considered, or the rate will not be equitable as between employer and
employe. The employer must furnish the shop, the tools, the power,
the heat and light. The cost of these items does not necessarily vary
in direct ratio with the increase or decrease in production. These
expenses must be absorbed by the finished product, therefore, even
under a piece─rate plan, the rate of production (the factor of time)
has an actual bearing on the rate per unit.
From the standpoint of the employer, the rate per unit should be based
on the productiveness of the individual, and should insure to the
most skillful, a wage as high as, or slightly higher than, he would
receive under the day─wage plan. This would, in theory, give to the
less skillful man a wage exactly commensurate with his skill. But as
workers become more and more skillful, and increase at the same time
their productiveness and their earning capacity above normal, there is
a tendency on the part of the employer to reduce the rate per unit to
bring the aggregate wage back to normal. The result is that the worker,
fearing a reduction in the rate, limits his production to the number of
units that will insure an average wage.
Thus the system fails in its object. It does not reduce the cost
of production to the lowest point. However, when piece rates are
intelligently applied they are found very satisfactory in certain
lines. But in all cases, the piece rate tends toward a uniform rate of
production, and, while reducing the cost of superintendence, involves
the expense of inspection. The latter, however, is not necessarily an
added expense, for, as a rule, inspection is required regardless of the
wage system in use.
=5. Premium Systems.= To obviate the difficulties found in both the
day─wage and piece─rate plans, the _premium_ or _bonus_ system was
evolved. This improved system of wages is intended to fulfill the
following conditions:
1. A guaranteed rate per hour for each grade of work for a contract
period.
2. An average earning power continuously higher than usual.
3. A lower cost per unit to the employer as wages automatically
increase.
4. A supplemental earning power, or bonus, to the worker above the day
wage, the bonus being based on efficiency.
The premium system is a combination of day wage and piece rate,
involving the establishment of standard times for stated tasks. It
is based on the theory that if, when a standard time has been fairly
established, the worker performs a task in less than standard time, he
is entitled to a bonus, or extra pay, for the time saved. The bonus is
based on the wage rate paid for standard time.
For what part of the time saved the workman should be paid, depends
on circumstances. It might be argued that the workman is entitled
to full pay for all of the time saved, but other factors than the
dexterity of the workman enter into the time saving. The employer
supplies additional power, there is an extra cost for wear and tear on
machinery, and an extra quality of material; all have a bearing on time
saving. The employer is, therefore, entitled to a part of the saving.
The original premium system is known as the _Halsey_ plan. There are,
however, several well─known modifications of the plan, all based on
efficiency, but each having certain distinguishing characteristics. No
more clear presentation of the essential features of the best known
premium systems has been made, than is found in a review by Mr. Carl
Bender, published in the Engineering Magazine, from which the following
is quoted:
HALSEY PREMIUM PLAN
To mitigate to some extent the evil workings of piece rates, Mr. F.
Halsey invented the premium plan shown in Fig. 1.
The slant of the wage line may be at any angle from horizontal,
straight piece rate, to coalescence with day rate line. This system
possesses at least four valuable points:
1. It pays day rates if a longer time is taken than standard.
2. It is a very flexible system and can be adapted to different
conditions.
3. It lessens but does not obviate the necessity of changing rates.
4. It lessens but does not wholly remove the inclination to limit
output.
It is in one respect a step backward, since it substitutes uncertainty
for definiteness as to wage costs. Nevertheless, the Halsey system
was an admirable step in advance. Usually the worker is given either
one─half or one─third the time he saves. Psychologically it is much
better than piece rate, since most workers are more inclined to lessen
their time than to increase the number of pieces turned out. A man
will deliberately decide that he ought not to turn out more than five
pieces a day, but he will not feel the same desire to avoid breaking
his own record of two hours per piece.
Under the Halsey system, no limit is placed on a man's earning power
per hour, and also a minimum piece rate of one─half or one─third the
initial rate per piece is allowed, so that if a man worked on his
own time, he would at least receive per piece one─half or one─third
standard pay.
