The Psychology of Management Part 28

It is realized that approximately one third of the extra profits from the savings must go to the employer, about one third to the employes, and the remainder for maintaining the system and carrying out further investigations.

This once understood, the satisfaction that results from a cooperative, profit-sharing type of management will be enjoyed.

The five methods of compensation which are to follow are all based upon the task, as laid down by Dr. Taylor; that is to say, upon time study, and an exact knowledge by the man, and the employers, of how much work can be done.

DIFFERENTIAL RATE PIECE WORK THE ULTIMATE FORM OF COMPENSATION.-- Dr. Taylor's method of compensation, which is acknowledged by all thoroughly grounded in Scientific Management to be the ultimate form of compensation where it can be used, is called Differential Rate Piece Work. It is described in "A Piece Rate System,"

paragraphs 50 to 52, as follows:--

"This consists, briefly, in paying a higher price per piece, or per unit, or per job, if the work is done in the shortest possible time and without imperfection, than is paid if the work takes a longer time or is imperfectly done. To ill.u.s.trate--suppose 20 units, or pieces, to be the largest amount of work of a certain kind that can be done in a day. Under the differential rate system, if a workman finishes 20 pieces per day, and all of these pieces are perfect, he receives, say, 15 cents per piece, making his pay for the day 15 times 20 = $3.00. If, however, he works too slowly and turns out only, say 19 pieces, then instead of receiving 15 cents per piece he gets only 12 cents per piece, making his pay for the day 12x19= $2.28, instead of $3.00 per day. If he succeeds in finis.h.i.+ng 20 pieces--some of which are imperfect--then he should receive a still lower rate of pay, say 10 or 5 per piece, according to circ.u.mstances, making his pay for the day $2.00 or only $1.00, instead of $3.00."

ADVANTAGES OF THIS SYSTEM.--This system is founded upon knowledge that for a large reward men will do a large amount of work. The small compensation for a small amount of work--and under this system the minimum compensation is a little below the regular day's work--may lead men to exert themselves to accomplish more work. This system appeals to the justice of the men, in that it is more nearly an exact ratio of pay to endeavor.

TASK WORK WITH A BONUS.--The Task work with Bonus system of compensation, which is the invention of Mr. H.L. Gantt, is explained in "A Bonus System of Rewarding Labor," paper 923, read before the American Society of Mechanical Engineers, December, 1901, by Mr.

Gantt. This system is there described as follows:--

"If the man follows his instructions and accomplishes all the work laid out for him as const.i.tuting his proper task for the day, he is paid a definite bonus in addition to the day rate which he always gets. If, however, at the end of the day he has failed to accomplish all of the work laid out, he does not get his bonus, but simply his day rate." This system of compensation is explained more fully in Chapter VI of Mr. Gantt's book, "Work, Wages and Profits,"

where he explains the modification now used by him in the bonus.

ADVANTAGES OF TASK WORK WITH A BONUS.--The psychological advantage of the task with a Bonus is the fact that the worker has the a.s.surance of a living wage while learning, no matter whether he succeeds in winning his bonus or not. In the last a.n.a.lysis, it is "day rate" for the unskilled, and "piece rate" for the skilled, and it naturally leads to a feeling of security in the worker. Mr. Gantt has so admirably explained the advantages, psychological as well as industrial, of his system, that it is unnecessary to go farther, except to emphasize the fine feeling of brotherhood which underlies the idea, and its expression.

THE DIFFERENTIAL BONUS SYSTEM.--The Differential Bonus System of Compensation is the invention of Mr. Frederick A. Parkhurst, and is described by him in his book "Applied Methods of Scientific Management."

"The time the job should be done in is first determined by a.n.a.lysis and time study. The bonus is then added above the day work line. No bonus is paid until a definitely determined time is realized. As the time is reduced, the bonus is increased."

THREE RATE WITH INCREASED RATE SYSTEM.--The Three Rate System of Compensation is the invention of Mr. Frank B. Gilbreth and consists of day work, i.e., a day rate, or a flat minimum rate, which all who are willing to work receive until they can try themselves out; of a middle rate, which is given to the man when he accomplishes the work with exactness of compliance to prescribed motions, according to the requirements of his instruction card; and of a high rate, which is paid to the man when he not only accomplishes the task in accordance with the instruction card, but also within the set time and of the prescribed quality of finished work.

