American steel magnate Charles M. Schwab (1862-1939) was renowned for his brilliant skills of management. He was in charge of Bethlehem Shipbuilding and Steel Company, which became one of the most important heavy manufacturers in the world under his leadership. One of Schwab’s greatest stories involved a steel mill of his which was always seriously under-producing. Although Schwab had already switched a couple of managers of the mill, there wasn’t any sign of improvement. Therefore, Schwab decided to visit the plant personally to see what could be done to turn the situation around. According to How to Win Friends and Influence People (Carnegie, 1936), the episode went like this:
“How is it that a manager as capable as you can't make this mill turn out what it should?” Schwab asked the manager of the mill.
“I don’t know,” the manager replied. “I’ve coaxed the men. I’ve pushed them. I’ve sworn and cussed, and I’ve threatened them with damnation and being fired. But nothing works. They just won’t produce.”
So Schwab asked the manager to show him the way to where the people worked. When Schwab visited the place, it was right at the end of the day when the day shift workers were about to leave for home. Schwab grabbed one of the workers, and asked him:
“How many heats did your shift make today?”
“Six,” replied the worker.
After hearing that, Schwab wrote a big number “6” on the floor, and soon left the plant.
When the night shift came in, they were surprised by the “6” on the floor, and asked what it was about. And the day shift told them, “The big boss was in here today. He asked us how many heats we made, and we told him six. He chalked it down on the floor.”
The next morning Schwab visited the mill again. To his delight, he found that the “6” written by him was already rubbed out by the night shift, and was replaced with a triumphant “7.”
And the day shift people saw that too. They immediately got the message that the night shift people were more productive than them, so they decided that they didn’t want to lag behind. As they finished that night, the “7” written by the night shift was fervently replaced by a victorious “10.”
The competition heated up between the two shifts in no time, and their enthusiasm was instantly reflected in their output. As a result, this mill was transformed into one of the top producers in the company in just a very short time.
How did Schwab manage to so easily solve a management problem that had troubled many of his best managers? As Schwab explained it himself:
“The way to get things done is to stimulate competition. I do not mean in a sordid, money-getting way, but in the desire to excel.”
This sentence could be boiled down into a very simple concept: social comparison. It is one of the most powerful ways to motivate people. As early as when we were little kids in school, we liked to compare ourselves with others. We admired the classmates who did better in exams, and envied those who came from a wealthier background. The feeling of being inferior to others is a very powerful force to prompt us to do better.
One famous example was the great Julius Caesar. According to Plutarch’s famous biography, the Roman Emperor had been living an ordinary life with a lot of debt into his thirties―moderately remarkable, but not too prominent. Until one day, when he read about the life of Alexander the Great, he burst into tears. “His friends were surprised, and asked him the reason of it. ‘Do you think,’ said he, ‘I have not just cause to weep, when I consider that Alexander at my age had conquered so many nations, and I have all this time done nothing that is memorable?’” He went on to pay off all of his debts and became one of the greatest commanders of all time.
Schwab’s ingenuity in the story is that he got the job done without any punishment or reward at all. He simply showed the workers that their peers were doing better than them, and that alone drove the workers to beat the other shift. This idea is now widely applied in many corporations, especially in their sales departments. Salespeople can see each other’s results on an eye-catching scoreboard inside the office, just like the giant number written by Schwab on the floor. The idea is the same: to stimulate competition through a direct comparison among the team members.
Reference: Carnegie, D. J. (1936). How to Win Friends and Influence People. New York, NY: Simon and Schuster.
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