Is everyone part of the gang? : the influence of diversity in employment forms on collaboration and performance

(1)

Is everyone part of the gang?

The influence of diversity in employment forms on collaboration and

performance

Master thesis – MSc. Business Administration Author: Kelly Peijnenburg

Student nr: 10882219

Specialization: Entrepreneurship and Management in the Creative Industries Supervisor: dhr. Dr. J.J. Ebbers

(2)

Statement of originality

This document is written by student Kelly Peijnenburg, who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

(3)

Abstract

To cope with changes in the market organizations are moving towards new ways of organizing. These new ways of organizing go hand in hand with alternative work arrangements and teams consisting of employees with various employment forms. In the film and TV industry this is strongly visible in production teams consisting of a combination of permanent-, temporary and freelance employees. This thesis examines the influence of these different employment forms on collaboration and performance.

To study this, qualitative data is obtained through semi-structured interviews with 13 people with varying contract forms, working in teams in the Dutch film and TV industry.

Because of these different employment forms, employees experience different degrees and directions of commitment and have different attitudes. These differences in commitment and attitude influence team collaboration and performance.

(4)

The business environment is changing. To cope with changes in the market and an increasingly dynamic and uncertain environment, managers are looking for a new way of organizing, which often involves flatter hierarchies, decentralized decision making, fluid communication and fuzzy internal and external boundaries (Daft and Lewin, 1993; Hobday, 2000; Snow, Miles and Coleman, 2000; Arthur, DeFillipi and Jones, 2001; Schreyögg and Sydow, 2010). Managers are letting go of the well known organizational structures and seeking success in new and fluid structures, such as the network-based organization, the boundary-less organization and the modular-organization (Schilling, 2000; Schilling and Steensma, 2001; Schreyögg and Sydow, 2010). To cope with the uncertain en risky environment that are the creative industries, project-based organizations are becoming more important. In their paper, Thiry and Deguire (2007) conclude that project based management will influence the current organizational practice and that this field is still quite unexplored. These competitive changes in markets have led organizations to take on a more collaborative nature of working (Bailey and Cohen, 1997), and working with different employment forms (Jia, Shaw, Tsui and Park, 2013). Nowadays, teams may consist of a combination of employment forms; permanent, temporary and freelance. According to Baines (1999), the number of freelance workers in the media industry is rising. Suβ and Kleiner (2007) also

(8)

observe a tendency towards a more flexible shaping of employment. Jia et al. (2013) indicate that future research should assess intra-team and extra-team networks of employees under different employment forms, in creative teams. Interviewees from the Ebbers and Wijnberg (2009) paper indicate that freelancers are willing to display extra-role behavior and commitment in the expectation that they will be rewarded in a later project. But is this the case, and if so, why?

Bailey and Cohen (1997) note that academics have indicated teams and team effectiveness as an important research area. In the shared definitions throughout the literature of what an effective team makes, shared values and commitment and embeddedness in a shared social system are reoccurring factors. However, does this apply to teams consisting of different employment forms? I cannot help but wonder. Rousseau (1995) indicates that the presence of dissimilar contracts can create a feeling of inequity and other by-products of social comparison between employees. Previous literature researches teams, team identity and team effectiveness, but little is written about teams consisting of members with different employment forms.

According to Whitley (2006) project-based organizations characterize the film industry. And with its fluid, temporary nature and members from multiple networks, it makes a good example for this study. Thus, examining the intra-team dynamic and the influence of diverse contracts on team collaboration and performance in the Dutch film and TV industry may offer insights for organizations in the creative industries, as well as other industries.

(9)

1.2 Research objectives

Existing literature indicates that there is a gap in the field of teams consisting of different employment forms that needs more attention (Jia et al., 2013). The creative industries are more risky than their common economic counterparts and often rely on more dynamic and flexible networks (Banks, Lovatt, O’Connor and Raffo, 2000). Creativity is often seen as a social, embedded process (DeFillipi, Grabher and Jones, 2007), but little is written about how to manage this creativity when the team or network constantly changes. This leads to my main research question:

How does diversity in employment contracts between permanent, temporary and freelance employees affect team collaboration and performance in creative projects?

In order to answer this main research question, I have subdivided this question into sub-questions:

1. What are the traditional and newly emerging organizational forms? 2. What different sorts of employment forms and contracts are there?

3. What different forms of control mechanisms, incentives and rewards are there? 4. What makes an effective team, team collaboration and performance?

5. How do different control mechanisms, incentives and rewards in teams with mixed contract forms affect team collaboration and performance?

1.3 Research method

The aim of this research is to explore the effects of different employment contracts on the team collaboration and performance whilst working on a creative project. To study this

(10)

dynamic an inductive research approach was used, based on qualitative data. This approach allows me to develop my understanding of the dynamics between team members with different employment forms, and how different people might perceive these differences. Primary data was obtained in the form of face-to-face, semi-structured interviews with 13 people working in teams on a creative project with different contract forms; permanent, temporary and freelance. The data in the form of interview transcripts was analyzed by comprehensive examination of the text. The aim was to identify concepts and create overlapping themes that are useful to answer the main research question. Respondent quotations are provided to support the arguments.

1.4 Structure

First, in chapter 2, I address the theoretical constructs, which are important to understand the phenomenon of teamwork under different employment forms. These are different organizational forms, different forms of employment and contracts, different control mechanisms, incentives and rewards and effective team collaboration. In chapter 3 the methodology of this study is addressed. In this chapter, the research design and strategy, quality of the research, data collection and method of analysis are explained. In chapter 4, the findings of the study are presented, supplemented by quotes from the interviews. In chapter 5, the results are discussed, including the limitations of this thesis and recommendations for future research. Lastly, a conclusion is provided.