ADVANTAGE OF THIS SYSTEM.--The advantage of this is, first of all, that the man does not have to look forward so far for some of his reward, as it comes to him just as soon as he has shown himself able to do the prescribed methods required accurately. The first extra reward is naturally a stimulus toward winning the second extra reward. The middle rate is a stimulus to endeavor to perform that method which will enable him easiest to achieve the accomplishment of the task that pays the highest wage. The day rate a.s.sures the man of a living wage. The middle rate pays him a bonus for trying to learn. The high rate gives him a piece rate when he is skilled.

Lastly, as the man can increase his output, with continued experience, above that of the task, he receives a differential rate piece on the excess quant.i.ty, this simply making an increasing stimulus to exceed his previous best record.

ALL TASK SYSTEMS INVESTIGATE LOSS OF BONUS.--Under all these bonus forms of wages, if the bonus is not gained the fact is at once investigated, in order that the blame may rest where it belongs. The blame may rest upon the workers, or it may be due to the material, which may be defective, or different from standard; it may be upon the supervision, or some fault of the management in not supplying the material in the proper quality, or sequence, or a bad condition of tools or machinery; or upon the instruction card. The fact that the missing of the bonus is investigated is an added a.s.surance to the workman that he is getting the "square deal," and enlists his sympathy with these forms of bonus system, and his desire to work under them. The fact that the management will investigate also allows him to concentrate upon output, with no worry as to the necessity of his investigating places where he has fallen short.

NECESSITY FOR WORKERS BEARING THIS LOSS.--In any case, whether the blame for losing the bonus is the worker's fault directly or not, he loses his bonus. This, for two reasons; in the first place, if he did not lose his bonus he would have no incentive to try to discover flaws before delays occurred; he would, otherwise, have an incentive to allow the material to pa.s.s through his hands, defective or imperfect as the case might be. This is very closely a.s.sociated with the second reason, and that is, that the bonus comes from the savings caused by the plan of management, and that it is necessary that the workers as well as the management shall see that everything possible tends to increase the saving. It is only as the worker feels that his bonus is a part of the saving, that he recognizes the justice of his receiving it, that it is in no wise a gift to him, simply his proper share, accorded not by any system of philanthropy, or so-called welfare work, but simply because his own personal work has made it possible for the management to hand back his share to him.

USERS OF ANY TASK SYSTEM APPRECIATE OTHER TASK SYSTEMS.--It is of great importance to the workers that the users of any of these five methods of compensation of Scientific Management are all ready and glad to acknowledge the worth of all these systems. In many works more than one, in some all, of these systems of payment may be in use. Far from this resulting in confusion, it simply leads to the understanding that whatever is best in the particular situation should be used. It also leads to a feeling of stability everywhere, as a man who has worked under any of these systems founded on time study can easily pa.s.s to another. There is also a great gain here in the doing away of industrial warfare.

SHORTER HOURS AND HOLIDAYS EFFECTIVE REWARDS.--Probably the greatest incentive, next to promotion and more pay, are shorter hours and holidays. In some cases, the shorter hours, or holidays, have proven even more attractive to the worker than the increase of pay. In Shop Management, paragraph 165, Dr. Taylor describes a case where children working were obliged to turn their entire pay envelopes over to their parents. To them, there was no particular incentive in getting more money, but, when the task was a.s.signed, if they were allowed to go as soon as their task was completed, the output was accomplished in a great deal shorter time. Another case where shorter hours were successfully tried, was in an office where the girls were allowed the entire Sat.u.r.day every two weeks, if the work was accomplished within a set amount of time. This extra time for shopping and matinees proved more attractive than any reasonable amount of extra pay that could be offered.

DESIRE FOR APPROBATION AN INCENTIVE.--Under "Individuality" were discussed various devices for developing the individuality of the man, such as his picture over a good output or record. These all act as rewards or incentives. How successful they would be, depends largely upon the temperament of the man and the sort of work that is to be done. In all cla.s.ses of society, among all sorts of people, there is the type that loves approbation. This type will be appealed to more by a device which allows others to see what has been done than by almost anything else. As to what this device must be, depends on the intelligence of the man.

NECESSITY FOR COoPERATION A STRONG INCENTIVE.--Under Scientific Management, many workers are forced by their coworkers to try to earn their bonuses, as "falling down on" tasks, and therefore schedules, may force them to lose their bonuses also.