[Illustration: Fig. 1. Diagram of the Halsey Premium Wage System]
TAYLOR SYSTEM
A fundamental departure was made by Mr. Fred W. Taylor, in his
differential piece─rate system, a diagram of which is shown in Fig. 2.
Mr. Taylor does not establish an initial time by guess or by assuming
a more rapid gait than on day work, nor does he appropriate other
unscientifically determined times. His method is to standardize all
conditions in the shop, to make them as perfect and smoothly acting
as circumstances will permit, and then to determine a reasonable
minimum time in which the job can be done. As a result, Taylor's
standard times are very much lower and also very much more carefully
and accurately determined than any system hitherto considered. Mr.
Taylor scorns the suggestion that by any chance the worker could earn
excessive wages. Any wages that an unusually efficient worker can
earn are legitimately his own. Assuming that under the Taylor system
a worker should do four pieces in four hours, his wages for the time
would be $1.00, but Mr. Taylor allows an increase of 20 per cent, 25
per cent, 30 per cent, or even more, according to the class of work,
for ascertaining standard time. Let us assume 20 per cent increase.
The worker then receives for four pieces in four hours, $1.20, a rate
of $0.30 each. For less than four pieces the maximum hourly rate is
$0.25, therefore $0.25 each. If the worker only delivers three pieces
in four hours, his earnings are only $0.75, or $0.1875 per hour. Mr.
Taylor's system awards, therefore, a heavy and increasing premium for
high efficiency, a heavy penalty for low efficiency.
The method of standard time determination is so rigorous that the
worker cannot figure on curtailing his output. He has to hustle to
make wages even at the low piece rate, and if he succeeds in this, a
very little extra effort will give him a higher piece rate.
The excellence of the system lies in the accuracy with which proper
rates are predetermined. It is, however, somewhat inflexible and not
so well adapted to work in which unforeseeable variations in time
occur.
[Illustration: Fig. 2. Diagram of the Taylor Differential Wage System]
THE GANTT BONUS SYSTEM
Mr. Gantt, a disciple of Mr. Taylor, introduced at the Bethlehem Steel
Company a bonus plan, see Fig. 3.
As in Mr. Taylor's system, the proper time is most carefully and
accurately predetermined. If the worker reaches the proper time, he is
given a bonus of 25 per cent above normal wages for the time. If he
does still better, he is given half of what he makes, as in the Halsey
plan. If he does not reach standard time, he is paid only 75 per cent
of normal wages for the excessive time, provided bonus earned permits
the imposition of this fine. If he had bonus to his credit he would not
be fined, however much he fell below standard.
This system has shown certain psychological disadvantages in practice:
1. The men have made it a point of semi─honor, among themselves, not to
do better than standard times.
2. Although the actual fines for failing to reach standard times were
insignificant, the men claimed that they were being robbed of thousands
of dollars in this manner. Neither fall─downs nor ability to lessen
standard time are always up to the man. It is therefore unfortunate
when a favorable chance occurs to lessen time, that the worker
deliberately holds back. It is also often unjust that he should be
fined for what may not be his fault.
Actual experience with these different wage systems brings out the fact
that psychology accounts for quite as much as any fair condition, and
that a good wage system must not only be fair but must also hit the men
right.
EMERSON EFFICIENCY SYSTEM
The most recent wage system is the Efficiency System, evolved
and perfected in theory by Mr. H. Emerson and his assistants and
practically applied by the officials in the shops of the Santa Fé
Railway.
[Illustration: Fig. 3. Diagram of the Gantt Premium Wage System]
This wage system superficially resembles the Halsey line, Fig. 4,
but in theory and in fact differs radically from all previous wage
systems, although it embodies much that was best in all of them. It
retains the principle of day pay irrespective of performance. It
retains in modified form the principle of a flat piece rate. Like the
Halsey system, it pays more per piece for less competent work. Above
all, it retains Mr. Taylor's and Mr. Gantt's principle of accurate and
scientific shop organization, including standard times for every job
and operation.
