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diff --git a/46977.txt b/46977.txt new file mode 100644 index 0000000..c3bd9ac --- /dev/null +++ b/46977.txt @@ -0,0 +1,3620 @@ +The Project Gutenberg eBook, A Rational Wages System, by Henry Atkinson + + +This eBook is for the use of anyone anywhere in the United States and most +other parts of the world at no cost and with almost no restrictions +whatsoever. You may copy it, give it away or re-use it under the terms of +the Project Gutenberg License included with this eBook or online at +www.gutenberg.org. If you are not located in the United States, you'll have +to check the laws of the country where you are located before using this ebook. + + + + +Title: A Rational Wages System + Some Notes on the Method of Paying the Worker a Reward for Efficiency in Addition to Wages + + +Author: Henry Atkinson + + + +Release Date: September 27, 2014 [eBook #46977] + +Language: English + +Character set encoding: ISO-646-US (US-ASCII) + + +***START OF THE PROJECT GUTENBERG EBOOK A RATIONAL WAGES SYSTEM*** + + +E-text prepared by Chris Curnow, David M, and the Online Distributed +Proofreading Team (http://www.pgdp.net) from page images generously made +available by (Internet Archive (https://archive.org) + + + +Note: Project Gutenberg also has an HTML version of this + file which includes the original illustrations. + See 46977-h.htm or 46977-h.zip: + (http://www.gutenberg.org/files/46977/46977-h/46977-h.htm) + or + (http://www.gutenberg.org/files/46977/46977-h.zip) + + + Images of the original pages are available through + Internet Archive. See + https://archive.org/details/rationalwagessys00atkirich + + + + + +A RATIONAL WAGES SYSTEM + +Some Notes on the Method of Paying the Worker a Reward +for Efficiency in Addition to Wages + +by + +HENRY ATKINSON + +Member of the Institution of Mechanical Engineers: +Engineer Expert to the Mixed Tribunal, Cairo + + + + + + + + +London +G. Bell and Sons, Ltd. +1917 + + + + + PREFACE + + +The question of scientific management, or the replacement of guesswork +by a common-sense study of the principles in economical and efficient +production, has not received the consideration it deserves in this +country; but one effect of the war has been to show the possibilities +of increasing production by a scientific study of factory methods. + +I believe that a much greater amount of interest will be taken in +the subject in future, and the fact that co-operation between the +management and the workers is the first essential to success cannot be +too strongly emphasised. + +From my own personal experience of its installation in England, I +can only say that, when approached broad-mindedly by both sides, the +workers have nothing to fear and, indeed, everything to gain by it. + +This description by Mr. Atkinson should prove very useful in bringing +the principles of one branch of scientific management, that branch +which most nearly affects the workers, to the notice of all concerned +in efficiency methods, and it is to be hoped that it will prepare the +way for a better understanding between employer and worker. + + H. W. ALLINGHAM, M.I.MECH.E. + + + + + INTRODUCTORY + + +It is universally admitted that the war will bring about great changes +in industry. The readjustment of financial affairs, the greatly +increased taxation, the displacement of labour due to the employment +of men now at the front, the dilution of labour by the employment +of women, the development of new industries and the modification of +present ones in order to meet new markets, changes in the old methods +of manufacturing and trading, will all add to the difficulties of the +situation. + +Some of the greatest of these difficulties will be in connection with +Labour, and the trade-unions will be faced with problems the solution +of which will tax their ingenuity and statecraft to the utmost. + +Already one predominant assertion is being made, and will be made +with greater insistence when the war is over--namely, that it will be +necessary to make wealth as quickly as possible in order to make good +the disastrous losses incurred by the war, and that this can only be +done by increased production with low labour costs. + +This haste to make wealth will induce many employers to endeavour to +retain war conditions when there is no longer any need for them. They +will try to "dilute" Labour permanently by employing women; they will +endeavour to lower permanently the age at which children may leave +school; they will lower wages where possible; and they will refuse to +carry out their promises to reinstate the men who volunteered at the +beginning of the war. + +Everything, indeed, points to a renewal of the old wage war with all +its absurdities, tyrannies, and slanders, its starvation and misery, +its strikes and lockouts, its waste and blundering. Anything that _can_ +be done to avoid or to ameliorate this state of things _should_ be +done; and if it can be shown that a method exists for keeping up wages +while at the same time lowering the labour costs, serious attention +should be given to it, and its advantages and defects should be +carefully studied. + +Low wages are not the same thing as low labour costs, for a greater +production with low labour costs may be obtained by paying high rather +than low wages if proper management and organisation be exercised. +The Reward System described herein is part of a method (that part +which affects the worker) whereby this result has been obtained. It is +based on paying the worker for efficient workmanship, and during the +past twenty years it has been adopted in a large number of American +factories and in a few (a very few) British ones. It has such a sound +basis that it should meet with the favour of both worker and employer, +and the writer is of opinion that some of the more serious difficulties +between Capital and Labour may be solved by its adoption. + +Many papers have been read on the subject in America, and some books +have been written about it; but, so far as the writer knows, no simple +description has been attempted, and certainly none that appeals to the +person chiefly concerned, the worker himself. + +The subject may be considered from the point of view of the nation, +the employer, the trade-union, or the worker. The following is an +attempt to show the worker how it affects him and how he benefits by it. + + + + + CONTENTS + + + PAGE + +PREFACE v + +INTRODUCTORY vii + + + PART I + + GENERAL PRINCIPLES + +CHAPTER + + I. DIFFERENT METHODS OF PAYMENT OF WAGES 1 + + (_a_) Day Work 2 + + (_b_) Piece Work 6 + + (_c_) Profit Sharing 8 + + (_d_) Co-partnership 11 + + (_e_) Co-operation 13 + + (_f_) Bonus Systems 15 + + (_g_) The Reward System 16 + + + II. WAGES AND EFFICIENCY REWARD 18 + + (_a_) The Reward System 18 + + (_b_) The Basis of Reward Payment 24 + + (_c_) Special Reward for High Efficiency 30 + + (_d_) The Classification of Work 31 + + (_e_) Reward derived from Increased Production 32 + + (_f_) Safeguards 33 + + (_g_) Attention to Service Details 35 + + (_h_) Loss of Skill due to the Reward System 40 + + +III. WAGES AND PROGRESS 43 + + (_a_) Antagonism between Employer and Worker 43 + + (_b_) Trade-Unions and the Reward System 45 + + (_c_) Scientific Management and the Reward System 47 + + (_d_) The Future of Labour 50 + + (_e_) The Actual and the Ideal 56 + + + PART II + + AN APPLICATION OF THE PRINCIPLES TO A + PARTICULAR CASE + + + IV. WORK AND REWARD 67 + + (_a_) Routing the Work 68 + + (_b_) The Time Study 70 + + (_c_) Fixing Standard Time 73 + + (_d_) The Instruction Card 79 + + (_e_) Spoiled Work 79 + + (_f_) Allowances 81 + + (_g_) Efficiency Calculation 83 + + + PART III + + EXPLANATION OF DIAGRAMS SHOWING + DIFFERENT METHODS OF REWARD PAYMENT + + + V. REWARD AND EFFICIENCY 86 + + (_a_) Reward System No. 1 90 + + (_b_) Reward System No. 2 92 + + (_c_) Reward System No. 3 94 + + (_d_) Reward System No. 4 96 + + (_e_) The Taylor System 98 + + (_f_) The Gantt System 100 + + (_g_) The Emerson System 102 + + (_h_) The Rowan System 104 + + (_i_) Day Rate 107 + + (_j_) Piece Work 107 + + (_k_) The Ford System 109 + +Appendix: A FLOATING WAGE RATE 111 + + + + + A RATIONAL WAGES + SYSTEM + + + + + PART I + + GENERAL PRINCIPLES + + + + + CHAPTER I + + DIFFERENT METHODS OF PAYMENT + OF WAGES + + +The war has brought the question of efficiency and efficiency methods +to the front very prominently, and there is a consensus of opinion that +it will be necessary to adopt them very widely if we are to retain our +present commercial and national position in the world. + +The object of such methods is to obtain increased production. It is +well known that the worker can produce far more than he does, but from +his point of view there is no particular reason why he should attempt +to do so under ordinary working conditions. + +The circumstances are altered entirely if increased production results +in higher wages with better conditions of work, and if the worker does +not get too tired or suffer any injury to his health in the process. + +The Reward System described herein satisfies these conditions, but +before giving the description it will be well to examine briefly the +existing methods of wage payment and point out their advantages and +disadvantages. + + +(_a_) DAY WORK. + +This is the commonest method of wage payment in the United Kingdom at +the present time. + +For every hour worked, the worker gets so many pence--10d., 11d., 1s. +an hour, or whatever it may be. As wages are paid weekly, it is usual +to reckon them at so many shillings per week. + +In any factory, nearly all the men who work at the same kind and class +of labour get approximately the same wage. In union shops they do all +get exactly the same wage. + +Before the days of the trade-unions each man was paid according to his +skill, as nearly as possible; a good workman received more wages than a +poor one. But the trade-unions have stopped that as far as they can. In +any one trade all workers, good, bad, and indifferent, are now paid the +same wages. + +The day work system, although in a great many cases it cannot be +avoided, is extremely unsatisfactory. + +On the one hand, the employer endeavours to get all he can out of the +worker while paying him the least possible wages. Speaking generally, +the employer looks upon the worker as a necessary evil, and treats him +accordingly. The worker must produce as much as possible and receive +as low wages as possible. No consideration is given to the question of +what wages will buy. + +On the other hand, the worker retaliates by doing just as much work as +will enable him to keep his job, and no more. Many workers spend as +much energy and time in avoiding work as they do in executing it, and +it is absolutely necessary for the employer to have a foreman hustling +round all the time to see that a reasonable amount of work is done. + +In order to equalise the conditions for all workers, the unions +have fixed a standard rate of wages for all men working at any one +particular trade. This means that both good and bad workers receive the +same rate of pay. + +Such an arrangement is quite unfair both to the good worker and to the +employer, and it gives the employer a very sound reason for opposing +the unions on all possible occasions. + +But it is worse for the good worker than for the employer, because it +affects him in several ways. When two workers are at work side by side, +one a good worker and the other a slacker, it is galling for the good +man to know that the slacker gets the same wages as himself. It tends +to make the good man indifferent to his work, and it needs a good deal +of moral courage and great force of character for a man to keep on +doing his best under such circumstances, especially when one remembers +the great excess of slackers over good men, and how easy it is to find +a good excuse for slacking. + +The extraordinary thing is that a man's union compels him to slack +even if he has no desire to do so. His fellow-unionists keep a watchful +eye on a good man, and if he is producing more than a certain quantity +he is told to ease up. There is no possible excuse for this attitude, +and it has done more to discredit the unions than any other thing. It +saps the good worker's morality, and reduces the whole ethics of Labour +and wage payment to the lowest possible standard. + +Apart from the question of antagonism between the employer and the +worker, there is one factor missing, a factor that is all-important +even in the best type of day work and under the best conditions. It is +that the best method of doing the work is never known. + +One man has one idea, another man has another; one man has his own +method, another man has a different method; one man has a certain knack +of using the special tools required for a particular job, another man +has only a general knowledge of their use; one man has done the job +many times and knows the short-cuts, another man is new to the job +and goes slowly; one man tackles the job haphazard, another spends +time in considering the best way of doing it; one man believes that +one form of tool is the best for certain metals, another man believes +in a different form; one man thinks a job should be done in this way, +another man thinks it should be done that way; one shop practice is to +do a job in such a manner and on such machines, another shop will do it +in a different way on a different type of machine. + +And so it goes on.... + +All the time the foreman is hovering around, urging the men, praising +one man for his speed in order to get him to work quickly all the time, +but more generally bullying the slow man into working a bit faster. And +he settles all matters in an arbitrary manner, which means the job must +be done his way, right or wrong! + +It cannot be helped. When a worker starts a job, he does not know just +what speed his machine must run at for that job. True, experience is a +good guide, but it means trying a speed before he can be certain. And +trying a speed means a certain amount of care and watchfulness; then +it probably means making adjustments of speed and tool. This means +stoppages, readjustments, retrials, and an all-round loss of time and +efficiency. + +Now, is the man a better workman for all this? If it proved eventually +that all men became of the same opinion as regards speeds, forms of +tools, and methods of working, and if all men became highly efficient, +one could at least say that the result justified the method, in spite +of the enormous waste of time and talk and temper. But, as a matter of +fact, one rarely gets two workmen of the same opinion or of the same +proficiency, and a man never turns out as much work as he is capable of. + +Added to all this is the deadening monotony of the daily round of toil +with no variation, no release from the fixed hours, no inducement to +do one's best, no chance of getting any extra pay unless by occasional +overtime. + +Theoretically, day work is the fairest method, because if a man does +his best he ought to get the same wages as any other man, no matter +what his production may be; but in practice this is impossible, hence +one is driven to the conclusion that day work, as it is practised at +present, stands condemned, and ought to be limited to such jobs and +working conditions where it is impossible to apply other methods. + + +(_b_) PIECE WORK. + +Piece work has one great advantage over day work--namely, the worker is +paid in exact proportion to his production. + +But that is the only advantage. If work could be correctly priced +according to the amount which a conscientious average man could do, +and that price always held good, piece work would have the additional +advantages that both worker and employer would know the conditions were +fair, and the worker would work diligently and be paid proportionally +to his skill and production. + +Under ordinary piece work conditions, however, such an arrangement is +impossible, and the objections to piece work are, if anything, greater +than the objections to day work, because of the necessary dishonesty on +the part of both worker and employer. + +The average employer will not believe what an enormous difference +there is in the quantity of work which different men are capable of +producing. He is under the impression that, within small limits, any +man can produce the same amount of work as any other man in a given +time. This is entirely wrong. Investigations have proved that some good +men can produce three times as much as an average man, the quality of +work being quite as good. + +Applying this fact to piece work, one sees at once how serious +differences may arise. A job is priced at, say, 1s. An average man +whose rate is 40s. a week will earn about 50s. a week on that job by +diligent work. Then a really first-class man comes along and earns 80s. +What follows? "If Smith can earn 80s., it is evident that the price +is too high and the other workers are slacking!" That is the natural +argument of the employer, and down comes the rate. + +Cutting rates is one of the most frequent sources of trouble on piece +work, but it cannot be avoided. The worker knows that the rates will +be cut, and therefore two methods of defence are open to him: First, +he always works slowly on a job until it has been priced. In this way +a good price is obtained, a price which enables the slowest worker to +earn his wages--and a bit above--easily. Second, the worker takes care +not to earn too much. It is arranged between the men how much each +ought to take on a certain job, and the arrangement made is carried +out. This is, of course, dishonest, but it is necessary. + +For suppose a good worker comes on the job and does his best, the +price comes down to everybody, and the average man cannot earn his +wages. The good man is therefore compelled to be dishonest to his +employer or unfair to his fellow-worker. And, again, in piece work +all prices are arbitrary. Even if one shop gives a reasonable price, +other shops in the same line of business find it out, and put on a +lower price in order to reduce works costs and thereby lower prices to +customers, which means snatching the trade from the good shop. + +Thus, the circumstances of the old-fashioned piece work method and +the dishonesty of both parties to it lead to misunderstandings and +dissatisfaction. + + +(_c_) PROFIT SHARING. + +There are various methods of increasing earnings by profit sharing. The +employer, from motives which may be good or bad from the standpoint of +the worker, desires to present the worker with a certain proportion of +the net profit. + +In some cases the motive is entirely for the worker's good; in others +it is for the purpose of getting the worker to stay with the firm, and +to make his interest so large that he dare not be independent in case +he should lose his profit. This means that the employer is no longer +troubled with strikes and labour disturbances. + +However, it is the effects that concern us here, and not the motives. + +Under