CHAPTER I

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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 L10, he gets L10

worth of shares. Then, when the next dividend is declared, he gets

the dividend on his L10 worth of shares. If there is a 5 per cent.

dividend, he gets 10s. as his interest for the year or whatever the

period of time may be.

He is not allowed to subscribe for shares until he has been with the

firm a certain length of time, and, in some cases, if he leaves he

loses his shares. If he dies, his widow gets the dividend on the shares

until she dies, when the shares go back to the firm.

In other cases the shares bear a fixed rate of interest, say 4 per

cent., and also an additional dividend if there is any profit after

dividends on other classes of shares reach a certain percentage.

In yet other cases a worker becomes absolute owner of his shares, and

can dispose of them by will or if he leaves the firm, but such cases

are rare.

Of course, where shares are purchased by deducting the price of the

shares from wages they are the absolute property of the worker.

The objections to profit sharing may be applied to co-partnership,

together with the additional one that the worker does not get profit,

but only interest on shares; and as he can never become a large

shareholder, the extra benefit is not very great. He is rendered quite

dependent on the firm--even more so than the profit sharer--and can

exert no pressure if conditions are unsatisfactory. The fact that

conditions are usually satisfactory in places where co-partnership is

practised does not make the principle a good one.

Certainly, sometimes the shareholding workers have the option of

electing a director, and this places some responsibility on the worker,

which is a good thing and gives him a real interest in the affairs

of the firm; but such cases are uncommon, and even then there are so

many other directors that the workers' representative has no voice

in determining the policy of the firm; he only voices the workers'

interests.

(_e_) CO-OPERATION.

Co-operation hardly comes into methods of wage payment, but we will

just glance at it.

It means that a number of workers unite to buy in large quantities the

commodities they require, and to distribute them at the least expense.

By these means they buy cheaply, and there is no non-productive middle

man to make a profit.

The great success of co-operative methods has resulted in the

co-operative societies manufacturing certain commodities for

themselves, as well as buying and selling. Having amassed a large

capital, and being certain of their market, they have every opportunity

of putting their workers under excellent working conditions.

As employers, however, the co-operative societies are exactly on the

level of other employees--no better and no worse. They do not even

adopt bonus or profit-sharing schemes except in one instance, and the

same labour disadvantages occur here as in the case of any ordinary

private firm.

Co-operation is strictly limited in its field of action. The buying

power of the society's members enables the society to know just what

goods and what quantity of goods are necessary, and they can go ahead

with certainty.

But a co-operative engineering works where all the capital is

subscribed by the workers is a practical impossibility. In the

first place, the number of workers in proportion to the amount of

capital required in an engineering works is very small, and no group

of ordinary workers could subscribe to start a factory and keep it

going. In the second place, even if a factory could be started, the

competition of the open market would throttle it in its birth. The

keen buying and selling and manufacturing need highly educated and

highly skilled men. Capable men are to be found in the ranks of the

workers, but men with the necessary technical and commercial knowledge

to run a large competitive engineering concern are extremely rare among

them. Outside men would have to be engaged for such work and for the

theoretical side of the business. This means high salaries, which the

worker capitalist would object to; and it also takes the management out

of the hands of the worker, and thereby destroys the whole basis of

co-operation.

It would be quite easy for an engineering business to grow out of a

co-operative society's need of machinery of various kinds, but it is

quite a different thing when one enters the open market.

In the two or three cases where co-operation, apart from the large

co-operative societies, is in practice, it will be found that the

business has in the first place been built up privately, and the

capital has afterwards been gradually transferred to the workers. There

is no instance of workers getting together and clubbing their savings,

and so starting a competitive business and earning their living thereby.

(_f_) BONUS SYSTEMS.

There are many bonus systems, and here again the advantages depend

largely on the moral principles of the employer who adopts them. It

does not follow that because an employer gives a bonus on work done

that the conditions of work in his factory are good. Even with the best

bonus system prices may be cut and conditions may become unbearable.

Indeed, the adoption of a bonus system is often an excuse for driving

and tyranny.

They have one advantage over profit sharing and co-partnership: they

do not interfere with the independence of the worker. I refer, of

course, to those systems which have no connection with profit sharing

or co-partnership, but where the bonus consists of a weekly payment for

excess production above a specified minimum.

A bonus system is based on a piece price or on individual or collective

output in a certain time. It is therefore an offshoot of piece work,

but it has a guaranteed minimum wage attached to it. Whatever happens,

the worker gets his guaranteed minimum, and if he produces more work

than is allowed for in that minimum he gets a fixed bonus at the end of

the week or month. It differs from profit sharing in that it depends on

quantity of work done and not on profit made.

Bonus is often given to men working under a subcontractor. The

subcontractor guarantees to turn out a certain job in a certain time,

and in order to induce the men to accomplish this result he offers a

bonus if the job is done to time.

There is no protection whatever against cutting times or rates, and

conditions generally are the same as those already mentioned.

(_g_) THE REWARD SYSTEM.

The Reward System (this is the name given to the system for the purpose

of this description) is different to all the foregoing methods.

The worker is paid the ordinary standard rate of wages for his

attendance at the factory, and this attendance implies the production

of a certain minimum quantity of work. If he produces more than that

quantity, he is paid additional wages in proportion to the work done.

If a certain standard quantity of work be produced, the standard being

considerably in excess of the minimum, the proportionate additional

wages, or reward, amounts to at least 25 per cent. of the day

rate--that is, of the trade-union rate. Also, an equal opportunity of

reaching the standard quantity is given to all workers, inasmuch as the

work is carefully studied, standardised, and recorded, and instructions

are given to the worker showing him just how to produce the standard

quantity. The standard quantity is within the reach of all diligent

workers.

This system is described in the following pages.

A rational wages system · 第 1 / 3 章