Modern Business A SERIES OF TEXTS PREPARED AS PART OF THE MODERN BUSINESS COURSE AND SERVICE OF THE ALEXANDER HAMILTON INSTITUTE ALEXANDER HAMILTON INSTITUTE NEW YORK Modern Business Editor-in-Chief JOSEPH FRENCH JOHNSON Dean, New York University School of Commerce, Accounts and Finance Associate Editors: PETER P. WAHLSTAD, ROLAND P. FALKNER Titles Authors BUSINESS AND THE MAN ....... Joseph French Johnson ECONOMY or BCS.NESS ....... {^I'^lf" ORGANIZATION AND CONTROL ..... Charles W.Gerstenber- FACTORY AND OFFICE ADMINISTRATION . . Lee Galloway MARKETING METHODS ....... Ralph Starr Butler ADVERTISING PRINCIPLES ....... Herbert F. De Bower SALESMANSHIP AND SALES MANAGEMENT . . John G. Jones CREDIT AND THE CREDIT MAN ..... Peter P. Wahlstad ACCOUNTING PRINCIPLES ....... Thomas W. Mitchell COST FINDING ...... .... Dexter S. Kimball CORPORATION FINANCE ....... William H. Walker BUSINESS CORRESPONDENCE ...... Harrison McJohnston ADVERTISING CAMPAIGNS ....... Mac Martin INLAND TRAFFIC ......... Simon J. McLean FOREIGN TRADE AND SHIPPING ..... Erich W. Zimmermann BANKING PRINCIPLES AND PRACTICE . . . E.L.Stewart Patterson DOMESTIC AND FOREIGN EXCHANGE . . . E.L. Stewart Patterson MERCHANDISING ......... John B. Swinney THE EXCHANGES AND SPECULATION .... Albert W. Atwood ACCOUNTING PRACTICE AND AUDITING . . . John T. Madden FINANCIAL AND BUSINESS STATEMENTS . . . Leo Greendlinger INVESTMENT ....... ... Edward D. Jones COMMERCIAL LAW Walter S. Johnson FACTORY AND OFFICE ADMINISTRATION BY LEE GALLOWAY, PH.D. Associate Professor of Commerce and Industry New York University School of Com- merce, Accounts and Finance MODERN BUSINESS VOLUME 4 ALEXANDER HAMILTON INSTITUTE NEW YORK COPYRIGHT, 1918, BY ALEXANDER HAMILTON INSTITUTE COPYRIGHT IN GREAT BRITAIN, 1918, BY ALEXANDER HAMILTON INSTITUTE The title and contents of this volume, as well as the business growing out of it, are further protected by laws re- lating to trade marks and unfair trade. AH rights reserved, including transla- tion into Scandinavian. Registered trade mark, Reg. U. S. Pat. Off., Marca Registrada, M. de F. Made in U. S. A. PREFACE Wilbur Wright once said that out of the sixty sec- onds in a minute an aviator is busily engaged for fifty- nine in keeping his machine on an even keel. A fly- ing machine must always move in order to stay aloft. If it stops it falls. Movement and balance are the two cardinal ele- ments in a science of business administration; and eternal vigilance is the price which every manager must pay for progress in his business, and efficiency which comes from running smoothly. In this book we are concerned primarily with the working of these principles in their application to the factory and the office. And while the main princi- ples of management here laid down apply as well to other fields of business administration, their applica- tion is confined here to the functions of production and to those functions which coordinate the various activi- ties necessary to promote accuracy and harmony in operations between departments, between men and be- tween production and distribution elements of busi- ness, i. e., the office. Sometimes a book can be described best by telling what it is not. This is especially true where the point of view in the book is new. The exposition of the vi PREFACE principles of administration as they have been deduced from many kinds of social activity to the special field of business relations, has not been the usual method of presenting this subject. Most books emphasise system and make only in- cidental reference to fundamental principles as may come from consigning this or that activity to the category of "good practice." We have taken the opposite method of approach and recommend as good practice only those activities which conform to basic principles. By this method we have been able often to include both factory and office practice under the same general classification, and thus to eliminate the repetition which would come from treating each entirely separately. The causes of industrial inefficiency appear to the author to be mental laziness, prejudice against so- called nonproductive labor and lack of foresight. Most men dislike to think, to risk money which does not go into assets which have value in case the enter- prise is abandoned, or to balance the profits due to future savings against the immediate outlay. In pre- senting the material the author has had in mind these obstacles to the ready acceptance of the principles and methods of modern business administration. LEE GALLOWAY. New York. TABLE OF CONTENTS CHAPTER I THE ERA OF THE ADMINISTRATOR SECTION PAGE 1. Growth of Industrial Establishments .... 1 2. Private and Public Administration .... 2 3. Need of Sound Business Methods Not Always Realized 3 4t. Weight of Personality 4 5. Weight of Economic Forces 4 6. Opportunities of the Present .... . . 5 7. Importance of Knowing the Social Trend . . 6 8. Specialization Develops Organizing Ability . . 7 9. Need for Leadership . 8 10. What Is Administration? 8 11. Test of the Administrative Function .... 9 12. Thought, the Basis of Administration . . .11 CHAPTER II PLANNING 1. Administration in Peace and War 14> 2. Napoleon's Success Due to Administrative Plan- ning 15 3. Napoleon, Planner as well as Dictator ... 15 4. Planning Adjusts Details to Principles ... 16 5. Collaboration in Planning 17 6. Lesson of These Analogies 18 vii viii FACTORY AND OFFICE ADMINISTRATION SECTION PAGE 7. Newer Methods Make Slow Progress .... 19 8. Pressure of General Economic Problems ... 21 CHAPTER III EXECUTIVE ORDERS 1. Orders: The Result of Planning 24 2. Fundamentals in Organization 25 3. Organization of Executive Work 26 4. Classes of Orders 27 5. An Example of General Orders 27 6. General Orders Converted into Special Orders . 28 7. Strength and Weakness of These Orders ... 29 8. Napoleon's Methods Not Practicable for Smaller Men 30 9. Improvised Administration 31 CHAPTER IV EXECUTIVE SUPERVISION 1. Third Function in Leadership 33 2. Conditions Calling for Direct Supervision . . 33 3. Limitations in Administrative Supervision . . 34 4. Supervision Involves Different Grades of Author- ity 35 5. First Principles of Supervision . .' . . . .35 6. The Master's Eye 36 7. Expectation of Surprises 37 8. Supervision by Inspection 38 9. Symptomatic Details 39 CHAPTER V REWARDS AND PENALTIES 1. Fear and Interest 42 2. Ruling by Division 42 TABLE OF CONTENTS ix SECTION PA <3 B 3. Prizes and Distinctions 43 4. Associated Interests 44 5. Moral Basis of Discipline . 44 6. Administrative Responsibility 45 7. Expert in Labor Selection 46 8. Industrial Counselor 46 9. Attitude Toward Employes 48 10. Causes of the Turnover ,. 49 11. Reduction of Labor Turnover 50 12. Labor a Relationship 51 13. Wage Relationship 52 14. Democracy and Industrial Freedom .... 53 CHAPTER VI PRINCIPLES OF BUSINESS MANAGEMENT 1. Administration at Close Range 55 2. Cardinal Elements of Management .... 55 3. Every Principle Implies a Force .... 56 4. Nature of Business Forces 56 5. Manager Must Direct Forces 58 6. Human Engineering 60 7. Basic Principle in Management 62 8. Purpose of Management Is Profit .... 63 9. Immediate Versus Future Profits 64 CHAPTER VII WHAT MANAGEMENT INVOLVES 1. Difference between Manager and Engineer . . 67 2. Specialization Complicates Management ... 68 3. Specialization in Management 69 x FACTORY AND OFFICE ADMINISTRATION SECTION PAGE 4. Department Specialization 70 5. Cooperation and Specialization Must Always Go Together 71 6. Scientific Methods of Investigation .... 72 7. Continual Study and Progress 74 8. What the Science of Management Involves . . 76 9. Effect of a New Standard 79 10. Furnishing the Men with a Teacher .... 80 CHAPTER VIII ORGANIZATION OF ADMINISTRATION 1. Few Principles but Many Methods .... 82 2. Economic Units .83 3. Industrial Units 84 4. Distinctions Between Economics, Industry and Business 85 5. Managerial or Business Units . t 86 6. Manager's Cabinet 90 7. Progress Due to Expert Knowledge .... 90 8. Analysis of Staff and Line Organization ... 92 9. Financial Department as a Unit 94 10. Sales Department as a Unit 94 11. Accounting Department as a Unit 95 12. Production Department as a Unit 96 13. Management Units the Basis of Organization Charts 97 14. Duties of the Management Units 98 CHAPTER IX TYPES OF MANAGEMENT THE FACTORY 1. Thin Line of Red Tape 101 2. Need of Clear Understanding of Organization Types 103 TABLE OF CONTENTS xi SECTION PAG 3. Several Differences Between Types .... 104; 4. Why Type Distinctions Grew Up . . . .105 5. Staff and Line in Business 106 6. Functional Type, the Factory 107 7. Functional Method of Organization . . . .108 8. Foremen of the Planning Department and the Shop 109 9. Unsystematized Type of Management . . .109 10. Majority of Industries Unsystematized . . .111 11. Systematized Type of Management . . . .111 12. Cost Records Highly Developed 112 13. Committee System 113 14. Work of the Committees 114 15. Special Types, Divisional and Departmental . . 114 16. Work Planned Ahead 117 17. Shape the Man to the Organization . . . .117 18. The Primitive Type for Small Firms . . . .118 CHAPTER X TYPES OF MANAGEMENT THE OFFICE 1. Function of the Office 120 2. Elements of Management Applied 122 3. Office Head 124 4. Selecting and Handling Employes 125 5. Establishing Standards 127 6. Military Type of Organization 129 7. Functional Type 130 8. Semi-Functional Organization 131 9. Committee System 133 10. Suggestion System 134 11. Arrangement and Lighting of Office .... 134 CHAPTER XI MODERN AIDS IN MANAGEMENT PLANNING 1. Real Management Is Concerned with Policies, not Details . 138 xii FACTORY AND OFFICE ADMINISTRATION SECTION PAGE 2. Adjusting Authority to Responsibility . . .138 3. Organization Charts a Prime Requisite . . . 139 4. Charts Clarify Ideas 140 5. Organization Records 142 6. Written Records a Basis for Standards . . . 143 7. Lack of Control Causes Confusion .... 144 8. A Typical Example of Nonproductive Labor . . 145 9. Planning Is Specialized Management .... 146 10. Planning and Overhead Expense 146 11. Overhead Actually Reduced per Unit . . . .147 12. Evolution of the Planning Department . . .148 13. Thoughtful Plans Make Valuable Records . . 149 14. Planning Movements and Operations .... 149 15. Proportion of Planners to Doers 150 CHAPTER XII PLANNING PRODUCTION THE FACTORY 1. Planning Department of a Factory .... 152 2. Coordinating Duties of Production Clerk . . . 152 3. Setting Sales-Delivery Dates 153 4. Relative Importance of Orders 154 5. Further Duties of Production Clerk .... 154 6. Aids That Lighten the Production Clerk's Task . 155 7. Qualifications for the Head of This Department . 156 8. Route Clerk 156 9. Method of Work for the Route Clerk . . . .157 10. Qualifications of Route Clerk 158 11. Special-Material (Foundry) Clerk . . . .159 12. Duties of Foundry Clerk 159 13. Balance-of-Stores Clerk, a Unique Feature . . 160 14. Major and Minor Duties of Balance-of-Stores Clerk . . 161 TABLE OF CONTENTS xiii SECTION PAGE 15. Time-Study Clerk . 163 16. Instruction-Card Clerk 163 17. Route-File Clerk 163 18. Order-of-Work Clerk 164 19. The Eye of the Superintendent 165 20. The Recording Clerk . . 166 21. The Cost Clerk -.166 22. How Cost Sheets Are Kept Up To Date . . .167 23. Duties of Cost Clerk 168 24. Timekeeper 168 25. Planning Introduces No New Duties .... 169 26. Other Functions Associated with Planning De- partment 170 CHAPTER XIII PLANNING THE CLERICAL WORK 1. Office Systems Often Haphazard 172 2. Working Toward Functional Control in the Office 173 3. Planning Department for the Office .... 174 4. New Policies Involve New Methods .... 175 5. Function I Keeping the Organization in Order 176 6. Function II Development of Methods . . .178 7. The Office Records 179 8. Function III Development of Standardization . 181 9. Function IV Development of Betterment Plans 183 10. Organization of the Planning Department . . 184 11. Personnel of the Planning Department . . . 185 CHAPTER XIV STANDARDIZATION MATERIALS AND EQUIPMENT 1. Correct Standards the Basis of Administrative Judgment 188 xiv FACTORY AND OFFICE ADMINISTRATION SECTION PAGE 2. Management a Series of Measurements . . . 188 3. New Standards Changed Plane of Competition . 189 4. Standards of Labor Efficiency 190 5. Objections to Standardization 191 6. Cautions in Adopting Business Standards . . 191 7. Standard Materials, First Step 192 8. Standard Quantities, Second Step 193 9. Monetary Savings Due to Standard Materials . 194 10. Standard Office Material 194 11. Example of Standard Drawings 195 12. Standard Equipment .196 13. The Principle as Applied to Delivery Systems . 197 14. Interchangeable Parts * . . .197 15. Importance Emphasized by Whitmore, 1841 . . 198 16. Use of " Limiting Dimensions." 199 CHAPTER XV STANDARDIZATION SYMBOLS AND ROUTINE 1. Use of Symbols 201 2. Constructing a System of Symbols .... 201 3. Symbols an Arbitrary Measure 202 4. Advantages of Mnemonic System . . . . . 202 5. A Working System 203 6. Applications of the System 204 7. Use of Numbers in Symbols 205 8. Symbols for Manufacturing 205 9. Improving This Method 206 10. Aims of Newer Methods 207 11. Standard Routine 207 12. Steps in Developing Standard Routine . . . 208 13. Profiting by the Experience of Others . . . 209 14. Function of Technical Societies . 210 TABLE OF CONTENTS xv SECTION PAG1 15. Value of Printed Records 210 16. Advantages of Loose-Leaf Manual . . . .211 CHAPTER XVI STANDARDIZATION AND LABOR 1. Goal of Every Producer 213 2. Production Limited by Hand Labor .... 213 3. Three Factors Conditioning Output . . . .214 4. New Standards Must Be Developed Continually . 215 5. Standard Time as Determined by Experience . .216 6. New Conditions Make Time-Standard Hard to Obtain 217 7. Some General Considerations in Standard Times . 218 8. To Attain Standard Times in a Shop . . . .218 9. Standardize Machines Before Getting Standard Time 218 10. Records Must Be Provided 219 11. Foremen and Laborers Must Be Taught . . .219 12. Standard Times in Handling and Assembling . . 220 13. Elements in Handling Time 220 14. Sample of Standard Time in Handling . . .221 15. Material-Handling Time . . . . .' . .222 16. Standard Assembling Time 223 17. Economy Gained by a Standard Time .... 224 CHAPTER XVII STANDARDIZATION AND RATE-FIXING 1. Chief Elements in Efficiency 226 2. Standard Time Not Always Shortest Time . . 226 xvi FACTORY AND OFFICE ADMINISTRATION SECTION PAGE 3. Standards for Wage Systems 227 4. The Moral Responsibility in Rate-Fixing . . 227 5. Trade-Union Opposition to Rate-Fixing . . . 229 6. The Employe as Rate-Fixer 230 7. The Employer as Rate-Fixer 230 8. Rate-Fixing as a Science 233 9. Rate-Fixing as an Art 235 CHAPTER XVIII WAGE SYSTEMS 1. Systems of Pay 239 2. The Premium or Bonus System 240 3. The Halsey System ; 240 4. Taylor Differential System 241 5. Efficiency System 242 6. Comparison of Emerson and Taylor Wage Plans 243 7. Comparison of Three Fundamental Rates . . . 244 8. The Purpose of Time- and Motion-Studies and Bonus Systems 245 9. Simple Bonus Plan Without Time-Study . . 245 CHAPTER XIX CONTROL OF LABOR SELECTION AND TRAINING 1. Selecting the "Right Stripe" 247 2. Methods Used by Chalmers and Taylor . . . 247 3. Aid Gained from a Written List 248 4. Make a Man Analyze Himself 249 5. Use of Written and Oral Tests 251 6. Testing for Physical and Moral Fitness . . . 252 7. Control by Education 253 TABLE OF CONTENTS xvii SECTION PAGE 8. Special Training for the Company's Work . . 256 9. Manuals as an Educational Factor .... 256 10. Special Training Schools for Employes . . . 257 11. Education for the Whole Industry .... 259 12. Work of the National Commercial Gas Association 260 CHAPTER XX CONTROL OF LABOR-WAGES, RECORDS AND PROMOTIONS 1. High Cost of Man-Power 265 2. Waste of Human Power 266 3. Periods of Rest and Relaxation 268 4. A Fair Day's Pay 269 5. Illustrations Six Cases . . . . . . .270 6. Special Factors Influencing Wages .... 272 7. Wages the Chief Incentive 274 8. Importance of Short-Period Records . . . 275 9. Pleasurable Surroundings 276 10. Chilly Surroundings Develop Fear .... 277 11. Stimulating Self-Interest 278 12. Checks Against Injustice 278 13. Elimination of the Unfit 280 14. A Typical Case of the Use of Records ... 280 15. Permanency of Employment, and Pensions . . 281 16. Hope of Advancement as a Stimulus .... 282 CHAPTER XXI SOURCES OF ADMINISTRATIVE INFORMATION- STATISTICS AND INSPECTION 1. Use of Statistics 285 2. Graphs and Statistics 285 3. Indicating Relation of One Set of Facts to Another 286 4. Comparisons of Time Periods 287 IV 2 xviii FACTORY AND OFFICE ADMINISTRATION SECTION PAGE 5. Reports 289 6. Determining Facts by Inspection 290 7. Inspection of Work in Process 291 8. Questions as Guides 292 9. Qualifications of Inspectors 293 10. Information from the Outside 294 11. Various Kinds of Inspection 294 CHAPTER XXII SAVINGS IN TIME RESEARCH AND RECORDS 1. Inspection and Research 296 2. A Large Research Laboratory 297 3. Commercial Results 298 4. Time-Study 299 5. Time-Study Reduced to Formula 301 6. Written Aids, Books, etc 303 7. Periodicals 303 8. Government Publications 304 9. Study of Competitive Methods ..'... 304 10. American Readiness to Supply Information . . 305 11. Consulting Experts 306 CHAPTER XXIII SAVINGS IN TIME ROUTING 1. Time-Saving by "Routing" 307 2. Essentials in Routing 308 3. Securing a Good Plant Layout 309 4. Straight Line between Terminals 310 5. Various Types of Manufacture 310 6. Analytic Manufacture 311 TABLE OF CONTENTS xix SECTION PAGE 7. Continuous Manufacture 311 8. Assembling Manufacture 311 9. Passageways Must Be Provided 312 10. Transportation 312 11. Growth Must Be Allowed For 314 12. Expansion Not to Interfere with Flow of Work . 314 13. Taking Advantage of Gravity 316 14. Time Element in Routing 317 15. Two Types of Routing 318 CHAPTER XXIV SAVINGS IN TIME-DISPATCHINGAUXILIARY APPLIANCES 1. When Special Dispatching Is Necessary . . . 321 2. How to Plan the Routing 321 3. What the Route-Board Is 323 4. Planning-Board Signals All Movements . . . 324 5. Questions Answered by Route-Board .... 324 6. Status of Work in Progress 325 7. How to Route Office Work 328 8. Time Schedule of the Clearing House .... 330 9. How Organization Saves Time 331 10. Substitute Power Equipment 331 11. Equipment Tickler 332 12. Other Methods to Avoid Shutdowns . . . .332 CHAPTER XXV SAVINGS IN MATERIAL STOCK-KEEPING 1. Stock-Keeping System a Necessity .... 334 2. Tool Room in Charge of Expert 334 3. Three Rules of Storekeeping . . . . . . 335 4. Receiving Supplies 336 xx FACTORY AND OFFICE ADMINISTRATION SECTION PAGE 5. Receipting for Goods 337 6. Issuing Supplies 338 7. How to Use Requisitions 338 8. Bill-of-Materials 338 9. Combination Systems 340 10. Complete and Simple System 340 11. Single and Double Check System 34-1 12. Responsibility for Remainder on Hand . . . 342 13. Stock Room Protects Goods 343 14. Classification by Kind 344 15. Size Materials When Checking 345 16. Stock Ledger and Inventory-Taking .... 346 17. Losing Time on Cheap Rather Than on Expensive Operations 348 18. Principles of General Application 349 FACTORY AND OFFICE ADMINISTRATION CHAPTER I THE ERA OF THE ADMINISTRATOR 1. Growth of industrial establishments. Mr. S. F. Bowser of Indiana started life hauling ice, conceived the idea of the self -measuring pump for distributing oil and gasoline, and from a, room in a cow-shed de- veloped a factory occupying twelve acres of floor space. His first machine was an improvised lathe operated from a belt driven by turning a wagon wheel. Twice his business has been completely wiped out by fire, but he has lived to see his employes number 1,600 and his sales amount to over $4,000,000 a year. We have in this illustration American business life epitomized. The man, the growth of the business and the complex problems which must have been in- volved, suggest the various elements which enter into the administrative activities of business life. Industrial enterprise and the growth of business are world wide. The Willys-Overland Company of To- ledo, Ohio, has so increased the use of electricity in its manufacturing processes that it now requires as much 2 FACTORY AND OFFICE ADMINISTRATION of it as a city of 250,000 inhabitants would for ordi- nary household purposes. The Ford Automobile Company uses a million cubic feet of gas a day enough to supply a city of 100,000 people. The Cad- bury Chocolate Works of Birmingham, England, have grown from a small industrial community composed of 300 persons in 1880, to the present urban propor- tions of nearly 7,000 employes. The Krupp Works at Essen, Germany, cover an area of 1,000 acres and employ over 35,000 persons. 2. Private and public administration. In the use of equipment, power and material and in the number of people employed, many of the world's industrial es- tablishments assume the proportions of city or state governments. From the viewpoint of size and the number of workers, the management of many modern factories involves administrative questions which a few years ago would have seemed applicable only to military or civil organization. Administration in- volves the velocity and the continuity of movements as well as their magnitude. When we take into con- sideration the intensity of activity in the different fields, the administrative problems which confront our municipal, state and military organizations pale beside those of industrial plants. A department store turns over millions in stock every three months. An automobile factory makes a machine every sixty seconds. A printing press folds 1,500 papers a minute, year in, year out. Again, the success of business administration must be THE ERA OF THE ADMINISTRATOR 3 judged by the standard, Does it pay in dollars and cents? Periods of accountability are sure and fre- quent. In this respect there is but slight similarity between the administration of an industrial unit which must draw its strength from within, and that of a civic or military unit which draws its resources from the pockets of an outside community or from the pil- laged fields of the adversary. The mayor of a city appeals to his constituents once in one or two or more years; the military leader may never be brought to account for his methods ; but a business administrator must account regularly for the profits of his concern. Public and private administration deal with simi- lar problems, and are guided by kindred principles of organization and operation, but the spur of compe- tition and the desire for profit develop a far higher efficiency in the private field. 3. Need of sound business methods not always realized. The industrial unit should be adminis- tered by a policy which is constructive, definite and responsible. It is reported that one large automobile concern decided to distribute $10,000,000 surplus after one night's reflection on the part of the chief executive. The story is typical of the rapidity with which decisions are reached by men trained thru expe- rience in the difficult task of administration. Such men sometimes believe that money can be made solely by energy and determination. They are not given to analysis and fail to realize how their own powers have grown as a result of the self-training they have given 4 FACTORY AND OFFICE ADMINISTRATION themselves, and are therefore indifferent to plans for scientific methods of administration. In. the United States, business men have grown up in a young and loose industrial organization. There have been few great interests which could not be temporized with. There has always been a large margin of profit, and problems of external or internal policy or old abuses were seldom so pressing that it was not easier to take chances than to take pains. 4. Weight of personality. When ignorance incurs few penalties, managers are prone to arrogate to themselves great wisdom. Too often the assumption of superior knowledge has stood in the way of prog- ress in the study of business problems. Self-made men delight to discourse on personality, but seldom do they give the world the constructive ideas upon which real improvement of business administration depends. Thru the mere glorification of success, much of our business philosophy is made up of pernicious dogmatism. With it is sometimes found abstract speculation on practical business problems, since it is much easier to imagine an ideal business situation than to know the tendencies of actual con- ditions. 5. Weight of economic forces. In the science of business administration the tendencies which have been noted have led to a confusion of issues, for in a science phrases and platitudes cannot be substituted for patient investigation and the analysis of facts. Civil and military necessities have compelled the state THE ERA OF THE ADMINISTRATOR 5 and army authorities to study and classify their activi- ties and experiences, and now economic pressure is forcing business executives to assume a similar atti- tude toward the administration of industry. The whole tendency of economic development is to destroy the isolation of former periods. Men in the conduct of business are compassed about by general economic forces which they must dominate or to which they must adapt themselves. Whatever takes place in any part of the world has its echo, faint or pene- trating, as the case may be, in the economic life of our nation. In the world-wide competition of modern times, mere money and dumb luck cannot be relied upon to give a man a place and keep him in it. Suc- cessful enterprise requires careful planning. Men may prepare for a business venture consciously or unconsciously, but there must be adequate prepara- tion. More and more are men becoming aware of this need ; more and more are they planning their busi- ness operations as an engineer plans his work. 6. Opportunities of the present. The nineteenth century was the golden age of machinery and this age has not yet seen its close. Innumerable inven- tions found a field open for widespread utilization, and called for vast financial combinations. Thomas Edison's life work displays the possibilities in regard to the invention of new industrial equipment; the accomplishments of J. J. Hill and Andrew Carnegie show the possibilities of creation in commercial or- ganization, and J. Pierpont Morgan's work epitomizes 6 FACTORY AND OFFICE ADMINISTRATION constructive labor in the field of financial organization all symbols of successful inventive effort. Invention the capacity to see new combinations lies behind all human progress. In the past century invention was chiefly concerned with the advancement of the arts connected with machines, materials and money, but there is prospect of further industrial progress if inventive power is applied at a new point. In the industrial trinity of machines, money and men, men seem to have been neglected. The machine age with division of labor, has prepared the way for an administrative age where men and their cooperation will count most in advancing civilization. It is not unlikely that the men with inventive power, who will be rewarded most highly by society in the future, will be the business executives the men who devote their creative and constructive energies to the problems of business and industrial organization and administra- tion. 7. Importance of knowing the social trend. The economic development of the last hundred years can be considered as the necessary preparation for a future in which administrative principles will play a larger part. This trend must be reckoned with. The young man who today prepares himself to become an expert watchmaker would find himself out of place in a land of dollar timepieces; and an of- fice apprentice would be foolish to devote his life to rapid mental calculations in the day of the adding machine. Dazzled by the successes of men who led in THE ERA OF THE ADMINISTRATOR 7 the industrial development of their day, many pres- ent-day youths, notwithstanding seek to emulate them by following the same course. Past progress has been rightly attributed to "divi- sion of labor," but this principle, which solved so many problems in the past, seems to have lost some of its power under present conditions. It has not in fact lost force, but men have taken too narrow a view of specialization. The possibilities of the division of la- bor are far from exhausted. Specialization has en- tered the realm of administration, and the chances of success for men who see opportunities and possess the power of invention, i. e., the power of inventing ad- ministrative methods instead of devising new ma- chines, have not become less numerous, tho they are found in a different and perhaps a higher field of busi- ness effort. 8. Specialization develops organizing ability. The most recent development in the division of labor is the setting free of the organizing ability of man- kind. When the workingman devoted his entire energy to making a living, he had little time for plan- ning better ways of doing his work. A century of specialized labor, however, has given great numbers of men an opportunity to perfect new machines and combinations of processes which have greatly enriched society. To these men society has been willing to pay the price which all constructive ability can de- mand. Men who found better ways than their fathers ever dreamed of for producing, exchanging 8 FACTORY AND OFFICE ADMINISTRATION and distributing commodities, have been richly re- warded. To this class belong the Vanderbilts, the Rockefellers, the Rothschilds, the Krupps and others like them. 9. Need for leadership. As industrial and com- mercial enterprises expand, the demand for able lead- ership becomes more and more insistent. It is not only among the highest officials of the modern corpora- tion that executive ability of a high order is required. There are many positions of lesser rank where men are charged with the handling of property and the control of men, on a scale which far exceeds that of the independent enterprises of earlier days. The large rewards in industry and commerce appear to be reserved for the executives who, in addition to the mechanical appliances which human ingenuity is con- stantly devising, bring to their task the ability to or- ganize and to administer vast masses of capital and great numbers of laborers. 10. What is administration? We have used the term administration as one which implies some degree of excellence and merit, and thruout this work shall continue to do so. Strictly speaking, the term is neu- tral; it means nothing more than the conduct or management of affairs. Whether guided by reck- lessness and ignorance, or by caution and wisdom, it is none the less administration. Since business is con- ducted for profit, and since bad administration cannot last, it is natural that the term business administration should carry the implication that it is backed by execu- THE ERA OF THE ADMINISTRATOR 9 tive ability. It is therefore to be expected that our consideration of business administration should con- cern itself with the study of the successful conduct of business affairs. We are concerned, therefore, with business that is guided by executive ability. No phrase is more com- monly used and none more successfully eludes precise definition than the rare gift of executive ability. It is a compound of many things. Executive ability has sometimes been described as "letting others do the work." It would be more exact to say that such abil- ity consists in doing nothing which others can do, and in selecting others who can do well the work in- trusted to them. One might perhaps add that prog- ress in executive authority consists in a nice discrimi- nation as to what may safely be deputed to others, and what must be reserved for the leader. 11. Test of the administrative function. The work of the executive often differs from that of his sub- ordinates, less in the kind than in the degree of re- sponsibility which is involved. The stenographer knows what limits are placed upon his activities; the man at the lathe is seldom troubled as to what consti- tutes his task. From the routine operations of the humblest workers to the activities of the directors of an enterprise, the duties of each position as it rises in the scale of responsibility seem to lose some degree of defmiteness. This appears perfectly natural when we examine the nature of responsibility in business. Company officials are fond of pointing out to their 10 FACTORY AND OFFICE ADMINISTRATION subordinates the dire consequences which follow cleri- cal errors. Mr. Smith of Wherenot, California, sends in his check for $146.92 in full payment for goods ordered from the New York Suit Company. The cash clerk who enters the order carelessly omits to write the figure 1 in the amount, making it $46.92. The order goes thru, but the credit department orders the goods shipped C.O.D., balance $100. Now Mr. Smith lives miles from the nearest rail- road station a three days' journey by wagon. The agent, in his notification of the arrival of the goods, supposing that Mr. Smith knows that $100 is due, makes no mention of the fact. When Smith comes to the station for the goods, the agent refuses to deliver them, in spite of Smith's protest that the money has been paid in full in advance. Smith has to drive back another three days' journey and be- gin a painful correspondence with the New York firm. Of course, the cash clerk's mistake is found out and the railway agent is instructed to release the goods, but Smith must make another round trip of 180 miles. To square itself with Smith, the New York Suit Company pays Smith's expense bill of $40 and presents him with a handsome watch besides, but it loses a customer. The clerk has injured the standing of the house with the customer by a purely mechanical act which is definitely measurable in its results, i. e., leaving off the figure 1, and the consequent error of $100 in the ac- count loses a customer. The management hopes to THE ERA OF THE ADMINISTRATOR 11 renew business relations with the customer and adopts measures to effect this. Here then rests the distinc- tion between the functions of the clerk and those of the manager. The clerk has a definitely limited scope of activities ; the manager deals with relationships which require the use of judgment. The broader the influ- ence of the executive, the greater is his responsi- bility, and the higher is his position. The manager of the New York Suit Company handles Mr. Smith's case because of the responsibility involved nothing less than the reputation of the house is at stake. The difference between the position of the clerk and that of the superior officer does not lie in the fact that one attends to details while the other deals with gen- eral policies ; the difference lies in the kind of details each handles. The duties of the cash clerk are those of routine, repetitive in nature and involving slight re- sponsibility. The manager's duties also involve de- tails, but these are symptomatic details, the handling of which involves heavy responsibilities. The clerk's error in detail caused the firm the loss of a few dollars and one customer. The manager's handling of that error was no less a detail, but the effects of a mis- take on his part would have been immensely greater. In the one case, the effects of the detail are lost within the department, the office or the firm itself; in the other, the effects lie beyond the office or the factory and involve the good- will and policies of the company. 12. Thought, the basis of administration j The Na- tional Cash Register Company has posted thruout its 12 FACTORY AND OFFICE ADMINISTRATION plant the notice, Think. To many executives, dis- couraged by repeated efforts to awaken initiative in their employes, such a sign seems as appropriate as a display of Edison service in an institution for the blind. But telling men to think and getting no re- sponse is after all no test of men's ability to think. If there were not depths of reserve power in every man of which he is seldom conscious, it would be use- less to discuss the essentials of administration. Why urge men to think if each is already working at the upper limit of his thinking power? Planning, giv- ing orders and supervising belong to the higher planes of thinking and constitute administration. Planning, giving orders and supervising call for outlays of energy on the part of the administrator, of which the follower of routine has not the slightest conception. That is why the office and shop men never tire of gossiping about the boss and wondering, How does he hold down his job? or, What does he do to earn his salary? Eight hours, a spot in the office or factory, a task these constitute a "job" to most men. The energy required to do the jobs is unimportant. The men who do them soon forget that they have brains. They cease to want a position which calls for adminis- trative qualities. Yet because thousands of others have deep layers of energy and reserve powers for reasoning, it is worth while to point out the essentials of administration the goal toward which every think- ing business man has a right to work, a field that is THE ERA OF THE ADMINISTRATOR 13 always open to those men who, tapping the hidden sources of their energies, are ever ready to mature plans, give orders with judgment and supervise effi- ciently the affairs of a big business. REVIEW What business influences have compelled the adoption of new policies of administration? Compare the standards used in judging the results of civil and military methods of administration with those of purely business enterprises. Why are business methods based on personality giving way to methods founded on constructive ideas and scientific research? What great responsibility is society placing upon the business man of today? What will be his reward? Show that the distinction between the work of a clerk and the work of a manager is not described by the word "detail." IV 3 CHAPTER II PLANNING 1. Administration in peace and war. Tho one ad- ministrator may be concerned with the conduct of some vast industrial enterprise, another may direct the operations of a city or state, while a third may be in- trusted with military operations vital to the life or prosperity of his country; these tasks are essentially similar. To seek maxims for the conduct of business from the exploits and methods of great military com- manders might seem at first blush incongruous. If we refer to military information for the principles un- derlying administration in general, it is because all administration is akin and because the records of war are far more complete than those of peace. In recounting the story of national strife no detail escapes attention. No phase of human activity is so well known down to the last order and report as the manner in which the great struggles of history have been carried on. Around them cluster a vast mass of official record and personal reminiscence, from which the student of a later day can vividly recon- struct the events of the past. Perhaps the most picturesque figure of military his- tory is Napoleon, and we shall draw largely upon his methods and experience to illustrate the general prin- 14 PLANNING 15 ciples of administration. In war the first element of success is a well-concerted plan of action, and that this is fundamental for business administration is ob- vious. 2. Napoleon's success due to administrative plan- ning. "The Emperor," says a biographer of Napo- leon, "spent his life in his study. . . . One may say that all the other circumstances of his life were merely digressions." This is putting it strongly to those who think only of the Man on Horseback, but herein undoubtedly lay the secret of Napoleon's success as a military administrator. To his military and civil ad- ministration his study was what the planning depart- ment of the General Electric Company at Schenec- tady is to the managers of that corporation. Planning preceded everything in the work of Na- poleon. In the midst of his campagn or in directing the destinies of France from his palace of the Tuil- eries we find him planning. While allies and ene- mies slept at midnight, the Emperor was found bend- ing over his maps "illuminated by twenty candles," meditating, deciding, dictating orders. 3. Napoleon, planner as well as dictator. Na- poleon did not observe the conventional methods of his day, nor was his brilliant success merely the result of the inspiration of genius without careful fore- thought. Those who admire his brilliancy, those who counsel others to ride rough-shod, like him, to their goal, think of him as the great commander, the dic- tator. They too often forget that planning was one 16 FACTORY AND OFFICE ADMINISTRATION of the factors responsible for Napoleon's success. Many persons in administrative positions believe themselves to be real leaders, when they are only dic- tators, leaving it to others to originate measures while they merely criticize. Modern administrators often seek to prove by citing Napoleon's example, that great administrators have a genius for details. This false conclusion rests upon the failure to distinguish between what Napoleon was compelled to do, and what he would have done had he been surrounded by men to whom he could intrust the execution of details. The genius of a leader lies in his ability to distinguish between the de- tails which as manager he must handle himself, and those of the routine class which belong to operation and not to administration. The importance of details is not measured by the size of the units which are in- volved. 4. Planning adjusts details to principles. To plan is to separate the essential from the non-essential, but to make this separation the administrator must have a few indestructible principles which act as crucibles for dissolving details. Napoleon's fundamental rule was simple. "The most difficult thing," he said, "is to discover the enemy's plans, and to detect the truth in all the reports one receives; the rest requires only common sense." When he had analyzed all details and decided upon a line of action, the execution of his plans was as sim- ple in outline as his method of planning. First, he PLANNING 17 stated, "I converged all my forces on the point I wished to force"; secondly, it was his principle, "to begin the fight and get in as many blows as possible the offensive in dead earnest along the whole line," and finally his rule provided that "at the weak point and at the moment chosen by him, the General-in- chief should give the formidable and decisive blow which overthrows his adversary." 5. Collaboration in planning. The strength of Napoleon lay in his planning; his weakness, in the effort to do his planning without aid. The German General Staff has learned to overcome this weakness in war. American business men are learning to over- come it in industry and commerce. In administrative planning collaboration is as new as are controlling accounts in bookkeeping. In both cases the necessity of keeping check on numberless details at long range has raised the newer methods almost to a par with the principles of planning and of bookkeeping. War, politics and business have undergone great changes, and conditions of adminis- tration have been much altered. The conditions which confronted Napoleon in his administrative labors precluded collaboration. They called for a centralized control. In recognizing this he planned the maneuver which won the day at Jena and Austerlitz only by one mind could such master- pieces of achievement be planned and carried to fruition. Centralized control and personal leadership were 18 FACTORY AND OFFICE ADMINISTRATION the principles of scientific management which Napo- leon introduced into the administration of his day. His adversaries followed traditional methods, and their controversy in the councils of war killed origin- ality of thought, retarded decisions, led to comprom- ises, postponed solutions, and deferred the grasping of opportunities until it was too late to use them. Busi- ness men who are disposed to jump at such new ideas as committee systems of management and the like, but who have neither a planning system, nor an en- vironment in which such ideas will bring forth fruit, would do well to study the "committee system'* in war, as applied in the councils of Napoleon's adver- saries. The life and methods of Napoleon show the heights to which centralized control and personal authority may go, but they also mark their limitations. 6. Lesson of these analogies. Only so far as these illustrations are paralleled in business affairs are they of importance here. In 1800, big business meant an investment of a few hundred thousand dollars, at the most, and the employment perhaps of a few hun- dred workers. Such conditions might well call for a centralized administration, or as Napoleon put it, "being personally present during the whole day in that corner of the battlefield where it is presumed that the decisive blow will be given." But today's business enterprises compete on battle lines which reach around the world. An American department PLANNING 19 store may operate carpet mills in Persia, lace works in Brussels, and sell by mail order in Russia and Aus- tralia. Modern corporations operate under one con- trol, mines, railways, steamship lines, stores and fac- tories spread over a continent. No one man, without collaboration, could control such vast enterprises. The staff of experts has become as necessary in busi- ness as in military administration. Machiavelli said that only one should command in war; that several minds weaken an army, but this maxim is of doubtful application to the huge enter- prises of today in war or business. Millions of men are engaged in warfare. In commerce even so simple a matter as selling groceries is often conducted in chain stores extending across a continent. These con- ditions have brought about a new leadership in which the decisions and orders of the leaders are the result of conferences among a number of experts. This was exemplified in the great organization guided by Moltke in the Franco-Prussian War and has received illustration in a different field in the conduct, since 1900, of the German chemical industry. 7. Newer methods make slow progress. That any form of collaboration in determining policies and di- recting the activities of a business has advantages is an idea which makes slow progress toward recogni- tion. Labor leaders and many conservative execu- tives look askance at any such plan. They are at a loss to understand how business can succeed without a 20 FACTORY AND OFFICE ADMINISTRATION dominating personal leader in whom the members of the organization implicitly relied, and whom they would follow with zeal and enthusiasm. Newer methods appear to lack force. The substi- tution of an executive committee for a personal leader has often weakened the energies of office, shop or sell- ing forces. While it would be idle to minimize what the personality of the leader has accomplished, there are requirements of modern administration which per- sonal leadership alone cannot fill. In passing to newer methods it is highly desirable that a concern make the transition in such a way that, while the collaboration principle involved in the staff conference is adopted, the advantages which come from the personal work of the leader be not lost. The expert staff depends for its efficiency on the applica- tion of the principle of division of labor, on the de- velopment of initiative and on a wide diffusion of knowledge and democracy among all employes. The personal leader relies upon concentrated power, un- ceasing activity and the ability to awaken and sustain feelings of loyalty, duty and self-sacrifice among his men. In adopting the staff conference in administrative matters, there is danger that composite opinion may be uncertain and decisions flabby. In such a case the attempt to retain the advantage of personal direction by issuing the staff orders in the name of the general manager usually fails. The manager loses enthusi- asm when he thus fathers orders which are not his PLANNING 21 own. Employes are quick to note any lack of interest on the part of the manager and to reflect the same spirit in their work. 8. Pressure of general economic problems. There is a vital weakness in the administrative organization of our business concerns. Efforts to develop har- monious cooperation between the men who plan and command, and the men who take orders and operate the business machinery, are often unsuccessful. Even a leader of the highest rank finds it difficult to sustain year in and year out the high ideals of duty, loyalty and sacrifice necessary to the most efficient operation of a modern business organization. Nor can staff or- ganization, or functional management as it is called when the same principles are applied to factory and office operation, accomplish these results among a great body of workmen, when their energies are ex- hausted by monotonous work, and their loyalty is weakened by appeals of trade-unions whose aims are not in harmony with company policies. Perhaps the greatest problems of business adminis- tration are not those of internal organization, but those which spring from general economic and social conditions. While these problems remain unsolved, an element of mere expediency exists in all efforts to secure cooperation within the organization. Bonus systems, profit-sharing schemes and copartnership plans are some of the evidences of the external pressure. Too often they are adopted without proper consideration of their relation to the general economic 22 FACTORY AND OFFICE ADMINISTRATION problems. A manager may find his organization working inefficiently, and to meet his own pressing internal needs may adopt some such scheme in an imperfected state, often taking it bodily from some other concern, which has taken it up with as slight de- liberation as himself. From such action we get piece- rate wage systems which are ineffective, welfare pro- grams which degenerate into fox-trot parties, and pension systems which put a premium on senility, simply because there has been no adequate planning and no proper adjustment of the means adopted to the end proposed. The problems of administrative planning are of three general classes. One chiefly concerns the em- ployer and executive; a second embraces production and distribution problems of machinery and men; while the third involves the relation of business organ- ization to the whole political and industrial system. REVIEW Contrast the principles of administration involved in super- vising the deposit of a check for $100,000, and the answering of an overcharge complaint on a gas bill for 40 cents. What principles used by Napoleon might well serve as the basis of business strategy? A business executive refuses to consult his experts, superin- tendents, foremen and others in forming his policies. Is this an evidence of being, a strong executive? A large tobacco company has many hundreds of retail stores thruout the country. What effect do size, distance, amount of business, etc., have upon the character of the control i.e., will it tend toward collaboration on the part of the executives or toward centralized personal control? Why? A corporation adopted the executive committee system of PLANNING 23 management. To overcome the objections of issuing orders in the committee's name, the orders were given out over the name of the general manager. It was noticed that the enthusiasm of both manager and men soon dwindled. What were the reasons for this result? CHAPTER III EXECUTIVE ORDERS 1. Orders: the result of planning. "When at the dead of night," wrote Napoleon, "a good idea flashes thru my brain, the order is given in a quarter of an hour, and in half an hour it is being carried out by the outposts." In civil administration giving orders is so often tied up with red tape that the time lost far outweighs the advantage of having checks to avoid errors. Nor is the curse of red tape confined to older communities. Witness the experience of a postmaster under the Commonwealth of Australia who wanted to have a table made. An official report records the cor- respondence as follows : Postmaster to Postal Inspector, date June 25th. Postal Inspector to Deputy Postmaster-General, date June 29th. Deputy Postmaster-General to Works Director, date July 2nd. Works Director to District Inspector for report and esti- mate, date July 8th. District Inspector to Works Director, date July 15th. Works Director to Deputy Postmaster-General, date July 17th. Deputy Postmaster-General to Postal Inspector, date July 21st. Postal . Inspector to Deputy Postmaster-General, date July 22nd. EXECUTIVE ORDERS 25 Deputy Postmaster-General to Works Director, date July 26th. Works Director to Accounts Branch, date July 28th. Accounts Branch to Works Director, date August 6th. Works Director to District Inspector, for action, date August 13th. "Seven precious weeks to have a table made," says the report. If the first step in administration is planning, the second is issuing orders. A decision having been reached, orders must be given. Leaders in war, rulers of nations, and managers of business may spurn collaboration when they are formulating their plans, but they cannot do without assistance when they issue orders. Even Napoleon, who "not only took the initiative in thought, but also attended personally to the details of every piece of business," developed a rudimentary staff, whose business it was to take orders and see that they were delivered. Yet neither Ber- thier nor Talleyrand ever gave an order or wrote a dispatch which had not been dictated by Napoleon. If, instead of military commander and emperor, Na- poleon had been a railroad magnate, Berthier his chief of staff and Talleyrand his secretary of state would have been glorified train dispatchers. 