Increasing Human Efficiency in Business: A Psychological Blueprint for Success by Walter Dill Scott

Walter Dill Scott’s Increasing Human Efficiency in Business stands as a seminal work in the field of applied psychology, offering a systematic blueprint for optimizing human capital in the early 20th-century industrial and commercial world. At a time when modern business had become the “true heir of the old magicians,” transforming materials and machinery with wizard-like efficiency, Scott observed that the human factor had remained remarkably untouched by this transformation. This insightful book delves into the powerful, often untapped, psychological forces—instincts, attitudes, and habits—that determine individual and organizational output, providing managers and employees alike with the means to unlock vast reserves of potential energy and efficiency.

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Who May Benefit from the Book

• Business Executives seeking maximum leverage.
• Managers and Foremen focused on staff motivation.
• Efficiency Experts and Industrial Psychologists.
• Aspiring Employees keen on self-development.
• Students of psychology and business management.

Top 3 Key Insights

1. Human Potential is Vastly Underutilized: Most employees utilize only a portion of their potential power, with the average day’s work being half or less than half of what a first-class man can achieve.
2. Efficiency is a Variable, Law-Governed Quantity: Human efficiency is not a fixed trait but a variable quantity that increases and decreases according to discernible psychological laws, allowing for astounding improvements through application.
3. The Human Factor is the Core Business Challenge: The central problem confronting modern business is no longer machinery or materials, but the study, training, and development of the individual employee.

4 More Lessons and Takeaways

1. True exhaustion is often caused more by the mental effort of resisting distractions and by worry than by the actual accomplishment of labor.
2. The highest forms of efficiency require a combination of intense practice to form routine habits and theoretical understanding to develop judgment and adaptability.
3. Effective compensation must appeal to three deep-seated human instincts: self-preservation, social distinction, and the desire to acquire or hoard wealth.
4. The ability to secure composure by consciously relaxing the body and mind minimizes anxiety and tension, leading directly to greater and more sustained efficiency.

The Book in 1 Sentence

This book applies psychological laws to business, revealing how individuals and organizations can tap reserve energy and utilize human instincts to maximize efficiency.

The Book Summary in 1 Minute

Walter Dill Scott argues that modern business has mastered machinery but neglected the human element, which holds untapped potential for significant efficiency gains. He asserts that human efficiency is variable and can be increased by applying psychological principles. The book systematically explores motivational factors, including imitation, competition, loyalty, and the structure of wages, showing how they drive greater individual and organizational output. Scott emphasizes overcoming distractions (concentration), managing fatigue (relaxation), developing beneficial habits, and ensuring training provides both practical experience and theoretical understanding for continuous improvement.

The 1 Completely Unique Aspect

The book presents the first systematic analysis of maximizing employee efficiency by linking specific business practices (like wage systems, factory layout, and training methods) directly to fundamental human instincts and psychological concepts (such as the hoarding instinct, conscious imitation, and the mental/physical effects of pleasure and relaxation).

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Chapter-wise Book Summary

CHAPTER I. THE POSSIBILITY OF INCREASING HUMAN EFFICIENCY

“Men who know how to get maximum results out of machines are common; the power to get the maximum of work out of subordinates or out of yourself is a much rarer possession .”

Scott opens by noting the astounding technological progress in modern business, contrasting it sharply with the minimal increase in human efficiency, except where workers are forced to keep pace with machinery. The chief problem is now the human factor, which remains to be systematically studied and developed. He asserts that human efficiency is a variable quantity that increases and decreases according to law, making psychological principles crucial for securing improvements. Drawing on F. W. Taylor’s work, Scott states that the average worker can produce only half or less than half of what a first-class man can. This unused capacity comes from our “reserve stores of strength,” which are only accessed by pushing past the first wave of weariness, a phenomenon evident in athletes and high achievers like Edison and Roosevelt. The average person could increase efficiency by fifty percent without injury to health.

• Chapter Key Points:
  • Human efficiency lags far behind mechanical efficiency.
  • Efficiency is a variable quantity subject to psychological laws.
  • The average person can likely increase efficiency by fifty percent.

CHAPTER II. IMITATION AS A MEANS OF INCREASING HUMAN EFFICIENCY

“The part of wisdom, then, is to utilize this power from which we cannot escape, by setting up a perfect copy for imitation .”

Imitation is introduced not merely as a trait of children, but as a continuous, fundamental social process and a powerful tool for increasing efficiency. Scott categorizes it as voluntary (conscious, deliberate copying) and instinctive/suggestive (unconscious mirroring). Early training schools for salesmen utilized imitation by having recruits watch experts demonstrate how to sell. To leverage this instinct, employers must control the working environment to ensure that perfect models of energy and efficiency are abundant enough to catch attention and be copied. Furthermore, inefficient or careless workers must be weeded out, as their negative example instinctively lowers the production speed of others nearby.

