Innovative work practices such as incentive pay, teamwork, and flexible job assignments are often said to increase the productivity of labor. However, there is continuing debate about both the nature of the effects on productivity in theory, and the extent of the effects in practice. This study analyzes the effects of human resource management (HRM) practices on 36 steel finishing lines owned by 17 companies. It finds that HRM innovations are generally introduced in particular clusters, and that these clusters of employment practices have a greater effect on productivity than the individual practices alone. Thus it is consistent with theories which stress the importance of complementarities among work practices.