2. Fundamentals in organization. When one man attempts, as did Napoleon, to shoulder all the respon- sibility, we may have an effective business machine so long as his health and energy endure, but organiza- tion will be lacking. Especially in execution does 86 FACTORY AND OFFICE ADMINISTRATION organization imply a division of responsibility. It is, in fact, the cooperation of subordinate chiefs, each with a limited field of action within which he is responsible, which constitutes organization. Under such a sys- tem the executive has so classified the essentials of his business that the necessary commands and orders originate at the natural source of supreme or subordi- nate authority according to their importance, and are issued by the authority which can supervise them most effectively. 3. Organization of executive work. The great executive delegates the superintendence of subordi- nate activities to others, but he realizes, like Napo- leon, that he is "the greatest slave of all mankind, obliged to obey a master who is heartless, the calcula- tion of events and the nature of things." To control these events and master the nature of things, the exec- utive builds up an organization which will take care of details without his personal intervention, and thus leave him free to work out his larger problems. The principle may be illustrated in the small detail of office correspondence. This may be so arranged that only the most important matters come to the at- tention of the manager, by some such procedure as the following: 1. An office employe sorts the mail. 2. Certain letters need only the manager's atten- tion, and are turned over to him for his careful con- sideration. 3. Some letters contain only certain sections that EXECUTIVE ORDERS 27 need his attention. These are checked, so that he may come to the point without unnecessary reading. 4. Notes are made of other letters that deal with certain points which must come to his attention. 5. Many letters do not need to be considered by him at all. Routine letters thus can go to the proper department at once. Following similar principles, the executive does not himself issue every order but only certain ones; he does not run to the files or record books but has them put on his desk ; he does not construct tables of figures from a mass of records before him, but studies the totals of results, charted by someone else for his ready comprehension. 4. Classes of orders. Orders issued by the execu- tive must be clear and explicit if the expected results are to follow. Orders, it will be found, are of two dis- tinct classes one designed to produce general efforts, the other directed to the performance of typical tasks. A military commander divides his orders into general orders and special orders ; a general manager in busi- ness speaks of shop and office policies, and production orders and office instructions. In order that we may make this distinction clear, we shall again revert to military history. Let us examine a general order issued by Napoleon to his chief of staff, and then trace its further developments into a series of special orders to the several commanders involved. 5. An example of general orders. On October 12, 28 FACTORY AND OFFICE ADMINISTRATION 1806, having decided to strike the Prussians at Jena, Napoleon gave his general orders to Berthier. Re- membering that his principles of war were concentra- tion of forces and rapidity and secrecy of movement, we observe that these orders are the clear and con- cise expression of the Emperor's purpose about 150 words in all, yet embracing general orders for seven commanders : Give orders to Marshal Davout to leave his position for Naumberg, where he must arrive as quickly as possible, but always holding his troops ready to fight. He will be pre- ceded by all his light cavalry, which will send out skirmishers as far as possible, as much for the purpose of obtaining news of the enemy as to make prisoners, stop baggage and get accu- rate information. General Sahuc's division of dragoons will be under his orders. It will proceed to Mittel-Pollnitz where it will receive Marshal Davout's orders. Prince Murat and Marshal Bernadotte are also ordered to Naumberg, but are to follow on the Zeitz road. Marshal Lennes proceeds from Neustadt to Jena, Marshal Angereu proceeds to Kahla, Marshal Ney will be at Mittel- Pollnitz. Headquarters will be at Gera, no6n. Give orders for sending off of the divisions of heavy cavalry and the divisions of dragoons which have remained in the rear, as well as the park of artillery, to Gera. 6. General orders converted into special orders. Berthier, the chief of staff, having received Napo- leon's general orders, proceeded to write to each of the commanders those instructions which pertained spe- cifically to him. Taking as an example Berthier 's special order to Marshal Davout, we find that hardly EXECUTIVE ORDERS 29 a word is added to the general orders such was Na- poleon's method in this one-man type of management. A few hours later, Davout, having received his or- ders, immediately assembled his troops and gave them their instructions regarding: 1, the route to be fol- lowed; 2, the order of march (first, second, third di- vision, etc.) ; 3, the formation of the troops (in a mass). 7. Strength and weakness of these orders. The success of Napoleon's method depended upon the se- crecy and rapidity with which orders were carried out. On an average of two hours after the receipt of the army orders by the commander of a corps, the troops were in motion. The weakness of the method is evidenced by an examination of the orders which he issued. These special orders, as Colonel Vachee in his "Napoleon at Work," says, Show by their tone the incorrectness of style, the numerous omissions, that they were written by secretaries after the dictation of Berthier, who had before him the Emperor's general order, which he occasionally completed by drawing upon information received verbally and perhaps set down in his green notebook. A glance will show that this method lent itself to a multiplication of omissions and an increasing of errors. Vachee says further: These orders, altho verbose, contained little; the object of the march, the position of the army and, in the case of the corps in the front line, instructions to obtain information IV 4 30 FACTORY AND OFFICE ADMINISTRATION concerning the enemy. But as to what the general-in-chief himself knew about the enemy, as to the ensemble of the pro- jected maneuver and the mission of each corps in that maneuver, there is no mention. . . . the commanders were marching in the dark and could with difficulty show initiative. There was no indication as to either zones covered while on the march or the routes to be followed by each of the army corps. The commanders of the corps chose the roads leading to destinations fixed for them and sent in the information to imperial headquarters. If we wish to get the full significance of this pas- sage, as it might apply to any administrative activity in business, we may reread it, substituting for the words, march, army, corps, enemy, general-in-chief, maneuver, commanders, imperial, the words: sales, sales organization, salesmen, competitors, general manager, campaign, sales agents, corporation. With these substitutions, the passage reads like a modern auditor's report explaining the causes for the bank- ruptcy of some business concern which he has ex- amined. 8. Napoleon's methods not practicable for smaller men. Men with but a fraction of his genius have be- lieved themselves Napoleons in war and in business. They have believed that only thru one master mind could operations be successfully conducted, and have been equally sure that theirs was the master mind. They have not reckoned with the fact that many types of modern business demand for their conduct a labor which exceeds the physical and intellectual force of any one man; they call for administrative methods EXECUTIVE ORDERS 31 which involve the employment of numerous staff officers, experts who have the confidence of the gen- eral manager. In the larger concerns of today no simple form of organization could be applied, and even lesser con- cerns are coming more and more to recognize the ad- vantages of effective organization. 9. Improvised administration. If collaboration in administrative planning, orders and supervision work so well, one might well ask why Napoleon did not adopt it. Why, if the excellence of such methods is so great, have they not been more widely adopted by business men in all parts of the world? The answer to the first question is that the scien- tific method of preparation takes time. Neither in France nor in the countries opposing her did the mili- tary situation in the Napoleonic era admit of the slow collaboration method of preparation. Nor is the answer to the second question different. Men shrink from the labor of reorganizing going con- cerns. The business man recognizes that such a re- organization involves a greater reliance upon the judgment of others. He is doubtful whether he can find men upon whom he can rely. If he trains them up in his own business he knows only too well that staff officials who possess sufficient information and judgment to work out complicated problems in their departments, and who can collaborate with intelli- gence and sympathy in building up general policies, are but slowly developed. 32 FACTORY AND OFFICE ADMINISTRATION If military organization has gone further than busi- ness, in systematic preparation for the emergencies which may call it into action, it is because it is easier to convince a nation of a public need than to impress upon successful men of business the value of new forms of carrying on their work. REVIEW In giving orders, what advantages come from having the ex- ecution follow as soon as possible a decision to act? How would you, as a business executive, apply to yourself the words of Napoleon who said, "I am the greatest slave of all mankind, obliged to obey a master who is heartless, the calcula- tion of events and the nature of things " ? State the advantages which come to an executive from so ar- ranging his daily work that it permits him to hit the highest and most important spot first. As a business man, criticize the order given by Napoleon to Berthier (page 28). Why should the factory or office executives be thoroly trained in administrative policies before a highly specialized functional control is adopted in place of the centralized, personal manage- ment? CHAPTER IV EXECUTIVE SUPERVISION 1. Third function in leadership. In all forms of administration there are three elements which are al- ways present planning, giving orders and super- vision. Two of them have been discussed and it now remains to consider the third. The order in which they have been named indicates not only their se- quence in time, but also, in the judgment of the best thinkers of today, their order of importance. Giving planning the first place and relegating su- pervision to a third, runs counter to the general opin- ion of the past, one which is widely held at pres- ent. Many are still disposed to place the greater emphasis on supervisory and directing activities. They think of the executive as seeing that his orders are carried out, they picture the manager as in the midst of affairs directing one man, correcting another the center about which all the activities are grouped. 2. Conditions calling for direct supervision. Earlier military and industrial activities could pros- per only with highly developed direct supervision; improvised methods called, of necessity, for continuous and strenuous activity on the part of those in control. The qualities which made these activities fruitful were 33 34 FACTORY AND OFFICE ADMINISTRATION extolled as executive virtues. Ability to command; to instil fear; to inspire enthusiasm; to "get action"; to show results; in such terms was executive ability described. Under modern conditions planning is receiving larger recognition as the chief element in administra- tion. "A wise direction is of more avail than over- whelming numbers, sound strategy than the most per- fect armament" ; or, if we wish to carry the figure into the field of industry, "a wise policy is of more avail than a large plant, good management than perfect equipment." But wise policies and good manage- ment are the result of thoughtful reasoning rather than of improvised expedients. 3. Limitations in administrative supervision. It is a not infrequent failing among administrators to as- sume responsibilities for which they are not fitted, and to take over the direction of affairs in which they are not expert, merely because their position gives them the power to do so. In national life, military organ- ization and operation are held to be subordinate to the aims of diplomacy. Yet no diplomat would attempt the supervision of armies in a campaign. In indus- try, on the other hand, those who manage the finances and control general policies, sometimes feel that they can with equal facility manage the operations of the plant and of the sales department. In many cases this may be true, but the possession of power does not necessarily imply the capacity to use it intelligently. Supervision, like planning and giving orders, in- EXECUTIVE SUPERVISION 35 eludes a variety of activities. If this part of admin- istration is to be well conducted, there must be a clear understanding of these activities and their mutual re- lations. When this is had specialization appears. Authority and responsibility, general matters and routine details are so distinguished that the several spheres of supervision become arranged as a perfect system, providing "an avenue," as Professor E. D. Jones says, "for the downward passage of ideas asso- ciated with initiative, and the upward movement of facts connected with response." 4. Supervision involves different grades of au- thority. A proper organization of supervision in- volves the marking out of boundaries between the functions of persons with various grades of authority. From the president to the shipping-clerk, the giving of orders and the supervision thru inspection and re- ports form themselves into a system whereby super- vision is effected from the top to the bottom, from the receipt of the sales order to the shipment of the goods and the payment for them. The details of such organization must be left for a later chapter. But whether the task be that of a gen- eral manager or of an office boy, it should be gov- erned by certain principles of sound administration. What these principles are we may now inquire. 5. First principles of supervision. One authority wrote concerning an army, "Every one must remain within the boundaries of his duties, otherwise every- thing will be confusion." This implies first, the plac- 36 FACTORY AND OFFICE ADMINISTRATION ing of responsibility, and secondly, the clear definition of the boundaries of each authority. Like principles should guide supervision in business affairs. Each superior officer, foreman, department chief, gen- eral chief should have a definite authority, superior so far as it goes, but clearly limited in its relations to that of other officers. When a business is so organ- ized, when we find no overlapping of functions and no contentions among officers as to their duties, it can be so guided as to carry out effectively the general policies which emanate from the chief executive. It is the part of the general manager to supply the unifying element. Allowing subordinates a rea- sonable opportunity to exercise initiative does not dispense with the need for general control. The su- pervision of the general manager aims to stimulate activity and to coordinate the efforts of all so as to se- cure the desired results. The head of each unit of supervision must take part in the execution of orders, if he would give to the men in his charge the impetus necessary to fruitful effort. Such an impetus comes from constant and friendly watching of the men, inspiring them thru the offer of rewards, encouraging the diligent, by repressing the idle and the careless thru appropriate penalties. 6. The master's eye. System may provide an ex- cellent plan of control, but it is of little avail without the "eye of the master." Orders are useless unless carried out; reports mean nothing unless acted upon It is well for the "master's eye" to be diligent in EXECUTIVE SUPERVISION 37 watching the business, but if the manager attempts to supervise every possible detail, he is apt to find that he has little time for weightier matters. Proper plan- ning will not overburden the manager, but will enable the "master's eye" to see all events that possess any significance. It is not to be denied that some managers appear to succeed thru the sheer force of personal activity. They want to see things for themselves, they follow orders closely, and inspect repeatedly until the de- sired result is accomplished. Some old-time execu- tives may have carried this method too far, but their practice may still serve as a lesson for managers who reduce their physical activities to sitting in a hand- some office and pushing a button, and for department heads who confuse seclusion from their men with ex- clusion of details. Heads and heels both play a part in proper supervision and neither can be neglected with impunity. 7. Expectation of surprises. We often compare man's life to a book. The comparison is good. The events of life are the stuff that books are made of. If the author would interest his reader, however, he must arrange his story so as to surprise him con- tinually. It is the unexpected that keys all men to the sticking point. Surprise is as necessary, too, in keeping men interested in their work as in holding the interest of the reader in his book. Supervision which neglects the element of surprise fails in its purpose. Important as this element of administrative pro- 38 FACTORY AND OFFICE ADMINISTRATION cedure is, it is a mistake to attain it at the expense of other and perhaps equally important principles. Foremen sometimes seek this element of surprise by looking thru keyholes or slipping unnoticed into rooms in order to "get the goods on the men." They may get what they want, but in so doing they sacrifice something which is priceless the good- will and confi- dence of the men. It is not necessary to resort to underhand methods to introduce into inspection the element of surprise which saves it from becoming a deadening and ineffec- tive routine. Napoleon was always doing the unex- pected. In his inspection he came and went before men were aware. He was thoro, but added the unex- pected. Finding a sentry asleep at his post, he took his gun and stood guard until the weary soldier awoke. Reviewing his troops, he asked unexpected questions of his officers. The routine method would have de- manded that the commander-in-chief gallop more or less brilliantly in front of the men, but not so with Napoleon. Stopping in front of a colonel, he asked, "What is your effective force? How many men have you in hospital? At the depot? And how many sick in camp or how many absent from any other cause?" One can easily understand how such methods kept men and officers continually on the alert. Each one felt that the Emperor had his eye on him, and each stood in constant expectation of a surprise. 8. Supervision by inspection. A supervisory unit should not be extended in its operations beyond the EXECUTIVE SUPERVISION 39 point where it can do well the work intrusted to it. If the proper quality of output cannot be had, or if the men cannot be keyed up to their full work- ing capacity, the unit is too large. It should be of a size to permit fruitful personal inspection, which can bring all matters to the attention of the manager. No business, however, can afford a system of super- vision which calls for the master's personal inspection at every turn, and reliance must be had upon subordi- nates. If planning outlines, the direction of supervision inspection furnishes the test of adequate control. The executive, therefore, who can control effectively only thru personal inspection must have his authority curtailed accordingly. The test of modern factory and office efficiency is measured by the extent to which inspection can be stretched and still maintain ade- quate control. One minute of a ten-thousand-dollar expert's time may be so utilized as to affect the activi- ties of a whole department. 9. Symptomatic details. An office manager steps into a department, gives a glance and departs. A stranger in so brief a time would have seen nothing; the experienced eye of the executive has caught essen- tial points by which he judges the whole. The details by which a physician judges the condition of his pa- tient are called symptomatic details, and the same ex- pression may properly be applied to the signs by which the administrator of a business concern judges its activities. 40 FACTORY AND OFFICE ADMINISTRATION One of Napoleon's principal anxieties was the num- ber of available combatants. Continually on the look- out for any symptom showing the changes in the number of his men, he studied the muster rolls from one to two hours every day until the twenty thick volumes which came to him every month were ana- lyzed. "I leave everything else," said he, " to see the difference between one month and another." Thus the leader was able to verify the execution of his orders and the force available for carrying them out, altho he was not always able to be present. Shop and office executives must likewise examine their muster rolls if they would impress their subordi- nates with evidence of their vigilance. Orders given in their names must be checked, and that this may be done economically and efficiently the supervision must be carried on by calculations based on the selection and observation of symptomatic details. If supervision is to be efficient, its nature, its limi- tations and the essential elements of the different methods must be studied. Thus we find that super- vision resolves itself into that factor of administration whereby the functions of control and direction are so distributed and coordinated that the greatest economy of time, effort and expense may be achieved thru the cooperation of all the units, and yet without destroy- ing the initiative of any subordinate unit. But an esprit de corps is as necessary as initiative and mechanical cooperation. This is gained thru the inspiration of the master spirit in supervision, be he EXECUTIVE SUPERVISION *1 chief clerk in the dictaphone department or general manager, for upon him depends the unity which abil- ity and open-mindedness in the leader can alone inspire. Given these qualities in a manager, the es- sential elements in supervision, such as surprise, in- spection and rewards and penalties, adapt themselves to methods best suited to the circumstances engen- dered by local conditions. Tact, courage, courtesy and all the other qualifications of a successful man- ager are drawn upon as the occasion requires, and as these are induced naturally, the acts of giving orders, inspection and the bestowing of rewards and penalties reduce friction to the minimum while contributing to the general spreading of good-will. REVIEW How may an organization provide for the placing of re- sponsibility and at the same time get the unifying element of an administrator's personality? State the limitations, as you see them, to the purely mechanical means of supervision. Show how the element of surprise in management keeps the employe on the alert. What relation does the expert bear to inspection in modern factory or office management? What are some of the "symptoms" by which a superintendent may judge the conditions of a department? CHAPTER V REWARDS AND PENALTIES 1. Fear cmd interest. Most men who are in au- thority in factory and office are consciously or uncon- sciously guided in their administration by the feeling that the two levers which move men are fear and inter- est. They believe that no man shows zeal unless he is anxious, and according to their native bent strive to change this anxiety into the fear of punishment or the hope of reward. Two leading methods of administration result ; first ruling by division, and second, rewarding by titles and prizes. Such methods rely for their success on an appeal to man's imagination or his vanity, rather than on an understanding of the deep-lying sense of what is right and just. 2. Ruling by division. There is an old Latin maxim that "He who would rule should divide." It expresses the fact that when men are divided in their interests they are unable to make common cause against their leader, and thus the leader's position is secure. While visiting a large factory in Brussels, an in- vestigator was told by the works' manager that he re- lied chiefly upon this administrative policy. The vis- itor's note-book contains the following comment : "A 42 REWARDS AND PENALTIES 43 manager of superior capacities, yet fearing every form of superiority in his subordinates. He seems secure, but is surrounded by an atmosphere of jealousy, servility and anxiety." This method is based on the weakness of human na- ture, and not on its strength. Instead of seeking to preserve independence of character and thought among his men, and then welding their labor into one unified effort, this manager adopted a cheaper means, which obtained unity of action only so long as the master's prestige remained intact. Fear may be a powerful motive to action but it is not one upon which a permanent organization can be successfully founded. 3. Prizes and distinctions. The appeal to fear brings eye and lip service but it takes the heart out of man, and one whose heart is not in his work cannot accomplish much. Far more effective is the method of rewarding good service by prizes and distinctions. The business world swarms with promotion plans, wage schemes, profit-sharing systems and bonus quota and prize rewards, all of which have for their aim to bring out men's effort by enlisting a personal interest. If a salesman makes a good record he is put in a special class, and may be given a particular district as a special honor. His picture appears on the first page of the house organ, he receives a prize of a gold watch, and so on. The material reward is often of slight value; it is the distinction which is prized. Someone made the objection to Napoleon that the crosses and ribbons of the Legion of Honor which he founded 44 FACTORY AND OFFICE ADMINISTRATION were mere baubles. "You call them baubles," he said ; "well, it is with baubles that men are led." Whether or not these adjuncts to business adminis- tration are to be commended depends altogether upon the spirit which is behind them. If they appeal merely to cupidity and vanity they are not an effective force for permanent results. They must be means to an end, and that end must be the cultivation of in- terest in and loyalty to the organization. 4. Associated interests. No system of rewards is vitalizing unless it is permeated with the spirit of as- sociated interests. Unless it aids to induce among all the members of the organization, no matter how humble, the feeling that their interests are wrapped up in the welfare of the whole, it will fail to reach the highest efficiency. It is toward this ideal that in- telligent business administration is constantly striv- ing. In the measure that it consciously fosters this spirit, it rises above low standards. It discards the cynical attitude so often expressed in the phrase "busi- ness is business," and adopts in its stead the view that all concerned, capitalist, administrator and employe are cooperating in a common effort, from which each shall draw the reward which is properly due him and in which each should feel the true enthusiasm which springs from creative effort. 5. Moral basis of discipline. "My factory is just like one big family," said the manager to a visitor as they walked thru the Port Sunlight soap works in REWARDS AND PENALTIES 45 England. He had in mind the spirit of freedom and contentment which should accompany home life. He suggested something further. The home presents the highest development of social adjustments. The administrator feels instinctively that he will not have a finely adjusted and perfectly articulated labor or- ganization until similar adjustments have been made. He is reaching out for some moral basis of control which will adjust the employe to his fellow- workers and to his job in such a way that discipline is pro- duced, not thru external authority, but thru internal impulses. 6. Administrative responsibility. Every football coach applies two tests in selecting his men. First, Will the candidate play the game for the benefit of the team and not try to star? Second, Can he be de- pended upon to attempt the seemingly impossible in an emergency ? These are stringent moral tests which apply to the factory and office as well as to a football team. The coach must make each man feel "This is my position." He encourages each player to throw into his work all his energy, but not until the "posi- tion" becomes a literal part of him does he permit a player to speak of "my position." The subtlest task in the field of administration is to turn "the job" of each worker into "his job." To call out, train and reward the best and highest in men calls for the best resources of an administrator. That the importance of the task is being recognized is seen IV 5 46 FACTORY AND OFFICE ADMINISTRATION in the appearance of a new administrative expert con- cerned wholly with the selection and training of em- ployes. 7. Expert in labor selection. The appearance of the expert in any field of action indicates that it is no longer economical to depend upon traditional methods in directing important affairs. It is only gradually, however, that this fact has been recognized. Not un- til after years of struggle have the lawyer, the doctor and the engineer come into reputable standing. A like struggle must be encountered by the busi- ness expert who presumes to act as a specialist on em- ployment relations. Two strong forces are, however, compelling both factory and office to give careful con- sideration to the selection, training and holding of their employes. One force is the trade-union which works outside the organization ; the other is the analy- sis of the labor "turnover" within the organization. 8. Industrial counselor. Trade-unions without and labor problems within are leading business men to seek a solution of their difficulties in the creation of a new department, headed by an employment man- ager or industrial counselor. The duties of such an officer are not as yet fully differentiated, but the goal that the employment relations are forcing into sight involves an industrial audit, conducted after the same method as that employed by accountants and engi- neers. The report of such an audit might contain the following statement of conditions, which will show REWARDS AND PENALTIES 47 how far afield a lawyer might be in attempting to give advice : (a) Analysis of fundamental industrial conditions. 1. Sources of labor supply. 2. Attitude of the management toward labor-unions and other associations. 3. Relation of the management to labor laws and court decisions (state and federal) . 4. Public policies ("safety first" and the like). (b) Analysis of employment conditions within the organization. 1. Description of jobs. 2. Selection and training of employes. 3. Wage system; method of payment rates, amounts, etc. 4. Labor turnover. 5. Safety ; sanitation, health, education, etc. This field of what may be termed "industrial audit- ing" is still young, and its technic is not fully devel- oped. The system is being tried out, however, and its possibilities are being proved by the test of practice. The preparation of such an audit would bring before a concern such businesslike questions as these : What are the fruitful sources of labor supply for the factory and the office? Except for the grades 48 FACTORY AND OFFICE ADMINISTRATION of labor at the bottom, does the firm find its best source of supply within itself? Are the channels up, out and in kept open and carefully guarded? Is the educational system of the concern a basic factor in the methods of discipline? Are the wastes due to the se- lection of wrong persons minimized? Are useful suggestions freely offered by all concerned? Is the spirit of cooperation predominant, and is it firmly based upon the knowledge of what the business as a whole stands for? These questions show the newer conceptions of the problem of labor control as contrasted with the earlier ideas of rewards and penalties based entirely upon the bauble theory of old-time administrators. 9. Attitude toward employes. The attitude of many managers toward the selection and the discharge of employes is one of extreme indifference. Nothing illustrates this better than the manner in which testi- monials are frequently written. A discharged drunk- ard oftentimes receives a testimonial that he has been found sober and industrious while the discharged crook will be praised for honesty and industry. The newer attitude toward employes is evidenced in the interview, the application blank, the physical examination and the psychological tests which are being used to prove or disprove the validity of the testimonials submitted by prospective employes. Competition is forcing business men to seek new economies. All plants are approaching similar levels of competition in equipment, machinery methods, REWARDS AND PENALTIES 49 purchasing skill, price of raw materials and prompt- ness in deliveries. In the near future, the varying grades of competitive success will be decided by the savings made thru the elimination of the wastes due to a high labor turnover and by the removal of those mal- adjustments that prevent a business organization from taking effective root in modern economic condi- tions. 10. Causes of the turnover. The reasons why men leave jobs are, of course, as numerous as the chances for the misunderstandings, mismanagement and mal- adjustments that grow out of men's relations to one another and to their work. Investigations of the turn- over of factory labor show the following factors which figure in it: Abundance or lack of work, fluctua- tions in the amount of work, rates of wages, character of working conditions, efficiency of management, rela- tions between the men and the management, work- men's opportunities to secure better work, and their qualifications or lack of qualifications for that work. Two cases that are given as typical indicate the na- ture of the questions with which modern management must deal in solving the problem of turnover wastes. Case I. In a lumber mill, in 1915, 49 men were dis- charged in 8 months for: Incompetency 20 Insubordination 13 Drink 12 Poor health. . 4 50 FACTORY AND OFFICE ADMINISTRATION Case II. In 3 metal-trades establishments, during 1913, 402 men were discharged for: Incompetency 133 Unsteadiness and loafing. 36 Disobedience 30 Slowness, sleepiness 16 Drink 14 Miscellaneous 11 No reason given 162 The significant thing about these tables is the large number of discharges due to causes which in most cases could have been avoided by the exercise of greater care in the selection of the men, while un- doubtedly many employes might have been saved to the firms if they had been given a chance in other de- partments instead of being summarily dismissed when found unsatisfactory. 11. Reduction of labor turnover. Frequency of labor turnover is a source not only of vexation, but also of expense. Anything which can be done to re- duce the turnover avoids expense and makes the fac- tory run more smoothly. The establishment of an employment department in some cases produces these very satisfactory results. An instance of what has been achieved by one com- pany in the direction of reducing labor turnover thru the careful selection and follow-up of employes, is shown by the following statement: REWARDS AND PENALTIES 51 Year Labor turnover 1911 68% 1912 61% 1913 52% 1914 37% 1915 v 28% This company employs 2,300 persons and estimates that it costs, on the average, $50 to replace a proficient hand. In the second year of the new system there were savings of about $25,000 over the year preced- ing its installation. 1 12. Labor a relationship. Labor as one of the im- portant relationships in the structure of a business or- ganization, is one of the newer conceptions determin- ing the solution of employment problems. Labor ex- ists only in the act by which it is sold, and it cannot exist unless it is given access to capital. It is not a commodity in the sense that the workman can store up stocks of it to be used as a basis on which to bargain for work. If a business organization were an association where the three prime factors of labor, capital and manage- ment which are engaged in production, shared alike in the profit and loss and in the government, the nature of employment and the consequent wage and labor problems would be entirely changed. But the busi- ness unit has been developed along other lines. Labor does not bear the risk, nor is it entitled by law to a i Report of Committee on Employment Plans for National Association of Corporation Schools, 1916. 52 FACTORY AND OFFICE ADMINISTRATION share in the accumulated stock, the right of business initiative, the management and the credit of the con- cern. These belong solely to those who supply the capital, while labor discounts its risks for a fixed peri- odical wage. Because of the exclusion of this essen- tial factor of production from the management, and because labor cannot be accumulated as a "reserve," the workman has attempted to protect his interests and to strengthen his bargaining powers by the for- mation of trade-unions. 13. Wage relationship. The tendency in the pay- ment of wages is at present to adjust them more closely to the work performed. This is a primary purpose of piecework. The reduction of the term of service in time-work from a yearly, monthly or daily basis to an hourly basis points in the same direction. One result of this method of measuring work against pay is that the laborer is secure in his income only from hour to hour, while the shortest lay-off means a loss of income. This tendency in the payment of wages has made the factory laborer feel that he is not a fixed part of the organization, and that his wages, both in amount and in regularity, depend upon the bargain- ing power of his union. It is not surprising that his loyalty should be to the union rather than to his em- ployer. Here is the weakness of modern administration. Without loyalty there can be little cooperation, and without cooperation there can be no great advance in the science of administration, under our present com- REWARDS AND PENALTIES 53 plex system of industry. The loyalty which the worker should give to the business is given to the work- ingman's union. If the union is strong, the worker can exercise thru it some influence upon the conduct of his employer's business, even tho he is denied any share in the control of the latter. The growing influ- ence of the labor-union upon management policies is second to none in the realm of business administra- tion. With the increasing influence over private enterprise that the working class is gaining thru union- ism, the laborer is demanding a voice in the regulation of questions of administrative detail within the firm. The relations that the unions involve, include not only the fixings of standards of pay, but also questions of the output of the individual worker, the conditions and the regularity of employment, the proportion of apprentices to the number of adult workmen and the methods of procedure on the occasion of any disagree- ment. All this means that the manager must share the administration of his business with an outside body in regard to many questions of internal organization. 14. Democracy and industrial freedom. Every step in the solution of problems of employment rela- tionship must tend toward democracy in industry. The manager who does not get this point of view is not taking advantage of the natural channels of pub- lic opinion in his search for greater business efficiency. Professor Carver of Harvard University says: Two things and two things only are essential to real democracy ; the first is an open road to talent ; that is to say 54, FACTORY AND OFFICE ADMINISTRATION that every man shall have an opportunity to rise to positions of power and responsibility in proportion to his ability, regardless of birth, privilege, caste or other social barriers. The son of a peasant may become the ruler in government or the employer in business, by the sheer force of his own merit, if he happens to possess merit. The second essential of pure democracy is that they who are in positions of power and responsibility shall be made sensitive to the needs and desires and the interests of those over whom they exercise power and responsibility. The opportunity to "make good" is the reward that modern methods emphasize as to be preferred to the bauble rewards of the older school. Such a policy means constant watchfulness on the part of managers but keeping the road open to talent can be made a practical working principle. REVIEW Sum up the arguments pro and con on the subject of control of the employe thru the giving of titles and prizes. Why should a manager base his methods of labor-control on the strong elements of human nature rather than on the weak ones? Explain the distinction between the expressions, "a job" and "my job." What is meant by an industrial audit, and what is the nature of the investigation that such an audit would involve ? What is the relation of the trade-union to the workingman, and how far can the business administrator give the workingman what the trade-union gives him? What are the purpose and function of the employment de- partment? CHAPTER VI PRINCIPLES OF BUSINESS MANAGEMENT 1. Administration at close range. We are now ready to consider the subject of administration at closer range. Administration, as we have interpreted it, applies to the big policies, and is therefore more in- clusive than the word "management." We shall be concerned henceforth with the control of these poli- cies thru systems and offices, which may be termed "management." As here used the term applies to the direction and control of the forces which produce re- sults in factory or office operations. 2. Cardinal elements of management. Manage- ment implies three things a force, a purpose or re- sult to be accomplished, and a director of this force to- ward the desired end. With any one of these three things lacking in an activity, no such thing as manage- ment is possible. In a baseball team, for example, the members rep- resent the force to be managed; each player is a human dynamo. The winning of the game is the pur- pose, and the captain directs the general play to this end. The use of the word "force" to indicate the body or machine employing force is significant in itself. We often speak of the "police force," the "working force," 55 56 FACTORY AND OFFICE ADMINISTRATION etc., when we mean the body of men which supplies the energy or force to be used in carrying out any project. 3. Every principle implies a force. The most im- portant thing about management, then, is that it deals with forces, i. e., energy. This fact alone raises busi- ness management into the realm of those subjects worthy of being treated scientifically. "Scientific management" would be meaningless jargon if forces were not involved. And it is well for the business man who has thousands of dollars invested in plants, of- fices, men, fixtures, etc., to realize this point at once. It will enable him to discriminate between the real efficiency engineer and the fake systematizer. The latter knows nothing of forces. He knows only of forms. The man who knows and realizes the nature of the forces working in a modern factory or mercan- tile establishment, is conservative. He realizes the consequences of getting in the way of these forces. A fool will try to stop a flywheel with a piece of card- board. Yet unfortunately, simply by reason of his assurance born of ignorance, a fool may gain the ear of an executive. But the manager who thinks of his business in terms of the forces which he is guiding can soon put to rout the "business doctors." 4. Nature of business forces. The promotion of a business enterprise is at bottom nothing more or less than an attempt to bring the forces of capital, labor and land together in such proportions and with such effectiveness that the highest profits will result from their combined efforts. There is no common business PRINCIPLES OF MANAGEMENT 57 name for the manager of an enterprise in the earliest or formative period of an undertaking. The econo- mist calls such a man an enterpriser. If the title of "promoter" had not become so closely associated with the raising of capital or the effecting of combinations of capital to the almost total exclusion of the other two forces of business, this name would more fully express the function of such a person than any other word. But whatever his name, a man of this sort is a manager par excellence. His plans involve the primary union of the three business forces, capital, labor and land. Poor management at this point means hampered production, poor distribution or lean markets after the business is started. Let the reader adjust himself at once to the point of view that management is interested in forces and not alone in things, methods and forms. If the idea seems abstract that management begins before the money is raised or the factory started, the notion can be given concreteness by thinking of the numerous failures of managers of production whose efforts and plans were useless because some incompetent enter- priser had started the business with too little regard for his labor supply. Or it might be well to look into the history of many managers of distribution, men who were doomed to failure from the start because some en- terpriser had overlooked the important place which location holds in relation to freight rates or delivery advantages. Or, again, the reader may find number- less examples of good sales managers whose efforts 58 FACTORY AND OFFICE ADMINISTRATION were handicapped for years because they could not develop their markets, owing to a lack of sufficient working capital. Management, then, deals with the three sources of force or energy capital, labor and . nature. The management should never lose sight of their important influence. A strike which involves trouble with the labor force may mean many hours of anxiety for the manager, but the labor loss may be as nothing com- pared with the capital losses in interest, depreciation and market disorganization incurred during the shut- down. 5. Manager must direct forces. The complexity and extent of the workings of a modern factory are forcing the question of management upon the atten- tion of both stockholders and the public. The stock- holders are interested in their profits. The consum- ing public is concerned about the high cost of prod- ucts. Both are beginning to believe that their inter- ests could be better served if the managers of produc- tion were specialists in management rather than as is too often the case composites of abilities ranging from the requisites of a good office boy to the accom- plishments of a mechanical expert. A manager must direct forces. He cannot be tied to the details of an office, of a department or of an organization. His special work is cut out for him by the forces which he handles and the object which he must attain in their direction or management. PRINCIPLES OF MANAGEMENT 59 The mechanical engineer, the electrical engineer, the locomotive engineer, etc., have their own special provinces. Each is a specialist in the control of his particular form of power. Yet it has often been ex- pected of managers of production that they not only be technical experts in various branches of an industry, but that they be expert handlers of men and judges of business methods as well. The discussions and investigations of big business operations during the past few years have so focused attention upon the manager that we are able to see his true relation to the organization in a better light than ever before. A chart, prepared by an auditing concern and re- produced on page 60, shows in a very simple way the relationship of the two chief forces with which the manager must deal. It will be here observed that the capital, land and labor forces have taken the form of plant and equip- ment, materials, supplies and men. The manager, therefore, has jurisdiction over these things and has charge also of the inspection of product and pur- chases. The two types of physical energy which are most evident in production, and which the manager must control, are those produced by fuel in conjunc- tion with a machine, and those which come from food when converted into the muscle and brains of men. When the full importance of these factors in man- agement is realized, it becomes evident at once how 60 FACTORY AND OFFICE ADMINISTRATION |f?_j_O_|_ *** I a I * i-SH I 23 .s'a T3 C ^ rvi O " 2 . futile are systems and schemes of control which pro- vide only records of results, and ignore the forces which produce results. 6. Human engineering, It has been supposed PRINCIPLES OF MANAGEMENT 61 until very recently that engineering has to do solely with the intelligent development and control of that energy which depends upon fuel and the machine. Accordingly, the mechanical engineer early became a recognized aid in the management of a plant and fac- tory, and now that business men are beginning to analyze their productive processes, the profession of engineering has been extended to include the develop- ment and control of that energy which displays itself thru the minds and bodies of men. A study of Figure 1 shows the main lines of activity which these two forms of physical force follow. The physical energy coming from the food which a man eats shows itself in either bodily or mental activi- ties on the part of the worker. In the factory, then, we may divide the workers into brain laborers and body laborers, and so throw into bold relief at once the basic problems of management. These are the prime factors which lie at the bottom of all permanent pro- ductive efficiency. The managers must find the best way to develop this human power and conserve its energy. Looked at in this light, it is not a matter of indifference to the management what the foremen, the laborers and others eat and drink outside of factory hours. NOT is it compatible with the principles of business management to ignore the sociological condi- tions which surround the workers at home and in the shop. Anything which dissipates the energy of the employe is a handicap to the productive efficiency of the factory. Welfare work, medical service, indus- 62 FACTORY AND OFFICE ADMINISTRATION trial betterment are growing and spreading among the world's great industries. This movement is taking place simply because it is good business policy. If welfare work succeeds, it does so because it develops and conserves the human working force. It pays for itself in productive efficiency and not merely in its ad- vertising possibilities. 