Business Firms

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 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. 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 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.

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:-- (1) Do you regard it as unwise to stimulate competition in any form? 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:--(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 co peration was essential to success and that any form of competition among the men tended to lessen such co 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 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 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.