(11)

2. Theoretical framework

2.1 Organizational structures

We are all familiar with the well-known functional-, divisional- and matrix-structured organizations, where in a functional structure, the organization is separated into units based on tasks, in a divisional structure, the organization is separated into units focusing on one product, customer group or location and a matrix structure is a combination of both. However, research and practice indicate a shift towards a more dynamic and fluid form of organizing. To cope with changes in the market and an increasingly dynamic and uncertain environment, managers are looking for a new way of organizing, which often involves flatter hierarchies, decentralized decision making, fluid communication and fuzzy internal and external boundaries (Daft and Lewin, 1993; Hobday, 2000; Snow, Miles and Coleman, 2000; Arthur, DeFillipi and Jones, 2001; Schreyögg and Sydow, 2010). Too much rigidity and too little flexibility can increase inertia and decrease the absorptive capacity, the ability to identify, process and apply new information, of an organization (Van Den Bosch, Volberda and de Boer, 1999).

As a response to the call for a different way of organizing, previous studies have identified new and fluid structures, such as the network-based organization, the boundary-less organization and the modular-organization (Schilling, 2000; Schilling and Steensma, 2001; Schreyögg and Sydow, 2010). According to Sahaym, Steensma and Schilling (2007) technological change and the increasing use of IT have a positive effect on the use of loosely coupled organizations.

Goold and Campbell (2002) introduce the structured network as an alternative to the traditional matrix organization. The structured network is a way to manage complex

(12)

structures, which are characterized by multiple dimensions of focus, interdependent units and more complicated accountabilities. “These structures should encourage decentralized decision-making and unit autonomy, and strive to make managers clear about their intended responsibilities” (Goold and Campbell, 2002; pp. 98). A strength of this approach is the flexibility. The business units in these structured networks have the ability to adapt in response to circumstances. Also, the shared accountabilities promote collaboration rather than competition between units. A limitation of this organizational form is the possible lack of clarity.

The modular organization is an organizational structure that is designed to be able to separate and recombine components when necessary to be more efficient. According to Schilling and Steensma (2001) forces driving the use of modular organizations are heterogeneity of inputs and demands, availability of standards, technological change and competitive intensity. Aspects of the modular organization that follow to accommodate these driving forces are contract manufacturing, alternative work arrangements and alliance formation. Contract manufacturing and alternative work arrangements permit the organization to be loosely coupled to specific and specialized sources of capabilities, talent and resources and to use these sources when needed, while focusing on its own core competencies, which gives the organization a competitive advantage (Schilling and Steensma, 2001; Snow, Miles and Coleman, 2000). An example of an alternative work arrangement is the contingent worker, a temporary employee hired for a specific time-period or particular project. For the employee, short-term, project-based working arrangements may be interesting and valuable because of the build-up of career-capital in the form of knowledge and experience. However, it is often accompanied by a high level of uncertainty (Arthur, DeFillipi and Jones, 2001). This way of managing human capital may give the organization access to new knowledge and skills easily, however, it also has its disadvantages. When on a short-term contract, the

(13)

employees may not develop the same firm-specific knowledge as the long-term employees in a short period of time, and the knowledge they do acquire leaves the organization as soon as the project is over. In addition, they may also fall short when it comes to loyalty and shared identity, compared to long-term employees. (Schilling and Steensma, 2001).

Another organizational form that emerges as an answer to these needs is the project based organization (which will be referred to as the PBO from this point on). In a PBO, the organization and employees are organized around separate projects. It combines the structure of a matrix organization and the focus of one single project. The PBO is identified as the form of organization that is equipped to deal with a dynamic, fast changing environment, innovation and high uncertainty. The structure of the PBO permits it to adapt to the demands of each particular and temporary project (Hobday, 2000) and to constantly redesign and reinvent itself (Schreyögg and Sydow, 2010). Ebbers and Wijnberg (2009) have also identified the PBO as an emerging organizational form. In their paper, they identify three types of organizations, the normal organization, the project-based organization and the latent organization. The normal organization is a hierarchical organization with a long-term orientation, the project-based organization is a temporary organization for the duration of the project and the latent organization is a form of organization that binds together configurations of key actors in ongoing relationships (Starkey, Barnatt and Tempest, 2000). These actors often collaborate in a series of project-based organizations. These ongoing relationships become active when a project demands. Arthur, DeFillipi and Jones (2001) view the collaboration on a project-based organization as a ‘community of practice’, where people from outside the boundaries of the organization come together. One main strength of the modular-, project-based- and latent organizations is the ability to recombine certain parts or people to increase efficiency (Hobday, 2000). However, it also has its disadvantages, for

(14)

instance, they come with high opportunity costs in terms of lost advantages when it comes to economies of scale and mass markets, but also coordinating resources and capabilities across projects can cause difficulty for the PBO (Hobday, 2000; Schreyögg and Sydow, 2010). Another major inconvenience is the knowledge that is lost when a project ends and the PBO falls apart. This lack of continuity proves to be a struggle for organizations.

Latent organizations differ from network- and modular organizations because the key actors can continually reunite for specific projects. This ensures quality of output because the key players involved know and trust each other. These key players share a knowledge base and a continual learning curve. Latent organizations can be described as a snapshot of agent-broker relationships that persist through time where the broker brings all the agents together again for a specific project. These ongoing relationships can reduce costs and uncertainty through constant coupling and decoupling. Other benefits are an assured level of quality and predictable costs (Starkey et al., 2000). This constant recombining of actors counters the loss of knowledge and continuity as mentioned as a disadvantage of the PBO.

The degree to which these “new” types of organizations are suited depends on the type of industry and the degree of competitive intensity and technological change (Schilling and Steensma, 2001).

(15)

2.2 Employment forms and contracts

New ways of organizing go hand in hand with alternative employment forms and contracts.

The use of contingent workers and outsourcing is another way of increasing flexibility and adapting to the changing environment. Part-time jobs and freelance work are well-known examples of alternative employment forms (Suβ and Kleiner, 2007) and the decision of where to draw the organizations’ boundary is becoming more and more important. Organizations have to decide who they will include in the organization and who they will keep at arm’s length (Pfeffer, 2005).

Rousseau (1995) mentions that the move towards more temporary employment is based on a fear of commitment. Also, that in the future, organizations will become “shamrocks”, a term introduced by Charles Handy (1989) in Rousseau (1995). This means that organizations will consist of a core of permanent workers, supported by external contractors and part-time help, hence creating teams with mixed contracts.