profit sharing the profit is paid out or credited to the worker +every six or twelve months, and one must be employed for a certain +length of time before one comes under the scheme. So that it holds +out little incentive to efficiency until the worker has been with the +firm for some years; until then his interest is so small that only the +naturally thrifty workers are interested in it. + +All profit-sharing firms base their hopes of increased efficiency on +the incentive given to the worker by an anticipation of profit; the +payment of wages is by day work or piece work, and these have the +defects already mentioned. There is no direct and immediate incentive. +The slacker gets the same reward as the good man, and there is nothing +to prevent piece rates being cut just as in an ordinary shop. + +Profit sharing is undoubtedly a splendid thing in principle, but +it tends to make a man drop his trade-union and takes away his +independence. It also means a rigid selection of workers, only the +ones who look ahead being automatically chosen. Already they must be +men of thrifty disposition, men who look forward to being employed +in one factory all their lives, otherwise they would not be chosen. +They are not necessarily the best men; indeed, they cannot be the best +men because only a wide experience of different factories and methods +produces the best men. But they are essentially steady men, and this +is the kind of man most employers prefer, because they are the least +likely to cause trouble when rates are cut or wages reduced. It is +usually pointed out that, if a rate has to be cut, the worker gets it +back again in the form of profit. + +This system certainly tends to get rid of the slacker--the worst form +of slacker, that is--and there are circumstances under which it would +prove of great value. + +The fact of there being so few profit-sharing firms tends to show that +profit sharing is not a method which appeals generally to both employer +and worker. + +The following is a profit-sharing scheme adopted by a large firm of +engineers in March, 1916, and therefore embodies the most modern +conditions: + + "1. Before any profits are divided with the employees, the + shareholders shall receive 8 per cent. per annum. + + "2. When the above 8 per cent. has been paid to the shareholders in + any calendar year, all cash dividends subsequently declared in that + year will be divided between the shareholders on the amount of their + stock interest and the employees on the amount of the salary or wages + received by them during the twelve months ending June 30 of that year, + as follows: (A) Employees who have been continuously in the service + of the company for at least two years prior to July 1 will receive + dividends at the same rate as the shareholders. (B) Employees who have + been continuously in the service of the company for more than one year + and less than two years prior to July 1 will get three-quarters of + that rate. (C) Employees who have served continuously for less than + one year will get one-half the rate of the shareholders. (D) Dividends + that have accrued will be distributed to employees once a year in + December. + + "3. No person will be entitled to a share of these dividends unless a + _bona-fide_ employee of the company at the time of their distribution, + except that employees laid off owing to lack of work or sickness will + be entitled to the dividends accruing in any year on the wages earned + by them during the twelve months prior to June 30 of that year. + + "4. Employees voluntarily leaving the service of the company or dismissed + or discharged will forfeit their right to any accrued dividends. + + "5. Any employee who may receive a commission from the company or + any share in profits other than the profits shared in this plan, + except through dividends of stock, if a shareholder, shall thereby be + rendered ineligible to receive dividends under this plan. + + "6. All employees except those entered in the three preceding sections + shall be eligible to share in the profits under this plan. + + "7. The above plan for division of profit is absolutely voluntary on + the part of the company, and is in no sense a contract. The right is + therefore reserved by the directors to make at any time such changes + in the plan as they may consider desirable for the best interests + of the organisation. The fact that any employee is receiving the + dividends in this profit-sharing plan shall not deprive the company of + the right at any time to discharge the employee, and thereby terminate + his participation under the plan, nor shall any employee acquire any + right thereunder to any accounting by the company concerning its + business or profits." + + +(_d_) CO-PARTNERSHIP. + +This is another method of inducing the worker to become more efficient. +It is frequently allied to profit sharing. + +The firm allows its workers to subscribe for shares, and the workers +thereby have a direct interest in the success of the firm. The idea +is that the harder they work the more profit there will be, and the +more dividend on the shares which they hold. + +Of course, no worker, especially if he has a family, can subscribe for +shares out of his wages. What usually happens is that the firm sets +aside a certain portion of its profit, after paying a dividend on its +shares, and allows the worker to share this profit. But he gets no +money, the profit being paid in shares. For instance, if a worker's +share of the profit at the end of twelve months be L10, he gets L10 +worth of shares. Then, when the next dividend is declared, he gets +the dividend on his L10 worth of shares. If there is a 5 per cent. +dividend, he gets 10s. as his interest for the year or whatever the +period of time may be. + +He is not allowed to subscribe for shares until he has been with the +firm a certain length of time, and, in some cases, if he leaves he +loses his shares. If he dies, his widow gets the dividend on the shares +until she dies, when the shares go back to the firm. + +In other cases the shares bear a fixed rate of interest, say 4 per +cent., and also an additional dividend if there is any profit after +dividends on other classes of shares reach a certain percentage. + +In yet other cases a worker becomes absolute owner of his shares, and +can dispose of them by will or if he leaves the firm, but such cases +are rare. + +Of course, where shares are purchased by deducting the price of the +shares from wages they are the absolute property of the worker. + +The objections to profit sharing may be applied to co-partnership, +together with the additional one that the worker does not get profit, +but only interest on shares; and as he can never become a large +shareholder, the extra benefit is not very great. He is rendered quite +dependent on the firm--even more so than the profit sharer--and can +exert no pressure if conditions are unsatisfactory. The fact that +conditions are usually satisfactory in places where co-partnership is +practised does not make the principle a good one. + +Certainly, sometimes the shareholding workers have the option of +electing a director, and this places some responsibility on the worker, +which is a good thing and gives him a real interest in the affairs +of the firm; but such cases are uncommon, and even then there are so +many other directors that the workers' representative has no voice +in determining the policy of the firm; he only voices the workers' +interests. + + +(_e_) CO-OPERATION. + +Co-operation hardly comes into methods of wage payment, but we will +just glance at it. + +It means that a number of workers unite to buy in large quantities the +commodities they require, and to distribute them at the least expense. +By these means they buy cheaply, and there is no non-productive middle +man to make a profit. + +The great success of co-operative methods has resulted in the +co-operative societies manufacturing certain commodities for +themselves, as well as buying and selling. Having amassed a large +capital, and being certain of their market, they have every opportunity +of putting their workers under excellent working conditions. + +As employers, however, the co-operative societies are exactly on the +level of other employees--no better and no worse. They do not even +adopt bonus or profit-sharing schemes except in one instance, and the +same labour disadvantages occur here as in the case of any ordinary +private firm. + +Co-operation is strictly limited in its field of action. The buying +power of the society's members enables the society to know just what +goods and what quantity of goods are necessary, and they can go ahead +with certainty. + +But a co-operative engineering works where all the capital is +subscribed by the workers is a practical impossibility. In the +first place, the number of workers in proportion to the amount of +capital required in an engineering works is very small, and no group +of ordinary workers could subscribe to start a factory and keep it +going. In the second place, even if a factory could be started, the +competition of the open market would throttle it in its birth. The +keen buying and selling and manufacturing need highly educated and +highly skilled men. Capable men are to be found in the ranks of the +workers, but men with the necessary technical and commercial knowledge +to run a large competitive engineering concern are extremely rare among +them. Outside men would have to be engaged for such work and for the +theoretical side of the business. This means high salaries, which the +worker capitalist would object to; and it also takes the management out +of the hands of the worker, and thereby destroys the whole basis of +co-operation. + +It would be quite easy for an engineering business to grow out of a +co-operative society's need of machinery of various kinds, but it is +quite a different thing when one enters the open market. + +In the two or three cases where co-operation, apart from the large +co-operative societies, is in practice, it will be found that the +business has in the first place been built up privately, and the +capital has afterwards been gradually transferred to the workers. There +is no instance of workers getting together and clubbing their savings, +and so starting a competitive business and earning their living thereby. + + +(_f_) BONUS SYSTEMS. + +There are many bonus systems, and here again the advantages depend +largely on the moral principles of the employer who adopts them. It +does not follow that because an employer gives a bonus on work done +that the conditions of work in his factory are good. Even with the best +bonus system prices may be cut and conditions may become unbearable. +Indeed, the adoption of a bonus system is often an excuse for driving +and tyranny. + +They have one advantage over profit sharing and co-partnership: they +do not interfere with the independence of the worker. I refer, of +course, to those systems which have no connection with profit sharing +or co-partnership, but where the bonus consists of a weekly payment for +excess production above a specified minimum. + +A bonus system is based on a piece price or on individual or collective +output in a certain time. It is therefore an offshoot of piece work, +but it has a guaranteed minimum wage attached to it. Whatever happens, +the worker gets his guaranteed minimum, and if he produces more work +than is allowed for in that minimum he gets a fixed bonus at the end of +the week or month. It differs from profit sharing in that it depends on +quantity of work done and not on profit made. + +Bonus is often given to men working under a subcontractor. The +subcontractor guarantees to turn out a certain job in a certain time, +and in order to induce the men to accomplish this result he offers a +bonus if the job is done to time. + +There is no protection whatever against cutting times or rates, and +conditions generally are the same as those already mentioned. + + +(_g_) THE REWARD SYSTEM. + +The Reward System (this is the name given to the system for the purpose +of this description) is different to all the foregoing methods. + +The worker is paid the ordinary standard rate of wages for his +attendance at the factory, and this attendance implies the production +of a certain minimum quantity of work. If he produces more than that +quantity, he is paid additional wages in proportion to the work done. +If a certain standard quantity of work be produced, the standard being +considerably in excess of the minimum, the proportionate additional +wages, or reward, amounts to at least 25 per cent. of the day +rate--that is, of the trade-union rate. Also, an equal opportunity of +reaching the standard quantity is given to all workers, inasmuch as the +work is carefully studied, standardised, and recorded, and instructions +are given to the worker showing him just how to produce the standard +quantity. The standard quantity is within the reach of all diligent +workers. + +This system is described in the following pages. + + + + + CHAPTER II + + WAGES AND EFFICIENCY REWARD + + +(_a_) THE REWARD SYSTEM. + +The rational study of work and the worker shows the following +principles to be essential when general and continuous efficiency is +the end in view: + +1. The greatest efficiency is obtained when the worker is most +contented. + +2. There is a limit to endurance, and efficiency cannot be maintained +if this limit be exceeded. + +3. The working environment must be agreeable. + +4. The nature of the work must be considered in determining the working +hours and conditions. + +5. There must be no penalties or price cutting. + +6. Suggestions must be encouraged and suitable rewards given for those +which are acted upon. + +7. There must be an incentive to efficiency, which should take the +form of an addition to wages when a certain minimum of production is +exceeded. + +8. Work must be carefully studied in detail so as to discover +conditions which give every worker the same opportunity of reaching a +high efficiency. + +9. Earnings in excess of the day rate should be in proportion to +efficiency. + +10. The generally accepted day rate of wages must be absolutely +guaranteed to the worker, no matter what his efficiency. + +All this is not pampering the worker or making concessions to him. The +hard fact remains that it is only by adopting these principles that +the greatest efficiency can be obtained--viz., greater production of a +better quality of work for the same or less expenditure in wages and +works costs. That it also gives the worker more income, better health, +less fatigue, greater contentment, are happy circumstances that make +for a rational and equable understanding between employer and worker +with a maximum of benefit to both sides, that entail no sacrifice of +principle on either side, and enable us to look forward to a national +efficiency which will be the achievement and the pride of every class +of which the State is composed. + +But under what circumstances can these principles be put into practice? + +As they evolved out of the methodical and patient study of production +and the application of common-sense ideas to labour and its ways, +we have not far to seek. The recorded results have been unified into +a system which has been and which may be applied to all sorts and +conditions of labour; this system, so far as it directly affects the +worker, is denoted herein by the short expression, the Reward System. + +It is a method whereby a worker is paid according to his efficiency. +There is a guaranteed minimum which is equal to his ordinary wage; +after that, the greater his efficiency the more he is paid. + +In order that he may have every opportunity of reaching a high +efficiency without undue strain or discomfort during his work, every +detail of the work, the machines, and the conditions, receives +consideration. + +He is not left to do the job in the best way he can think of, with any +tools he may consider suitable. Before he starts any job under the +Reward System, both the job and the machine on which it must be done +have been studied and timed; the best tools for the purpose have been +selected; the right speeds have been chosen; the correct depth and +speed of cut have been decided upon, and so on. Also the comfort of the +worker has received attention, and if he can do the work better sitting +than standing, a chair is provided. + +All this means that, as far as possible, the job is equalised for every +worker who is put on it, and every job is put on a time and condition +basis, which results in every worker having an equal opportunity. + +It is therefore quite clear that, as conditions are the same for every +worker, the amount of work done, and in consequence the amount of +reward earned, depends entirely on the energy and ability of the worker +himself. + +The above is, of course, only a statement, and the worker will want to +know just how the right times and conditions are arrived at, and what +assurance he has that conditions will not be altered once they are +fixed. + +Here we will consider the general principles; an example with fuller +detail is given in Part II. + +First, all the details of the work to be done, the material of which it +is to be made, the method of manufacture, are carefully considered by +the design and planning departments of the factory. + +The particulars of the job, together with a drawing, if necessary, are +handed to the time study engineer in order that he may see the finished +and unfinished sizes, the quality of material, the machine and tools to +be used, etc. + +The position of time study engineer is one of the most onerous and +responsible in the whole field of the scientific study of work and the +worker. He should be a man of considerable skill and experience; he +must be thoroughly practical, and should have had a shop training in +addition to his scientific studies; he should be able to divide the +work up into elements suitable for the machine on which the work has +to be done, and to suggest improvements in the methods of performing +it; he must be able to see that the work is carried out in the most +expeditious way; he should be well educated apart from his engineering +training, and should have a knowledge of hygiene, physiology, and +psychology, in order that he may understand the effect of work on +different workers, the causes and prevention of fatigue, and what +surroundings are best for the health and happiness of the worker. + +Such a man should be chosen with the greatest care, as so much depends +on his engineering ability, his sympathetic judgment, and his broad +outlook on the question of production from the point of view of both +worker and employer. + +And, in consequence, his standing in the firm should be correspondingly +high, if he is to fulfil his duties satisfactorily to himself and to +those with whom he is associated--worker, trade-union, and employer. + +When the job goes into the shops, a few of the articles are passed +through each