PROCEEDINGS
OF THE TOMSK ORDER OF THE OCTOBER REVOLUTION
AND ORDER OF THE RED BANNER OF LABOR
POLYTECHNIC INSTITUTE
named after S. M. Kirov

Vol. 292　　　　　　　　　　　　　　　　　　　　　　　　　1974

SOME METHODOLOGICAL ASPECTS OF MATERIAL INCENTIVES FOR EMPLOYEES OF RESEARCH INSTITUTES

E. F. GAVRILENKO

Distribution relations under socialism have both their qualitative and their quantitative aspects. The qualitative essence of distributive relations is only the reverse side of relations in production proper and therefore is determined solely by the character of ownership of the means of production. “Any distribution of articles of consumption is always only a consequence of the distribution of the conditions of production themselves. The distribution of the latter, however, expresses the character of the mode of production.”¹

The quantitative proportions in the distribution of the consumption fund are influenced by a number of factors. These are, first, the specific nature of the content of labor, as well as the volume of the fund being distributed and the social method of evaluating the significance of one or another kind of labor.

Consequently, distributive relations in the sphere of science, while resting on the general laws of distribution under socialism, must also reflect the specific features of scientific labor.

Distribution relations in the field of science appear in two forms:

1. In the form of relations between the worker and society concerning the distribution of material benefits for the creation of new technology through the wage system and through special state systems of bonuses for scientific and technical achievements.

2. In the form of relations between the worker and society concerning the distribution of additional income obtained through the improvement of the collective’s relations with the state, by improving the formation and use of incentive funds of scientific organizations.

This article considers certain aspects of distributive relations mediated by the scientific organization in which the given worker is employed, appearing in the form of relations worker—collective—society, i.e., relations of the formation and distribution of incentive funds.

The following specific features of scientific labor exert the most important influence on distribution relations in the field of scientific research:

1. The creative character of the labor of scientific workers, which determines its relative non-reproducibility, uniqueness, the probabilistic character of its results, and the sharp differentiation both

as a consequence of the great difference in the individual creative abilities of workers, and the absence of a clear limitation of the labor process by the framework of working time.

1. The special role of the factors of time and uncertainty in evaluating this type of activity, expressed in the impossibility, on the one hand, of precisely establishing the basic proportions between expenditures and the expected effect because of the time lag between them (the noncoincidence of the time when expenditures are made and the time when results are obtained), and, on the other hand, of reliably determining in a number of cases the ultimate results of scientific labor and the ways of its realization in social production.

Thus, both in forming the incentive fund of a scientific organization, including the substantiation of the sources of incentives and of fund-forming indicators, and in distributing material-incentive funds among structural subdivisions and individual performers, it is necessary to take full account of the influence of the above-mentioned specific features of scientific labor.

Let us consider the procedure for forming bonus funds in branch research institutes. At present, the bonus fund of branch research institutes is formed in accordance with the “Regulations on Bonuses for Employees of Enterprises and Organizations for the Creation and Introduction of New Technology,” which notes that funds for paying bonuses to employees of research institutes performing work on the creation and introduction of new technology are provided in the estimates for the maintenance (in the cost estimates) of these organizations in the amount of 4–8% of the annual wage fund. Of the fund thus formed by a research institute, up to 50% of the indicated funds are transferred to ministries, departments, and other higher organizations for the formation of a centralized bonus fund, while the other part is left at its disposal. Funds from the centralized fund are spent on incentives for employees of research institutes for carrying out the most important research and development work on new technology, depending on the economic efficiency obtained; and if it is impossible to calculate economic efficiency, then in an amount of up to 20% of the wage fund calculated according to the official salaries of the employees engaged in these works. That part of the funds which remains at the disposal of the heads of the research institutes is spent on incentives for employees for the successful fulfillment of thematic plans².

Analyzing this procedure for forming bonus funds, it is necessary to note that neither the base for calculating the funds nor the source from which the funds are formed is connected with the economic results produced by the introduction of research-institute developments into the national economy.

Moreover, the very procedure for forming bonus funds for the creation of new technology is apparently not entirely economically justified. Indeed, expenditures on new technology are costs borne by society for the expansion of production; therefore, the source of their formation should not be production costs but, in the main, the surplus product. Here one can agree with K. P. Kedrova, who notes that the fund for material incentives for the creation of new technology should be formed out of that additional profit which society receives from the introduction of new technology into material production³.

Comparing the procedure for distributing the centralized bonus fund and the bonus fund of research institutes, it is necessary to note that, if the distribution of the centralized fund among research institutes is carried out mainly depending on the economic effect that is obtained—

contributes to the national economy from the introduction of scientific developments, then that part of the funds which remains at the disposal of the head of the research institute is only weakly linked with the economic effect obtained in material production. In other words, the centralized fund is an instrument for redistributing bonus funds in favor of research institutes that produce the most effective developments, whereas the part of the bonus fund remaining at the disposal of the research institute, which is paid for fulfillment of thematic plans, is much more weakly linked with the economic efficiency of the work carried out by the institute, and at best this fund serves to redistribute resources in favor of the institute’s subdivisions that have achieved higher performance indicators in their work.