It pays a high premium above wage or piece rate for coöperation or
assistant foremanship on the part of the worker, and finally, as part
of regular and daily shop practice, it revises erroneous schedules
whether they be too low or too high, and it makes this revision
without lessening the earning power of the worker. In addition it
substitutes for the costly, annoying, inaccurate time recording of
each job, a general monthly efficiency record which covers the shop as
a whole, each department, gang, foreman, worker and job, and, based
on accurate study and efficiency, it predetermines, before work is
begun, the absolute cost of every operation.
These results are facilitated by recognizing that the attainment of
standard conditions as to all operations depends on four totally
different elements:
(1) The shop itself must be highly organized and efficiently operated.
This is a duty that devolves solely on the management, and for poor
organization and operation the worker is not responsible.
(2) The character of the work itself, the quality of materials, etc.,
may vary greatly on the same job at different times. Neither manager
nor worker is wholly responsible for this variation.
[Illustration: Fig. 4. Diagram of the Emerson Efficiency Wage System]
(3) Assuming standard shop and work conditions, the worker himself
can do much to coöperate with the management in making the other
conditions as well as himself effective.
(4) Costs should be standardized for the shop on a basis of normal
conditions and be adjusted in the counting room on the basis of the
monthly efficiency factor.
(a) As an incident to high shop organization and efficient operation,
the standard time required for every job should be scientifically
ascertained.
(b) To eliminate accidental and unavoidable variations in material,
etc., the worker is allowed to sum the standard time of all his jobs,
gaining on some, losing on others, averaging closely even.
(c) For coöperating with the management in eliminating wastes, the
worker is paid a 20 per cent bonus for the efficiency of 100 per cent,
which means, that the time taken for all his jobs must be equal to
the standard times allowed for all his jobs. If he takes 10 hours on
a 1─hour job and 1 hour on a 10─hour job, his average remains 100 per
cent.
(d) The same work is assumed to be done always in the same standard
manner. Variations from standard are a general charge or credit to
shop efficiency, not a specific variation in cost. A train passenger
is not charged more because his train has been delayed by a snowstorm,
or less because a fair wind and a clear track made the particular
train run less costly than usual.
Under the efficiency system the worker is entitled to standard day
rates, even if he is doing nothing. If, however, by reason of special
individual effort or skill, he does his work faster, he is entitled,
not to a part (one─third or one─half, as in the Halsey system), but he
is entitled to be paid in full for all the time he saves. As he has not
less coöperated with the management, he is, in addition, entitled to 20
per cent bonus for all the time he works.
Therefore, if a worker whose pay is $0.25 per hour delivers 300 hours
of jobs in a month of 250 working hours, he receives:
1. 250 hours at $0.25 $62.50
2. 50 hours saved, at $0.25 12.50
3. 20 per cent on 250 hours' pay 12.50
──────
Total $87.50
If, however, the worker does not so coöperate with the management as to
make the shop operate at high efficiency, himself included, he does not
receive as much extra pay, but a lessening amount until at 67 per cent
and below he is paid day rate and no more.
The diagram shows plainly the efficiency wage line beginning at 6
hours, showing 20 per cent increase at 4 hours, standard time, and
paying 4 hours time even if the work took no time at all──a condition
that arises practically quite often, as when a worker runs two jobs at
the same time, or when he does work on his own time.
While the diagram can be applied to a 4─hour job, the worker is not
paid by the separate job, but is paid straight day wages and a bonus
for his full─pay period efficiency. For each per cent of efficiency
there is a corresponding increase in pay.
For 100 per cent efficiency the increase is 20 per cent, and for each
1 per cent increase in efficiency above an efficiency of 100 per
cent, the pay also increases 1 per cent; therefore, for 120 per cent
efficiency the pay is increased 40 per cent. Below 100 per cent the pay
table runs as follows:
Efficiency Additional Pay
Per Cent Per Cent
67 0.00
74 1.