Terms concerning different work arrangements that are widely used are core-, contingent-, peripheral- and networked employees and independent contractors (Rousseau, 1995). “Employment relationships can be evaluated on two dimensions, (1) the time frame of the relationship (short-term versus long-term) and (2) the degree of internalization or externalization (embeddedness in the organization)” (Rousseau, 1995; pp. 104). In terms of relationship duration, long-term workers are more likely to rely on relations within the organization. The worker and the employer invest time (and money) in one another and this reliance makes exit costly. Internalization versus externalization depends on the degree of socialization, training and firm-specific knowledge and development. Firm-specific knowledge and commitment will be higher for insiders and insiders are particularly important when specific skills and knowledge offer a competitive advantage.

(16)

Traditionally, employees were highly internalized and long-term. They were embedded in the organization and possessed a history and a future of employment with that organization. Emerging new ways of organizing, as discussed previously, are accompanied by short-term and externalized employment relations, in terms that the work is not performed solely by core-employees but by others with no history and (possibly) no future employment with that organization. Rousseau (1995) identifies four types of employees based on the previously mentioned continuums;

The long-term insiders are the permanent employees; they form the base of the organization. These core employees give the organization stability and are characterized by shared values and beliefs and are highly committed and involved within the organization. These employees grow within the organization and often work on various jobs. This leads to a mutual attachment between the employee and the organization. Because of this relationship, core employees often display extra-role behavior. Contracts often have many relational components.

The short-term insiders are people who aim to make a career in an industry, not a specific organization. These careerists are evaluated on their results without becoming fully organizationally internalized. Separate jobs are seen as stepping-stones and a means for individual learning. The organization misses out on this learning because the knowledge leaves the organization when the job is done. This construction resembles outsourcing and the organization risks the possibility of becoming “hollow”, which means that the organization lacks distinctive capabilities. Careerists provide flexibility on a low-involvement basis. They seek personal psychological success rather than collective or promotional success. Contracts are often highly transactional.

The long-term outsiders are periodic employees who work for a specific organization irregularly but over a long period of time. These employees often appreciate the flexibility.

(17)

The specific contract varies depending on whom they are committed to, the organization or themselves. The more external they view themselves, the more transactional the contract is. But when they are continually employed over a longer period of time, relational elements sneak in. This working arrangement resembles the networked- or latent organization as described by Starkey et al. (2000).

The short-term outsiders are external workers who are employed temporarily. This form of externalization promotes flexibility and meets various needs, of the organization as well as the individuals. Rousseau (1995) makes a distinction between being hired as an independent contractor or through an agency. For the organization, independent contractors bear lower costs and risks in terms of a long-term investment and benefits, than core employees.

In general, the degree of long- or short-term will influence the degree of membership, skills and work-norms an individual shares with the organization in question (Rousseau, 1995). As mentioned above, independent contracting is a relatively common employment form these days. The use of this employment form is increasing for many reasons, among others, cost saving decisions by new management, need for specialization and new technologies. There are several reasons to become an independent contractor, or self-employed, completely voluntarily and for the love of flexibility or because of organizational rejection. This form of employment offers the larger hiring organizations the possibility to shift risk from the employer to the employee, increasing uncertainty and vulnerability for the individual. Baines and Robson (2001) found several trends during their research among self-employed people. One of these trends was that many self-employed people experience insecurity, isolation and an uncertain position in the workplace. Freelancers are an example of self-employed people. A freelancer is a self-dependent, specialized person who can be employed flexibly regardless of location, time or employer. It is argued that freelancers show less loyalty, identification and commitment towards their employers than do permanent employees due to spending

(18)

limited time within an organization (Suβ and Kleiner, 2007). This corresponds with the short- and long-term outsiders as mentioned by Rousseau (1995), where the degree of commitment and identification depends on the length of the relationship.

For an organization, flexibility often means the ability to adapt the mix of assets and resources when a project calls for it, moving towards a modular organization. This is where the contingent workforce comes in. Contingent, or non-fixed, temporary workers can be hired, for instance through an agency, when the need for their competencies is high. An advantage of this type of labor is that it is quick, easy and brings new knowledge into the organization without the high costs that are associated with fixed employment. The number of these employees can be easily increased or decreased, to match the demand of the organization. Contingent workers offer organizations flexibility, but possibly at the expense of managerial control because of lack of direct commitment and loyalty towards the organization. For the contingent workers, this means higher risk and uncertainty than direct employment, and they also often receive fewer benefits (Rousseau, 1995; Schilling and Steensma, 2001; Sahaym et al., 2007). When the contract is well specified and transactional, the received benefits can be merely financial, but without the non-economic and social benefits that come with relational contracts.

The most basic form of a contract is on the premise of agency theory, where the principal designs a contract, which states the obligations the agent has to commit to (Eisenhardt, 1989; Rousseau, 1995; Prendergast, 1999). “The overall idea of agency theory is a relationship that mirrors the basic agency structure of a principal and an agent who are engaged in cooperative behavior, but have differing goals and differing attitudes toward risk” (Eisenhardt, 1989, p. 59).

(19)

The principal-agent perspective focuses on determining the appropriate contract between a principal and an agent, based on outcome uncertainty and risk aversion. The assumption is that the agent is more risk averse than the principal, since the agent is not capable of diversifying his or her employment but the principal is capable of diversifying the investment in labor. This leads to two assumptions; (1) if there is complete information and the principle can accurately monitor the agents’ behavior, a contract based on behavior is most efficient and (2) if there is no complete information and it is unclear if the agent is performing appropriately, a contract based on outcomes is most efficient. The latter transfers risk to the agent and motivates the agent to co-align performance to the principals’ preferences. “The heart of the principal-agent theory is the trade-off between (a) the cost of measuring behavior and (b) the cost of measuring outcomes and transferring risk to the agent” (Eisenhardt, 1989, p. 61).

The traditional principal-agent theory assumes goal conflict between the two parties; however, in highly socialized firms this is less of an issue. Without goal conflict, the agent will behave according to the principals’ preferences and the motivation for outcome-based contracting decreases, as the need for risk sharing is reduced.