7. Basic principle in management. Little need be said about the power which manifests itself thru the aid of machines. This force in production is very evi- dent and its utilization has been the point of attack for a hundred years or more. In fact, so much attention was given to this factor that the managers of great enterprises overlooked nearly all the other elements in production. To get a new piece of equipment, a machine, a filing cabinet, an adding machine, seemed to be the climax of many a manager's ambition. Con- centration upon this single side of the proposition has brought its penalties as well as its rewards. Man- agers fixed their eyes upon the size of their output. Bulk, production on a large scale, tonnage became the great words in managerial circles. To secure these results the machine was developed to the highest point. Mechanical invention was the only thing considered, and the mechanical engineer became the most impor- tant member of the staff of managerial experts. But finally the machines became so plentiful, the factories covered so much space, the output grew so large, the employes numbered so many thousands, that the energy which was developed and directed by PRINCIPLES OF MANAGEMENT 63 means of the mechanical equipment began to be lost and wasted. The old standards of achievement could not be maintained and the management began to ask itself the reason. The inquiry led to the discovery of the basic principle in management, which deals with the conservation of energy and the correlation of the forces of production. When this point was reached many problems arose which had not up to that time in- truded themselves. For example, the question of fuel supply was no longer a question of weight but of heat- ing power. The belting problem was no longer a question simply of price per foot, but of lost power thru inattention to the proper belt tensions, etc. Thus we might run thru the whole list of problems of man- agement and find that in their last analysis they all resolve themselves into terms of power, force or en- ergy. 8. Purpose of management is profit. It is well, when so much is being said about the methods of gain- ing productive efficiency, to draw attention to the fact that the ultimate purpose of enterprise is profits. A saving of energy formerly lost, or the institution of a frictionless organization, may have other purposes than maintaining or increasing the profits ; but unless these things bear upon this element somewhere in the course of the firm's operations, they should be counted up to the concern's philanthropies or advertising and not to its productive management. The manager or efficiency engineer who is unable to organize or reor- ganize a system of management without sacrificing 64 FACTORY AND OFFICE ADMINISTRATION permanent profits has not the faintest conception of the nature of his work. Such a person is generally trying to "instal a system." It should be borne in mind, however, that a thorogoing plan of management may, and for that matter generally does, involve an outlay of money which may not show immediate re- turns. A suitable foundation for a building may not show its advantages over a flimsy structure for several years; yet a wise business policy would not sacrifice the permanent profits for the sake of immediate sav- ings. 9. Immediate versus future profits. No one busi- ness policy has caused the wrecking of so many firms and the shattering of so many managerial reputations as that of paying dividends, regardless of the means or source of income. A manager must gain the profits by putting the materials and forces of production thru certain processes. The legitimate gains of his activity as manager show in a product of higher value. He starts, we will say, with a ton of iron ore, and after many smeltings and purifyings and temperings, thou- sands of fine steel springs are produced. So long as quality determines value, and value determines price, the manager's duty is to shape his methods toward meeting the conditions of that market the judgment of which passes upon the quality of all products. He therefore turns out steel springs of a quality that satis- fies the particular demand for that product. His in- fluence upon the profits will show in his maintaining the quality demanded by the customers, and in his PRINCIPLES OF MANAGEMENT 65 ability to effect economies in the use of the forces of production and in the handling of his productive organization. But, having been urged to show immediate results, many managers have tried to short-circuit their forces of production. Instead of putting the capital which should have gone into materials, new machines, new roadbed, new cars, etc., into these investments of pro- duction investments which would have brought profits in the future some managers have short-cut the process and put the capital directly into the divi- dends. The "skinning" of many railroad properties and industrial plants by this short-circuit process was too common a few years ago. It is not unknown to- day, and it is a very alluring method for a young or inexperienced manager when a short-sighted director- ate insists on "results." This practice of sacrificing the permanent profits for the immediate "showing" is not less fatal when applied to the business organization of a company than when used to "skin" the equipment. Poor routing of materials thru the shops, slack timekeeping, persistent soldiering, bungling storekeeping, etc., may mean a very economical organization for a certain period, but the effects of such disorganizing practices upon the output of a plant will prove in the end to be even more damaging than the mere skinning of the capital or equipment. REVIEW Distinguish between the functions of a "promoter" and those of a general manager of a factory. 66 FACTORY AND OFFICE ADMINISTRATION Distinguish between the activities which fall within the prov- ince of the mechanical engineer and those that belong to the industrial engineer. Analyze the statement, "The basic principle in management deals with the conservation of energy and the correlation of the forces of production." A factory manager was able to show "good results" by keep- ing back new improvements, holding up needed repairs, etc. Criticize this policy. CHAPTER VII WHAT MANAGEMENT INVOLVES 1. Difference between manager and engineer. Management, therefore, involves not only the forces of production, but careful considerations of the results to be obtained, i. e., the profits. It is the latter which distinguishes the man with managerial ability from the purely technical man. The mechanical en- gineer may be able to control and develop the pro- ductive forces in a plant. In fact, a specialist of this kind is absolutely necessary. But his point of view is narrowed to the activity of the machine and of the ma- chine's tender. He is interested in supplying power and machines for getting out articles according to cer- tain dimensions and specifications. The manager must be able not only to judge the mechanical nec- essity of this activity, but also to estimate its effect on the commercial end of the business. Commercial ap- praisal must supplement technical judgment. Many illustrations of this difference in abilities might be cited from the experience of shop men who have seen many a fine article, from the engineers' point of view, sent into the factory, only to be torn to pieces and ruthlessly changed by the manager who had to meet commercial conditions. 67 68 FACTORY AND OFFICE ADMINISTRATION 2. Specialization complicates management. Spe- cialization is both a result and a cause of technical im- provements ; therefore, we find the two developing side by side. So far as the modern industrial organization is concerned, it makes little difference whether we speak of it in terms of specialization or in terms of machinery. A study of any industry will soon show how complex its organization has become, thru the number of specialties into which every process is di- vided. Generally, each division requires a new ma- chine or tool. If we compare the present organiza- tion of any industry with the organization of a similar industry of fifty years ago we discover that, altho the number of men necessary to produce a given quantity of product has greatly diminished, the quantity put out under one management has so increased that the number of employes has increased and the number of machines has multiplied accordingly. The manager has been engulfed in a sea of indus- trial specialization. The correlation of all the spe- cial activities has overtaxed the abilities of managers for years that is, where they have given this element of management the consideration it deserves, and have not simply stumbled along trying to meet every diffi- culty by adding a new machine a method not unlike that of a tired man urging his flagging energies to renewed efforts by taking stimulants. They get him over the present difficulty, yet they leave him not only debilitated, but hindered by the drug itself which clogs his system. WHAT MANAGEMENT INVOLVES 69 3. Specialization in management. Not many years ago it was the custom to defend the advantages of specialization against the virtues of all-round skill the expert against the all-round man. But there is little argument today. The place of each is well un- derstood. In technical work the economic superiority of the expert is too much in evidence to allow any argu- ment. The "jack of all trades" has disappeared. The change makes for special dexterity and great sav- ing in time and money. Preparatory expenses are greatly reduced and much time in changing from one job to another is saved. At the same time we have come to recognize that there is a distinct and very im- portant place for the all-round man in executive work of the higher order. Today there is a new form of specialization going on, which, being more difficult to represent in a con- crete form, is not so easily understood or so readily ac- cepted by the manager. We refer to the specializa- tion that is taking place in the field of management it- self. Instead of employing one foreman to look after a whole department some firms are breaking up the work into several parts and are putting specialists in charge of each. Thus there may be a gang boss, a speed boss and a disciplinarian where once there was only a foreman. As it is not easy to figure the re- sults of management specialization in terms of a ma- chine's output a concrete thing which can be shaped and handled and measured many executives are backward in recognizing the same economies here that 70 FACTORY AND OFFICE ADMINISTRATION they have so eagerly exploited in the field of technical and mechanical specialization. 4. Department specialization. Between the two extremes of specialization, that of the machine at one end and that of the management at the other, comes an intermediate type of specialization. This may be called departmental specialization, and often serves as a step to the more advanced form of specialized management. This intermediate type is illustrated in the Fierce-Arrow Motor Car Works. Here all lathes are divided into groups and subgroups. The main groups are put into departments by themselves and are there arranged into subgroups according to the size, class of work, etc. For instance, one section is known as the turret department and is divided into subgroups of automatic chucking machines, automatic screw machines, flat and hexagon turret lathes and hand screw machines. The larger turret lathes of the Gisholt type are not included in the department, but form separate groups. The hand and spur gear-cut- ting machines form separate groups. The milling machines are classified as vertical, horizontal, Lincoln type and hand groups. The drilling machines are divided into radial, heavy-duty, medium and sensi- tive groups. The grinders are grouped as internal, plain and surface. Specialized supervision is thus naturally induced to a limited degree, for an assistant foreman is put in charge of each subdivision of ma- chines and is responsible to the foreman, who has direct charge of the departmental groups. WHAT MANAGEMENT INVOLVES 71 The necessity for this growing practice of depart- mental grouping is due to the great burden which ex- tensive specialization in the agents of production has put upon the manager. Departmental grouping is an attempt to bring as many common factors as possible into one group for purposes of supervision. It pro- vides a more efficient means of watching the wastes and coordinating the efforts of many individual and highly specialized machines. The experiment of the Pierce- Arrow Company shows a practical application of the economic principle that coordination is a neces- sary complement to specialization if the highest effi- ciency is to be obtained. 5. Cooperation and specialization must always go together. Just as the forces of a business must be cor- related, and the machine processes coordinated, so must the laboring force cooperate in order to let spe- cialized employment and divisions of labor produce their full results. The enormous product turned out by the factories and transportation systems of today is possible because the machine has developed into a spe- cialist of the highest type. Specialization does not stop, however, with the factory processes, the ware- house, the bank or the transportation system. The management of these various business activities is dividing its work more and more into specialties. One man no longer tries to do all the work of manag- ing a factory, but calls to his aid superintendents, fore- men and bosses. Such is the predominant type at present but it is 72 FACTORY AND OFFICE ADMINISTRATION rapidly becoming modified. The machines, the men, the departments, the responsibilities of a large factory are so numerous that further specialization must go on if this century is to keep up with the last in the pro- duction of goods. 6. Scientific methods of investigation. Scientific knowledge rests upon one great underlying principle the conservation of energy and the correlation of forces. There are, however, two ways in which a sub- ject may be studied. These may be called the "specu- lative" method and the "practical" method. The first has been largely instrumental in the development of the sciences of astronomy and biology, and the sec- ond has been chiefly employed for investigations in chemistry. Sciences differ among themselves in the extent to which one or the other of these methods is used, and it is essential that a new science adopt the method most suitable for its development. So far as management is concerned, both methods are applicable to a certain degree, but the practical method, in which experiment is the basis of drawing scientific conclu- sions, is the one which must predominate. Only a few deductions can be drawn in the science of management. But these few are most important, since they serve as guides for the experiments in, and analysis of, factory, shop and office conditions. They look to the avoidance of waste and the gaining of in- creased power thru a thoro knowledge of men, ma- chines and conditions. If investigators of manage- ment problems would keep this one idea clearly in WHAT MANAGEMENT INVOLVES 73 mind, they would then at least be in the right attitude to begin their study. With this goal in view, the in- vestigator can follow the practical method without confusing his principles with the mechanism. Such an investigator will hold the factory or shop in proper perspective and will not feel bound by traditions and prejudices. He studies the departments as a whole and compares them with those of other plants as he knows them. This method enables him to analyze the proposition into units which permit of numberless ex- perimental recombinations. All this takes time and patience, for superficiality has no place in any science. Mr. F. W. Taylor, for instance, to achieve one result, performed 50,000 ex- periments, all of which were recorded, studied and classified ; they involved an outlay of material amount- ing to 800,000 pounds of steel and an expenditure of $200,000. Similar care and attention must also be given where the data to be collected pertain to men and not to material. The laws of fatigue and rest are even more complex than the laws of materials. It is not till these laws have been discovered that standards of production can be established and methods set forth for their accomplishment. Having the general proposition clearly in mind, the management investigator can go after his facts. Observation and experiment will be required to enable him to select the facts and, from conclusions drawn from them, to formulate those laws by which he can select his machines, material and men. Some laws 74 FACTORY AND OFFICE ADMINISTRATION will become standards by which the workingmen in any particular department may be scientifically se- lected. The men who are physically or temperamen- tally unfit to perform the duties in a particular de- partment may be taken out and fitted into some other place more suited to their particular abilities. Such a redistribution of men results in a total increase of efficiency without drawing forth more labor energy from men and machines. The results will show not only that a scientific method has been used, but that a scientific object has been obtained. 7. Continual study and progress. The first prac- tical rule in the application of this scientific method of adapting the instrument to purpose, demands not only a redistribution of responsibilities but the establish- ment of intimate cooperation between managers and men. This may be called the rule of sympathetic co- operation, in which there is "mutual recognition of the possibility of mutual helpfulness." An example of this practice is seen in those shops where the chief distribution of functions consists of dividing the purely mechanical and muscular operations from those requiring brain and effort, and then select- ing men who are particularly fitted for each kind of work. This division and redistribution of the func- tions necessitates a greater degree of planned cooper- ation between the two groups than was essential under the old style of management. Under the old system the workman was left to determine the method of doing his work as well as to do it. Under the system WHAT MANAGEMENT INVOLVES 75 where the function of planning is separated from the performance, the method is given into the hands of an expert body of planners and the workmen are left free to apply all their energy to the one thing the doing of the work. Present-day management, however, does not stop with experiments alone. It requires that the facts, having once been obtained, should be used for the con- tinual advancement of the organization. The first rule for the practical administration of the laws and principles which have been deduced should be the se- lection of proper instructors to teach the men upon whom the production of the plant depends. Under this rule, a workman, once selected and assigned to a duty to which he is especially adapted, is kept at his highest point of efficiency by being continually helped and taught how best to do his work. The factory thus ceases to be a "mill" and becomes a school instead. A law is limited by the circumstances which condi- tion it. Before any specific devices are discussed by which the direction of a business enterprise may be changed from a "hit and miss" sort of management to a system of carefully studied control and direction, it may be well to throw out the following caution. Altho a law, once formulated, is fixed by the condi- tions which gave rise to it, there is no assurance that the conditions will not change. In fact, conditions are ever shifting and, as a consequence, new observations and new experiments will result in the derivation of new laws. No manager should assume that any con- 76 FACTORY AND OFFICE ADMINISTRATION elusion he may reach is final. A rule of action which may guide the organization today to higher planes of efficiency may later be rendered obsolete by a new set of conditions and higher standards of accomplishment. The manager who approaches his subject in the spirit of a scientist never stops because a cost has been reduced. Nothing is final with him. He is ever on the lookout for the possibility of further reductions and the discovery of new and important laws by which these reductions may be made. 8. What the science of management involves. A science of management involves a natural force, an in- ductive method of study, and a distribution and group- ing of activities according to functions. One of the great difficulties in getting business men to see that management is anything more than just "common sense," is their disinclination to listen to any- thing which smacks of theory or principles. They as- sume that common sense deals with concrete things while theory deals with abstractions. The truth is that common sense is not dissociated from theory. The thing which people call common sense is simply the working out of a theory or principle thru con- crete things. When the phenomena are familiar and when the causes and effects are in harmony with ordi- nary experience, they are spoken of as simply com- mon sense. The trouble arises when a man mis- takes the illustration of a fact or principle for the principle itself, and thinks he has dodged all re- sponsibility for thoroness of investigation and care- WHAT MANAGEMENT INVOLVES 77 fulness in recording and studying data, by calling the whole thing simply a question of common sense. To the janitor the putting of salt on an icy sidewalk is simply a question of common sense ; to the chemist it is a question of chemical affinity. To the ordinary "boss" the following example taken from Mr. F. W. Taylor's experience will appeal only as a common- sense thing to do; to the manager looking for truths by which he may guide his own endeavors, there will appear the great problem of the saving of labor power, the inductive principle of investigation and a never-ceasing struggle to attain new standards of ef- ficiency there being no assumption of finality in the derivation of laws. Mr. Taylor was looking for the law controlling the efficiency of shoveling. Accordingly, he first selected the type of man who was best adapted to the work. He did not, as he says, take a trotting horse as his standard to find out what a first-class draft horse should do in hauling coal. So when he wanted to study the science of shoveling he selected two men and spoke as follows : You are good shovelers ; we want you to work squarely. We are going to ask you to do a lot of fool things, and we are going to pay you double wages while this investigation is going on. It will probably last two or three months. This man will be over you all day long with a stop-watch. He will time you ; he will count the shovel-loads and tell you what to do. He does not want you to hurry; just go at your ordi- nary pace. But if either of you fellows tries to soldier on us, that will be the end of it ; we will find you out as sure as you 78 FACTORY AND OFFICE ADMINISTRATION are born, and we will fire you out of this place. All we want is a square day's work ; no soldiering. If you don't want to take that job, don't, but if you do we are very glad to pay you double wages while you are doing it. These men took the job and did a fair day's work thruout the period of investigation. Mr. Taylor con- tinues : We began by taking the maximum load on the shovel and counting the shovelfuls all day long and weighing the tonnage at the end of the day. I think it was about thirty-eight pounds to the shovel. We found how much those men could do when they were shoveling at thirty-eight pounds to the shovel on an average, and then we got shorter shovels, holding about thirty-four pounds, and measured the tonnage per day, and it was greater than when they were using the thirty- eight pound shovel. They shoveled more with the thirty-four pound shovel-loads than with the thirty-eight pound shovel- loads. Again^we reduced the load to thirty pounds and they did a still greater tonnage; again, to twenty-eight pounds, and another increase; and the load kept on increasing as we diminished the shovel-load until we reached about twenty-one pounds, where the man did his biggest day's work. With twenty pounds, with eighteen pounds, with seventeen, and with fourteen, they did again a smaller day's work. Starting with a thirty-eight pound shovel, they went higher and higher until the biggest day's work was done with a twenty-one pound shovel ; but when they got the lighter shovel the load went down as the shovel-load diminished. The conclusion reached from this long experiment was that the highest efficiency in shoveling depends upon supplying the workingmen with a shovel which holds twenty-one pounds, no matter what the material may be. WHAT MANAGEMENT INVOLVES 79 9. Effect of a new standard. But a standard es- tablished in one department meant a change of condi- tions in other departments. The principle of the dis- tribution of functions applies to departments as well as to men, and upon a correct balancing of them de- pends the success of a management which would avoid waste thru a correct correlation of its productive forces. This principle is well illustrated in the final outcome of the experiments with the shovelers. First the management had to build a shovel-room for the common laborers. Up to this time the men had owned their own shovels, but now all this was changed, for it was- found necessary to equip the shovel-room with eight or ten different types. One shovel, for instance, would be suitable for rice coal; another for a very heavy ore, etc., but each would carry just a twenty- one pound load. The establishment of a shovel-room was a simple thing in itself, but it meant organization where before there had been none. A good shovel is of little use un- less the right laborer has it at the right place, and in a yard two miles long and half a mile wide, and employ- ing six hundred men doing all kinds of miscellaneous work, the arranging of a working schedule is no small task. This meant more organization and a redistribu- tion of managerial functions from the foreman's point of view. Instead of having the old-fashioned fore- man, who walked around with his men and told them what to do, a large building was erected for a labor of- fice and three highly trained men with their assistants, 80 FACTORY AND OFFICE ADMINISTRATION planned the work of the shovelers at least one day ahead of the work. 10. Furnishing the men with a teacher. The final element in business management also is illustrated by the methods described in the experiment which has been described. The teaching element is no new thing in management. It has always been there, but generally it has been so confused with other functions that it has been lost sight of in these days of big and complex business operations. Every boss is supposed to be an instructor, but he uses his authority more often than his knowledge of the particular job to keep the laborer to his pace. In some of the more recent attempts to discover the principles of management, the function of instruction has been again emphasized. This, also, is seen in Mr. Taylor's experiments with the shovelers. Having provided a physical organization for handling his six hundred or more men, he made out a time-table show- ing just how long it took the men to do each kind of work. Then it devolved upon the management to in- form the men each day just what they had done the day before, and just what they were to do that day. The teacher would stand beside the man as a friend and show him how to earn his premium. Or if he found men too light for the work the teacher would recommend that the men be transferred to a job better suited to their strength. Kindly and intimate per- sonal study of the workingman is the surest way to find the work best suited for each man. The instruc- WHAT MANAGEMENT INVOLVES 81 tor coordinates the work of the planning room with the work of the laborer and in that way facilitates the flow of productive force in the business organization. REVIEW How should an investigator of factory conditions go about his work if he would be considered as doing his work scientifically? What effect has the growing tendency toward specialization had upon the problem of management? How can the deductive and inductive methods of scientific in- vestigation be adapted to factory and office management? How can the methods of the teacher be introduced naturally into factory and office management? CHAPTER VIII ORGANIZATION OF ADMINISTRATION 1. Few principles but many methods. The princi- ples of management hold true in every kind and branch of business. It makes no difference whether the business unit is a billion-dollar corporation or a foreman's department where pig-iron is handled. But the methods of applying these principles are as varied as the types of business themselves. There is a particular method most suitable for each business and each department. Businesses, like people, have personal characteristics; no two are exactly alike. If every person were to dress in the most appropriate style, it would be necessary to put him in the hands of an expert and let the latter study all the points of harmony so as to dress the customer accordingly. In such a case, ready-made clothing would disappear and valets and custom tailors would increase in num- ber. Such great economies have been effected, how- ever, by the adoption of certain standardized units, such as hat, coat and trousers, that a tailor or a cloth- ing house that tried to eliminate or seriously modify these clothes, would soon go out of business. Likewise, economic society has adopted certain busi- ness units for purposes of management. These units of management correspond roughly with a natural di- ORGANIZATION OF ADMINISTRATION 83 vision of the anatomy of business enterprises. The legal corporation and the commercial organization are units of management because the anatomy of a busi- ness is naturally divided into a head for ownership and a body for production. A style of hat which obscured the eyesight would sacrifice efficiency to vanity. A. method of corporate management which neglected the stockholders would sacrifice an ownership function for a selfish reason worse than vanity. Now what we wish to show by the comparison is this : Just as there are many styles of hats, so are there many methods of management; and just as the best hat is determined by its fitness to serve the purpose of a hat, so is that method of management best which carries out most efficiently the functions of the department which it serves. The basic functions of a hat are protection and adornment; the prime functions of management are control and direction. Methods, like styles, must conform to the purposes for which they were created. 2. Economic units. The economic unit, starting with the family, at length grew to include the town and finally embraced the nation. But as nations de- velop and extend their territorial control, the lines marking out the boundaries of the present economic units become more and more arbitrary, and only tend to confuse, instead of to help, clear thinking on eco- nomic subjects. This economic fiction is being main- tained thru the necessities of political policies rather than by the demands of economic science. The best units in a science of economics are not de- 8* FACTORY AND OFFICE ADMINISTRATION termined by their size or weight, etc., but by the func- tion which is performed. Thus, we find that the sci- ence of economics is divided into the four fundamental branches of production, distribution, exchange and consumption. Each of these, in turn, is divided into units which are classified according to the function which each performs; thus* production is considered from the points of view of the three units of capital, labor and land. 1 Now each of these units is again divided into other units ; hence, capital is spoken of as fixed or circulating, according to the way it performs its function and thus we may go on subdividing and resubdividing as long as a single shadow of difference in performance of function remains. It was by such rigid analysis and classification that economics was reduced to a science of business rela- tions. It is only when the basic units have been de- termined that true measurement or judgments can be made between the respective demands of labor and capital. We must know the function of each before we can determine the rights of each from the social point of view. 3. Industrial units. In the broad field of economic activity we distinguish the different industries. Here again we search for the unit of classification based on the function which each industry performs, and we find manufacturing industries, transportation systems, banking or exchange houses, etc. Each is an in- i The facts here stated in general terms have been more fully set forth in the Modern Business Text on "Economics of Business." ORGANIZATION OF ADMINISTRATION 85 dustry, in that it uses the elements of land, labor and capital to effect different objects. These functions are sufficiently described by the names themselves. 4. Distinctions between economics, industry and business. Business, in the narrowest interpretation of the word, is made up of activities designed to effect a specific purpose within the field of each industry; manufacturing is a broader term than plant; trans- portation than railroading; exchange than banking. Therefore, if we are to get a clear understanding of a business we must discover the basic functions which give character to it, or which, as we commonly say, de- termine the nature of an enterprise. This is a some- what difficult matter under the present confused con- ditions of thought concerning economics, industry and business. But, briefly, the differences are these: Economics treats of land, labor and capital in their relation to human wants; the social point of view is emphasized. In industry these three factors become parts of systems or processes by which society is fur- nished with economic goods. In business these ele- ments are used for the purpose of producing revenue or dividends. Thus we see that in economics the point of view is social. In industry it is partly social and partly pri- vate. In business the social point of view is com- pletely submerged, and that of private interest pre- dominates. These three points of view are clearly seen in the distinguishing phrases of each division. In economics they are utility, value or price ; in industry 86 FACTORY AND OFFICE ADMINISTRATION they are mass production, transportation in bulk, or syndicating; in business they are corporate control, centralization and money profits. By keeping these three points of view in mind it is possible to see more clearly the great political and busi- ness problems of the nation, in so far as they have an economic basis. The railroad problem, the labor agi- tation, the tariff question, etc., all lie largely in the field of industrial organization; and the chief point at issue is to determine where society's rights begin and private privileges end. Society, for instance, is interested in having the manufacturers of the nation turn out a maximum of goods. The business man is not anxious primarily about the quantity of commodi- ties made, but about the amount of money received for them. 5. Managerial or business units. From the man- agement point of view, the corporation is a form of specialization which puts the function of ownership and policy control into the hands of a management different from that which directs the productive oper- ations of a business unit. The business unit became so large and complex that it had to be subdivided into smaller units for purposes of management. The corporate organization, therefore, forms one manage- rial unit, made up of stockholders, directors, commit- tees and officers, for the purpose of directing the finan- cial policy of the business. The other division which it has been found necessary to organize into a man- agerial unit is the operative or production end of the ORGANIZATION OF ADMINISTRATION 87 business. The latter has come to be further special- ized into what may be called a staff organization and a line organization. These management units and their relationship to the general management can best be shown in the form of a diagram, as follows : PRODUCERS CREDIT MEN ACCOUNTANTS SALESMEN FIGURE 2. CORPORATE, STAFF AND LINE OROANIZATIOX. An analysis of this chart will show that: (1) the corporate unit by virtue of its ownership reserves for itself the right of determining what shall be done by the general manager; (2) the staff organization unit 88 FACTORY AND OFFICE ADMINISTRATION has become a necessary part of every large business, for the general manager cannot know how everything can be done in the best way; (3) the line organization gets its orders directly from the general manager, who is advised by the corporation and staff experts. Altho the results of the management issue directly from the line organization, yet the importance of the other units is not to be minimized. The corporate management is controlled by a body of specialists who devote their time to the consideration of financial and commercial policies; and the staff technical experts concentrate their efforts upon the planning of methods by which the purpose of the owners may be carried out thru the line organization the men who obey orders and achieve results. One important thing which should not be overlooked is the central position occupied by the general man- ager. It has been pointed out how closely specializa- tion must be followed by a more comprehensive organization for the purpose of developing cooper- ation. With the specialization attendant upon the development of the corporate and operative units of management, there grew up an overwhelming de- mand for a coordinating managerial element in the business unit. The general manager is being forced more and more to assume this very heavy responsibil- ity. It is his function to correlate the policies of the corporate advisers with the methods of the technical experts, and then to harmonize both of these with his ORGANIZATION OF ADMINISTRATION 89 means of production as they are found in the line organization. The details of management are therefore being forced upon three suborganizations which, until very recently, have been given little consideration from the point of view of management. As the pressure in- creases, the necessity of further specialization within each unit becomes greater. Thus we see new points forming, thru which managerial methods and policies are developed or directed. While the complete treatment of corporations and their organization is given elsewhere in the Modern Business Series, a brief statement of their organiza- tion for management purposes is outlined here. Stockholders Directors Executive Committee | President Vice-president General Manager Treasurer Secretary FIGURE 3. ANALYSIS OF CORPORATE ORGANIZATION. Corporate management begins with the stock- holders, who own the business and consequently have initiatory powers. It ends with the executive officer, who, like the other officers and the committees, de- rives his authority from the board of directors, whose members, in turn, look to the stockholders. The presi- dent or vice-president presides at all meetings of the corporate organization. The treasurer is custodian 90 FACTORY AND OFFICE ADMINISTRATION of the funds, which he disburses on receipt of the proper requisitions. The secretary takes care of all corporate correspondence and keeps the corporate records and the seal. The general manager, who is chosen by the executive committee, acts as the medium of contact for the corporate, staff and line organiza- tions. The corporate officers may or may not be members of the staff or line organizations. 6. Manager's cabinet. The operation of a plant, whether industrial or commercial, calls for the exer- cise of judgment upon many technical matters; ac- cordingly, it has been found necessary to aid the gen- eral manager by means of an industrial cabinet made up of experts. For many years the manager, who was also a skilled mechanic, was able to conduct the operations of production with marked success. This was due to the importance of the part which mechan- ical equipment played in our industrial operations. But at length other factors in the making of goods became prominent. Chemistry became as important as mechanics. Now it is being realized that the organ- ization of the factory, commercial house, bank, etc., must be given special attention. If the size of any firm's business is commensurate with the average American enterprise, few men would consider them- selves capable of exercising the best judgment on all these different specialties. Accordingly, the manage- ment has been strengthened by bringing in experts in various lines. 7. Progress due to expert knowledge. The history ORGANIZATION OF ADMINISTRATION 91 of the industrial development of the various nations shows that the country which has led the world at any particular period has been one which developed first and most efficiently some one special activity as an aid to the management. England was first in the field with the use of power machinery. She be- came the "work shop of the world." America adopted much of the English technic but she leaped to the front industrially largely because of her cor- porate organization for controlling large capital forces and concentrating them in the exploitation of her natural resources. Recently the position of both England and the United States has been threatened by the industrial technic of Germany. She has brought industrial chemistry to her aid in the inter- national strife for commercial supremacy. The field of specialization which is still open for development, is organization. Few factories, rail- roads or banking institutions have placed among their technical experts a special department for fur- nishing advice to the general manager on productive efficiency. Judging by the widespread interest that is being displayed at present, however, it does not seem likely that American business men will permit this im- portant function, management, to go undeveloped. Machinery, chemistry and corporate organization have all reduced costs. The extension of the organi- zation principle to the fields of production, transpor- tation, selling, etc., will have a like effect. Many men believe that the addition of an organization ex- 9 FACTORY AND OFFICE ADMINISTRATION pert to the cabinet of the general manager is impera- tive. 8. Analysis of staff and line organization. Next to the corporate organization stand the staff and line organizations as units in management. The follow- ing chart (Fig. 4) shows the position of various ex- MANAGER .MANAGER FINANCIAL SALES OEP'T DEP'T MANAGER MANAGER PRODUCTION ACCOUNTING. DEP'T DEB'T FIGTTBE 4. STAFF AND LINE ORGANIZATION. perts and their relation to that of the general man- ager; and also how these numerous activities may be further subdivided into smaller units for purposes of more specialized administration. The various specialists belonging to the staff or- ganization may be permanently or temporarily re- tained. In either case their position holds such a relationship to the manager's that they are not gen- ORGANIZATION OF ADMINISTRATION 93 erally considered employes. The feeling is gradually growing that these men should hold the same relation- ship to the general manager that a lawyer holds to his client. The lawyer looks into the details of each case and reports to the client. The latter accepts his law- yer's advice or rejects it, as he thinks best. By re- ferring the investigation and solution of the details to competent specialists, the manager is left free to assimilate their plans properly and to correlate the activities which follow from their advice. When we come to the line experts, the men who are to carry out the orders of the general manager, we are on familiar ground. These departments have been closely connected with the management for many years. As the duties of the general manager have grown it has become necessary to depend more and more upon the managers of departments to look after the details. Some confusion has arisen as a result of this dependence upon the departmental man- agers. The latter in many cases have absorbed the functions of the staff specialists. They not only have become the executors of the work but also act as spe- cial advisers in the planning. If, however, the func- tions of their departments are kept clearly in mind, it will be seen that their activities should be confined to the carrying out of orders given them by the general manager. This division of function may not always be necessary or possible in small plants, but the con- sideration of management from the point of view of the units for carrying out the functions of -manage- IV 8 94 FACTORY AND OFFICE ADMINISTRATION ment requires such a division. It affords not only a clear comprehension of the problems of management, but also indicates a modern tendency to relieve the general manager of as many details as possible so that he may be ready to meet every emergency. The de- tails of the administration are, therefore, left in the hands of the manager of production, the manager of sales, the manager of finance and the manager of ac- counting. 9. Financial department as a unit. The manager of the financial arrangements in connection with the operative departments may have control of the cash, credits and collections. He may also act as inspector of all subordinate financial offices. But the financial operations of a business go beyond these matters. The financial specialist in large concerns handles such things as the marketing of securities. The position of the financial manager, when his functions are fully differentiated, would appear as in the following chart : Financial Manager Credit Man Assistants Collector Assistants Cashier Inspi Assistants Assis FIGURE 5. ANALYSIS OF FINANCIAL DEPARTMENT. 10. Sales department as a unit. The importance attaching to the marketing of goods has generally been recognized, but the peculiar conditions surrounding American markets have, until recently, made the sell- ing of goods a comparatively simple matter. To get ORGANIZATION OF ADMINISTRATION 95 salesmen with a "good front" or a "personality" seemed formerly to be the chief problem in sales man- agement. Today this is all changed. It is stated on good authority that 30 per cent of the organization of the merchandising departments of the country under present management is unnecessary, and therefore an added burden of expense. The manager of a sales department must plan his selling campaigns with the thoroness of an army general. To the sales manager are referred all plans for the getting of new business, the problems of selling, competition, the making of sales contracts, the reporting of sales data and the in- spection of sales agencies. The following chart shows the units that make up the sales department. Sales Manager I Advertising Agent Division Sales Agents Inspector Assistants Salesmen Assistants FIOUBE 6. ANALYSIS OF SALES DEPARTMENT. 11. Accounting department as a unit. The man- ager of the accounting department has charge of all raw material, worked material and supplies. He likewise has charge of the inoperative plant and equip- ment and of all finished product. He investigates claims and procures, compiles and distributes all necessary records of conversion and operation. This department is responsible for the inspection of all records. An analysis of the accounting department follows. FACTORY AND OFFICE ADMINISTRATION Manager of Accounts I Head Accountant Auditor I I Helpers Commercial Bookkeeper Cost Bookkeeper Receiving Shipping Billing Storekeeper Timekeeper Stockkeeper Clerk Clerk Clerk I I I | | | Helpers Helpers Helpers Helpers Helpers Helpers FIGURE 7. ANALYSIS OF ACCOUNTING DEPARTMENT. 12. Production department as a unit. Classifying the functions which belong to the production depart- ment and the sub-classification into still smaller units has constituted the chief activity of the modern efficiency engineer. According to him a redistribu- tion of these functions is very necessary, but without going into the discussion at present let us see what natural divisions we should find under any system of management. The following chart (Fig. 8) will show that the manager of production should have charge of, and jurisdiction over, the plant and equip- ment, and the purchase of material, supplies and labor. He will also supervise the inspection of pur- chases and output. Manager of Production Purchasing Superintendent Inspector Agent | | | Foremen Assistants Assistants | Various Bosses Workers FIGURE 8. 'ANALYSIS OF PRODUCTION DEPARTMENT. ORGANIZATION OF ADMINISTRATION 97 13. Management units the basis of organization charts. It has been said that 99 per cent of the enter- prises now in existence have no such thing as a chart or diagram showing the essential units of which their organization is composed. Probably 50 per cent of the managers never heard of such a thing. No doubt, managers are not generally aware of the aid which such a chart would be to them. First, it throws into bold relief the whole organization ; secondly, it shows, in a form that can be visualized, the weak or unde- veloped parts of the management. An organization that cannot be charted so as to show the well-defined relationships cannot be said to be scientifically managed. Mr. H. F. J. Porter has said: Management is like a coaching outfit. The coach must be built right before its service is at its best. All its four wheels must be of the correct size and its body of correct propor- tions. The horses must be well-matched and strong enough to pull the coach. One must not be a dray-horse and another a trotter. The harness must be properly suited to the horses so that the collars will not chafe and irritate them and the traces must be of the s-ame length, so as to pull evenly and not permit one horse to get his legs over the other horse's trace and interfere with him. If all these requirements are not met, there will be danger of not running straight. Merely speaking kindly to the horses, or patting them on the neck, or giving them sugar, or plying the whip, is not going to reach the cause of the trouble. But when this organiza- tion is properly arranged so that everything is in its right place, without overlapping or interfering, it is ready for the skilled coachman to get up into the box, take the reins and drive the coach over such roads as he may meet. There is 98 FACTORY AND OFFICE ADMINISTRATION some assurance that it will stay in the middle of the road with- out any inherent tendency to go over into the ditch on either side. The man on the box is the manager, and upon his gen- eral knowledge of conditions and his skill in handling the organization will depend the efficiency of the organization. This man is an entirely different one, however, from the one who designed the coach or the harness, altho he should have very much to say about the selection of the horses. Without going into the details of organization which this analogy suggests, it will be sufficient for present purposes to note that, generally speaking, any organization has four basic departments, which may be compared to the four horses drawing the coach. They are the financial, the sales, the produc- tion and the record departments. Each of these should be as independent in its action as any one of the horses, but all should be so thoroly related by their harness as to constitute a uniform and united force in pulling the business. In other words, these units of management should remain distinct, but their efforts should be so coordinated as to bring about a unified result. 