blem caused many American firms to develop and pursue stringent production cost reduction programs (Pennar, 1988, p. 102). There is, however, just so far that a company can go in improving productivity through production cost reduction. Pennar (1988, p. 102) pointed out that it is "obvious in the more recent productivity numbers that the benefits of slimming down and restructuring are running out." In this latter context, American manufacturing productivity has improved, but, in terms of productivity growth, the United States ranks only fifth among the industrial countries, behind, in order of greatest productivity growth, Japan, Britain, France, and Italy ("Special Report: Productivity," 1988, pp. 102 152; Harber, and Samson, 1989, pp. 283 303).
Harrington (1991, pp. 23 27) claimed that one reason for the improvement in American productivity is the increasing use of self managed work teams in American industry. Masternack (1993, pp. 225 238) attributed the gains in productivity to the use of profit sharing strategies. Ross (1992, pp. 46 51), by contrast, contends that the current organizational fascination with work teams may be misguided, and may, at best, produce only short term improvements in productivity. Brookes (1993, p. 13) cautions that profit sharing not only may not improve productivity, but, in some cases, may harm productivity.
Disagreement exists with respect to the long term effectiveness of either the work team concept or profit sharing as a strategy to improve productivity. The marriage of the two concepts within a productivity improvement program generates additional controversy. A significant problem, thus, confronts the organizational management seeking to develop an effective productivity improvement strategy.
Literature is reviewed relevant to the problem investigated. The topics covered in the literature review are performance appraisal and reward, profit sharing and productivity, participatio...