Firm-wide incentives and mutual monitoring at continental airlines

In February 1995 Continental Airlines introduced an incentive scheme that p romised monthly bonuses to all 35,000 hourly employees if the company achie ved a firm-wide performance goal. Conventional wisdom suggests that free ri ding will render such schemes ineffective. We present evidence indicating t hat the incentive scheme raised employee performance despite the apparent t hreat of free riding. To explain why the scheme may have been effective we argue that the organization of employees into autonomous work groups enable d Continental to induce mutual monitoring among employees within each work group.