ABSTRACT
This chapter traces the evolution of pay for performance from antiquity through the 1950s, viewing it from the perspective of four temporally overlapping eras. The first era covers the intuitive use of incentives from antiquity through the rise of the domestic system and the eve of the Industrial Revolution. The second era illustrates the isochronal struggle of economists and industrialists to relate to their new and changing environment. The third era reflects the mushrooming of practitioner oriented incentive plans as engineers attempted to create practical solutions to the daily realities they faced on the shop floors. The fourth era spans the age of the social scientists, which, building on findings such as Hawthorne, featured a diminished role for pay and increased emphasis on group participation and nonfinancial rewards. As the industrial revolution gained strength, the increased demands for efficiency and performance by the factory system, combined with a more sophisticated economic rationale, led to more complex incentive programs.
