THE contract, express or implied, which ties a man to his job is one in
which good faith must have the deepest significance. From the employer's
stand-point, the work done within his business is the commodity he
offers to society. Faithful work is essential to the success of the
business—faithful employees its greatest asset.
For the employee, this contract concerns the most precious of all
commodities—his own life—which he invests in the organization that
employs him. His past experience, present status, and future hopes arc
all packaged in this fateful agreement. If he does not have confidence
that he is "getting a square deal" in return for his outlay of energy
and skill, he suffers a deep frustration that may be harmful to his
efficiency.
The question of a person's worth is not determined, of course, by the
whim or benevolence of the employer. A cartoon pictures a bar of iron
worth $5.oo. The same bar of iron made into horseshoes would be worth
$10.50. Made into needles, it has a value of $3,285.01; and if turned
into balance-springs for watches, it becomes worth $250,000.00. The
value of any material is not determined so much by what is in it as by
the service it performs.
So it is with people. Their economic value depends on what they produce.
This, in turn, depends upon great many complicated considerations. Only
under the most primitive conditions of production and barter might the
worker hope to get the full value of his production. In the Middle Ages,
the problem was already so complex that theologians argued endlessly
over the just wage and the just price. Today, with machine production
and the extreme specialization that separate the producer from the
ultimate consumer, the problem of what is a just wage in any particular
instance becomes practically insoluble.
The president of a Brazilian Rotary club, in an address on employee
relations, expressed part of the dilemma as follows:
The principle is that it does not appear to be right to fix the same
remuneration for good and bad elements alike, and to lose sight of the
immediate aim of a salary which should correspond to the work produced.
We admit that the minimum wage was a necessity to avoid abuses. But from
there onward, the actual system of increasing wages under threats, or
under impositions, including prosperous concerns with those of smaller
resources, comes to be a crying inequality.
The difficulty of actually achieving a square deal with employees only
increases the need for good faith in seeking one. An open and earnest
effort to establish a fair scale of rewards is needed. But, in
describing the efforts of some Rotarians, no claim is made that any one
of them actually achieves a square deal or that a specific plan could be
used in every business. They are reported, rather, as manifestations of
good faith and sincere intention.
Each business has its own special problems and must cut its coat
according to its cloth.
The modern sciences of aptitude-testing and job-analysis are useful in
finding the relative worth of employees in the same business. Keeping
square pegs out of round holes, and making sure that each task is valued
correctly in terms of difficulty and experience does not determine,
however, what wages should be paid. At best, human abilities are
conserved with resulting benefit to all concerned.
A Swiss Rotarian was able to develop a simple plan for determining wages
in a plant where there had been many complaints and jealousies among the
workers. A basic wage was graduated according to the age and domestic
responsibilities of the worker. To this was added a so-called active
wage based on the degree of skill or experience required by the
particular job. In addition, a productive wage was geared to output.
Since each part of the plan was assessed on a common point system, the
satisfaction of the workers arose from knowing exactly what was required
to improve their position.
A rather similar point system is used by an American insurance company
to decide the readiness of its employees for promotion. The following
qualities are taken into consideration: teachability, supervisory
responsibility, initiative, public relations, analytical ability,
personal friendliness, monetary responsibility, application, volume of
work, neatness and accuracy, thoroughness.
Each quality (teachability, for example) is assessed according to the
following definitions, and the capacity for advancement emerges from the
average score after all the qualities have been assessed.
Needs repeated instruction (unsatisfactory in present position)..... 1
Requires detailed instruction (decreasing efficiency)..... 2
Slightly below average (keep in present position)..... 3
Average (advance questionable)..... 4
Slightly above average (advance slowly)..... 5
Readily grasps new ideas (advance steadily)..... 6
Outstanding ability (advance rapidly)..... 7
An obvious weakness of this system is the variability of human
capacities and the relative importance of particular qualities to any
given job. The chief advantage, however, is in making such assessments
known to the employee. In this way he may see where improvement is
needed and be convinced of the good faith of his employer and that he is
receiving a square deal. Many Rotarians take pride in the fact that
their good faith with employees is so evident, and working conditions so
satisfactory, that: no employee has ever been moved to ask for a raise.
