Document Type

Thesis - Open Access

Award Date


Degree Name

Master of Science (MS)


Mechanical Engineering

First Advisor

Kenneth D. Christianson


In Japan, productivity increased by an average of 9.9% from 1960 to 1973 and by 3.6% from 1973 to 1978. In West Germany, during the same periods, it increased by 5.8% and 4.2%, while in the United States the increases were only 2.9% from 1960 to 1973 and less than half that from 1973 to 1978. As a result, United States competitiveness in world markets has declined and inflation and unemployment have become not only our major economic problems but great social problems as well." Although all of our nation's economic problems cannot be blamed on a low rate of productivity increase, this statement by President Ronald Reagan points out the importance of productivity to the economic well being of our nation. Process automation, improved work methods, and employee motivation are the three major approaches used to increase productivity. Employee motivation can both influence, and be influenced by, automation and work methods. A properly motivated employee can suggest better work methods, or possible automation, to make his or her job easier. Some of the more widely recognized are working conditions, financial rewards, advancement, recognition, personal satisfaction, supervision, relationship with peers, and personal life. However, according to Robert S. Rice, "There are many ways to stimulate people to do what they can do, but a monetary incentive is still probably the most effective universally." In recent years, many industrial companies have built manufacturing facilities in eastern South Dakota. One of the major attractions of the area has been the strong work ethic of the people. The question then is, "Will a wage-incentive system have any noticeable affect on this already relatively high level of productivity?" In an attempt to answer this question, this study will first examine several methods that are available for establishing production standards and wage-incentive systems. Then a detailed explanation of the method used for this particular investigation will be made. An analysis of ·the production and quality data will follow, and finally a discussion of the results and conclusions will be presented. The purpose of this investigation is to determine what effect a wage-incentive system has on the productivity of a manual assembly operation in eastern South Dakota and on the quality of output from that operation. The specific research questions to be addressed are: 1. Is the productivity level of the operation significantly higher after the installation of a wage incentive system? 2. Is the quality level of the output product significantly lower after the installation of a wage incentive system? The investigation is limited to the study of a nontechnical, direct-labor activity. This activity, which is primarily assembly operation, was monitored for several months before and after the installation of a wage-incentive system.

Library of Congress Subject Headings

Industrial productivity
Incentives in industry
Wage payment systems
Industrial productivity -- South Dakota.
Incentives in industry -- South Dakota.
Wage payment systems -- South Dakota.



Number of Pages



South Dakota State University