LIMITED INTERTEMPORAL COMMITMENT AND JOB DESIGN

Margaret A Meyer

Nuffield College, Oxford University

 Trond E Olsen

University of Bergen and Norweigian Research Center in Organization and Management

and

Gaute Torsvik

University of Bergen and Norweigian Research Center in Organization and Management

 

 

September 1995

 

Summary

The paper shows that some of the guidelines for job design that emerge from a static analysis of the multitask agency problem can be overturned in a dynamic model when commitment to long-term compensation contracts is limited. Static analyses have shown that it is optimal to assign workers sole, rather than joint, responsibility for tasks, and to allocate them tasks which are as homogeneous as possible with respect to the ease of measuring performance. Our dynamic analysis demonstrates that it can, instead, by optimal to make workers jointly responsible for tasks and, for those cases where they do bear sole responsibility, to make their task portfolios as similar to one another, but as internally diverse, as possible. The reason why the principles for job design can change so fundamentally as we introduce dynamics is that job design affects the ratchet problem.