The Psychology of Management by L. M. Gilbreth (best large ebook reader .txt) 📕

third, the promised rewards are remote; fourth, the plan makes no provision for bad years; fifth, the workmen have no means of knowing if the agreement is carried out." Without discussing any farther whether these are worded exactly as all who have tried the plan might have found them, we may take these on Mr. Halsey's authority and discuss the psychology of them. If the workmen are given a share in what they do not earn, they have absolutely no feeling that they are being treated justly. This extra reward which is given to them, if in the nature of a present, might much better be a present out and out. If it has no scientific relation to what they have gotten, if the workmen share regardless of individual deserts, this, as Dr. Taylor says, paragraph 27 in the "Piece Rate System," is the most serious defect of all, in that it does not allow for recognition of the personal merits of each workman. If the rewards are remote, the interest is diminished. If the plan makes no provision for bad years, it cannot be self-perpetuating. If the workmen have no means of knowing if the agreement will be carried out or not, they will be constantly wondering whether it is being carried out or not, and their attention will wander.

The Premium Plan. — The Premium Plan is thus described by Mr. Halsey — "The time required to do a given piece of work is determined from previous experience, and the workman, in addition to his usual daily wages, is offered a premium for every hour by which he reduces that time on future work, the amount of the premium being less than his rate of wages. Making the hourly premium less than the hourly wages is the foundation stone upon which rest all the merits of the system."

Dr. Taylor's Description of This Plan. — Dr. Taylor comments upon this plan as follows:

"The Towne-Halsey plan consists in recording the quickest time in which a job has been done, and fixing this as a standard. If the workman succeeds in doing the job in a shorter time, he is still paid his same wages per hour for the time he works on the job, and, in addition, is given a premium for having worked faster, consisting of from one-quarter to one-half the difference between the wages earned and the wages originally paid when the job was done in standard time," Dr. Taylor's discussion of this plan will be found in "Shop Management," paragraphs 79 to 91.

Psychologically, the defect of this system undoubtedly is that it does not rest upon accurate scientific time study, therefore neither management nor men can predict accurately what is going to happen. Not being able to predict, they are unable to devote their entire attention to the work in hand, and the result cannot be as satisfactory as under an assigned task, based upon time study. The discussion of this is so thorough in Dr. Taylor's work, and in Mr. Halsey's work, that it is unnecessary to introduce more here.

Profit-sharing. — Before turning to the methods of compensation which are based upon the task, it might be well to introduce here mention of "Coöperation," or "Profit-sharing," which, in its extreme form, usually means the sharing of the profits from the business as a whole, among the men who do the work. This is further discussed by Schloss, and also by Dr. Taylor in paragraphs 32 to 35, in "A Piece Rate System"; also in "Shop Management," quoting from the "Piece Rate System," paragraphs 73 to 77.

Objections to Profit-sharing. — The objections, Dr. Taylor says, to coöperation are, first in the fact that no form of coöperation has been devised in which each individual is allowed free scope for his personal ambition; second, in the remoteness of the reward; third, in the unequitable division of the profits. If each individual is not allowed free scope, one sees at once that the entire advantage of individuality, and of personal recognition, is omitted. If the reward is remote, we recognize that its power diminishes very rapidly; and if there cannot be equitable division of the profits, not only will the men ultimately not be satisfied, but they will, after a short time, not even be satisfied while they are working, because their minds will constantly be distracted by the fact that the division will probably not be equitable, and also by the fact that they will be trying to plan ways in which they can get their proper share. Thus, not only in the ultimate outcome, but also during the entire process, the work will slow up necessarily, because the men can have no assurance either that the work itself, or the output, have been scientifically determined.

Scientific Management Embodies Valuable Elements of Profit-sharing. — Scientific Management embodies the valuable elements of profit-sharing, namely, the idea of coöperation, and the idea that the workers should share in the profit.

That the latter of these two is properly emphasized by Scientific Management is not always understood by the workers. When a worker is enabled to make three or four times as much output in a day as he has been accustomed to, he may think that he is not getting his full share of the "spoils" of increased efficiency, unless he gets a proportionately increased rate of pay. It should, therefore, be early made clear to him that the saving has been caused by the actions of the management, quite as much as by the increased efforts for productivity of the men. Furthermore, a part of the savings must go to pay for the extra cost of maintaining the standard conditions that make such output possible. The necessary planners and teachers usually are sufficient as object-lessons to convince the workers of the necessity of not giving all the extra savings to the workers.

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

This once understood, the satisfaction that results from a coöperative, 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 illustrate — 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 12×19= $2.28, instead of $3.00 per day. If he succeeds in finishing 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 circumstances, 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 constituting 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 assurance of a living wage while learning, no matter whether he succeeds in winning his bonus or not. In the last analysis, 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 analysis 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 assures the man of a living wage. The middle rate pays him a bonus for trying to learn. The high rate gives him a