University of Virginia Library

3. CHAPTER III

COMPETITION

AS A MEANS OF INCREASING HUMAN EFFICIENCY

THIRTY years ago American steel makers were astonishing the world with new production records. What English ironmasters, intrenched in their supremacy for centuries, had regarded as a standard week's output for Bessemer converters, their young rivals in mills about the Great Lakes were doubling, trebling, and even further increasing. Hardly a month passed without a new high mark and a shift in possession of the leadership.

To this remarkable increase in efficiency William R. Jones—"Captain Bill" Jones as he was familiarly known—contributed more than any other operating man. He was a genius among executives as well as an inventor

of resource and initiative—a natural leader and handler of men. When he was asked by the British Iron and Steel Institute in 1881, to explain the reasons for the amazing development in the United States, he attributed it to organization spirit of the workmen and the rivalry among the various mills.

"So long as the record made by a mill stands first," he wrote, "its workmen are content to labor at a moderate rate. But let it be known that some other establishment has beaten that record and there is no content until the rival's record is eclipsed."

It was on this idea of competition for efficiency—of production as a game and achievement as a goal—that the wonderful growth of the steel industry was based.

On the intensive development of this idea by Andrew Carnegie, within his expanding organization, hinged the tremendous progress and profits of the Carnegie Company. "The little boss" matched furnace against furnace, mill against mill, superintendent against superintendent. He scanned his weekly and

monthly reports not merely for records of output, but for comparative consumption of ore, fuel, and other supplies, for time and labor costs in proportion to product.

If a superintendent, foreman, or gang failed to respond to this urging, failed to get into the race for the famous broom which crowned the stack of the champion Carnegie mill or furnace, the parallel showing of the other mills became a club to drive the laggards into line. So intense was the competition, so sharp the verbal goads applied that Jones, after resigning in indignation, parodied in sarcastic notes in this manner the Carnegie fashion of bringing executives to task: "Puppy dog number three, you have been beaten by puppy dog number two on fuel. Puppy dog number two, you are higher on labor than puppy dog number one."

How effective was this system of pitting man against man, plant against plant, was shown by the dominant position of the Carnegie Company in the trade when the Steel Corporation was launched and by the staggering

value put upon its business. Indirect testimony of the same fact was given another time by Jones when he refused thousands of dollars in yearly royalties for the use of his inventions by outside companies, this though the men who sought them were personal friends and his contract with the Carnegie Company allowed such licenses. His excuse was eloquent of the power residing in the Carnegie contest for efficiency and results: leadership for his charge, the Edgar Thompson works, in output and costs, meant more to him than money and a chance to help his friends.

The Carnegie system was one of the most comprehensive applications in business of man's instinct of competition to the work of increasing individual and organization efficiency.

In the handling of executives it was carried to such extremes as few great managers would approve to-day. Undeniably, however, the contest idea was an important influence in the building up of a vast business in relatively brief time, while the influence on the pace of the whole industry gave the United States its

present supremacy in steel and iron. It survives in the parallel comparisons of records with which the Steel Corporation measures the efficiency of its units of production and keeps its mill superintendents to the mark. It is utilized, in some degree and in varying departments, by hundreds of successful houses.

Let us analyze the facts, the habits of thought, the emotions behind competition and determine where and how it may be applied to the task of increasing our own and our employees' efficiency.

The experienced horseman knows that a horse is unable to attain his greatest speed apart from a pacemaker. The horse needs the stimulus of an equal to get under way quickly, to strike his fastest gait and to keep it up. In this particular an athlete in sprinting is like the horse. He is unable by sheer force of will to run a hundred yards in ten seconds. To achieve it he needs a competitor who will push him to his utmost effort.

The struggle for existence, one of the main factors in the evolution of man, has raged most

fiercely among equals; without it, development scarcely would have been possible.

So fundamental has been this struggle that the necessity for it has become firmly established within us. We require it to stimulate us to attain our highest ends.

As is made evident by a consideration of imitation we are eminently social creatures. We imitate the acts of those about us. Imitation is, however, only the first stage of our social relationship. We first imitate and then compete. I purchase an automobile in imitation of the acts of my friends, but I compete with them by securing a more powerful or swifter car. By erecting a new building because some other banker has done so, the second individual does more than imitate. He competes with the first by planning to erect a more magnificent structure and on a more commanding site. Or a great retail store, announcing a "February sale" of "white goods" or furniture, invariably tries to surpass the bargains offered by rival establishments.

We do indeed imitate and compete with all our associates, but those whom we recognize as our peers are the ones who stimulate us more to the instinctive acts of imitation and competition.

Our actual equals stimulate us less than those whom we recognize as the peers of our ideal selves—of ourselves as we strive and intend to become. The man on the ladder just above me stirs me irresistibly.

