Wages, supervision and sharing

Instrumental efficiency wage models predict an inverse relationship between wages and supervision with this relationship being more pronounced amongst firms participating in employee sharing. My theoretical exposition predicts that an increase in remuneration reduces monitoring more in “sharing” than in “nonsharing” firms. I explore these predictions using the 1998 Workplace Employee Relations Survey. My empirical results confirm an inverse relationship between supervision and pay, but the trade-off is only heightened by performance-related pay and employee share ownership schemes. I find that employee share ownership and performance-related pay are more successful in alleviating the need to monitor.