Challenge to Industry

It would be "comparatively simple" to augment the U.S. supply of war workers by at least 25% (4,000,000 men) without adding a single person to the nation's payroll. So said tall, white-mustached Albert Ramond, president of the Bedaux Co., to a capacity audience at the Los Angeles Town Hall Club last week. His simple formula: incentive pay.

Albert Ramond should know what he is talking about. His company, which labor once associated with the most hated kind of production speedup, has in recent years learned to work with labor well (TIME, Jan. 19, 1942), is now up to its ears in war work. And, loved or loathed, the Bedaux System has always centered around pay incentives.*

The U.S. Government, Mr. Ramond pointed out last week, has given pay incentives a somewhat backhanded endorsement (a WLB order allows "wage adjustments . . . made as a result of increased productivity under incentive plans"). Long experience has proved that they increase efficiency from the ground up because every worker becomes "an interested partner in management." Incentive pay is also a powerful antidote for absenteeism. Why then, is incentive pay not a positive national policy? Because of three largely phony fears, said Albert Ramond.

First, there is the fear that a positive endorsement of incentive wages would imply that labor has to be bribed to be patriotic. Nonsense, said Mr. Ramond: it is high time that people realized that "there is a vast difference in emotional atmosphere between fighting on the battlefronts and working in a war factory." Most factory jobs are dull and (Mr. Rickenbacker to the contrary) most soldiers would find them just as dull as warworkers do. Besides, Britain and Russia are relying heavily on incentives, and who questions their patriotism?

Second is the fear of inflation. Not valid, said Mr. Ramond, because production rises commensurately with earnings and "real inflation comes only when wages rise faster than production." (This argument is only partially true for the present, since the supply of consumer goods is shrinking in relation to the supply of money. But incentive pay is certainly far less inflationary than the Government's recent 48-hour-week ruling that overtime must be paid for the last eight hours without any corresponding production increase.)

The third fear hampering incentive-pay schemes, said Ramond, is management's fear of labor controversy. Seeing that only last year General Motors tried to introduce incentive pay but was turned down flat by the United Automobile Workers, that fear would seem to be justified. But now, thinks Ramond, full employment has affected a real change in labor's traditional opposition to incentive pay--opposition that is largely a holdover from the days when piece rates usually added much more to corporate profits than to the worker's paycheck.

In fact, Albert Ramond believes that labor may soon take the incentive-pay ball and run away with it--thus in effect getting credit for adopting what has heretofore been a management-endorsed idea. His final challenge to industry last week: "Is industry going to wait for a new Reuther plan, or will it take the leadership in advocating this most practicable means of solving our manpower problem?"

*Charles Bedaux, founder and 55% owner of the company, is now in jail in North America charged with trading with the enemy (TIME, Jan. 25). He has had no managerial connection with the company since 1937; his stock is now in escrow under U.S. Treasury control.

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