80 3.27
85 6.17
90 9.91
95 14.53
100 20.
The system has other merits:
(1) It standardizes not only the work of each worker, but also of every
foreman, every department, and of the shop as a whole.
(2) It therefore standardizes the shop cost of every job, whether it is
done by a cheap apprentice in two hours, or a high priced mechanic in
10 hours. The average shop or department efficiency factor equalizes
accidental variations.
(3) It separates absolutely all questions of wage rate from questions
of output, shop conditions, or individual excellence.
(4) It fines the management heavily if shop conditions are not
maintained so as to realize standard times.
(5) It puts no limit on the ambition or earning power of any man.
(6) Standard times are being constantly corrected. If the standard man
cannot average 100 per cent on his schedules, it is evident that some
of them are too short and ought to be lengthened. If on the other hand,
a new machine tool is introduced, new schedules are drawn up for it,
but the worker will not, on that account, make less than he did on the
old schedule.
It is too much to expect that any system of paying wages will
prevent an outbreak of selfish interests whether of employer or wage
earner. There will, however, be a distinct gain if the nature of the
disagreement can be made entirely distinct and plain. Clear thinking
must precede clear acting, and this description of different wage
systems may contribute towards clearer conceptions and more just
practice.
To establish a modern wage system, standard times must be determined
on a scientific basis, and the rate must not only be equitable as
between employer and employe, but, as Mr. Bender has said, "it must
hit the men right." Shop conditions must be right and every facility
given the workmen to attain standard time or better, including teaching
him how to do the work in standard time. The _speeder_ or _task
setter_ employed under the day─wage plan must be superseded by the
_instructor_, who, instead of selecting the most speedy worker and
basing standard times on his operations, first determines as closely
as possible what the time should be, and then teaches his men how to
attain that time. Where stop─watch methods foster discontent and breed
antagonism, instruction is followed by coöperation. The average man
does not object to doing a task in a stated time when he is given the
facilities for doing the work that will make that a reasonable time.
Add to this the incentive of extra pay for equaling or bettering that
time, and his coöperation is insured.
METHODS OF TIME KEEPING
=6.= Time keeping may be divided into two classes. The first class
includes methods of recording the total time that the employe works
during a pay─roll period. The second class includes methods of
recording the results of the labor of each employe──the quantity
produced, expressed in the units adopted by the trade in which he is
employed.
[Illustration: BATTERY OF HYDRAULIC PRESSES (3000 AND 4000 TONS
CAPACITY) IN HEAVY FORGING SHOP OF THE J. G. BRILL COMPANY,
PHILADELPHIA, PENNA.]
Ordinarily, trading concerns require records of the first class only,
the pay of the employe being based on the time spent, rather than on
the quantity of his production. This is because of established custom
and the difficulty of measuring his production. Primarily, the pay of
the employe is based on his efficiency, but it is not always practical
to attempt to reduce the results of that efficiency to standard units.
Manufacturers require records of both classes. Not only is it necessary
to know how many hours each employe has worked, but the quantity of
production must be known.
It is true that a manufacturing business requires the services of some
employes whose productiveness is not readily expressed in standard
units, in which cases the first method only can be used. These are
the men who are necessary to the economical operation of a department
or shop, or of the plant as a whole, but whose time cannot be charged
to a particular job. Labor of this class is termed _indirect_ or
_non─productive_.
The labor of most employes in a manufacturing plant is applied directly
to the production of specific articles, or to the completion of certain
definite jobs. This makes it possible to reduce the results of their
labor to definite units. Labor of this class is termed _direct_ or
_productive_.
Records of production, as well as records of time, are necessary for
two reasons. First, when the piece rate or the more modern premium
system is used, employes are paid according to the number of units
produced. Second, to obtain accurate records of costs, it is necessary
to have accurate records of production.