The fact that, in many kinds of work, a man falling below his task will prevent his fellows from working, is often a strong incentive to that man to make better speed. For example, on a certain construction job in Canada, the teamsters were shown that, by their work, they were cutting down working opportunities for cart loaders, who could only be hired as the teamsters hauled sufficient loads to keep them busy.

VALUE OF KNOWLEDGE GAINED AN INCENTIVE TO A FEW ONLY.--Extra knowledge, and the better method of attack learned under Scientific Management, are rewards that will be appreciated by those of superior intelligence only. They will, in a way, be appreciated by all, because it will be realized that, through what is learned, more pay or promotion is received, but the fact that this extra knowledge, and better method of attack, will enable one to do better in all lines, not simply in the line at which one is working, and will render one's life more full and rich, will be appreciated only by those of a wide experience.

ACQUIRED PROFESSIONAL STANDING A POWERFUL INCENTIVE.--Just as the success of the worker under Scientific Management a.s.sures such admiration by his fellow-workers as will serve as an incentive toward further success, so the professional standing attained by success in Scientific Management acts as an incentive to those in more responsible positions.

As soon as it is recognized that Scientific Management furnishes the only real measure of efficiency, its close relations.h.i.+p to professional standing will be recognized, and the reward which it can offer in this line will be more fully appreciated.

PUNISHMENTS NEGATIVE AND POSITIVE.--Punishments may be first negative, that is, simply a loss of promised rewards. Such punishments, especially in cases of men who have once had the reward, usually will act as the necessary stimulus to further activity. Punishments may also be positive, such things as fines, a.s.signment to less pleasant work, or as a last resort, discharge.

FINES NEVER ACCRUE TO THE MANAGEMENT.--Fines have been a most successful mode of punishment under Scientific Management. Under many of the old forms of management, the fines were turned back to the management itself, thus raising a spirit of animosity in the men, who felt that everything that they suffered was a gain to those over them. Under Scientific Management all fines are used in some way for the benefit of the men themselves. All fines should be used for some benefit fund, or turned into the insurance fund. The fines, as has been said, are determined solely by the disciplinarian, who is disinterested in the disposition of the funds thus collected. As the fines do not in any way benefit the management, and in fact rather hurt the management in that the men who pay them, no matter where they are applied, must feel more or less discouraged, it is, naturally, for the benefit of the management that there shall be as few fines as possible. Both management and men realize this, which leads to industrial peace, and also leads the managers, the functional foremen, and in fact every one, to eliminate the necessity and cause for fines to as great an extent as is possible.

a.s.sIGNMENT TO LESS PLEASANT WORK EFFECTIVE PUNISHMENT.-- a.s.signment to less pleasant work is a very effective form of discipline. It has many advantages which do not show on the surface, The man may not really get a cut in pay, though his work be changed, and thus the damage he receives is in no wise to his purse, but simply to his feeling of pride. In the meantime, he is gaining a wider experience of the business, so that even the worst disadvantage has its bright side.

DISCHARGE TO BE AVOIDED WHEREVER POSSIBLE.--Discharge is, of course, available under Scientific Management, as under all other forms, but it is really less used under Scientific Management than under any other sort, because if a man is possibly available, and in any way trained, it is better to do almost anything to teach him, to a.s.sign him to different work, to try and find his possibilities, than to let him go, and have all that teaching wasted as far as the organization which has taught it is concerned.

DISCHARGE A GRAVE INJURY TO A WORKER.--Moreover, Scientific Management realizes that discharge may be a grave injury to a worker. As Mr. James M. Dodge, who has been most successful in Scientific Management and is noted for his good work for his fellow-men, eloquently pleads, in a paper on "The Spirit in Which Scientific Management Should Be Approached," given before the Conference on Scientific Management at Dartmouth College, October, 1911:

"It is a serious thing for a worker who has located his home within reasonable proximity to his place of employment and with proper regard for the schooling of his children, to have to seek other employment and readjust his home affairs, with a loss of time and wages. Proper management takes account not only of this fact, but also of the fact that there is a distinct loss to the employer when an old and experienced employe is replaced by a new man, who must be educated in the methods of the establishment. An old employe has, in his experience, a potential value that should not be lightly disregarded, and there should be in case of dismissal the soundest of reasons, in which personal prejudice or temporary mental condition of the foreman should play no part.