14. Duties of the management units. The duties of the corporate management, as we have seen, are (1) to furnish funds and (2) to determine the gen- eral commercial policy of the business enterprise. The second group of duties becomes a unit which carries on the productive functions; this in turn is divided into the staff organization the chief duty of which is the advising of the general manager upon various technical matters and the operating ORGANIZATION OF ADMINISTRATION 99 unit, which is generally called the line organization. The operating unit is the one in which we are at present peculiarly interested. This unit, as we found, was divided for purposes of more efficient manage- ment into four basic departments. The duty of the first of these departments is to collect and disburse the money. The duty of the sales department is to ob- tain orders for work by which the third or production department is kept going. The third department then converts into finished goods the orders which it has received. It will be noticed at once how de- pendent this department is upon the first and second departments for equipment, and then in turn how dependent these departments are upon the production department. If maladjustment is to be avoided, these departments must be equally balanced and normally independent. This requirement leads us to the fourth or record department, which is intended to keep account of all that happens in the other depart- ments and thus maintain an operative balance. It provides records for the receipt of all raw material, holding it back until it is needed by the production de- partment, keeping track of what the latter does with it, taking it back as finished products, handing it over to the sales department and telling the financial de- partment how much it has already cost, how much more it will cost before it is sold, and how much should be added for profit in order that all the departments may be kept in good condition continually. 100 FACTORY AND OFFICE ADMINISTRATION REVIEW How do you distinguish between a plan of management and a system ? Point out the difference in the points of view which each of the following presents: economics, industry and business. Under the designations of staff and line organizations, point out the chief elements which distinguish each. Why have managers added a cabinet of experts to their staffs ? What effect has expert management of financial matters had upon American industrial progress? What argument can be advanced in favor of a manager's adding an expert production man to his staff who will hold the same relation to the company that the corporation lawyer does? Outline the various functions, in the form of a chart, which will show in skeleton form the administrative organization of a typical factory. CHAPTER IX TYPES OF MANAGEMENT THE FACTORY 1. Thin red line of tape. A recent report issued by the Parliament of the Commonwealth of Aus- tralia, on Business Management of the Department of Home Affairs, gives the following account of govern- mental red tape: A school teacher in the Federal Territory of New South Wales wants a minor repair in a school closet. He writes thru the local inspector to the Department in Sydney, and the Minister ad- dresses the Premier of New South Wales, who gravely addresses a letter to the Right Honorable, the Prime Minister of the Commonwealth, informing him that the woodwork of a closet is in a state of decay owing to the ravages of white ants, begging him to bring the matter to the notice of his colleague, the Minister of Home Affairs, with a view to the Admin- istrator of the Federal Territory being instructed to have the closet mended, and concluding by having the "honour to be his obedient servant." The Prime Minister does as desired, and ultimately the work is put in hand. When the work is done, a notification is sent back by the same tortuous course. "Famil- iarity," says Mr. Me C. Anderson, the investigator, "does not seem to lessen the shock one gets at the ex- 101 102 FACTORY AND OFFICE ADMINISTRATION ceedingly long journey a very small matter has to take before it can be remedied." National governments all over the world have in- creased their activities year by year until the adminis- trative machinery threatens to crush its foundation. There is no necessity that the efficiency of government management be measured by the business standard that the value of the product exceed the cost. The "system specialists" can work year after year without a check. Should they be compelled to study other factors, such as the necessity of raising money on a four per cent basis, or the problem of "stock turnover," governmental departments would purge themselves automatically of "figures not worth while." To show what red tape means in government practice would hardly be worth while, did not a somewhat similar con- dition prevail in nearly every large business organi- zation. The introduction of improved methods en- counters the universal aversion of business men to any increase in general overhead or office expense, which is fundamentally, tho not always consciously, based on a feeling of helplessness in regard to the con- trol of those parts of an organization which cannot be checked by the "results" standard. There is no spirit of "business is business" to hold the system in the office to a definite end without meaningless ex- cursions. The costs of operation of the department are covered by the general prosperity of the whole, and the only way the average business man knows of 'FACTORY MANAGEMENT 103 handling them is to "play safe" and oppose organiza- tion expenses on general principles. 2. Need of clear understanding of organization, types. The idea that organization means red tape, and that red tape means more overhead expense, has done much to retard the general movement for more efficient management. Yet a very little thought ap- plied along the right lines would show that red tape is only an exaggerated form of one feature in organiza- tion, and that it generally disappears as soon as real organization is introduced. Let there be, then, a definite statement at the out- set: (a) No organization can take the place of business judgment, for organization is but a means to an end; it provides a method. (b) The guiding questions in selecting a type of organization are : Does it permit the choosing of the things worth doing? Does it emphasize the factors that have the greatest bearing on the results, and per- mit the casting out of the unessential and insignificant factors? (c) Organization as a system should (1) relieve the administration judgment of details, and yet bring to it the essentials necessary for correct premises, and (2) provide an orderly procedure for the carrying out of executive decisions when they are put into opera- tion. (d) The following factors, which make organiza- 104 FACTORY AND OFFICE ADMINISTRATION tion, should be considered in the adaptation of the or- ganization type to the character of one's business : ( 1 ) Structure : lines of authority, responsibility, di- vision of labor, system, discipline. (2) Records: accounting, statistics, instruction. (3) Esprit de corps: cooperation, team work. (e) The managing principle by which every organ- ization should be controlled is the determination of the relative importance played by each of these factors; since this is influenced by purpose, conditions and ma- terial, no two administrative policies would follow ex- actly the same course. (f ) The name or designation of a type of manage- ment depends upon the element (see d) which re- ceives the greatest emphasis. Hence, (1) if lines of authority are emphasized in one way, the organization in which this occurs is called a "military type"; (2) if lines of authority are emphasized in another way, in- volving the division of labor, especially as applied to administrative functions, the organization is spoken of as a "staff" or "functional type"; (3) if system ac- counting and other facilitating activities is well-or- ganized, then the type is known as a "systematized type" ; if this feature is lacking, a general weakness of discipline prevails, and the organization is classed as unsystematized; (4) if a serious attempt is made to increase the esprit de corps thru committee work, then we have a type known as the "committee" form of management. 3. Several differences between types. Just what FACTORY MANAGEMENT 105 distinction is to be emphasized in the classification of staff and military types of management is not always made clear. The military organizations of today un- doubtedly employ staff methods and have developed them to a high degree of efficiency. The contrast which most writers have in mind when comparing the staff with the military type seems to be the method of exercising control of the business, or the execution of orders and commands. The military type suggests a domineering attitude, an autocratic method and pro- motion by seniority. The staff implies specialized knowledge, conferences and advancement thru proved fitness. The military type is usually described as a one-man power having for its ruler a despot who de- termines his actions by the standards of inherited in- formation, and who manages his business by rule- of -thumb methods. The staff type is pictured as be- ing just the reverse of this. Here the manager is su- preme in command, but he is advised at every step by experts whose information upon their specialties is the very latest that can be found. Neither snap judg- ments nor empiricism is in control. 4. Why type distinctions grew up. Since there is so much discussion on the subject today it may be well to state the case somewhat more at length than the importance of the distinction between the military and the staff types warrants. The distinction has grown up largely thru the attacks of industrial engineers upon the present system of industrial organization. They found most of the industrial plants of the 106 FACTORY AND OFFICE ADMINISTRATION country poorly managed because in most cases one man was trying to do everything. The manager, finding his powers limited in time and space, put much responsibility upon the superintendents. These, in turn, forced the work of carrying out orders upon the foremen. The latter, becoming overburdened, were compelled to rely more and more upon the judgment and initiative of the workmen. This system brought the burden of the work and responsibility upon the very men who were least able to bear it. Disorgani- zation and great waste were the results. Since the manager with his superintendents, foremen, etc., sug- gested the army organization, the name military was attached to it. This military form became associated with poor management and extravagant waste in pro- duction. Then came the discovery that some con- cerns had increased their efficiency by hiring expert chemists, draftsmen, students of labor questions, etc. This at once suggested the staff organization. The system was then developed so as to put most of the important functions of management under the guidance of a body of specialists. A business, there- fore, which had such an addition to its managerial equipment was spoken of as being organized on the staff principle. 5. Staff and line in business. One firm which uses the distinction between staff and line officers is the Sherwin-Williams Paint Company. The principal office experts, such as Chief of Motor Power or Var- nish Sales Department Manager, without having ex- FACTORY MANAGEMENT 107 ecutive control, confine their attention to the working out of the best methods and the adoption of the best standards. The control is with the line or territorial managers. The company holds that the technical man is doing his best work when he is showing another man how to do it. The specialist is particularly needed during the period when construction and in- stallation are taking place. The salesmen in the field should be instructed so that they may meet ordinary business contingencies. 6. Functional type, the factory. Under the older forms of management much depends upon the fore- man's ability to grasp the larger problems of the man- ager's policy. In arranging for the work of the fore- man, it has been determined of late that the same pro- cess shall be adopted in developing efficient specialists here as was done in the case of the common laborer. Each foreman, instead of having charge of a number of men performing many kinds of work, has now one thing to do. This was found necessary because cap- able foremen with broader ability were difficult to find. Such general work demands of a foreman that he have a fair quota of brains, some general educa- tion, fair physical health, some technical knowledge and some manual dexterity. In common with all ad- ministrative positions, his position calls for tact and judgment. He must have a knowledge of every part of the product; he must see that the workmen use their time for the best interests of the company. He must be a "hustler" himself and he must know how 108 FACTORY AND OFFICE ADMINISTRATION fast other men can work. His duties include the dis- ciplining of the man, the settling of disputes between employes, and the adjusting of wages in case of ab- sence, sickness and so on. 7. Functional method of organization. The diffi- culty of getting men of the proper caliber to take charge of the departments has set managers to devis- ing a method or organization which calls for less abil- ity in any one foreman. Accordingly the functional method of organization is gradually supplanting the military method. In an organization of this kind, a man possessing three or four of the above qualifi- cations can be trained to fill the position of a func- tional foreman. He is required generally to do only two or three things, and in the larger shops only one thing. This does not mean that the same amount of ability, taking the shop as a whole, is not needed under the functional plan, but that it is organized differ- ently. All the ability which is needed for planning is concentrated in a planning department. The shop foremen are no longer expected to do this planning. In a fairly large factory there will be four foremen in the planning department, and another set of four fore- men will be constantly upon the floor of the shop, in- structing and helping the men. This division of labor causes no confusion, for the workmen never see the foremen in the planning department. This illustrates how all the functions may be separated and, whereas the old system provided one foreman from whom a group of men took their orders, the newer method per- FACTORY MANAGEMENT 109 mits any workman to have as many as eight bosses. 8. Foremen of the planning department and the shop. The foremen in the planning department are (1) the route clerk, (2) the instruction-card man, (3) the cost clerk, (4) the time clerk. The duties of these men are fully treated in Chapter XII on plan- ning in the factory. In the shop there are (1) the gang boss, (2) the speed boss, (3) the inspector, (4) the disciplinarian. These men can be selected without difficulty, and their training can be provided for if the manager has a clear idea of what he wants to accom- plish. The gang boss has no definite duties as such. He simply carries out such work as the planning depart- ment assigns him. The speed boss sees that the work is carried out ac- cording to the schedule sent out by the planning room. The inspector looks after the quality of the work as it comes from the machines. He must be able to in- struct the men as to the type and quality of workman- ship required. The disciplinarian settles all cases of insubordina- tion, and passes judgment upon the disputes which arise between workmen and foremen. There is a fifth boss in some factories, whose duty it is to keep the machines clean and in repair. 9. Unsystematized type of management. In an unsystematized plant the chief characteristic of the management is the lack of a proper system of cost ac- counts, and an inadequate method of keeping the ac- IV 9 110 FACTORY AND OFFICE ADMINISTRATION counting information in good shape. In so far as every management must depend upon its cost and financial records in order to meet market competition, the unsystematized plant is at a distinct disadvantage. Inadequate cost records are the cause of many losses and failures. It is a frequent experience of certified public accountants, on being called in to examine books of account, to find that the firm is losing money. When a competitor discovers the fact that his rival is not keeping close account of costs, he is some- times able to purchase the goods more cheaply from the firm which keeps inaccurate cost accounts than to make them himself. It is said that a large depart- ment store which had for years done its own printing, finally ceased this branch of work because it discov- ered that the printing trade in general kept very in- adequate records of its costs. It then adopted the method of sending for estimates to a large number of printers whenever it had a job which it wished to give out. All of these estimates were to be based upon a printed sample which the store sent to the various printers. The manager was safe in choosing the low- est bid submitted, for without fail some of the bids would be below cost. Under the unsystematized type of management the accounting generally consists of a statement prepared some time after the annual or semi-annual stock-tak- ing, and shows the profit and loss, and the assets and liabilities. In most cases, however, such a record is chiefly of historical importance. If the statement is FACTORY MANAGEMENT 111 bad, it is too late to remedy the troubles of the previ- ous year, because it shows merely the result of that year. If, as is likely to happen where there is little system, the yearly statement is delayed, the record be- comes too ancient to be of much use. It frequently happens that firms whose fiscal year ends in January do not know the result of their year's business until six months later, and then only in the form of statements as to profit and loss and assets and liabilities. Some of the information is eighteen months old and it all comes too late to stop any of the leaks. 10. Majority of industries unsystematized. It is probably safe to say that the great majority of the firms of this country belong to the unsystematized type of management. The prevalence of this type in America is due in a great measure to the large margin which has existed between the cost of production and the selling price. Many firms with a large margin of profit have paid little attention to scientific ac- counting; but conditions in this respect are changing and the number of systematized concerns is growing every day. 11. Systematized type of management. Under the systematized type, the managers are methodical and systematic ; each department has been studied and sys- tematized until, so far as records go, the firm knows exactly where it stands at all times. The distinction between the systematized type of management and the unsystematized is seen in the dif- ferent emphasis which is put upon the accounting. 112 FACTORY AND OFFICE ADMINISTRATION Instead of vague reports made once or twice a year, the books of the systematic type of management show the conditions of the business quarterly or monthly, and in much detail. Four new features usually ap- pear under this form of management: 1. Reports comparing last year's cost with this year's costs. These may be made on the basis of a department or of a certain product. 2. There will be costs, showing material and labor value. 3. In addition to the deter- mination of these direct costs, there will also appear a practical method whereby overhead charges may be equitably distributed. 4. The results of the business will be periodically put before the manager in a simple but comprehensive table or chart. 12. Cost records highly developed. The cost rec- ords give systematized management a distinct advan- tage over the unsystematized types. Correct cost ac- counts are relied upon to establish the selling price, and to point out excessive costs and indicate, perhaps, where they may be reduced. Many managers, there- fore, believe that when they have a systematized plant they have also an efficient plant. It is just at this point that the advocates of the new scientific manage- ment take issue with them. They point out that sys- tem helps only one function of management and that even under the best systematized methods many de- fects might be discovered pertaining to the system it- self which would be eliminated under the efficiency or scientific type of management. These critics point out, for example, that the same general system of ac- FACTORY MANAGEMENT 113 counting under the systematized type does not extend to the whole plant. To illustrate, the clerical work in the different departments may not be included in the cost accounting. The close analysis to which the un- systematized type of management has been recently subjected has set a new standard of accomplishment before the management. To attain results new methods of management, based upon close analysis, are proposed. As these contrast sharply with the older methods, a new type has been established. 13. Committee system. One method which is com- ing more and more into use is the committee system of management. It is an attempt to apply the same democratic principles of government to factory man- agement that are embodied in the national and state governments. The primary idea is to enlist the co- operation of the men in the shop in forming plans and offering suggestions for the good of the company. By means of frequent meetings and a thoro airing of opinions an esprit de corps and a feeling of responsi- bility for the success of the business as a whole are established. In its method this system is the op- posite of the military type of management. The committee system is especially well adapted to fur- nish a means by which the discontented can give ex- pression to their feelings, and affords a valuable aid to the management in locating the cause of any dis- affection. Furthermore, it is claimed for this system that it provides a method of overseeing whereby an executive totally ignorant of shop and sales processes 114 FACTORY AND OFFICE ADMINISTRATION is provided with reliable data concerning any weak spots in the production, buying or selling department or in the office. 14. Work of the committees. The work which forms the basis of each committee discussion must be in harmony with the purpose of each committee. The following will be suggestive in showing the funda- mental problems which, in some form or other, must be considered : 1. Routine work and report of progress. 2. New designs and inventions. 3. Cost reductions and economy. 4. Plans to standardize products. 15. Special types, divisional and departmental. One of the great problems of railroad management is to overcome the difficulties imposed upon it by the great distances which separate the operating depart- ment from the source of control. To look after the details of operation of any railroad four or five thou- sand miles long would be beyond the capacity of any general manager. Accordingly, the operating terri- tory is generally divided into districts and its manage- ment put in the hands of subordinates. The division may be long or short, according to circumstances. For example, the Pennsylvania Railroad station in Philadelphia is the head of the Philadelphia division, but the average length of the divisions of this same line east of Pittsburgh, outside the big cities, is 150 miles. That the details of a territory as large as this may be managed, considerable power must be vested FACTORY MANAGEMENT 115 in some local authority. The divisional superinten- dent, under this type of management, is therefore a man of importance. No matter how capable a man the superintendent may be, he cannot be an expert in several directions. If he is a good operating man, he is likely to be un- fitted for the work of a civil or mechanical engineer. Hence the rise of a departmental type of management, in which the operating superintendent confines his work to his specialty, i. e., to the operation of the trains, and is aided by experts in mechanical and civil engineering. Under this departmental management the divisional superintendent does not have absolute control over all activities. For example, if two en- gines are to be repaired and the division superin- tendent wishes the work done at once, he must first take up the question with the superintendent of motive power, who is an expert in such matters. The latter officer, however, not being connected with the local division staff, after having considered the advisability of the repairs, would then refer the matter to the mas- ter mechanic who is located in the division superin- tendent's territory. Before the recent discussions on the subject of busi- ness efficiency became so general, there were three types of management, and this classification to cover the whole field in a much broader way than the more recent ones. These types were the traditional type, the transitory type and the functional type of man- agement. 116 FACTORY AND OFFICE ADMINISTRATION It will not be necessary to discuss the first two types, because they cover in a general way the kinds already described. The boss, military or strenuous types of management would fall under the tradi- tional plan. When this plan has been improved upon by the adoption of more systematized methods, the type is spoken of as transitory. The third type, or the functional, has been described above. Since these three types embrace all the others we may briefly re- view their characteristics and see their contents more clearly if we study the following synopsis as it applies to the stores department. TRADITIONAL TYPE TRANSITORY TYPE FUNCTIONAL TYPE 1. Does not realize that 1. An equipment prop- 1. Physical appearance proper space for storage erly arranged for storage, resembles Transitory Type. is important. 2. May be general store- 2 (a). Various depart- 2. (a). Central control room, but all the stores ments often have their own of department stores, seldom found there. stores but not under cen- (b). Proper system laid tral control. out in orderly way. (b). E very thing ar- ranged in neat and orderly manner. 3. No system in piling 3. Everything is kept in 3. Provision for holding stores. Generally put in its place. and piling stores. place most convenient at 4. No person to assume 4 (a). Storekeeper is- 4. (a). Balance-of-stores and carry out responsibili- sues all stock, but no cen- clerk controls all materials ties for the order in which tral office control. from central office. stores are kept. (b). Stores isued on req- (6). Materials delivered uisition only. on requisition only when (c). Storekeeper has as- signed by stores clerk in sistants for moving stores central office, in and out. (c). Storekeeper has as- sistants. All act on orders from central office. 5. Proper records of 5 (a). Perpetual or 5. (a). Ledger sheets in stores generally missing, "book" inventory kept in central planning office have office but seldom prede- maximum and minimum re- termined maximum and quirements for each kind minimum requirements. of material. (6). Office Book inven- (?<) Balance-of-stores tory is balanced with stores sheets (ledger sheets) kept and once a year the bal- in the central office. Upon ance checked against an these the location of ma- actual physical inventory terial is shown. of stores. (c). All bookkeeping for stores done in central of- fice. 6. Some kind of division 6. Symbols used to desig- and classification of stores nate different kinds of will be found. stores. FACTORY MANAGEMENT 117 TRADITIONAL TYPE TRANSITORY TYPE FUNCTIONAL TYPE 7 (a). Sometimes a cen- 7. (a). All work on ma- tral planning station is terials planned ahead in found. planning department. (Z>). In the station the (b). All planning done operations for each proc- before operating depart- ess are written out before ment needs them, work is started. (c). Materials running (c). Where planning sta- low noticed at once and a tion is not in operation, ma- supply obtained before op- terials are often wanted be- erations begin, fore it is discovered that some part or material is missing. 8. "Supply stores, euch 8. System covers all sup- as belting, electrical appli- ply stores, ances, etc., are not usually put under the general sys- tem of stores. 9. Special men, called "move men," take and re- move materials to and from machines, thus relieving workman and keeping him from looking for or waiting for his materials. 10. Fire protection. 16. Work planned ahead. Perhaps the broadest contrast between the functional type and other types is in the planning of all the work for each workman ahead of time. The principle by which this kind of management gains control of the operating elements is that of planning completely the proper execution of the work before a single move is made. A route sheet showing the names and order of all the operations which are to be performed is made out, and instruction cards are clearly written for each operation period. Requisitions on the stores department showing the kind and quality of the materials and where they should be moved, and the list of proper tools for doing the work in the best way, are prepared for each opera- tion and the very best methods for performing each operation are determined in advance and embodied in the instructions. 17. Shape the man to the organization. Shape the 118 FACTORY AND OFFICE ADMINISTRATION man to the organization, not the organization to the man. A wise policy dictates that the best men should be placed at the head to plan and organize the work for less able men. When exceptional men assert them- selves they should not be allowed to break down the machinery and do the work single-handed, but they should at once be given important positions where, by constructive work, they can strengthen that ma- chinery. In fact, it is to such exceptional men that the rule applies with special force, "Let no man be- come indispensable." If he does, the organization collapses with his exit. Instead of building up the company, he ruins it. The notable tendency of our time, in accord with which successful individuals have incorporated their undertakings, thereby voluntarily subordinating themselves to their ideas, shows that the really big men recognize this impersonal nature of organization. The method of the efficiency engineer is distinct, not because it enumerates new principles, but because it applies in greater detail and in a more systematic way principles which are well established and in universal use. 18. The primitive type for small firms. The most primitive form of management and the form which is still the most efficient in small matters is found in those cases where the owner carries "his office in his hat." This primitive owner or foreman performs each one of the functions of management. He plans the work of the office, he digs up the information he needs, he pro- vides the necessary machines and materials, and he FACTORY MANAGEMENT 113 hires and instructs his workmen. When the establish- ment grows beyond the capacity of one head, some or all of these functions must be delegated to others. The owner hires a draftsman, a bookkeeper and a fore- man, and lets the latter hire and instruct the work- men. As the work increases other departments are added as needed, and the organization becomes more complex. Permanent progress in this world is, after all, a process of evolution, not revolution. Steadily from generation to generation the efficiency of manu- facture, of agriculture, of transportation and of all the many other activities which form a part of our com- plex civilization, has increased. And since our methods are still far from perfect, we may look for- ward to similar or even greater progress in the fu- ture. REVIEW What danger to efficient management is likely to arise when a factory or office grows very large and the activities become nu- v merous? Why do business men object to the introduction of new methods and systems into an office or factory? If you were asked to distinguish between "red tape" and or- ganization, what series of statements could you make to show the difference ? How is the principle of specialization in management being worked out with reference to the foreman? What is meant when the remark is made that the majority of industries are unsystematized ? Show how the cost records of a factory may be taken as a guide in deciding to what type of management the factory belongs. What representative form of government is being used in business management? What element clearly marks off the functional method of man- agement from all others? CHAPTER X TYPES OF MANAGEMENT THE OFFICE 1. Function of the office. The function of the office is to facilitate the work of production and distribu- tion. In other words, here is the place from which the facilitating activities are directed. In its usual sense, the "office" is the part of a business establish- ment in which the administrative and clerical work is performed. That is to say, if the vice-president hap- pens to have charge of the factory, his headquarters are said to be "in the office." The department of the sales manager, the advertising manager, treasurer and accountant are also regarded as parts of the office. But for our purpose that of laying down basic prin- ciples in the management of the office we must adopt a different point of view. It has already been explained that, generally speak- ing, a business is divided into four basic departments the production department, the sales department, the financial department and the accounting depart- ment. Each has its own specific functions to per- form. The production department supplies the art- icle to be sold, the sales department is concerned with selling it, the financial department collects and dis- burses the money involved in the conduct of the entire business, and the accounting department records all 120 OFFICE MANAGEMENT 121 the transactions, summarizes the facts and presents the results in statements and reports for use in further operations. The office, as we shall have to regard it, performs the clerical work required by these four depart- ments. In the production department, records of or- ders, quotations, invoices, stock, requisitions and the like are constantly needed. The whole attention of the factory superintendent or manager should, the- oretically, be devoted to the efficient production of goods. This calls for the use of all his skill and ability in the handling of machinery, plant, men and ma- terials. He is interested in the clerical work only as it is an aid in the performance of his duties. When he is about to purchase a new machine, for example, his interest does not lie in how the quotations are filed, but in the bids themselves. If the factory manager is uncertain as to the specifications on an order going thru the plant for one of the customers, he wants the original order when he calls for it. He does not care how the order is found; he wishes only that it be brought to him promptly. There are also sales records and statistics, follow-up files, prospect lists, clippings, electros and other mate- rial which must be cared for. The sales manager, like the factory superintendent, is supposed to give his whole thought and attention to increasing sales. It is necessary that the sales records be reliable, and that they be on hand when wanted. Further than that the sales official's interest does not go. 122 FACTORY AND OFFICE ADMINISTRATION The financial department also has its records, such as credit information, lists of delinquents and the like upon which it relies in conducting its operations. The accounting department requires sundry clerical work, such as billing, filing vouchers, etc. In addition, the four departments referred to re- ceive and send out mail, which must be typewritten, filed and otherwise handled. There are other details incident to the routine of every office, such as the oper- ation of duplicating, addressing and other machines, and attending to callers, errands and inter-office com- munications. All these details fall within the scope of the office proper. From a management point of view, then, the office may be defined as that part of a business organ- ization which performs the purely clerical work neces- sary in the conduct of the whole business. 2. Elements of management applied. The same cardinal elements of management discussed in previ- ous chapters are present in the management of the of- fice. In other words, we face the problem of direct- ing forces or energy toward the fulfilment of a pur- pose. There are, for this, two kinds of energy human and mechanical. The purpose of the office is to provide the clerical work necessary in the con- duct of the entire establishment. To perform this work expeditiously and efficiently contributes to the profit-making of the concern in the same sense that increasing sales or reducing the cost of production does. OFFICE MANAGEMENT 123 The first step should be a study of the work required of the office, as we now understand the term, and an analysis of the amount of energy available. To put the matter more concretely, we may compare the office manager's work with that of a contractor about to build a schoolhouse or other building. His plans and specifications are laid before him. He knows what is wanted. He knows, too, that he has so many men, so many dummy engines, and so on. The men and engines represent a given amount of energy, which the contractor measures by the amount of work they can perform. A bricklayer can lay an average number of bricks a day ; a forty-horse-power engine can move an average number of loads a day. The office manager may have five, six or more departments to serve. Each department requires certain services which are approximately determin- able. These services are the "results" required of him. He studies the people on his force and the mechanical appliances at his command. The efforts that the two groups put forth represent the energy under his control. He, too, measures energy by re- sults. For instance, he realizes that while a typist can turn out about 900 lines a day, a duplicating ma- chine can produce about 35,000 form letters a day. Knowing what the office can do, with its present equipment of people and machines, the office manager must determine whether the existing standards are sufficiently high and, where possible, must raise the standards, thru the introduction of new methods or a 124 FACTORY AND OFFICE ADMINISTRATION better grade of help, or by reorganizing the work where reorganization is required. This really is the axis around which all the office manager's duties re- volve. 3. Office head. The term "office manager" has been used above. Since the duties properly within the scope of the office may be separated from other duties, and since the management of the office may be consid- ered as a separate function, it would seem that there should be an official who would be specifically respons- ible for its efficient conduct. Theoretically this is true, and in many large concerns, such as the West- inghouse Air Brake Company and branches of the United States Steel Company, there is actually such an official. In the majority of cases, however par- ticularly in medium-sized and small concerns this duty is either divided among a number of department heads or is only one of a number of duties assigned to an officer also in charge of some other branch of the concern's activities. This feature is considered in a later section of this chapter. It is desirable now to inquire into the necessary qualifications of the person or persons charged with governing the office. We have seen that the office proper is in close touch with every other department in a business establish- ment. As a matter of fact, it is an essential to the effi- cient conduct of these departments. What would be easier, for instance, than to frustrate an important plan for increasing sales by neglecting the clerical features of the plan? Or if the financial department OFFICE MANAGEMENT 125 were contemplating a special campaign to stimulate collections during a month usually "slow," the person in charge of the clerical work, failing to comprehend the importance of the movement, might easily cause a loss of several thousand dollars by postponing atten- tion to certain details in favor of "more pressing things to be done." It is highly desirable, then, that there be complete harmony between the office and all the other departments. There is a corollary to this conclusion. The per- sons in charge of the office must be thoroly familiar with the purposes and policies of all the other depart- ments, and must be fully aware of the import of every move that is made involving clerical work. This would hardly be possible unless these persons under- stand the principles that underlie the conduct of busi- ness in general. Knowledge of what the sales depart- ment is for, of how it operates, of the method of the work in the production, financial and accounting departments is important to the office head. He should also, of course, be thoroly familiar with the sub- ject of organization and management and should be in touch with all the modern office methods and de- vices. In addition, he should possess the natural qual- ifications of any leader tact, precision, sympathy, f orcef ulness and a keen, accurate perception of the de- tails of problems presented for his decision. 4. Selecting and handling employes. The prob- lem of directing the office force so that its members will work harmoniously and with maximum efficiency 126 FACTORY AND OFFICE ADMINISTRATION is one of the hardest to solve. Yet the principles of good administration are as capable of application in the management of an office as they are anywhere else. It is important, first of all, that proper care be given to the selection of employes. The fourteen-year-old applicant for the office boy's position should be a fu- ture executive. He should be examined with that end in mind, and his physical and mental characteristics should be carefully studied. During the last few years much progress has been made in establishing scientific physical tests. Some of the large concerns have installed medical departments for this sole pur- pose. The education, home surroundings and future ambition all of which may be determined by discreet questioning are also important barometers in helping an employer to judge the ability of a person to per- form the work to which he or she is assigned and the probability as to whether the employe is likely to ad- vance to a more important position. Coupled with the selection of employes is the im- portance of assigning to them the duties which they are by nature best fitted to perform. This seems obvi- ous, yet how many clerks are at the billing desk when they should be order clerks or entry clerks ? In cases where there is an original examination such as has just been discussed, it is only a matter of carrying the proc- ess one step further and determining what qualifica- tions are necessary to the performance of a given kind of work. In the mailing department of one of the large publishing houses, for example, it has been OFFICE MANAGEMENT 127 proved that an active, nervous girl can turn out more work than a calm, self-contained girl, even tho the lat- ter may move decisively. The welfare movement which had its inception in factories is now being applied to offices as well. In many of the large companies, like the Metropolitan Life Insurance Company and the American Tele- phone and Telegraph Company, light, airy lunch rooms are provided, where wholesome food is tastily served at low prices. The National City Bank of New York, Spencer Trask & Company and other large companies have provided club rooms, libraries and recreation rooms where office employes may gather after office hours and listen to lectures on busi- ness subjects, discuss outings and so on. All these movements should be encouraged and aided by office managers and by the heads of concerns. They stimu- late among the employes loyalty, cooperation and an interest in one another which in the long run result in an increased interest in the work. 5. Establishing standards. Office work does not lend itself well to scientific management. Yet it is possible to establish standards and by means of re- ports to determine the efficiency of employes. Mar- shall Field & Company of Chicago, the Simmons Hardware Company of St. Louis and other concerns have, for instance, placed their typing departments upon an efficient basis in the following manner : By means of a register which records the number of strokes on the typewriter keys they obtain a fairly ac- 128 FACTORY AND OFFICE ADMINISTRATION curate record of each girl's output. In other cases the number of lines (of a given length) , or the number of words, is counted by the chief of the typing de- partment. The following is a sample week's record in one of the concerns which use the line method of calculation. The high records were made by opera- tors on dictating machines turning out standard para- graph letters, while the lower records were made by be- ginners or by girls on difficult dictation. The initials in the top row indicate the correspondents who dic- tated during the week ; the names of the typists appear in the left-hand column: TAT LRS BMO FL BL EWC MHE HT COPY TOT. Miss Smith 270 670 585 750 1,065 ' 60 1,240 4,640 Miss Jones 85 ... 4,900 145 95 415 5,640 Miss Brown 310 4,870 590 ... 300 6,070 Miss Richards 250 ... 3,900 150 ... 1,545 5,845 Miss Hart 655 850 420 ... 2,040 3,965 355 670 6,450 5,970 750 3,900 2,370 155 5,540 26,160 These records form the basis of a bonus system. Any such bonus system must necessarily be elastic and more or less arbitrary. In this particular case the committee which awards the bonuses takes into consid- eration the number of lines, the nature of the work and the accidents and other delays reported. The op- erators cannot tell in advance just what their bonuses, if any, will be. Their reliance on the fairness and judgment of the committee, however, helps to make the system effective. In addition, the figures posted on a bulletin board arouse a friendly competitive spirit. OFFICE MANAGEMENT 129 Many large concerns have discontinued bonus and piecework systems in the office. The American Law Book Company of New York tried a piecework system but gave it up. So did the Sears, Roebuck Company of Chicago. At one time five hundred clerks in the entry department of this company were paid on a piecework basis, but the plan was found im- practicable. 6. Military type of organization. There are three types of office organization: first, the military type; second, the functional type; third, a combination of the military and functional types, which may be termed semi-functional. In the military type, which is the most common, the head of each department con- trols all the work that is performed in the depart- ment, irrespective of its character. The sales man- ager, for example, not only is provided with assistants for writing to salesmen, for handling mail-order work and for other purely sales activities, but in addition has his own stenographers, typists, statisticians, file clerks, mail clerks and errand boys. The sales department, under these conditions, becomes practically a business office in itself. On the one hand, it is credited with sales and on the other hand, it is charged with its ex- penses. This is an easy method of determining the exact ratio of sales expense to income. As has al- ready been pointed out in an earlier part of this book, however, the military form of organization is obviously inefficient for the sales department, for under such a system this department is forced to perform functions 130 FACTORY AND OFFICE ADMINISTRATION entirely outside its scope. The selling type of mind is different, as a rule, from the type needed for the effi- cient regulation of routine. The same basic objections apply to the military form of organization in the other departments. 7. Functional type. The separation of strictly office work from that within the scope of the sales, production, financial and accounting departments is similar to the change which takes place in the factory organization when the functional type is substituted for the military. The duties of the gang foreman, in the latter case, are distributed among a number of functional foremen, each with his own special duty to perform. In the office, the department heads confine their energy to selling, manufacturing, financing or accounting, as the case may be. The specialized func- tion of managing the office is turned over to a person trained for this duty. Frequently we find an officer usually the accountant performing the dual task of running an office and one of the four other depart- ments. While this arrangement is sometimes expe- dient, especially when a concern is not large enough to warrant the employment of an office manager, it does not conform strictly to the accepted idea of a func- tional organization. When the functional idea is in force it is carried out, so far as possible, thruout the entire office organiza- tion. Except in cases where there is not enough work to keep a person busy, one specific task is assigned to OFFICE MANAGEMENT 131 each employe. Functional organization in a modified form is illustrated in Figure 9. During the change to the functional scheme of or- ganization, in this case, numerous instances were dis- covered where one clerk could do the work that had formerly occupied two. The office, in this organi- zation, is a separate department directly responsible to the executive committee. It is.not a subdepart- ment of any one department, but a subdepartment of them all. All the clerical work is under the supervi- sion of the office manager, and he has his subordinate chief clerks, whose duties are also specialized. The functional idea is carried to its consummation in the collection department where each clerk has one task to perform. One checks bills, receipts and addresses, another types form letters, another enters remittances, and so on. 8. Semi-functional organization. We frequently find an office organization almost on a functional basis, but still adhering in minor respects to the old scheme of management. For good reasons, the various de- partments retain their own stenographers and one or two special clerks. The work may be of a confiden- tial character, or the clerk may need specialized train- ing that can be obtained only by carefully obeying the head of the department or his assistants. The organization of the office in the White Com- pany, Cleveland, Ohio, manufacturers of motor cars, is of this character. In this company the sales de- OFFICE MANAGEMENT 133 partment is in two divisions, one in charge of the sec- ond vice-president, the other under the jurisdiction of the secretary. The auditor is also office manager, but various sales departments and subdepartments have retained some clerical help. The advertising depart- ment is a typical example. Specially trained clerks are usually necessary in advertising work and we find that special stenographers and clerks are assigned to this department. 