The production processes at many firms rely on a highly choreographed and interdependent network of workers performing specialized jobs. We designed and implemented a targeted employer survey to measure the extent of coordination in work processes. We link this firm-level coordination measure to administrative data and find that firms with a more coordinated work process are more productive, pay higher wages, and experience lower worker turnover. Yet, these firms suffer more severe negative consequences from unexpected worker absences and adopt various strategies to mitigate such risk, the reliance on which we document. We also find that more coordinated employers suffer worse consequences of negative aggregate shocks. Finally, we discuss policies that may encourage firms to adopt more productive coordinated work processes by increasing the resilience of coordinated employers to negative idiosyncratic or aggregate shocks.
The paper was presented at the 2022 Carnegie-Rochester-NYU Conference on Public Policy on “Economic Resilience and Interconnectedness” held at the Tepper School of Business, Carnegie Mellon University in Pittsburgh on November 11-12, 2022. Benjamin Pugsley gave a great discussion on this paper.