The effect of one individual upon others, then, is not confined to imitation. There is a constant tendency to vary from and to excel the model. My devotion to golf is mainly due to he example of some of my friends. My ambition is to outplay these same friends. Imitation and competition, apparently antagonistic, are in reality the two expressions for our social relationships. We first imitate and then attempt to differentiate ourselves from our companions.

The manufacturer or merchant imitates his competitor, but tries also to surpass him. Indeed it is a truism that competition is the

life of trade. In the shop and in the office, on the road and behind the counter, in all buying and selling, competition is essential to the greatest success. Competition, the desire to excel, is universal and instinctive. It gives a zest to our work that would otherwise be lacking. In every sphere of human activity competition seems essential for securing the best results.

We assume ordinarily that competition exists only between individuals. As a matter of fact, a slight degree of competition may be aroused between a man's present efforts and his previous records.

While not so tense or so compelling as is competition between individuals, it has the advantage of avoiding the creation of jealousies. In all the more exciting and stimulating games, rivalry between individuals is a prominent feature. In golf the game is frequently played without this factor, the only competition being with previous records or with the mythical Bogy.

Such competition adds considerable zest

to the game, and the same principle is applicable to business. The most compelling rivalry is between peers; without this, however, it is possible to pit the possibilities of the present month against the achievements of the previous four weeks or the past year or even against a hypothetical individual "bogy." This bogy may be fixed by the executive, and the man induced to compete with it. Thus the dangers of competition may be minimized and the advantages of the human instinctive desire for competition be gained.

In the average well-organized business the carrying out of such a plan would not be difficult. Studying the previous records of his men, a manager or foreman could determine what each individual bogy should be. The employee should know just what the record is that he is competing with, and that his success or failure would be recorded to his credit or otherwise. Above all, the bogy must be fair and within the power of the man to accomplish.

Competition need not be confined to individuals.

Frequently one city finds a stimulus in competing with another. Nations compete with one another. In any organization one section may compete with another.

In an army there may be competition between regiments. Within the regiment there may be the keenest rivalry between the different companies. We are such social creatures that we easily identify ourselves with our block, our street, our town, our social set, our party, our firm, or our department in the firm. Like teams in any game or sport, these groups may be rendered self-conscious and thus made units for competition.

It is possible to create such units for competition in business organizations. In some instances individual employees of one firm are pitted against those of a competing firm, the contest proving stimulating to the men in both. In other instances the competition is restricted to the house, and similar departments or sections are the units.

The closer the parallel between the units and their activities, as in the Carnegie blast

furnaces and steel mills, the more interesting and effective the competition becomes.

This principle has received widest recognition and achieved greatest success in the sales department. Here individuals are on a footing of approximate equality or may be given equality by a system of handicaps based on conditions in their territories. Success has also attended the pitting of selling districts against each other. These larger competing units work against bogies of the same character as do the individual ones. The whole house may be keyed up to surpass previous records or to attain some fixed standard.

To ascertain to what extent the principle of competition was consciously employed by business firms and what methods were used to apply it in increasing the efficiency of the men, a number of successful business firms were asked the following questions:—

How do you utilize competition in increasing efficiency among your employees?

(1) Do you regard it as unwise to stimulate competition in any form?

(2) Do you encourage men to excel their own records of previous years?

(3) Do you encourage competition between men in the same department?

(4) Do you encourage competition between your own departments?

(5) Do you encourage competition with departments of competing establishments?

(6) In competition do you make it fair by "handicapping" your men?

What reward does the winner receive, e.g.:—

(1) Monetary reward?

(2) Promotion?

(3) Public commendation?

In answers by equally successful managers great diversity of opinion prevailed. Some men were afraid of all forms of competition.

They believed that coöperation was essential to success and that any form of competition among the men tended to lessen such coöperation. Most of the men interviewed believed that competition when wisely handled is very effective in stimulating the men.

Of course, most firms try in some way to

encourage their men to excel their record of previous years. The inquiry developed, however, that a few are unwilling to employ competition even in this mild form as a means to increased efficiency. Most of the firms made conscious use of this principle and were convinced of its potency.

Competition between men in the same department was approved by a majority of the firms, and its adaptability to the selling department was especially emphasized. But some of the best houses will permit no such competition. The diversity in opinion was very pronounced in answering this question.

As to encouraging competition between departments in the same firm, no general answer is satisfactory. Organizations differ widely. In many houses such competition is not practicable; in others it certainly is not to be encouraged. In many organizations which would admit of such competition the experiment had not been tried. In others it has become a regular practice and is looked upon with favor.

In competition between members of the

same department or between departments the danger of jealousy and enmity seems to be so real that the greatest caution has to be observed in managing the contests. When such caution is exercised, the results are ordinarily reported upon favorably.