• Chapter Key Points:
  • Imitation is fundamental in education and social life.
  • Provide perfect models (conscious and instinctive) for employees to copy.
  • Weed out inefficient workers who set a dilatory example.

CHAPTER III. COMPETITION AS A MEANS OF INCREASING HUMAN EFFICIENCY

“The most industrious and ambitious men are stimulated by competition; with the less industrious such a stimulation is often wonder working in its effects .”

The instinctive drive of competition, which Scott calls the life of trade,'' is essential for achieving maximum efficiency, pushing men beyond what imitation alone can accomplish. The chapter details the success of Andrew Carnegie's system of pitting units (mills, departments, superintendents) against each other to set new production records. Competition can be internal (between individuals or departments) or external (against rivals), and even involve challenging one's own past performance (a self-imposedbogy”). To ensure wide participation and fairness, particularly in sales, a handicap system (like calculating quotas based on territory potential) is crucial. Rewards often include monetary prizes, promotion, and, highly valued by employees, public commendation and publicity in house organs.

• Chapter Key Points:
  • Competition is an instinctive, universal stimulant, essential for peak performance.
  • Contests should use fair handicaps and varying forms to sustain interest.
  • Competition can be between individuals, teams, or against past performance (“bogy”).

CHAPTER IV. LOYALTY AS A MEANS OF INCREASING HUMAN EFFICIENCY

“The employer who secures the loyalty of his men not only secures better service, but he enables his men to accomplish more with less effort and less exhaustion .”

Loyalty is a powerful force that ensures united action and increases the individual worker’s energy and output. This loyalty is reciprocal: if the employer provides consideration, fair treatment (the “square deal”), reasonable hours, and steady work, the employee provides devoted service and extra effort in crises. Human sympathy is the greatest factor in creating loyalty. Crucially, employees are first loyal to the specific personalities—the executive or the foreman—who represent the house, before developing loyalty to the abstract firm. Large organizations can maintain this personal touch through agents or departments dedicated to promotion and discharge, ensuring justice and minimizing misfits. Loyalty can also be developed through an educational campaign, acquainting employees with the firm’s history and triumphs to give the company a personality worthy of devotion.

• Chapter Key Points:
  • Loyalty increases efficiency with less worker exhaustion.
  • It is secured primarily through human sympathy and reciprocal fairness.
  • Loyalty is first developed toward individuals, then toward the company.

CHAPTER V. CONCENTRATION AS A MEANS OF INCREASING HUMAN EFFICIENCY

“He is exhausted, not because of his achievements, but because of the expenditure of energy in resisting distractions .”

Concentration is the mental power essential for great achievement. The modern worker’s energy is dissipated by ceaseless distractions (noise, movement, worry). Scott asserts that exhaustion is caused more by resisting these distractions than by the work itself. Concentration requires minimizing passive attention (responding to distractions) and relying on secondary passive attention (focusing without exhausting voluntary effort). To maximize focus, distractions must be removed: sound-proof walls, segregated noisy machinery (like typewriters), or opaque glass windows to block moving external scenes. Ultimately, concentration is secured by making the task itself interesting, thereby minimizing the reliance on exhausting voluntary effort.

• Chapter Key Points:
  • Distractions are the primary cause of exhaustion, not work volume.
  • Remove external and internal distractions (e.g., noise, poor lighting).
  • Foster concentration by making the work intrinsically interesting.

CHAPTER VI. WAGES AS A MEANS OF INCREASING HUMAN EFFICIENCY

“Payment of wages, so far as possible, should be made to appeal to the instincts for social distinction and for acquisition as well as to the instinct for self-preservation .”

Wages are the primary stimulant to industry because they satisfy three powerful instincts: self-preservation (food, shelter), social distinction (status signified by earnings), and the hoarding instinct (the pleasure of collecting money). The efficiency gained is dependent not merely on amount but on wise expenditure. Piecework or commission systems offer constant monetary stimulation, driving maximum quantity, though often sacrificing quality. Fixed salaries, however, encourage loyalty, quality control, and the preparation for higher responsibilities. Progressive employers increase the value of wages by offering non-monetary assurances, such as continuous employment and promotion from the ranks, which significantly improve worker satisfaction and efficiency.

• Chapter Key Points:
  • Wages motivate through self-preservation, social distinction, and hoarding.
  • Non-monetary benefits like guaranteed employment increase wage value.
  • Piecework drives quantity; salary may foster quality and training.

CHAPTER VII. PLEASURE AS A MEANS OF INCREASING HUMAN EFFICIENCY

“Pleasure secured in and from work is the best preventive and balm for tired muscles and jaded brains. Dislike or discomfort, on the other hand, adds to toil by sapping the strength of the worker .”