But, on the other hand, as indicated in the regulations on bonuses, resources from the centralized fund are spent only on rewarding employees for the performance of work provided for in the national-economic and annual plans for new technology of ministries, departments, krai executive committees, and oblast executive committees.^4 Therefore, all work on the creation and introduction of new technology that has not been included in the above-mentioned plans cannot be rewarded from the centralized fund, even when such work is of great national-economic importance and has high economic efficiency. And this greatly narrows the sphere of operation of the centralized bonus fund.

In addition, the basis for the disbursement of resources from the centralized fund is the orders of the ministries, departments, krai executive committees, and oblast executive committees in whose jurisdiction these funds are located, which in practice often leads to the untimely payment of bonuses and sharply reduces the incentive role of the bonus fund.

It appears that a more perfect system would be one for forming a material-incentive fund in which the greater part of the resources remains directly at the disposal of the research institute and only a small part is directed to a centralized fund, which should be used for bonuses only for especially important, highly effective work, as well as for those scientific-research works whose economic efficiency cannot be calculated.

However, the transition to such a procedure for forming incentive funds should occur only on the basis of a change in the fund-forming indicator; that is, it will become possible when the absolute majority of the resources of the bonus fund are formed through deductions from the additional profit of consumer enterprises using the economic effect of a scientific development.

In this respect, the experiment being conducted in the scientific-research institutes of the electrotechnical industry is of interest.

In research institutes that have moved to the experimental bonus system, the formation of the incentive fund takes place in accordance with the decree “On the Procedure for Forming the Economic Incentive Fund,” which states that the material-incentive fund is formed:^5

a) from receipts from industrial enterprises of deductions from profits accruing to them as a result of an actual reduction in production cost through the use of new scientific solutions proposed by the research institute. Fifty to sixty percent of the resources obtained in this way are directed to the material-incentive fund;

^4 “State Committee of the USSR Council of Ministers on Labor and Wages.” Bulletin, 1970, no. 2, p. 8.

^5 Collection of Guiding Materials on Improving the Efficiency of the Work of Scientific-Research, Design-Engineering, and Technical Organizations of the Electrotechnical Industry. Moscow, “Informelektro,” 1969, p. 76.

b) from revenues from the profits of industrial enterprises, provided for in the prices of new types of products that yield a high technical level, depending on the annual economic effect obtained in the national economy. Fifty to sixty percent of the funds received is allocated to the research institute’s material-incentive fund;

c) from funds included in the estimated cost of research work on the development of electrical equipment, the amount of which is determined depending on the economic effect obtained by the consumer, and also from funds included in the estimated cost of work on creating unique models of electrical equipment and developing circuits at the level of the best world research achievements, whose economic efficiency cannot be established. Forty to forty-eight percent of the total amount of estimated accruals is allocated to the material-incentive fund.

With such a system for forming the material-incentive fund, the greater part of the bonus fund is formed from deductions from the additional profit received by the consumer enterprise.

Consequently, this system for forming the bonus fund is more closely connected than the one considered earlier with the economic effect that the national economy derives from the introduction of scientific developments into production, and thereby it much more effectively stimulates research work that yields the greatest economic effect.

However, while on the whole more effective than the generally accepted system for forming the bonus fund on the basis of the estimate, the experimental regulation under consideration also contains a number of shortcomings.

The main difficulty under such a procedure for forming incentive funds lies in the fact that the calculation of the economic efficiency itself from introducing the products of science into production is still very imperfect. In addition, there is no scientifically substantiated methodology for determining the share of the research institute in the above-plan profit received by the consumer enterprise. As a result, the amount due to the research institute is determined only conditionally by the consumer enterprise, which places research organizations in an unequal position.^6

The experimental regulation notes that the distribution of funds formed from deductions for the creation of new technology is carried out depending on the volume, complexity, and type of work, in the following amounts: for research work, from 30% to 60% of the total amount. The specific amount for each organization is determined in the contracts concluded between them.^7

But the absence in practice of a scientifically substantiated methodology for calculating the amount due to the research institute often leads to the contractual amount not reflecting the actual contribution of scientific organizations to the creation of new technology; rather, it is determined to a significant extent by circumstances of a subjective order, above all by volitional factors.

After the bonus fund has been formed, it must be distributed among the individual employees of the research institute. However, the distribution of the bonus fund among the employees of a research organization must be mediated by a primary distribution of bonus funds among structural subdivisions. Such an intermediate stage of redistributing the bonus fund is

^6 V. A. Zhamin, Science and the Economics of Socialism. Moscow, Mysl, 1971, p. 218.

