit-sharing by utilizing a before-and-after analysis of panel data to assess whether the effects of profit-sharing adoption on productivity growth vary, depending on whether a profit-sharing adopter utilizes work teams or not, while controlling for numerous variables that may affect these results within a carefully constructed sample of Canadian establishments. To our knowledge, this is the first study to examine the moderating role of teamwork in the relationship between profit-sharing and productivity growth. Besides the implications for profit-sharing, ascertaining whether profit-sharing and work teams are complementary practices would have important implications for understanding how to develop more effective work teams, a topic of ongoing interest. We utilized a longitudinal research design to compare within-firm productivity growth during the three-year and five-year periods subsequent to profit-sharing adoption and within-firm productivity growth during the same periods in firms that had not adopted profit-sharing. Overall, our results suggest that use of team-based production plays an important moderating role in the success of employee profit-sharing—at least in terms of workplace productivity growth. Establishments that had adopted profit-sharing showed a substantial and highly significant increase in workplace productivity over both the three-year and five-year periods subsequent to adoption, but only if they had work teams. These findings are in line with the notion that work teams help to mitigate potential shirking behaviour in profit-sharing firms (Freeman, Kruse and Blasi, 2010) and are also in line with the argument that work teams serve as an effective mechanism to help translate the purported motivational and other benefits of profit-sharing into tangible productivity gains (Heywood and Jirjahn, 2009).
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Our empirical analysis is based on Statistics Canada’s worker-firm matched data set, the 2003 Workplace and Employee Survey (WES). The sample size is substantial: about 4,000 workers over the age of 50 and 12,000 between the ages of 25 and 49. Training was a focus of the survey, which offers a wealth of worker-related and firm-related training variables. We found that the mean probability of receiving training was 9.3 percentage points higher for younger workers than for older ones. Almost half of the gap is explained by older workers having fewer training-associated characteristics (personal, employment, workplace, human resource practices and occupation/industry/region), and slightly more than half by them having a lower propensity to receive training, this being the gap that remained after we controlled for differences in training-associated characteristics. Their lower propensity to receive training likely reflects the higher opportunity cost of lost wages during the time spent in training, possible higher psychological costs and lower expected benefits due to their shorter remaining work-life and lower productivity gains from training, as discussed in the literature. The lower propensity of older workers to receive training tended to prevail across 54 different training measures, with notable exceptions discussed in detail. We found that older workers can be trained, but their training should be redesigned in several ways: by making instruction slower and self-paced; by assigning hands-on practical exercises; by providing modular training components to be taken in stages; by familiarizing the trainees with new equipment; and by minimizing required reading and amount of material covered. The concept of “one-size-fits- all” does not apply to the design and implementation of training programs for older workers.
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The aim of this study is to examine the empirical question of how the provision of work-life benefits is associated with wages, promotions, and job satisfaction. This is an important question for industrial relations scholars and one that, as yet, has no definitive answer. In order to answer this question, we employ both economic theory and methods. Specifically, the economic theories being tested are the compensating wage differentials theory and the efficiency wage theory. To test the efficacy of each theory, we use econometric techniques using longitudinal data from the most recent Workplace and Employee Survey of Canada. We use regression to unpack the effects of work-life benefits on various employment outcomes and employ instrumental variables to mitigate against reverse causality. We find broad support for the efficiency wage theory. Alternatively stated, we find that increases in benefits are not associated with decreases in wages and other employment outcomes. If bundled correctly, work-life benefits are positively associated with increased wages, a greater number of promotions, enhanced employee morale in the form of job satisfaction, and improved employee retention. These results suggest that the provision of work-life benefits is not a zero-sum game for employers and employees. On the contrary, it appears that both parties to the employment relationship can benefit from work-life benefits.
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