9. Committee system. The committee system is employed in the office with excellent effect. In Fig- ure 9, it will be seen that the office manager is a mem- ber of the executive committee. The value of this ar- rangement is evident when it is remembered that the force he controls is in constant attendance upon the de- partments of which the other members of the commit- tee have charge. Thru the committee meetings the office manager keeps in touch with the plans and poli- cies of the various departments, and is thus enabled to direct his force with an intelligent regard for that work which should take precedence over other work. Here, too, he learns of the shortcomings of his force, receives suggestions that add to its efficiency and im- bibes the spirit of the entire organization, which in turn he communicates to his department heads thru an of- fice committee. The office committee is composed of the office manager and his chief clerks. The fre- quency of the meetings of the executive committee and the office committee depends upon the nature of the business. The former usually meets more often than 134 FACTORY AND OFFICE ADMINISTRATION does the latter. There is danger of carrying the com- mittee system too far, just as there is of not carry- ing it far enough. The routine of the day should not be broken any more than necessary; it is often advis- able, in fact, to hold meetings during the lunch hour or on Saturday afternoons. 10. Suggestion system. The suggestions offered by office boys and other minor employes frequently surprise even the most ardent advocates of the sugges- tion system. The usual plan is to offer two or three definite money prizes for the best suggestions turned in during a given period, say one month. The sug- gestions are unsigned, a copy being kept by the author. They are deposited in a box designed for that pur- pose, or are laid on the desk of the office manager. Either the executive committee or the office committee passes on the various suggestions submitted and awards the prizes, posting the winning suggestions on a bulletin board. The contributors submit their cop- ies, receive the prizes, and their names are then writ- ten on the posted documents. Suggestions in regard to providing a motor for a hand-driven device, reduc- ing the sizes of various pieces of stationery to avoid folding, pasting carbons to letters instead of pinning them, thus saving space in the files and the cost of pins or clips, and other ideas of this sort are the most com- mon. Very often, however, advertising and selling ideas and suggestions of similar importance come from the most unexpected sources. 11. Arrangement and lighting of office. While the OFFICE MANAGEMENT 135 subject of office arrangement might properly be treated under the head of organization it is, neverthe- less, an important element in the management of the office and may well be considered at this point. The arrangement of desks, filing cabinets and other equipment depends much upon the type of organiza- tion. Under the functional type, where the filing is concentrated in one department, where the typists are gathered under one chief and the other functions are similarly segregated, it is obvious that the equipment is grouped according to the departments. The prob- lem then becomes one of allotting the proper floor space and position to each department. The general principle of progression should be adhered to as far as possible. It is usual to follow the course taken by the orders received. This is illustrated by the floor plan of the office of a large clothing house in New York (Figure 10). The orders are first laid on the president's desk. From there they go to the credit de- partment, and when the sales manager receives them he knows whether or not they are approved by the credit department. After receiving his approval they proceed to the order department, where the produc- tion orders are made and the proper copies sent to the filing department for the sales and other files, to the billing department and to the factory superintendent. The latter is not far distant from the purchasing agent, with whom he is in frequent communication. The treasurer is located close to the credit and account- ing departments. The shipping slips come up from 136 FACTORY AND OFFICE ADMINISTRATION the shipping department, on the floor below, to the billing department, which is across the hall from the accounting department. The filing, mailing and CREDIT TREASURER CASHIERS DEPART- AUDITOR PRESIDENT MENT _J 1 1 1 1 i ACCOUNTING n7rp D . PRIVATE CORRIDOR | TION 1 MAIN CORRIDOR DEPARTMENT VICE 1 FACTORY 1 PRESIDENT SUPERINTENDENT BILLING DEPARTMENT SECRETARY RRIDOR | REST ROOM AND LIBRARY -H. 'o O 1 SALES MANAGER o: u MAILING g 'DEPARTMENT SALES DIRECTORS' ROOM PRIVA < 5 STENOGRAPHIC DEPARTMENT --f DEPARTMENT PURCHA9-I AGENT 1 FILING _ _J | DEPARTMENT ORDER PURCHASING DEPARTMENT OFFICE MANAGER 1 1 DEPARTMENT MAIN CORRIDOR ELEVATORS AND STAIRWAYS FIGURE 10. -FLOOR-PLAN OF OFFICE IN NEW YORK CLOTHING ESTABLISHMENT. stenographic departments are also conveniently lo- cated. There is very little doubling back in this office. Care should be given to the proper lighting of the OFFICE MANAGEMENT 137 office. Poor light is responsible for much of the in- efficiency in office work. Lighting has been reduced to a science, and it is in most cases advisable to call in an expert. Sometimes it is found cheaper to in- stal an indirect lighting system; in others, a direct system with properly diffused light is better. The candle-power, the kind of shades, the distance of one light from another and from the work all these are important points to be considered. REVIEW Study the full significance of the term, "facilitating activities/' as applied to the functions of the office. Should the activities of the office be looked upon as non-pro- ductive in the sense that these activities do not help produce profits or produce the goods ? Why can the cardinal principles of management be applied to the office organization as well as to the factory? What vital principle in management would you say has been violated if, upon thoro investigation, you should find numerous "misfits" at work on the various jobs in the office? Do you think it advisable to establish as many standard opera- tions as possible in an office? Why? Show how you would apply the functional method of organiza- tion to an office. An expert in gas illumination advised a manager to change his method from one involving a central source of lighting to one by which each desk is lighted individually. The manager dismissed the expert without listening to his argument. On what particu- lar point would you judge the manager to be weak as an execu- tive ? CHAPTER XI MODERN AIDS IN MANAGEMENT PLANNING 1. Real management is concerned with policies, not details. Most managers will admit that they are han- dicapped because they must attend to too many details. Foremen, superintendents and bosses will generally admit that they are overworked. Yet if a superior officer should suggest that some of their duties be lightened or removed, how many of these men would submit without any protest? It is this factor more than any other in human nature the unwillingness to surrender any fraction of authority that stands in the way of progressive management. One frequently hears the remark made that the head of the concern is the last one to be convinced that his own organiza- tion might be helped and his own effectiveness in- creased if some of his responsibilities were shifted to the backs of other men. He is more likely to object, because he has more authority to surrender than the men below him. 2. Adjusting authority to responsibility. How- ever strenuous may be the objection in certain quarters to any particular system of scientific management, it is generally conceded that there are certain aids which will help the manager to lighten his burden and in- 138 PLANNING IN MANAGEMENT 139 crease his efficiency without lessening any part of his total authority. Not all of these aids, of course, can be mentioned, but a few which have been tried and found successful will be given. Perhaps the simplest is a chart showing the form of the organi- zation, the effectiveness of which will be much in- creased if it is supplemented by an organization record. Other devices which are gradually being adopted, as a whole or in part, are the planning de- partment, time-studies, standards, mnemonic symbols, bonus rewards for labor and welfare work. 3. Organization charts a prime requisite. A chart showing clearly the line of authority and responsibility of each individual in an organization will go far to- ward removing many inter-departmental jealousies. The chart should be so simple that it will be self-ex- planatory upon inspection. Each man's position is thus made perfectly clear and he easily informs him- self as to what course to take when transacting busi- ness with other departments. If the chart is for a factory, each workman will know to what particular gang boss or job boss he is directly responsible; each gang boss or job boss will know to what foreman he must report ; each foreman will know to what superin- tendent he must answer ; and each superintendent will know where his authority begins and ends with respect to other departmental heads. Furthermore, the chart should show who is responsible for machines and equipment. To be most effective the chart should be hung in a conspicuous place. Each of the manufac- 140 FACTORY AND OFFICE ADMINISTRATION turing departments should have one, as well as the office ; 24 x 36 inches is a suitable size. When made in the form of blue-prints, charts are inexpensive, but they should be framed and protected by glass, to shield them from pencil markings and other injuries. 4. Charts clarify ideas. These charts will not only prove themselves an aid in instructing the employes in the workings of the organization, but they will be found to be of great value in helping the manager to clarify his ideas and in adding to his information regarding his organization. Any manager who has never planned a chart of this kind will be surprised to find how many gaps there are in his knowledge of his own plant. Furthermore, the making of such a chart compels the manager to look upon his organiza- tion from the point of view of functions and activities rather than from the standpoint of the persons who are running the business. This elimination of the personal equation is one of the first things which the manager must accomplish if he would obtain absolute control of his business. He can look at his organization as if it were a ma- chine and, having studied the various parts and their functions, he can take up the question of the personnel and compare the qualifications of the different men who might run that particular part of the organiza- tion. The following chart (Fig. 11) brings out in a graphic way the elements mentioned above. This particular form of organization was taken for various IV 11 141 142 FACTORY AND OFFICE ADMINISTRATION reasons. It is a good illustration of that type in which the departmental or functional principle is carried out in a modified way to suit a small industrial plant. Moreover, it shows the position of the planning de- partment in its relation to the other departments. It will be noticed that on this chart (Fig. 11) the press shop is divided into groups of men and machines. Each group has a gang boss, who is responsible to the press shop foreman. The departments other than the press shop are all small and employ but few men, ex- cept the tool room and the die shop. The erecting floor is in charge of the gang boss, under whom are several assistant gang bosses, according to the number of jobs or different kinds of work in process on the floors assigned. It will be noticed that the planning department is the medium thru which the superintendent controls the shop. All orders, designs, detailed drawings, super- vision of new work, etc., emanating from either the counting room or the engineering and drafting rooms, pass thru the superintendent's hands and the planning department before reaching the manufacturing de- partment. 5. Organization records. The organization chart will meet its full possibilities only when it is supple- mented by the organization record. It consists of a book of written instructions covering the duties of each person shown on the organization chart. Copies of this record are furnished to each employe or officer concerned. Managers who add this important aid to PLANNING IN MANAGEMENT 143 their equipment will promote their interests in three ways: (1) writing of instructions prevents the mis- understanding or forgetting of oral orders; (2) writ- ing out instructions generally clarifies the ideas of the men who issue them; (3) writing leaves a permanent record of all instructions which have been issued, often preventing, as a consequence, many confusions and conflicts of authority. Oral instructions leave no written record for future employes. Men who are removed to other departments, or who leave the em- ployment of the firm altogether, often carry with them knowledge of important details which the firm is likely to lose because the foreman, not appreciating the importance of these details in the work, neglects to see that they are recorded. Under a system of proper written instructions, however, this could not occur, for all important details are noted as being a part of the whole operation. 6. Written records a basis for standards. It should be noted here also that a slip of written instructions is absolutely necessary if a manager wishes to adopt one of the further aids mentioned later on, namely, prede- termined standards for the accomplishment of his work. If such a record is properly kept up it will fur- nish the management with a complete account of all the details of the business. It will also contain all the forms from the accounting and other departments, with a full description and explanation of their uses. It need hardly be mentioned that all changes in the instructions should be written out, copies handed to 144 FACTORY AND OFFICE ADMINISTRATION the persons affected and a duplicate posted in the or- ganization records. It may not be necessary to record the duties of the manager, but beginning with the as- sistant manager and continuing on down to the lowest man in the organization, the record should contain written instructions covering the specific duties of each man. These instructions, if compiled in book form, would make a goodly volume, and the collection of the data requires much time and labor. After the information is gathered it has to be continually re- vised. These are the objections generally offered against adopting such a record as an aid to the man- ager. If all this information which is floating about in the possession of the employes, unknown to the manager, is vitally essential to the accomplishment of the work, then it is well worth while to have it put down in writing even tho the process does require much labor and money. 7. Lack of control causes confusion. One of the commonest sights in the ordinary machine shop is men running here and there looking for tools, ma- terials or seeking further instructions. To a greater or less extent this lack of system is found in every business which has not adopted some method of rout- ing material or tools to the mechanic and supplies to the clerks and operators, whereby they may be sup- plied with everything necessary to carry out their work. Such a condition denotes a lack of strict super- vision. This situation has grown up largely because industries have increased so in size; that is, business PLANNING IN MANAGEMENT 145 enterprises have added to their equipment and to their labor forces, while, on the other hand, they have not had a correspondingly large extension in the depart- ments of management and administration. 8. A typical example of nonproductive labor. A machine shop, for instance, employing a superintend- ent and a foreman would be called upon to supervise the efforts of 125 men or more. They are perhaps given clerical assistance to the extent of two or three clerks; and such a situation might be considered an ideal one by many managers. The so-called nonpro- ductive labor has been reduced to the minimum. Such managers, however, lose sight of the fact that the brain energy namely, the planning which must accompany every operation forms the greatest part of the work. It is the same old story again of making the brain save the heels; and in an office, shop or factory, when the heels of the employes are working, generally some machine or other important costly device is being left unused, and the output is being restricted by the un- productive activity of both men and machine. A flock of "order chasers" running thru a plant is a sure sign that there is little direct supervision or centralized con- trol of the productive process. The motto of many business executives seems to be : "Millions for machines and expert machinists, but not one cent for supervision." Money spent for men who would plan the work before it enters the operating de- partment is looked upon as tribute. It appears that one of the best aids in overcoming the handicap im- 146 FACTORY AND OFFICE ADMINISTRATION posed upon the manager by the extensive operations which must be carried on under modern business con- ditions, is the establishment and maintenance of a planning department. 9. Planning is specialized management. Planning is carrying into the supervising activities the idea of specialization, which has been operating in the produc- tion side of our industries for the last hundred years. Specially trained men must plan and analyze all the work, methods, etc., and prepare the way for the work- ingman to produce at his highest efficiency. The workingman is skilled in his trade; he is a specialist. The man in the planning department is skilled in analysis, and he also is a specialist. The duty of the planning department is to find "the one best way" for doing a thing before a cent has been spent in either labor or material. It designs the job, prepares proper details and drawings, analyzes the work in its various elements, and routes it in its future progress thru the office, store or shop. It is easily seen that when this is done the greatest part of the work has been accom- plished, for planning means brain work. The sav- ings made after the introduction of such a department are not always of the spectacular kind, such as were effected when the new tool steels were first introduced ; nevertheless the gains are important even tho they are made up of innumerable small savings. 10. Planning and overhead expense. The chief ob- jection offered by many managers to the introduction of the planning' department is the added overhead ex- PLANNING IN MANAGEMENT 147 pense. They look upon all planning expense as non- productive, and when it means that there shall be one man for the planning department for every three to five men in the operating department the proposition appeals to them as absurd. Besides this, the outlay for printed forms and office supplies is largely in- creased. But before judgment is passed it is well to look at the results. If the total net cost is not in- creased it makes little difference whether the money is spent on producers or on the so-called noriproducers. In the case presented by Mr. Hathaway the total num- ber of men employed under the new system is not more than that employed under the old system. They were simply distributed differently. Under the old system he employed 125 men in the operating end and two clerks in the office. With the planning depart- ment added, he now has 100 men in the shop and 25 in the planning room. 11. Overhead actually reduced per unit. T^he overhead charges naturally increased but they were far from being "nonproductive." The product turned out was three times what it was before this new aid to the management was added. Such an outcome simply puts the addition of a planning de- partment on the basis of any other investment. It is in reality spending money looking to future increased returns. Mr. Parkhurst claimed that for a shop em- ploying a few hundred men, only about six additional employes in the new planning department were nec- essary. The cost for the six additional men, in wages, 148 FACTORY AND OFFICE ADMINISTRATION totaled about $4,000 a year. For additional sta- tionery, office room, etc., this sum was increased by $1,000. But this change brought about a doubling of output, not to mention the permanent assistance ob- tained by the manager thru having at hand a force of men investigating, collecting and utilizing knowledge which he could not possibly get unaided. 12. Evolution of the planning department. The organization of the planning department is a natural evolution of much interest to the student of manage- ment. Under the traditional system of management the foreman and workingmen, after deciding in a gen- eral way what the work was, put the job into the shop and studied how, when and where it was to be done after the operation had been set in motion. It is perfectly evident to most managers today that it is not safe to trust the planning of what is to be done to the men who are to supervise the execution of the work. But it took many years before the establish- ment of the drafting department was considered any- thing else than an extra expense or burden. Just as the planning of what was to be done before the work is put into the shop was found to be even more economi- cal when put into the hands of experts, so it will be found that there will be even greater savings when the planning of how, when and where the work shall be done is taken from the shoulders of the foreman and the men in the shop, and is put in a special de- partment called the planning department. It will be seen at once, therefore, that nothing is done in the PLANNING IN MANAGEMENT 149 planning department that does not have to be done by someone in the place, under any scheme of manage- ment. Some workmen are good at planning their work, but others are not. Thus, it appears that if the best man in this respect is selected for the planning, all the less efficient men will get the advantage of his greater sagacity. 13. Thoughtful plans make valuable records. Not long after such a man is put in full charge it is found that the advantage gained is not alone that resulting from his superior intelligence. The com- pany soon accumulates classified and recorded data which become a source of knowledge in planning the best methods, greater than that furnished by any in- dividual man's experience. 14. Planning movements and operations. It is easy to show the advantage of planning ahead in order to provide necessary materials, tools and supplies, but to make men see that it is just as necessary to plan the movements, operations, etc., ahead is more diffi- cult. Where this has been done, however, further subdivisions of the work of the planning department are necessary. This work is of two general kinds, planning how each job is to be done, and planning when it is to be done. Concerned with the how are the following specialists: route clerks, instruction- card men and time-study men. Concerned with the when are the production clerks and the order-of-work clerks. It was soon found, however, in shops making a diversified product that still further subdivision of 150 FACTORY AND OFFICE ADMINISTRATION the work in the planning department must be made. Accordingly, we find such men as recording clerks, balance-of-stores clerks, foundry clerks, clerks who write up the numerous details, make out orders, tags, etc., time-keeping and cost-keeping clerks, and various others. 15. Proportion of planners to doers. The ques- tion of how many of these men will be needed in the planning department depends entirely on the nature of the specific business. Some businesses will require two or more men for each of the positions, whereas in others two or more of the functions may be put under the direction of one man. In one shop, for in- stance, employing several hundred men, four clerks in the planning department handle all the work, while in another concern, employing only about one hun- dred men, twenty-five clerks are necessary. The first concern manufactures a limited variety of products in large quantities from standard designs; the sec- ond concern manufactures a great variety of goods in small quantities, and with frequent necessary changes in their design. In the first case a man at a machine may run on the same job or on similar jobs for a month, whereas in the second concern each work- man is employed on three or four different jobs every day. It will be seen at once, therefore, that a descrip- tion of any one planning department will be incom- plete, but for our purpose it is best to take the more complex form, where the duties of the various men have been clearly differentiated and put into the hands PLANNING IN MANAGEMENT 151 of individual persons. This will make the explana- tion simpler and more comprehensible, since each function, in such a scheme, will have an individual man to carry it out. Perhaps the organization of the department can be most easily understood if we take up the duties of each clerk as they arise in planning for a manufac- turing order. Each man in turn will receive this order and work out the plans which come under his jurisdiction. REVIEW An employe suggests to his superior officer a plan which in- volves extensive changes in the organization. The suggestion is "turned down" without comment. What allowance should the employe make for the officer's attitude? Would an organization chart help an employe who wished to present to his chief plans for the improvement of his depart- ment ? What is meant by organization records? It is conceded by experts in organization that a planning de- partment increases the amount of clerical help necessary to carry out the work along the lines laid down by scientific management. What argument will offset the one implied in the above state- ment, namely, that overhead expenses are unduly augmented? Is a planning department an absolute innovation in the factory or office? CHAPTER XII PLANNING PRODUCTION THE FACTORY 1. Planning department of a factory. In choos- ing an example to show the methods followed in the planning department of a factory we may select an engineering enterprise. Here the work is more mi- nutely subdivided than in other enterprises and affords better opportunity to study the detail of the planning organization. In such a concern we find the follow- ing positions: (1) production clerk, (2) route clerk, (3) foundry clerk, (4) balance-of -stores clerk, (5) instruction-card clerk, (6) route-file clerk, (7) order- of-work clerk, (8) recording clerk, (9) mail carrier, (10) tickler clerk, (11) time-and-cost clerk, (12) stenographers, messengers, etc. 1 2. Coordinating duties of production clerk. As soon as the process of specialization has divided the duties of one man or of one department among several men or several departments the chief prob- lem of management is to bring about an efficient cooperation among the various parts which have thus been separated. When an enterprise grows to anything like normal proportions, it is necessary i It must not be assumed, however, that this sequence is absolutely necessary. There are cases where several of these functions may be per- formed at the same time; that is, two or more of these clerks may be working out their plans at the same time. 152 PLANNING PRODUCTION 153 to separate the sales department from the manufac- turing department. No sooner is this division made, however, than difficulties arise. The sales depart- ment sends in orders and expects the manufacturing department to get them out on schedule time. As every business man knows, these expectations are not uniformly realized, and friction results. A reduction of this friction and the bringing about of a greater amount of cooperation between these two depart- ments is one of the chief functions of the production clerk. He is in a true sense a coordinator, the con- necting link between the sales force and the shop. The sales department depends upon him for informa- tion upon which to base its promises of delivery. He is, in fact, responsible to the sales department for making these deliveries at the time promised. 3. Setting sales-delivery dates. To set his dates, however, the production clerk must have information other than that supplied by the sales department. He therefore first consults the stores clerk and learns what manufactured articles are required for stock. With this in mind he then sets to work to prepare a schedule, or, as it is called, an order of work. This schedule contains a list of all orders in hand for each department, arranged according to their relative im- portance. The importance of an order is, of course, determined by many conditions, but in general the classes into which most of the manufacturing orders may fall are as follows: (1) the emergency work, (2) tools or appliances, (3) manufacturing orders, 154 FACTORY AND OFFICE ADMINISTRATION (4) orders for stock parts, (5) orders for stock ma- chines. As soon as an order comes to the production clerk, he classifies it under one of the above divisions. 4. Relative importance of orders. It need hardly be said that the emergency job has the right of way thru the factory in preference to any other job. But the production clerk must consult the manager before an order can be placed under the emergency class. An order in class 2 would have preference over any orders of the later classes, for such an order would arise only when the work under way was being held up because of a broken tool or a lack of appliances, etc. Class 3 comprises all those orders for products not carried in stock, but which must be made up after the customer's order has been received. This class may be further subdivided into definitely dated orders and orders which can run on and be completed at the manufacturer's convenience. At regular intervals whenever the need arises the production clerk revises the order of work for each department. 5. Further duties of production clerk. The sched- ule having been made out, the production clerk must see that its requirements are observed in the drafting room, in the planning department itself and in the shop. In fact, his duties now are largely those of "checking up." Having fixed a date for the com- pletion of the job, and having placed the date on the shipping order, he files the memorandum away in the tickler. When the date arrives for this job to be PLANNING PRODUCTION 155 started, his record appears automatically and he checks up the drafting department by it. A like method is pursued in checking up the planning and the delivery of materials. The tickler is to the pro- duction clerk what a cab window is to an engineer on a locomotive; both men must be constantly looking ahead to assure themselves that the track is clear. If obstructions appear the production clerk must ar- range to have them removed in plenty of time so that they may not interfere with the general order of pro- duction. 6. Aids that lighten the production clerk's task. In watching the progress of the work thru the shop, the production clerk has further aids to help him in de- tecting things that go wrong or that may go wrong. These are the route sheet, the progress sheet and the bulletin board. The method by which the production clerk checks up the progress of the work in the shop is interesting because it differs so widely from the practice in common use. His mind is continually on the promise he has made to the sales department, that upon a certain date a certain delivery will be made. He therefore begins his daily checking up of the progress of work not by first looking up the orders due to be shipped today, or those overdue, but, on the contrary, by starting at the bottom of the list and making sure that everything necessary to the com- pletion of the order just received is on time and is being carried out to the letter. He works up the list instead of down, and the last item to receive his atten- 156 FACTORY AND OFFICE ADMINISTRATION tion is the order which is to be shipped immediately. Mr. H. K. Hathaway, in the Engineering Digest for July, 1912, says: The principal cause of the failure to complete orders on time is that little or no attention is given them on this score until the date of shipment approaches. In machine shops a great deal of time is ordinarily wasted in getting drawings and patterns made, and getting materials into the shop. This time cannot be made up after the work is started, and the effort to do so results in confusion, decreases the efficiency of the plant, and causes more or less friction among the individuals comprising the organization. 7. Qualifications for the head of this department. The production clerk need not necessarily be a man trained in the technic of the particular business which he serves; if he is in the planning department of an engineering concern, however, it will be much to his advantage, and add to his efficiency, if he has had two or three years' shop-practice experience. Of course, he must be familiar with the processes of man- ufacturing, for these determine when a certain oper- ation is to be done. It may also be well to mention here that the authority of the production clerk, like that of all other members of this department, is su- preme in his own field. Even the manager or super- intendent must respect his authority. But when he has planned the time when certain work shall be done, his authority ceases. Beyond this he has no right to say what shall be done or how it shall be done. 8. Route clerk. The function of the route clerk is to show how a thing is to be done. As soon as the PLANNING PRODUCTION 157 drafting department has shown what is to be done, the planning of the work proceeds to the route clerk. It is his duty to take the information which comes to him in the form of drawings and bills of materials and plan how the product shall be made. He must be able to read readily the drawings from the drafting depart- ment ; he must understand machine construction, so as to be able to analyze it and put in writing or in chart form the methods which show how the manufacture is to be carried out in the shop. Furthermore, he must be thoroly familiar with the location and capac- ity of all the machines, so that his routing of the mate- rial may be the most efficient possible. 9. Method of work for the route clerk. In prepar- ing his outline or his diagram, the route clerk proceeds about as follows: (1) Having analyzed the con- struction of the machine he divides it up into groups or parts. (2) He studies the length of time it will require to get the castings or various parts that call for special construction, and the amount of time nec- essary to work up the various parts and assemble them. Knowledge of these points enables him to de- cide the relative importance of the various groups, and with this scale or order of importance in mind he is enabled to lay out the first draft of his chart or diagram which embraces only the individual groups. (3) Each group is now considered separately and a special diagram or route chart is made of it. This will include, in their order of relative importance, all parts that go into the order, the operations to be per- 158 FACTORY AND OFFICE ADMINISTRATION formed upon them, the machines that are to perform the various operations and the material required for each part, with a note whether it is to be purchased from the outside, made especially for the job, or to come from stores. (4) He applies to each part a suitable symbol. This identifies the part as it goes thru the shop, indicates what part of the machine it belongs to, and serves as an operation order-number and an index to the instruction card which is made out for the several operations. In fact, this symbol is used in connection with all the processes involved in the manufacture and planning of this job, at length serving the cost keeper in compiling his records, and finally becoming a basis for filing any data which may pertain to the piece that the symbol represents. (5) Under instructions from the route clerk, another clerk prepares route sheets and progress sheets upon which the movement of the work thru the shop is recorded. In fact, it is here that the various operation orders, in- spection orders, stores issues, etc., originate. The work of the route clerk in a large plant be- comes very involved, and requires that the duties of the office be subdivided. Thus there will often be found one expert who gives his whole time to the making of route charts pertaining to the assembling alone. Other experts will be engaged solely in lay- ing out the machine operations for the various parts ; others again will compute the quantities of material required, and the like. 10. Qualifications of route clerk. Any man who PLANNING PRODUCTION 159 is put in a position where he must show other men how things are to be done, should be endowed with much tact. Especially is this true of the route clerk, who must consult daily with the foremen in the shop, seeking their advice as to the best method to be fol- lowed in machining various parts and assembling them into groups, etc. Even in the planning room itself he must be in continual conference with the various clerks of the department. It is the time-study and instruction-card men who can tell him which machines and what laborers can perform the work in the most economical manner, whereas the balance-of-stores clerk can inform him of the condition of the material and supplies. 11. Special-material ( foundry) clerk. Concerns that do a variety of work and do not keep all the materials on hand, find it necessary to order the special material from outside. In cases where this is done continually, a clerk is provided to look after the spe- cial work in the planning department. He is fre- quently called the special-material clerk, but in ma- chine shops where the special material referred to is largely made up of castings which must be obtained from some outside foundry, he is spoken of as the foundry clerk. 12. Duties of foundry clerk. The foundry clerk's duties do not call for a man trained in the technic of the manufacturing business, but they do require a man who is wide-awake ; because special work of this kind, especially if it is in connection with the foundry, in- 160 FACTORY AND OFFICE ADMINISTRATION volves the care of a great number of patterns. The first duty then of the special-material clerk is to see that the patterns are stored and labeled properly. He must know whether they are in storage or whether they are at the foundry. The records will show when patterns were delivered and when returned. His next general duty is to make out detailed orders on the foundry, and these orders it is his further duty to follow up closely. Each order, therefore, is care- fully scheduled; it shows the amount wanted, when wanted and the number in each lot. It has been found that the checking up of these lots when they are delivered from the foundry is a very important thing, since the foundry must deliver the full number in each lot if the job is to be complete before any order is begun. Anyone familiar with the common shop methods, where special materials are often delivered in broken lots, will easily see where such a foundry clerk will soon earn his salary. Without him, jobs are started when only a part of the material is on hand, only to be dropped again when the supplies run out. This often requires the machine to lie idle for a long time or to be reset. Altho this position is purely a clerical one, it requires much energy, because the clerk must see that material is in the shop on time. 13. Balance-oj '-stores clerk, a unique feature. The taking of the "stores balance sheets" out of the store- room and putting them into the planning department is one of the unique features of the planning depart- PLANNING PRODUCTION 161 merit. The clerk who has charge of this department is called the balance-of-stores clerk. His chief duty is to keep a running inventory of each article carried in stock. His records are kept on what are known as "balance sheets." The chief items which this clerk must look after are indicated on the sample sheet (Fig. 12) on page 162. In brief they are: (1) the maximum and the minimum quantity, (2) the actual quantity carried in the stores, (3) the quantity on order but not yet received in stores, (4) the quantity required for orders for shipment or manufacture to which they have been apportioned but not yet issued, (5) the quantity available for future requirement. 14. Major and minor duties of balance-of-stores clerk. The detailed duties of the balance-of-stores clerk will be indicated by these items themselves. He will have various forms to make out, such as orders on the storeroom as soon as the route clerk hands to him his route chart and bill of materials. Altho these duties are largely those of a bookkeeper, nevertheless there are others, such as checking the balance sheet against the actual stores, which call for considerable expertness in the classification of the various orders according to their symbols, since the stores orders are returned to the balance-of-stores clerk at the end of each day by the storeroom clerk. Of course it is this clerk's duty to inform the pro- duction clerk as soon as the supply of stock parts be- gins to run low; and in case any of the materials are not available at the time of the apportionment, he 162 FACTORY AND OFFICE ADMINISTRATION A-S-10 COLUMN 1 AND ADO THE TO COLUMN 3; WHEN FECTED. i 1 1 ill i O P 3 U. Z " > o J O " g a Z > t S | a 5 = THE QUANTH 5 ADD QUANT ON HAND IN ONED-3 NOT YET | EROOM ! m S2S i| r S ^Z S < Q u.St < U 1 Z S do 5 o ce S 8 o z a X 115 _ ^ " ol Q < H S tg 111 SIP NS 1 AND 4 ( WHE D, SUBTRACT QU IN ALL CASES BR il 22 Is III ii i 2 w L. f < z . SS C/3 z " 1 *o UJ DC ^f i si g Q o ^ |S5| UJ U. < p i *' CO E tr {; 2 S O a: >- s O ) C O LU S a 0* rds which show the decisions covering general >utine from day to day; these records in some way lodify the procedure laid down in the standardized istructions of the manual. This book of memoranda known as the special data book, and since every de- 180 FACTORY AND OFFICE ADMINISTRATION partment must keep one as a record of the particular legislation issued by the executive authority, much confusion can be avoided by checking individual de- partmental orders which would run at cross purposes with those of other departments. The third set of records consists of the individual instruction cards. As the work of specialization goes on in both factory and office, the greater becomes the necessity of clearly defining the duties and describing the activities of the various production units, whether each unit be a department, a machine, a work bench or an office desk. In the work of standardizing the office, the desk is coming to be recognized as the unit about which certain functions cluster rather than a place where certain individuals work. Accordingly each desk is equipped with a set of instruction cards describing, under subject headings and appropriate subdivisions, the work to be done. As used by the Retail Credit Company of Atlanta, Georgia, these cards are 3x5 inches in size, and each clerk carries in a tickler a set pertaining to his desk. When work is even temporarily rearranged, the tickler is placed upon the desk to which the new functions have been transferred. This method standardizes the work of each desk and of each clerk. The cards are especially valuable in aiding new employes to master their duties, and in f umishing a record of absentees and the work of substitutes during vacations. It is apparent that specialization of this kind tends to break down the coordination which exists when PLANNING THE CLERICAL WORK 181 one man performs many functions. The coordinat- ing element here is the man himself. When these functions are distributed among several men, it is necessary to supply administrative coordination. Thus, in preparing and -improving the records and instructions, and in delegating duties, a planning de- partment supplies the needed coordination, since these matters become the special care of a department which looks upon the control of office duties as a serv- ice to the whole organization. 8. Function III: Development of standardiza- tion. The part that standardization plays in modern business administration is considered in Chapter XIV. We limit its application in the office to the methods, materials and equipment used. One of the chief in- fluences which made a careful study of standardiza- tion in the office a necessity, is the need of utilizing space more efficiently. Accordingly, filing cabinets, book and card records, stationery, etc., have gradually grown smaller, with the attendant necessity of short- ening phraseology, of the development of symbols, and arranging printed matter to meet the space con- ditions. A planning department, by keeping on file samples of all the forms used thruout the organiza- tion, could give valuable suggestions and could direct with intelligence the development of a policy which would work toward a general standardization of forms and equipment thruout the office. With respect to the development of standardized equipment, the planning department can play a very 188 FACTORY AND OFFICE ADMINISTRATION important part. In the factory, the planning depart- ment contains a testing division whose duty it is to examine machines, product and materials in accord- ance with standard specifications of quality, etc. The office today, thru its use of mechanical aids, is un- dergoing a like development. The purchasing de- partment may provide men who are experts in buy- ing according to specifications of quality, etc.; their work needs to be supplemented, however, by the judg- ment of experts upon the utilization of the machines and materials. The planning department of the office should, therefore, act as judge in such matters. Take the choice of a desk as one example. The plan- ning department, by its study of the uses to which the desk is to be put, can decide between the flat-top, the standing desk and the "tub" type, with better results than a purchasing department, which judges pur- chases on the basis of prices. Desk standardization brings many economies, such as savings in the station- ery and desk supplies; and if we consider its impor- tance in the dispatching of work, as, for instance, in the case of the National Cloak and Suit Company offices, a very wide range of activities is opened up for the consideration of the planning department. If we carry this function of the department a step further, we find that it also naturally embraces the study of the equipment market in order to keep the home office informed as to all new and meritorious labor-saving devices. Its representatives should know what is offered thru the latest circulars and PLANNING THE CLERICAL WORK 183 catalogs, and should keep in touch with "business shows," expositions and the experiences of their com- petitors. 9. Function IV : Development of betterment plans. Just as the function of discipline in the shop is taken away from the shop boss and placed under the planning department head, so in the matter of handling office employes, the selection, training and guiding is intrusted to the office planning department. Many concerns which never before thought of a plan- ning department have already developed good sys- tems for handling their employes. Generally these functions are connected with an employment bureau, where adequate records of present and prospective employes are kept, and all the office positions are listed and analyzed as to qualifications necessary for their incumbent. There are, however, many reasons why these functions should be consolidated with those of the planning department. They are all activities which affect the organization as a whole, and by bring- ing them within the compass of one department, the same advantages will result as in the case of the fac-, tory where the draftsmen are in close proximity to the store clerk in the planning department. They both have a common interest in the "bill-of -materials schedule.'* The development of efficiency records in the office goes hand in hand with salary standardiza- tion, while the grading of work is closely associated with promotion plans. If the keeping of records of service and other qualifications are to be functions of 184 FACTORY AND OFFICE ADMINISTRATION the planning department, the question of superan- nuation, and pension and wage systems should like- wise be in close association with those activities which must be factors of more or less importance in the de- termination of general welfare policies. 10. Organization of the planning department. In large commercial organizations where the greater part of the work falls upon the office, the function of planning is gradually becoming specialized. But the small office organization must meet many of the same problems that the larger one does. If its re- sources will not allow of a special department, with its necessary complement of executives and clerks, the study of the methods used by a large planning de- partment will prove of inestimable value in enabling the office manager to classify his office activities and in at least permitting him to schedule his own efforts with a clearer vision and with better results. Here he shall find that the main work of an office con- sists of the following elements: organization routine and equipment layout, work processes to be studied, standards created and checked by continual improve- ment, daily operations in dispatching orders thru the office, and the cultivation of cooperation and loyalty among the workers by carefully selecting and caring for them, and by planning for their scientific training and guidance. In the case of larger offices, where there are one hundred or more employes, the planning department can be used to especially good advantage. PLANNING THE CLERICAL WORK 185 11. Personnel of the planning department. The permanent membership of the planning department will correspond in a general way with that of the pro- duction department in the factory. No general rule as to members and the division of their work can be laid down, but we give below the judgment of Mr. H. A. Hopf, of the Phosnix Mutual Life Insurance Com- pany of Hartford, Connecticut. His methods as ap- plied to office organization have proved themselves very efficient. The permanent staff of the planning department should consist of a manager and a male clerical employe. Steno- graphic and typewriting service should be supplied by the stenographic department, but it might be deemed advisable to assign a special stenographer to the planning department, by reason of the fact that much work of a confidential nature would have to be performed, and it might, therefore, be best to locate the stenographer in the planning department itself. Upon the manager of the planning department a consider- able share of the responsibility for the success of the work would naturally rest. It is a matter of course, therefore, that he should be carefully chosen with respect to his qualifications for the work. The clerical employe, apart from the usual qualifications, would make himself especially valuable if he possessed capabilities as a draftsman. Furthermore, he should have an analytical mind and be able to obtain informa- tion from various departments without creating friction. To make the work of the planning department really effec- tive, it should reach out into all the departments of the organization and endeavor to supplement its functions by special planning in the individual departments themselves. This could best be done by the temporary assignment to the planning department of well-qualified and ambitious employes of various departments, who would serve in the planning 186 FACTORY AND OFFICE ADMINISTRATION department in rotation, usually for a period of thirty to sixty days. This arrangement, if carried out systematically, would enable specially qualified employes from all over the organization to gain the broad viewpoint so essential to proper development, and would put them in a position more effectively to study the special needs of their own depart- ments. In this manner, the better grade of clerks in the organiza- tion would be encouraged to develop reasoning and observa- tion faculties, and would gradually form a special group from which undoubtedly many promotions to various lines of work in the office could be made as vacancies might occur. Employes would serve one at a time in the planning depart- ment, preferably during the slack periods in their own departments. This would enable the planning department to develop from six to twelve men per annum by means of special training, and the individuals so chosen could perform the regular functions of the planning department and act as scouts in securing information from all directions. The period of service might be termed a course in plan- ning, and it may be taken for granted that when the depart- ment representative returned to his own department he would not only have a much better grasp of the work thereof but also a far clearer conception of the needs and requirements of different departments all over the organization. REVIEW If you examine the history of the average office, what do you find to be the circumstances attending the growth and expansion of its system of organization? Having planned the work, and having decided upon a system of routing the work thru the office, can the manager neglect to give it his constant thought and attention? What is your estimate of a manager who listens to sugges- tions that have proved themselves valuable when used by other concerns, but answers all arguments by, "Yes, that may be all right but my business is different" ? Is aggressiveness in a foreman or an office manager a sure PLANNING THE CLERICAL WORK 187 sign of strength? How can a planning department protect a business against weak aggressive men? What activities do you see in a large office that are common enough to all office work to be standardized? What three types of records would you be able to keep in any office ? What influences have been at work making standardization necessary in office administration? What can be done in the way of planning the welfare work of a large office? Compare the personnel of the planning department of an office with that of a factory? CHAPTER XIV STANDARDIZATION MATERIALS AND EQUIPMENT 1. Correct standards the basis of administrative judgment. A sound judgment is the prime mental attribute of a good manager. When a manager fails he is criticized for not using good judgment. But to accuse a manager of exercising poor judgment is only to say that he has used wrong standards in draw- ing his conclusions. Judgments are the results of comparisons. When comparisons are made we con- sciously or unconsciously use one thing as a standard by which the other things are measured. When the full moon rises from behind the hills we say it is as large as a wagon wheel. When it is overhead then we say it is as large as a plate. In these cases we have unconsciously compared the moon with certain objects and as the moon moves from one position to another our judgment varies. 