Another aspect is the duration of the relationship, if the principal and the agent engage in a long-term commitment to one another, the principal will learn to assess the agents’ behavior, making behavior-based contracts efficient. However, when the principal and the agent engage in short-term commitments, information asymmetry remains high and hence outcome-based contracts are more efficient (Eisenhardt, 1989).

As noted by Prendergast (1999), an important observation in the agency-theory literature is that of the Informativeness Principle, which implies that any information that measures the performance and effort of the agent, objective and subjective, should be specified in the contract and used to reward the agent.

(20)

In synthesis with the three types of organizations mentioned earlier, normal-, PBO and latent-, from the paper by Starkey et al. (2002) two types of contracts are identifiedlatent-, transactional contracts and relational contracts. Transactional contracts often have a more narrow scope and economic focus and a usually shorter time frame. Transactional contracts also have short-term financial rewards and are more explicit. This type of contract is more suitable for a project-based organization and short-term external employees. Relational contracts have a broader scope and also non-economic objectives. It includes an open-ended time frame and the expectations and obligations arise from relationships. Relational contracts allow flexibility and have an implicit, long-term nature. This type of contract is more suitable for latent-organizations and long-term internal and external employees. The degree of implicitness and subjectivity comes with agency costs, unless the principal and agents’ beliefs regarding a good performance are perfectly correlated. This type of contract entails a degree of subjective evaluation of the agents’ behavior, from the principal as well as from the agent him or her self, enabling the use of self-enforcing contracts. For this to be efficient, repeated interaction between the principal and the agent is required, as the signals and measures for good performance should be common knowledge for both parties. Also, there has to be a degree of trust and confidence in one another. If there is a disagreement between the principal and the agent, based on differing beliefs about the appropriate performance, the agent may choose to respond to this by imposing costs upon the principal by lowering performance(Macleod, 2003).

Another distinction that can be made regarding contracts is between psychological contracts and implied contracts. An important difference between these two types of contracts is the degree of subjectivity that is allowed for. A psychological contract implies individual beliefs about reciprocal obligations towards one another, leaving more room for subjectivity and

(21)

perception, and an implied contract implies mutual obligations at the level of the relationship, which resides in the social structure and is more explicit (Rousseau, 1989). Rousseau believes that “contracts are fundamentally psychological and that agreement exists in the eye of the beholder” (Rousseau, 1989, p. 6). Linking this back to agency theory, the more psychological the contract, the more risk exists, for the principal as well as for the agent. Hence, psychological contracts only seem efficient when there is a long-term relationship between the principal and the agent.

2.3 Incentives and rewards

Simply put, a control mechanism is a means to coordinate a process in the desired direction. In the case of this study, a control mechanism is a tool with which the principal, or the organization, can manage the agents’, or employees’, behavior and performance. Ways to do this are through incentive and reward structures. Incentives and rewards steer and compensate desired behavior and performance (Groves, 1973; Prendergast, 1999). Also, “employees need to be rewarded in order to maintain their motivation to engage in certain activities” (Lindenberg and Foss, 2011 pp. 511).

As a part of agency theory, incentives and rewards are used as a trade-off to risk, in the sense that; the higher the incentive and reward, the more risk the agent is willing to bear (Prendergast, 1999). The most common way to incentivize and reward performance is by the application of Relative Performance Evaluation, which implies comparing one employees’ behavior to that of another employee carrying out similar tasks (Prendergast, 1999).

In terms of incentives and rewards, a distinction can be made between extrinsic and intrinsic nature. Extrinsic rewards are a tangible means of incentives and rewards; this type often refers to monetary rewards in the form of salary, profit sharing, pay for measured

(22)

performance (common in sales) or a raise in salary (Prendergast, 1999; Kunz and Pfaff, 2002). Other extrinsic incentives are employment benefits such as pension, vacation- and sick days. Intrinsic rewards are means that are symbolic, social and psychological in nature. Research indicates that monetary rewards and the economic value it holds are an effective way of motivating employees, but that there is also value in symbolic rewards. An important factor of monetary rewards is the perceived fairness of the reward in the way and the amount it is distributed. The perceived fairness influences individual performance, work attitudes and commitment (Mickel and Barron, 2008). The level of the rewards is dependent on the competitive process within the organization (Ebbers and Wijnberg, 2009).

2.3.1 Individual level

A basic principle is that employees respond to incentives that reward performance (Prendergast, 1999). The most basic way to pay according to performance and/or results is a piece rate, where the employee is paid based on his or her output in units. Research has shown that piece rates increase productivity, however, only in the case of “simple” jobs where clear measures of performance are available. This form of incentivizing and rewarding is most extrinsic of nature. Payment based on such an objective performance measurement may lead to employees performing in such a way that is beneficial to them but at the cost of the organization. An example of this would be in the case of a recruiter who is rewarded based on the number of recruits. If this recruiter would only focus on the quantity of recruits and not the quality, this would be beneficial to him or her but at the cost of the organization. Hence, previous literature suggests that compensation structures should be dependent on more subjective performance measures (Prendergast, 1999). A key issue in employer-employee relationships is the case of what each party owes the other (Rousseau, 1990) and

(23)

what one is worth. One’s worth is illustrated by the fact that senior employees, having more experience and firm-specific knowledge, are often compensated more generously than are newcomers. When an individual’s capabilities are extremely unique, an organization will be willing to lock in these capabilities and compensate accordingly (Williamson, 1979).

Besides continual pay for performance, organizations can offer individuals a bonus when their performance exceeds a certain performance threshold (Prendergast, 1999). This type of incentive induces individuals to perform better than initially expected. Sometimes, focusing only on extrinsic rewards can harm performance and productivity by decreasing intrinsic motivation, and turning effort into something an employee would rather avoid. This is less the case when employees find pride and joy in their work (Prendergast, 1999).