operation in order that the worker may become familiar +with it. This also enables the time study engineer to see that tools +and speeds are satisfactory and to cut out useless motions. + +A special time study is then made of each detail or element of the +work from the time it comes to the worker to the time it leaves him. +Every change that occurs--for instance, when the machine is stopped or +another tool is brought into position--is the end of one element and +the beginning of another, and each element is timed and recorded. For +this work a good average worker is chosen, and he is paid time and a +quarter during the study. + +The reason for this separation into elements and the careful timing +of each is in order to find out exactly what time each element should +take. These are averaged out when a certain number have been timed, and +the average is assumed to be the correct time for each element. Then +the average times of all the elements are added, and this gives the +time of the operation which that particular worker is engaged upon. + +In this manner the best method is found, and one that puts all workers +on exactly the same basis, which is the essence of the system. + +It is not claimed that the time study is perfect and that the records +obtained are absolutely exact. Even with the greatest care errors +will creep in and the times will be incorrect. This especially is the +case with hand work. Again, the skill of the worker increases very +considerably, and he himself finds quicker methods of doing the work. +All that is claimed for the time study method is that the dividing +up of the operation into elements, and timing them as carefully as +possible and eliminating all unnecessary movements, gives the nearest +approach to perfection of rate setting yet discovered; there is a +bed-rock character about it that is not found in any other system. + +The time thus obtained is considered to be the fastest time in which +the operation can be done. Actually, it is not the fastest time for +two reasons, one being that any time so obtained may be improved on +when the worker becomes thoroughly used to the job, and the other +being that a good _average_ worker is chosen for the time study, and +therefore a first-class man can improve on the time obtained. But it +is _considered_ to be the fastest time, and we will call it the "base +time." + +It is quite evident that this cannot be reached regularly by every +worker, and this is taken into consideration when determining the +standard time. + +To obtain the standard time--namely, the time in which the work is +_expected_ to be done--an allowance is made on the base time. This +allowance depends on the nature of the work, greater allowances being +made for jobs that necessitate a good deal of handling than for jobs +that are nearly all cutting, because cutting is independent of the +worker. + + +(_b_) THE BASIS OF REWARD PAYMENT. + +This standard time is the basis of the Reward System, and is therefore +the most important time. It is so fixed in relation to base time that +every worker put on that work should be able to reach it. If he does +so, he is said to have reached an efficiency of 100 per cent. + +A worker who reaches continuously 100 per cent. is a high efficiency +man. + +This efficiency should always be reached by a worker who follows the +instructions and works diligently. + +Reward begins, however, considerably before this point is reached, +because it may be necessary for a worker to be on a job some time +before he reaches a high efficiency. Again, sometimes one worker is +naturally slower than another, and although his work is good he can +reach 100 per cent. efficiency only by special effort. There would +be little encouragement if reward did not begin until the worker had +reached the 100 per cent. point. + +For these reasons, and as an incentive to every man to become as highly +efficient as possible, reward begins when the worker reaches 75 per +cent. efficiency. + +(This particular figure of 75 per cent. is taken to illustrate the +method, and because it is frequently used as the reward point. Any +percentage may be used, and several methods are given in Part III.) + +This means that a time addition of 33-1/3 per cent. is made to the +standard time or standard production in order to obtain a new figure, +which is called "reward time" or "reward production," because it is the +point where reward begins. + +The following are three brief examples showing the working out of the +reward earned: + + I. II. + Base time 12 hours 8 hours + Standard time (= base + 25%) 15 " 10 " + Reward time (= standard + 33-1/3%) 20 " 13.3 " + Time taken 16-1/2 " 8.5 " + Time saved 3-1/2 " 4.8 " + Rate per hour 9d. 9d. + Reward 3-1/2 x 9 = 2s. 8d. 4.8 x 9 = 3s. 7d. + Reward, week of 48 hours 7s. 9d. 20s. 2d. + Weekly day wage 36s. 0d. 36s. 0d. + Total earnings 43s. 9d. 56s. 2d. + Efficiency 91% 117.5% + + III. + Base quantity 40 per hour + Standard quantity (= base - 10%) 36 " + Reward quantity (= standard - 25%) 27 " + Time worked 6 hours + Quantity produced 220 + Reward quantity for 6 hours 162 + Excess quantity 58 + Reward at 27 for 6d. 1s. + Reward for week of 48 hours 8s. + Weekly day wage 24s. + Total earnings 32s. + Efficiency 102% + +The two first examples are on a time basis, and the third on a quantity +basis. These are worked out in detail in Part II. + +The first thing that strikes one when these figures are examined is +that wages are considerably increased. In view of this increase the +worker will want to know more about the conditions under which the +work is done, and whether such earnings can be maintained continuously +without special effort. + +The reply is that such earnings not only can be, but are being, made +regularly, and the workers have a greater degree of comfort in their +work than they have under usual working conditions. + +This is because of the time study method. Every detail of the work is +carefully studied, as has been explained, and everything that will +aid the worker to increase his output has been provided. The work is +brought to the machine and taken away by labourers, the tools are all +specially designed and exactly suited to the work. Instruction cards +are given to the worker, so that he can see exactly what he has to do, +how he has to do it, and the time he should do it in. If he can do the +work sitting better than standing, a chair or stool is provided. + +In fact, everything is done to assist the worker to reach a high +efficiency, as this means greater production besides greater reward. + +The Reward System is, clearly, far better than either day work or +piece work. The time study shows what is the best time in which a +good average worker can do the job. A trustworthy worker and one who +appreciates the time study principle must be selected for the study. If +this were not done, a false time might be obtained, and this would lead +to doubts as to whether the times of other jobs were correct. This is a +difficulty that hardly ever arises, because the worker knows that he is +being fairly dealt with, and there is nothing to be gained by getting a +false time. + +Times once obtained are never altered so long as the conditions remain +the same. + +Some exceptionally good workmen can make large rewards every week, and +it is to the firm's benefit that they should do so. Suppose the price +was lowered because of this high reward. The general efficiency of +all the workers would fall immediately, and the dissatisfaction with +the alteration in price and with the firm's attitude would result in +serious loss to all concerned. + +The following is an example of what happens under an ordinary bonus +scheme when times are reduced: + + -------------+---------+-------+-------+-------+-------------------------- + | | | | | _Works Costs at 2s. + | | | | | per Hour, including + |_Time |_Time |_Time |_Reward| Labour._ + |allowed._|taken._|saved._| at | + | | | | 10d._ +-------------------------- + | | | | |_Cost._|_Reward._|_Total._ + +---------+-------+-------+-------+-------+---------+-------- + | Hours. | Hours.| Hours.| s. d. | s. d.| s. d. | s. d. + Original time| 5 | 4 | 1 | 10 | 8 0 | 10 | 8 10 + Cut to | 4 | 3-1/2 | 1/2 | 5 | 7 0 | 5 | 7 5 + " | 3-1/2 | 3 | 1/2 | 5 | 6 0 | 5 | 6 5 + " | 3 | 7 | -- | -- | 14 0 | -- | 14 0 + Increased to | 4 | 7 | -- | -- | 14 0 | -- | 14 0 + " " | 5 | 3-1/2 | 1-1/2 | 1 3 | 7 0 | 1 3 | 8 3 + Cut to | 4-1/2 | 7 | -- | -- | 14 0 | -- | 14 0 + -------------+---------+-------+-------+-------+-------+---------+-------- + +In this case the original piece time allowed for the work was five +hours, this being an estimate based on the time taken when working +under day work. The men were paid at the rate of 10d. per hour, and the +works costs, including labour, amounted to 2s. per hour. Bonus was paid +on the time saved. + +The workers completed the job in four hours, a reduction of one hour +on the time set, and thereby earned a bonus of 10d. The time was cut +to four hours, and the work was done in three and a half hours, the +workers earning a bonus of 5d. It was then cut to three and half hours, +and the workers completed the job in three hours. Again the time was +cut, but the patience of the workers had reached its limit, and the +time taken was seven hours, with a correspondingly increased works cost. + +The time was immediately increased to four hours, but with no effect. +On increasing the time to the original five hours the workers completed +the job in three and a half hours, and earned a very good bonus. Once +again the time was cut, with the result that the workers' suspicion was +aroused, and the time promptly jumped to seven hours. The workers had +learned their lesson! + +Neither worker nor employer can be satisfied with such a result, and +mutual suspicion is the natural outcome. Yet all rates must be juggled +with in this manner in the absence of a method whereby the time may be +accurately determined. + +It follows that, in the first place, the firm will not cut prices, +and, in the second, that the first-class worker may earn the highest +reward in his power, with the knowledge that he is not injuring the +welfare of his fellow-workers in any way. + +Now, suppose for some reason a worker takes longer than reward time to +do a job, or suppose he produces less than reward quantity. It only +means that he gets no reward. His day wages, 36s. or 24s. a week, +or whatever it may be, are absolutely guaranteed. Whatever happens, +his day wage is not interfered with. It must be kept in mind always +that--_Day wages are for attendance; reward, is for efficiency._ The +two things are distinct, and it is advisable to pay wages and reward +earnings at different times. The firm must see to it that when the +worker is in the works he earns his day wage, and in this respect the +day wage standard is equivalent to reward production or reward time. If +the worker does less than these he is not earning his wage, although he +gets it, and such a case calls for the immediate attention of the firm +as well as of the worker. + +Let us sum up the foregoing points: + +1. The time study gives all the workers the same opportunity of earning +reward. + +2. Reward is paid for all production above a certain minimum. + +3. Reward begins at such a production that everyone should be able to +earn some reward. + +4. The standard production is so calculated that all workers should +reach it by diligence and careful attention to the instructions. + +5. No matter how large a worker's reward may be, prices cannot be cut. + +6. The worker is safeguarded by the conditions of the system. + +7. The day wage is guaranteed even if the production be less than the +reward point. + +8. As reward is proportional to profit (the higher the reward the +greater the efficiency, and the greater the efficiency the greater the +firm's profit), the worker is encouraged to earn high reward. This can +only be done by good conditions and freedom from fatigue, and therefore +the comfort of the worker is assured by the principles of the system. + + +(_c_) SPECIAL REWARD FOR HIGH EFFICIENCY. + +Besides the reward described in the foregoing explanation, special +reward is given to all high efficiency workers--that is, to those who +reach 100 per cent. efficiency all through the week. + +This special reward takes the form of paying the worker a bonus either +in the form of a sum of money or an additional percentage on the +standard time. + +If the worker's efficiency reaches 100 per cent. or more for any one +week, and the hours on reward are, say, forty or more, a cash reward of +1s. or 2s., or other suitable amount depending on the status, etc., of +the worker, is given in addition to the reward earned by production. It +is necessary to base this special reward on the number of hours worked; +otherwise, if the worker happened to be only an hour or so on reward +during the week, and his efficiency for that hour was 100 per cent., he +would get the special reward, and this would be absurd as well as being +unfair to workers who had been on reward all the week. + +In the other case, when the worker reaches 100 per cent. efficiency +on any one job, no matter how long it takes, his reward for that job +jumps 5 per cent. or 10 per cent., or whatever special proportion be +decided upon. If the reward point be 75 per cent., then at 100 per +cent. efficiency the reward is 33-1/3 per cent. of the job rate. To +this would be added, say, 5 per cent., thus making the reward 38-1/3 +per cent. of the job rate. + + +(_d_) THE CLASSIFICATION OF WORK. + +A very important matter in connection with the Reward System is that of +deciding the right kind of worker for the different classes of work. + +For work requiring much skill and close application, or work which +requires skilled handling, the highest class of worker is necessary +and the job rates will be high. For work which is automatic or +semi-automatic, boys or girls may be employed. For work such as rough +drilling or heavy unskilled handling, men who have no special skill +or training may be suitable. But the point where one grade of labour +merges into another is not easily defined and needs very careful +consideration. + +The circumstances of different trades vary so greatly that it is +impossible to apply any rules in such general notes as these. It must +be left to the employer, the workers, and their trade-unions, to settle +these grades between them, and from the trade practice there should not +be much difficulty. + +One thing stands out--namely, the worker who has a continuously +high efficiency in any grade is easily distinguishable, and would be +selected to pass into a higher grade with higher wages when opportunity +occurred. + + +(_e_) REWARD DERIVED FROM INCREASED PRODUCTION. + +It may be asked how it is that a firm can afford to begin paying reward +when a job is done in twenty hours, while the time study shows that the +same job can be done in twelve hours? + +The reply is, First, that under ordinary day work the waste of time +on the job is so great that the job would certainly take longer +than twenty hours; second, that by giving reward there is a decided +incentive for the worker to do the work in a shorter time; third, that +twelve hours is the shortest possible time with a good average worker +working under the most favourable conditions, and this happens so +seldom that it may be considered accidental, though it is necessary to +observe these conditions when making a time study in order to find an +absolute basis on which to pay reward; fourth, for every hour saved +on the job the overhead charges are reduced proportionally, and this +lowers the works cost. + +If a job takes twenty-four hours under day work, it is clear that, if +the same job be done in nineteen hours, some reward may be allowed, +while if it be done in fifteen hours an extra bonus may be given. + +The training in efficiency habits of work is also very valuable, and +means economy all round. A man not used to these habits may expend +twice as much energy and produce half as much work as an efficient man. + + +(_f_) SAFEGUARDS. + +The time study is in itself an absolute safeguard against cutting +times. It is quite impossible for a job to be done in less than a +certain time by an average worker after all the elements have been +studied and tested. So long as the elements do not change, the times +must hold good, and a new study will confirm this if any doubt arises. + +So that if the workers are all taking high rewards it is clear proof +that they are of high efficiency. + +Suppose a firm cuts the time with the object of getting more profit. +One result is shown on p. 27. Another result is that the good workers +will leave, because efficient men can always get good jobs elsewhere. + +As a matter of fact, however, rates are practically never cut. It +does not pay to cut rates, because if efficient men leave, and only +inefficient men are left, the firm loses heavily, and their own time +studies together with the general efficiency of the workers show how +valuable their men are. + +This is why the time study is a decided safeguard against cutting rates. + +One method of rate revision sometimes occurs. When a job is found to +be rated too highly from some cause or other, and the worker is taking +excessive reward on that job, a change is made in the conditions of +the work and the job is restudied. Two reasons are given for this +procedure: first, that it is unfair to the other men for one man to +be taking exceptionally heavy reward, and, second, under the new +conditions the job is still on exactly the same basis as all other jobs +in the factory, and standard efficiency with its proportionate reward +can be made just as easily as in other cases. + +There is another safeguard. The relation between standard and reward +times is so arranged that when a worker reaches standard he gets at +least 25 per cent. of the job rate. This is an accepted principle, and +must be conceded always. It is an irreducible minimum in connection +with the Reward System. + +It may be said that, however much the principle is accepted, it does +not follow that the employer will stick to it. + +But he must! If he does not do so, what is the alternative? Either he +gives less than 25 per cent. reward or he gives none until the standard +time is reached. In the first case, if he gives less than 25 per cent., +reward is not worth working for, and the worker will not trouble about +it, thereby rendering the whole system useless. If the worker gets no +reward until standard time is reached, the effort required by the men +is so great in order to get reward that it is not worth it, and the men +do not try for it. + +So that this principle must be accepted by the employer whether he +likes it or not, if the system is to be a success. + +It is not to the interest of the employer to treat the worker badly. +Firms with brains and foresight enough to adopt time study methods are +not going to spoil the whole business by getting the workers up against +them. It is more to the firm's interest than to the worker's to get a +continuously high efficiency; that is why time study and reward methods +were introduced by the employers, and not by the workers. + + +(_g_) ATTENTION TO SERVICE DETAILS. + +It must be clearly understood that the Reward System does not pretend +to be by any means a solution of all the difficulties between employer +and worker. + +Without mutual good-will no system will work satisfactorily. What is +claimed for the Reward System is that it provides a basis upon which a +good understanding and a mutual interest in increased production can be +built up and maintained. + +The time study shows beyond argument the very quickest time in which +a job can be done by an average man with the means at his disposal. If +this is followed up by a rational organisation, the Reward System will +be entirely successful. But if an employer endeavours to foist the time +study and Reward System on an existing rule-of-thumb organisation, it +will undoubtedly fail, and will cause deep suspicion in the mind of the +worker as well as being wholly unsatisfactory to the employer. It will +be looked upon as an endeavour to get more out of the worker without an +adequate return, and this, as a matter of fact, is just what it will be. + +One thing is certain: No employer will adopt the Reward System unless +he sees clearly that it is to his direct financial benefit, and there +is no reason why he should. He, on his part, would be foolish to take +on an increased responsibility without adequate return. + +It follows, therefore, that the system is part of the rational +organisation of production, and it cannot be properly carried on +without such organisation. + +Even when such a system is adopted, there are ample opportunities for +letting things slide and for unfair conditions to creep in. This is why +the worker should understand the system, because then only will he be +able to assert his position and see that conditions are fair. + +The following are some of the things to watch out for: + +Time study must not be used for speeding up day workers. There is a +tendency to do this when it is found that a job can be done in half the +time, but it must be remembered that conditions are quite different and +the incentive is lacking. The remedy is to put all workers on reward +as far as possible, and to adopt a profit-sharing or other scheme to +stimulate day workers. + +Overstrain and fatigue must be carefully guarded against. This means, +as a rule, guarding the worker against himself. He wishes to earn as +much reward as he can, but if he feels tired out at the end of the day +he is doing too much, and he will wonder why his efficiency drops. One +part of the system is to consider fatigue, and to make an allowance on +the base time to cover necessary rests during the day. + +Cutting the rates need hardly be mentioned, because it is very bad +policy on the part of the employer, and always means loss of efficiency +and hence loss of profit. + +The question of keeping machinery in order and bringing up supplies is +one that the worker must watch. It is no use trying to reach a standard +time when one gets let down by lack of attention on the part of other +people. It is true that a day time allowance may be given, but this +is not altogether satisfactory. It means that reward cannot be earned +for the day time period, and, besides that, there is a possibility +of not receiving the allowance. It is possible, also, that the +superintendent may refuse allowances, and so dissatisfaction results. +Day time allowances and allowances for exceptional conditions (such +as bad metal), which increase the machine time, are open to abuse. If +a worker reach 99.5 per cent. efficiency or thereabouts, it is quite +possible that an unfair allowance of an hour, or even half an hour, on +the job will put him over the 100 per cent. efficiency mark, and his +reward rate would be considerably increased. With regard to bringing +up supplies and attending to slight machine breakdowns--broken belts, +for instance--the labourer or other person responsible should be put +on reward, his reward being in proportion to the average reward of the +workers he serves. + +The worker must see that proper allowances are made for bad work +which he is not responsible for. For instance, if he is on small parts +on an automatic machine, and the inspector throws out several pieces +as spoiled, it may be the fault of a bad adjustment which the worker +cannot help. It is the worker's duty to stop his machine and draw +attention to the fault; but if it can only be found on close inspection +in the inspection room, and if it consists of, say, a capstan becoming +loose, it may be impossible for the worker to detect the fault while +the work is in process, and it is no fault of his. + +The proper counting of the quantity of work done is a point that must +be insisted on. On large work it is simple enough, but on small parts +that are counted by weighing it is easy to make serious mistakes. + +Proper check must be kept on the gears used for a particular job. On +automatic machinery a change of gear is frequently necessary, and if +the change is not properly recorded it may mean that cycle time--the +time of all the elements done by the machine on that part--is quite +wrong, and an efficiency much too high or too low is the result. + +Reward is reckoned either on each job taken by itself or on the net +result of the week's work. The former is better for the worker, but it +is not always fair to the employer, because there is a tendency for +the worker to take it easy on difficult jobs where there is little +chance of earning reward. With an exact time study and close attention +to instructions, such cases, theoretically, should never occur; but +they do, because it is impossible to get every job on exactly the same +basis, and the worker after a little experience knows what jobs are +easy and what are difficult. In some shops the experiment of deducting +inefficiency from efficiency has been tried. That is, suppose a worker +was 10 per cent. below reward efficiency one week, then that 10 per +cent. has been deducted from his efficiency the following week before +reward has been allowed. Result: Disaster! The fairest way is to take +the balance of efficiency on the week's work, and if a particular +job is a bad one from the worker's point of view, he can always draw +attention to it. + +Another important matter is that of determining the class of work +which is to go to the worker. Automatic work will go to comparatively +unskilled workers, but the dividing line between classes of work is +sometimes a very fine one. Skilled handwork must be given to the +skilled worker, of course; but it is impossible to lay down any rules +in this connection, and the worker must keep his eyes open, and either +draw attention to doubtful cases or consult his trade-union. + +The greatest difficulty is in fixing the allowance on the base time in +order to obtain standard time. It is easy to fix it so that the worker +cannot reach standard time, and that means a loss of efficiency and of +reward. This is essentially a point for trade-union interference, and +it is here that the supreme value of the time study is best appreciated. + +Most of the foregoing items are in connection with the practical +working of the system, and it is to the interests of both employer and +worker that all such interferences with production should be prevented. + +Each trade will have its special loopholes where miscalculations can +creep in, and the worker must watch for these and have them corrected +immediately they are discovered. + + +(_h_) LOSS OF SKILL DUE TO THE REWARD SYSTEM + +It is sometimes stated that under time study methods a man cannot +attain the same skill as a day work man, and that he loses what skill +he had if he becomes a "team" worker. + +Let us consider this contention. + +Suppose a man leaves a "reward" shop and goes to work in a day work +shop; is he any less efficient under day work because of his training +under the Reward System? + +Now, in the first place, he has been trained and used to care +and diligence, to working to definite instructions. Is that any +disadvantage to him? It is clear that such an experience is a distinct +advantage. But has he the same knowledge and adaptability and +initiative as the older-fashioned worker? Can he tackle a difficult job +with the same chance of success? + +Well, what difficulties has he to face? It does not follow that +because he has been working to instructions he remains in ignorance +of the essential factors of his trade. On the contrary, instructions +scientifically worked out give him far more knowledge than if he is +compelled to work them out for himself. The men who work out these +instructions are highly paid men who have all the advantages of a shop +training and a scientific engineering education combined, and this is +an expensive and arduous business. If a man prove a failure, one may be +sure he will not be allowed to continue planning out such instructions +as we are discussing. + +Therefore one must assume that the men who make out the instructions +have studied every element of the case. The brains of these men are in +the methods and instructions used by the workman, and if the latter is +worth his salt he will soon know far more than the old rule-of-thumb +man. + +If the worker is a man of ordinary common sense, he cannot help but +take notice of the ways in which jobs are done; of the best and most +satisfactory tools, both shape and material; of proper speeds and +proper depths of cut for roughing and finishing; and many other details +that are constantly before him. + +"But this system converts the workman into a mere machine, and already +his work is too dull and mechanical!" That has been said, but not by +anyone who understands the system or who has had direct experience of +it. + +That work under _present_ conditions is often dull and mechanical +is only too true. One of the reasons why this Reward System is so +attractive to the worker is because it removes these conditions. When a +man knows he is being paid for efficiency, the work immediately ceases +to be dull; as soon as a man is interested in producing as much work as +he can, that work immediately ceases to be mechanical. Some jobs will +always be mechanical and dull, and the only thing to do in such cases +is to change the worker at frequent periods. + +The conditions under which the Reward System is run must be agreeable, +because it means a loss of efficiency if they are not; and when a +man is working under agreeable conditions, when he knows he gets a +reward for his efficiency, when he knows that rates cannot be cut, +when he knows he is doing no injury to his fellow-workers by earning +big rewards, he is happier at his work, he takes greater interest in +it, he comes to it with a certain degree of pleasure, and he leaves it +with far less fatigue and with greater contentment than under any other +system. + +One can say with certainty that a man who is a good workman under any +other system will be a better workman under the Reward System. A bad +workman will be bad under any system, but such a one can "find himself" +much more certainly under the Reward System than under any other. In +many cases, too, a very moderate workman will find some one particular +job where he can do good work and earn good money. He will want to stay +on that job, of course, and if he keeps up his efficiency the employer +will agree that he shall stay on it. + +There is one remarkable thing that no other method of wage payment +shares--namely, it is to the direct and immediate benefit of both +worker and employer that the greatest efficiency be obtained. + + + + + CHAPTER III + + WAGES AND PROGRESS + + +(_a_) ANTAGONISM BETWEEN EMPLOYER AND WORKER. + +Let us try to see straight on this point. + +First as to the relations between them. The employer wants to get as +much profit as he can, and, as wages are usually a large and a plastic +item in his expenditure, he always tries to cut down that item either +by lowering wages or by getting more work produced for the same wages. +"Low labour cost" is the continual cry of the employer. + +Next, the average worker wants as much wages as he can get for as +little work as possible. He thinks that the less work he does the more +there is for somebody else, and it suits his nature to go easy. "High +wages and short hours" is the cry of the worker. + +Is there anything to choose between them? Only the fact that, as the +employer's profits are so high and the worker's wages are so low, there +ought to be a better distribution of the wealth produced. Morally there +is nothing to choose between them, because each is trying to rob the +other. They cannot help it. Neither is to blame altogether; it is the +fault of the present industrial conditions. Under these conditions the +employer cannot give to the worker a fair share of the wealth produced. + +To have a factory it is necessary to have capital. That capital has +been obtained from the surplus wealth produced by the worker. The +worker cannot work without the capital necessary to provide the tools +to work with and the material on which to work. Interest must be +paid on capital in order that the employer may live, and in order to +accumulate more capital, because there are more workers coming into +being every year, and they will want work and there must be capital to +provide the means necessary for that work. + +And so the vicious circle goes on. It is not the fault of the employer; +it is not the fault of the worker. It is, I repeat, the fault of the +system. + +Take any worker from his work and place him in charge of a factory with +a large capital, and ask him to run the business in competition with +other businesses; he would soon find how keen a man must be in order +to keep the business going successfully. Suppose the profits fell off, +what would our worker-employer do? Cut down wages, of course! + +There is no getting away from it, and we must look the conditions +squarely in the face and blame neither employer nor worker overmuch. + +Now, here is where the Reward System scores. The employer gets "low +labour costs"; the worker gets "high wages and shorter hours," with +good conditions and greater comfort added. + +I am quite convinced that there will be less antagonism between them +under the Reward System than under any other. It keeps both up to the +mark, and it means a mutual dependence on each other and a mutual +interest in high and efficient production. An employer who pays wages +under the Reward System soon finds that he has adjusted his whole +establishment and sales policy on this basis. If he goes back to day +work or piece work, the labour costs go up instantly. So he must stick +to the system: it pays him to stick to it. Yet he dare not make things +too harsh for the worker; if he tries to do so, down comes efficiency. +And the essential items that make for efficiency are reasonable hours, +pleasant conditions of labour, and a reward in proportion to that +efficiency. + + +(_b_) TRADE-UNIONS AND THE REWARD SYSTEM. + +The trade-unions must be properly organised to meet the new conditions. + +The trained engineers of the unions should be thoroughly up to date +in their knowledge of all the branches of the trade. In connection +with engineering workshops, they should be acquainted with the latest +practice in all kinds of machines and tools, tool steels, methods of +cutting, and everything else bearing on the working of metals. + +Such a trained engineer is worth a good deal to the union, and he +should be paid highly. The saving to the union cannot be adequately +calculated. In many cases an exhaustive inquiry into conditions of +work would often prevent an expensive strike or would smooth out +difficulties that tended towards a strike. Such a man should be +paid anything from L500 to L1,000 a year. This sounds a lot, but it +is absolutely essential for the unions to be in a position to let +the employer see that they know as much about the business as he +does--perhaps a bit more--and they cannot get the sort of man they need +for less. + +The trade-union must also see that time studies are properly made. This +will be no part of the union's duty until disputes arise. If there is a +general complaint from any shop that time studies are unsatisfactory, +the trade-union engineer should be sent to the factory to study one or +two representative jobs. + +He will do this side by side with the employer's engineer, and he must +allow the firm to choose the worker (who would, of course, be a union +man), so that there can be no complaint of unfairness and no accusation +can be made that the union desires to impose conditions on the employer. + +A comparison between the times thus obtained and the firm's standard +times will show at once whether the complaint is well founded. + +The allowances on the fastest time in order to obtain standard time +is a matter more open to arrangement. It is, in fact, one of the +most vital matters in connection with the time study system, and one +where the most unfairness will take place. But an approximate check +may be obtained because the handling times of each element of the job +can be totalled and the cutting times totalled, and according to the +circumstances of the case the allowances can be arranged. + +The relation between reward and standard times is a simple matter. +It is only necessary to see that reward when standard efficiency is +reached is at least 25 per cent. of the day wage. That is to say, if +wages are 20s., the reward when the work reaches standard efficiency +should be 5s.; if wages are 30s., reward should be 7s. 6d.; if wages +are 40s., it should be 10s. + + +(_c_) SCIENTIFIC MANAGEMENT AND THE REWARD SYSTEM. + +This Reward System, when based on time study, is a part of what is +called "scientific management," and cannot be carried on without +proper departments for standardising products and methods of +production, planning and routing the work, attending to tool repair +and replacement, examining and maintaining machine tools and driving +gear, keeping stores and stocks, inspecting the product, costing +production accurately, preventing waste, keeping the sales and +publicity department up to a high standard, and watching every phase +of the work so as to keep everything up to a high pitch of efficiency. +All this does not directly concern the worker. His chief interest lies +in whether his conditions of work are improved, whether he suffers less +fatigue, whether he gets more wages, whether he does his fellow-worker +no injury in earning high rewards If he is satisfied on these points, +then all the rest does not concern him. + +Now, scientific management is not some fanciful suggestion that the +worker may accept if it pleases him, and refuse if it doesn't. It is +here already, and the war will cause an enormous increase in the number +of firms adopting