2. Management a series of measurements. A great economist once said that all economic activity in its last analysis resolves itself into the simple proc- ess of moving matter. It might with truth also be said that the problem of management resolves itself into a series of measurements. Every manager has some standard. The difference between a progres- 188 STANDARDIZATION 189 sive and a nonprogressive manager is largely deter- mined by their attitudes toward the standards which they use. The one, having decided that a certain type of machine or a certain kind of man or method for performing an operation, is the correct one, rests con- tented with using these units as standards year after year; the other is continually on the lookout for im- provements in his machines, men and methods, and frequently changes his standards in order that he may judge his efficiency under new conditions. 3. New standards changed plane of competition. When the Carnegie Steel Company entered the com- petitive fight which finally resulted in the formation of the United States Steel Corporation, it was truly a "battle of the standards." Mr. Carnegie proved himself to be the most progressive manager of the day, in view of his attitude toward standardiza- tion. While other companies were judging their efficiency by the capacity of old equipment, Mr. Car- negie was equipping his plant with new and up-to- date machinery. His standards were of the twentieth century, his competitors' standards were of the nineteenth. Since Mr. Carnegie's success few men have questioned the necessity of continually watching their machine standards in determining the efficiency of their output. The general acceptance of this prin- ciple was a great step forward. Yet the problem connected with the determination of machine stand- ards is a comparatively simple one when compared with the determination of those standards which are IV 14 190 FACTORY AND OFFICE ADMINISTRATION connected with men, and which become the basis of judging labor efficiencies. To establish rational work standards for men requires indeed motion-studies and time-studies of all operations, but it requires in addition all the skill of a planning manager, all the skill of the physician, of the humanitarian, of the psychol- ogist, of the physiologist; it requires infinite knowledge, directed, guided and restrained by hope, faith, and com- passion. 1 4. Standards of labor efficiency. The difficulties of the problem, however, should not deter any man- ager from beginning to study the conditions sur- rounding his workingmen. The next great step for- ward in the organization of our industry will be along the lines of finding and adopting the true standard conditions under which men shall labor. Perhaps when the next great competitive battle is fought the manager who can measure his fighting strength in terms of labor efficiency will inscribe his name higher on the list than that of any of the great captains of industry of the past. Such a man will have standard- ized his conditions and will know that he will be wast- ing less time, squandering less effort and spending less money than any of his competitors. As before noted, every manager has standards of some kind. Evidences of these standards are seen in written specifications, in the purchase of materials, goods, etc. But as we approach the operations which the men perform and the conditions under which they i Harrington Emerson, in "Twelve Principles of Efficiency," page 275. STANDARDIZATION 191 work, these records grow rarer and rarer. Seldom do we find written specifications covering what might be known in a given concern as standard practice. But when it is realized that standard operations and standard efficiency are as valuable to a firm as stand- ard materials and standard machines, then will be seen the true functions of the planning department and its record of standard practice. 5. Objections to standardization. Perhaps the commonest objection to adopting standards, aside from the difficulty of obtaining them and of keeping a permanent record, is that they will destroy the initia- tive and incentive of the workman. Those who raise this objection seem to reason that when a standard is once adopted it is to remain forever. But standards are ever changing, and that is the reason managers are needed. No sensible manager of today will ignore any suggestions from his men which may improve his standard practice. All that such managers require is that the men first show themselves capable of ac- complishing work according to the standards that are set by normal conditions. Absolute standards can never be set in business; therefore, there will always be plenty of opportunities for the exercise of the workman's ingenuity. 6. Cautions in adopting business standards. Per- haps some caution, however, might be suggested re- garding the establishment of standards. In business, that particular standard is desired which will produce the largest output with the least effort or cost under 193 FACTORY AND OFFICE ADMINISTRATION the existing conditions. One of the chief considera- tions is the human element. In a shop employing one hundred men, one man might be found who would be able to do a given piece of work three times as quickly as anyone else. If this man's accomplishment were taken as the standard and the other men were forced to meet it, the output in a very short time would fall appreciably. The men working beyond their strength would soon show the result in their lagging energy. The excellent man's accomplishment should not be the standard for the good man's effort, because it is the latter upon whom the management must de- pend in the long run for its steady output. Normal conditions, and not "spurt" conditions, should con- trol. The schedule should be made so as to allow for the general run of men, but should permit a place for the unusual as well as the mediocre. As Mr. Emer- son says, there are places where the poor men may fit, even as the tame goose plucked for his feathers and prepared for the feast shows one hundred per cent efficiency, whereas a thin wild goose is far below par; but the efficiency would be reversed, in the case of the goose, if flight instead of diet were being con- sidered. The schedule must fit the man and the man must fit the schedule. There is no such thing as a universal schedule. 7. Standard materials, first step. Among the first departments into which definite standards were intro- duced were the purchasing and contracting depart- ments. These standards have proved their worth to STANDARDIZATION 193 such an extent that every business is familiar with them. The extent to which specifications have been standardized is remarkable, and the results are sig- nificant of what might be done in other fields. Too much emphasis cannot be placed upon the fact that standardizing is a continuous process. No speci- fication is necessarily perfect, and modifications and remodifications, which only experience will develop, must be made to meet constantly changing trade con- ditions and to correct fundamental defects. 8. Standard quantities, second step. The quan- tity of each kind of material to be kept on hand and the amount to be purchased are involved in the second step in standardizing materials. The object in view is to prevent the annoyance of running short (so com- mon in all unorganized stock rooms) , to purchase suf- ficient quantities, to secure good prices and still not to lock up an unnecessary amount of capital. This ob- ject is accomplished by establishing a minimum below which the stock must never be allowed to fall. The minimum depends upon how long it takes to get sup- plies delivered, how fast the material is generally used up and how rapidly it deteriorates. Sometimes a sec- ondary or emergency minimum is added, if the new supplies have not come in before a dangerous point is reached, to call special attention to that fact. The amount to be purchased depends upon the saving to be gained thru quantity buying, the room and help available for handling, the capital tied up, the sea- sonal variation in prices and the amount that is used. 194 FACTORY AND OFFICE ADMINISTRATION These figures are generally placed directly on the material-ledger accounts so that the stock clerk can see instantly when supplies are running low, and can replenish in time. 9. Monetary savings due to standard materials. One of the big advantages of standardizing materials is the direct monetary saving. An examination of the supplies used will generally show a surprising variety in the kinds and grades of the same article. The Commission on Standardization of the City of New York found that the city had twenty-five different standards for horses, and numerous standards for coal. They have been able to classify all the city re- quirements under seven grades for horses and one specification for coal. So far, the Commission's work has covered only one-fourth of the city pur- chases, but if the 5 per cent saving effected thus far can be applied to the whole $22,000,000 which the city spends annually for supplies, the saving will be over a million dollars a year. Since the introduction of standard materials is not hampered by existing conditions new materials of one kind or another must be ordered from time to time it provides the ideal way to begin standard- izing. 10. Standard office material. Office material is a particularly good field for standardizing, since differ- ences in stationery rarely have any more logical basis than chance. For instance, many kinds of carbon paper, typewriter ribbons, pencils, pens and erasers STANDARDIZATION 195 are found in every office, together with many different shapes and sizes of account books, forms, etc. 11. Example of standard drawings. The multiple system of standard-sized drawings which is universal in large drafting offices can be used to advantage in general office work. In this system the fact is recog- nized that all drawings cannot be made on one size of paper even tho such a method is very desirable. A given large size is adopted as standard, which is divided into halves, quarters and eighths for smaller sizes. By this arrangement all drawings can be filed in cabinets of uniform size by dividing the drawers to correspond with the smaller drawings. As the stand- ard-sized sheet is always selected, the paper can be cut to the best advantage and without waste. For in- stance, if the standard or A sheet is 23 x 36 inches, which is a stock size of paper, the four sizes allowed in the office would be: Full sheet A 23 x 36. Half-sheet B 23 x 18. Quarter-sheet C 11% x 18. Eighth-sheet D 11% x 9. The multiple system has also been adapted to ship- ping, especially in seed houses, where the packages for different quantities are all multiples of each other. This permits all orders to be packed in boxes of the same size. Orders too large for one box can be packed in several separate boxes and the boxes can be nailed together with strips on the outside. This 196 FACTORY AND OFFICE ADMINISTRATION saves storage space in the shipping room and greatly facilitates the routine. 12. Standard equipment. It is better to have all the machines second class than many first with a few second and third class, because the operators on the first-class machines will regulate their speed to that of the workmen on the second and third-class machines. Thus the efficiency of the first-class machines is al- ways lowered to that of the poorer ones. All machinery, however carefully watched, wears out and breaks down. To avoid costly delays it is therefore necessary to carry repair parts in stock. If one type of machine is used, one set of parts will be sufficient for all breakages. The probabilities are against two machines breaking down in the same way at the same time. If two kinds of machines are used, two sets of parts become necessary, because the parts of one will not interchange with the parts of the other. If many makes are used, many sets of repair parts are necessary. Unproductive capital is locked up in these parts, increasing the indirect expense. Machin- ery manufacturers are waking up to the importance of this matter of repair parts, so that it is now possible to get a complete range of tools, the parts of which are interchangeable; fewer parts consequently need to be carried in stock. It is also good practice to select the entire equipment from one or two firms, provided the purchaser does not become too depend- ent upon one source. Any advantage of heavy ma- chines of different makes is often more than offset by STANDARDIZATION 197 a gain in uniformity. Where a firm manufactures much of its own machinery it is advisable to carry out the same idea. 13. The principle as applied to delivery systems. That the tendency with large companies is toward a standardization of their delivery and office equipment no less than of their production machinery, is shown by the following advertisement: Another big order for trucks was placed yesterday an order for ten from the Long Island Express Company. This concern already has ten trucks, purchased on Jan- uary 31, 1911. The reorder makes twenty of them, all told, $72,000 in trucks. Rather significant is this order. When a big company invests as much money as this in one manufacture of truck, its own answer to the motor-truck question is clear. But consider for a moment what other express companies have in the way of trucks: American Express Com- pany, 27; Westcott Express Company, 11; Adams Express Company, 4. These three express companies have an investment in trucks of $161,000. Four companies, all told, total $233,- 600 in trucks, an investment that is greater than the capital of many motor-truck manufacturers. 14. Interchangeable parts. More important than the number of designs is the matter of standard or in- terchangeable parts, both of the same machine and of the machines of an entire line. Mr. C. U. Car- penter, in his "Profit-Making Management," sum- marizes as follows: The great advantage of standardized products is, of course, apparent. It means cheapening production thru 198 FACTORY AND OFFICE ADMINISTRATION duplication of parts and ease of handling ; increase of output per square foot of floor area thru quicker production, and the consequent reduction in indirect expense per piece; the possibility of building for stock in slack times and so keeping up the factory output; quicker deliveries and more orders, better satisfied customers, and a more rapid turning over of working capital. The differences in legs, screws, pins and other un- important parts of machines are largely the result of the individual designer's whim, and should be obvi- ated. The Engineering Standards Committee of the Institution of Civil Engineers discovered in their in- vestigations that a large part of the differences in British rolled sections had been deliberately intro- duced by the manufacturers, so that duplicates and repair parts would have to be ordered from the origi- nal maker; and that, instead of having the desired result, this action, because of the need of special tools and dies and the expense of changing rolls, had so in- creased production costs that the American and Ger- man plants were gaining the trade by underselling. Where small parts are standardized, the need of con- tinually redesigning them is eliminated and conse- quently the designer can concentrate his skill on the essential elements of the problem. 15. Importance emphasized by Whitmore, 1841. The importance of interchangeable parts was first emphasized by Joseph Whitmore in his paper, "A Uniform System of Screw Thread," read before the British Institution of Civil Engineers in 1841. Such a system was first generally adopted by American STANDARDIZATION 199 watch manufacturers. During the middle of the last century some of these manufacturers made a lasting impression on foreign engineers by dismantling two watches, mixing the parts with similar unused stock parts and then reassembling the watches as the for- eigners handed them the parts, selected at random. Similar astonishment has been occasioned in more re- cent times by certain of our automobile makers, who performed the same severe test; they dismantled a car after a long run, mixed the parts with similar stock parts and after reassembling them made another long run. 16. Use of "limiting dimensions." To insure the fitting together without any filing of parts which have been made by different workmen, the system of "limiting dimensions" has been developed. This sys- tem provides that important dimensions shall be marked in an appropriate manner as to the maximum variation allowable if the part is to match with its neighbors. The workman thus knows where special accuracy is required, and is supplied with limiting gauges for testing his work. REVIEW Would you advise your company to develop certain standards and, after adoption, to hold to them without change? In establishing a labor standard for a certain job, would it be good practice to choose the best workman in the shop, and set up his accomplishments for the day, or the gob, as a standard for all the other men? Why is the office a good place in which to begin the adoption of standards? 200 FACTORY AND OFFICE ADMINISTRATION A manufacturer who had a mixed assortment of machines, some high grade and a few of the second and the third class, found that his output was far below the average. What effect would be produced upon the labor by the adoption of a standard sec- ond-class machine thruout? What is meant by "limiting dimensions," in connection with the subject of standardization? CHAPTER XV STANDARDIZATION SYMBOLS AND ROUTINE 1. Use of symbols. Convenience is promoted by the use of symbols. A good symbol system must be : (1) unmistakable; (2) easy to remember; (3) brief. The usual terminology of tools and parts is very loose. The meaning in which words are used differs widely among different firms, and the same word is often used for several ideas; it is consequently neces- sary to determine which one is intended. The first step in symbolizing, therefore, is to adopt definite names in accordance with both current commercial usage and dictionary definitions. As one of the chief purposes of a symbol is to correct the vagueness of common language, it is essential that each symbol be applicable to only one definite thing or idea. 2. Constructing a system of symbols. A symbol involves two things, a sign and a position. The sign may be a letter, a figure, some borrowed charac- ter, such as a Greek letter, or something manufac- tured to serve the purpose. Where there are enough signs to indicate all the classes, position is unneces- sary. This is the case with the chemical symbols. N stands for nitrogen, whether it is at the begin- ning, as in NH 4 C1 (ammonium chloride) ; in the middle, as in NaNO 3 (sodium nitrate) ; or at the end. 201 202 FACTORY AND OFFICE ADMINISTRATION Where, however, there are not enough signs to go around, position is added for significance. The digit 6 means sixty in the second place (60) , and six hun- dred in the third (600). Where letter symbols are united to form groups, it is preferable to have com- binations of capital and small letters, as in the chem- ical symbols, rather than to have all capitals, because by the former method spaces are more easily distin- guished. Each succeeding capital represents a place. In using numbers, it must be remembered that the range of any one column is to 9, not 1 to 10. Where letters and numerals are used together it is better to alternate them. It is also advisable to omit the letters I and O lest they be mistaken for one and zero. 3. Symbols an arbitrary measure. Symbol sys- tems are "standards of measure" and must not be con- tinually changed. In order to avoid confusion they must be definitely, even if arbitrarily, established. In fact many of the speakers before the American Society of Civil Engineers have claimed that this is the great advantage of a number system, since such a system makes no attempt at being logical. When it is once established there is little temptation to alter it. 4. Advantages of mnemonic system. Mnemonic means "aiding or designed to aid the memory." The advantage of using mnemonic symbols is that less referring to charts is necessary and consequently there is less likelihood of mistake. As a general rule, letters, especially when related to the words they SYMBOLS AND ROUTINE 203 stand for, are more easily remembered than numerals. The two-letter system is the one most generally used. Its 676 possible symbols are ample for most require- ments. The letters should be either: first and last letters as Rm, for Ram ; or first and second letters as Fr for Frame; or first letter and a letter indicating the sound as Dy for Die. Where none of these com- binations is possible the same end can be attained by making the letter so extremely inappropriate as to be conspicuous. This is doubtless the idea back of the X for Inkstand in the Derby Desk system de- scribed below. The memorizing of symbol systems is not so formidable a task as it appears, because each man uses comparatively few of the total number and need remember only those he uses. 5. A working system. As one example of a well- constructed system, among many that might be given, take that used by the Derby Desk Company. In this system the following capital letters, the mne- monic value of which should be noted, are used to in- dicate types of products : H High roll-top desk. L Low roll-top desk. C Special roll-top desk. S Flat-top desk. D Double flat-top desk. K School-teacher's flat-top desk. F Flat-top typewriter desk. DF Double desk with one side arranged for type- writer. 204 FACTORY AND OFFICE ADMINISTRATION PF Flat-top desk with typewriter instead of right-hand bank of drawers. R Roll-top typewriter desk. B Bookcase. RB Revolving bookcase. P Coat tree. X Inkstand, single. DX Inkstand, double. M Letter tray. MC Map and chart case. T Table. U Umbrella stand. W Wardrobe. 6. Application of the system. As most of this company's desks are made both with sanitary legs and with drawers to the floor, sanitary designs are indi- cated by prefixing the letter O. Styles of desk or bookcase under each type are indicated by serial num- bers. The length in inches follows the style number. Then comes the type symbol, and finally the number of the catalog (serially numbered) in which the desk is described. Take, for instance, the symbol O3360DF8. To one who is familiar with this system it is at once ap- parent that this refers to a sanitary desk, style 33, sixty inches long, a double desk with one side ar- ranged for a typewriter, described in catalog num- bered 8. This is not at all a complex system. It takes only a short time to become thoroly familiar with it. It SYMBOLS AND ROUTINE 205 tells all that is necessary in order to identify any product, and thus prevents indefiniteness and saves a great deal of time. 7. Use of numbers in symbols. Size is best ex- pressed and most easily remembered as a numeral. A series of arbitrary numbers is suggestive of the relative size, not the actual. It is better, if possible, to use some characteristic dimension. This is more descriptive and allows the adding of new sizes in their logical order without disturbing the existing symbols. Where arbitrary numbers are assigned, a sufficient number of blanks should be left to cover all future additions. In addition to preventing misunderstandings, sym- bol systems save a great amount of writing on draw- ings, requisitions, stock records and time-cards ; many managers consider this saving in clerical labor the greatest advantage of a symbol system. 8. Symbols for manufacturing. Symbol systems may be roughly divided into four classes covering: 1. Finished product. 2. Parts. 3. Operations. 4. Tools and machines. The usual method of symbolizing the finished prod- uct is to divide it into classes ; to designate each of these classes, if there are less than twenty-seven, by a single suggestive letter ; and to represent the different members of the class by consecutive numbers. Thus a certain line of presses may be grouped as follows: 206 FACTORY AND OFFICE ADMINISTRATION Class B Bench Presses of all kinds. Class C Cutting, Horning and Wing Presses. Power, Single or Double action. Class D Drawing and Deepening Presses. Power, Single or Double action. Class E Embossing and Coining Presses. Power, Toggle or other. Class F Foot and Hand Presses Lever Pendu- lum Screw, etc., Single or Double action. Class G Gravity Presses, Drops, with Hand Foot Crank Belt over Roller Lifter. Class P Punching and Shearing Presses. Power, Throated. Class S Stamping and Bending Presses. Power, Double-crank, Composite frame. Throated or straight, upright or inclined rectangular or round beds. The individual presses are Cl, C2, C3, El, E2, W3, etc. 9. Improving this method. A better method, how- ever, wherever possible, is to make the symbol de- scriptive, as are the chemical symbols, by combining a number of their elements. Thus there will be fewer symbols to remember and anyone can pick out the meaning of the combined symbol, even if he has not seen it before. The Derby Desk Company's system is of the descriptive kind. There are two systems of designating parts. The older one numbers the parts of the finished model consecutively. If Pi is the model symbol, the part SYMBOLS AND ROUTINE 207 symbols would be Pl-1, Pl-2, Pl-3. The great dis- advantage of this system is that with an increase of interchangeable parts the same part used in two or more machines will have two or more symbols. This makes stockkeeping difficult and perpetuates one of the very faults the system was designed to eliminate, the confusion of common terminology. Its advan- tage is that the trade, in ordering repair parts, will not confuse parts of different models. 10. Aims of newer methods. The newer method aiming at fewer drawings, alternation of existing pat- terns whenever possible, and the development of in- terchangeable parts, takes the part as the basis and builds up the final model. This second system is, in its nature, the direct opposite of the first. The parts are grouped according to their similarity, not their use. All bolts, for instance, would be classed together as bolts, and then would come such particulars as ma- terial and size. This greatly facilitates stockkeeping, and throws on the designer, where it belongs, the responsibility of making up a correct bill of material for each manufactured article. In order to prevent confusion, the drawing and the pattern should be des- ignated by the same symbol as the part, and this num- ber should be stamped on the part in some way, so as to facilitate work in the factory and make it possible for customers to order duplicate parts without con- sulting a catalog. 11. Standard routine. Time-study is one means by which to develop a standard routine. The more 208 FACTORY AND OFFICE ADMINISTRATION common method in practice today is to establish standards on the basis of experience. This method approaches the problem not from the standpoint of the work to be done but from that of the best pre- vious performance, and is more or less unconsciously followed in all businesses. One man in a shop will turn out more work than his neighbor. His method is studied and made the standard for the shop. By and by, someone else, perhaps a foreman, will discover a short-cut and so, little by little, the effi- ciency increases. A thoughtful clerk works out a new way of handling credits, which the office adopts. The sales manager seeks suggestions from his older salesmen, which he tries out and finally crystallizes into a manual, the codified best-way-of -selling. The difference between the standardized and the common practice is that each advance is at once officially re- corded where conditions are standardized, whereas, in everyday life, advances are recorded by tradition alone and so are likely to get lost. Harrington Emerson has graphically compared standardized practice to a ratchet which holds every- thing gained so far, without in any way retarding further progress. The business executive can stop a moment to rest and reflect without letting the busi- ness deteriorate. One man starts where his prede- cessor left off, instead of spending his time on a prob- lem which has already been solved. It is the ratchet system. 12. Steps in developing standard routine. The SYMBOLS AND ROUTINE 209 first step in establishing a standard routine is to find out exactly what the present procedure is. One way to determine this is to have each employe write out exactly what he does, together with any suggestions that he may wish to make concerning the improvement of any phase of the work. The next step is to work the best of these suggestions up into a manual to serve as a standard until something better is evolved. This is only preliminary, but it must be done whether standards are to be developed by time-study or by evolution, the better method usually being to employ both methods. The introduction of a standard routine is often delayed unduly while the standard is being perfected on paper, and thus much of the advantage of the standard is lost and its ultimate perfection delayed. The quickest way to get a standard adopted is to place it in concrete form before the office, shop or sales force. The worker must then agree or dis- agree ; his test will prove the standard right or wrong. In either case, his ideas are focused for the use of the office. 13. Profiting by the experience of others. It is also advisable to profit by the experience of others. Mr. Gilbreth gave the following testimony before the Interstate Commerce Commission : We furnish our men with eighteen bricks in what we called a pocket for the want of a better name. That pocket con- sists of a tray with four slats, two this way and two that way for handles. I got the idea for that from Mr. Taylor and Mr. Gantt in the matter of handling pig iron at the Bethle- 210 FACTORY AND OFFICE ADMINISTRATION hem Steel Company. They found after long experiment that 92 pounds was the best unit for handling pig iron. If that is true of pig iron, and the laborer makes no use of the material he carries, it must be true also of brick. So we arranged to have the pocket that would best handle 82 pounds of brick. 1 Care must be exercised, in adopting other stand- ards, to make sure that conditions are the same or to make due allowance for local conditions. Differences in machinery, hardness of metal, and such factors, ap- parently only details, will entirely change the amount of work which can reasonably be expected. 14. Function of technical societies. The develop- ment of standards both of measure and of routine is one of the principal duties of the technical societies. For example, the American Street and Interurban Railway Association in 1906 adopted, and recom- mended for use by its members, a standard code of rules for the government of conductors and motor- men. The American Railway Master Mechanics' Association recommended a standard apprenticeship in 1898, which they have amended from time to time. The American Institute of Architects in conjunction with the Master Builders' Association have adopted a uniform building contract. There is also a society specially organized to promote uniformity in methods of testing cement. 15. Value of printed records. Routine, however developed, should at once be put on paper. The rapid progress of civilization since the introduction of i Brandeis, "Scientific Management," p. 27. SYMBOLS AND ROUTINE 211 printing, as compared with that of the centuries be- fore, shows the efficacy of the printed record. The record of business routine operations is known as a manual, and it is surprising to see how universally ap- plicable its regulations are. In the office, the cor- respondence manual contains a series of carefully worked out paragraphs covering routine questions, by the use of which the correspondent can greatly re- duce the time necessary to handle his mail. The man- ual of the Long Island Railroad contains 773 rules covering the duties of different employes, how to make up trains, the rights of trains, how to signal, etc. Similar codes are in force on all the other railroad systems. Most department stores have their "Book of Rules." The "Standard Book" of the Westing- house drafting room contains twenty-four drafting dictionaries which specify: lines to be used; letters and figures; methods of sectioning; mechanical fea- tures, such as size of sheet, position of title; element charts; illustrations of the elements of their various machines; illustrated index of terms used; digest of the 400 pages of circular instructions issued from time to time ; and sample drawings and abbreviations. 16. Advantages of loose-leaf manual. While the material in the manual, and not its form, is the im- portant thing, nevertheless it is convenient, where the firm is large, to publish the manual as a loose-leaf book, small enough to slip into the pocket. Changes can be made from time to time without republishing the whole book; and because of its convenient form 212 FACTORY AND OFFICE ADMINISTRATION it can be carried around and can be readily referred to. It should be fully indexed to facilitate its use. In small companies it is convenient to type, mimeo- graph or blue-print the manual. An even simpler form is a scrapbook in which are pasted copies of each specification for material and of each letter of instruc- tion which the office issues. This kind of manual is not so convenient as the others, because the material is not properly classified, and duplicates cannot be issued without considerable trouble. REVIEW Why do business men adopt abbreviations for certain words, etc., as soon as their business becomes large and complex? De- scribe a natural system of symbols? What principle underlies the practice of symbolizing the fin- ished product after dividing it into classes, by designating each class, if there are less than twenty-seven, by a single suggestive letter, and by representing the different members of the class by consecutive numbers? Show how time-study may be related to the development of a standard routine. The manager of a certain office, upon hiring a new man, always spent considerable time in explaining the office routine to him. Afterward he noticed that each employe in any one department had a different conception of his duties and that frequent talks were necessary to keep the men doing the work in the way he had described to them. How could this defect be remedied? CHAPTER XVI STANDARDIZATION AND LABOR 1. Goal of every producer. One of the chief dif- ferences between machine-made and hand-made goods is that the latter possess greater individuality. The recent revival of the handicraft trade shows what a strong hold this quality in a ware has upon the con- sumer. Nevertheless, when the producer of a hand- made article finds that competition is threatening his market he begins the standardization of his product. He may first adopt a definite brand for his article, by which method he hopes to impress a community with the fact that his goods possess a standard of pur- ity or some other excellence which is highly desired in the market. Failing to monopolize the trade by this method, he may attempt to hold his market by a re- duction in the cost of making his goods. If his goods are made altogether by hand, the costs will be lessened by turning out a larger product than before in a given period of time. This he can do with the best results if he makes a standard type and confines himself to manufacturing it over and over again. 2. Production limited by hand labor. This is standardization, but its effects cannot be carried very far under a system of handicraft labor, for the work- ing power of a man is limited. However, with the 213 214 FACTORY AND OFFICE ADMINISTRATION addition of steam power and machinery to the work- man's shop, the problem of fatigue is largely solved; the question of being tired does not apply to either the engine or the tools. The more work the machines can be made to do, the higher will be the productive capacity of the shop. Thus, even in a primitive fac- tory where tools and machines are simple, and the motive power chiefly that of the operator, attempts will be made to use the equipment as much as possible according to some sort of standardization. But be- fore the producer can determine the highest efficiency of a shop, he not only must know his own endurance and skill, but must determine what the possibilities of his machines are under the best conditions. Here then we have the whole problem of stand- ardization, which has become more and more difficult to solve. All machine work may be divided into two parts: (1) the work of the machine and (2) the work of the man who runs it. But as the years have rolled by, new inventions and new conditions have added many variables to an already complex problem. 3. Three factors conditioning output. The three principal factors conditioning the output of both man and machine are speed, the character of the material and the tools. It is therefore necessary to determine what particular speed, what particular grade of ma- terial, what particular quality, what particular kind of tools can all be united in producing the greatest amount of goods of a given quality during any pro- duction period. When these have been determined STANDARDIZATION AND LABOR 215 for each of the factors, we have what is known as standard speed, standard materials and standard tools. But while this problem is simple to state, the actual work involved in determining any one of these standards is enormous. It took Mr. Taylor, with a body of experts, a whole year to standardize the shovels in the Bethlehem coal yards. If the problem of standardization is so difficult of solution with so simple a thing as a shovel, what about the complex machine which has at least a dozen variables such as the angle of the cutting part, the angle of its edge, the depth of the cut, the speed of the cut, and so on? The combinations which are possible with even nine vari- ables, amount to 416,880. Thus a machine is actually capable of being set many thousand ways. It will be recalled that Mr. Taylor made over 50,000 recorded experiments in the determination of standard feed and speed for cut- ting metals. 4. New standards must be developed continually. As the size of the industry increases and the number of men and machines grows, it becomes necessary to apply the principle of standardization * to new proc- esses, equipments and appliances. Thus we find standard times for handling the work, standard times for assembling, standard office forms, and finally a standard wage, which rests upon a consideration of i In the Santa F6 system of transportation, referring only to the various shops, roundhouses, etc., there are 23,000 operations recognized as standard, with additions being made every year. 216 FACTORY AND OFFICE ADMINISTRATION the relations of all those processes which have been standardized, to the labor which is necessary to direct them. The standardizing of a product, a tool, a process or a relation, depends upon the removal of as many as possible of the variable or uncertain factors. ' What may be a standard under one set of productive con- ditions may be entirely set aside under another, be- cause some uncertainty connected with the old stand- ard has been removed. The measure, therefore, that is used in a factory in determining its productive ef- ficiency, or the efficiency of any part of the productive process, is the lowest possible time in which each piece of work can be completed. This is known as the standard time. A standard time, however, is simply the reduction of a product to its lowest terms, the product being made up of a number of other prede- termined standards. 5. Standard time as determined by experience. When a foreman turns over a job to a workman and says, "John, this ought to take you one hour," it is very doubtful, in the majority of cases, that either of them has the slightest idea of the immense amount of study and work which lies back of this simple state- ment. The standard time for this job in the mind of the foreman is one hour. But why it should be one hour rather than some other time he could tell only by saying that he had found this to be about right after years of experience ; and he might even add that this was the standard time in all the shops that he STANDARDIZATION AND LABOR 217 knew, and that the foreman before him had worked under the same conditions. This is the method by which standard times in both the shop and the office have been established, and it represents the way in which rule-of-thumb standards have developed. Probably years of time, thousands of men, and hun- dreds of thousands of jobs have contributed to the ex- periment of which the total outcome was summed up in the foreman's direction: "John, this ought to take you one hour." 6. New conditions make time-standard hard to obtain. Modern investigations show that standard times which have been determined by the experience of the past are not always safe guides. The man who can do the work does not necessarily know the best way to do it. Mr. Gantt gives a record of a plant where the standard times in the running of a loom were based upon usual practice. The manager, however, after a short investigation considered the plant ready to adopt scientific management; accordingly he adopted an arbitrary new standard time. He put a weaver at work upon a loom, but on the very first day the schedule broke down. The next two weeks were spent by the management in studying the adjusting of the parts, and in getting the bobbins filled properly so that the loom would be uniform and standardized. Not until all this had been done could the management in fairness ask the worker to do the job in the new stand- ard time. Then he did it, and the weaving was gradu- ally accomplished on the new basis. 218 FACTORY AND OFFICE ADMINISTRATION 7. Some general considerations in standard times. The determination of the time- standard is one of the biggest problems before every factory and office of to- day. It involves the whole question of time- and mo- tion-studies besides many problems of human fatigue, and the like. Therefore, there will be no attempt here to do more than point out some general considerations which should be observed in arriving at standard times. A study of them may serve as a caution to those man- agers who lose sight of the very important element of time when planning a reorganization of their factory or office, and who expect to get results within a few months or a year. The necessity for time-standards will be evident when the following conditions with all their variable factors are considered. 8. To attain standard times in a shop. Modern conditions in the shop so different from the state of affairs of only fifteen years ago, have in general been brought about by (1) the introduction of high-speed steel for cutting tools ; ( 2 ) the use of devices for hand- ling modern material; (3) the provision of better working conditions. The first of these factors has affected the rate of production dependent on the ma- chine; the second has established quick relations be- tween men and machines ; while the third has increased the rate of production on the part of the men. It will be necessary here to speak of the effect of the first two factors only. 9. Standardize machines before getting standard time. In regard to the revolutionary effect upon f ac- STANDARDIZATION AND LABOR 219 tory work, the introduction of high-speed cutting tools stands next to the invention of the steam engine itself. Hence, before standard times can be estab- lished, the investigator must consider ( 1 ) the charac- ter and limitations of the existing machine tools ; ( 2 ) the correct shapes for the cutting tools ; (3) the proper temper of the steel tools; (4) the best running condi- tions as provided by various cooling agents, etc., and (5) ihe maximum speeds. All these factors having been standardized, the time that machine work should take may be easily calculated by reference to slide rules prepared for these data. But the work done by the workmen is a more difficult matter to determine notwithstanding the magnitude of the task which has just been mentioned. 10. Records must be provided. When the stand- ards suggested by the above factors have been devel- oped, it is further necessary to establish an adequate system whereby all the data pertaining to production may be collected and so arranged that the manage- ment can feel assured that the plant is operating daily at the new standard of efficiency. Any facts bearing upon standardization may be used as the basis of other experiments. Of course, due consideration should al- ways be given to the conditions existing at the time of the tests. 11. Foremen and laborers must be taught. It is just as well to suggest that such work belongs to the expert alone; for it is sometimes forgotten that standardized physical conditions make up only part 220 FACTORY AND OFFICE ADMINISTRATION of the requirements to be met before the standard time can be established. Intelligence in dealing with the new conditions is necessary. Foremen and working- men must be taught to appreciate the changes and how to secure the results expected ; and the gaining of this standard of intelligence is a prerequisite also to the introduction of standard times. 12. Standard times in handling and assembling. The determination of many of the standards pertain- ing to materials, machines, speeds and the like, be- longs to the province of the engineer. Many progres- sive managers are now extending the principle of standardization to other features connected with the making of goods. The handling of materials before and after they reach the machine, and the assembling of the parts into a completed whole are now receiving the same close attention that has been bestowed on the machinery processes. 13. Elements in handling time. The time required to handle the tools, machines and materials in any large factory, is an important consideration. In the Watertown arsenal it took a workman 329 minutes to cut a gear. When the job was analyzed it was found that 152 minutes was the running time of the machine, and 177 minutes was the handling time taken by the man in assembling finished gears, put- ting in new blanks to be cut, adjusting cutters and lifting pieces to and from the machine. In making a study of this case for the purpose of getting at a standard time, it was found that the job could be done STANDARDIZATION AND LABOR 221 in 220 minutes 109 minutes less than the actual time taken. The machine's running time was fixed; this saving all came out of the 177 minutes of handling time. Handling time, as a whole, is divided into three parts : that devoted to (1) handling tools ; (2) hand- ling the machine; and (3) handling the materials. The handling of the tools takes the most time; it is estimated that in many cases this consumes 75 per cent of all the handling time. The handling of the ma- chine takes 15 per cent of the time. The handling of materials takes 10 per cent. 14. Sample of standard time in handling. "It is no uncommon thing," says Mr. H. K. Hathaway, "to see men spend fifteen minutes in trying to screw a nut onto a clamping bolt when 0.71 minute would have sufficed to perform the whole operation of lifting, adjusting and tightening the clamp to a machine." In arriving at a standard time for this operation he obtained the following data : Min. To lift the bolt, block and clamp to table of machine 0.17 To put the bolt in slot of table 0.04 To remove nut from bolt by unscrewing with fingers 0.13 To clamp over bolt and on work ... 0.05 To put block under clamp 0.05 To put washer on bolt 0.07 To screw nut on bolt with fingers 0.13 To tighten nut lightly with wrench 0.07 To draw nut down tight with wrench 0.10 Total 0.71 If this simple operation is analyzed, it will be seen that only one of the elements of handling has been IV 16 222 FACTORY AND OFFICE ADMINISTRATION considered, i. e., the handling of the tools. If we should desire to standardize the handling of the opera- tions which accompany those of the drilling machine to which this clamp was attached, we would then have a standard time for that operation of the machine. Further, if it is desired to study the handling con- nected with the bar of iron which was held on by the clamp and drilled by the machine, another set of time- studies would give the standard time for that opera- tion. Thus the standard handling time would be divided into four parts, each of which would be stand- ardized. These parts are the time for (1) handling the material on its way to the machine, (2) setting up the job, (3) machining the work and (4) removing the work. 15. Material-handling time. The method of hand- ling material has been standardized by having certain operations, such as the piling or placing of parts, al- ways done in the same manner, and by having the parts put in the same places each time the operation is performed. For example, in the handling of light pieces, where various operations require close atten- tion, the stock may be carried in boxes of the stand- ard size. This reduces to the minimum the number of sizes needed and effects a sort of standardization. A second standard may be obtained by carefully selecting the place where the box is to stand. A low, strong table can be used. This table at once stand- ardizes the spot where the stock shall be placed; and the fact that the workman becomes accustomed to STANDARDIZATION AND LABOR 223 reach for his stock always in the same spot aids ap- preciably by inducing in him a set of standard actions. The conditions are now ready for a test for the purpose of determining the least time necessary to do the work. A series of stop-watch tests upon an active workman will serve as a basis for a standard time for handling this part of the work. It is well, however, to check this test by other trials performed by an expert "tester." The latter is really a standardized laborer. 