It would be ideal if ambition could be directed always into constructive
effort through the assurance that increased productivity would reflect
automatically in the pay check. The National Industrial Conference Board
(U.S.A.) offered a critical study of “measured day work.” A base rate of
pay was established after a job had been valued in terms of complexity,
skill, mental, and physical demands. This rate was then compared with
prevailing rates for similar jobs in the same area. In addition, extra
compensation ranging from 15 percent to 25 percent of the measured day
rate was given for production, quality, versatility, and dependability.
One result of this plan has been less spoilage, because the worker knows
that each piece of scrap affects his rating. There is also an eagerness
to develop short cuts in manufacturing, and closer relations with
supervisors.
One disadvantage noted was that exceptionally fast workers are
discouraged by the limited variation between normal and maximum rates.
That weakness was overcome by a Rotarian who operates a factory with
fifty employees. He made them virtual sub-contractors of the orders
which came into the plant. The employer furnished the material and
machines, and bore the overhead expense. The worker supplied his labor
at a rate considered fair to him, to the company, and to the customer,
From the moment this sub-contract was accepted, the worker became his
own boss. The faster he worked, the more orders he could handle and the
higher his wages would climb.
This scheme was profitable to the company because it permitted exact
cost control, and the results in employee satisfaction were amazing. Not
only did ambition lead to greatly increased earnings, but there was no
need for pushing or for stop-watch holding and little need for
inspection because a spoiled unit had to be done over on the employee's
own time.
There is ample evidence that thorough development of such plans is
beneficial to all concerned. Another company with an incentive-pay plan
reported an 80 per cent decrease in man-hours for the same volume of
goods, a $5,000 annual wage for laboring men, lower prices to the
customer, and dividends on a stable basis from year to year for the
stockholders.
Business stability interests not only stockholders but everyone affected
by the boom-and-bust cycle that has plagued world economy. Most affected
of all is the employee who is laid off during slack times. One man so
affected strode into the office of his Rotarian employer.
"You can't do this to me!" he declared bluntly. "You can't turn me out
onto the street. You wouldn't do that to a horse. You can't do it to me"
The employer was embarrassed. "Can't you go back to the job you came
from?" he asked.
“No, I can't” said the man. "I had just got a little business started
when you sent a man to ask me to work for you. I didn't know that you
would just keep me a couple of months—just long enough to ruin my
business—and then turn me out"
This caused the Rotarian to think hard. His business was of a seasonal
nature, and such layoffs were quite common and customary. But were they
fair to all concerned? By careful planning, he was able to reorganize
his operations so that every employee -was hired at an annual wage. The
key to his plan -was flexibility. New employees were assigned to an
"extra gang" which fills in wherever there is a rush. Whole departments
were organized as extra gangs. In this way, it was possible to keep his
labor force busy and earning most of the year.
That this plan, coupled with an incentive system on a departmental basis
and profit-sharing, is satisfactory to labor is evidenced by the recent
renewal of a union contract which included a guaranteed annual wage for
2,080 hours each year. Actually this type of contract is being sought
increasingly by trade-unions, and a U.S.A. government study indicates
that introducing these features in most seasonal industries would not
increase costs more than six per cent if coordinated with existing
system of state unemployment compensation. While no panacea for
insecurity, this study concluded, the annual wage does make a
substantial contribution to the stabilization of purchasing power.
How purchasing power can be "stabilized" was described at a Christmas
party in an American pottery plant where the owner, who had been on poor
relief 14 years previously, distributed $705,000 to his 827 employees.
Each of the 88 men and women who had been with the business ten years or
more received a bonus of $3,500. This story-book rise to riches began
when the employer with seven other relief clients came to live in an
abandoned pottery building. "My road has not been an easy one','
remarked the employer to his party guests, "but no man could ask for one
more pleasant. Many people would like to be a king, possess great
riches, or live a life of ease, but I would not trade your friendship
tor anything in the world."
