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
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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
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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 stag-
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gering 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
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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_
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_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.
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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
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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
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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._
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_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
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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?
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(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 co<o:>peration was essential
to success and that any form of competition
among the men tended to lessen such
co<o:>peration. 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
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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
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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 un-
illuminating. 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_.
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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 com-
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petitions 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 con-
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scious 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
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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
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$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
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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 presi-
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dency 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
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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
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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.
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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.
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_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
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promote co<o:>peration 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 co<o:>peration of
large numbers of participants.
Prizes should be widely distributed, so that
the greatest number may be encouraged.
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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.