16. Standard assembling time. The establishment of a standard time for assembling work presents prac- tical difficulties which are far more serious than those connected with machine standards. The variations in human judgment and skill are more difficult to de- termine than the peculiarities of a machine. In most factories the workmen dislike to have their best speed known to the management, for then if they do not at- tain it, a relative decrease of pay often results. The only general rule that can be applied in the determina- tion of the standard times in this work, is to separate the assembling operations for any particular job into as small a number as possible. If a workman can be confined to three operations, or fewer, the problem is much simplified. But where the assembler has as many as ten different operations on a particular part, the solution becomes highly involved. The character of the difficulties in the way of the determination of this standard time indicates that the manager should help solve the problem. "The waste of time," says Mr. C. U. Carpenter, in his excellent book, "Profit 224 FACTORY AND OFFICE ADMINISTRATION Making in Shop and Factory Management," "in the ordinary assembling department of the average manu- facturing concern is almost beyond belief." 17. Economy gained by a standard time. A test made by Mr. Carpenter on assembling work shows what can be done in effecting economy in this direction. Taking advantage of a strike in the polishing depart- ment, the manager adopted a system of determining the new men's standard times of assembling. Twelve expert polishers were assigned to instruct sixty-two green hands. A partial analysis of the work after a few weeks showed that a reduction of 40 per cent could easily be made in the rate paid, and still the men could be provided with a good wage. In three weeks it was found possible to put the entire force upon piecework at the reduced rate. The men were assured that no further reduction would take place and were urged to do their best. The records showed that at the end of a period of ten weeks, the average earnings exceeded $5.50 per day, whereas under the old system they were only $3.00 per day. And at the same time, the work itself increased so materially that at the end of six months the actual records showed savings in the pay- roll in this department amounting to over $55,000 per year. The relation of standard times to other features of organization is very close and vital. The determina- tion of the "shortest time" in which a job can be done is the first problem to be solved in establishing a wage STANDARDIZATION AND LABOR 225 system; and what standard times mean to the cost system has only to be mentioned to be realized. REVIEW Before adopting a standard output for a machine, why is it necessary to determine what particular speed, grade of material, and quality and kind of tools will best combine to produce the desired result? What is the difference between hard-and-fast standards and standards set by scientific methods? What is the difference between time-studies and motion- studies ? What conditions in a modern shop or office make the subject of standard times of great importance to the manager? How would you proceed to establish the standard times con- nected with the assembling of a simple product like a chair? CHAPTER XVII STANDARDIZATION AND RATE-FIXING 1. Chief elements in efficiency. The principal mat- ters in connection with efficiency that have been treated so far are : ( 1 ) the centralization of manufacture at shops best fitted by reason of location or otherwise for doing the work; (2) standardization of parts, tools and operations; (3) supervision of materials, tools and methods, and the planning and designing of devices and tools to help labor and machines in re- ducing delays. There still remains a fourth topic for consideration that which relates to the reduction of labor cost by the application of a system of wage pay- ments and a system of adequate instruction. 2. Standard time not always shortest time. In de- termining the standard time of any process involving the combined work of machines and men, the many difficulties that arise are largely due to the "human element." Some of these difficulties have been men- tioned; among them is the difference in men's capacity to work. Therefore, before a standard time can be adopted for a particular operation, it must first be de- termined what the capacity of the average man is. If the standard time is based upon what the best man can do, and the average laborer is expected to reach 226 STANDARDIZATION AND RATE-FIXING 227 that standard, the failure of any wage system based upon it is practically certain. 3. Standards for wage systems. Standards are of little value unless they can be used as measures in comparisons. A standard in a system of wages must be used in effecting two comparisons ; first, the work- ing efficiency of each laborer at different times; sec- ond, the working power of different laborers. By a consideration of these two comparisons, the manager is enabled to determine what the individual laborer is capable of doing from day to day, and what he ought to do as compared with the other laborers who do the same grade of work. This is a long and difficult task, but once working standards have been determined for a man, it then follows that the management must pro- vide records by which costs and profits can be checked, and a proper incentive can be furnished which shall serve to keep the laborer diligently at work. How then may laborers be held to standard performances? The machine requires as its return only the repairs and renewals necessary to keep it going. The laborer, on the other hand, asks as his return all that he pro- duces. The nearer he thinks he is approaching this reward, the greater is the incentive to work. It is, therefore, not always a high wage that determines the labor efficiency of a factory but the system by which the wage is determined and paid. 4. The moral responsibility in rate-fixing. In every mechanism, in every system, in every relation- ship between two persons, or between social and eco- 228 FACTORY AND OFFICE ADMINISTRATION nomic groups, there is a point upon which the differ- ent forces or interests converge with a maximum ef- fect. The entire operating success of the machine, business, industrial organization or social group, de- pends upon the man or institution that stands at the focal point, so balancing the forces and interests that a perfect equilibrium is obtained and the structure at this point is kept from yielding to the special strain. Such men, in the work of distribution, are the grain and cotton graders and other inspectors of staple prod- ucts. Upon the judgment of these men depends the determination of the class or grade in which the neces- sities of life are placed, and in so far as they determine this they fix the price which the producer will get, and which the consumer will pay for these products. In factory and in office the rate-fixer holds a position similar to that of the grain inspector and grader. Grading and rate-fixing depend upon the same funda- mental principles. One deals with commodities, the other with men, but both must discover the dominant characteristics that give commodities or men varying commercial values. One value pertains to the mar- ket, the other to the employer. And each, in its way, is of equal importance to the laborer. As a con- sumer, the wage-earner is interested in the price that he pays for his food and clothing poor grading may cause the laborer-purchaser a loss, because he may pay for a quality which is lacking. As a producer, the wage-earner is anxious about the price he gets for his labor. Bad or slovenly rate-fixing may compel STANDARDIZATION AND RATE-FIXING 229 him to take less for his work than he should get, be- cause his job has been graded below the class to which it belongs. There is no other position in the business world where the moral responsibilities are greater than those of an inspector whose judgment determines the grade of commodity, goods and labor for any social group. Such men are standard-makers, and upon their standards much of the happiness of mankind de- pends. 5. Trade-union opposition to rate-fiacing. Said the old-time doctor who sold his own drugs, "It is silly, perfectly useless, to depend upon apothecary's weights for drugs, because it takes fifty times as much chloroform as it does cyanide of potassium to kill a goat." Analyzed, this statement simply means that a druggist's scales need to be used even by a man who knows the difference between chloroform and cyanide of potassium. Labor-union leaders often condemn premium systems by similar reasoning. "It is harm- ful, absolutely iniquitous to depend upon the Taylor system of wage payment for a square deal, because it takes fifty times as much 'minimum wage' as it does 'straight piecework' to kill a workman." The point of view represented by such a statement is held by two distinct classes: (1) those who do not understand the principles of time- and motion-studies which underlie all scientific wage systems, but who are honestly endeavoring to get the most out of a very complex relationship between employer and employe, and (2) those who do not understand these principles 230 FACTORY AND OFFICE ADMINISTRATION and who, because they do not understand them, fear that the principles will interfere with certain selfish interests. These men prefer to befog the issue rather than analyze the problem and establish the true rela- tionship. 6. The employe as rate-fixer. The premium or bonus idea in industry is not new. The difference be- tween the old and the new application of the idea has to do, first, with the method of determining the bonus, and secondly, with the person relied upon to estab- lish the bonus standard. The germ of the bonus sys- tem lies in the mind of every shop and office employe who believes that he should be paid a daily wage just for being "on the job," and that if the employer wants extra "results" he must give an extra inducement. The reply of the Liverpool Harbour Board's car- penter who applied for a job at the Mersey Dock office, shows how and by whom the bonus standards were established under the traditional systems of man- agement. When asked what wages he expected, he replied, "Three shillings if I take the hammer here" (up near the head) ; "four shillings if I take it here" (half way down the handle) ; "five shillings if I take it here" (at the point where he could work most effi- ciently with it). 7. The employer as rate-fixer. The labor problem is sometimes given a narrow interpretation from the administrator's point of view, as follows : "How can I, as manager, occupy all the time of my employes productively, continuously and profitably?" Driving. STANDARDIZATION AND RATE-FIXING 231 false allurements and cut-piece rates have all served their day and, like all false methods, their after and indirect effects are worse than the immediate results. The distrust which laborers now have of every method proposed by the management is one of these indirect effects ; and now that organized labor has forced em- ployers to resort to some method other than that based on fear and guesswork, the good methods backed up by the high-principled motives which are now preva- lent, must suffer thru the opposition of the unions, because of bad predecessors. The wage difficulties which now beset the administrators are a natural out- growth of the old system of management, which put nearly all the productive responsibility upon the la- borer. The laborer, not being able to pass the work farther down the line to someone below him, took ad- vantage of his position to "scamp" and "soldier." The management then began to devise means of forc- ing a higher labor efficiency and, as a result, a number of wage systems appeared. The first of these was the straight piece-rate system. By its means, the manager sought to stop "soldiering" by paying only for what each man produced. This had its desired ef- fect. It brought about overproduction from the management's point of view, and overwork from the standpoint of the men. To correct these evils, the employer at first cut the piece-rates, and the employe thru his union set a minimum wage. In this contest the unions won, but rather thru force than thru the championship of a correct principle of wage de- 232 FACTORY AND OFFICE ADMINISTRATION termination. Next, the employer tried to overcome the trade-union prestige by accepting the prevailing daily wage of the locality, and adding to it a bonus or premium, provided a certain standard task was per- formed. This brings us to the first formal plan, now known as the Halsey-Towne premium system. Altho this left the situation very little better than before, yet it did show the weakness of any system which did not try to determine the nature of each task from direct observation before a rate of payment was attached to it. The fundamental weakness of this system was its reliance upon the past records of performance, and upon the workingmen's own estimate of what should constitute a reasonable time of performance. To remedy this fault, the third step in the develop- ment of wage systems was introduced. Mr. Taylor, in his differential piece-rate system, placed the empha- sis upon the importance of making a close analysis of each job before a standard of performance should be published. This study being made by the manage- ment and under the direction of experts, little import- ance was attributed to the old records of the employe or to the employe's estimate of his own worth. In this, as in all scientific methods, lasting results and permanent progress could be obtained only by getting accurate measurements. The early investi- gators relied upon miscellaneous records and imper- fect judgment; the later students of the question in- sist upon first, an isolation of the unit to be measured ; second, standardized conditions in the method of meas- STANDARDIZATION AND RATE-FIXING 233 urement ; and third, devices for taking measurements which shall be free from the personal equation. These tests, having been applied to an office or factory job, resulted in the establishment of two important methods of scientific investigation before a wage rate can be fixed, or a wage system established. These methods are known as motion-study and time-study; in the development of each, two names stand out prominently. Mr. Frank B. Gilbreth, by applying the use of the motion-picture camera, the speed-clock and the cyclegraph to motion-study, and Mr. S. E. Thompson, thru his stop-watch tests and scientific time-studies, have made motion-study and time-study, as administrative aids, almost separate professions in themselves. Altho these studies are the basis of any scientific system of fixing the rate of pay, it is not pos- sible here to go into detailed description of them fur- ther than to remark that the fundamental distinction between the two is this: Motion-study is applied to the analysis of each operation, with the object of sepa- rating it into the most elementary motion units possi- ble. Here time-study comes in and measures these units. Time-study, then, has to do, fundamentally, with the measurement of units. At this point, the motion-study element comes in again, since in estab- lishing a new method of performing the work only the efficient units are combined. Then the operation may be spoken of as being standardized. 8. Rate-fixing as a science. By comparing Eng- land and the United States, the progress of manage- 234 FACTORY AND OFFICE ADMINISTRATION ment can be measured in terms of the position which is given to rate-fixing. In England, the rate-fixer's function may be summed up in the remark made by a prominent works manager: "A rate-fixer should be able to detect at a glance if the proper speeds and feeds are in use on machines he is constantly dealing with." And so far as the office is concerned, the great majority of concerns have given very little attention to either speed or feeds. In America, the art has moved from a position where it depended upon the eye and experience of a trained observer, to the point where accurate measur- ing instruments, close analysis of motions and the se- lection of the most efficient are in use. With Eng- land, the United States recognizes the importance of the skill and experience of the foreman in following motions with his eye, and in judging the amount of time that they consume. Sight, hearing and touch must all be keenly developed, but this training fits an expert only in getting preliminary results, which can be obtained without the use of devices. In American practice it is after this preliminary study has been made that the emphasis is placed. In making more intensive studies of certain trades, such as shoveling, concrete work, brick-laying and the like, it was found advantageous to photograph the various positions of the hands, arms and feet during the oper- ation, as well as to record the time that the operator took to move from one position to another. And when all this was done for one method, the results STANDARDIZATION AND RATE-FIXING 235 were compared with those of other methods. Mr. Gilbreth who, in collaboration with Mrs. Gilbreth, has done much in the cause of rate-fixing, in develop- ing devices for accurately recording motion and time measurements, has been able to use the modern pic- ture-camera in combination with a speed-clock so that movements in surgical operations have been recorded and timed to the millionth part of an hour. This fact is mentioned to show the direction which the science has taken, and the results which can be obtained in the study of motions. Such close measurements would seldom be necessary, however, in the study of motions pertaining to industrial and office operations. 9. Rate-fixing as an art. The recognition of rate- fixing as an art distinct from f oremanship, dates prac- tically from the use of high-speed steel and the ac- companying development of the premium system of wage payment. Mr. Taylor emphasized, as early as 1885, the necessity of segregating this function of rate-fixing, and the subject received similar attention at about this time on the river Tyne. It was not un- til 1900, however, that rate-fixing became, in both England and America, an important object of ad- ministrative attention. In the case of machine shops and the same princi- ples would hold in other shops and in the office Mr. Taylor divided the function of time-study so that it would apply to (1) preparation allowance and (2) operating time. In the following table, which has been adapted to English as well as American condi- 236 FACTORY AND OFFICE ADMINISTRATION tions, we find the details for an elementary time-study : A. Preparation allowance: (1) Taking instructions from job boss (charge handwork, material, drawings, etc., at machine in advance). (2) Obtaining tools (fixing, cutting and gauging) . (3) Preparing machine and setting up tools. (4) Restoring machine to normal conditions, re- turning drawings, tools, etc., at end of job. B. Operating time per piece: (1) Cutting time. (2) Securing and setting work in machine (crane service where needed). (3) Changing tools (allow for grinding if not pro- vided for by tool room) . (4) Starting out and sizing; also allow for return- ing the tool to starting point or any other place re- quired (sometimes averaged as 25 per cent of cutting time). (5) Gauging. (6) Minimum rest period (sometimes taken at 5 to 12 per cent of net working time, items 1, 2, 3, 4 and 5 ) . Under a system of scientific management the above factors would be carefully planned and timed. In ordinary practice, however, the rate-fixer would look thru his records of the work done by the machine until he found a piece of work as nearly as possible similar to the proposed job; he would then guess at the time required to do the new piece of work. In determin- STANDARDIZATION AND RATE-FIXING 231 ing the times in cases where close time measurements have not been taken, English and American practice would not vary much. Thus in the above, a close es- timate of the possible operating time having been made, a margin of 50 per cent is added to establish an operating time limit. A similar method is allowed in the case of the preparation allowance. This 50 per cent is estimated by assuming that if the man does the job within standard time he will be paid at a rate based on one-half the time saved. He will thus automati- cally earn a bonus, or premium, of 25 per cent on his time wages, provided, as is often the case in England, the Halsey-Weir or the Rowan wage system is in operation. If straight piecework prices are paid, then a margin of only 25 per cent would be allowed upon the estimated (standard) time. Of course, if other rates of premium or bonus should be desired, then a corresponding adjustment would be made in the per- centage allowance on standard times. i The safeguards against ill-judged time measure- ments lie, first, in the accuracy with which the condi- tions surrounding the operations (the job data) are standardized, and secondly, in the thoroness with which the job data are interpreted by drawing, in- struction card, etc., and then put into records as guides for future practice. REVIEW After a standard performance has been set, how can the labor- ers be held to their task? IV 17 238 FACTORY AND OFFICE ADMINISTRATION What similarity is there between the work of the rate-fixer in an office and that of a grader of cotton? What opposition would you expect to meet from a trade-union if you tried to introduce a new system of wage payment based on time-studies? What bad effects generally follow an employer's cut in piece- rates? Give a brief resume of the history of wage systems, showing how the modern scientific method has been evolved gradually. How did Mr. Taylor divide the function of time-study? What safeguards should be kept in mind in order to prevent ill-judged time measurements? CHAPTER XVIII WAGE SYSTEMS 1. Systems of pay. The most prominent systems of pay in the United States are the day-work plan, the piecework plan, and various modifications of the premium or bonus plans. The first method is usually employed where special conditions prevail. Thus, it would be fatal to adopt a system of wages in a department where great care and accuracy were demanded if the system stimulated the workmen to produce more but inferior work. The piecework system provides for the payment of work by the piece. It was at first hailed with en- thusiasm by the worker, but so many abuses which proved hurtful to the pieceworker, crept into the system that the latter now generally regards it with suspicion. One of the abuses is the practice of cut- ting rates when the men begin to earn high wages. The mischief is very largely caused by poor judgment in the establishment of the piece-rate in the first place. Neither the standard prices nor the standard times were based upon scientifically determined data, but upon, some such basis as the "best previous records," an "ordinary try-out," or the foreman's estimate. The laborer generally saw that by working harder he could increase his income by several per cent, but this gener- 239 240 FACTORY AND OFFICE ADMINISTRATION ally led to a corresponding cut in the price. Thus the laborer was obliged to work very much harder than a few days before, for a return in wages no larger than formerly. 2. The premium or bonus system. With the day- work plan and the piecework system as a basis, other methods have been made possible by the more accurate determination of standard times. The premium, or bonus system is one which sets a definite time for the accomplishing of a task, and which provides for the payment of an extra sum of money if the Work is com- pleted within this time. This is a modification of the day-work plan, whereby a definite task has been more scientifically determined in regard to the time neces- sary to accomplish it. The principle involved in this system, as in the other, is to establish a fixed rate of pay per day, so that if the laborer turns out less work than is demanded by this standard he will be insured at least a living wage. On the other hand, if he at- tains the standard set, or exceeds it, he will be paid a proportionately larger wage. 3. The Halsey system. The Halsey system, named after its inventor, is an example of a wage sys- tem formulated along these lines. A standard time is set for accomplishing a task but if for some cause beyond the control of the work- man that piece of work cannot be done in the time set, the laborer gets the wage previously agreed upon. It is also understood that this rate of wages will not be cut. Suppose that the man were working on a six- WAGE SYSTEMS 241 hour-day basis, he would be expected to finish in six hours, and if he did, would be paid 25 cents an hour, or $1.50 a day. If he did the work in five hours he would get a part of the wages which he had saved by finishing an hour sooner. If the proportion agreed upon were one-half, he would then get $1.37% for the five hours' work namely, five hours' work at 25 cents, plus 12 1 A cents for the hour he saved. If he did the work in three hours he would get three times 25 cents, plus one-half of the wages for the time saved, or $1.12 1 /1>. Under this system, therefore, the laborer never fell below the day-rate that was fixed, and he always had the chance of earning more by turning out more work. This was a compromise between the day-work and the piecework system which lessened the effects of each. The employer received part of the benefit of the em- ploye's increased output; thus his temptation to cut the laborer's wages was eliminated. On the other hand, the workman would not be inclined to limit his output because he wished to do as little work as possi- ble as under the day-work plan, or for fear that his wages would be cut, which so frequently happens under the piecework system. 4. Taylor differential system. Another system is that known as the Taylor differential piece-rate sys- tem, also named after its inventor. This is based on an accurately determined standard time, a careful study having been made of the operations involved and of estimates of how long it would take a first-class 242 FACTORY AND OFFICE ADMINISTRATION man to accomplish a given piece of work. If that standard is reached, the workman receives a high rate of wages. If he just falls short of the standard set, a considerable deduction from the day-rate is made. For example, suppose twenty units or pieces to be the largest amount of work of a kind that can be done in a day. If a workman finishes 20 pieces and all are perfect, and he receives 15 cents per piece, his pay will be 15 X 20, or $3. If, however, he turns out only 19 pieces, then he is allowed a proportionately lower price, say 12 cents per piece, and his pay for the day will be 12 X 19 or $2.28. If he succeeds in com- pleting 20 pieces, some of which are imperfect, then he is given a still lower rate of pay, say 10 cents, or even 5 cents per piece, according to the circumstances. Thus, while incompetence is heavily penalized, care- lessness is still more severely dealt with. This is only another of the special plans made to suit particular conditions. It could be introduced into only high* grade shops, where the work is standardized and the men are trained by functional foremen. It might be applied where the intensity or the rate of production must be high in order to get the utmost out of the* very costly machinery, tools and so on. 5. Efficiency system. The efficiency system is still another of these methods of wage payment. Here the time limit is set, as in the Taylor system, and if the workman fulfils the requirements he receives a large bonus ; that is, the employe is paid by day wages, but is stimulated by an additional bonus proportioned to WAGE SYSTEMS 243 his efficiency efficiency in this sense being the ratio between the time he takes for the job and the standard or schedule time set for him. The amount of the bonus is determined by a standard table which fixes the percentages of wages, for time actually worked, that is paid in addition as bonus at any determined rate of efficiency. As applied in the Santa Fe shops, this system grants no bonus for work below 66% per cent efficiency that is, below the rate of working at which the man takes 1% the standard time for com- pleting his job; from that point upward, it allows bonus on a rising scale, which reaches 20 per cent in addition to actual wages at 100 per cent efficiency (or the completion of the job in the standard time). Thereafter it adds 1 per cent of wages for each addi- tional 1 per cent of efficiency. 6. Comparison of Emerson and Taylor wage plans. Thus it is seen that this system does not pun- ish a man for not reaching a standard and obviates the failing of the Taylor system by enabling the men to earn a fair wage even if unforeseen difficulties occur. For instance, if a man reaches 100 per cent efficiency, he receives a 20 per cent bonus; if he falls below or goes above this standard, he receives less or more, according to the following table : Percentage of Efficiency Additional pay 67% 74% 1 80% 3.37 85% 6.17 90% 9.91 244 FACTORY AND OFFICE ADMINISTRATION Percentage of Efficiency Additional pay 95% 14.53 100% 20 110% 30 120% 40 7. Comparison of three fundamental rates, That the three rates of payment may be compared the more easily, the following table has been prepared in which each system has been reduced to a time payment basis : Day's Work Piecework Premium Hours, Daily Hourly Daily Hourly Daily Hourly work Wages Rate Wages Rate Wages Rate 7 $1.75 .25 $1.50 .214 $1.75 .25 6 1.50 .25 1.50 .25 1.50 .25 5 1.25 .25 1.50 30 1.375 .275 4 1.00 .25 1.50 .375 1.25 .312 3 .75 .25 1.50 .50 1.125 .37 2 .50 .25 1.50 .75 1.00 .50 1 .25 ,25 1.50 1.50 .875 .875 In order to make a further comparison of the va- rious systems, we will assume that the following con- ditions might occur: ( 1 ) The workman reports at the shop, stays there all day, but is given no work; (2) the workman does the standard work in the standard time; (3) the workman does all the work in a very short time, re- mains in the shop, but is given no further work. Then, under the various systems we have mentioned, their pay would be respectively as follows: No.l No. 2 No. 3 Day-rate. Full wages. Full wages. Full wages. Piece-rate. Premium. No wages. Full wages. Normal pay. Full wages. Full pay. 50% additional Pay- Taylor. No pay. Bonus above Full bonus and normal pay. full pay. Efficiency. Full wages. Bonus above Full bonus and normal pay. full pay. WAGE SYSTEMS 245 8. The purpose of time and motion-studies and bonus systems. There is no necessary relationship be- tween time-study and premiums. Either might exist without the other in any system. Each has a dis- tinct purpose. A straight piece-rate system may be based on accurate time and motion-studies, and may prove very satisfactory to both management and men ; while a piece-rate plan involving a large bonus may be equally disappointing to all concerned. Time and motion-studies should determine the amount of work that can be done in a day. In short, they should es- tablish the basis of a fair day's work, and hence a fair day's pay. The premium element in the system may serve simply as a means of distributing the wage, but its real purpose is to stimulate the worker to greater and better production. Its most important result is the stimulus that it gives to human endeavor; while affording the basis of a just reward it furnishes a prize to be won. 9. Simple bonus plan without time-study. Where past records have been taken as a basis of a wage rate in combination with a simple bonus, the minimum of workingmen's resistance has resulted. The bonus plan of payment as combined with methods that deter- mine accurately the shortest time in which a job can be finished, has much to recommend it. In the first place, it is readily understood and can therefore be easily introduced among a body of laborers. It is easily adapted in some form to almost any other sys- tem of pay that may already be in existence in the 246 FACTORY AND OFFICE ADMINISTRATION shop. Some managers have found it advisable to ex- tend the bonus plan so as to include the job bosses and the foremen. The plan in this case is to give bonuses to the foremen if all the men under them earn bonuses. This has the advantage of stimulating the foremen to give immediate and close attention to the inefficient workman. They will either attempt by proper and speedy training to raise such a man's efficiency, or drop him from the payroll. Thus from the point of view of labor the great pur- pose of standardizing, as to both operations and time, is to introduce some system of wages whereby effi- ciency is increased and stimulated by means of bonus awards. Perhaps the greatest discovery which the modern manager has made in his studies and attempts to solve his labor problems thru better wage systems, is the fact that the efficiency of the whole organization is the efficiency of the individual workman, and that the effi- ciency of the latter is secured and increased by giving him a wage proportioned to his production. REVIEW Point out the distinction between a premium system that has the daywork plan as a basis, and a premium system that has the piecework plan as a basis. Which wage system is based upon the most accurate data, the Halsey system or the Taylor system? If you were manager of a high-grade shop where the work is standardized and the men well-trained, which system of wage payment would you favor and why? Employer and employe are continually making demands upon each other that are based on the argument of a fair day's work and a fair day's pay. What do these terms mean ? CHAPTER XIX CONTROL OF LABOR SELECTION AND TRAINING 1. Selecting the "right stripe" The employer of labor is inclined to select men for their qualities rather than for their experience. If an applicant has ability and willingness to work he can be taught what to do; whereas laziness, dishonesty or wrong preju- dices will inhibit the best results of experience. " In determining an applicant's fitness, every em- ployer of labor should have certain standards to guide him in selection. These standards should involve an understanding of the requirements of the situation ; a knowledge of the aptitudes, abilities, interests, ambi- tions, resources and limitations of the applicant; and a careful consideration of the relationships of these two groups of facts. 2. Methods used by Chalmers and Taylor. In view of the importance which the average employer attaches to experience, the following lists are very significant. One comes from an expert in the selling field, Mr. Hugh Chalmers, president of the Chalmers Motor Company; the other, from an authority in pro- duction, Mr. F. W. Taylor. Not more than one quality in each list refers to experience or business training. All the others are inherent. 247 248 FACTORY AND OFFICE ADMINISTRATION HUGH CHALMERS 1. Health. 2. Honesty. 3. Ability. 4. Initiative. 5. Knowledge of business. 6. Tact. 7. Industry. 8. Open-mindedness. 9. Sincerity. 10. Enthusiasm. F. W. TAYLOR 1. Health. 2. Honesty. 3. Brains. 4. Grit. 5. Special knowledge, manual dexterity or strength. 6. Tact. 7. Energy. 8. Judgment. 9. Education. 3. Aid gained from a written list. The employer may be greatly helped in choosing his men if he makes out a similar list of the prime characteristics which his own experience has shown him to be necessary in the men who are employed in his business. With this list before him he can mentally check up the applicant and feel sure that he has not let some essential slip by CONTROL OF LABOR 249 unnoticed. Mr. Chalmers' testimony may be helpful along this line: When I was working as a salesman myself I was always trying to analyze successful men to find out the reason for their success. Later when I became sales manager and had to employ, train, and supervise men, I had these (ten) requi- sites put on a blackboard in my office, and I used them for measuring men, for discovering their weak spots, and I have always found them very helpful. 4. Make a man analyze himself. Besides the in- formation which a manager of labor gathers from ob- servation, there is much benefit to be gained if he can induce the applicant to carry on a proper self-analysis. Altho the man's estimation of himself may be wrong, nevertheless the manager will see the problem from a different angle by means of this procedure, and many a characteristic will disclose itself, even where the ap- plicant has attempted to cover it up. The following questions prepared by Mr. Gustav A. Blumenthal are suggestive of what may be done along this line : Where born ? Is father living?. . . His occupation? Is your health good? If not, what is your trouble? What exercise do you take ? . . . , Are you fond of sports? If so, which?, What schooling have you had? , What are your favorite studies?. In what studies are you weak ? . , 250 FACTORY AND OFFICE ADMINISTRATION What kind of reading have you done ? Are you following a definite line of reading or study now? If so, what? Do you sing? Play on any instrument?. .. Have you a hobby? If so, what? Does your mind concentrate, or skip from one thought to another? Have you self-confidence? Patience? Are you inclined to be lazy?. ... Do you act impulsively?. . . Do you make friends easily?. . . . Are you fond of company? Are you sensitive? Are you inclined to think yourself misunderstood? How do you spend your leisure time? What are your pleasures ? What habits or vices do you have to fight down in yourself? Are your thoughts clean?. . . . Can you trust yourself?. . . . Do you consider yourself absolutely honest ? Trustworthy? ,.'.. Conscientious? What is your religion? Are you a church member? Are you self-supporting? Can you save money? How many depend upon you for support? Indicate the different occupations you have followed: Occupation : How long in it? How did you like it? What life do you think you would prefer ? What training or special fitness have you had for this work? What is your present occupation? Do you like it? Why? Do you aspire to be an employer of men ? CONTROL OF LABOR 251 What is your greatest ambition? Are you willing to pay the price in hard work to attain suc- cess? When the applicant has filled out the above blank the employer may classify the information under the following headings: mental characteristics; physi- cal characteristics; moral and social characteristics; abilities and talents ; vocation in which success may be reasonably expected; courses of study and hobby ad- visable. 5. Use of written and oral tests. The oldest method of determining fitness is the written or oral examination, but little use has been made of it in the business world. The Chicago and Northwestern Railway, however, has a system of progressive exami- nations running thru three years. Each fireman when he is employed is given the first year's book of questions, the company's book of rules and a time-card. As soon as convenient after the expiration of his first year's service, he is given a written examination by the traveling engineer or trav- eling fireman, who also examines him orally. If suc- cessful in passing this test, he is given the second year's book of questions, upon which he is examined a year from that time in the same manner. At the end of his third year the fireman is examined by a joint board of examiners appointed for the whole system; 252 FACTORY AND OFFICE ADMINISTRATION this board sits in Chicago each spring and fall. Some of the traveling engineers and the airbrake instruc- tors compose this board, and their favorable report makes the man eligible to promotion to the position of engineer whenever he is needed on his own division. The failure to pass any one of these progressive examinations results in a second trial six months later ; two successive failures drop a man from the locomo- tive service at once. No man is permitted to waive his right to promotion. 6. Testing for physical and moral fitness. Little need be said about the necessity for discovering a man's physical and moral qualities. The methods employed in obtaining data for physical fitness lie largely in the province of the physician, and many business houses employ physicians for this purpose. But the testing for moral qualities is a comparatively new feature in business management. The usual procedure is to "size up a man," but so many mistakes are likely to happen in using surface appearances as the basis of judgment that business men are today demanding a more intimate analysis of their employes' characters. They are beginning to recognize that the most desirable qualities, such as conscientiousness and loyalty, are less in evidence than initiative and polish, and that, moreover, while good clerks and mechanics may possess all of these qualities, they may lack the knack of personal salesmanship. Difficult as it is, the problem of placing the right man in the right place is being successfully solved for CONTROL OF LABOR 253 continually increasing numbers of men and women. 7. Control by education. Business managements, like political governments, are coming to realize that the basis of control must in the end be education. The tendency to adopt this point of view is indicated by the following examples: The New York Edison Company offers educational facilities thru its Educational Bureau and the Edu- cational Committee of the Association of Employes. The committee prepares technical and accounting courses, in which the attendance is voluntary. The Educational Bureau prepares the commercial courses and part of the routine work of the commercial de- partment, and instruction is given on the company's time. The commercial courses include hygiene, health and recreation; the basic principles of salesmanship; company organization ; the elements of central station business-getting; and the fundamental principles of electricity. The school staff consists of a manager, an instructor in charge and a secretary. The term begins in October and closes in May. The work covers two years. The technical courses consist of laboratory exer- cises, preceded by a talk in which the instructor out- lines the work briefly. Students are rated on their work. Prizes are given to those who attain the high- est standing. The course lasts fifteen weeks each year five evenings and one afternoon each week. The accounting course was offered for the first time 254 FACTORY AND OFFICE ADMINISTRATION during the year 1912-13. It consists of a series of lectures by a professional teacher. Besides these courses, the company has lectures, given by their offi- cials or by prominent speakers, on general and public policy, etc., and on technical subjects. The Metropolitan Life Insurance Company gives a course in business English. It consists of thirty weekly lessons in grammar, composition and business letter writing. A fee of $3 is charged. There are also classes in stenography and typewriting. The company maintains a circulating library of general literature, science, etc. In July, 1912, there were 6,729 books and pamphlets for the use of the em- ployes. The total membership of the library is 2,605. There is an average daily circulation of 107 books. A trained librarian and three assistants are in charge. The National Metal Trades Association is lending its support to institutions that are teaching courses on industrial subjects. For instance, in Chicago it cooperates with the Lewis Institute; in Cincinnati, with the Continuation School and Cooperative High School, as well as with the University; and in Cleve- land, with the Technical High School and the Young men's Christian Association. In Hartford, Conn., the public school authorities have started a continuation school to which the mem- bers of the Metal Trades Association send their apprentices. In St. Louis, members are working with the Rankin Trade School, where the apprentices are making gratifying progress. In Indianapolis, a CONTROL OF LABOR 255 committee of the association equipped with machin- ery certain buildings of the Winona Technical Insti- tute, and furnished scholarships of the value of $100 each for prospective students. The committee so- licited contributions of equipment and scholarships from members of the Metal Trades Association. The American Bankers' Association has a branch called the American Institute of Banking. Its pur- pose is to educate bankers in their special lines, to maintain a standard of education by official examina- tions, and to issue certificates for the accomplishment of certain work. It has 12,000 members, organized into 75 chapters in the principal cities of the country and in Cuba and Hawaii. Employes of country banks are enrolled as correspondence students. The course of study covers the theory and practice of bank- ing and allied principles of law and economics. The course requires at least 100 hours of class and corre- spondence work under approved teachers. Spencer Trask and Company of New York City, one of the largest bond-investment houses in New York, gives a course of instruction covering financial organization. This firm requires its employes to study corporation finance, foreign exchange, the money market, theory of investments, and to analyze current security fluctuations, speculation and the stock market. Their men are also required to pass exami- nations on political economy, money and credit, and the principles of salesmanship. The National City Bank of New York provides 256 FACTORY AND OFFICE ADMINISTRATION classes in business correspondence, French, German, Spanish, penmanship, commercial arithmetic and bookkeeping. These are given as a first-year course ; a more advanced course is outlined for a second year of study. 8. Special training for the company's work. Some firms try to give their employes specific training for their own work. Classes are held during work hours or in the evenings. They are supplemented by lectures on such vital subjects as hygiene, sanitation, diet, first aid to the injured, and the like. The Na- tional Cash Register Company has an agents' school for salesmen, one for advertising men, one for officers for the study of business management, and others for foremen, janitors and waiters. The company has a kindergarten for the children of its employes, and con- ducts cooking, sewing and millinery classes. It real- izes that any training that benefits the home makes better workers. The Heinz Company has cooking and sewing classes for its seven hundred girls, most of whom are immigrants. The Charles William Stores in Brooklyn instructs their salesmen and other em- ployes, and provides lectures for the foremen. Many companies provide libraries and reading rooms, with technical literature, popular fiction and magazines. 9. Manuals as an educational factor. Some firms distribute manuals describing the details of their work. One corporation publishes a two-hundred-page book with cuts and reports, and gives one to each employe, who is supposed to read it all, with special attention to CONTROL OF LABOR 257 the parts pertaining to his work. Quizzes are held frequently, and those who are deficient in any subject are dismissed. The publication of the book costs $2,000 but the company considers the money well invested. Each new man must read the manual so as to get a general understanding of the whole system. The effect has been good in lessening mistakes among both old and new workers. This system makes it easier for the various departments to work together harmoniously. Each person knows why he is doing certain things, and as a consequence has much more interest in his work and greater enthusiasm. He also has some comprehension of the part his work plays in the whole organization. 10. Special training schools for employes. Many organizations recognize the value of giving employes preliminary training for their work. Some find it worth while to broaden the employes' knowledge of the business as a whole, while a smaller number are far-sighted enough to accept responsibility for aiding their employes to fit themselves thru courses of study for advancement, altho the courses that are given may apparently have but slight bearing upon the immedi- ate earning power of the employes. The methods by which this special training is given differ greatly among corporations. However, if we select the main features of these training schools, it is found that such institutions may be classified under three types as follows : (a) Company business school. In the type known 258 FACTORY AND OFFICE ADMINISTRATION as the company business school, the subjects taught and the training given are related directly to the work of a particular company. The type can be subdivided into three groups of schools, according to the methods that are followed. The first group is directly connected with those cor- porations that expect the student-employe to give all his time to study while he is taking the course; they do not, therefore, expect him to do productive work while he is in training. Such a school expects to get definite results with the least possible loss of time; it is organized to accommodate two classes of employes, i.e., new employes and old employes. This principle applies as well to the second and third groups below. The second group embraces those companies which combine practice-work with study and which are only partly productive. The third group confines its efforts to work courses alone. In this kind of school the students are doing productive labor continually. (b) Company continuation school. The second main class of schools, the company continuation school, altho typically German, is gradually working its way into our system of vocational education. Its motto is "Learn while earning." In contrast with the rigid methods employed by the first type in the selection of students, we find few re- strictions here. The company continuation school is marked by a somewhat broader educational outlook than that of the company business school. Accord- CONTROL OF LABOR 259 ingly, we find classes in English, mathematics, history, civics, geography, spelling, hygiene, typewriting, shorthand, sewing and dressmaking. These are all in addition to a number of other subjects, directly re- lated to specific occupations, such as engineering, drafting, machine operation, printing, office work, telephone operation and salesmanship. Of this kind there are two groups, those schools conducting evening classes, and those holding day ses- sions. The methods of instruction are as varied as the subjects taught. Many corporations, however, use only the correspondence method. (c) Public or private continuation school. The third main type, the public or private continuation school, is cooperative in its nature and is similar to the first type, second group, in that the instruction in- volves both study and practice. The study is done, however, at the public school and under its direction, instead of being done with the company. This method necessitates cooperation between the business organization and the public school, but its practicabil- ity is proved by the increase in the number of firms that are using it. 11. Education for the whole industry. The stand- ardization of the methods and materials of education for each industry is growing year by year. The vari- ous industries are attacking their work in different ways. This variety of method may be illustrated by reference to the department stores and the gas com- panies of the United States. 