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1. |
The forrns of compensation. In a broad sense
the compensation of the worker consists of the sum of the advantages which he
obtains as a result of his activity. Many of them are of a somewhat intangible
character, but they are none the less important in determining the choice of an
occupation, or in inducing the employe to remain in the position which he has
taken. Some of these advantages are inherent in the nature of the occupation and
it would carry us too far into detail to discuss them here. Others consist of
comforts, conveniences, and opportunities for the employe which are broadly
designated under the term welfare work, and these are discussed in another chapter.
The present chapter is devoted to the financial compensation of the worker, whether
it be in the weekly pay envelop or in the monthly check, or in money payments
which are subsidiary to these and to some extent, at least, grow out of them. |
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2. |
Wage and other payments. In considering
the compensation of employes, it is not to be forgotten that what counts with
the worker is the regular weekly or monthly payment as the case may be. The various
extra payments which have been considered contribute much to the temporary satisfaction
of the worker, but permanent contentment can only be obtained when he feels that
he is receiving a fair and just wage for the work currently performed. This has
an important bearing on determining the proportion which may judiciously be
observed between the regular payments and any other payments which may be made
for any reason whatsoever. If the latter are considerable in amount, they may
awaken in the mind of the recipient the idea that they are a large part of
the wages whose payment has been withheld and deferred by the employer. The judicious
management will exert itself to protect itself from the judgment of the worker.
Nothing creates greater discontent than the feeling that the employer is unjustly
withholding what is due the worker. Irregularities in payment are frequently more
keenly resented than low wages. |
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3. |
Piecework. So well-nigh universal in office work is the payment of wages and salary on a weekly or a monthly basis that the piecework system might, it would seem, go without mention in this connection. In very few instances has the introduction of straight piecework payment for office work been practicable. Generally speaking, the work of office employes is too varied to permit the introduction of a payment plan which presupposes that the worker will be engaged constantly on the same type of work and will repeat over and over again the same process. One of the rare instances in which piecework pay ments were applied and applied successfully, was in the elaboration of the thirteenth census of the United States in 1910. One of the important operations in the tabulation of the population consisted in the transfer of the records from the population schedules bymeans of a punching machine to cards especially prepared for this purpose. Here the work of the operator consisted of identical units constantly repeated. Operators of these machines were paid at the outset like other Government employes by the month, but as soon as they became proficient in the use of them they were paid at the rate of a certain sum per thousand cards. The system proved entirely satisfactory to those who had the skill and the strength to make a large output. It was, however, the subject of much criticism which took the usual form that the piece rate was so low as to put an unreasonable strain upon the worker who wished to obtain a proper reward for the time spent in the work, and that the quality of the work suffered by the inevitable speeding up which resulted from this method of payment. But if the
piece rate finds little use in office work as the exclusive form of payment, this
does not mean its underlying principle is wholly overlooked. On the contrary,
its indirect influence on compensation for office workers is constantly increasing.
Its indirect influence finds its expression in establishing normal tasks; accomplishment
beyond the normal tasks may be rewarded by special payments, and where proper
work records prevail they will always be taken into consideration in questions
of promotion. |
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4. |
Wage problems With the hiring of the new employe the wage problems of the office manager have just begun. In making the initial rate he has not a wide margin of latitude. He must be governed by the general conditions in the labor market. Indeed he can never wholly escape from the influences of these outside forces. They condition wage increases and in some instances wage decreases. These, however, are general and not individual problems. Each worker offers
a problem with which the office manager must from time to time grapple. Wage increases
with or without promotion in rank call for attention. Old fashioned office control,
still widely prevalent, consists only in supervision, and is marked by an absence
of definite work records. The head of the office has a general responsibility
to see that the employe keeps at work, and that the work done is commensurate
with the compensation. If it is a question of promotion or of a wage increase
the decision is based on general considerations the employer's estimate of
merit. Such a plan often leads in the minds of the workers to the suspicion
of favoritism and it is doubtful whether any system of management however skilfully
devised will entirely root out such suspicion. By standardizing procedure and
work much can be done to mitigate this source of discontent |
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5. |