"Constant changing of employes is not wholesome for any establishment, and the sudden discovery by a foreman that a man who has been employed for a year or more is 'no good' is often a reflection on the foreman, and more often still, is wholly untrue.

All working men, unless they develop intemperate or dishonest habits, have desirable value in them, and the conserving and increasing of their value is a duty which should be a.s.sumed by their superiors."

PUNISHMENT CAN NEVER BE ENTIRELY ABOLISHED.--It might be asked why punishments are needed at all under this system; that is, why positive punishments are needed. Why not merely a lack of reward for the slight offenses, and a discharge if it gets too bad? It must be remembered, however, that the punishments are needed to insure a proper appreciation of the reward. If there is no negative side, the beauty of the reward will never be realized; the man who has once suffered by having his pay cut for something which he has done wrong, will be more than ready to keep up to the standard. In the second place, unless individuals are punished, the rights of other individuals will, necessarily, be encroached upon. When it is considered that under Scientific Management the man who gives the punishment is the disinterested disciplinarian, that the punishment is made exactly appropriate to the offense, and that no advantage from it comes to any one except the men themselves, it can be understood that the psychological basis is such as to make a punishment rather an incentive than a detriment.

DIRECT INCENTIVES NUMEROUS AND POWERFUL.--As for the direct incentives, these are so many that it is possible to enumerate only a few. For example--

This may be simply a result of love of speed, love of play, or love of activity, or it may be, in the case of a man running a machine, not so much for the love of the activity as for a love of seeing things progress rapidly. There is a love of contest which has been thoroughly discussed under "Athletic Contests," which results in racing, and in all the pleasures of compet.i.tion.

RACING DIRECTED UNDER SCIENTIFIC MANAGEMENT.--The psychology of the race under Scientific Management is most interesting. The race is not a device of Scientific Management to speed up the worker, any speed that would be demanded by Scientific Management beyond the task-speed would be an unscientific thing. On the other hand, it is not the scope of Scientific Management to bar out any contests which would not be for the ultimate harm of the workers. Such interference would hamper individuality; would make the workers feel that they were restricted and held down. While the workers are, under Scientific Management, supposed to be under the supervision of some one who can see that the work is only such as they can do and continuously thrive, any such interference as, for example, stopping a harmless race, would at once make them feel that their individual initiative was absolutely destroyed. It is not the desire of Scientific Management to do anything of that sort, but rather to use every possible means to make the worker feel that his initiative is being conserved.

ALL "NATIVE REACTIONS" ACT AS INCENTIVES.--Pride, self-confidence, pugnacity,--all the "native reactions" utilized by teaching serve as direct incentives.

RESULTS OF INCENTIVES TO THE WORK.--All incentives in every form of management, tend, from their very nature, to increase output.

When Scientific Management is introduced, there is selection of such incentives as will produce greatest amount of specified output, and the results can be predicted.

RESULTS OF INCENTIVES TO THE WORKER.--Under Traditional Management the incentives are usually such that the worker is likely to overwork himself if he allows himself to be driven by the incentive. This results in bodily exhaustion. So, also, the anxiety that accompanies an unstandardized incentive leads to mental exhaustion. With the introduction of Transitory Management, danger from both these types of exhaustion is removed. The incentive is so modified that it is instantly subject to judgment as to its ultimate value.

Scientific Management makes the incentives stronger than they are under any other type, partly by removing sources of worry, waste and hesitation, partly by determining the ratio of incentive to output. The worker under such incentives gains in bodily and mental poise and security.

CHAPTER IX FOOTNOTES: ==============================================

1. W.P. Gillette, _Cost a.n.a.lysis Engineering_, p. 3.

2. F.W. Taylor, Paper 647, A.S.M.E., para. 33, para. 59.

3. Hugo Diemer, _Factory Organization and Administration_, p. 5.

4. James M. Dodge, Paper 1115, A.S.M.E., p. 723.

5. F.W. Taylor, _Shop Management_, para. 310-311, Harper Ed., pp. 142-143.

6. See also C.U. Carpenter, _Profit Making in Shop and Factory Management_, pp. 113-115. For an extended and excellent account of the theory of well-known methods of compensating workmen, see C.B. Going, _Principles of Industrial Engineering_, chap. VIII.

CHAPTER X