departments, while his authority extends to other departments only in
respect to their record systems. In the accounting department, his
direct assistant is the chief accountant; and in the stenographic, the
chief stenographer.
In a smaller organization the comptroller may not require the services
of a chief accountant, in which case he performs the duties of the
position. Or the treasurer may occupy the office of comptroller.
_Chief Accountant._ The chief accountant is in immediate charge of
the commercial and factory accounting. His assistants are cashier,
bookkeepers, factory accountant, cost clerks, time clerks.
This department accounts for the receipt and disbursement of all moneys
and properties, figures costs and pay rolls, and prepares statistics
necessary for the use of the comptroller in making up his reports and
statements.
It is evident from this that the comptroller is in a sense the
custodian of all property belonging to the business, since he must,
through his accounting department, account for its receipt and
disbursement. This explains why the comptroller prescribes all systems
for the care and recording of stores, supplies, and finished product.
_Chief Stenographer._ The chief stenographer is at the head of the
correspondence department, with authority over all stenographers,
typists, filing and mailing clerks.
Stenographers are supplied to all divisions by this department. This
plan of having all stenographers in one department subject to the call
of those having need of their services is now adopted by most large
concerns, except in a few cases where stenographers act as private
secretaries to the officers. The plan is an economical one, for only
the number actually required to handle the work of the establishment
need be employed. Under the old plan of employing one or more
stenographers in each department, it is common to find them idle in one
department while in another the work is behind. Another strong point
in favor of the more modern plan is that each stenographer becomes
familiar with the dictation of all departments, and no stenographer has
an opportunity to become familiar with the secrets of the business.
In the stenographic department, the work of addressing and mailing form
letters, catalogues, and circulars is done.
All correspondence is filed by this department.
Records of office supplies, stationery and printed matter are
maintained in this department.
The chief stenographer has charge of and accounts for all postage, but
secures postage by requisition from the cashier or accountant.
=14. Sales Division.= By far the most important division of the entire
commercial branch is the sales division. This division is responsible
for finding a market for the output of the business.
It must create a demand for the product through advertising, open new
fields, study the demands of the trade and the products of competitors,
ascertain as far as may be the possibilities of marketing new products,
and, above all, sell goods at a profit.
The selling division of some of the largest industrial establishments
is in sole charge of a general sales manager, who has authority over
the advertising as well as selling. In our chart we have divided
responsibility for the conduct of this division between sales and
advertising managers, placing the advertising manager on an equality
with, rather than subordinate to, the sales manager. This combination
will produce the most satisfactory results for most enterprises.
_Advertising Manager._ The advertising manager has charge of the
preparation of all advertising literature, catalogues, copy and designs
for all periodical advertising and usually the placing of all contracts
for printing and engraving.
He has authority over all artists and copy writers employed regularly
and for special work.
With the sales manager and general manager, he makes up appropriations
for periodical advertising and places contracts when these
appropriations have been approved.
He confers with the sales manager on all questions pertaining to his
work, no printed matter for the use of the selling division being
ordered until approved by the sales manager. Thus, coöperation of the
sort that makes for success is assured.
_Sales Manager._ The sales manager has authority over the sale of goods
and filling of orders, and his department is divided into selling and
filling. The selling department is further subdivided into salesmen and
mail orders.
One subdivision represents that portion of the sales made by personal
salesmen. The active work is carried on by salesmen who call on the
trade under the orders of the sales manager.
The sales manager hires all salesmen, prescribes their territories and
routes, and supervises their expense accounts.
He compiles reports and statistics of their work for presentation to
the comptroller or general manager, and keeps the records prescribed
for this department.
The mail order division is engaged in the sale of goods by the use of
letters, circulars, and catalogues. Lists of customers and prospective
customers are maintained, and sales follow-up systems are operated
under the immediate supervision of this division.
In the filling department, the chief order clerk is in charge of
entering sales orders, making shipping orders and manufacturing orders.
He maintains a record of sales and manufacturing orders so that he can
keep informed on manufacturing or stock requirements. All invoicing of
shipments is done in this department.
The shipping clerk maintains records of rates of transportation by
rail, water, or truck, and keeps posted on routes and facilities. He
supervises the packing of all goods, and secures proper receipts from
transportation lines.
_Credit Man._ The position of the credit man is an important one in any
establishment.
