MANAGEMENT: Incentive Pay Finds a Way

The problem of incentive pay is the hottest potato in U.S. war production. It has been championed as the answer to the manpower pinch, as a shot in the arm to hop war production up as much as 30%. It has also been condemned as a backward step towards the piecework system (particularly unpopular with automotive workers), the speedup, the sweatshop.

Last week in Detroit, where incentive pay has made snail's progress in the onetime auto industry, C. E. Wilson, WPB's production chief, once again pleaded for it. He begged labor not to confuse plantwide incentive pay programs with the union-hated Bedeaux plan, which "provides individual bonuses to inspire competition." But WPBster Wilson could have made his point more graphically if he had pointed to the way one incentive pay system operates in a Detroit plant.

Pinochle Speed-Up. Two years ago, Detroit's Murray Corp. (auto frames and parts) was having production trouble with its branch plant in Ecorse, a Detroit suburb. The fault lay in obsolete time studies (schedules setting average time to complete operations), which actually gave some workmen so much free time that they played pinochle in washrooms. Murray got its U.A.W.-C.I.O. local to agree to new time studies by a firm of industrial engineers. To quiet union suspicions of a profit-inspired speedup, Murray did something unique in time study history: five union men were selected to take a nine-month time-study course, to help work out the new schedules.

Together—a Plan. Last fall, the new schedules were put into effect—along with a 4¢-an-hour WLB raise. The union men were given the full-time jobs of seeing the schedules worked properly. Production improved somewhat, but meanwhile the wage freeze had lowered workers' morale. Both management and union began to think seriously about incentive pay for the Ecorse plant. (In Murray's main plant shifting war schedules prevent compilation of permanent time studies, make an incentive plan infeasible.) Together, they worked out a simple, easy-to-understand system: on every plant operation, the normal production rate (based on the time studies) was set at 100%. If the group of workers on an operation exceeded 100%, wages were upped accordingly. But if they fell below, wages still remained at 100%. To keep production from becoming unbalanced, thus causing layoffs of some workers (one danger in many incentive pay systems), a ceiling was arbitrarily set at 125%. Fast workers who exceeded that figure received no extra compensation.

To husky, roughhewn Lloyd T. Jones, onetime Kentucky minister, organizer and president of the Murray local, went the knotty job of selling suspicious workers the plan to work harder. By plugging the hard fact that their pay could increase only through the adoption of the incentive plan, Union Leader Jones got it approved for a trial period in the Ecorse plant.

Together—Benefits. Results were amazing. Loafing stopped. So did the pinochle. Fast workers helped slow workers, unhooked production kinks. Production rose 16%. Hourly wages, which once ranged from $1.02 to $1.10 an hour, rose with it to average $1.25 an hour. Unit costs of parts for jeeps, army trucks, other military equipment dropped.