As to encouraging competition with departments of rival establishments, the diversity of business makes general statements unilluminating. Even where such a course is possible, some managers reject the practice as unwise. They believe that it is not best to recognize other houses or to consider them in this particular. A few firms report that they are able to stimulate their men successfully in this way, even though the conditions for such a contest are difficult to handle. Of those who utilize competition a few houses employ no handicaps to put their men on the same level and make success equally possible to all.

The principle of handicaps is so manifestly fair that organizers of contests can hardly afford to neglect this essential to the widest interest and participation in the competition.

If the little man in a country territory doesn't feel that he has a fighting chance to equal or surpass the man in the big agency, he makes no attempt to qualify. And the purpose of every contest, of course, is to get every man into the game.

Touching monetary rewards for the winners, there is practical unanimity of opinion. The winner should receive a prize in cash or its equivalent. Usually the effort is to distribute the prizes so that all who excel their average records receive compensation and recognition for the additional work. In many instances unusual increases in sales or output are rewarded by a higher rate of compensation.

That success in contests should influence promotion was generally agreed. The knowledge and energy shown are indications of capacity to occupy a better position.

The contest merely reveals such capacity; the promotion might well follow as part of the prize for the winner or winners.

Public commendation of winners in competitions

is held by many firms to be bad policy. There is fear that such commendation might render the participant conceited and unfit for further usefulness. A majority of firms, however, give the widest possible publicity to such commendation. This, indeed, is the reward most generally used and apparently most keenly desired by employees. Reproduction of photographs of the winners in the house organ with an account of their achievements is the commonest acknowledgment of their success, though posting the names of the winners in various parts of the establishment is the method employed by smaller houses.

Many important houses use competition as part of their regular equipment for handling and energizing men.

Particularly is this true of manufacturers and distributors of specialties, patented machines, trade-marked goods and lines, and wholesalers whose travelers are selling in territories where conditions are generally the same. Several firms of this sort make conscious

and elaborate use of the instinct of competition in their ordinary scheme of management.

A concrete and typical illustration of its application to selling is afforded by the experience and the undoubted success of one of the largest specialty houses which distributes its products direct to the consumer. The sales force numbers about 500 men, and executives of wide experience declare that the organization is, of its size, the most efficient in the United States. Analysis of this company's methods is most illuminating and suggestive because every phase of the instinct of competition has been exploited to the advantage of both the house and its employees.

The medium of competition is a series of contests—monthly, quarterly, even yearly which bring into play all the motives urging individuals to maximum effort and industry desire to beat bogy, ambition to win in individual contest with immediate neighbors and against the whole organization, team spirit in

the matching of one group of agencies against another group, and finally organization spirit in the battle of the whole force to equal or surpass the mark which has been set for it.

The first and basic contest here is that of the individual salesman against his bogy or "sales quota."

This quota, the monthly amount of business which each agency should produce, has been worked out with great care and has a scientific foundation. Since the great bulk of sales are made to retail merchants, the possibilities of each territory are determined by reckoning the total population of all towns containing three retailers rated by commercial agencies. For normal months there is a standard quota, a little above the monthly average of all agencies the previous year, reckoned against their total urban populations. In "rush" months, this quota is advanced from fifteen to forty per cent, as the judgment of the sales manager dictates. If general and trade conditions lead him to believe, for instance, that the month of May should produce

$1,000,000 in orders, while the sum of the usual quotas is $800,000, he calls for an over-plus of twenty per cent. The territory containing one per cent of the total urban population of the country, as reckoned, would then be expected to make sales equal to $10,000. This would be the agency quota for the month, and the first and most important task of the agent would be to secure it.

Because all quotas, both normal and special, are figured on the productive population of the territories and standings may be calculated by percentages, it follows that all agents are on terms of equality.

This is essential in a contest for individual leadership as well as in team or organization matches. For at least eight months of the year, there is such a competition for the best selling record in the entire force. Variety is given to these contests and the interest of the men sustained by changing the terms of the competition. One month the chief prize will be given to the salesman who secures his quota at the earliest date; next month the

award will be for the individual who first obtains a fixed sum in orders, usually $2500; leadership the third month will go to the man who gets the highest per cent of his quota during the entire period; again, the honor will fall to the agent whose net sales total the greatest for the month.

Further changes are rung and the inspirational effect of the contest immensely increased by enlarging the conditions so that every third or fourth agent is able to qualify for the month's honors and a prize.

Here, for instance, besides the prize for the first agent selling $2500, there will be prizes—like hats, umbrellas, and so on—for every man who closes $2500 in orders before the twentieth of the month, with the attendant publicity of having his portrait and his record printed in the house organ which goes to every agent in the field and every department and executive at the factory. Before leaving the individual contests, mention should be made of the "star" club of agents who sell $30,000 or more during the year; the presidency

going to the agent who first secures that total, the other official positions falling to his nearest rivals in the order in which they finish.