He collects and records information about the financial responsibility
and credit standing of customers. When necessary, he makes special
investigations, and on the basis of his information extends or limits
credit. Every order from a new customer must be approved by the credit
man before it can be accepted.
When accounts have been opened, it is the duty of the credit man to
collect them when due, or, if not paid promptly, to use every means to
secure a settlement. His work brings him in contact with both the sales
and accounting departments.
The credit man is assisted by such clerks and collectors as may be
necessary for the conduct of his department.
=15. Superintendent.= The superintendent is given general supervision
over the manufacturing branch of the business. His authority extends
directly to the engineering and drafting departments, the work of the
assistant superintendent, foreman of tool room, and shop foremen. His
relations with the purchasing department are advisory rather than
managerial.
His immediate assistants are the chief engineer, assistant
superintendent, and shop foremen.
It is his duty to execute orders for the manufacture of goods, operate
the plant in the most economical manner, study and introduce processes
and methods that tend to reduce manufacturing costs, and keep informed
generally on the efficiency of men, machinery, appliances, and
materials in all manufacturing departments.
With the assistance of the purchasing agent he provides all materials
and supplies required in the manufacture of goods or for the operation
of the plant.
_Chief Engineer._ The chief engineer designs all special machinery
and appliances to be manufactured for use in the plant, designs and
plans all new products for which there appears to be a demand, and
personally supervises the experimental department. The installation of
new equipment is also done under his supervision.
His authority extends to the drafting department which is in charge
of a chief draftsman. This department draws all designs, plans of new
machinery or product, and all plans not classed as architectural.
In a plant where many special tools are made, the chief engineer also
has authority over the tool room.
_Assistant Superintendent._ The assistant superintendent is responsible
for the maintenance in efficient condition of all power, pumping,
heating, and lighting plants, internal transportation facilities, and
the repair of buildings and equipment.
Except in the larger plants, he has authority over the tool room
which is placed in charge of a tool room foreman. This department
is responsible for the custody of all tools, repairs to tools, and
their manufacture. Tools are issued only on requisition and perpetual
inventories are maintained according to systems prescribed.
In some very large industrial plants, like a steel plant, there are
several assistant superintendents, each having specific duties. There
may be a superintendent of power, superintendent of transportation,
superintendent of machinery, superintendent of buildings,
superintendent of stores, etc. In a small plant, the superintendent
will personally perform the duties here assigned to the assistant
superintendent.
_Shop Foremen._ As the name indicates, the shop foremen are in charge
of the various shops or manufacturing departments. It is the duty of
the shop foreman to lay out the work called for by the orders of
the superintendent, and to assign the work to his men. He will make
provision for the prompt execution of orders by making requisition for
the number of men that can be profitably employed in his department. It
is his duty to keep all of his men supplied with work.
=16. Purchasing Agent.= The purchasing agent has charge of the purchase
of all materials for the manufacturing branch, and in some cases for
the commercial branch. In a purely trading concern, his duties would
be in connection with the commercial or selling branch, but in a large
industrial enterprise, the purchase of office supplies, advertising
literature, etc., is usually under the supervision of the comptroller,
chief accountant or advertising manager.
He procures catalogues, price lists, names of manufacturers and
dealers, and keeps generally informed as to sources of supply. He
obtains samples which are submitted to tests by the engineering
department or otherwise.
With the superintendent and general manager, he makes schedules of
materials, secures bids, and places orders. Records of orders and all
information needed in his office are kept according to the systems
prescribed by the comptroller.
He has full authority over the store rooms, in which he is assisted
by the chief stores clerk. This department receives all goods, checks
receipts with orders or invoices, stores the goods, delivers them on
properly executed requisitions, and maintains perpetual inventory
records as prescribed.
EMPLOYMENT DEPARTMENT
=17.= A department, or rather a sub-department, not shown on the chart
but found in some establishments, is the _employment department_. This
department is very properly in immediate charge of the superintendent,
and, in the average manufacturing plant, he will hire all men.
In a plant employing a great number of men, it is impossible for
the superintendent to personally take charge of this work, and an
employment agent is placed in charge.
The employment agent keeps records of all employes and applicants and
hires all men needed by the different foremen.
GENERAL MODIFICATIONS
=18.= The organization that we have described is a representative
illustration of the application of the principles to a large
enterprise, necessitating a considerable number of subdivisions.
