WAGE INCENTIVE

Ashburton Guardian, Volume 70, Issue 115, 28 February 1950, Page 4

WAGE INCENTIVE

PAPER DISCUSSED BY ACCOUNTANTS ATTRACTION OF WORKERS FROM OTHER SERVICES (P.A.) AUCKLAND, Feb. 27. Too much stress was being placed on incentive bonuses and profit-sharing schemes, said Mr J. Grierson, one of the principals of a firm of public accountants and chairman of the Hospital Board, at a session of the conference of the New Zealand Society of Accountants to-day. With only a section of workers enjoying the high pay involved, labour was attracted away from the public service, hospitals, and other essential services, where no such schemes existed.

Mr Grierson was one of the official commentators on a paper presented by Mr W. K. Hutchens, of Christchurch. He said Mr Hutchens had made a very valuable contribution; but experience had shown that the fixing of standard rates of production presented the greatest difficulty. Mr Hutchens had not gone far enougn in this direction. Together with incentive bonus schemes, it was necessary that the youth x of the country should be encouraged at the outset of their careers to take up those vocations for which they are best fitted. It was obvious labour was being attracted from essential services in New Zealand by incentive schemes operating in industry, said Mr Grierson. This must have the effect of lowering the standard of living if insufficient labour were available to operate those services to the full. He preferred incentive' bonus payments to payments under the slipshod profit-sharing scheme. ' Natural Improvement A lot of savings and increases in production being made should be the natural improvement coming from the goodwill of the operators and the efficiency of the management. Emphasis should be placed on incentives only when they could be comprehensively adapted to a greater section of workers in the community. “I feel that these schemes can only flourish to any great extent in times of shortage of labour,” continued Mr Grierson. “As a body of accountants we must' consider the total repercussions of paying some employees over and above the standard fixed as a fair thing for everybody. We are going through great changes in our world of commerce, very great changes in relationship between employee and employer, and I feel that incentives are only a palliative. We have to consider something much more scientific and far-reaching.” In reply to a member of the audience, who asked what would happen to incentives and profit-sharing when production overtook demand, Mr Hutchens said it was an interesting problem and so far he had not seen any authoritative reply.

Mr Hutchens’s Paper

“The moralist may deplore the use of a Avage incentive on the grounds that it raises production by appealing to men’s financial cupidity instead of to their pride of craftsmanship and humanitarian sympathies,” said Mr Hutchens in his paper. “The moralist would be nearer the mark if he attacked profit-sharing on the grounds that it is aimed at improving profits rather than at reducing selling . prices,” he added. “The tAVO major principles are that ’extra income Avill come only if the participant applies skill and zeal equal or greater than certain standards, and that all should knoAv the rules of the scheme Avhich should give a legal as well as a moral right to the extra income.”

Arbitrary rewards did little to foster the spirit of skill and Industry. There was a high risk that favouritism, inequities, and anomalies would accomplish the reverse of what the payment Avas intended to achieve. The essential ingredients of a successful .wage-incentive plan were complete agreement and understanding on both sides, fair play and justice- carefully established standards of performance, a guaranteed standard rate, payment of extra earnings soon after achievement of the task, and every access for employees’ committees to all computations of standards and calculations of incentive payments. Mr Hutchens added that profit sharing had suffered many failures in Britain, and successes in New Zealand were, “remarkably rare.”