it. And where scientific management is introduced, +efficiency in production follows--that is what it is for. The point is, +is the worker going to accept it and its consequences, understanding +it, seizing its good points, rejoicing in increased efficiency, +increased wages, and increased opportunities of a satisfactory life +which these things provide, or is he going to resent it and try to +fight it as his fathers fought against the introduction of machinery? + +If he chooses the latter course, it means bitter antagonism, suspicion, +Labour troubles, instability of employment, low wages, loss of +earnings, and the whole of the intellectual forces of the country +will be against him, because the conditions after the war will demand +industrial peace if we are to maintain the commercial position we had +before the war. And in the end it will only mean a sullen acceptance of +defeat. + +Would it not be better for the worker to get a clear understanding of +the system, welcome it for its advantages, and reserve all his strength +and power to adjust and preserve the bases upon which the payment of +labour depends in the various trades of the country? + +It is quite true that the worker will work harder and will produce +considerably more; it is equally true that prices will be reduced in +consequence, and therefore more men will be required to make more +articles for the increased demand that is bound to follow the reduction +in price. In the long run, the system will mean employing more men +than would be employed under present methods, and they will be men of +high efficiency, and on the average of a better class, such men as +will greatly increase our national assets, and such as will maintain +our reputation in the markets of the world for the excellence and +durability of our manufactures. + +In the clash of interests that will prevail for a time when the war +is over, the worker will have to decide whether to be the controller +of his own destinies or whether to become servile. Much depends on +the attitude of the skilled worker towards the capitalist. The burden +of debt left by the war _must_ be shouldered, and both interest and +repayment of loans must come from somewhere. Unless the worker is to +be ground to the dust, he must assert himself; but he will be utterly +ignored if a selfish and stubborn attitude be adopted, and he will be +driven by stress of the nation's adversity to accept what is offered +to him by the more far-seeing and powerful members of the State. This +means losing all the freedom that he fought for in the great war, and +it will put back the worker's progress for an indefinite number of +years. + +Let him follow up the great sacrifices he has made during the war by +an intelligent understanding of the altered conditions, and the worker +will take an honoured place in the affairs of the State and share its +responsibilities and its benefits. If he is to take that place--and no +man has a better right to it--if he is to have a voice in the councils +of the nation that will compel attention and respect, will it come by +antagonism to progress and indifference to the general welfare, or by +organisation and efficiency? + +The reply is obvious. + +The organisation is the duty of the trade-unions, and the Reward System +is a method of providing the efficiency. These will compel the worker +to take a greater interest in his surroundings and in the way he is +governed. He will resent inefficiency in civic and national matters +when he realises how he suffers from its consequences and what perils +it brings upon him. + +And it must always be remembered that the worker will owe nothing to +the employer in attaining this position; there will be no paternalism +or "giving shares for nothing" about it. It will be clean, honest hard +work and endeavour, and the employer will not only be giving nothing +away, but will actually profit by it. + +And while each benefits by the efficiency of the other, the State will +benefit by both. + + +(_d_) THE FUTURE OF LABOUR. + +How will this time study and Reward System affect the position of the +worker? + +This is a very serious problem. + +It is evident that a transmutation of labour is taking place and will +proceed more rapidly after the war. + +Workers on the whole are becoming less skilled as craftsmen, and +machine attendants are taking the place of hand-skilled men. + +it is quite impossible to stop this change. But what cannot be avoided +may possibly be controlled, and the trade-unions should endeavour +to direct these economic changes rather than to obstruct what is +inevitable. + +Handicrafts can never wholly cease to exist, but the skilled fitter, +and more especially the skilled turner, finds machinery and methods of +using machinery encroaching more and more on his particular domain. + +An unskilled man is given three or four weeks' tuition, and then, +if he shows sufficient intelligence, he is put on a machine with an +instruction card. The setter-up sets up the machine and gives advice +and surveillance, and the man is henceforth a tradesman, getting full +wages for that class of work. + +The systemisation of production thus means a great increase in the +average skill of the workers as a whole. There are about 4,000,000 +skilled workers who are members of trade-unions at the present time, +and this number will be greatly increased if the machine attendants of +the near future are absorbed by the unions. If the trade-unions are +to control the organisation of Labour, this new class of semi-skilled +workers must be absorbed either in one of the older unions, such as the +A.S.E., or else a new union must be formed for its accommodation. The +former would be by far the better arrangement. + +At any rate, it will be fatal to allow this growing class to be at the +mercy of the employers. Such a state of affairs will mean not only the +exploitation of the new class, but the destruction of the old, because +the more intelligent men of the new class will be selected and trained +to take the place of trade-union men. This is a natural process, and is +not aimed at the destruction of the unions. + +The general result will be to transfer craftsmanship from the craftsman +to the standards book. Then the instruction card will be made out from +the standards book and handed to the machine attendant, who will work +to it, and will earn something in excess of his weekly wages according +to his diligence and care in working to the instructions. + +A new profession will result--indeed, has already resulted--one that +will employ many intelligent people: I refer to the profession of the +rational industry organiser. + +It will mean, further, a great increase in the clerical staffs of firms +who adopt these systems. + +Yet, again, it means a new trade, the trade of inspector, a trade +especially suitable for women on account of the lightness of the work +and the delicate handling of the gauges. + +And, above all else, it means a great increase of production per man, +with a consequent lowering of prices. Now, a lowering of prices always +means a greater demand, which in its turn means more workers. Speaking +generally, any article made in very large quantities is sold to a great +number of people, which means that it is sold largely to the working +class. Therefore the reduction in price of an article tends to be to +the advantage of the workers--it would be more correct to say the +better-paid workers. + +But now we come to the vital point in connection with all industry and +industrial systems--namely, the ultimate advantage or disadvantage to +the workers as a class. + +The employer will, of course, endeavour to reduce wages, because the +semi-skilled labourer need not be paid so highly as the fully skilled +craftsman. + +It is impossible to say what the trade-unions will do--whether they +will accept the situation and adopt sliding scales of wages for +different classes of labour, or whether they will insist on the same +wages being paid to all union members. + +Of course, semi-skilled labour would be engaged almost always on +repetition work--work, that is, which lends itself excellently to the +Reward System. This system means, as I have shown, an addition to +the day rate of wages, and therefore the unions might arrange for a +lower wage to be paid to semi-skilled workers, and rely on individual +efficiency to bring wages approximately up to the union rate. + +In such a case it would be necessary for the unions to see that at +"standard efficiency" the wages received were at least equal to the day +rate for skilled men, and that the tasks were set in such a manner that +this efficiency could be reached without excessive strain. + +Skilled men would get the ordinary union rate, and if put on reward +their individual efficiency would bring the earnings to considerably +more than the highest earnings of semi-skilled workers. + +This arrangement should be a satisfactory compromise between the +employer and the worker, but it can only be brought about by the Reward +System, or some similar method, and under trade-union control. + +Unless such a compromise is attempted, industry will soon be in a state +of economic warfare, and the division of the workers into skilled +and semi-skilled camps will be disastrous. If the trade-unions lose +control over labour-not only skilled, but semi-skilled labour also--the +natural tendency will be for the employers to coerce and intimidate the +workers into accepting lower and still lower wages. Our tremendous war +indebtedness will provide the excuse, and a "free labour market" will +contribute to the success of this reduction. + +There is a certain level of necessity to which wages always tend. If +wages are high, they tend to be reduced; if they are low, they tend +to increase. The tendency to reduction is due to the endeavour of the +employer to lower costs, and the acceptance, under pressure, of a lower +wage by the worker so long as the wage does not fall below the limit of +absolute necessity. The tendency to increase is due to the discontent +of the worker when wages are below the necessity level, this leading to +strikes, slacking, and inefficiency, which compel the employer to raise +wages in order to avoid excessive loss. I am speaking here of skilled +labour, where there is always more or less of a demand for workers. In +the case of unskilled labour, where the supply is always considerably +in excess of the demand, wages are always below the necessity level. + +There is a constant "regression towards mediocrity," to use Galton's +phrase--in other words, a constant tendency towards the average. It is +because this average at present is an average of _necessity_ instead +of an average of _reasonable comfort_ that Labour troubles recur so +frequently; the slightest variation in the price of necessary articles +immediately affects the purchasing power of wages. + +It is evident to all unbiased persons that no one can be efficient +without a certain minimum income based on comfort; a minimum based on +necessity means inefficiency, because no worker can be really efficient +when haunted by the constant fear of debt and misery and starvation. +And it is also evident that this minimum of comfort cannot be based +on the money a man receives as wages, but on what he needs. What +constitutes need is open to argument, but there are certain items of +necessity which are beyond dispute. + +No matter where a person lives, he needs a good roof over his head, +food to eat, clothes to wear, fuel, household necessities, and a +surplus for emergencies. The cost of living differs in various parts of +the United Kingdom, and therefore there should be a scale of wages for +each district, based on the purchasing power of wages in that district. +This is recognised by the trade-unions, and in consequence union wages +are higher in London than in provincial towns. + +In each district the amount of wages should be based on the price +of perishable articles--food, fuel, household necessities--in that +district.[1] It is an easy matter to record the prices of these +necessities: and if an annual revision of wages be made, the employer +cannot complain about excessive increases, because between one year and +another prices do not vary sufficiently to cause any great difference, +and all manufacturers would be affected the same way. + +[1] What is necessary in the way of food, clothes, fuel, household +articles, rent, etc., in order to keep an average family in reasonable +comfort can easily be determined. I have worked this out in detail, but +it is hardly a subject for these notes. + +Fixed items, such as rent, should be revised every five years or so. + +Such an arrangement would mean basing wages on what may be termed +"reasonable comfort" instead of on necessity. This alteration of the +basis of wage calculation, together with the payment of a reward +for efficiency, would have a remarkable effect in lessening the +difficulties between Capital and Labour, and would make for a permanent +and progressive industrial peace. + + +(_e_) THE ACTUAL AND THE IDEAL. + +Whenever scientific management is criticised, there seems to be a +tendency to avoid a comparison between the conditions of work under +scientific management and other _existing_ conditions. The comparison +generally drawn is between scientific management and some non-existent, +more or less ideal, condition imagined by the critic. + +But we have to deal with immediate practical problems; with prevailing +conditions; with a non-producing investing society which is constantly +seeking profits; with masters who are in open or veiled antagonism +to the workers; with workers who have no chance of obtaining a real +education, and whose minds are so confused by the contradictory +statements made in the Press--their only means of becoming acquainted +with the broader aspects of citizenship--that they can rarely exercise +a balanced judgment on any subject. Any scheme of work and wages must +take into account these things as well as the present-day desires and +ambitions of the average worker, if it is to be of any real use or if +it is to assist the worker, consciously or unconsciously, towards the +attainment of what are considered better things. + +The worker cares more for money than for anything else. In this he +is singularly like most other people. The aesthetic nature of his +surroundings when at work make little appeal to him, and no appeal at +all if two or three shillings a week are in the balance against it. +He does not know how his health improves and his efficiency increases +when he is in pleasant surroundings, and he will have no hesitation in +leaving a pleasant factory for a dismal one if he receives a slight +increase in wages by doing so. + +Certain employers--Rowntree, Cadbury, Lever, for instance--after +becoming wealthy, try to improve the condition of their workers. +Increased efficiency is not their aim so much as making the lives of +their workers pleasant and happy. But it is impossible for all firms to +be wealthy, and there are few even among the wealthy who care how their +workers live; hence the multitude of repellent workshops up and down +the land. + +Scientific management, however, starts in at the beginning with +pleasant conditions because it pays to have them. It is frankly +utilitarian, and if slavery in a dark house resulted in greater +efficiency, then that method would be adopted. But since it _does_ +mean healthier and happier conditions, and more wages and greater +opportunities for a fuller life, why cling to worse conditions while +dreaming of some vague future state which is utterly outside present +practical possibilities? + +That Capital is necessary is evident to everyone. Whether the +capitalist is necessary is open to argument, but we must accept him +for the present whether we like it or not. And, accepting him, we must +acknowledge that he has certain rights and privileges--rights and +privileges which so many of us are seeking for ourselves; for instance, +the right to control his capital, to increase it by any legitimate +means, to dispose of it in any way he chooses. + +One of the ways of increasing capital is by lowering the cost of +production and thereby gaining a wider market. Better organisation and +the introduction of automatic machinery enable the capitalist to do +this. He risks his capital in the hope of greater returns, and no one +can deny him the right to better his organisation, to use his brains +and energy and wealth to attain this end. + +One of the most striking and successful methods of organisation is +this of scientific management, of which the Reward System is a part. +To oppose the system, to oppose the introduction of machinery, is not +to make things better. If one could say we will not have efficient +management, we will not have automatic machinery, the case would be +different; but this system and this machinery were being introduced +before the war, and the installation of automatic machinery has been +increased enormously since the war began. This class of machinery +has come to stay, and, now that the urgency of war work has forced +engineers to realise their possibilities, they are looking forward to +the application of automatic machines to thousands of jobs that were +previously done on general machines. + +Now, automatic machinery is the same under any system of management or +wage payment. The same amount of manual skill is required, and the same +amount of mental application. But whereas day work means constant close +supervision by the foreman, and piece work means mutual dishonesty, the +Reward System means a keen interest in both the quality and quantity of +the work produced. + +Under what system can work on automatic machines be made pleasant? The +usual reply of the idealist is to draw a comparison between handicrafts +and automatic machinery, dwelling on the skill and interest and beauty +of the one and the deadening monotony of the other. But when a man is +compelled to take up a handicraft for the sake of a living--and this +always _was_ the case--there is not so much difference between being +compelled to work on an automatic machine and being compelled, for +example, to throw a shuttle through the frame of a hand loom, which is +but a man-driven machine, after all. And, to be fair, the comparison +should be completed, and the comparative luxury enjoyed by present +workers set against the bare, cheerless existence of the artisan of the +Middle Ages. + +It is assumed that the craftsman of those days had a tremendous pride +in his work, but it is to be doubted whether he was really so proud all +the time of the work whereby he earned a miserable pittance. How many +of those workers would gladly have given up their beloved crafts and +tended automatic machinery if they could have obtained the conditions +of the present day by doing so! + +The conditions obtaining in the Ford motor factories at present show +what influences and governs the actions of the worker. Mr. Henry Ford +put into practice a bonus scheme which included all workers who had +certain qualifications. For some time after this became known the +Ford Company received over one thousand letters a day from workers +desiring employment. The conditions of the work did not weigh with +them at all, but, Mr. Ford being what he is, the conditions were, of +course, excellent. This gave the Ford Company the pick of the workers +of the United States. As far as can be ascertained, there is great +satisfaction among the Ford workers, and it is considered a privilege +to get a situation with the Ford Company. Now, an essential feature of +the work in this firm is team work. The work is split up into small +elements arranged so that, as the work is passed from one worker to +another, the least time is taken on each element. Repetition work is +the order of the day, and even the man whose work for over three years +was to give two turns to No. 16 nut did not leave because the work was +too monotonous. + +The fact remains that, as a rule, workers do not object to monotony so +long as they are well paid for the work, and there does not appear to +be any increase of idiocy in the Ford shops owing to the dulness and +once-and-for-ever nature of the work. + +To produce work by handicraft means a life of unremitting toil for +the craftsman, and even then the cost of the finished article is so +great, if the worker is to get but a very moderate return, that only +the wealthy could buy it. This postulates a wealthy class which is +diametrically opposed to the principles of the idealist. + +The craftsman would have neither leisure nor opportunity for the study +and appreciation of finer things, and in the end it means poverty, and +poverty means ignorance and misery.