Wages determined by the type of services. Generally speaking, the first thing that determines the wages paid is the type of service rendered. It would scarcely be necessary to mention anything so obvious if there were a general recognition of the need of distinctly defining the types of work which the office requires. Because this is not recognized and because functions frequently overlap much discontent arises. The first requisite of a satisfactory'" wage system for an office is job analysis and classification. What is the exact work required of each class of employe and can it reasonably be expected of them? The United States Bureau of Labor Statistics has recently brought out a pamphlet on the classification of office workers which marks the progress which has been made in standardizing employments. With this as a guide an office manager could readily group the employes under his charge according to their essential occupations. The second step is the fixing of definite salary limits for each class of work. If reasonable limits appear to the manager to give too large a spread it is notice to him that the classification is not sufficiently detailed. With such a definite salary schedule well understood among the employes the words transfer and promotion acquire a definite meaning. Obviously in such a case they represent changes from one type of employment to another. To allow employes who draw widely different salaries to work side bj^ side at closelv similar work is wrong in principle and vicious in practice. Nowhere is this more striVingly illustrated than in the national civil service. The w hole range of minor employes are designated simply as clerks and are divided into five or six salary classes. The allotment by Congress of clerks to the different offices follows in a large measure traditional lines, and there is only a rough approximation of the number of higher paid and presumably better qualified clerks to the actual needs of the office. Hence the greatest disparity in the type of service and grade of service which is rendered by employes receiving the same pay in different offices and indeed in the same office. |
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6. |
Wage variations dependent on service. In determining the wages of employes of equal rank a factor which often plays a prominent part is the length of service. Other things being equal the employe who has been long in a given service, who is thoroly familiar with it, is capable of rendering a greater service than one who is comparatively new to the work and who lacks experience. Employes generally recognize the justice of wage distinctions in such cases. There is some danger that employers will overlook the qualifying clause "all other things being equal," and there is a practical certainty that employes will do so. As a principle in fixing wages, length of service is a useful guide only when it is kept within narrow limits, in other words where there is a distinct and well understood classification of jobs. Then it may be an effective measure provided there is proper supervision which keeps all workers up to a reasonable service to distinguish between employes of equal rank. The application of the principle of classification, modified by considerations of seniority within each class, is shown in the following salary schedule of an insurance company. Class E Boys: $360 for the first year, $420 for the second year, and $480 for the third year, provided these respective increases are merited. Advances in compensation are automatic up to and including the third year Class D Junior Clerks, Men and Women: $480 for the first year, $540 for the second year, $600 for the third year, and $660 for the fourth year, provided these respective increases are merited. Advances in compensation are automatic up to and including the fourth year. Class C Senior Clerks, Men and Women: Minimum salary $780, with any advancements fixed by the Salary Committee, in no case to exceed $1140 per annum. Advances in compensation in this class are on recommendationonly Class B Special Clerks, Men and Women: Minimum salaries $1200 per annum with various maximum fixed by the Salary Committee, in no case to exceed $2000 per annum. Then the advances in this class are on recommendation only. Class A Technical and Supervisory Clerks, Men and Women: Compensation is
in excess of $2000 per annum with the minimum and maximum salaries fixed by the
Salary Committee. Advances in compensation in this class are made on recommendation
only.
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7. |
Wage variations dependent on work performed. Wage variations among persons of equal rank based on length of employment, can of course only be justified on the theory of more efficient and more valuable service rendered by the older employes. Length of service offers a rough, sometimes a very rough, measure of efficiency. Oftentimes because of the nature of the work done it appears as the only practicable measure of efficiency which can be adojDted. But the same careful analysis of office work which is being used to determine a classification of employments, is bringing to light the possibility of establishing standard performances for each type of work. The condition upon which standard tasks can be set is the uniformity of the operations involved. Elements which disturb the regular routine and flow of work can very frequently be removed by assigning them to another worker. In most offices the same typists write the letter and prepare the envelop. If the letters are short the typist has many envelops to prepare and this may interfere with accomplishing the task assigned. To avoid this result the preparation of the envelop may be made a separate operation performed by a clerk who does this work exclusively. Typing, perhaps, of all clerical work lends itself most readily to the establishment of standard tasks. One concern measures by lines and fixes 900 lines of 514 inches in length as a day's task. The Willys Overland Company has a standard of 6000 square inches per week of 44 hours. Four square inches is allowed for name, address and salutation on each letter, and two square inches for addressing an envelop. In setting standard tasks care must be taken to maintain quality as well as secure quantity. This usually takes the form of deductions for mistakes When standard tasks are thus established, it is right and fitting to make a special recognition of work which exceeds the standard. The forms in which this may be done are most varied. The various new forms of wage payments which are discussed in the volume on "Plant Management" will offer many suggestions. There seems to be a disposition to consider that an extremely nice adjustment of the extra payment to the extra work performed smacks too much of factory methods and the common practice is to make one or two gradations of extra pay which are sometimes designated as prizes. By whatever name they may be known they introduce to some extent the principle of varying the compensation of employes of equal rank in accordance with the work performed. This principle
is of wider application than many office managers are willing to admit. They grant
readily that it can in some instances be applied to typing but can see no further
utility in it. This attitude may in some cases be justified, but more frequently
it springs from inertia. They are unwilling to take the time and trouble necessary
to study the clerical work in detail and to seek for means of reducing it to definite
standards.