^7 Collection of Guidelines for Improving the Efficiency of the Work of Research, Design-and-Engineering, and Technological Organizations of the Electrical Industry. Moscow, Informelektro, 1969, p. 20.

necessary for more effective stimulation of research work that has yielded the greatest economic effect when implemented at enterprises.

Since at present any completed study is the result of the labor not of an individual employee but of entire departments of a research institute, it is practically very difficult to determine the contribution of an individual employee to the economic effect achieved as a result of introducing a scientific solution into production, if the activity of each employee is considered as completely independent, outside its connection with the work of the department in which he works. (Here, for the time being, we are speaking not of properly creative labor, but of executive labor.)

Apparently for this reason some economists consider it incorrect that the most convincing indicator of the work performed by an employee should be the economic effect achieved as a result of introducing his research into production. They rightly note that this would be true if the completed study were the result of the labor of individual employees.^8

Thus, the indicator of the economic effect from introducing a study at an enterprise characterizes the activity not of a single employee, but of the collective of the department that created the given development.

In the standard regulation on bonuses for the creation of new technology there are no criteria determining the procedure for distributing bonus funds among the structural subdivisions of a research institute. In our view, this is explained by the fact that the fund-forming indicator of this system is not economic efficiency, but the wage fund. It follows from this that, since the formation of bonus funds is determined by the wage fund, there is, naturally, no need to redistribute the bonus fund among subdivisions; bonuses can be paid directly from it to individual employees.

Conversely, if the formation of bonus funds depends on the receipt of money from consumer enterprises that realize the economic effect of a development, then the distribution of the bonus fund among individual employees must be mediated by a primary redistribution among the departments of the research institute.

In this respect, the experience of the Tomsk Scientific Research Institute of the Cable Industry (NIKI), which in 1969 switched to an experimental bonus system, is of interest. At that time the economic department of NIKI, on the basis of the general experimental regulation, developed a system for awarding bonuses to the institute’s employees, in which it was noted that the distribution of the bonus fund among subdivisions is carried out in proportion to the wage fund, taking adjustment coefficients into account. Moreover, for the executors of developments from whose introduction funds were received into the bonus fund in the quarter for which bonuses were awarded, the amount of the bonus is increased by 25%.

The practical application of such a bonus system showed that it does not stimulate sufficiently effectively work that yields a high economic effect when introduced at enterprises. Then, at the end of 1972, NIKI economists developed a new regulation under which up to 40% of the funds credited to the material-incentive fund for a topic (that is, for a scientific development) is directed toward bonuses for employees of the department to which the topic is assigned and for employees of co-executing subdivisions. (It should be noted here that both the 25% surcharge under the first system and the 40% under the second are empirically established figures.)

^8 See, p. 10, Renanina, Criteria for Assessing the Activity of Employees of Sectoral Research Institutes, in: Criteria for Assessing the Activity of Socialist Enterprises, Leningrad: Leningrad University Press, 1970.

Thus, in this case a direct relationship is established between the economic effect obtained from the introduction of a scientific development and the amount of the bonus placed at the disposal of the department that carried out the given research.

The correct distribution of the bonus fund among the subdivisions of a research institute significantly simplifies the problem of determining the individual size of the bonus, because in this case the basis for calculating the bonus may be the monthly salary and the time actually worked by the employee, although the final distribution of bonuses must also take into account the effectiveness of each worker’s labor, since the creative character of scientific work causes a sharp differentiation in identical labor expenditures by scientific workers, owing to the great difference in individual creative endowments.

Consequently, an indicator of labor effectiveness that takes into account not only labor expenditures but also their effectiveness most fully characterizes the individual contribution of a scientific worker to the developments created.

But on the question of the possibility of measuring the effectiveness of the labor of scientific workers, there is no single point of view in the economic literature. Some authors completely deny such a possibility, motivating this by the fact that the labor of scientific workers is creative and does not lend itself to measurement. Others assert that the effectiveness of the labor of scientific workers should be measured by the same methods as in industry.^9 In our view, one cannot agree with either point of view.

At present, one of the widespread methods for measuring the effectiveness of the labor of scientific workers is the system of expert evaluations. However, it suffers from a number of serious shortcomings, first and foremost a large share of subjectivism. Therefore, the primary redistribution of funds among the departments of a research institute, although it does not remove the problem of determining the effectiveness of scientific labor, nevertheless significantly simplifies it, and also creates conditions for more successful application of various systems for determining the effectiveness of the labor of scientific workers, including the system of expert evaluations.

^9 A. Konson, V. Sominsky. The Economics of Scientific Developments. Moscow, “Ekonomika,” 1968, p. 160.

1. K. Marx and F. Engels. Works, vol. 19, p. 20. ↩

2. “State Committee of the Council of Ministers of the USSR on Labor and Wages.” Bulletin, 1970, No. 2, pp. 8, 9. ↩

3. See K. P. Kedrova, ch. 6, Scientific and Technological Progress and Economic Reform. Moscow, “Nauka,” 1969, p. 247. ↩