As mentioned, there are different types of incentives and rewards, and not all are monetary or economic in nature, many incentives and rewards are intrinsic in essence, such as social, symbolic and psychological rewards (Kunz and Pfaff, 2002). These social, symbolic and psychological rewards are the type of rewards that are not freely available in the market (Ebbers and Wijnberg, 2009). Forms of social rewards are the feeling of being valued, feeling of accomplishment, positive reinforcement, social capital, opportunities for growth and learning and prospects of promotion (Leana and van Buren, 1999; Prendergast, 1999; Griffin and Moorhead, 2011). Another type of reward is a strong reputation after the completion of a project; this is the case for the employee as well as the employer (Chiles & McMakin, in Ebbers and Wijnberg, 2009). This can lead to the assumption that reputation (or the risk of losing it) is also a strong control mechanism.

(24)

2.3.2 Group level

Not all rewards and incentives are individually based and Bailey and Cohen (1997) indicate that the organizational designs such as reward systems can have a great impact on how teams function. Group level rewards are important for establishing a common goal and linking this goal to joint production. Group level rewards emphasize that the goal requires collective effort and induces cooperative behavior, since the reward is dependent on the overall group performance (DeMatteo, Eby and Sundstrom, 1998; Lindenberg and Foss, 2011). Harrison, Price, Gavin and Florey (2002) also found that team contingent rewards lead to greater collaboration.

When a group of individuals collectively produces a single output, it may be difficult to decide how to reward everyone equitably for their individual contribution (Ouchi, 1979), this is especially the case when tasks are interdependent. In this sense, performance can be measured more accurately at the level of the group instead of individually (DeMatteo et al., 1998).

Group level rewards have two consequences, first, there is a possibility for free-riding or social loafing within the team and second, because of this, team members monitor each other’s performance which leads to peer pressure to perform well for the team (Prendergast, 1999). In the case of large group based rewards such as gain sharing, where the gains achieved by better performance are divided over the group, the risk of social loafing is higher because it is more difficult to recognize individual efforts in the overall group performance (DeMatteo et al., 1998). Group level rewards can also lead to internal competition as opposed to internal cooperation (Milne, 2007; Lindenberg and Foss, 2011).

When deciding how to reward employees, individual or group based, organizations first have to decide what behavior they want to induce (Kerr, 1995 in Milne, 2007).

(25)

2.3.3 Influence of rewards on motivation

“The structure and allocation of rewards may affect the motivation of individual team members” (Lawler, 1981; in De Matteo et al., 1998, p.143).

“Intrinsic motivation involves people doing an activity because they find it interesting and derive spontaneous satisfaction from the activity itself. Extrinsic motivation, in contrast, requires an instrumentality between the activity and some separable consequences such as tangible or verbal rewards, so satisfaction comes not from the activity itself but rather from the extrinsic consequences to which the activity leads” (Gagne and Deci, 2005; p. 331). Hence, extrinsic rewards have a direct effect on extrinsic motivation; however, focusing only on extrinsic rewards may have a negative effect on performance as it decreases intrinsic motivation (Milne, 2007). This is in line with Cognitive Evaluation Theory, which suggests that external motivators diminish the sense of autonomy and hence undermine intrinsic motivation. So naturally, intrinsic motivators such as appreciation, passion and a sense of autonomy increase intrinsic motivation and hence performance. A combination of extrinsic and intrinsic rewards is necessary to achieve total job satisfaction (Gagne and Deci, 2005). When rewards are group-based and employees find it difficult to see their personal contributions in the overall team’s performance, there may be a loss of motivation. To resolve this issue, managers can structure tasks in such a way that tasks are interdependent and close coordination is needed. This way, employees should be able to notice their personal efforts in the overall team performance, increasing motivation by social pressure (Hertel, Konradt and Orilkowski, 2004). The feeling of being indispensible to the team is a strong intrinsic motivator.

(26)

2.4 Effective team collaboration

There are many different forms of teams, and the use of teams is increasing as a response to the changing competitive challenges (Bailey and Cohen, 1997). The paper by Eckel and Grossman (2005) also indicates an increase in the use of teams in organizations, and that teams are an efficient and flexible way to coordinate a (production) process. Teams are important in the context of both regular organizations and PBO’s. In the case of regular organizations, there is a permanent core team, and, if the situation calls for it, additional temporary team members. In the case of a PBO, a temporary team is created which is resolved after completion of the project.

Previous literature gives multiple definitions of a team, where most definitions have the following constructs in common: a group of interdependent individuals who share the responsibility over tasks and outcomes, who share common values and commitment and are embedded in a shared social system (Bailey and Cohen, 1997, Stewart and Barrick, 2000, Katzenbach and Smith, 2005).

A well-managed team is necessary when working on a project basis, especially when the project takes place in an uncertain environment and the tasks are complex and interdependent. Part of managing a team is the coordination, which can be described as the linking and integrating of interdependent parts of an organization in working together to achieve an organizational goal (Bailetti, Callahan and DiPietro, 1994). Allocating interdependent tasks and coordinating communication and information flows are responsibilities of the project team manager (Simon, 2006).

Previous research indicates that team performance may depend on team structure (Bailey and Cohen, 1997; Gladstein, 1984; Hackman, 1987; Manz, 1992; Wageman, 1995, in Stewart and Barrick, 2000). From this can be derived that in order to achieve high performance, a team structure consisting of employees with multiple contract forms must be given careful

(27)

thought. Task design must take into account factors such as interdependence, tenure and rewards (Bailey and Cohen, 1997).

Self-leadership, the extent to which members of a team have the authority to freely lead themselves without external supervision and interdependence, the extent to which members of a team have to cooperate and interact to complete a task, are indicated as two of the most important factors influencing the team performance (Stewart and Barrick, 2000). Task interdependence increases team-effectiveness through cooperative behavior, helping, job satisfaction and quality of group processes (Wageman, 1995). Baker (1997) in DeMatteo et al. (1998) also found that reward and task interdependence produce higher levels of team performance. However, too much interdependence may raise the effort needed for coordination up to an inefficient level. Hence, for effective team performance it is important that tasks are interdependent but people are also able to work individually on those tasks. Creating a structure that recognizes both these factors is not easy (Milne, 2007).