But even here the charts show only what may be termed the principal
divisions; the charts might be extended in greater detail. The
explanation might include the exact duties of every employe in each
department, but, as our purpose is to present general principles in
sufficient detail to serve as a guide, explanations of these minute
details have been omitted.
There are, however, modifications to be found in certain cases which
may be made clear by further suggestions. We have referred to the
comptroller, and while in many concerns no such office is recognized,
at least by that title, some man in every business of any magnitude
fills an analogous position.
Most frequently it is the auditor, or if the office of auditor has
not been created, it may be the treasurer. Again, the duties or a
greater part of them, may fall on the office manager or the chief
accountant. Even in a small partnership where one of the partners is
the bookkeeper, the duties exist, and are performed by that partner
who keeps the accounts. It must be remembered that the comptroller's
office is primarily statistical. It matters not whether the statistical
operations involve the keeping of a simple set of books or require
large commercial and factory accounting forces with a third division to
compile statistics from their records, every business demands certain
statistical work. Neither is it important whether the man in charge of
this work be called comptroller, auditor, accountant or office manager,
but we have used the title of comptroller as more exactly descriptive
of the functions of the office when carried to its legitimate
conclusion in a large business.
While, in most manufacturing industries, the superintendent and
purchasing agent have full authority in the making of purchases for
the manufacturing branch, it has been found advisable in some cases
to give the comptroller authority over the purchasing department. A
reason for this is the importance of reducing the investment in raw
material, supplies, etc., to the lowest point consistent with the
actual requirements of the business. Much needless capital is tied up
in raw material, when it might be at least earning bank interest. His
chief concern being to provide a liberal supply of raw materials, the
superintendent is very liable to overstep the bounds in the direction
of too liberal purchases.
A still different condition is found in a large merchandising
establishment. Here practically every department manager is his own
buyer and while he must be regarded as the best judge of what to
buy, it becomes necessary to supervise his purchases in respect to
quantities. The comptroller should, therefore, have authority over the
amounts invested by the several buyers. This is usually controlled
by giving the buyer a stated appropriation at the beginning of each
season, the amount being determined by a study of present conditions
and records of past performance. The making of an appropriation does
not operate against special appropriations to be used in taking
advantage of specially advantageous market conditions, or to increase
stocks of fast selling lines.
DUTIES CLEARLY DEFINED
=19.= One of the first requirements in the development of a successful
organization is that the duties of every employe be clearly defined,
and that each employe be fully informed as to his duties. Nothing
tends to produce greater friction than an overlapping of duties and
authorities.
In a manufacturing plant, when a foreman is placed in charge of a
shop he should be instructed as to his authority, responsibilities,
and exact duties. When these authorities have once been established,
no other man of equal or lower grade in the organization should be
permitted to interfere in any way, nor should the foreman be permitted
to overstep his authority.
Those occupying positions to which greater authorities are attached
should also be careful to not presume upon their authority by
attempting to direct work properly under control of the foreman. The
superintendent or manager who, in passing through a plant, discovers a
workman in the act of violating an established rule, or doing something
dangerous to the lives of himself and fellow employes, or performing
work in the wrong way, is justified in at once bringing the matter to
the notice of that workman; but he should report the occurrence to the
foreman at the first opportunity.
On the contrary, if the manager or superintendent wishes to make a
change in policy involving a departure from the established customs of
the shop, or if he requires the services of a workman even temporarily
in another department, he should first take up the matter with the shop
foreman.
The same policy in general should be observed throughout the
organization. The person placed at the head of a department or division
of the work should have full authority and be held responsible for the
work of all employes in that department. Complaints of inefficiency
of an individual employe should be made to the department head. If
the purchasing agent, for instance, finds the work of a certain
stenographer unsatisfactory, his complaint should be made to the chief
stenographer.
=20. Duties of Individual Workmen.= The duties of the individual
workman in the shop should be as clearly defined as are those of his
foreman. It is the duty of the foreman to lay out the work and to keep
the workman regularly employed on the work assigned to him.
In the operation of the manufacturing branch, the most important
consideration is economy of production. When a workman is kept at one
task he becomes a specialist, increases his production, and reduces
costs.
=21. Duties of Office Employes.= Each clerk in the office should have
his work clearly defined. If specialization is profitable in the shop,
it is equally so in the office. Every man who has been responsible for
the management of an office will agree with us that in no other branch
of business is there a greater tendency to allow work to get behind.