[2] + +[2] Since writing this paragraph I have found the following statement +in Mr. Graham Wallas's book, "The Great Society" (p. 347): "It is true +that Morris, for all his greatness, never faced the fact that we cannot +both eat our cake and have it; cannot use slow methods of production, +and also turn out without overwork large quantities of consumable +wealth. Once, while I listened to him lecturing, I made a rough +calculation that the citizens of his commonwealth, in order to produce +by the methods he advocated the quantity of beautiful and delicious +things which they were to enjoy, would have to work about two hundred +hours a week. It was only the same fact looked at from another point of +view which made it impossible for any of Morris's workmen, or, indeed, +for anyone at all whose income was near the present English average, +to buy the products either of Morris's workshop at Merton or of his +Kelmscott Press. There is no more pitiful tragedy than that of the +many followers of Tolstoy, who, without Tolstoy's genius or inherited +wealth, were slowly worn down by sheer want in the struggle to live the +peasant life which he preached." + +We must accept the fact that wealth is the product of machinery or +of some worse form of slavery, and, for my part, I prefer it to be +produced by machinery. + +Besides all this, machinery is here, and to do without it is absolutely +impossible--as impossible as it is for a highly developed organism to +revert to its primitive state. + +Where shall we draw the line and say, We will have no more machinery +than we have at present? We cannot do so; it is manifestly impossible. +Where, then, shall we draw the line and say, This work must be done by +hand and not by machine; this work must be done on a general machine +and not on an automatic; this work must be done by a single man and +not by a team of men; this work must be done under this or that +old-fashioned system and not under a well-organised system? These lines +can never be drawn. Progress, by its very nature, will crush whatever +opposes it, even though it has no intention of doing so. And it is +not desirable to oppose progress if we desire to live and develop. As +automatic machinery is the extreme end of one line of progress, so it +is undesirable to sweep it away, even if it were possible. + +Now, automatic machinery means cheap production, and this means +more wealth. More wealth ought to mean more leisure for everybody. +In order to make the best use of leisure, better education, real +education, is needed--education in reasoning, in science, in civics, in +art, in economics, in freedom. + +The trade-unions are not educational; it is no part of their programme. +The workers depend on their opponents for their education. Instead of +curtailing wealth, the trade-unions should endeavour to control the +production and distribution of it, to divert it so that it will benefit +the workers, in order that both leisure and education may be theirs. + +Under any conceivable system, the man who has the energy and initiative +of the man who at present becomes a capitalist would always be a more +important and better paid or better rewarded man than the worker. But +he would be a leader and not a driver, and whatever he possessed would +be looked upon by those who worked under him as a natural and righteous +return for his ability. I merely mention this because trade-union +control is no menace to the progress and success of the man of ability. + +Finally, let me say that, if we must have cheap production, if we +must have better organisation and make more and more use of machinery, +if we must increase each man's output in order to meet the financial +necessities of the immediate future, what method shall we adopt? Is +it to be day work or piece work? Is it to be co-partnership or profit +sharing that tend to rob a man of his liberty and turn him into a +miniature capitalist? Or is it by such a method as this Reward System, +whereby a man retains his full liberty, where his work is made more +interesting, where he does no harm to his fellow-workers by earning +high wages, where his trade-union is his stand-by? + +These are the ways, the practical available ways, that confront the +worker. It is easy to imagine pleasanter ways, but the devil drives and +we have to decide now. The trade-unions would be wise to give close +attention to the Reward System and that greater organisation of which +it is a part. With trade-union support it will become one of the most +satisfactory solutions of the differences between worker and employer; +without trade-union support no system will be satisfactory. + +It is not efficiency for efficiency's sake that is the issue. +Efficiency is only a means to an end, to the end that the worker +eventually may be in a position to exercise some control over the +making and distribution of wealth. Present conditions drive him farther +and farther from that end, and only education, better conditions +of living, a certain amount of leisure, and a desire to undertake +responsibility, will enable him to achieve it. Following on that will +come the realisation of what efficiency would mean applied to the +general production and distribution of commodities, to education, to +the affairs of State, and with that comes the desire to control, and +after that, again--well, perhaps Idealist will begin to see daylight! + +These notes are not concerned with the essential rightness or +otherwise of this or any other system of wage payment, or of the +wages system itself, or of the Capitalist System. These are matters +altogether outside the subject. These notes are only written because +the writer considers the Reward System, when properly carried out, +to be the best of several existing methods of payment for work done; +and as this particular method will be adopted more and more, and as +it undoubtedly leads to greater production and is to the direct and +immediate advantage of the worker, those concerned with the welfare of +the worker ought to consider the system in all its bearings, and not +hurriedly condemn it because it is new, because it is American, and +because it increases the productivity of the worker. If there is any +practical scheme that can be immediately adopted and will appeal as +strongly to both worker and employer, by all means let us have it and +abolish existing methods of wage payment altogether. + + + + + PART II + + AN APPLICATION OF THE + PRINCIPLES TO A PARTICULAR + CASE + + + + + CHAPTER IV + + WORK AND REWARD + + +The following is a description of one particular method of the time +study and reward payment following out the principles described in +Part I. This particular case is one which has been introduced into two +engineering factories in England. + +It must be understood that the methods described are not necessarily +those which apply in all factories. Only the basic principles have been +described in Part I., and only one particular method of application is +described in Part II. Almost every shop will have its special details, +its individuality, and different trades will differ widely in the +carrying out of the principles. Manufacturing machinery, laying bricks, +sewing shirts, shaving, etc., cannot all be brought under one exact +scheme. But all must have time study and reward payment in proportion +to efficiency as a foundation on which to build a superstructure +of sound economical business management with satisfactory labour +conditions. + +There will be an occasional repetition of points dwelt upon in Part I., +but this is in order that the detailed description will be complete in +itself. + + +(_a_) ROUTING THE WORK. + +When an order is received for a certain quantity of any article, the +first thing to do is to make a drawing of the article, and, following +on that, all the operations to be done on it are studied in the drawing +office. + +The kind of metal is decided on; which operation must be done first +and which next; which machine each operation must be done on; how many +operations can be done on one machine and with one setting up of the +article; which tools to use; how fast the machines must run; what speed +and depth of cut is best; what cutting compound to use, etc. + +Then a time study is made of the job as it goes through the various +operations on each machine. + +It depends on the nature of the work how this study is made. On +automatic machines the output depends largely on the speeds of the +machines and the moving of the turret, and these can be calculated +from the countershaft speeds, the gears, and the cams. On other work, +however, where each job has to be set up and taken down, and where +tools have to be brought into position by hand, it is necessary to +watch all the processes and movements carefully, so as to discover the +best and quickest way of doing it. + +On hand work it is the same, but there is more scope for motion +study--that is, moving the job and working on it with the least number +of movements. + +A good average worker is chosen, and is paid time and a quarter during +the study. + +After the job has been done a few times in order that the worker +may become familiar with it, to see that the tools and speeds are +satisfactory, and to cut out useless motions, the time study is made, +every detail being observed carefully. + +The reason for separating the job into its details or elements is in +order to see that each detail receives careful attention, for only in +this way can the best method of doing the job be found. The essence of +the system is that the best methods shall be found for all the details, +and the record thus obtained puts all the workers on the same basis. + +It must be particularly noted that the time study is not for the +purpose of driving the worker. The study of the job is really a +process study, and method after method is tried until the best way of +doing the work has been determined. Then, and then only, the time is +taken--not for purpose of driving to get a shorter time, but to record +the actual time in which the work has been done under certain special +conditions. The process study, together with the time recording, form +what is called the "time study," which is a permanent record of all the +circumstances under which the job has been done, _including_ the time +taken, so that when the job has to be repeated all the conditions are +known accurately and immediately. This should be borne in mind both by +the worker and the employer. + + +(_b_) THE TIME STUDY. + +A time study sheet is filled in with the general information connected +with the job, and also a dimensioned sketch of the article in the +finished condition. (If necessary, a sketch or the dimensions of the +article before machining are also given.) + +Methods of tool setting are given, and also description and details of +fixing any jigs, carriers, clamps, etc. + +Each element of the operation, from picking it up and putting it on +the machine bed to taking it off when finished, is put in a column in +sequence on the left side of the sheet. Even an element which requires +only a few seconds to perform is entered separately. + +There are several columns for entering the times of the elements, one +column for each complete operation. + +The time study engineer stands where he may see every motion of the +machine and every movement of the hand. The stop-watch is mounted on +the same board as the time study sheet, so that they can be held in one +hand while the times are jotted down with the other. + +The watch is set to 0, and the figure is entered against the first +element. When the operation begins, the watch is started, and at the +end of the first element the time is noted and set down. The watch is +not stopped, and therefore each element time consists of the watch +reading of the last element subtracted from the reading of the element +under consideration. For instance: + + + TIME STUDY READING. + + -----------------+---------------+---------------+---------------+------- + Element. | 1st Timing. | 2nd Timing. | 3rd Timing. | + ---+-------------+-------+-------+-------+-------+-------+-------+Average + No.| Name. |Reading| Time |Reading| Time |Reading| Time | Time + | |(Mins.)|(Mins.)|(Mins.)|(Mins.)|(Mins.)|(Mins.)|(Mins.) + ---+-------------+-------+-------+-------+-------+-------+-------+------- + | | 0.00 | | 0.00 | | 0.00 | | + 1 | Set up +-------+ 3.40 +-------+ 3.20 +-------+ 3.36 | 3.32 + | | | | | | | | + |-------------+ 3.40 +-------+ 3.20 +-------+ 3.36 +-------+ + | | | | | | | | + 2 | Turn face +-------+ 2.70 +-------+ 3.00 +-------+ 2.88 + 2.86 + | | | | | | | | + +-------------+ 6.10 +-------+ 6.20 +-------+ 6.24 +-------+ + | | | | | | | | + 3 | Turn radius +-------+ 1.10 +-------+ 0.90 +-------+ 1.06 | 1.02 + | | | | | | | | + +-------------+ 7.20 +-------+ 7.10 +-------+ 7.30 +-------+ + | Turn | | | | | | | + 4 | Periphery +-------+ 1.00 +-------+ 1.20 +-------+ 1.12 | 1.11 + | | | | | | | | + +-------------+ 8.20 +-------+ 8.30 +-------+ 8.42 +-------+ + | | | | | | | | + 5 | Bore +-------+ 2.30 +-------+ 2.80 +-------+ 2.61 | 2.57 + | | | | | | | | + |-------------+ 10.50 +-------+ 11.10 +-------+ 11.03 +-------+ + | | | | | | | | + 6 | Tap +-------+ 1.80 +-------+ 2.10 +-------+ 1.93 | 1.94 + | | | | | | | | + +-------------+ 12.30 +-------+ 13.20 +-------+ 12.96 +-------+ + | | | | | | | | + 7 | Take down +-------+ 0.40 +-------+ 0.35 +-------+ 0.34 | 0.30 + | | | | | | | | + +-------------+ 12.70 +-------+ 13.55 +-------+ 13.30 +-------+ + | | | | | | | | + | +-------+ +-------+ +-------+ +------ + |Total (mins.)| 12.70 | | 13.55 | | 13.30 | | 13.18 + ---+-------------+-------+-------+-------+-------+-------+-------+------ + +It will be seen that the watch is not stopped until the end of the +complete operation, and therefore the last reading indicates how long +the operation has taken; it is the sum of all the elements. + +If anything happens which is not a part of the operation--for instance, +if a tool needs replacing owing to accident or becoming dull too +quickly, or if a belt breaks--the watch is stopped, and when the +operation begins again it is started and goes on from the point where +it stopped. + +During the timing, observations are made to determine whether any part +of the operation may be done in a quicker or easier way, or whether any +element is taking longer than it ought to do. + +It must be particularly noted that there is a distinct difference +between time study and time recording. Any job, the slowest or fastest +in the whole factory, may be time-recorded by merely observing the time +with a stop-watch, but this is not a time _study_. + +When several sets of figures have been obtained, the number of sets +depending on the circumstances, the timing part of the study is over. + +The figures are now examined. The time of each element is obtained as +described in the example. In noticing the times of any one element, +times which are much less or much greater than the others are +eliminated, and the average of the remaining times is taken. Then all +these averages are added together, and the average time of the complete +operation is thus obtained. + +This time is considered to be the fastest time in which the operation +can be done. It is not actually the fastest for two reasons. One is +that any time so obtained may be improved on when the worker becomes +thoroughly used to the job, and the other is that a good _average_ +worker is chosen for the time study; therefore a first-class man can +improve on the time obtained. + +But it is considered to be the fastest time, and we will call it the +base time. + +Now, this time has been obtained under exceptional circumstances. When +a man is working on a time study job--that is, with the knowledge that +he is on trial, so to speak, and with the time study engineer timing +and observing every detail and motion--he works faster than usual. +There is no opportunity for little breaks, or rests, or breathing +spaces; it is hard slogging all the time. The time study engineer does +not intend it to be so, but by the nature of the circumstances that is +what happens, and no man can keep this up for long. + +It is quite evident, therefore, that this time cannot be reached +regularly by every worker, and this is taken into consideration when +determining the standard time--_i.e._, the time in which the job should +be done by the average worker. + +To obtain the standard time an allowance is made on the base time. This +allowance depends on the nature of the work, a higher allowance being +made for jobs that need a good deal of handling than for jobs that are +nearly all cutting, because cutting is independent of the worker. + +The way to arrive at the allowance is to examine the recorded figures, +and add together all the cutting times and then all the handling times. +An allowance of about 10 per cent. is usually given on the cutting +times, and from 15 per cent. to 50 per cent., or even more, on handling +times. The cutting times depend on the machinery, and that is why a +smaller allowance is given for them. + + +(_c_) FIXING STANDARD TIME. + +This standard time is the basis of the Reward System, and is therefore +the most important time. It is so fixed in relation to base time that +every worker put on that work should be