FINANCIAL INCENTIVES AS THE EXPRESSION OF A SYSTEM OF BELIEFS.

This paper discusses a problem which lies on the borderline of economics where the economist reaches the limits of his competence and the sociologist or social anthropologist may be interested to take over. In the post-war years, the impact of full employment on managerial policy was particularly marked. British management was confronted with an acute shortage of labour, made worse by what management considered particularly low standards of effort. Many firms found that action was urgently required to deal with the problem of the shortage of labour. Under increasing pressures they tried payment by results as a solution. It appears that in most firms the use of incentive schemes rests on faith in, rather than proof of, the effectiveness of financial incentives, the results expected from payment by results have acquired the status of achieved results in spite of the lack of factual proof of the achievement. Implicit in the belief in the supremacy of the financial motive is the assumption that the worker is always interested in earning more money than he is getting on time-rates. The recurrent wage-claims of the post-war years have helped to strengthen this belief nevertheless in many situations it may be unwarranted.