Pleasure in work is a potent force because it directly enhances physiological processes, such as deepening breathing and heightening the pulse, which accelerate recuperation and make muscle/brain cells more available for consumption. Therefore, an enjoyable day often results in less fatigue than an unsuccessful one. In business, the removal of discomfort is the crucial first step (e.g., providing ample light, heat, ventilation, and cleanliness). Psychologically, pleasure induces a suggestible condition: the body adopts a receptive attitude (open hands, erect posture, expanded chest), muscular strength increases, and the mind becomes responsive and trusting, making the person more likely to purchase or follow a foreman’s suggestion.

• Chapter Key Points:
  • Pleasure aids recuperation and increases endurance and achievement.
  • Discomfort increases toil and exhaustion.
  • Pleasure induces a suggestible and receptive state of mind and body.

CHAPTER VIII. THE LOVE OF THE GAME AND EFFICIENCY

“For some men, buying and selling is as great a delight as felling a deer. For others the manufacture of goods is as great a joy as landing a trout. For such a man enthusiasm for his work is unfailing and industry unremittent .”

For executives, maximizing efficiency relies on the instinctive love of the game—a profound enthusiasm for the work itself, independent of monetary reward. Although partly innate, this instinct can be cultivated through three primary conditions: 1) Granting responsibility and initiative so the man feels he is creating something and expressing himself in the work. 2) Ensuring the work possesses social prestige, encouraging the adoption of the artist’s standard (honor for the quality of the deed) over the capitalist’s standard (honor for money earned). 3) Emphasizing the importance and usefulness of the work, connecting the specialized task to the broader function of the industry and humanity.

• Chapter Key Points:
  • Love of the game is essential for sustaining executive enthusiasm.
  • It requires feelings of independent, creative responsibility.
  • The work must be seen as useful and socially prestigious.

CHAPTER IX. RELAXATION AS A MEANS OF INCREASING HUMAN EFFICIENCY

“It is your relaxed and easy worker, who is in no hurry, and quite thoughtless most of the while of consequences, who is your efficient worker; and tension and anxiety, and present and future, all mixed up together in one mind at once, are the surest drags upon steady progress and hindrances to our success .”

Scott cautions against the “American Ideal” of continuous overtension, noting that great achievers like James J. Hill or Joseph Lyons accomplish immense tasks without appearing hurried. Relaxation is a physiological necessity, as all bodily processes (like the heart and lungs) require brief but complete rest periods. Worry exhausts more than labor. The individual can improve efficiency by consciously adopting the power of relaxation through control of muscles and deep breathing, cultivating composure rather than anxiety. Complete physical relaxation also frees the intellect for constructive thinking and is necessary for the most perfect execution of skilled acts, as seen in expert tennis players.

• Chapter Key Points:
  • Overtension and anxiety are major drains on efficiency.
  • Relaxation is a physiological necessity, even for the heart and lungs.
  • Acquiring the ability to relax at will is critical for efficiency and composure.

CHAPTER X. THE RATE OF IMPROVEMENT IN EFFICIENCY

“The rise of the efficiency curve thus depends upon recurrent periods of successful struggle followed by periods of habit formation and by the development of powerful spontaneous interests .”

The acquisition of skill begins with rapid improvement, stimulated by the interest of novelty and the easy utilization of old habits and knowledge. This period is followed by plateaus—periods of stagnation or retrogression found universally in learning curves. Plateaus occur because: 1) novelty interest is exhausted; 2) all easy improvements based on prior experience are done; 3) the nervous system requires a period of incubation to organize and solidify new habits; and 4) voluntary attention cannot be sustained indefinitely. To overcome plateaus, executives must introduce new motives, such as changing the form of competition or varying rewards, to re-stimulate interest until the desired new skill is reduced to habit.

• Chapter Key Points:
  • Skill acquisition features rapid initial gains followed by stagnation (plateaus).
  • Plateaus are caused by novelty exhaustion and the need for habit incubation.
  • Overcoming plateaus requires injecting new motives and sustained interest.

CHAPTER XI. PRACTICE PLUS THEORY

“There is no warfare between theory and practice. The most valuable experience demands both, and the methods of procuring the most valuable experience in business and industry demand that the theory should supplement the practice and not precede it .”

The most valuable experience must develop both skill (routine efficiency) and judgment (ability to make new adjustments). Experience that only provides skill without increasing the breadth of view risks rendering the employee machine-like and easily replaced. Scott advocates the Practical-Theoretical method of learning, where theoretical interpretation follows and supplements practical experience. This is contrasted with haphazard, apprenticeship (too narrow), and theoretical-practical methods (too detached). Continuous education, conventions, and trade journals are essential throughout a career, as the theoretical training of youth is inadequate to interpret new demands; theory must grow out of daily experience to prevent a man from becoming engulfed in the practical and reducing himself to a machine.