For the purpose of determining the amount of wages due the piece
worker, time records are not needed; records of production supply the
information required. But to determine the actual labor cost per unit,
time records are needed even in the case of piece workers. Piece rates
are based on continuous production at a uniform rate. A marked falling
off in production means a perceptible increase in the cost per unit for
overhead expense. For example, we will suppose that a manufacturer has
$50,000.00 invested in machines operated by piece workers. One of the
definite items of expense to be apportioned to the product of these
machines is interest, at say five or six per cent. If production falls
to one─half of the normal quantity, because one─half of the machines
are idle, the amount of this one item of expense that must be borne
by each unit of production is doubled. Or, we may have two workers
operating identical machines on the same class of work, the production
of one being twice that of the other. The overhead expense is the
same for each employe and each machine, consequently the cost of the
finished product is affected by the factor of time. The piece worker
who fails to maintain the rate of production established as standard in
his or her trade, is not a profitable worker.
=7. Time─Keeping Systems.= There are several systems or methods of
time keeping in use. No one system is adapted for use under all
conditions. Like all other classes of records, the time─keeping system
must be selected with reference to the conditions under which it is to
be operated. The system used in a factory, where all operatives are
housed in one or more buildings, is not well adapted to the needs of a
contractor whose men may be working on jobs located at points widely
separated.
In this discussion, we will consider first the systems used to record
the total time employed. This will be followed with descriptions of
systems for obtaining records of production.
=8. Time Book and Check Systems.= Of the time─keeping systems that have
been at some time considered standard, the oldest is the time book kept
by the time─keeper. This system required the time─keeper to identify
each man at work, and to record, opposite his name in the time book,
the number of hours worked each day. Sometimes a special time─keeper
was employed, or the foreman might keep the time book for his own men,
the time books of all foremen being turned in for the purpose of making
up the pay─roll. A system so dependent on the memory of one man never
could become satisfactory.
With the object in view of doing away with the mistakes that were
continually being made in the operation of the time─book system, the
check system was introduced. This was probably the first attempt at
automatic time recording.
Under the check system, each man is assigned a number and given a
brass check on which his number is stamped. In entering the works the
men are required to pass in front of the time─keeper's office and to
hand in their checks. The time─keeper has, in his office, a large board
with hooks numbered to correspond with the check numbers. As the checks
are handed in they are hung in their proper places on this board. The
checks on the board show what men are in the works, and from them the
necessary entries are made in the time books.
When the men pass out at noon their checks are handed to them. Every
man must pass out and take his check; otherwise he will not receive
credit for the half─day's time.
The system does not prove entirely satisfactory for several reasons.
It is not exact, for no accurate record of the time a man enters is
possible. Usually the time─keeper's window is closed at starting time
and opened fifteen minutes later to take care of the late arrivals.
Thus the man who is one minute late pays the same penalty in lost time
as the man who comes in fifteen minutes after the whistle blows. As a
natural result, when a man finds that he cannot reach the works on time
he takes the full fifteen minutes.
While the handing in of a check furnishes reasonable proof that the man
has entered the works, it furnishes no proof that he is at his work.
Many a man has turned in his check in the morning, left the works by
another exit, returned a few minutes before noon, received his check
and full pay for the half day.
In some manufacturing plants where the check system is still used, this
difficulty has been overcome to a certain extent. The operation of the
system is reversed, the men receiving their checks from the time─keeper
as they enter the works. In the shops there are check boards on which
the men hang their checks. These boards are hinged and provided with
locks, the keys being carried by the foremen. Five minutes after
starting time the boards are locked, and late arrivals are required to
turn in their checks to the foreman who makes records of the time of
arrival. Once during each working period, the time─keeper makes the
rounds of the shops and takes the time records in his time book. At the
quitting hour the boards are unlocked, the men take their checks as
they pass out, and turn them in at the time─keeper's office.
=9. Time Clocks.= The modern system of time recording makes use of a
time clock or mechanical recorder. Instead of trusting to the accuracy
of a time─keeper, or depending on the workmen to keep records of their
own time, the modern recorder automatically records the time of arrival
and departure of every employe.