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7ECONOMIC SCIENCES
THEORETICAL ASPECTS OF THE AMERICAN WAGE SYSTEM FOR WORKERS
Vinnytska O.
Pavlo Tychyna Uman State Pedagogical University, Uman, Ukraine,
Associate Professor Chvertko L.
Pavlo Tychyna Uman State Pedagogical University, Uman, Ukraine,
Associate Professor Korniienko T.
Pavlo Tychyna Uman State Pedagogical University, Uman, Ukraine,
Associate Professor DOI: 10.5281/zenodo.6579840
ABSTRACT
The article examines issues related to the peculiarities of the American experience in motivating the labor activity of employees. It has been established that administrative sanctions are gradually being replaced by such a form as non-payment of bonuses that could be received in the performance of one's duties and initiative. Considering the general rather high discipline and culture of production in American society, it is obvious that such a model for increasing labor productivity is viable.
Keywords: remuneration, motivation, tariff scale, incentives, bonuses.
Introduction. European integration attitudes of Ukraine cause changes in approaches to personnel management. State, private, corporate enterprises in practice felt that increasing their competitiveness is impossible without the search for new modern forms of motivation and stimulation of labor using the experience of foreign companies, in particular, the system of personal motivation in the United States.
Analysis of studies and publications. Many economists have worked and are working on the issues of labor motivation. A significant contribution to the development of theory and practice was made by well-known foreign authors of modern theories of motivation - F. Taylor, A. Fayol, D. MacGregor, P. Drucker, F. Herzberg, E. Robins and others. Works of many domestic scientists were devoted to the problems of labor motivation of workers, in particular: K. F. Brezitskaya [1], A. M. Venger [9], A. R. Danielova [2], N. Dryakhlov [4], N. V. Dudina [3], A. M. Kolot [5], I. V. Korneeva [6], S.V. Rusakov [7] and others. All scientists came to a common conclusion about the need to use a motivational mechanism in an enterprise, but a single approach that would become universal for any organization has not been found.
Purpose of the article. The purpose of the article is to identify and study the main ways of motivating staff on the basis of the American model of labor motivation.
Presentation of the main material. The American incentive system is based on a universal consideration of the working and living conditions of workers, their work skills, marital status, and is an effective mechanism for linking the material interest of workers and their labor productivity. Along with significant differentiation in wages, reflecting differences in performance, using various forms of individual and group incentives, American corporations are increasingly supplementing traditional forms of incentives with new programs that provide for the provision of social benefits and services to employees.
The modern system of remuneration of workers is characterized by the increasing role of the hourly form of wages, the expansion of the functions of tariff systems, the widespread use of incentive options for hourly wages, the improvement of various forms of individual and collective payments depending on the quantity and quality of labor [3, p. 19].
The expansion of the use of the hourly form of wages has led to an increase in the role of the tariff system. The development of tariff systems for remuneration is based on an assessment of the totality of indicators characterizing the labor contribution. Currently, mainly the summary method of performance evaluation and the method of analytical evaluation are used. The overall assessment involves comparing different types of work performed in the enterprise as a whole. The assessment is made by distribution by enlarged categories. The analytical evaluation system sets tariff rates depending on the determination of the relative severity of the work performed. Based on a previously developed scale of indicators characterizing the severity of various types of work, and the requirements that the manufacturer of these works must meet, a quantitative assessment is made of all operations performed at the enterprise. As a rule, works are evaluated according to the following groups of factors: qualifications of the performer (education, professional training, work experience); physical and mental efforts, the degree of responsibility of the worker; working conditions (heavy, harmful). The quantitative assessment of each factor is made depending on the specific requirements for the worker for each indicator, on the degree of application of this factor in the work.
Based on the quantitative assessment, a tariff scale is developed. Works that have received the minimum amount of points are evaluated at a lower tariff rate. Higher tariff rates are set taking into account the coefficient of complexity of the work. To identify some specific characteristics of a worker, a merit rat-
ing system is used. As a rule, it complements the system of analytical evaluation described above. With the improvement of indicators for each factor, the premium to the tariff rate is reviewed [8].
The review of each tariff rate within and between categories can be done both automatically and by merit assessments, as well as by combining these methods. Automatic promotion is usually carried out in cases where workers are mainly required to acquire skills, and the skill level is available to the vast majority of workers. An automatic revision is made when evaluating both low-paid and medium-paid categories of workers. The intervals between viewings depend on the nature of the work performed, the rate of improvement of the employee's skills. Under a merit rating system for salary review, a periodic evaluation of the performance of the performer is made [4].
The points system is based on a guaranteed minimum hourly wage, with a bonus for units produced in excess of the hourly or daily rate. Units of production are established by means of points. If the normal output is 30 units per hour, then each unit will be equal to two points (60 minutes - 30 units). An employee receives a guaranteed salary if his output does not exceed the norm, and with an increase in output, he receives an appropriate bonus. Foremen, controllers, bookkeepers, freight forwarders and other similar employees often also receive a bonus calculated on the basis of points earned by the shop or other division of the enterprise.
