Fellowship Focus: Summer Painting Jobs Stir an Interest in Employee Ownership

By Anne Sherber

As an undergraduate student at the University of Wyoming, Phil Mellizo was drawn to courses that indulged his interests in understanding capitalism and the potential of different economic forms in addressing economic, social, and political inequalities. Mellizo recalls that many of the themes discussed during his courses came to life when the semester ended, and his summer employment began. He says that his work as a painter in successive summers on three different crews with contrasting ownership and management structures served as a primer on potential employee and democratic ownership schemes for workers, firms, and consumers.

Phil Mellizo, an
Associate Professor in the
Department of Economics
and Business Economics
at The College of Wooster,
received a Louis O. Kelso
Fellowship as part of SMLR’s
Fellowship Program on
Employee Ownership
and Profit Sharing.

The first job, which he landed after his freshman year, was as a painter with the University’s maintenance crew. His wages and hours were set and nothing he did – or didn’t do – had much of an impact on either.

After Mellizo’s sophomore year, a friend’s uncle hired him to paint houses. “Uncle Ken,” Phil recalls with a laugh, “would, quite literally, hit us with a stick. As you might imagine, my job satisfaction was not very high. And getting paid was a challenge.”

By the summer after Mellizo’s junior year, Uncle Ken had retired. Mellizo and two of his friends with whom he had painted in previous summers rented Uncle Ken’s equipment and went into business. “I remember a feeling of liberation,” he says. “The flexibility with how we managed our schedules was striking. It was also quite amazing to us how much more money we were making as owners compared to previous summers as employees.”

Mellizo says that it wasn’t only the pay that made that third summer memorable. “The work that we were producing was ours. I found myself caring quite a bit more about the quality when it was our business.”

He says that the degree to which he was involved in the management and ownership of his summer jobs directly and profoundly affected his attitude about work. “The job tasks I performed in each of the three jobs were basically the same, but the experiences and take-home pay were very different under each management and ownership structure,” he recalls.

As it turns out, those hard-earned, summer job insights about the ways in which employee participation has an impact on satisfaction and productivity have formed the basis for much of Mellizo’s current research.

Mellizo’s work, for which he has received fellowship support as a 2011-12 Louis O. Kelso Fellow in SMLR’s Fellowship Program on Employee Ownership and Profit Sharing, seeks, he says, to use experimental economic methods to study “traditional and longstanding questions in the field of employee ownership.” The fellowships have been a source of funding for data collection that has formed the basis for Mellizo’s current research projects.

Mellizo notes that there are many plausible explanations for the idea that when workers participate in important workplace decisions, that this could positively impact their performance.  An essential challenge to disentangling these different explanations, however, is in first establishing that there is indeed a connection between employee participation and employee performance.  This is a difficult relationship to isolate given many confounding factors that could also explain differences in worker effort in non-experimental settings.  Mellizo and his co-authors have designed a number of experiments to isolate the effect of participation on effort and the resulting data strongly suggests a causal linkage between employee voice and increased efforts.

Mellizo says that fellowship-funded research challenged a belief that many economists hold that group incentives, such as end-of-year bonuses based on company profits, give some workers permission to free-ride on the efforts of others. “I have conducted some experimental research that suggests that free-riding under group incentives is not an issue, even in the absence of some of things that we know would mitigate this behavior, such as mutual monitoring. In fact,” Mellizo says, “the results from my study suggested that workgroups with compensation structures that employed some type of group incentive scheme out-performed groups without those group incentives.”

Currently, Mellizo is focusing on organizational citizenship behavior, and wants to develop a reliable way to measure both the frequency and the intensity with which workers are willing to help co-workers on the job given a variety of governance and compensation structures. “My hunch is that in firms that are employee-owned, or that have some kind of democratic governance, or team-based compensation structure, the willingness for workers to engage in organizational citizenship behavior – helping co-workers – would be different than in firms that compensate employees on a very competitive basis. This is important since very small changes in group productivity can have large effects on firm outcomes.”

Mellizo says that the value of the support that he has received from SMLR has been enhanced substantially by his attendance at the school’s biannual conferences – the Beyster Symposium and the Mid-Year Fellows Workshop in Honor of Louis. O. Kelso – which bring together leading scholars from around the world.

“The mentorship that I’ve received from senior Fellows, as well as the ability to interact with senior and junior members who are at the forefront of this whole field of research, has been extremely provocative and invaluable,” Mellizo says.

This is the first installment in a new series exploring the work of Research Fellows in SMLR’s Fellowship Program on Employee Ownership and Profit Sharing.