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Gainsharing and the British Royal Navy

The British Royal Navy in the age of Admiral Lord Nelson (1758-1805) knew a thing or two about incentivizing employees. According to John Steele Gordon writing in yesterday’s Wall Street Journal (“Incentives vs. Government Waste,” May 14, 2010, A19), the British Royal Navy was extremely good at capturing enemy warships and sweeping enemy commerce from the seas. And there was a good reason why.

The Royal Navy’s success, says Gordon, was due to the enormous incentives that it offered its officers and men. The entire value of the spoils was shared by the Navy officers and their men according to a rule of eights. One-eight went to admiral; two-eights went to the captain of the ship; one-eighth each to the commissioned officers, senior warrant officers, petty officers, and midshipmen; and two-eights to the crew.

These were not insignificant amounts of loot. They could make captains rich by the standards of the mid-18th century. The crew could receive many times a year’s pay. Gordon asserts…