The system of progressive bonuses is based on bonus payments, the size of which increases with the growth of the employee's output. A base pay or guaranteed minimum is determined, as well as a standard output per hour or per day. As soon as a worker reaches this level, he receives a bonus, determined as a percentage of the base salary. Standards are set in such a way that an experienced worker with normal productivity usually meets the output rate. As he approaches the standard, he receives a small bonus, and when he meets or exceeds the standard, he is paid a gradually increasing bonus. If the standard production is 100 units, then the worker, having produced 80 units, receives, for example, a 5% bonus; when manufacturing 90 units, he can receive a 10% bonus; at 100 units, the worker receives a 20% bonus, and so on [7].
The described systems can also be used for a group (team) of workers. Once a group's output has been determined and a bonus has been calculated, it can be distributed among individual workers based on the ratio of individual rates, based on the output of each member of the group, or equally among all workers.
Some incentive systems used for material incentives contain elements of bonus systems with income sharing, for example, the system proposed by the entrepreneur J. Lincoln back in the 30s, and to this day remains relevant due to the motivational foundations laid down in it. In this scheme, covering all employees, remuneration depends on the overall performance, but taking into account the individual labor contribution, and is determined by the total profit of the company minus funds allocated for the development of
production and a fixed rate of dividends (6% of net profit). Colleagues, specialists, and managers are involved in determining the assessment score that characterizes the contribution of each employee. This assessment characterizes the quality indicators and the growth of the employee's qualifications, labor discipline, creative participation in rationalization and other activities aimed at improving the work of the site and the company as a whole. The score is calculated by formula :
B=O.O.PKmd,
Where
B - the amount of individual remuneration;
O.O. - the basic salary (rate) of the employee;
P - premium factor;
Kind. - individual coefficient of the employee.
The bonus factor P sets the amount of remuneration per unit of the basic wage fund and calculated according to the formula:
Amount too be rewarded
The individual coefficient K is a normalized assessment score of an employee's activity for a year or a shorter period. Accordingly, the amount of real individual remuneration may be significantly higher or lower than the average level. In some companies, the evaluation score is determined relative to the average not for the company, but for the division, service.
When calculating individual remuneration B, the individual coefficient K is determined by normalizing the assessment score (e.s.ind.) according to the formula:
g, s.ind
where: e.s.av. - the average score for the division (company), is determined as the arithmetic mean of the scores of all employees of the division (company).
Increasingly widespread in the United States are flexible forms of remuneration (about 75% of employers). Such a system contributes to the interest of the worker in the results of both his own work (individually, his team, shop), and the functioning of the company. Among the forms of flexible remuneration, one can single out those dependent on: 1) the qualifications, knowledge of workers, the number of tasks and the quality of their implementation; 2) financial results of the company. In the first case, this may be a one-time remuneration for the performance of specific tasks or an increase in wages, taking into account the quality of work, mastering related professions, and increasing qualifications. In the second case, workers receive an annual remuneration depending on the profits of the company [1].
Wage differentiation can be achieved on the basis of vocational orientation. Taking into account such criteria as professional experience, education, initiative, responsibility, mastery of related professions, the remuneration of one and the same category of employees can vary significantly. Given the specifics of the industry, the range of differences is as follows:
workers and office workers - a coefficient of 100200 with 8-9 intermediate rates;
the lowest link of executives - a coefficient of 240-340 with 5-7 intermediate rates;
middle and senior executives - a coefficient of 300-880 with 10-12 intermediate rates [2, p.23].
Bonuses can be paid depending on the seniority (for example, from 3-5% with three to five years of experience to 18-20% as it grows).
In the practice of one of the companies engaged in the oil industry, for example, seven levels of performance by employees of their duties are established [2, p.24]. At the same time, all of them are also evaluated according to criteria A, B, C (A - the degree of performance of work; B - independence, the amount of guidance for performing work; C - experience, skills in performing work). This method involves a periodic review of the requirements for employees as production develops, changes in the organizational structure. The frequency of merit evaluation is usually one year; for many employees, it is carried out more often (once every six months, and sometimes every quarter). Recently, there has been a tendency to use self-assessment of the employee and the opinion of the team in assessing the merits.
One of the most illustrative examples of material incentives for industrial discipline can be the widespread practice in the United States of combating absenteeism of personnel. If at first absenteeism of workers was punished by the imposition of fines or transfer to low-paid work, later a system of material incentives began to be introduced everywhere, subject to industrial discipline. The practice of material incentives covers absolutely all workers who are responsible for observing the production regime, and according to entrepreneurs, it is more effective than an administrative penalty for absenteeism, which, as a rule, leads to conflict and subconscious resistance of the employee in relation to the company's management [6, p.19].
In addition to solving the problems of labor discipline, the main attention in American enterprises is turned to improving the production culture, primarily the quality of labor. In this case, "quality circles" are catalysts for innovation processes, and, according to various estimates, they account for up to 50% of the effectiveness of measures to improve and increase the competitiveness of manufactured products. As a rule, separate brigades are placed in competition conditions on the basis of the payment of large bonuses to the winner according to the final results of work. For example, at Motorola, a team that wins in terms of the quality of manufactured products is paid a bonus in the amount of 5 to 15% of the annual earnings of its members.
