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Systems Of Wage Payments

( Originally Published Early 1900's )

The method of compensation employed in paying meat cutters or clerks has a great influence upon the wage percentages. There are three principle methods of compensation employed such as :

1. Straight Salary.

2. Salary and Commission.

3. Straight Commission.

The Straight Salary

The great majority of meat cutters and clerks are employed on a straight weekly salary basis. This method of payment gives the meat cutter or clerk the advantage of knowing exactly the amount of money he receives at the end of the week. The market owner's only advantage is in the fact that he knows in advance the amount of money he has to pay out for wages.

From a business standpoint, however, the method of paying a straight salary has its principal disadvantages in the fact that, unless a working man is exceptionally ambitious, this method will be found lacking in providing an incentive to do more than is required of him. The method of paying a straight salary, therefore, has a great bearing upon the high cost of meat merchandising.

The Salary and Commission Method

A method of paying which is gaining very much favor with the retail meat industry is that of a certain fixed salary per week for meat cutters, and a certain percentage of commission on sales. The meat cutter is thereby assured of a certain amount of salary per week, and his mind is at rest for he knows that irrespective of results he will get a certain amount of money at the end of the week. The commission which is paid provides an incentive to do more, as it is natural for any man to try to earn as much money as possible.

Such a method of paying leads also to a friendly rivalry and competition among employes, as each one is anxious to in-crease his sales. For that reason careful, comparative records should be kept. The retail salesman behind the counter is the same kind of human being that the great majority of people are. By setting him a task or a goal to reach, more interest is created in the business.

Friendly Competition

The paying of commission after a certain quota has been reached, instills a certain sporting element in the business which is lacking in the straight salary method. For instance, the employer of a group of salaried men, may take them out in his back yard, and ask them to carry heavy cobble stones over a neighbor's fence. He finds that they will be satisfied to obey their employer's order and bring the stones into the other lot. The employer, however, who takes these same men and asks them to see how far they can throw these stones over the fence, will find that each man will exert himself and do his utmost in order to do better than the next man. This same principle exists also when applied to the paying of wages on a quota and commission basis.

Commission on Sales or Profits

There are various ways of applying this method of payment. Commissions may be paid either on sales or on profits. It is not considered fair, from a business standpoint to pay individual meat cutters on profits, for the simple reason that profits are beyond the control of the clerks or meat cutters, because they do not determine the selling prices. Furthermore, profit-sharing, in order to be fair to both parties, should also apply to loss sharing, and this has proved a failure time and again. Usually meat cutters, and practically all other employes will be found to be very reluctant when it comes to sharing losses.

Commission On Sales

Since the selling price is in the control of the individual retailer, the fairest method is to pay commissions on sales and not on profits. This principle, however, may not be applicable in a chain store which may have a manager who is responsible for the profits of the store. To compensate a manager of a store who is held responsible on a sales basis entirely might be disastrous, for his ultimate object would be to sell as much as possible irrespective of profits. If managers are paid on sales, it should be made conditional upon earning a certain amount of profit, and then to receive an additional compensation in the form of a bonus after the specified percentage of profit has been reached.

Commission On Sales During Holiday Season

There are, of course, times as during the Thanksgiving and Christmas holiday periods, when sales frequently double and treble on account of the large poultry sales. It is the custom of companies, and organizations who use this system of paying salary and commission, to pay a commission equal to the average commisson earned per week during the year.

The percentage of commissions and salaries to be paid depends entirely upon the wage conditions in a given locality. This principle of applying commissions against sales can be worked out with individual clerks equally as well as with groups of employes. It provides one method of lowering the percentage of sales.

Table Showing Wage Percentages On Salary and Commission Basis

As an example, five different methods of paying fixed salaries and commission have been worked out and are shown in the following tables. It will be noted that considerable variation can be worked out to meet the conditions of wage scales existing in a certain locality.

