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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 £10, he gets £10
worth of shares. Then, when the next dividend is declared, he gets
the dividend on his £10 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 × 9 = 2s.  8d.   4·8 × 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 £500 to £1,000 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 æsthetic 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 × 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 × 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 × 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 × 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 × 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 × 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 × 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 × 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
× 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 × 8-1/2 =
170. If the worker produces 170, his efficiency is (170 × 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 × 100)/170 = 117·5 per
cent. If, on the other hand, he produces less than 170, say 150, his
efficiency is (150 × 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 élite 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) × 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




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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