Utopia, you are standing in it!

A job is a grouping of tasks (Lazear 1998). Job design objectives include technological efficiency, flexibility to temporary and permanent changes, explicit incentives, intrinsic motivation and commitment, and social aspects such as peer pressure, social comparisons and social interactions (Baron and Kreps 1999; Lazear 1998).

Job design parameters include the level and the breath of job content, the variability over time of task assignment and extent of rotations, the specific mix of tasks of worker or group at any time, individual effort or team membership, and the level of autonomy (Baron and Kreps 1999).

Multi-task working environments are common. Most jobs group together a variety of tasks with each requiring different degrees of employee effort and attention. The design of jobs and rewards to employees affects the level and allocation of employee effort and initiative (Holmstrom and Milgrom 1991; Lazear 1998).

The complexity of tasks that are grouped into many jobs allows workers to work harder on measured and rewarded tasks at the expense of unmeasured and unrewarded outputs and quality, and workers can take excessive risks or be too cautious (Baron and Kreps 1999; Prendergast 1999; Lazear 1998).

Employee effort can be strategically shifted between measurement periods, or too much time is spent influencing supervisors’ evaluations. In addition, workplaces require co-operation but giving strong rewards for individual efforts can undermine team performance (Lazear 1998; Baron and Kreps 1999).

Employers bundle tasks into specific jobs. There are competing merits in specialised and broad task assignment (Brickley, Smith and Zimmerman 2004). Specialised task assignments exploits comparative advantage of employees in specific task and lowers cross-training expenses, but foregoes complementarities across tasks, increases coordination costs, and reduces flexibilities (Brickley, Smith and Zimmerman 2004). Phased retirement affects the nature and specialisation of task assignments because fewer tasks can be bundled into a part-time job.

Every firm must provide incentives embedded into job and team designs so that employees act in the way the employer wishes, giving the agreed level of effort and correctly allocating their efforts across different tasks as the employer would want them to do in the presence of uncertainty, incomplete and dispersed information and costly observation and measurement (Alchian and Demsetz 1972; McKenzie and Lee 1998; Holmstrom and Milgrom 1991).

Employers do not always know what instructions to give to their employees. This is because employers lack access to all of the local and tacit information dispersed across the firm and individual employees about what can be done, what needs to be done and what has changed. Incentives are important to ensuring that workers have the freedom of action to best use the information particular and local to their particular jobs, equipment and customer interactions and are correctly rewarded for taking the initiative (McKenzie and Lee 1998).

Entrepreneurs reap profits from discovering the job designs and wage policies that elicit the agreed level of employee effort and the desired levels of initiative, self-management and expeditious use of local knowledge across the multiple tasks that each employee must perform across time in their jobs and teams.