Lack of system is mainly responsible for this state of affairs. While
his duties may be more or less clearly defined, the work of the average
office clerk does not follow any well defined plan. He does the thing
that seems most important, leaving the less important tasks until he
"has time." Instead of surveying the field and laying out a logical,
systematic plan, the average office employe goes about his work in a
haphazard sort of way following the line of least resistance.
The work in every office is largely routine, but the faithful
performance of routine tasks is a necessary accompaniment to those
larger tasks, which in themselves, appear of greater importance.
Routine tasks are drudgery--something that every man seeks to escape.
In freeing himself from a state of drudgery, the department head should
be careful lest he place his subordinates in the same dreaded rut. An
office clerk should be given an opportunity to learn all of the routine
of the division in which he is employed. He will become a more valuable
employe; while adding variety, the performance of more than one task is
training him for a more advanced position.
[Illustration: Fig. 6. A Working Chart for the Guidance of the Employes
in One Department]
To properly systematize the routine, the department head should
first study his department to find out what the routine tasks really
are--what work must be done each day or each week. He should then
list these tasks and assign them to certain clerks to be performed at
certain stated times.
This can be best presented by means of a chart as shown in Fig. 6. This
chart covers the work of a typical general accounting department. At
the top, the general or routine tasks are listed, grouped under proper
divisions. From each task listed a line is extended to the time when
it is to be performed: daily, the day of the week, day of the month,
or the month. The letters at the end of the lines indicate by whom the
tasks are to be performed, _C_ representing clerks, _B_, bookkeepers,
and _A_, cashier.
Taking the collection division as an illustration, we will suppose that
it is Monday, the 2nd of the month. The chart shows that on Monday
notices of notes and accounts due are to be mailed. On the second day
of the month, past due accounts must be taken up and disposed of. In
addition are the daily tasks as indicated by the lines extending to the
daily line.
When a task is to be performed two or three times in a month, the line
is broken and the letter inserted at each break. Even the time of
drawing off a balance sheet, once every three months, is indicated.
A similar chart should be made to show the routine duties of each
department.
Such charts, supplying, as they do, complete working schedules for
the routine of each department, soon reduce the time taken by routine
tasks, which is of no little importance in the conduct of a well
regulated department. They fill a place in office routine analogous to
that of the working plan in the shop. The same idea can be carried out,
and will prove equally valuable, even in an office where the bookkeeper
does all of the work.
CHARTING SALARY AND WAGE DISTRIBUTION
=22.= We have seen how authorities, responsibilities and even routine
duties are most graphically represented by means of charts--the working
plans of the recording divisions of the business. For purposes of
record, the distribution of the expenditures for salaries and wages
of those who make up our organization is of equal importance to the
definition of the authorities and duties.
If the accounts are to be of value they must be correct, and they
cannot be correct unless every item is charged to the proper account.
The value of correct accounts is recognized. They do more than show
what we have received or the expenditures for a specific purpose during
a stated period; they show when and why an expense is increased or
decreased. With such information to point the way to economies in the
future, instead of records that show us merely the amount of an expense
already incurred, accounting takes its rightful place as one of the
most important functions of a business enterprise.
Probably more businesses have failed owing to the lack of proper
accounting methods than from any one other cause. Many a business has
been rejuvenated--turned from failure to success--by the introduction
of a system of accounts that truthfully portrays its activities. Few
business failures are the result of a failure to buy goods at right
prices, or to establish selling prices that show a profit. The more
usual cause is found in leaks in the expense account. Any method that
locates the leaks places us in position to stop them.
The chief value of accounting records lies in the opportunity afforded
for comparison. The fact that a certain expense amounted to $900.00
last month furnishes no information of special value; but when compared
with the amount expended for the same purpose two, three and four
months ago (if these expenses are analyzed and compared with production
or sales or whatever factor would affect the amount) the figures assume
an important significance. But if expenditures are erroneously applied,
if an amount has crept into an expense account that does not belong
there, the comparison had better not have been made. Thus is seen the
necessity of an absolutely accurate distribution.
Here the chart--the working plan--is again applied to excellent
advantage. The chart, Fig. 7, applied to salary and wage distribution,
shows to which of the two principal divisions each item should be
charged. This is the important question--to properly apply expenses to
the commercial and manufacturing branches. Subdivisions of such a chart
segregating expenses of each division are easily made.