Katzenbach and Smith (2005) also indicate four elements that make an effective team, these are; common commitment and purpose, performance goals, complementary skills and mutual accountability. Complementary skills and mutual accountability can be linked to task interdependence in the sense that all team members are dependent on one another to perform well. All these elements contribute to the collective identity and commitment of the team members.

2.4.1 Commitment and identification

A difficulty for a manager in a PBO is that he must organize a cohesive team of people from different departments, specializations, and sometimes-even organizations. These people are

(28)

expected to cooperate immediately and build a strong commitment towards organizational goals, which often results in conflict (Butler, 1973).

Moser (1997) in Suβ and Kleiner (2007) defines commitment as “a particularly intensive,

non-contractual relationship between an individual and a company and is figuratively referred to as a “psychological tie”. They also mention that in order to be committed, an

employee needs to “bind himself to a company beyond contractually regulated guidelines”. In the paper by Foreman and Whetten (2002), identity is tied to commitment. They indicate two views on commitment, the attitudinal view and the behavioral view. The attitudinal view is focused on the emotional and affective attachment employees have to the organization and the behavioral view focuses on the person’s investment in the organization, indicating that time and effort spent are sunk costs and thus raise the stakes which are involved with leaving the organization. The consensus among organizational science scholars is that there is always a combination of these two views. Linking this to teams with mixed contracts, there may be a difference in the degree of attachment and investment one has with the organization. For permanent employees, there is a high level of mutual investment, where the organization invests time and money in the individual and the individual invests time and effort in the organization. This mutual investment leads to a mutual commitment and attachment to one another, but also high exit costs. However, this does not necessarily apply to short-term employees, who do not receive the same amount of investment from the organization and hence do not feel the same commitment and attachment to the organization, and therefor have low exit costs (Rousseau, 1995). The difference in organizational commitment between long-term and short-long-term employees may have a negative effect on common commitment as mentioned by Katzenbach and Smith (2005) and hence on team performance.

In order to achieve effective team collaboration, it is important to foster team commitment. A feeling of ‘membership’, and hence a shared identity, can increase commitment to the

(29)

group, since the group’s fate is the individuals’ fate. Group identification leads to cooperation. In their studies, Eckel and Grossman (2005) find that team identification may increase the amount that members of a team value the team interest over the individual’s interest and a high degree of team identification may limit free-riding and shirking behavior. However, team identification alone is not sufficient to rule out opportunistic behavior. “Actions designed to enhance team identification contribute to higher levels of team cooperation” (Eckel and Grossman, 2005; p. 385). Thus, to increase overall team effectiveness through identification and cooperative behavior, managers should encourage team activities that are not directly related to the team production tasks. This can be achieved through social integration, which, according to Harrison et al. (2002) has a strong positive influence on team performance.

Loosely coupled working arrangements within an organization may have a negative effect on the shared team identity (Schreyögg and Sydow, 2010). Also, these ways of managing human capital may shift part of the risk towards the employee. To spread some of this risk, short-term employees may decide to work on more projects at the same time, which may also decrease the shared identity, feeling of ownership and team spirit within a specific project. If this is the case, the project may suffer from weak team coherence (Hobday, 2000). Also, in the case of a PBO, not all the employees will be part of the team or organization for the same time period which may increase differences in firm-specific knowledge, loyalty and commitment, which in turn may enhance turn-over (Schilling and Steensma, 2001)

(30)

3. Research methodology

In this chapter the methodology that was used for this research is discussed. Firstly, the research design and strategy are discussed, after which the quality of the research is highlighted. Following is a paragraph elaborating on the data sample collection and finally, in the last paragraph the method of analysis is discussed.

3.1 Research design and strategy

The aim of this research is to explore the effects of different employment form contracts on the team collaboration and performance whilst working on a creative project. In order to study this, the main research question is; How does diversity in employment contracts between permanent, temporary and freelance employees affect team collaboration and performance in creative projects?

For this study, an inductive research approach was used, based on qualitative data. Qualitative research is especially appropriate when answering a “How” question and to understand the perspective of those being studied (Pratt, 2009; Yin, 2013). Firstly, existing literature was thoroughly reviewed to form a basis of knowledge and afterwards interviews were conducted. This approach allows me to develop my understanding of the dynamics between team members with different employment forms, and how different people might perceive these differences. This research approach also permits the study to change along the way (Eisenhardt, 1989).

Since my research question is quite broad, it is applicable to various types of creative industries. However, to limit myself, the research is conducted in the Dutch film and TV industry. I have chosen this field because in this area people work very closely and

(31)

intensively together on temporary, creative projects. Also, because of the dynamic nature of this industry, the use of different employment forms is very common.

Primary data is obtained in the form of face-to-face, semi-structured interviews. These interviews were conducted within teams working on a creative project in the TV and film industry. To gain a full view from different perspectives, team members with different contracts were interviewed: permanent employees, temporary employees and freelance employees. The level of analysis is intra-team and the unit of analysis is the individual within the team.

Semi-structured interviews are used in order to collect the data because this allows me to gain a rich and detailed understanding of the data (Saunders, Lewis and Thornhill, 2009). Also, since my research question entails the perception of the respondents, open-ended questions seem appropriate to fully understand these perceptions and feelings about the subject. To secure all the collected data the interviews were recorded, and transcribed afterwards. The process of data collection is described in chapter 3.3.

By doing semi-structured interviews with different members of multiple teams, the research takes on the form of a case study. To be able to apply my findings more broadly, multiple case studies were conducted, in 6 different teams in different organizations.

The research design of this study is descriptive as well as exploratory and I wish to complement and build on the existing theory. For this research, I used a grounded theory building approach to develop concepts, in the tradition of Glaser and Strauss (1967) using the methodology as designed by Gioia, Corley and Hamilton (2013).