The Straight Commission Method

Whenever men are willing to work on a straight commission basis, it has been found that this provides the greatest incentive for more business and at the same time allows meats to be sold at the lowest possible cost. The market owner has the advantage of positively knowing his sales cost and thereby gains control of his principal expense, inasmuch, as the rest of the ex-penses are more or less fixed and do not vary much. By paying straight commissions, the meat cutter or clerk has the opportunity of exercising salesmanship to his maximum ability, as he realizes that the more meats he sells the more money he will receive.

This system of paying a straight commission on sales is applied by a very successful chain store organization in one-man markets. It proves to be of great advantage where groups of clerks are working on a straight commission basis. The market owner who is able to secure men to work on a straight commission basis knows that he has men who will do their utmost to bring their sales up to a maximum figure. Where more than one clerk is employed in a market, and to prevent any friction as to who shall wait on the trade, customers are handled in rotation as they come in providing, of course, the store is not too large. In other markets a system is used where clerks are assigned to certain counters or parts of the counter. This gives them an opportunity to handle all different kinds of meats. This system is also used in markets which are departmentized.

The percentage of straight commission to be paid depends somewhat upon prices secured and the profits of the store. One very successful chain store company allows its men a total percentage of 8i% on sales, for wages. The result has been that one-man markets have done a business of as high as $1,000 per week with only one extra helper on a Saturday. In this case, the compensation paid to the meat cutter is $80.00, after deducting $5.00 for the helper on Saturday. This gives the meat cutter a net earning of $80.00 per week and at the same time gives the owner an unusually low operating expense.

Working Conditions

In Table No. 53 are given the results of an investigation made of a great many markets of :

1. The daily working hours.

2. Saturday working hours.

3. Percentage of weekly business done on a Saturday.

4. Time given off during the week.

The working conditions are governed entirely by custom in the various localities. Climatic conditions are also an influential factor in working hours. It will be noted, for instance, that stores are opened earlier in a warmer climate such as in the south, for instance, than in other parts of the United States. In New Orleans, Louisiana, where a great deal of meat is bought at the public market, meat cutters report at 2 or 3 o'clock in the morning on Saturdays, which is practically unheard of at the present time in other localities in the United States.

The table was compiled from several hundred questionnaires sent to retailers throughout the United States, as to the working conditions in various localities. In each case, thé most typical working conditions have been given as reported by the retailers.

It will be noted that the Saturday closing hours do not run as late into the night as they used to in former years. Quite a few cities close their markets at 6 or 7 P. M. This tendency to close earlier on a Saturday is gradually influencing other localities in the United States.

Closing hours in the retail meat industry seem to be governed primarily by local conditions. In small towns and rural communities, meat markets keep their doors open sometimes to 8, 9 and 10 o'clock in the evening and some as late as midnight.

It may be said that such conditions are governed entirely by conditions which the retailers force upon themselves. If in a small town there are three retailers, and one keeps his shop open, the others will do likewise.

In localities where retailers are organized, it has been found that better conditions exist, brought about primarily by the close co-operation between the retailers themselves. There are several cities in the United States where meat markets close at 6 o'clock on Saturday evening. Such ideal working conditions are the result of such co-operation between meat retailers.

Sunday Closing Hours

In the majority of the larger cities, municipal ordinances pro-vide for the closing of meat markets on Sundays. There are, however, many cities where meat markets remain open until 11 and 12 o'clock on Saturday evenings and then open again on Sunday morning. Such conditions are directly traceable to the lack of co-operation on the part of the retailers.

Where laws have been passed for Sunday closing of markets, some retailers have been unable to withstand the temptation of securing the small amount of Sunday business by violating the law. Where groceries and delicatessens are handled in combination with meats, such type of store finds that it is very frequently able to sell meats by keeping the store open for the purpose of selling delicatessens. Such methods and practices are considered unfair competition.

There are still a great many cities and some of them of large size, such as for instance, New Orleans, Louisiana, or Kalamazoo, Michigan, which have no Sunday closing laws, and where meat markets do business on a Sunday morning.

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