Doubts on Incentive Bonuses
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Labour and Other Troubles Likely to be Caused by Singling Out Bus Crews for Bonuses
pRESENTING his paper, "A Review of the Pros and Cons of Incentive Bonus Schemes for Traffic Staffs,Mr. Cox said that his subject presented a most complex problem and one that could well become contentious. As some 14d. per mile was spent on wages, traffic output per man-hour was uppermost in the minds of executives.
Equally, no one would wish to embark on a bonus incentive scheme if, by so doing, the national wages structure were undermined. For that reason, the National Joint Industrial Council made possible the introduction of such schemes in 1951, with the proviso that they should be submitted to that body for prior approval.
A clear distinction had to be drawn between incentive bonus schemes and merit schemes. The former should he based on increased productivity, whilst the latter were remunerations added for freedom from accidents, length of service and general attention to duty.
A local authority backing an incentive scheme would expect to procure economies in scheduled hours paid, resulting in a reduction in numbeirs employed and consequent savings in such items as National Insurance, sick pay. cost of uniforms, superannuation and holiday pay. If such an arrangement were negotiated with the local branch of the union side, a danger might exist in bargaining one undertaking against another, for the scheme might not be universally appropriate and could be used as a basis of argument in connection with wage differentials.
The most important principle in any scheme would be to increase revenue at minimum operating cost by the elimination of waste. Both conductor and driver could contribute to this end in a variety of ways, notably by ensuring the full collection of fares, running to time and maintaining a vigilant look-out for intending passengers.
Only Group Scheme Possible
Howeyer, having regard to the wide variations in route earnings and the amounts collected by individual conductors, it would appear to be virtually impossible to• introduce an individual scheme and the group scheme became the only possibility. The exclusion of transport inspectors, cash and depot clerks and ticket staffs might lead to unrest.
Variations in route earnings in his own municipality ranged from 12.75d. per mile to 44d, per mile. Although any group scheme would take the rough with the smooth, the fact remained that a bonus would be paid to employees manning buses that were operating much below cost. Mr. Cox showed figures provided by 11 holiday-resort undertakings to show the effects of weather on takings: a warm, sunny day at one earned 5 per cent, more than average, but at another, 56 per cent.
Revenue alone must be inferred to be an unsound base for any productivity scheme, particularly where seasonal staff were employed. Any formula must utilize the figure of man-hours paid, any increase in output being assumed to reduce man-hours. But would one-man operatiOn, which halved the man-hour figure, double the bonus?
Another pertinent question: although the standard basic week was one of 44 hours based on a six-day week .or an 11-day fortnight, the impact of a 40-hour week on a bonus would be great, because many undertakings worked a week in excess of 44 hours. Man-hours were also affected by schedule speeds which could not, with safety, be increased.
Running Uneconomic Services
There were unavoidable fluctuations in weekly man-hours, caused by sickness, holidays, staff shortages and special events. It might be conceded that reduced frequencies could be negotiated with comparative ease, but it was also true that the industry was a shrinking one and uneconomic services must be pruned.
Traffic productivity was determined by output per mail-hour paid and it was necessary to examine carefully the passenger-mile figures and the method of their calculation. Mr. Cox expressed the foregoing in equation form,, thus:
• Output (Passenger Miles)=Passengers x Distance in Miles and Productivity= Output Passenger Miles Man-Hours Man-Hours Ample evidence was available to prove that the number of passengers was falling, but new, out-of-town housing estates had led, in many cases, to longer journeys. It might be claimed, therefore. that what was lost on the passenger roundabouts was gained on the mileage swings. Thus, although a driver might have fewer stops and fewer passengers, his productivity might not be reduced, the average length of passenger journeys having been increased.
Many Difficulties
There were difficulties inherent in the operation of an incentive bonus scheme for traffic staffs. The fundamental problem was the calculation of an individual bonus from group-scheme statistics, having regard to stand-by crews, special duty rosters, overtime traffic work by depot staff, private hire, holidays, weather, the withdrawal of bonus for disciplinary reasons and the increased burden placed on the administrative staff.
Unless a bonus scheme was merely an excuse to increase the basic wage rate. the theory must be that additional revenue would offset additional cost arising from higher wages in the form of a bonus, at the same time providing the undertaking with a proportion of the R32 gain. Any increase in cost without direct improvement in efficiency was likely to be severely criticized by the general public: it was known that the passenger diminution factor was very high after fares had been increased.
Mr. Cox described the three approved schemes already in operation—those of Manchester, Bury and Sunderland. At Manchester a group scheme was prepared in 1956, using a formula devised to provide bonus payments based on earnings per crew calculated on plain time paid.
A standard revenue was fixed for each garage and, for each unit increase in revenue per hour above the standard, one-third was to go to the conductor, one-third to the driver and one-third to the department. The bonus limits fixed were a maximum of 3d. and a minimum of O.. 8d. per man-hour.
Bury's scheme was in two parts, approximately 40 per cent. of the calculated bonus being paid in respect of merit, good conduct and attendance. The incentive section had a formula determining the number of tickets sold per hour in excess of an agreed standard.
The total sum available for distribution was then computed by multiplying the variation in tickets sold by the hours worked during a four-weekly period and
then by 14.d. (approximately half the average fare). This amount was then• divided by the total hours worked to give the bonus rate in pence per pound of wages paid.
At Sunderland, the bonus scheme was to be paid on a passengers/man-hour index, obtained by dividing the total number of passengers carried per quarter by the number of man-hours worked in the period. Each decimal point movement in the index represented 3d. increase or decrease in the bonus. The amount of the bonus was based on the index of the preceding quarter, the financial year 1958-59 having been chosen as the datum.
Mr. Cox pointed out that, although 3 per cent, of the municipalities were experimenting with bonus schemes, not one company operator had seen the need to introduce one. He foresaw a reduction in bus services in the years ahead, resulting in the employment of fewer people in the industry. Nevertheless, a new economic level would emerge' and new standards would be evolved nationally. He saw no evidence of a real need for incentive bonus schemes, unless it were a national need. Was the industry doing all it could in examining the question of increased productivity apart from cash bonus incentives?