(32)

3.2 Quality of the research

To ensure the quality of this study, four aspects of trustworthiness must apply. These are respectively; credibility, transferability, dependability and confirmability (Guba, 1981). Credibility, also referred to as internal validity, is concerned with testing the interpretations with the data sources, in the case of this study, the interview respondents. This is also referred to as “member checks” (Guba, 1981). To ensure credibility of this study, respondents were sent the corresponding interview transcripts and given the opportunity to alter or leave out certain remarks. Also, during the interview, it was made sure that respondents understood the questions and that I accurately understood the answer.

Transferability, also referred to as external validity, is concerned with the rich description of the research setting and the generalizability to other contexts. To ensure transferability, a thorough description of the research sample and the research setting are given. However, it should be noted that contexts are never completely similar so generalization must be approached with caution (Guba, 1981).

Dependability, also referred to as reliability, is concerned with the trackable variance of the research. In other words, if someone else can repeat the research at another place and time (Guba, 1981). To ensure this, an audit trail is made by documenting the data collection, method and analysis.

Lastly, confirmability, also referred to as objectivity, is concerned with removing bias of the investigator (Guba, 1981). To ensure this, the method of analysis is clearly explicated to leave no room for bias of the researcher or the reader. This chain of evidence is open to external scrutiny.

(33)

3.3 Sample and data collection

The data for this research was collected qualitatively through interviews with people working on projects in the Dutch film and TV industry. One case deviates in industry; two interviews were done with people working in radio. The level of analysis of this research is intra-team, so I interviewed people from 6 different teams. The respondents have varying contract forms, consisting of permanent-, temporary- and freelance contracts. For this study, 13people were interviewed, of who 5 had a permanent contract with their employer, 4 had a temporary contract with their employer and 4were hired on a freelance basis, mostly for the duration of a single project. Overall, the respondents were from 6 different production companies and, as a team, worked in different stages and departments of a production project. In the end, the sample consists of 13 respondents, who were interviewed over the period of April to June 2015.

To approach possible respondents, I sent out e-mails to Dutch film and TV production companies. Since this did not prove to be very useful, often due to tight schedules of the production companies, I approached possible respondents through more informal channels. This proved to be more useful, since it seemed (and was confirmed in the interviews) that the Dutch TV and film industry is a “very small world”.

9 of the interviews took place in Amsterdam, one interview took place in Utrecht and two in Hilversum. 8 interviews took place at the office of the respondent, 2 interviews were conducted at the home of the respondent and 2 interviews were conducted at a café. One interview was conducted in writing via e-mail, due to time constraints of the respondent. The sample consists of 6 men and 7 women.

All the interviews followed the same interview protocol, however, with deviating follow-up questions (see Appendix II). The interview protocol consists of 23 questions, most of them open-ended. These questions were supplemented with probing questions, which seemed

(34)

relevant at the time. The questions are based on the theory described in chapter 2 of this thesis. The interviews lasted about 30 minutes to an hour.

Permission was asked to record the interview and confidentiality and anonymity were addressed.

3.4 Method of analysis

As mentioned above, this research follows a grounded theory development approach by creating new concepts and constructs in tradition of Glaser and Strauss (1967) using the methodology as designed by Gioia, Corley and Hamilton (2013). This is not a method or a handbook; it is simply a way of approaching qualitative data analysis (Gioia, Corley and Hamilton, 2013). The data collected are interview transcripts from semi-structured interviews. This data was analyzed by comprehensive examination of the interview transcripts. To structure the data, 1st_{order concepts were identified based on the respondents’} quotes and narratives. From these concepts, 2nd order concepts were identified to create overlapping themes within the data. Lastly, from these 2nd order themes, aggregate dimensions were created. This full set of 1st order concepts, 2nd order themes and aggregate dimensions is the basis of the data structure. The overview can be found in figure 1 in chapter 3.4.1.

To analyze the data, Nvivo was used. Nvivo is a useful tool to gain an accurate and transparent overview of the data by creating coding nodes. From here the emerging concepts can be grouped into overlapping themes, creating the aggregate dimensions (Welsh, 2002). I expect to find that the diversity in employment forms and contracts causes tension within a team, as a result of different goals and attitudes, and hence influences the team collaboration. The findings provide a further exploration on the subject.

(35)

(36)

(37)

4. Results

This chapter will present the findings of the influence of contracts on team collaboration and performance from the interviews with permanent-, temporary- and freelance employees in the Dutch film and TV industry. The findings are discussed according to the structure of the 2nd order concepts and aggregate dimensions that were identified from the interviews. Also, the statements are justified with quotes of the respondents. An overview of the respondents can be found in the Appendix. Besides the contract type, the nature of the respondents’ job is indicated by either C for creative or NC for non-creative to give additional insight in why certain statements may be made.

4.1 The project team setting

Project-based activities and mixed contract teams characterize the film and TV industry. All respondents agreed on this and did not know if it could or should be organized any other way. However, most of the respondents emphasized the importance of a stable core team that is supplemented by temporary and freelance employees when a project calls for it. This resembles the “shamrock” structure as mentioned by Charles Handy (1989) in Rousseau (1995). A proportion mentioned often is 20% core employees from within the organization and 80% from outside the organization, either on temporary or freelance contracts. Also, the various stages of the production process call for different team compositions, hence changing the group of people who are involved at each stage; “Some people are only involved in the development, those people almost always leave when the production phase starts. Then there is a whole different team. And it changes again in post-production, that phase is less intense. So it differs a lot, but I am there constantly” (permanent employee, C #12). This means that the size of the team also changes over time.

(38)

Another aspect characterizing the film and TV industry is the way people end up at their current jobs. Almost all the respondents found their current job through their network or their current employer found them based on a certain reputation; “They called me and asked if I wanted to come work for them [..] they knew who I was because of the work I had done before” (temporary employee, C #2). As can be derived from these statements and as mentioned by all the respondents, the Dutch film and TV industry has very strong ‘small world’ features where everyone knows everyone and connections are very important.

4.1.1 Transactional versus relational nature of the contract

Part of a permanent or long-term contract is a task description. This describes what is overall expected of someone, however, it does not entail exactly all the tasks and responsibilities. Also, due to the tenure of permanent employees, the tasks and responsibilities may change and grow over time. In this sense, permanent contracts are relatively transactional in nature with relational elements sneaking in based on tenure.

