Scheme B: In a sense this is more difficult to formulate since the
criteria by which a firm’s overall performance should be measured are
complex and difficult to define. Simple ‘profitability’ is not much help
here since the prices charged by such a firm are in a sense arbitrary. Fur-
ther, there is no meaningful sense in which one could say that a sudden
drop in the price of cement, which would improve profitability, reflected
an improvement in the performance of the firm. Under these cir-
cumstances it seems wisest to construct some index to performance
which is based on the annual average fulfilment of the norms of all the
building teams; on the extent to which wastage of material has been
avoided; and including an adjustment for the cost of additional
machinery introduced during the year making a particularly heavy ad-
justment (using a high shadow price) if this machinery is imported. The
annual bonus should be paid (if it is earned) to all members of the firm
and be divided either in proportion to their wage or be distributed as
equal shares to the entire staff.

This scheme too would give every member of the firm a clear in-
terest in the performance of the whole and would help to em-
phasise the common interest between managerial workers and
other workers.

In the long run some scheme could be devised which would
bring in other institutiens. Hence, if MECCO has idle work teams
and delays in its schedule because, let us say, S.T.C. does not
deliver goods in spite of the fact that these were ordered giving
sufficient notice, then there should be a clearing house
arrangement where MECCO could claim this loss from S.T.C.
(adding some of this money received, to the annual bonus to com-
pensate for the ‘unjustified’ deduction from MECCO employee
wages at the time of these stoppages). If S.T.C. in turn had been
let down by ‘customs’ let us say —meaning again quite
mechanically that they had submitted the documents properly and
in time but had not received them by an agreed time, then they
pass this claim on to ‘customs’ and so on. Until the daim lands
with the link in the chain that was responsible. This particular in-
stitution must then bear the loss and furthermore this loss must
make some tangible difference to the wages/salaries of the em-
ployees of the institution responsible (or the division or section of
an institution). Claims which arise through anavoidable cir-
cumstances might end up before a special tribunal of Treasury
which would decide to what extent they are justified and com-
pensate the institution concerned either in whole or in part out of
a contigency fund established for the purpose.

129

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