The Economic Costs and Benefits of Self-Managed Teams Among Skilled Technicians

Abstract

This paper estimates the economic costs and benefits of implementing teams among highly-skilled technicians in a large regional telecommunications company. It matches individual survey and objective performance data for 230 employees in matched pairs of traditionally-supervised and self-managed groups. Multivariate regressions with appropriate controls show that teams do the work of supervisors in 60-70% less time, reducing indirect labor costs by 75 percent per team. Objective measures of quality and labor productivity are unaffected. Team members receive additional overtime pay that represents a 4-5 percent annual wage premium, which may be viewed alternatively as a share in the productivity gains associated with innovation or as a premium for learning skills.