able to reach it after a little +practice. If he does so, he is said to have reached an efficiency of +100 per cent. + +A worker who reaches continuously 100 per cent. is a high efficiency +man. + +This efficiency should always be reached by a worker who follows the +instructions and works diligently. + +Reward begins, however, considerably before this point is reached, +because it may be necessary for a worker to be on a job some time +before he reaches a high efficiency. Again, sometimes one worker is +naturally slower than another; and although his work is good, he can +reach 100 per cent. efficiency only by special effort. There would +be little encouragement if reward did not begin until the worker had +reached 100 per cent. efficiency. + +For these reasons, and as an incentive to every man to become as highly +efficient as possible, reward begins when the worker reaches 75 per +cent. efficiency. + +This means that an allowance of 33-1/3 per cent. is given on the +standard time or standard production, and this new figure is called +"reward time" or "reward production" because it is the point where +reward begins. + +The following examples will make the matter clearer: + +Let us assume that the time in which the job can be done is found +by the time study to be 12 hours; this is the base time, and can be +reached or even exceeded under favourable circumstances, because in the +first place it has already been reached during the time study, and in +the second place the worker on the time study was a good _average_ man, +so that a _first-class_ man should be able to do the job in quicker +time. + +Now, suppose the job needs a good deal of handling. In such a case +the time will be increased by, say, 25 per cent. in order to obtain +the standard time; 25 per cent. of 12 hours is 3 hours, so that the +standard time is 12 + 3 = 15 hours. Therefore, if the worker does the +job in 15 hours, he has reached 100 per cent. efficiency, which is the +point to be aimed at. It should always be attained by every worker who +follows the instructions accurately and works diligently, while a good +worker should always be able to do it in less time. + +The point when reward begins is arrived at by adding 33-1/3 per cent. +to the standard time--that is, 15 hours with 33-1/3 per cent. of 15 +hours added; 33-1/3 per cent. of 15 is 5, and 15 + 5 = 20 hours. Reward +is earned, therefore, when the job is done in anything less than 20 +hours. + +It will be seen that, while it is quite possible to do the job in 12 +hours or even less, yet if the job be done in anything under 20 hours +reward is earned. + +What amount of reward? Well, suppose the job rate is 36s. This means +that the job is given to a worker whose day wage is about 36s. per +week. This is 9d. an hour on a 48-hour week. Suppose the work is done +in 16-1/2 hours. As the standard time is 15 hours, the job has taken +longer than standard time; it is 1-1/2 hours longer than standard. But, +as the reward time is 20 hours, it has been done in 3-1/2 hours less +than reward time; in other words, 3-1/2 hours have been saved on the +job. The worker gets paid for all the time he saves = 3-1/2 hours at +9d. per hour; total reward 2s. 7-1/2d. So that for his 16-1/2 hours' +work he gets his day wage of 9d. per hour (= 12s. 4-1/2d.) + a reward +of 2s. 7-1/2d.--that is, 15s. in all. In other words, he earns 11d. +per hour instead of 9d. per hour. + +His efficiency is 91 per cent., but efficiency calculation will be +mentioned later. + +Let us now examine another case, a small part job. We will assume that +the time study shows a production of 40 of these small parts per hour. + +We have now shifted from times to quantities. The base quantity is 40 +per hour, that number being the greatest number produced by a good +average worker in 1 hour under favourable circumstances. The standard +quantity will, of course, be less than this, and, as such work would +probably be done on an automatic machine with practically no hand work, +an allowance of 10 per cent. is made on the base quantity in order to +obtain the standard quantity. Ten per cent. of 40 is 4; therefore the +standard quantity is 40-4 = 36. This is the quantity the worker ought +to produce continuously if he is diligent and attends to the machine +properly. + +As before, reward begins at an earlier point than standard. That is to +say, if a smaller quantity than 36 be produced reward is earned, but a +certain minimum quantity must be produced before reward begins. This +minimum quantity is called "reward production," and begins at 75 per +cent. of the standard production. (36 x 75)/100 = 27.0, and this is the +reward production for one hour, reward being paid on any excess above +this. + +Let us assume that a worker is 6 hours on this work, and in that time +produces 220 pieces. The reward quantity is 27 per hour, and for the 6 +hours is 27 x 6 = 162. The job rate is, say, 24s., because this work +would be done by unskilled or partially skilled labour. This is 6d. per +hour, and if the worker produces 27 or less pieces per hour that is +what he receives. If he produces more than 27 per hour, he gets paid at +the rate of 6d. per 27 for the excess, this being equivalent to being +paid for all the time saved. + +The production in 6 hours is 220; the reward quantity for that time is +162, and the standard quantity 216. It is seen that efficiency in this +case is over 100 per cent., because 220 is 4 more than standard. Reward +is paid on 220-162 = 58, and payment is made at the rate of 6d. for +each 27. If we divide 58 by 27, and multiply the result by 6d., this +will give the amount of reward--namely, 1s. This is the reward for 6 +hours' work, and is 2d. per hour, so that the worker gets 8d. per hour +instead of 6d. + +Efficiency is about 102 per cent. + +The following shows these examples in tabular form: + + + I. + + Base time 12 hours + Standard time 15 " + Reward time 20 " + Time taken 16-1/2 " + Time saved 3-1/2 " + Job rate per hour 9d. + Reward 3-1/2 x 9 = 2s. 8d. + Total reward for week if reward is earned at + same rate all the week (namely, 48 hours) 7s. 9d. + Total earnings .. .. .. 36s. + 7s. 9d. = 43s. 9d. + + + II. + + Base quantity 40 per hour + Standard quantity 36 " + Reward quantity 27 " + Time worked 6 hours + Quantity produced 220 + Reward quantity for 6 hours 162 + Excess quantity 58 + Reward at 27 for 6d. 1s. + Total reward for week if reward is earned + at same rate all the week (namely, 48 + hours) 8s. + Total earnings 24s. + 8s. = 32s. + + +The foregoing examples are of average workers. The following is an +example of what a good worker can do, and, as the method of calculation +is given above, a tabular statement is all that is necessary: + + + III. + + Base time 8 hours + Standard time (base + 25%) 10 " + Reward time (standard + 33-1/3%) 13.3 " + Time taken 8.5 " + Time saved 13.3 - 8.5 = 4.8 " + Job rate per hour 9d. + Reward 9 x 4.8= 3s. 7d. + Total reward for week if reward is earned + all week at same rate 20s. 2d. + Total earnings 36s + 20s. 2d. = 56s. 2d. + Efficiency 117.5% + +The result is not an exceptional one. + + +(_d_) THE INSTRUCTION CARD. + +After the time study has been made, an instruction card is made out for +the job. On this card all the particulars are given--how to do the job, +the sequence of operations, the tools to be used, the base, standard +and reward times or productions, the job rate, and any other necessary +information. + +It is by acting in accordance with the instructions on the card that +the worker can reach standard time regularly, and the foreman or +setter-up and the superintendent are always ready to assist the worker +in every way to attain this result. + +If the operator finds he cannot reach standard time by diligent +work and following the instructions, he should always inform the +superintendent, in order that the matter may be investigated. + + +(_e_) SPOILED WORK. + +The question of spoiled work must be taken into account. It is almost +impossible for all the work produced to pass inspection. Machines may +not work quite right; tools become dull; material is not always the +same; workers sometimes get careless. + +How is this spoiled work to be dealt with? + +It would be quite unfair to make the worker responsible for bad work +which was due to no fault of his. It would be equally unfair for him to +get paid for bad work which was due to his own carelessness or neglect. + +When work is inspected, and some of it found to be bad, it is not +difficult as a rule to find where the fault for this bad work lies. If +it is due to bad material or bad machining, the question arises of how +far the worker is to blame. He should stop his machine and call the +attention of the foreman to any fault of tools or material. If too deep +a cut be taken, or if a part be badly worked by hand tools, this is the +worker's fault. + +Work which is spoiled by the worker or by his neglect is deducted from +his gross production, and his reward is reduced accordingly. + +It is quite possible that, if a large amount of bad work be produced, +and the worker's total production be not very high, the amount to +be deducted is greater than the amount of reward. In such a case +nothing is deducted from his day wage, and nothing is held over to be +deducted from reward earned in a later week. For instance, suppose a +worker receives a day wage of 36s. per week. Then suppose his total +production would bring him a reward of 10s., but that deductions on +account of spoiled work amounted to 8s. His wages for that week would +be 36s. + 10s. = 46s.--less 8s. = 38s. net. Now, if reward due to total +production was 6s., and spoiled work amounted to 10s., then if spoiled +work were deducted in full he would get 36s. + 6s. =42s.--less 10s. = +32s. net (namely, 4s. less than his day wage). But this is never done. +He gets his full 36s., and the 4s. is cancelled altogether. Each week +is taken entirely by itself, and the day wage for the week is always +guaranteed, whatever happens in connection with the work or the reward. + +If any of the spoiled work be rectifiable, this does not interfere +with the deduction. It means that, in order to make the article pass +inspection, more work, more inspection, and more supervision, must be +done on it. + + +(_f_) ALLOWANCES. + +It happens quite frequently that stoppages occur during the progress of +the work. For instance, the worker may have to wait for material; the +driving belt may need tightening; tools may need changing at odd times +not recorded in the instructions; metal may be hard or bad, thereby +necessitating a reduction in speed--and so on. + +All these things result in a reduction in the quantity of articles +produced, and none of them is due to the fault of the operator. + +In such cases the worker either clocks off or receives a day time +allowance. He clocks off when his machine is actually stopped for +fifteen minutes or more at one time. If he has several short stoppages, +the foreman adds the times together and writes a day time allowance for +the whole on the worker's operation card. If it be necessary to reduce +the speed of the machine on account of hard metal, bad material, tools +not tempered correctly, or anything that tends to lower production +without actually stopping the machine, a day time allowance is made and +written on the operation card; or in some cases the standard time is +increased, thus giving a longer time in which to do the job. + +Clocking and day time allowances mean that this time is deducted from +the time on reward. For example, suppose the machine is stopped for 1 +hour during a job that has the standard time of 7 hours, and suppose +the time from start to finish is 8-1/2 hours. The 1 hour is subtracted +from the 8-1/2 and is paid for at day rate, the time for the job being +calculated to be 7-1/2 hours. + +If during the week there are day time allowances of 7 hours, then there +are 41 reward hours and 7 day time hours. + +The effect of making day time allowances is to increase the reward, as +will be seen from the following example: + +Assume that during 20 hours 500 small pieces are produced, and that +the machine stops 4 hours out of the 20. If the production be spread +over the whole 20 hours and reward production be 24 per hour, the +reward quantity is 20 x 24 = 480. Reward is therefore paid on 500-480 += 20 pieces. If the 4 hours be deducted, the net time on reward is 16 +hours, not 20, and the reward quantity for the 16 hours is 16 x 24 = +384. Reward is paid on 500-384 = 116 pieces, instead of 20. Let the job +rate be 8d. per hour. Then, as the reward production is 24 per hour, +this means that the worker receives 8d. for each 24 pieces; the reward +on 20 pieces at 24 for 8d. = 6-1/2d., while the reward on 116 pieces += 3s. 3d. This shows how important it is to get the proper day time +allowances. The 4 hours are, of course, paid for at the worker's day +rate. + + +(_g_) EFFICIENCY CALCULATION. + +Efficiency is the percentage ratio between the time it takes to do the +job and the standard time. Or, if we are dealing with quantities, the +percentage ratio between the quantity actually produced in a certain +time and the standard quantity which ought to be produced in that time. + +The standard time or standard quantity is considered to be 100 per +cent. efficiency, as we have seen. + +If the standard time for a job be 12 hours, and the worker does it in +12 hours, his efficiency is 12/12 x 100 = 100 per cent. Suppose he +does the job in less than 12 hours, then it is quite clear that his +efficiency is more than 100 per cent. Say he does it in 10 hours; his +efficiency is (12 x 100)/10 = 120 per cent. If he takes longer than +standard time, his efficiency is less than 100 per cent. Say he does it +in 15 hours; his efficiency is (12 x 100)/15 = 80 per cent. Reward time +is 12 + 33-1/3 per cent. of 12 = 12 + 4 = 16 hours. Suppose the worker +takes the reward time of 16 hours to do the job; his efficiency is (12 +x 100)/16 = 75 per cent. This efficiency is the ratio between reward +time and standard time, and that is why we say the efficiency point for +reward is 75 per cent. + +RULE I.--In order to calculate efficiency on a time basis, the +standard time must be multiplied by 100 and the result divided by the +actual time. + +In dealing with small parts, the basis is the standard _quantity_ per +hour--in other words, the quantity which ought to be produced in one +hour in order to reach 100 per cent. efficiency. + +If the standard quantity per hour be 20, and the worker is on the job +8-1/2 hours, then the standard quantity for that time is 20 x 8-1/2 = +170. If the worker produces 170, his efficiency is (170 x 100)/170 = +100 per cent. Suppose he produces 200 in the time, then his efficiency +is more than 100 per cent., because he has produced more than the +standard quantity. His efficiency is (200 x 100)/170 = 117.5 per +cent. If, on the other hand, he produces less than 170, say 150, his +efficiency is (150 x 100)/170 = 88.25 per cent. + +RULE II.--In calculating efficiency by this method, it is evident that +the quantity produced in a certain time must be multiplied by 100 and +divided by the standard quantity for that time. + +If a definite number of articles are to be machined, the whole +quantity may be looked upon as a single job. For instance, suppose +there are 3,000 pieces to be produced, and standard quantity is 150 per +hour. Then the _standard time_ for the whole quantity is 3000/150 = 20 +hours. _Reward time_ will be 20 + 33-1/3 per cent. of 20 = 20 + 6-2/3 = +26-2/3 hours. Efficiency may now be worked out by the first method. + +Efficiencies are, of course, calculated on the _net time_--that is, on +the total time of the job after day time and other allowances have been +deducted. + + + + + PART III + + EXPLANATION OF DIAGRAMS + SHOWING DIFFERENT METHODS + OF REWARD PAYMENT + + + + + CHAPTER V + + REWARD AND EFFICIENCY + + +In order to illustrate the general principles of the Reward System, an +individual case was taken and one particular relation between reward +and standard times was selected--namely, 75 per cent. + +The sewing on of buttons, the laying of bricks, ploughing, +shipbuilding, etc., would have served just as well, and the same +general results would have been obtained. + +The relation between reward and standard times has given rise to +much discussion and experiment, and the relation selected in Part II. +is one that appeals most strongly to the worker as he gets paid for +all the time he saves. If reward begins earlier and the worker gets +a proportion of the time he saves instead of the whole, reward at +standard time should be just the same, or nearly so. It only means that +the worker has a better chance of getting a higher reward when he is +below the 100 per cent. line, and a smaller one when he is above it. + +The following diagrams show the relation between reward and efficiency +according to the principal methods in use at the present time, some of +them being used in the same factory for different classes of work. A +complete diagram is illustrated on p. 88, but, for convenience, only a +portion of this is used in most of the other diagrams. + +It must be noted that reward at standard time must be never less than +25 per cent. of the job rate, while 30 per cent. to 35 per cent. is +fairer. + +In order to find the amount of reward at any efficiency, read off +the efficiency on the bottom line, run a pencil along the line +corresponding to this efficiency until it touches the graph, then run +the pencil along horizontally until it reaches the vertical scale. Read +off the percentage of reward on the vertical scale. + +It will be seen at once that any efficiency below the reward point +means that no reward is earned, but that there is no reduction of day +wages. (The Taylor and Gantt methods are exceptions to this rule.) + +The diagram on p. 88 is a descriptive one. The first column shows wages +plus reward on a wage basis of 8d. per hour. + +The second column shows wages plus reward on a wage basis of 10d. per +hour. + +The third column shows the proportion of the reward to the day wage for +any efficiency, the day wage being considered 100 per cent. + +The efficiencies are shown along the bottom line, and the 100 per +cent. efficiency line is dotted. + +[Illustration: DESCRIPTIVE DIAGRAM] + +Two methods of wage payment are plotted on this diagram, the full line +being Reward System No. 1, and the dotted line the Taylor System. + +For convenience the following diagrams are enlarged: Nos. 1, 2, 3, 4, +and the Emerson diagrams consist of the rectangle ABCD, and the Taylor +and Gantt diagrams consist of the rectangle EFGH. The Rowan diagram +is to the same scale as the Taylor and Gantt diagrams. The relation +between the vertical and horizontal scales has also been altered to +make the readings clearer. + + +(_a_) REWARD SYSTEM NO. 1. + +In this method, reward begins at 62.5 per cent., and half the time +saved is paid for until standard time is reached. At that point and +above