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8. |
Extra payments. Wliere there is no effort to measure work specifically there is sometimes an attempt to gauge the efficiency of the employe by more general indications. In this case what might for want of a better term be designated as office habits are carefully noted and recorded. This concerns such things as attendance, tardiness, visiting in office hours and the like. In general it may be true that employes who have had no bad office habits do more work than those who are less amenable to the necessary office discipline. But there seems to be some incongruity in paying for a person's time and then making an extra payment because you get what you paid for. If a system of
extra payments based wholly upon attention to duty does not seem well founded,
it does not mean that these things are not important. They are of the highest
importance and it is very feasible to take cognizance of them, in the form of
merits and demerits as subsidiary elements in a payment scheme based upon a standard
accomplishment.
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9. |
Gratuities. Gratuities based on salaries are quite different things from extra payments based on work, tho to both of them the term bonus is frequently applied. Strictly speaking a bonus is a payment beyond what is formally due. When the wage system provides a specific payment over and above the stated wage, this extra payment must be regarded as a part of the wage contract, even tho its exact amount is not determinable in advance. If it is earned by special effort it cannot be withheld without breach of good faith. The bonus on the other hand is a pure gratuity usually made once a year, generally at the Christmas season. It is commonly a percentage of the salary paid during the previous year, usually with a maximum amount. Generally only those who have been in the employ of the company for the entire year participate in the distribution. The designation of the bonus as a Christmas gift implies that it is no part of the regular payment. It may be a substantial addition to income in concerns when the bonus has become a confirmed habit with the management, but it remains a habit of the employer and never becomes a right of the employe. Sometimes a nicer adjustment of the amount of the bonus to the merit of the individual is attempted. In such cases there is what might be called a standard bonus to which for various causes additions may be made. There is a beginning of such an idea when the bonus is made applicable only to those employes who have been in the service of the company for a certain period of time. It may be extended to those who have been six months with the company or perhaps a year or sometimes indeed it may be confined to those who have been two or more years in the company's service. A further amplification of this idea is found when to the standard bonus additions are made proportioned in some way to the length of time the employe has been in the concern's employ. It is clear also that where the office records provide a careful system for rating employes, an extra bonus can be given to those who had obtained the higher ratings There are many other amplifications which might suggest themselves to the mind of the ingenious manager, and they might go far to satisfy his sense of justice. It must, however, not be forgotten that the more complicated the system is which is introduced the less satisfactory it becomes to the employe. If he is unable to ascertain by simple rules how the amount of his bonus is determined, he is very apt to suspect that in some way or other he has been discriminated against. Of course, any dissatisfaction in the amount of the bonus goes far to neutralize whatever good effects may be expected from the bonus itself. Such a bonus must
be regarded as an investment of the management in the good will of its employes.
It will be noted that so far as the latter are concerned, it is usually a
general rather than a specific reward, since any attempt to make an adjustment
of the amount received to the special merit of each recipient is likely to
result in the difficulties considered in the preceding paragraph.
