MONEY AND MOTIVATION

'There is no evidence to suggest that the more a man is paid, the harder he will work. On the contrary, productivity may indirectly be impaired.'

This sweeping conclusion from the CIoB has to be set against the seemingly self-evident fact that pay and incentives do play a crucial role in the productivity equation. And, indeed, UK site earnings are among the lowest in Europe. Is this itself a significant productivity factor?

Financial incentives are behind the building and civil engineering industries' move to revise their national agreements to provide a graded structure designed to link basic rates to the acquisition of higher levels of certified skill.

Otherwise, the FCEC's David Chapman said: 'There are two basic schools of thought. You can have a measured productivity scheme to provide incentives. Alternatively, it is claimed that you get the best results with the right recruitment policy and with the right supervision.'

The current weight of opinion leans in favour of the latter.

Shell construction chief, Chris Taylor, reported: 'We stick with the engineering construction national agreement's fixed productivity allowance. We don't use measured bonus. We've tried it in the past. It wasn't effective. It was just divisive and led to stoppages.'

John Elliott at Kellogg takes the same line. Much of the industrial relations problems of the 1960s and 1970s were directly the result of disputes over measured bonus schemes, he argues. And all too often the bonus scheme simply degenerates into a 'going rate.'

Chapman argues that measured productivity may have its place. But there are built-in dangers. 'I wouldn't put too much faith in incentive schemes as a panacea,' he stated.

'You have to be careful not to put a measured productivity scheme in too early before there is sufficient throughput of work. You need a planned alternative if there is downtime that is outside the men's control - changes in the client's programme, failure to deliver materials, and so on. And the contractor has to be very firm in ensuring that the bonus does not become a charade.'.

Ian MacPherson has no doubts. 'I have never thought measured bonus schemes were worth it,' he said. 'I would rather see a significant increase in basic rates and agreed productivity targets. Otherwise, it's just magic pencil exercises.'

Taylor concedes that some site tasks are clearly suitable for measured bonus schemes - scaffolding or bricklaying, for example. In other cases, such as steelwork, the operative is too dependent on the planning capacity of management. And here the removal of the measured bonus has put pressure on management to improve that capacity.

The crucial point is to get the bonus element right. It has to be clearly relevant to productivity. And Taylor suggests that a fixed bonus set at about 30% of the basic rate as in the engineering construction national agreement is the right balance.

It may seem like a paradox. But one conclusion is that you can actually reduce labour costs by increasing rates of pay.

Bovis' Colin Andrews is inclined to accept this view. He advances the argument that the credibility of national negotiations is stretched when they offer a weekly craft minimum of œ163 while the real going rate is closer to œ300.

'This has a psychological effect on the way labour views employment in the industry,' Andrews said. 'We are still rooted in the structures of the 1950s. Indeed, we have a 19th century attitude to our labour. We see it as being the lowest part of the hierarchy. But the operatives are the ones who are actually closest to the product. So they are closest to the customer. We are still not sufficiently customer-focused.'