In the sphere of production in the USA, the introduction of rationalization proposals by any member of the labor group is fully encouraged. Even in the case when the proposed proposal is not implemented due to its technical imperfection or objective obstacles, the initiator is paid a symbolic premium for interest in the activities of the enterprise. General Motors Corporation, for example, is offering a $10,000 reward. for the implemented valuable offer of an organizational and technological nature; it receives an average of one
offer per worker each year, although it enters only a third of them.
The involvement of workers and employees in the financial and economic activities of their firms continues to be practiced. Shares of the company are distributed among the workers on preferential terms, which increases their interest in its prosperity and the growth of labor productivity. In the company «Dana» 70% of employees and production workers own 12% of the shares [2, p.28]. The personnel policy pursued in the company is also of interest: management positions are occupied exclusively by those employees who have worked in the company for at least 15 years and have positively recommended themselves in the company. Employees who came from other firms, no matter how great their merits there, are practically unable to achieve a leadership position in the company. Thus, a course is being purposefully pursued to instill in employees a sense of devotion to their company.
Among the most effective and used motivation systems for high-performance activities is the system of employee participation in income. In US firms, four systems have been quite common for a long time: Scanlon, Rucker, Iproshear and the "customer-consumer" system. The Scanlon system provides for monthly payment of bonuses based on the results of the previous month. Representatives of the administration and workers pre-set the standard for the share of direct labor costs in the total cost of conditionally net production. With the successful operation of the enterprise and savings on wages, a bonus fund is formed in the amount of the amount of this savings, distributed as follows: 25% goes to the reserve fund to cover possible future labor overruns; the remaining amount is distributed between the management of the enterprise and the workers in the proportion: 25% - administration and 75% - workers. The distribution of the bonus among the workers is made in proportion to their labor participation, calculated on the basis of wages. The reserve fund is closed at the end of the year and distributed among the workers.
Rucker's system is based on the formation of a bonus fund, depending on the increase in conditionally net production per one dollar of wages. The application of this system involves the establishment of the so-called «Rucker standard» - the share of the wage fund in the volume of conditionally net production, which is defined as the average value over the past few years [5].
The size of the bonus fund is determined as follows: the actual volume of conditionally net production is multiplied by the Rucker standard. The wages actually paid by the employee are excluded from the calculated value. The remaining amount is considered as a result of increasing production efficiency and a significant share of it is directed to bonuses to personnel. When determining the size of the bonus for specific employees, the qualitative indicators of their activities are taken into account mainly [9, p.35].
No less well-known system of participation in the profits of American firms is the Iproshare system [6, p. 95], which is based on rewarding employees for
saving working time (in man-hours) spent on producing a given volume of products. This performance incentive system was developed by management consultant M. Fein. It differs significantly from the other two profit-sharing systems. First of all, productivity gains are not measured in dollars, but in units of hours worked. First of all, the basic standard is determined -the number of man-hours required to produce a unit of output. Then the actual number of man-hours of working time is compared with the baseline. If this number is less than the standard, the employee is paid a bonus.
The considered systems exist in a number of US companies: McDonnell-Douglas (in some departments), Motorola, Dana, at separate enterprises of General Electric, Firestone, TPO, covering the entire company - in Chaparrel and Herman Miller.
Another example of the successful construction of a system of material incentives is the approach used in the Lincoln Electric, created in the USA during the years of the Great Depression. Its advantage is simplicity and efficiency. The essentially group system of material incentives involves the payment of individual bonuses to employees. And its essence is as follows. The annual bonus fund is 50% of the total income of employees. At the end of the year, the board of directors of the company leaves part of the profit, minus capital investments and various insurance and reserve contributions, for bonuses to workers and employees. This is the bonus fund, divided by the total amount of wages received by the company's employees last year. The resulting value forms the «premium factor». The size of individual bonuses is determined by multiplying the value of this factor by the size of the annual individual salary and the so-called «resulting factor», which is a coefficient from 0.8 to 1.2. It is set for employees individually, based on the results of several studies carried out during the year, depending on the amount of work done. Thus, the value of the bonus of each employee equally depends on the level of individual wages, on the performance of the entire company according to the results of the year, and on the personal activity of employees [6, p.95].
Conclusions and offers. Analyzing all the methods of material incentives for workers used in the USA, we can conclude that administrative sanctions are gradually being replaced by such a form as nonpayment of bonuses that could be received for the performance of their duties and creative initiative. Considering the general rather high discipline and culture of production in American society, it is obvious that such a model for increasing labor productivity is viable.
Issues of the effectiveness of the system of payment and incentives have always been of great interest to the American society. In recent years, this interest has only increased due to the globalization of the economy, the aggravation of international competition, and the significant influence of various national management models. For a long time, the US wage system, like the entire system of American government, was perceived in many countries of the world as a role model. They really reflect modern scientific methods of management and the realities of economic development. However, today in the United States, management problems are also being rather sharply discussed, and above all, the violation of the relationship between the remuneration of top managers and business efficiency, which prompts the search for new approaches to solving emerging problems.
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