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10. |
Profit sharing Such monetary distributionsas are described in the preceding paragraph are not in frequently spoken of by employers as a species of profit sharing. It will be found quite often that many so called profit sharing plans are some what of this nature. Whatever the excellence of such methods, it may be well to point out that in a strict sense of the word they cannot be considered as profit sharing. The essence of profit sharing is that the amount of the payment distributed to the employe depends in a minor degree on his work, but chiefly on the profits earned by the firm. In true profit sharing the proportion of the profits which is to be distributed is fixed in advance and with the varying fortunes of the enterprise the amount will vary from year to year. When the amount has been determined, the share which will go to each employe can then be fixed according to whatever plan may have been previously adopted. There is room for all sorts of variations. Sometimes all workers are included and sometimes only specified classes. Where there are limitations, the distribution is often confined to the employes in executive or semi-executive positions. The underlying idea of such a limitation is that only persons of such positions, who can exercise some influence upon the business policies of the concern, and thereby help to determine the profits, should have the privilege of sharing those profits. The general theory of profit sharing is to the effect that the privilege of sharing in the profits will spur all concerned to a greater effort and because of this greater effort extra profits will be earned. In some cases, these results may be obtained, but if it does occur, the profits, like the rain, fall on both the just and the unjust. In other words, those who do not respond to the incentive presented, share equally with those who do. The fundamental drawback of true profit sharing, however, lies in the fact that the profits which may be earned depend not only upon individual and collective efficiency, but also on market conditions. Whatever view may be taken of the nature of profits, it is clear that they' are not governed by the same rules as the compensation of labor. Profit sharing
as above described is so little used in office work that for its own sake it
scarcely deserves mention. A consideration of its features, however, will
serve to show that many of the arrangements which are properly designated as
profit sharing do not in reality belong in this class, and will bring out clearly
the important distinction between rewards which are measured directly by the
application and energy of the individual and those which are dependent upon
the more or less direct profits of the concern. |
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11. |
Other money payments. The matters heretofore considered do not exhaust the monetary advantages which may come as a result of the employment to some of the workers. Modern business has introduced in many offices a variety of other devices designed to improve the positions of the workers, which in some cases involve money payments. Such, for example, are arrangements which are made to give insurance to employes. This insurance may give sick benefits or death benefits or both. It may be arranged thru a mutual benefit association and thru the group insurance policy. In the same class also comes the pension system In so far as the whole or a part of the cost of these arrangements is borne by the employer, he regards them as a part of his labor cost. But then, this would be true in like manner of the whole group of office activities which are included under the terms, welfare work. It is important, however, to note here as elsewhere that labor costs and wages are not one and the same thing, that the employer's view point of them and the employe's are distinctly different The employe regards as wages or in the broad sense compensation for labor only those money payments which come to all employes of the same class alike and in which all participate. The employe who is never sick may be willing to pay a reasonable sum as provision against sickness. Unless he is sick it Appear to him as an outlay rather than an income. If he leaves the employ of the company, neither the death benefits nor the pension which the company provides are a soui'ce of income to himself or his family. These things may induce him to remain in the employ of the company which offers such advantages, but it is clear that a large part of the employes of the company will never benefit from them directly. For these
reasons, a consideration of all of these eventual payments is excluded from
the discussion of the worker's compensation and is reserved for the consideration
of welfare work. |
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12. |
Wage increases. Employes who have remained for any length of time in an office naturally desire to have their salaries increased. They feel that they are worth more to the organization than they were at first. The plan of adjusting salaries once a year is inelastic, but it is still popular. It is often combined with secrecy, in order to minimize the natural discontent of those who are not included in the salary increase. This plan does not take due notice of the fact that there is always a certain percentage of the employes who have been less than a full year in the service. An alternative plan is to adjust salaries on the anniversary of entrance. Yet even this modification of the plan is open to the objection that the increase may not keep pace with the achievement, which is the point to be kept in mind. Some employers delay the increase until they are sure that the moment has arrived when, if the increase is not granted, the worker will be lost. Besides the injustice of such a scheme, they may miscalculate the time and lose a valuable worker, with the consequent cost of replacement. Where no attempt is made to keep records of efficiency, a "raise" is often attained by the few who have the nerve to ask for it, which puts a premium upon qualities which are not necessarily synonymous with efficiency. There is advantage in the policy of considering wage increases oftener than once a year. It increases the feeling that a display of special effort or ability does not have to wait too long for recognition. It is just as important to know who are not deserving an increase as it is to ascertain who are. A clerk whom the manager is forced to ignore when advancement is being given, should be given a chance to render himself worthy of it, or he should be eliminated if he is incapable. Stationary wages and contentment do not usually go together. No matter how conservative an employe may be, his or her personal expenditures are subject to a regular rise, and if there is no corresponding increase in earnings, eventually the disparity between income and outgo is certain to become intolerable It is, therefore,
to be recommended that questions of wage increase should be considered only at
certain regular intervals. If the matter is taken up irregularly by the management,
the employes will consider that they can raise the question whenever they see
fit. This is too often true, but it is a bad policy to have the matter of wage
increase depend upon the initiative of the employe and his persistence in the
matter. To do so keeps the salary question, one of the most fruitful sources
of discontent in the office, awake at all times pestering the employer and keeping
the employe thinking more about his rights and privileges than about the work
he is hired to do. Many concerns, however, find it desirable to take up the question
of wage adjustment quarterly. This insures a prompt consideration for the employe
who is making unusual progress and limits the consideration of a vexatious
question to a definite number of times per year. |