• Chapter Key Points:
  • Experience must develop both routine skill and adaptive judgment.
  • The optimal learning method is Practical-Theoretical (theory supplements practice).
  • Learning must continue throughout one’s career to avoid becoming a “machine”.

CHAPTER XII. MAKING EXPERIENCE AN ASSET: JUDGMENT FORMATION

“Past success, the possession of wide experience, and technical instruction keep me from assuming the self-attentive attitude and enable me to take the problem or objective attitude. This is the only attitude consistent with improved form of thought or action, and hence is the attitude essential for valuable experience .”

Experience is capitalized into four forms that modify future action: habits, practical judgments, reflective judgments, and expert judgments. For judgment formation to be valuable, it must be performed with health, intensity of application, and the crucial objective attitude—a state achieved by forgetting oneself and focusing solely on the problem, ideally under full personal responsibility. Practical judgments are based on the conscious recall of vivid, recent, single concrete experiences. Reflective judgments are the higher form of thought, based on generalizing a principle from many experiences, a process enhanced by theoretical education, suggestion from others, and verbal expression.

• Chapter Key Points:
  • Valuable experience is gained with health and an objective attitude.
  • Practical judgments rely on vivid, recent, single experiences.
  • Reflective judgments rely on principles derived from multiple experiences.

CHAPTER XIII. CAPITALIZING EXPERIENCE: HABIT FORMATION

“The more of the details of our daily life we can hand over to the effortless custody of automatism, the more our higher powers of mind will be set free for their own proper work .”

Habits are essential because they are automatic ways of thinking and acting, functioning as capitalized experience. Good habits offer five main benefits: reduced time of action, increased accuracy, reduced exhaustion, relief of attention from details, and permanency of skill. The physiological basis for habit is the plasticity of the nervous system—repeated thoughts and actions carve an easy path in the brain. Scott strongly promotes the adoption of efficient occupation habits through the techniques of scientific management, such as standardizing tasks and drilling workers in economical motions (e.g., teaching a mason to reduce 18 motions to 5 per brick). This automation frees the mind’s higher powers for constructive thinking and new problems.

• Chapter Key Points:
  • Habits are capitalized experience, providing speed and reducing exhaustion.
  • Habits free the attention for higher mental work.
  • Scientific analysis of motions is key to developing efficient occupation habits.

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Notable Quotes from the Book

1. “A first-class man can, in most cases, do from two to four times as much as is done on the average .”
2. “The contention here supported, however, is that human efficiency is a variable quantity which increases and decreases according to law.”
3. “For the science of psychology is in respect to certain data merely common sense, the wisdom of experience, analyzed, formulated, and codified .”
4. “Actual instances prove that great increase of work and results can be secured by outside stimulus and by conscious effort .”
5. “Many men have never discovered their reserve stores of strength because they have formed the fixed habit of quitting at the first access of weariness .”
6. “Not to give too wide application to his discovery that the average day’s work is only half or less than half what a first-class man can do, it is more than probable that the average man could, with no injury to his health, increase his efficiency fifty per cent .”
7. “The individual remains to be studied, trained, and developed—to be brought up to the standard of maximum results already reached by materials and processes.”
8. “While overwork has its place among the things which reduce energy and shorten life, it is my opinion that overwork is not so dangerous or so common as is ordinarily supposed .”
9. “It is not a question merely of how much is spent but how wisely it is spent.”
10. “The struggle for existence, one of the main factors in the evolution of man, has raged most fiercely among equals; without it, development scarcely would have been possible .”

About the Author

Walter Dill Scott is the author of Increasing Human Efficiency in Business, a text considered a contribution to the psychology of business. Scott was highly active in the field of applied psychology, having also authored The Theory of Advertising, The Psychology of Advertising, The Psychology of Public Speaking, and Influencing Men in Business. His primary focus was analyzing and formulating the laws which govern human thinking and acting in trade and industry. Scott’s work is fundamentally practical, seeking to leverage human instincts and mental processes to secure greater individual and organizational success, based on the belief that human efficiency is a variable, controllable quantity, not a fixed attribute.

How to Get the Most from the Books

Apply the psychological laws presented—especially the techniques for concentration, habit formation, and competition—to both self-improvement and staff management for sustained efficiency gains.

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Conclusion

Scott’s Increasing Human Efficiency in Business provides a comprehensive and compelling argument that the frontier of modern economic growth lies in maximizing the efficiency of the human mind and body. By systematically isolating and applying fundamental psychological principles—from the harnessing of innate drives like imitation and competition, to the crucial necessity of relaxation, and the strategic formation of efficient habits and judgments—Scott offers a timeless guide to transforming the individual from an unstudied asset into a powerful, optimized engine of production. The core lesson is clear: sustained success requires leaders to stop treating men like machines and instead develop them into their maximum potential through psychological understanding and consistent effort.