A Comparative Analysis of the Incentive Systems Under Taylorism and Fordism
Storia del Pensiero Economico, 2008/2, 65-89
25 Pages Posted: 6 Jul 2012 Last revised: 28 Dec 2013
Date Written: 2008
Lliterature on Taylorism has surprisingly ignored the role of its payment systems, while the results achieved on Ford’s five-dollar day programme appear contradictory and sometimes isolated from the organisational change simultaneously undertaken. I seek to fill these theoretical gaps. I provide a historical analysis of the relevant features of Taylorism and Fordism and analyse a simple agency model with a linear compensation scheme to account for the observed differences in payment systems between Taylor’s performance-related pay and Ford’s fixed wages. I show how the ex-post observed divergence may be interpreted in terms of technology-related differences in i) responsiveness of effort to incentives and ii) responsiveness of proceeds to effort.
Keywords: Taylorism, Fordism, agency theory, labour contracts, incentives
JEL Classification: D8, J3, J41, L2
Suggested Citation: Suggested Citation