In 1974, when the U.S. automobile industry was just beginning to sense the end of business as usual, the Volvo company was building a new plant in Kalmar, Sweden. It was a final assembly plant, with a capacity of thirty thousand cars per year per shift. And yet it was not an assembly line plant. In a break from the tradition established by Henry Ford, the production process was developed to accommodate cooperative work teams. In the Kalmar plant, each auto chassis is placed on an electrically driven carrier and is moved from work area to work area. Each area is “owned” by a work team of fifteen to twenty people, who complete a major subassembly – the steering gear or electrical system, for example (Katz and Kahn 1978: 729–30).

How does the hierarchy monitor, control, and reward the individuals in the thirty work teams? For the most part, it does not monitor, control, or reward the individuals at all. Those jobs have been delegated to the work teams themselves. The team decides its own allocation of manpower to tasks, determines its own pace and rest schedules, and inspects its own work. The firm's compensation is based on team, rather than individual, production. Group-based compensation should theoretically create an incentive for individuals in the team to shirk; but the firm allows the team to deal with that problem as it sees fit.