This story has a heart-warming sequel. More than a year later, a
disastrous fire left half the pottery a charred and twisted ruin.
Uninsured, the owner thought that he was ruined, but he had not counted
on his friends. While the building still smoldered, hundreds of
employees and townsfolk were at work feverishly clearing away the
debris. Manufacturers of materials were promising quick delivery- To
show that he could count on them, employees put $1,000 into a pot before
the fire was out, and subsequently worked at a low hourly rate on the
unfamiliar task of rebuilding. Within two months, the plant was restored
and equipped for a greater volume of production. Once more the employer
had an apt comment: "I've invested in human nature in this community and
no man ever received greater profits than it goodwill."
The theme of "you can't take it with you" has often been a dominant note
in profit-sharing, but the aim of giving employees a square deal and
actually increasing profits through stimulating their keenness, inspires
the more carefully thought-out plans. Whether as largess, as a
demonstration of good faith, or as plain good business, the tangible
participation of employees in the
success of capitalist enterprise is receiving widespread attention.
The Eastern Rotary Wheel reports a club meeting in Calcutta, India,
where profit-sharing was seen as the cure for labor conflict,
particularly in small concern where there is intimate contact between
all sections. Under the New Zealand Company Act (1924 and 1933) a plan
for "labor shares" designed by a Rotarian became legal. In this scheme
of employee-partnership, control of the business as well as profits is
assigned on the basis of personal service. Mountains of statistics were
accumulated by a subcommittee of the U.S.A. Senate in its "Survey of
Profit-Sharing" (1938) to demonstrate that profit-sharing had been
practiced successfully by large impersonal corporations as well as by
small firms.
The objections of labor to profit-sharing, on the grounds that it is an
uncertain form of reward and hampers organization, can be overcome. This
was demonstrated in the experiment of a Birmingham (England) Rotarian
who had had a long experience in sharing his profits. Some skeptics told
him: "Yes, men will behave all right while it pays them. If
circumstances were such that by showing goodwill it would affect their
pockets, there would be a different tale to tell" Also, he heard some
trade-unionists say that a firm that has profits to share should pay
them out directly in higher wages.
The Rotarian was so impressed by this last argument that he decided to
present such a scheme to his employees—an end to profit-sharing and a
general raise in wages. To his surprise, the general meeting of
employees received the plan without enthusiasm. Everyone agreed that it
was quite generous, but each man who spoke seemed to have the fear that
it would spoil the good spirit that had existed hitherto. One remarked
that they had ceased to think of their jobs merely in terms of what they
were going to get out of them, and did not want to be deprived of their
dignity as partners.
A business that distributes half of its net profits to employees and is
now five times as profitable as in the old days when the owner kept all
the profits for himself, found that it could accomplish this happy
result only with the co-operation of the union. Membership in the union
was made a prerequisite of sharing. Dividends were paid monthly
according to the changing ratio of the sales value of production to
labor costs, With the co-operation of the union in allowing workers to
change jobs and to help each other, unit efficiency increased 54 per
cent in the first year.
But what of the non-profit organization? Where there is no opportunity
for profit-sharing, or similar employee incentives, can other means be
found to provide the square deal for employees?
Rotarians need only to look to their central office in Evanston and to
its branch offices to find the answer to this question. Rotary
International is strictly a non-profit organization. Its revenue is from
a fixed per-capita contribution of its member clubs. Its income
increases only in proportion to the increase in the size of the
organization—and such increase brings with it a corresponding increase
in expenses. Here is found a staff, averaging some 200 persons, who can
have no delusion that increased production will result automatically in
increased revenue, which will, in turn, be reflected in
the pay envelope. They are not dealing with production units and follow
no sales graphs or charts. They deal in intangibles. Their interest is
in quality production rather than quantity.