The team and organization contests are usually carried on simultaneously with the individual competitions. These range from matches between the forces of the big city offices, like New York, Chicago, and St. Louis, upward to district contests in which each team represents from thirty to fifty salesmen and finally to international "wars" where the American organization is pitted against all the agents abroad. Challenges from one district to another usually precipitate the district competitions; once a year there is a three months' general contest in which all the districts take part for the championship of the whole selling force.

To announce contests is a simple matter; to organize and execute them so that they are of benefit is much more difficult.

Unless the interest of the men is focused on the contests, they are not worth while. To

make them successful the firm under consideration utilized the following devices:—

During the contest the house organ appeared often and was devoted almost exclusively to the contest. In it the record of each salesman was printed, his quota, his sales to date, and other pertinent information. The sheet was edited by a "sporting editor," and great tact and skill were displayed in giving the contest the atmosphere of an actual race or game. In addition the sales manager, the district managers, and the house executives wrote letters and telegrams of encouragement, and even made trips to the agencies that got under way too slowly.

The unique feature of the contest was the manner in which the "sporting editor" gave actuality to the contests by pictorial representations. One competition took the form of a shooting match. The house organ contained an enormous target with two rings and a bull's eye. When a salesman qualified with orders for $625, he was credited with a shot inside the outer ring and his name was

printed there. With $1250 in sales, he moved into the inner ring, and when his orders amounted to $2500, he was credited with a bull's eye and his name blazoned in the center space.

Another contest was represented as a balloon race between the different districts. Each district was given a balloon, and as sales increased, the airship mounted higher. On the balloon the name of the district leader in sales was printed, while cartoons enlivened the race by showing the expedients, in terms of orders, by which the district managers and their crews sought to drive their airships higher. Each issue of the house organ showed the current standing of the districts by the heights of their balloons. This conception of the selling contest was very successful. "Going up—going up—how far are you up now?" was used as a call, and it seemed to strike the men and inspire them. It became the greeting of the salesmen when they met, and irresistibly produced a feeling of competition and a desire to have the district balloon go higher.

Other ingenious fancies by which the contests were given the appeal and interest of popular sports was their conception as a baseball game, a football game, an automobile race, a Marathon run, and so on.

In providing prizes, the firm was rather generous, though the expense was never great. While the contest was in progress, all those who were really "in the running" had the satisfaction of honorable mention, with their photographs reproduced in the house bulletin. This honor and publicity was the chief reward received by the great majority of contestants, and was adequate. Minor prizes were offered on conditions, allowing a large number to qualify, and tempting virtually everybody to make an effort to win one. The value of the prizes did not need to be great, for each man was impressed with the idea that his comrades were watching him, that they observed every advance or retrogression. Success in the contest meant "making good" in the eyes of the other salesmen as well as in the eyes of his superiors.

This desire for social approval and the spirited comment of the editor had a marked influence on the efficiency of many of the younger salesmen.

These special contests were conducted chiefly during the "rush" seasons, when activity and efficiency of salesmen meant greater returns to the house. Because of their varied forms the contests did not become monotonous, and thus fail in their effect. During the three or four "big" selling months when special quotas were announced, an individual pocket schedule was mailed to each man, showing how much business he must close each day to keep pace with "Mr. Quota," the constant competitor.

The most industrious and ambitious men are stimulated by competition; with the less industrious such a stimulation is often wonder working in its effects.

For many positions in the business world a hypothetical bogy should be created after the style of the quota referred to above.

To increase the feeling of comradeship and

promote coöperation between the men the entire organization or single sections of it occasionally should be made the unit of competition. This is perhaps the most helpful form of competition, but it is hard to execute.

Valuable prizes should always be given to the winners. This "need" may not necessarily be monetary.

Promotion should not depend upon success in contests, but such success may be well reckoned in awarding promotions.

Public commendation for success in competition costs the company little and is greatly appreciated by the winner. There seems to be no reason why the head of the house should not assist in the presentation.

The most essential factor in creating interest in a contest is the skill of the "sporting editor" in injecting the real spirit of the game into each contest, thus securing wide publicity, and enlisting the coöperation of large numbers of participants.

Prizes should be widely distributed, so that the greatest number may be encouraged.

A fair system of handicapping should be adopted in every case where equal opportunity to win is not possessed by all. Previous records often make successful bogies, and should be more extensively employed.

It is possible to carry on contests between individuals in the same department without jealousies, but skill is required to conduct them. There is the danger that individuals will seek to win by hindering others as well as by exerting themselves. Where it is not possible to carry on a contest and retain a feeling of comradeship between the men, no competition should be encouraged.