The development of reward systems HR Management

As a separate management concern the issue of reward systems is fairly recent, indeed reward management has often been viewed as the ‘poor relation’ of HRM concerned with ‘systems, figures and procedures’. During the development of a ‘factory’-based economy, owners found that they were unable to control the ‘effort’ side of the bargain effectively. Workers, who were previously self-controlled and motivated in many respects by subsistence, worked in small ‘cottage’ industries within which the product of their labour was owned by the producers (workers themselves; notably in regard to the skilled artisans) and they worked as hard as necessary in order to meet their subsistence needs.

As Anthony suggests, ‘A great deal of the ideology of work is directed at getting men [sic] to take work seriously when they know that it is a joke’ (1977: 5). Owners found that getting workers to keep regular hours and to commit the effort owners considered to constitute ‘a fair day’s work’ was problematic. In response to this dilemma they employed the ‘butty’ system of reward management. Under this system owners committed a specific level of investment to a selected group of workers (normally skilled artisans) who then hired labour on ‘spot contracts’ by the day.

The major problem for the owners with this system was that these ‘subcontractors’ had control over the effort/reward bargain and were able to enrich themselves at the expense of the owners. The owners enjoyed little or no control over the process of production so the system was economically inefficient and failed to deliver the returns (rents/profits) required or more importantly that were possible from the process of industrialisation.

From this group of ‘favoured’ workers, along with the introduction of some university graduates there grew a new management cadre. This was a slow process, as Gospel notes that generally, in UK industry, this group (management, technical and clerical) amounted to only 8.6 per cent of the workforce in most manufacturing organizations (1992: 17), within which development was uneven and patchy.

These changes did little to address the problems associated with the effort/reward bargain, meaning productivity was below optimum levels. In part the problem was generated by the fact that ‘the managers’ brain was still under the workers’ cap’, more precisely that these managers rarely possessed the skills or knowledge of the production process held by the workers. This led to lower than optimum levels of production and reduced profits, a system F.W. Taylor described as ‘Systematic Soldiering’.

This activity was engaged in by workers, according to Taylor, ‘with the deliberate object of keeping their employers ignorant of how fast work can be done’ (Taylor, 1964). From his observations Taylor took the view that workers acting in this manner were merely behaving as ‘economically rational actors’ desiring their own best interests. It was clear therefore that management needed to take the reins of the production process and reclaim their right to determine the outcome of the wage/effort bargain.

Taylor, as the so-called ‘father of Scientific Management’, developed a system of measuring work which assisted the process of reclaiming managerial rights. Jobs were broken down into specific elements which could then be timed and rated, whilst in the process, returning the determination of the speed of work to management and allowing for the development of pay systems which reflected, however crudely, performance.

This scientific system devised by Taylor became the basis of countless pay systems operating effectively alongside the routinisation and deskilling of work which is often associated with Scientific Management within the literature (see, for example, Braverman, 1974; Burawoy, 1985; Hill, 1981; Littler, 1982, 1985; Thompson, 1983; and Wood, 1982). Whilst this allowed management to reassert their control over the level of outputs, to relocate the managers’ brain under their own hats and hence the determination of the wage/effort bargain, it did generate problems in relation to managerial attempts to convince workers to take work seriously.

In straightforward terms we can suggest that the ‘Measured-Work’ techniques advocated by adherents of Taylorism further separated conception from execution and led to feelings of alienation. Alienation can be defined as ‘various social or psychological evils which are characterized by a harmful separation, disruption or fragmentation which sunders things that properly belong together’ (Wood, 2000); in our terms that means the separation of workers from that which they produce.

Blauner (1964) argued that such an objective state is created as an offshoot of the subjective feelings of separation which workers experience under modern production systems. These feelings and their outcomes can be briefly outlined in the following manner:

Although Scientific Management originated at the beginning of the twentieth century, its legacy has lived on in many areas. Similar experiences have been reported in the design of work in service industries and call centres (Ritzer, 1997, and 2000; Taylor and Bain, 1999; Taylor and Bain, 1999; Callaghan and Thompson, 2001). The solution to this problem has been sought, following Taylor’s notion of man as an economic actor (see below), by the introduction of various performance and reward systems and mechanisms, the core objectives of which were originally to operationalise effective control over the wage/effort bargain and later with current systems to alleviate the feelings of alienation and generate commitment to organisational goals.


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