Yet those Rotarians, who have worked closely with these men and women as
members of the board of directors or of Rotary International committees,
have never failed to marvel at the loyalty, the sincerity, and the
esprit de corps of the staff.
Add to this the fact that the governing body of Rotary International
undergoes an almost complete change of personnel annually and a complete
change every two years and one wonders, therefore, what may be the
secret of this spirit of co-operation between employer and employee.
Frankly, there is no secret. It is merely an example of vocational
service in action. Rotary International practices what it preaches.
Rotary International provides for its employees pleasant working
conditions and a healthful, friendly atmosphere in which to work.
Surely, the principles of vocational service are getting more than
lip-service at the headquarters of Rotary International—and in the
branches of that office. Rotarians are cordially invited to inspect
these "plants" at the first opportunity.
In all these efforts that Rotarians and others are making to achieve a
square deal with employees, the keynote is expansion, increased
efficiency, and employee satisfaction. In the square deal, the employee
plays his part, convinced and inspired by the good faith manifested by
the employer. He begins to identify his interest with the firm and to
share the vision of its possibilities. He comes to appreciate the role
of capital in storing up profits for a rainy day and investing in new
machinery to improve the productivity of labor.
When the first census of manufacturers in the U.S.A was taken 105 years
ago, the average worker was putting in 69 hours a week and took home
$4.74. The manufacturer had on the average $557 invested for each worker
he employed. Today the employer has about $10,000 invested for each
worker who puts in about half as many hours and draws nearly twenty
times as man dollars. The importance of this form of profit-sharing will
not be lost on the employee who appreciates
square deal, and he will seek to reciprocate by refraining from wildcat
strikes, by meeting production standards, and by striving to attain the
qualities of the faithful employee specified in the following statement:
A SEARCH FOR MEN
Wanted
A man for hard work and rapid promotion, a man who can find things to do
without the help of a manager and three assistants.
A man who gets to work on time in the morning and does not imperil the
lives of others in an effort to be the first out at night,
A man who is neat in appearance.
A man who does not sulk for an hour's overtime in emergencies,
A man who listens carefully when he is spoken to and asks only enough
questions to insure the accurate carrying out of instructions.
A man who looks you straight in the eye and tells you the truth every
lime.
A man who does not pity himself for having to work.
APPLY ANYWHERE: The world is searching for such men.
Perhaps Winston Churchill was thinking of such men when he described his
view of the square deal enlarged lo a national scale:
"Our aim is to build a property-owning democracy, both independent and
interdependent. In this I include profit-sharing schemes in suitable
industries and intimate consultation between employers and wage-earners.
We seek as far as possible to make the status of the wage-earner that of
a partner rather than an irresponsible employee.
"It is in the interest of the wage-earner to have many other
alternatives open to him than service under one all-powerful employer
called the State. We do not wish the people of this ancient island
reduced to a mass of State-directed proletarians, thrown hither and
thither, housed here and there, by an aristocracy of privileged
officials or trade-union bosses. Our ideal is a consenting union of
free, independent families, and homes."
Perhaps the first step in realizing this ideal is for employers to
subject their present arrangements in rewarding and advancing their
employees to a careful scrutiny. They might ask themselves questions
such as those suggested by a British Rotarian in writing on
"Incentives":
(1) Are the people in production sure of receiving justice from all
grades of management?
(2) Have they a sense of security?
(3) Is effort made to keep them fit?
(4) Do the wages they receive insure the security of decent living?
(5) Are they convinced that they will be promoted if they have the
ability?
(6) Is the paramount incentive, creative activity aroused?
(7) Do they feel the sense of dignity of man in the work they perform?
(8) Are they made to feel the sense of duty, to get the spirit of their
responsibility and their duty to the community?
(9) Do they realize that the dignity of man means the application of
inescapable duties?
Even though it may not be practical to redeal the cards immediately, it
should be possible to remove the suspicion that whim or accident is a
controlling factor. To establish confidence in his own good intentions
is essential for any employer who hopes to inspire goodwill and earnest
effort.
How do you plan to achieve a square deal with your employees?