it two-thirds of the time saved is paid for. + +Reward begins early, and increases definitely until standard time is +reached. Then there is a considerable jump, and after that the reward +goes on regularly at a higher rate than before. + +This method is, in the opinion of the writer, the best of all reward +payments, and carries out the spirit of reward principles better than +any other. + +The worker gets some reward, however little, and there is a direct +incentive to reach 100 per cent. efficiency owing to the rapid increase +of reward at that point. If he gets nothing, then he either feels +ashamed of his laziness, or, what is more likely, he inquires into the +reason why he has received no reward. This is just what the employer +wants, as it discovers inefficiencies in connection with machinery or +supplies or with other processes or routines. + +At the same time, an inaccurate time study neither penalises the worker +too much on the one hand, nor causes excessive reward on the other. + +Yet again, the worker always gets his day rate even though his +efficiency falls below the reward point. + +It is eminently suitable for both employer and worker. + +[Illustration: N^o. 1] + + +(_b_) REWARD SYSTEM NO. 2. + +In this case the reward consists of payment for half the time saved, +and reaches 30 per cent. increase on the wage rate at 100 per cent. +efficiency. + +It is suitable for many classes of work, and neither worker nor +employer suffer too much in the event of an inaccurate time study. + +Reward begins early and is a direct incentive to efficiency, but there +is not the same urge towards the 100 per cent. line as in the case of +System No. 1. Usually there is an extra bonus given, say 5 per cent., +to those reaching standard time, and this takes the form of a lump sum, +so that the angle of the line of increase is not interfered with. + +[Illustration: N^o. 2] + + +(_c_) REWARD SYSTEM NO. 3. + +Reward in this case begins at 80 per cent. efficiency and all the time +saved is paid for. + +It is a method suitable for high-class workers and necessitates a very +accurate time study. It needs a decided effort to get reward, but once +reward begins it increases rapidly. An inaccurate time study means +either little or no reward if the inaccuracy results in increasing the +difficulty of the job; while if it makes the job easy, then excessive +rewards are earned. + +There is usually an extra bonus of 10 per cent. when standard time is +reached. + +The system is suitable for automatic work where there cannot be a great +variation in efficiency, and where the operations are to a large extent +taken out of the hands of the worker. + +This method of payment is now adopted by Mr. Allingham after +conference with trade-union officials, as it gives the worker the whole +of the time saved. + +[Illustration: N^o. 3] + + +(_d_) REWARD SYSTEM NO. 4. + +This is a diagram illustrating the example given in the foregoing +description of the reward system. + +Reward begins at 75 per cent. efficiency, and when standard efficiency +is reached the proportion of reward to job rate is 33-1/3 per cent. +At this point a bonus of 5 per cent. is given, and the line of reward +above this point is parallel to the line below it, but 5 per cent. +higher. + +All the time saved is paid for, and from this point of view it is more +satisfactory to the worker. + +Diagrams 1 to 4 are similar in principle to the Halsey bonus method, +the vital difference being that Halsey bases his standard time on the +average time taken under ordinary day or piece work conditions instead +of on a time study. + +[Illustration: N^o. 4] + + +(_e_) THE TAYLOR SYSTEM. + +This is the system advocated by Mr. Taylor, the originator of +scientific management, and hence of the Reward System. + +A certain piece rate is paid until standard time is reached. At that +point there is a jump to another higher rate, say from 10d. to 14d., +a jump of 40 per cent. The worker gets this increase for all the work +done, and the increased rate is paid on the rest of the work. + +The worker makes strenuous efforts to reach 100 per cent. efficiency +because of the great increase, and also because he suffers directly +when he fails to obtain it. + +The task set is so high that only highly skilled and rapid workers can +reach it, but the reward is also high. A good man can earn as much as +from 60 per cent. to 100 per cent. of his wages. + +The system is one that weeds out the inefficient and the moderately +efficient. It is only satisfactory to highly skilled men, the elite of +the workers, and its use is therefore limited as most men will not work +under it. Its greatest fault is that it penalises the worker too much +for inefficiency. A man who regularly attains 90 per cent. efficiency +would be considered a fair worker in most shops, but under this system +he would not only receive no reward, but he would only receive 90 per +cent. of his day wages. + +The rate must jump at least 40 per cent. at 100 per cent. efficiency, +otherwise the method is not so advantageous as some of the other +methods, while it is much more difficult to earn reward. + +[Illustration: TAYLOR] + + +(_f_) The Gantt System. + +This method is very similar to the Taylor System, except that the +worker is not penalised so much if he fails to reach standard time. + +A large increase in the piece rate is given when 100 per cent. +efficiency is reached. For all time taken in excess of standard the +worker gets three-quarters of his wage rate instead of the whole of +it. As an example, suppose the standard time of a job be 10 hours and +the worker takes 12 hours. He is paid full-day rate on 10 hours, and +three-quarters the day rate on 2 hours. At 10d. per hour this amounts +to-- + + d. + 10 hours at 10d. = 100 + 2 " " 7-1/2d. = 15 + ---- + 115 + +for 12 hours' pay, which is equal to 9-1/2d. per hour. The efficiency +is (10/12) x 100 = 83.3 per cent. + +The sloping line below the day rate line shows the hourly rate at +various efficiencies. + +After 100 per cent. efficiency is reached, the reward is just the same +as in the Taylor System. + +The advantage of this system over the Taylor System is that the +loss for inefficiency is not heavy, yet it is enough to make the +worker endeavour to reach standard time. This, again, is a method only +suitable for highly skilled workers. + +[Illustration: GANTT] + + +(_g_) THE EMERSON SYSTEM. + +In order to arrive at a gradually increasing bonus line, Mr. Emerson +took a point on the wage line at 66.6 per cent. efficiency, and another +on the 100 per cent. efficiency line at 20 per cent. bonus. The bonuses +between these two efficiencies were then arranged so that for each +1 per cent. increase in efficiency the bonus increased in greater +proportion. The resulting diagram is a curve which is approximately a +parabola. Beyond 20 per cent. efficiency the worker gets paid for all +time saved. + +By this method reward begins fairly early, so that all workers should +be able to get some reward. It progresses very slowly from 66.6 per +cent., and at 80 per cent. is about 3-1/4 per cent. of the wage rate. +Then it increases more quickly, and at 90 per cent. efficiency it is 10 +per cent. of the wage rate, at 95 per cent. efficiency it is about 15 +per cent., and at 100 per cent. efficiency it is 20 per cent. + +One thing must be noticed: The reward above 100 per cent. efficiency +is based on standard time, and not on reward time. This means that the +worker gets a bonus of 20 per cent. on the time worked, and in addition +to that the full rate of wages for the time he saves above standard +time. As an example, take a job with a standard time of 20 hours: + +[Illustration: EMERSON] + + + _Case I._ + + Suppose job done in 22 hours. + Efficiency 91 per cent. + Bonus (see diagram) 10 " + 10 per cent. of 22 hours 2.2 hours. + Reward: 2.2 hours at 10d. 22 pence. + Wages: 22 hours at 10d. 220 " + Total payment for 22 hours 242 " + Hourly rate for job (wages + reward) 11 " + + + _Case II._ + + Suppose job done in 18 hours. + Efficiency 111 per cent. + 20 per cent. on 18 hours 3.6 hours. + Time saved (20-18) 2.0 " + Reward: 5.6 hours at 10d. 56 pence. + Wages: 18 hours at 10d. 180 " + Total payment for 18 hours 236 " + Hourly rate for job (wages + reward) 13.1 " + + +This method enables the worker to get reward at a comparatively low +efficiency. The reward is not much to begin with, but it is enough to +induce the worker to try and get a higher efficiency. When standard +time is reached, the reward is not enough, but beyond that it increases +rapidly. + + +(_h_) THE ROWAN SYSTEM. + +This method differs from all others in the variation of reward earned. + +It is extremely simple in calculation, as the worker gets 10 per cent. +increase in wages for every 10 per cent. of time saved. He cannot save +more than, say, 99 per cent. of the time on the job, because when 100 +per cent. is saved it means that the job is done in no time at all. + +[Illustration: N^o. 1] + +[Illustration: N^o. 2] + +Suppose the time allowed is 10 hours. If it be done in 5 hours, 50 per +cent. of the time has been saved, and the worker gets 50 per cent. +increase of wages for the 5 hours he has worked. If the job be done in +over 10 hours, day wage, say 10d. per hour, is paid for all the time +taken. If done in 9 hours, 11d. per hour is paid; if in 8 hours, 1s. +per hour; if in 7 hours, 13d. per hour; and so on. + +The efficiency is the standard time (time allowed) divided by the time +taken. If a line be plotted of efficiencies and rates-paid, the line +is not a straight one, as in other cases, but a curve as shown in the +diagram. + +Reward rises rapidly at first, but it gets less and less as efficiency +increases, which is in direct opposition to reward principles. + +The method has little to recommend it except the simplicity of +reckoning the reward payment. + +It will be seen that the employer cannot possibly overpay the worker, +no matter what his efficiency. + +No. 1 is the ordinary diagram, 100 per cent. efficiency being the point +where bonus begins. This point is based on an estimated time, not on a +time study. + +No. 2 is a diagram drawn to compare the Rowan System with the Reward +System. Assuming that the worker under the Rowan System will usually +earn 20 per cent. in excess of his day wages, this has been used to +determine the 100 per cent. efficiency line, and the curve has been +drawn as before. + + +(_i_) DAY RATE. + +The thick horizontal line marks the day rate of payment for work done. +It is the same at all efficiencies, and there is no inducement whatever +for a worker to increase his efficiency. Under such conditions the +average worker will only do enough work to enable him to keep his job, +and will resist all attempts to find out whether the work may be done +more efficiently. + + +(_j_) PIECE WORK. + +The straight piece work system means that the worker gets so much +for each piece produced no matter how long it takes to produce it. +Therefore the faster the work is done the more money is earned. + +Efficiency is based on the quantity a worker ought to do in order to +earn the standard rate of wages. Assuming he gets 10d. an hour, then +the payment for the work done ought to equal 10d. when working at +the normal rate--namely, 100 per cent. efficiency. If less than this +is earned, efficiency falls below 100 per cent.; if more is earned, +efficiency is over 100 per cent. + +The sloping line shows the earnings per hour at different efficiencies. + +There is no scientific basis on which to determine the proper time of +the job, and there is great inequality in the prices of different jobs, +some being easy, some very difficult. For the disadvantages of the +system, see p. 6. + +[Illustration: DAY WORK. PIECE WORK. FORD SYSTEM.] + + +(_k_) THE FORD SYSTEM. + +The Ford System is illustrated in the diagram on p. 108. The amount +received by the worker is the same no matter what his efficiency may +be, but wages are 50 per cent. higher than the standard day rate. For +this reason the firm adopting this system has a far greater choice +of workers than other firms, all the best labour gravitating to the +firm. The worker is, of course, expected to submit to the conditions +prevailing in the factory, and to do the work allotted to him in the +stated time and with the degree of accuracy stipulated. Needless to +say, the amount of work expected is far greater than under ordinary day +work conditions. + +This system has two serious disadvantages, the first being that +it is of extremely limited application, and the second that it +necessitates an exceptionally high degree of organisation if it is to +be satisfactory. + +With regard to the first point, the system depends entirely on paying +wages considerably higher than the average of the district or country +in which the factory is situated. This high wages inducement gives the +firm the pick of the workers and holds the men to their positions. It +is obvious that only one or two firms in each trade can do this. If +the system became general, it would mean that wages would be increased +all round and that men need no longer be afraid of being discharged. +They could leave and get equally high wages elsewhere. Under such +circumstances all the advantages of the system would disappear, and +wages would be reduced all round until some firm began again. + +Dealing with the second point, production will not be increased, or +will be increased very little, if the men are left to themselves, and +therefore a high degree of organisation is necessary. It means time +study, planning, constant improvement in methods and machines, and +all those incidentals described herein under Reward System, but with +an overhanging threat of dismissal that is absent from the Reward +System. The firm must have a standard product if the system is to be +economically successful, and each man must do one job only and do it +in the manner indicated. Team work is the essence of the system. It +is quite impossible to obtain any beneficial result from the Ford +System if applied to an average factory. Men cannot produce anything +approaching their maximum capacity unless the work is thoroughly well +organised, and waste of time, labour, and material, eliminated. And no +matter how much the men desire to be worthy of the increased wages, +they cannot be blamed if the organisation fails. The only incentive to +high production is, of course, the threat of dismissal. + +If the Ford System is to be successful, therefore-- + +1. The organisation must be as keen as, or even keener than, that of +the Reward System. + +2. The firm must have a highly specialised business. + +3. Efficiency must be maintained under threat of dismissal. + +4. The system must be adopted by only one or two firms in each trade. + +Where these conditions prevail the system should be highly successful. + + + + +APPENDIX + +A FLOATING WAGE RATE + + +The following suggestion for a floating wage rate would prove a +perpetual automatic incentive to continuously high efficiency. + +It consists of a variation of, say, 6s. per week in the wage rate +of every class of worker, the lowest wages in the class being the +trade-union rate, and the highest wages being 6s. above the trade-union +rate. + +Every quarter-day each worker who reaches an average efficiency +of, say, 95 per cent. or over during the previous three months for +a minimum number of reward hours worked, say 500, will receive +automatically an increase of 1s. per week in his wages for the next +three months. If he keeps up this efficiency for eighteen months he +will reach the highest wage rate. + +The wages of every worker who fails to reach an average efficiency of, +say, 85 per cent. during the previous three months will automatically +drop 1s. per week until he is on the lowest rate. + +Under these conditions a worker on the lowest rate will try to reach +a higher one, and if he is on a higher rate he will always try to +maintain his efficiency. A drop in efficiency means a direct loss to +the worker, and the worker would probably complain of the conditions +of his work. If other workers can keep up their efficiencies on the +same jobs, the complaint is groundless; while if other workers cannot +keep their efficiencies, it is obvious that something is wrong, and the +conditions will be investigated. + +The variation of the wages being automatic, no one can complain of +unfairness. + +The advantage of making the change every three months instead of a +longer period would mean that every worker would take a live interest +in his continuous efficiency, and would not be content with a good week +one week and a medium week the next. And, again, a good man who dropped +down owing to unforeseen circumstances would only be down for three +months, while a medium worker would always respond to the incentive, +and when he reached another step up he would make great efforts not to +go down again. + +There would be an automatic selection of the best men, and favouritism +would be reduced to almost nothing. A foreman could not prevent a man +getting the increase when his efficiency proved that he had earned it, +and he could not push on an inferior man because of personal friendship. + +Should a high wage man leave, then he would have to come back on the +lowest wage rate if he wanted to come back. This would induce men to +keep their situations. Should a man be discharged, the same thing would +happen. But a high wage man is of far more value to a firm than a low +wage man, and he would not be discharged unless discharged permanently +for some fault. + +If a firm thought to lower wages by discharging all the high efficiency +men, and then take them on again at a lower wage, that firm would +immediately lose caste, and no high efficiency man would work there. A +high efficiency man can get a job anywhere. + +This floating wage rate would be quite apart from the question of +reward, and the job rates for reward work would be the same for all +workers no matter what their wage rate was. + + +BILLING AND SONS, LTD., PRINTERS, GUILDFORD, ENGLAND + + + + + * * * * * * + + + + +Transcriber's note: + + Obvious errors were corrected. + + Page 46: accordng changed to according + Page 55: unbiassed changed to unbiased + Page 59: introdution changed to introduction + Page 111: efficiences changed to efficiencies + + + +***END OF THE PROJECT GUTENBERG EBOOK A RATIONAL WAGES SYSTEM*** + + +******* This file should be named 46977.txt or 46977.zip ******* + + +This and all associated files of various formats will be found in: +http://www.gutenberg.org/dirs/4/6/9/7/46977 + + +Updated editions will replace the previous one--the old editions will +be renamed. + +Creating the works from print editions not protected by U.S. copyright +law means that no one owns a United States copyright in these works, +so the Foundation (and you!) can copy and distribute it in the United +States without permission and without paying copyright +royalties. 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