Wages : Part 3

Increasing Efficiency In Business: A Contribution to the Psychology of Business
by Walter Dill Scott, Ph.D.

(Page 8 of 18)

In judging of the relative merits of fixed salaries as compared with other methods the experiences of individual firms offer no certain data. The relative merits and demerits are best disclosed by a psychological analysis of the manner in which the various devices appeal to the employee's instincts and reason.

When wages are based on commission, piece rate, or a bonus or premium system, the stimulus to action is constantly present. Every stroke of the hammer, every sale made, every figure added, increases the wage. The wage thus continuously beckons the worker to greater accomplishment.

All other considerations lose in importance, and the mind becomes focused on output. The worker is blinded to all other motives, and invariably sacrifices quality unless this be guarded by rigid inspection. The piecework or task system thus influences the worker directly and incessantly without regard for the particular instinct to which it may be appealing. Every increase in rate adds directly to the means of self-preservation, of social distinction, and of the accumulation of wealth.

The worker with a fixed salary or wage does not feel as continuously the goad of his wage. It is less in mind and does not control his attitude toward his work. The man on a fixed salary, therefore, will not produce so much.

If he be a workman, he may take better care of his tools, keep his output up to a higher standard of quality, prepare himself for more responsible positions. If he be a salesman, he may be more considerate of his customers and hence really more valuable to his employer; he may be more loyal to the house and hence promote the "team work" of the organization, and he may because of his more receptive state of mind be preparing himself for much greater usefulness to his house. If he be a superintendent, he may be more thoughtful of his men, or more scrupulous for the future of the business.

Production methods or labor conditions are often such that piecework is impossible. There are many functions and processes which thus far have not been satisfactorily adjusted to task systems; there are others (the inspection service in a factory, for instance) where a premium on increased output would defeat the first purpose of the service. Where results can be accurately measured, however, and the quality of the service can be automatically secured or is not sacrificed by concentration upon quantity, the task system - whether it take the form of piece rates, premiums, or bonus - has such superior psychological advantages that it will probably come more and more into use.

Under the general heading quoted above -

"How do you make the most of the wages paid your employees?" - the following question was asked: "What special method do you employ to make men satisfied or pleased with their wages?" The answers were most interesting and instructive. One manager having many thousand men in his organization narrated various methods by which he kept in personal touch with his men, and turned this personal relationship to the advantage of the house.

One illustration will make clear the line he pursued. In the card catalogue of the employees, the birthday of each is noted, the executive recognizing that for the average man this is an anniversary even more important than New Year's.

If for any reason a member of the organization deserves or requires the executive's personal attention, his birthday may be chosen as the date of the interview. Then whether the man merits an advance for extra good work or needs help to correct a temporary slump in efficiency, the reward or the appeal takes on added meaning because it coincides with a turning point in his life.

To facilitate the plan, the manager's file of employment cards is arranged, not by initials or departments, but by birthdays. Each workman's name falls under his eye a few days in advance, long enough to secure a report from his foreman, if knowledge is lacking of his progress.

As I entered this manager's office, I met a young man coming out. He had been in the company's employ only a few months and his relations with the organization had not yet been established. Asked for a report, his foreman gave him a good record and recommended a small advance. Imagine the surprise, the instant access of pride and loyalty, the impulse towards greater effort and efficiency, when the young man was called into the manager's office on his birthday, congratulated on his record, and informed that he would start his new year with an advance in wages. Double the advance, if allowed in the usual way, would not have so impressed and satisfied him. The increased wage made its appeal direct to the instinct for social recognition, and hence was very effective.

Such a method does not admit of general application. Practiced in cold blood, it might even be harmful. But in this case, it struck me not as an act of selfish cleverness, but as the expression of a real sympathy and interest which the manager felt for his men. The cleverness lay in the recognition that no man is ever so susceptible to counsel, to appreciation, or to rebuke as on his birthday, when the social self is especially alert.

In other organizations, the effort to extend this factor of human sympathy to each worker and to see that full justice is rendered to him takes the form of a department of promotion and discharge. The head is the direct representative of the "front office" and is independent of superintendents and foremen. No man can be "paid off" until the facts have been submitted to the consideration of this department. Here also the man may present his case to an unprejudiced and sympathetic arbiter.

About the Author

Walter Dill Scott (1869-1955) was one of the first applied psychologists. He applied psychology to various business practices such as personnel selection and advertising. In 1900 he was appointed instructor of psychology and education and director of the psychological laboratory at Northwestern University. In 1905, Dr. Scott was made professor of psychology and head of the department of psychology.