From this study, it should be noted that temporary contracts resemble either permanent contracts or freelance contracts, based on the prospect of future employment at the current job. Temporary employees who expected to stay with their current employer for a longer period of time confirmed statements made by permanent employees and temporary employees who did not expect to stay with their current employer for a longer period of time confirmed statements made by freelance employees. This distinction is noticeable throughout the results as, sometimes; there will be no clear separation in answers by temporary employees. Taking this distinction into account, temporary contracts can be open to changes and job enlargement; however, they can also state quite explicitly what is expected of one for a short period of time.

(39)

Freelance contracts range from very transactional to very relational in nature. Three of the four freelance respondents do not have an actual contract with their current employer or almost any employer. These types of arrangements are relational in nature and are based on verbal agreements. The main reason mentioned for this type of arrangement is all the paperwork that comes with formal contracts; “I make verbal agreements and we always follow through. Nothing is in writing because it is such an administrative hassle” (freelance employee, C #11). This informal arrangement may work for some employees, however, it also has its disadvantages. For instance, when a project is terminated or wrapped up sooner then initially agreed on and there is no more work to be done. If there is no contract, there is no guarantee that one will be paid for the agreed upon period of time. Also, because of the informality agreements may lack transparency; “Sometimes I don’t know exactly how much I get paid for a job and schedules can be unclear” (freelance employee, C #6). Most freelance respondents indicated that this is a regular practice in this industry.

The other side of freelance contracts is the more transactional contract where the tasks and expectations are very clear. This type of arrangement seemed to be used mostly for shorter jobs where there is little time for explaining. One aspect of freelance contracts that is clear in almost all of the cases is the compensation agreement. I will elaborate more in this in chapter 4.3.1.

4.2 Advantages and disadvantages of the contract form

All contracts have advantages and disadvantages, both for the employee as for the employer. These advantages and disadvantages are mostly based on the degree of security versus uncertainty, freedom and independence, continuity and knowledge and the cost consideration. Some of these factors are mediated by the amount of experience in the industry.

(40)

4.2.1 Security versus uncertainty

For permanent employees, the main benefits mentioned by the respondents are security of a job and a fixed income. This sense of security translates into more commitment towards an organization; “I notice the difference with permanent employees [and freelancers], they have more commitment towards the organization, which is logical because they have the prospect of staying here for a while” (permanent employee, C #12). This commitment is two-way; the employee is willing to work hard and the organization is willing to reward the employee by investing in him or her; “As a permanent employee you can learn more because you are there for a longer period of time, people are able to invest more in you and take time to explain things, that is something I am willing to work hard for” (permanent employee, C #12).

Another advantage mentioned is the fact that permanent employees are judged less on one time performances and the risk of performing badly is less than for freelance employees; “At company E they will always try to find something else for you if a project does not suit you well” (permanent employee, C #10).

Because permanent employees have such a strong commitment towards an organization and vice versa, the exit costs are very high when one wants to leave the organization; “As a permanent employee, if you quit your job it is gone for good” (permanent employee, C #10). When an organization has invested time and money in an employee and the person leaves the organization, the organization may interpret this as a betrayal of trust and loyalty.

For temporary employees, the feeling of security versus uncertainty is dependent on the prospect of future employment at the organization. One of the temporary respondents was quite confident about the possibility of staying at the company and hence did not experience

(41)

any insecurity about keeping the job. Other temporary employees knew that they would not be able to stay at the company and were already looking for another job.

Freelance employees do not have the same security as permanent employees when it comes to their job, they constantly have to think ahead and figure out how to get their next job. Some of the freelance respondents indicated that this insecurity gives them a lot of stress; “I would rather know what I can count on and have security” (freelance employee, C #3). Another disadvantage mentioned by all freelance employees is the risk, in terms of lack of employment benefits such as vacation days and pension. Other benefits freelance employees are missing out on are training and career advice. Due to current budget cuts in the creative industries employment benefits for non-core employees, such as freelance employees, are the first to go; “I am missing out on everything that can support me in the learning experience [..] career-wise I would have achieved more if I was a permanent employee” (freelance employee, C #11).

4.2.2 Freedom and independence

For permanent employees the security of a fixed job goes hand in hand with less freedom about which projects to choose. A permanent employee who also works on a freelance basis occasionally stated; “The advantage of working as a freelancer is that, each time, you can think; I am not doing it [a project]. And as a permanent employee you can do that too but then you will lose your job definitively” (permanent employee, C #10).

This aspect is much more present for freelance employees. When facing the decision between working on a freelance basis or a permanent contract, the choice between flexibility versus security is the most important consideration; “I worked long-term for one company before, but at some point I was done with the fact that I did not have the control, I think it is very

(42)

important to work from passion and you can not do that if you are not your own captain” (freelance employee, C #4). Being able to choose the jobs one works on seems to compensate for the uncertainty.

4.2.3 Continuity

Permanent employees agree on the fact that with a long-term contract you can actually build something long lastingcompared to fleeting relationships based on temporary- and freelance contracts.

For an organization as well as the employee, one of the main benefits of working with permanent contracts is the continuity and knowledge that one gains and that stays in the organization. Because of the investments organizations’ make in people they are building a solid knowledge base; “The longer you are there, the more you hear, see and know” (permanent employee, C #10). Permanent employees help to build the organization; “When you have a core of permanent people you can make sure that the knowledge is documented and absorbed so it stays in the company. Then you can really invest in the company” (permanent employee, NC, #5). This continuity of people and knowledge is also beneficial to team and overall collaboration; “A permanent employee knows how the organization works, how communication is organized. This way you can interact a lot better with your superiors and co-workers” (permanent employee, C #12).

Temporary employees can also add to the continuity and knowledge base if there is a prospect of staying at the organization. Otherwise these temporary employees take the acquired knowledge with them when the project ends and they leave the organization. This may inhibit the organization to invest in these people, which is not beneficial to building a knowledge base or the employee as an individual.

Is everyone part of the gang? : the influence of diversity in employment forms on collaboration and performance