Wages : Part 6

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

(Page 11 of 18)

In line with this policy are the systems of benefit insurance for accident and sickness maintained and partly supported by many companies; the pension systems which have been adopted within the last few years by some of the greatest and most progressive companies in America; the free medical service, both in case of factory accidents and sickness at home, which other firms provide for employees; and various other activities contributing to the welfare of workers, both during working hours and afterwards.

Employers are coming more and more to see that this is the case and to devote both thought and money to the elimination of conditions which cut wages below par.

Whatever reduces hazard, discomfort, loss of time, uncertainty, or the cost of living for workers adds value to their wages and is a means of influencing their attitude towards the company.

Some employers are continually exercised to keep the wages of their men from falling below par. Others are equally solicitous that their men may regard their wages as above par. This classification is a real one and was made plain by some of the interviews referred to above. Thus in answer to the question, "What special method do you employ to make men satisfied or pleased with their wages?" one employer immediately put his own interpretation on the question. To him it meant, "What method do you employ to keep your men from being dissatisfied with their wages?"

His answer was: "By paying them somewhere near what they ask or expect. If we don't," he added, "they go out on strike and we have to compromise."

The majority of successful employers have advanced beyond this negative, defensive attitude and take a positive and aggressive position in dealing with the problem.

Instead of assuming their work accomplished when the men are not dissatisfied or rebellious, they do not rest until every dollar paid out in wages is above par in its influence upon efficiency.

Thus in innumerable ways the progressive employer increases the value of all wages he pays by making them appeal to the reason and to the instincts of workers in a way un- dreamed of by less enlightened men. The purpose of wages is to produce a certain psychological effect and to promote the most favorable attitude on the part of the worker. The methods of increasing the purchasing power of money thus spent is one of the most interesting and yet complex problems which the business man has to face.

This chapter shows the psychological ground for the following statements: -

Employees differ in their response to piecework rates and to salaries. Some respond more satisfactorily to one and some to the other.

When the development of men for better positions is of prime importance, the piecework system is not to be adopted. If the quantity of work per unit of wage is of greatest importance, then some form of wage other than fixed salary should be used.

An employee should not be dismissed as hopelessly lazy till he has shown this attitude in more than one department or has failed to respond to different forms of stimulation.

Changes in wages may often be placed under the authority of some person or committee other than the immediate superiors of the employees involved. This authority may be vested in the direct representatives of the executives or in such a committee as would be formed by representatives of the executives and also employees from the different departments of the establishment.

Payment of wages, so far as possible, should be made to appeal to the instincts for social distinction and for acquisition as well as to the instinct for self-preservation.

Wages should never be reduced without a tactful and sincere attempt to convince the men of the necessity of such an act.

Increase in wages may well be made a personal matter. Some firms, however, are most successful with a mechanical wage system in which employees know exactly the conditions necessary for an increase in wages.

All work should be thoroughly supervised and inspected so that employees know that good service will be recognized and rewarded.

The policy of filling all positions from the ranks seems growing in favor, since it gives certain hope for advancement and hence greater satisfaction with the present wage.

The wage may well include a tacit insurance for the future. Employees should be assured that so long as they remain faithful to the firm, their work and pay will continue, and that in accident or old age they will be provided for. Accepted thus, the wage secures increased service.

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.