260 FACTORY AND OFFICE ADMINISTRATION The department stores, as a rule, are working inde- pendently of one another in their educational en- deavors. Strawbridge and Clothier of Philadelphia has developed a system with reference to its own problems, and Stern Brothers of New York is solving its difficulties by means of its own special methods. Perhaps the appearance of the Department Store Education Association of New York City shows that the educational work of this big industry will be studied along the more economical lines by all the leading stores that are cooperating in the movement. One of the most thoro and systematic department store schools is that conducted by Stern Brothers. This school, working in harmony with the Depart- ment Store Education Association, divides its work into three branches: (1) store system and salesman- ship, (2) merchandise (textiles and textile processes), (3) merchandise (non-textiles, leather, rubber, paper, pottery and glass). Classes are held on company time and the instruction is in the hands of a director and two assistants. Diplomas are given to those who complete a course. That the employes appreciate this work is clearly shown in the organization of an alumni society and the adoption by its members of a special badge. Not only is increased selling efficiency ob- servable as a product of this system, but also a grow- ing esprit de corps which before was lacking. 12. The work of the National Commercial Gas Association. In contrast with the methods of the de- partment stores, there are those of the gas companies, CONTROL OF LABOR 261 which have attacked their educational problem thru their national organization. As a consequence, the educational material for the commercial men in the gas companies is uniform thruout the industry. Over eight thousand men have already taken advantage of the opportunities offered. While the work is based on the correspondence method, individual gas compa- nies, such as the Public Service Gas Company of New Jersey, the United Gas Improvement Company of Philadelphia, and the Consolidated Gas Company of New York, Brooklyn and Baltimore, have special well-organized classes under paid instructors, for car- rying on the work. Since the gas companies have carried this kind of work the furthest, the following program is given below : Introductory Division, LESSONS, Manufacture of Gas Distribution of Gas Generation of Electrical Energy Transmission and Distribution of Electrical Energy. REFERENCE PAPERS, Arithmetic Business English Chemis- try Properties of Matter Elementary Magnetism Ele- mentary Electricity Elementary Mechanics Algebra Geometry Heat Generation of Electrical Energy Light Sound. SIDE TALKS, General Suggestions and How to Study Arithmetic Business English Manufacture of Gas. Course 1, INDUSTRIAL FUEL AND POWER, Principles of Heat Transfer of Heat and High Temperature Measure- ment Combustion and Selection of a Fuel Blast-Burner Design Air Blast Refractories and Insulation Steel Heat Treatment of Carbon Steels Heat Treatment of High Speed Steels Surface Combustion Principles of Power Engineering The Gas Engine Steam Factors Govern- ing Efficiencies of Appliances Application of Industrial Gas to the Treatment of Materials Industrial Illuminating 262 FACTORY AND OFFICE ADMINISTRATION Engineering Competitors of Industrial Gas (The Indus- trial Fuel Information Books will be incorporated in these lessons and issued from time to time). Course 2, ILLUMINATION, History of Illumination Units of Light and Illumination Graphical Methods of Presenting Data Photometry Measurement of Light Production of Light Requirements of Illumination Residence Lighting Church Lighting Office Lighting Factory Lighting In- dustrial Lighting Store Lighting Street Lighting. Course 3, SALESMANSHIP, General Sales Problems Water- Heating Circulating Types Air-Heating Systems (Gas) Hotel and Restaurant Appliances Water-Heating, Auto- matic, Storage, and Instantaneous Domestic Science and Its Appliance to Selling Gas Hygienic Value of Using General Gas Appliances Advertising Window Decoration Do- mestic Cooking Appliances All-Gas Kitchens Accessory Cooking Appliances Domestic Lighting Commercial Lighting Industrial Lighting Public Lighting The Law of Contracts Agencies Friendly Relations with Plumbers, Dealers, etc. Architecture and Engineering. Course 4> COMMERCIAL MANAGEMENT, Analysis of Terri- tory Plan of Work Office Organization and Practice Filing Systems Sales Organization Company Policy Choosing, Training and Holding Men Methods of Compen- sation Purchasing How to Advertise Selling Aids, Ad- vertising Talks Details of Laying Out Advertising Space Special Selling Campaigns Service Requirements Main- tenance Relations with Manufacturers Sales Managers' Reports Graphic Charts, Budgets, etc. How to Analyze Merchandising Accounts Collection and Credit Public Utilities. Course 5, ACCOUNTING, General Principles of Accounting Books of Original Entry Financial Statements Balance Sheet or Indicant Accounts Income Accounts Organiza- tion of a Gas Company Acquisition of Fixed Assets De- partmental Organization of the Company Beginning of Op- erations. First Month Sales of Gas, By-Products, Appli- CONTROL OF LABOR 263 ances, etc. First Month Cost of Administering, Financing, etc. First Month The Trial Balance Accounting Trans- actions for Five Months Closing the Books. First Six Months' Period The Reorganization Control by Public Service Commissions Branch Accounting and Auditing. Extended Course 5, ACCOUNTING. This course will cover the same subjects that are given in Course 5. In addition, however, lessons on Public Utilities will be given, including: Management Financing Organization Operating Inter- departmental Relations Public Relations. A lesson in Business English is given with each lesson thruout the entire course. Lesson papers and test questions are mailed at intervals of one month, except during July and August. Test questions are sent with each lesson paper. The ques- tions can be answered after a study of the lesson paper. The reference papers are intended for reference use only, and the student need not attempt to master them as he would the lesson papers. The test questions are graded at the headquarters of the Association and returned to the students with corrections and suggestions. Each course consists of two and a half years' instruction, and a diploma will be awarded at the end of that time to all students who have answered the test questions to the satis- faction of the Board of Educational Control. The educational work is divided into three divisions or periods : FIRST PERIOD, consisting of the Introductory Di- vision; SECOND PERIOD, consisting of the first ten lessons in each specialized course ; THIRD PERIOD, consisting of the re- maining lessons of the specialized course. Many of the corporations just mentioned, as well as hundreds of other companies, are also cooperating in the work of the Alexander Hamilton Institute, which need not be here described. 264 FACTORY AND OFFICE ADMINISTRATION REVIEW What advantage does an employer of labor gain if he can get the applicant for a position to analyze himself? What are the moral effects of a system of labor management that provides periodical tests of the ability of the workers and does not permit a man to waive his right to promotion? How would you provide for an employe who has studied and worked hard to master his position, but who has not materially increased his output? An employe has followed the courses of instruction provided by the firm and has succeeded in proving himself to be a $2,000 man instead of a $1,000 man. There is no place open for him in the way of advancement. What would you advise in his case ? CHAPTER XX CONTROL OF LABOR WAGES, RECORDS AND PROMOTIONS 1. High cost of man-power. The difference be- tween the costs of man-power and of machine power is tremendous. Large electric-power companies quote prices of 10 cents to 2 cents per kilowatt hour; and prices as low as 0.5 cents have been known where electric current was used in very large quantities. A man-power has been estimated to be equal to about one-tenth of a horse-power. On the basis that a kilowatt is 1.34 horse-power, and that labor is paid 15 cents an hour, it is figured by a prominent engi- neer that human physical force is from 20.1 to 100.5 times as expensive as electro-motive force the force in each case being purchased from the generator. The most significant factor in the development of the American nation, whether we look at the subject from the political, religious, social or economic side is the high cost of man-power. No nation is likely to advance with equal rapidity along all lines at once, for that element in a nation's life matures most quickly which calls to it the strongest men. Busi- ness, therefore, in America has been able to over- shadow other callings because it could pay the price. 2(\5 266 FACTORY AND OFFICE ADMINISTRATION As a converse proposition, it might be stated that business can pay the price because it has drawn to itself the highest type of man-power, the intellect of men. Thinkers and leaders in the economic world have seen the advantages of replacing, where possi- ble, the high-priced physical human labor by the cheaper natural forces. Thus business itself has been modified from within by the same force which made it the leading factor in our civilization; the high cost of man-power has compelled business men to use steam, electricity and water-power. Few managers today need to be told that the most efficient way to utilize man's physical strength is to employ it in the control of machinery by which the work is actually performed. The locomotive engineer or the man who manipulates the many-tonned trip-hammer, con- trols forces thousands of times greater than he him- self could exert. But there comes a time in all progress when the ad- vancement in a particular direction is retarded and when every gain is made at greater and greater cost. This is the case at present in the basic industries. Every machine needs a man to tend it, and thus there is a point below which the substitution of machinery for men cannot go. Realizing this, a few progressive managers are looking in new directions for the saving of this high-priced man-power, or at least for the more economical use of it. 2. Waste of human power. When the chief con- cern of the manager was to get out his product, no CONTROL OF LABOR 267 matter what its quality, of what use was it to speak of a science of labor control? He needed men the stronger the better. The industrial frontier was ad- vancing by leaps and bounds, and men were needed. Any kind would do. The manager seldom ques- tioned closely to see whether an applicant was "the man for the job" when he employed him; and when he dismissed an employe he assumed that the man's failure was due to general incompetence. That the workman might simply be a "misfit" never occurred to the manager. The frontier days of business are gone. "Big kill- ings," with primitive methods, are now as scarce in business as in hunting. It is time that some of the energy of investigations be turned upon the question of labor adjustment the more economical use of human power. Consider the efforts of our schools, colleges and private laboratories to solve questions pertaining to mechanical and electrical engineering; the striving to produce mechanical refinements and power-saving appliances; the tests of coal, oil and other fuels; the gauges for measuring the use of power and then consider the small amount of effort used in investigating the use and conservation of labor power ! Some years ago, late in 1907, in a very large machine shop we utilized the month of shut-down, when 90% of the em- ployes had been laid off, to relocate 15% of the machines so as to facilitate, expedite, and cheapen production. Nothing was done as to personnel, altho it is obvious that an organ- 268 FACTORY AND OFFICE ADMINISTRATION izing skill that could instal in poor locations three-quarters of the machines, would also, to at least some extent, fill the personal positions badly ; and so it proved, for when business started up again there were a succession of demoralizing and costly strikes. Investigation shows that in most industrial plants at least three-quarters of the men are badly placed, which does not in the least mean that the men are undesirable. An intelli- gent readjustment and reassignment of positions without discharge may improve the efficiency of a plant 30% to 40%. Efficiency tests and analyses, tests of operation, not of or- ganization, always show, among the day wage-earners in the same plant, individual variations between 30% and 120% ; the extremes of actual test on a whole month's work being 7% and 210%. The 210% man was evidently, by accident or choice, extremely well-fitted to his work; the 7% man was equally, by accident or choice, extremely poorly fitted to his work. Operation can gradually, in the course of months and years, eliminate men of low efficiency, and by experiment and test and successive discharges replace them with men of higher efficiency. In this way it is possible in the course of three or four years to bring the efficiency of operation up from 50% to 100%, but as an element in organization it is possible by predetermination of aptitudes to curtail the time very greatly and in the end secure a better personnel. 1 3. Period* of rest and relaxation. While it is true that experiments have shown that a man-power is equivalent to about one-tenth of a horse-power, there are elements in labor power that do not need to be considered in determining mechanical efficiency. A man is spending his own energy, first for himself, and then indirectly for the benefit of the manager. When a man reaches the fatigue point, the consequences of i Harrington Emerson, in address before the Efficiency Society, annual meeting, 1913. CONTROL OF LABOR 269 continued labor are something more than slackened production; he is robbing himself of his health the storage battery of his working power. It is at this point that employers of labor need more knowledge of the relationship which should exist between the pe- riods of rest and relaxation for "different volumes of load" carried by the laborers. They should be able to see how to adjust these periods in the predetermina- tion of industrial operations so as to obtain the maxi- mum of work without exceeding the "elastic limit" of the employe. It was along this line that Mr. F. W. Taylor conducted some of his most important investi- gations. He not only recognized that the working- time units must be separated from the resting-time units, but he was the first to point out that the differ- ent kinds of work require different percentages of rest, according to the kind and nature of the work done. Altho little work has as yet been done along this line, there are evidences of much interest in the deter- mination of a fair day's work. Time studies, fatigue studies, work records, etc., are growing quite common, and their results all bear on the determination of a fair day's work. 4. A fair day's pay. Closely associated with the problem of a fair day's work is the question of a fair day's pay. They are the two sides of the same shield. The employer sees one side; the employe the other. It will, however, be a comparatively simple thing to determine a fair wage when we know how to estimate IV 19 270 FACTORY AND OFFICE ADMINISTRATION the labor involved. Yet there are other elements to be considered besides the amount of energy expended by the laborer, and the rate per day that he is paid by the manager. These are (1) steadiness of employ- ment, (2) permanency of employment and (3) future prospects. Altho American business men proved to the world that high wages do not necessarily mean high costs of production, it seems difficult for many employers to see the application of this principle when they are brought face to face with the question of labor costs in their own store or factory. They see the "wages paid" but forget the "output." "Wages paid" are high or low, according to the size of the output ; "wages received" are high or low, in proportion to the time which the laborer takes to do the work. The combina- tion of low wages given with high wages received would prove to be ideal. 5. Illustrations. CASE I: Assume that a work- man turns out ten units of a given product, for which he is paid $3 a day. The upkeep, interest and de- preciation of his machine amount to $6 a day. The factory overhead cost, distributed to either the man or the machine, is $1.50 a day. The material required for the ten units costs $7.50. While this is purely a supposition, the proportions are typical. The cost is $1.80 for each piece. In the form of a simple equa- tion the results work out as follows: Labor -f- Machine -J- Overhead -j- Material = Cost CONTROL OF LABOR 271 This equals a piece-rate of 30 cents of wages to the workman. If the employe can be induced to increase his output, the more he makes the cheaper becomes the cost. CASE II: If the workman earns $4.50 by increas- ing his output by one-half, the cost per unit of product drops to $1.55. Labor -f Machine -(- Overhead -|- Material = Cost " + + $0.75 =$,.55 lo lo CASE III: If he earns $6 by doubling his output, the cost drops to $1.42%. Labor -|- Machine -}- Overhead _j_ Material = Cost $0.30+ !22 + + $0.75 = CASE IV: If, however, the employe cannot be in- duced to exert himself, except by means of a higher piece-rate, say 35 cents for each piece, it will still be real economy to allow the increase. Tho the work- man would earn the high wages of $5.25 and $7 per day, the original cost of $1.80 would fall to $1.60 with the lower, and $1.47% with the higher earnings. CASE V: Suppose, in Cases II and III, that in order to increase the output 50 per cent it is necessary to increase the office force and to supply storeroom clerks, etc. This makes the overhead rise to $2 a day. The cost would, nevertheless, drop to $1.63% in Case II, and $1.50 in Case III. Labor -{- Machine -f- Overhead -f- Material = Cost $0.35 + !2 + 22 + $0.75 =$1.63% $0.35 + + + $0.75 = $1.50 272 FACTORY AND OFFICE ADMINISTRATION If, however, which is the more probable supposi- tion, the rate should be made 25 cents instead of 35 cents the saving would become even more marked. Labor -|- Machine -J- Overhead -}- Material = Cost $0.25+ rgp + = + $0.75 = $1.53% CASE VI : Or suppose a bonus system is adopted ; the man continues at $3 a day, but is allowed 50 per cent of the time that he saves, as a bonus. This distributes the cost as follows : Illustration (a) where there is a 50 per cent increase in output. Labor -|- Machine -f Overhead -}- Material = Cost $0.25 -f $0.40 4- $0-13% + $- 75 =$1^3% Illustration (b) where there is a doubled output, piece. Labor -f- Machine -f- Overhead 4. Material = Cost ' -j- $0.10 + $- 75 =$1-371/2 It will be noticed that the machine and overhead charges are constant, irrespective of output. If a $3 a day man idles for half an hour the loss is not the 18 cents that he receives, but the $7.50 -r- 16 = 45 cents, loss in machine and overhead. If the man is on piece-rate, there is no loss in wages when he slows up, but the machine cost of 45 cents is still there. 6. Special factors influencing wages. The amount of increase of wages over the customary payment necessary to induce a man to appreciate his job and to take care of it, must be found by trial. If it is not ample, the men will decline "to be worked," as they express it, and the plan fails. If it is too much, the CONTROL OF LABOR 273 men sometimes become irregular about coming to work, and may fall into habits of dissipation. If the happy medium is attained the workman becomes steadier, lives better and accumulates property. The proper rates of increase given by Mr. F. W. Taylor are: Light work calling for no special fatigue, such as ordinary shop practice 30 per cent. Ordinary labor, calling for strength and severe bodily exertion and fatigue 50 to 80 per cent. Special skill or brains, with close application, but requiring no bodily exertion 70 to 80 per cent. Skill, brains, close application and extreme rack and bodily exertion, such as are required in running a steam hammer 80 to 100 per cent. Other industrial engineers agree approximately on these increases, and Mr. Taylor pertinently remarks that they are not quantities to be theorized over by boards of directors, but are facts determined by costly experiments. The workman is interested in his total day's pay, and not in the unit in which it is figured. The stand- ard illustration of this fact is the case of the ore shov- elers at the Bethlehem Steel Works. They were paid 3.2 cents per ton for unloading iron ore from cars. Pittsburgh companies were paying 4.9 cents per ton for the same work. Hearing of this, the Bethlehem gang all quit and went to Pittsburgh. The condi- tions there, however, were such that they could not maintain their output, and their total earnings fell off. 274 FACTORY AND OFFICE ADMINISTRATION Within four weeks the entire gang was back at Beth- lehem, glad to work at the lower rate, under which their total earnings were greater. The wage system must be so established that the self-interest of the workman, and the interest of the company will correspond. There should be no con- fusion of the issue with hypocritical sentiment. Both the employer and the workingman are working for their own interests; and they work together because they can thus best further their own ends. The simplest way to get a man to exert himself is to make it to his personal interest to do so. Each man must be treated as an individual and rewarded in propor- tion to his individual exertions. 7. Wages the chief incentive. The amount of money paid a man for his work is more important, from the manager's point of view of business policy, than the actual payment which may include many things besides money for example, free lunches, use of gymnasium, libraries, etc. But the money which a laborer receives is his, to do with as he pleases. It is this bit of absolute possession that appeals to every man. Therefore, it is a wise manager who lets as much as possible of his labor policy show in the wages envelop. It was this knowledge of human nature that led Napoleon to counsel his brother Joseph, "The first thing to be done is to allow no arrears in the pay of your forces." For a manager to institute industrial betterment, medical service, etc., etc., be- CONTROL OF LABOR 275 fore he has worked out a satisfactory wage system is simply to waste his efforts. 8. Importance of short-period records. Men love independence, and cash gives it. But having estab- lished a working-wage system, it is well to apply all the aids available to stimulate the labor force to high endeavor. Modern psychology is furnishing many suggestions along this line. Among them are two which are worthy of special mention. Trainers of bicycle riders discovered that the rec- ords made when a man was merely riding against time were poorer than when the man was accompanied by a pace-maker. More than that, he showed less exhaus- tion when making the paced record than when riding more slowly alone. The presence of the pace-maker had. this effect. Man needs society in order to do his best work, and if he has some means of comparing his accomplishments at different stages with a known standard, he can call on his reserve forces without the same fatigue which accompanies a solitary perform- ance and a slight knowledge of the progress he is making. The ultimate goal is usually too far away to offer the stimulus necessary to high accomplish- ment. This principle has been applied by some man- agers in allowing their bosses to post a record from time to time during the working day, showing each man just what he is accomplishing. The effect of a record of this kind has been measured in the laboratory upon a university athlete, and it 276 FACTORY AND OFFICE ADMINISTRATION shows that under this method great gains in endurance are made without evil effects. A college man was set the task of testing the strength of his hand by grip- ping a contrivance. His first set of performances were completed with absolute exhaustion. Later on, under exactly similar circumstances he was given an- other test, but now he was provided with a record of each effort showing just how much he exceeded or fell below his previous record at that point. The result showed that this extra stimulation raised his efficiency over 33% per cent. The best example in business of capitalizing this spirit of competition or emulation inherent in all men, is seen in Mr. Gilbreth's methods of handling his bricklayers. At regular periods the accomplishment of each man was posted alongside the standard re- quirements. 9. Pleasurable surroundings. Another psycho- logical factor that plays an important part in the efficiency with which men work, is the element of pleasure. Buoyant spirits and pleasurable thoughts have a decided effect on the physical well-being of man, just as they have upon his temperament. The heart works better and the circulation of the blood is more free, when a man is happy and contented. The basis of good nutrition is laid and health is affected directly. On the other hand, fear contracts the blood vessels and checks the flow of the blood. The close connec- tion between the mental state and the physical con- CONTROL OF LABOR 277 dition is strikingly shown in the slang phrase, "cold feet." Fear lowers the working ability of man. A girl who worked with her back to a passageway be- side which her machine stood was about to be dis- charged because her work was not up to the standard in quality or quantity. The foreman, however, de- cided to let her remain and to watch her. He found that every time a truck or box was hauled behind her she involuntarily started and slackened her pace. She was placed in a quiet part of the room and there became the most efficient employe in that department. 10. Chilly surroundings develop fear. But if fear causes "cold feet," the reverse of the proposition is just as true. The full effects of warm and hygienic surroundings are not appreciated until the influ- ence which these conditions have upon the minds of the employes is seen. Warmth of body reduces the tendencies to fear and dread. With these gone, sus- picion and connivance diminish also. The manager's problem of lessening the number of "discontents" in his factory, shop and office is thus in part solved by making the employes' surroundings pleasant and com- fortable. This solution is not offered as a panacea, but em- phasis has been placed upon the point because the in- fluence of industrial betterment upon the efficiency of the worker would be little indeed if it stopped with the physical effects produced upon the bodies of the men, and did not emphasize the mental effects condi- tioned by them. The man whistling at his work is 278 FACTORY AND OFFICE ADMINISTRATION more efficient than the same man shivering over his task. The philosophy of industrial betterment rests on the fact that the body and the mind act and react upon each other. 11. Stimulating self-interest. The pay envelop does not draw to itself all the lines of self-interest which determine a man's attitude toward his work. Employes are interested in their records as workmen. If a man does good work he is stimulated to repeat it or to surpass previous efforts, provided he receives due credit. Nothing is more disastrous to individual ef- fort than to elevate the shirk and overlook the in- dustrious man. The management must use some method whereby the individual's work is not merged with that of the mass and lost sight of. But to treat men individually, the work must be carefully allotted and an individual record must be kept. This method has two good effects : ( 1 ) it assures the workman of a fair deal; (2) it becomes the means of eliminating poor men. The manager can keep tab on his fore- man's appointments, and thus assure the workman that his work is constantly under review in the head office. If the manager or superintendent wishes to take advantage of this system, he can refer to these records and whenever he sees an opportunity to praise an employe he can walk thru the shop or office and by casually greeting the man and referring to the par- ticular praiseworthy accomplishment, he can in time bind all the good men to him in interested loyalty. 12. Checks against injustice. Furthermore, work- CONTROL OF LABOR , 279 men's records become vital aids in helping to do away with jealousies and injustices attendant on promo- tions. They force the foremen to depend upon some principle other than consanguinity, the "softsoap grip," or petty tribute, in making promotions. They know that their recommendations must stand the test of recorded efficiency. A manager who suspects his foreman of "playing favorites" can compare his rec- ommendations with the records of other men entitled to consideration. Without removing the foreman's power of promoting a man he can call him to the of- fice and say, "Smith, I understand there is to be a vacancy in your department." "Oh! yes," says Smith. "Well," says Mr. Manager, "we have sev- eral good men down there ; let us look over their rec- ords." Now the manager knows that Smith intended to recommend a worthless cousin for the job. Such an appointment would hurt the discipline of the de- partment as well as cripple its productive efficiency. But he does not want to curtail the power of his fore- man. So they look over the record cards of the men. The cousin's record stands out in bold contrast to that of the good men working by his side, who know how incapable he is and that he is related to the boss. The manager does not counsel his foreman, but the latter knows that he will be held responsible for this appointment. If the foreman were willing to take the responsibility, the manager could not object until the result of the foreman's appointment showed in the record. Smith does not recommend his cousin for the 280 FACTORY AND OFFICE ADMINISTRATION position, and every man in the department is stimu- lated to do better work because he feels he is going to be judged by his record and get a fair deal. 13. Elimination of the unfit. The second use to which a record may be put is the gradual elimination of the inefficient and the acquisition of a permanent staff. The record substitutes exact data for impres- sions and other intangible influences at times when men are to be laid off. On this point Mr. Gantt says : Some years ago it became necessary to lay off about ten molders in a foundry. The superintendent sent for the rec- ord of the men and made up a list of men to be laid off. There was great complaint, in which the foreman joined, that the wrong men had been selected and that some of these men were the best workers in the shop. The superintendent in- vited an inspection of the records, which the foreman had never been willing to pay any attention to before, with the re- sult that everybody was satisfied and the efficiency of those re- maining soon showed a very marked improvement. 14. A typical case of the use of records. It is per- haps natural that the railroads should be foremost in developing systems of discipline for their employes. Slackness in railroad operation may result in fatal ac- cidents, as well as in loss of profits. The old system of discipline by suspension from duty has been quite generally displaced by the system of "discipline by records." Mr. H. H. Vreeland, when president of the old Metropolitan Street Railway Company of New York City, described this system as applied to his company. Mr. Vreeland stated that in this organization, which CONTROL OF LABOR 281 employed 15,000 men, the whole force practically re- newed itself every two years before the new methods were adopted. There were not fifty men who had been with the company five years. Division superin- tendents could discharge men whom they had never seen, and the idea that a man might offer a defense never suggested itself. No account was kept of a man's .discharge and he might be hired again in a few days. Soon after the record system was installed improvement in the conduct of the men became marked. They felt in closer touch with the manage- ment and knew that each had an equal chance, for they knew that altho their errors were noted, their good work was recorded as well. 15. Permanency of employment, and pensions. The readiness with which a skilled mechanic will some- times leave his trade, in which he can earn $5 a day, to enter an office at $75 per month shows how strong is the influence of permanency in a job. Small com- panies often compete favorably for labor with big- ger firms because they take care of their workingmen during slack times. In some large concerns the power to discharge a man as a matter of discipline is resorted to only in exceptional cases. The Pennsyl- vania Railroad Company's records show that 1,350 active employes have been with the company forty years or more; and there are 1,013 men who, having served over forty years, have retired on pensions. So strong has the idea of stability of employment grown of late years that hundreds of big corporations 282 FACTORY AND OFFICE ADMINISTRATION have adopted some form of pension system. By this means they hope to make the men better satisfied with their work. Many kinds of old-age pensions have been formulated, but the commonest forms are those which provide for the retirement of the employe after a certain period of service in the company, or at a specified age. The amount of the pension is based on a stated percentage of the average income of the recipient, covering a number of years just previous to his retirement multiplied by the number of years of service. Another method, tho less common, is the payment of fixed sums instead of an amount figured on the actual time of service. The Pennsylvania Railroad Company was the pioneer in establishing a pension system. Their sys- tem is the result of an elaborate investigation of the experience of foreign railroad corporations. Sev- eral arrangements were considered, and finally the best was adopted. Since its introduction, January 1, 1900, 1 it has been a model which both railroad and in- dustrial organizations have followed. 16. Hope of advancement as a stimulus. So strong is the desire of most young Americans to ad- vance, that many concerns make a practice of hold- ing out glowing possibilities to ambitious men, and at the same time they expect them to work at first for very small wages. Where the firm is sincere in its promises no employe will complain, but it is nothing more than obtaining services under false pretenses to i See U. S. Dept. of Labor Bulletin, 1901, p. 1090. CONTROL OF LABOR 283 get the best out of an ambitious man and then let him go when he can be deceived no longer. One has only to run thru the list of "situations wanted" in a morning paper to see how prevalent is the willingness of employes to sacrifice money returns if only steady advancement is assured. Out of a total of 1,129 situations wanted, advertised in one paper, over 12 per cent of the applicants emphasized the "future." In another paper, 14 per cent of the "com- mercial help wanted" ads referred to "chances of ad- vancement." "Don't go outside to fill a vacancy if you can help it," is a policy now generally accepted as the best. Strict seniority, however, is apt to drive out the men of force and initiative. Accordingly, some firms dis- regard the strict rule of seniority by confining its ap- plication chiefly to the minor positions, the higher offices being quite free from its influence. REVIEW What conditions in America and to a lesser degree in Europe are forcing managers to a scientific study of the cost of man- power ? Employers of labor are considering the subject of "misfits" on the job with greater interest than they did a few years ago. Why is this? What argument can you give for a division of the labor units into resting-time units and working-time units ? In your estimation, what would be the economic and social effects if business men knew what a fair day's work consisted of, and acted accordingly? Under ordinary conditions what drawback exists when a man- ager raises the wages of his employes far above the customary rates ? 284 FACTORY AND OFFICE ADMINISTRATION How can a manager keep fully informed of the character of the workingmen in the various departments, and still hold his foremen responsible for the selection and control of them? What relation is there between an employe-pension system and stability of employment? Why do employers, in taking on new men, often say, "The wages will be small, but the chances for promotion are good"? CHAPTER XXI SOURCES OF ADMINISTRATIVE INFORMATION STATISTICS AND INSPECTION 1. Use of statistics. Only when statistics can be employed progressively are they effective. It is not so important that past conclusions be confirmed by statistics as it is that deductions for the future be correctly drawn. Only when they take on the latter character may they be said to be vitalized. Among the monthly reports of the Harriman lines is one of particular interest because it looks forward instead of backward. It asks not for an explanation of the unsatisfactory conditions shown by the figures, but for a statement of what action has been taken to correct them. R. R Division. 19.... General Superintendent : Dear Sir. I transmit herewith explanations of fluctu- ations in operating expenses for 19 . . . . , com- pared with the same period of previous years, having per- sonally reviewed the month's exhibit. The fluctuations are regarded by me as unsatisfactory, and I have taken action to improve results in future periods. 2. Graphs and statistics. The graphic method of presenting statistics, tho inferior to the numerical in accuracy, has the advantage of enabling the eye to IV 20 285 286 FACTORY AND OFFICE ADMINISTRATION take in at once a series of facts. This advantage is not of first importance when we are considering only one set of facts. Accuracy is then more essential than ease and rapidity of representation. But ease and rapidity are essential when we want to compare many sets of facts, because if the mind is hampered in getting the general effect of one set, it loses count of the others. The function of the graphic method is the comparison of different sets of statistics. A for- mer president of the New York Central told the New England Railway Club how a simple use of graphic charts saved the road $2,000,000. Thirty years ago we built four grain elevators in Buffalo. In 1909, it became necessary to rebuild them, and two mil- lion dollars were appropriated. However, I had an analysis made of the grain business, and plotted a chart of the curves of production and consumption. Those lines cross at 1913, meaning the probable end of exporting grain, and we decided to spend only $80,000 and merely repair the existing ele- vators. 3. Indicating relation of one set of facts to an- other. Another function of graphic charts is the in- dication of the true relation of one set of facts to another. For instance, it is known that cost varies with output. In starting a new business or shaping new plans it might be desirable to know just what this variation was likely to be in order to estimate how much business would be necessary to overcome the initial expenses, and what profit should be realized from a given volume of business. A chart will show STATISTICS AND INSPECTION 287 far more clearly than statistical tables the variations of two factors in relation to each other. 4. Comparisons of time periods. Still a third class of information which can be advantageously studied with the aid of curves is that which involves compari- son from month to month of such items as costs, sales, output, etc. Almost any kind of information can be plotted with time as the horizontal coordinate, and the desired information as the vertical. Curves repre- senting succession units of time are most convenient when they read from left to right. The advantage is that the curve can be kept up to date, and that com- parisons with previous and standard conditions are grasped more easily and present the results over a long period of time. For instance, the average mar- ket price of a product for every business day in the year can be shown in much less space than is possible in any other way. In the matter of output, sales, costs, etc., it is customary to carry in addition to the quantity for the period, the cumulative total for the year. The height of this curve always shows the total business to date, and its slope shows whether the tendency is for the volume to increase, remain station- ary or fall off. Conditions making for or against im- provement may thus be understood sooner than they would, be if tabulations of figures were used. Note, for instance, how quickly you catch in Figure 13 (page 288) the relation between orders and shipment. In it are also shown a cumulative total and the plotting of two or more curves to scale on the same chart. 288 FACTORY AND OFFICE ADMINISTRATION H 3 S 8 s - V - A X\ FIGURE 13. GRAPHIC REPRESENTATION OF RELATIONS BETWEEN ORDERS AND SHIPMENTS IN A MANUFACTURING CONCERN.I i Reproduced by permission from Woods' "Reports on Industrial Or- ganization, Systematization and Recounting." STATISTICS AND INSPECTION 289 5. Reports. Reports from subordinate officers to the management are the most common means of col- lecting information. The trouble with them in most cases is that they are too long delayed to be of real service. This need not be the case; reports can be kept up to date. All that is needed is a time schedule. The payroll, to give a familiar illustration, is always complete at the end of the week, because the men must be paid at noon, but the cost department, using the same data and doing the same work, merely making the debit instead of the credit entry, is allowed to fall a month or more behind in its work. In fact, the only difficulty in keeping a department up to the minute lies in catching up at the beginning. The depart- ment that is regularly three months behind is hand- ling a full day every day ; otherwise it would continue to fall behind instead of remaining regularly three months in arrears. After it has once caught up, the same effort will enable it to stay caught up. In fact, work that is up to date is more easily handled; since errors or discrepancies are readily detected while the matter is still in mind, they are difficult to get at after the incident has been forgotten. Improved account- ing methods, which utilize perpetual inventories and controlling accounts, make it possible to keep in daily touch with the financial condition of the business, in- stead of waiting for a monthly or yearly stock-taking. Robert Owen, at the beginning of the last century, was accustomed when away to receive daily reports from the mills at New Lanark; present-day execu- 290 FACTORY AND OFFICE ADMINISTRATION tives who are not in daily touch with conditions are more than one hundred years behind the times. 6. Determining facts by inspection. Another method of determining the facts of a business is irf- spection. One may be well assured that in these days of keen competition and close scrutiny of expense of all kinds, the outlay for inspection must be considered a good investment, or it would not be tolerated by so many important companies. The inspection methods of the Westinghouse Elec- tric and Manufacturing Company 1 are typical of large engineering concerns. The inspection depart- ment, which is under the supervision of the manager of works, consists of several hundred men and this force is divided into two sections; one for the inspec- tion of apparatus building in its own works, the other for the inspection of all materials coming from out- side manufacturers including the various raw and partly finished materials and of apparatus of its own manufacture returned for any reason, such as for repair or exchange, or sent back from loans or ex- hibits, etc. Materials coming from outside manu- facturers are generally inspected upon arrival at the works, tho certain kinds of a special nature, such as bar pulleys, etc., are often given a preliminary inspec- tion or test at the place of manufacture. In addition, representatives of the company are sometimes delegated to inspect the works of manuf ac- i"The Work of Shop Inspection," C. B. Anel, American Machinist, May 25, 1911, p. 977. STATISTICS AND INSPECTION 291 turers with whom there seems a likelihood of doing business, to see if their facilities are such as to enable them to furnish materials of the degree of excellence required. The material specifications prepared by the Ma- terial Committee are made use of by the inspection department in seeing that the materials supplied are actually what was ordered. A very complete chemical and testing laboratory is maintained by the company, and full advantage is taken of it not only in the preliminary testing of raw materials but also in the examination of partly fin- ished material or apparatus at various stages during the process of manufacture. Careful records are kept of materials rejected or found defective in any respect, and steps are taken to see that they are promptly disposed of, to prevent any possibility of their becoming mixed with accepted ma- terials. 7. Inspection of work in process. In the inspec- tions of the company's apparatus endeavor is con- stantly made in each department to have the work in- spected during the actual making as well as upon completion. As there are 85,000 different items listed in the stock room it would be impossible to inspect every in- dividual piece. When automatic and semi-automatic machinery is used, after it is properly set and working it is necessary to inspect only a small percentage of the output with a view to preventing the dies from wear- 292 FACTORY AND OFFICE ADMINISTRATION ing out or getting out of alignment. On the other hand, apparatus which is made by hand with special limit gauges, templets, etc., requires frequent detailed inspection of all its parts, and this the company aims to give. Next to inspecting the work while it is still in the workman's hands, the best method is to have the ma- terial after each operation delivered, with an identifi- cation tag, to an inspector and approved before going to the next operator. Some concerns hold each man responsible for de- fects in the piece on which he works, thus causing him to examine carefully all the work he receives, for errors of the preceding workers. 8. Questions as guides. It is of great assistance to the inspectors, especially the new men who are being trained, to be supplied with some list of ques- tions such as the following, which call their attention to special points to be noted. The questions are so framed that they may be answered by yes or no ; thus the amount of writing required is minimized. COMPLETE MACHINE INSPECTION TAG OF THE WESTINGHOTJSE ELECTRIC AND MANUFACTURING COMPANY Has frame been cleaned and painted inside? Are field coils tight, and is bore of field correct? Are holes evenly spaced ? Do interpole bolts extend beyond shot face ? Are connections between field coils properly cleaned and insulated ? . STATISTICS AND INSPECTION 293 Has flame-proof braid been removed from brush-holder ends and replaced by tape ? Are housings entirely free from dust and core sand? Do bearings and housings fit, and is alignment correct?. . . . Are oil grooves chipped in cells ? Is drain hole provided for waste oil? Are brush-holders properly spaced and brush tension cor- rect? Are brushes parallel with commutator segments ? Are oil covers properly fitted? Is pinion tight on shaft and key properly fitted? Does gear-case clear gear? Did commutator develop high-bar on test ? Serial Order Inspected by 9. Qualifications of inspectors. Inspectors should be chosen from among experienced workmen and, if possible, from the department where they will serve as inspectors. They should be men imbued with a sense of the responsibility of the position and with good judgment not only in passing on materials but in dealing with men. Judgment is essential in inspection because while some variations from drawings in no way affect the utility of the machine, others may cause serious re- sults. All defects and variations are given careful consideration in order that it may be determined whether the piece should be scrapped outright, whether the imperfection may still be rectified or, if 294 FACTORY AND OFFICE ADMINISTRATION the fault be an unimportant one, whether the machine or apparatus may be passed as it stands. Of course, a full knowledge of the situation is required before an intelligent decision can be arrived at. If the inspec- tor is undecided he refers the matter at once to the department head, stopping all work thereon, pending a decision. 10. Information from the outside. The efficiency of inspection depends in very large degree upon the aid received from the engineering, correspondence, testing and other departments. Every letter of com- plaint is accepted at its face value and conditions are thoroly investigated : first, with a view to ascertaining the cause of the trouble; second, with a view to pre- venting a recurrence of it. It will be found decidedly efficacious when complaints are received involving de- fective workmanship, now and then to send the fore- man or inspector of the department at fault to see for himself the cause of the trouble. In this way, his viewpoint will be broadened and he will appreciate more fully than he would otherwise the necessity of good work. No matter how adequate the organizations may be, there will be certain points, particularly with new ap- paratus, or new applications of standard apparatus, that can be gleaned only from actual experience. Hence, the efficiency of the works must depend to a large extent upon the suggestions of their erecting gangs and customers. 11. Various kinds of inspection. Inspection as a STATISTICS AND INSPECTION 295 means of gaining information is not confined to me- chanical lines. Traveling auditors perform similar duties in a different field. Spasmodic inspection, however, unless backed by proper reports, is liable to result in erroneous impressions. Conditions are likely to be unusual and the men nervous. In fact, compa- nies often waste considerable money in this kind of investigation. When it is rumored that an inspection is to take place, men are taken off their regular work and set to cleaning up, since so many officials under such circumstances confuse appearance with efficiency. This loss of time may be prevented in part by having the inspection take place unannounced ; but better by the percentage system, which provides that a certain percentage of the work be examined or an established number of inspections be made, the particular lot or time of inspection, of course, being unknown. If the work inspected proves satisfactory the entire amount is passed. If any defects are found the entire lot is carefully examined for further errors. REVIEW Why are business men inclined to dislike statistics? What important information can be conveyed to an executive thru the medium of the graph? Inspection plays an important part in every business. Explain the basic reason for this fact. How can inspection be improved thru the cooperation of the laborers ? If the selection of an inspector were among your duties, what qualifications would you keep in mind whereby you could test the applicants? CHAPTER XXII SAVINGS IN TIME: RESEARCH AND RECORDS 1. Inspection and research. Closely allied with in- spection, so closely allied, in fact, that one set of appa- ratus often serves the two functions, is research. The two functions are, however, distinct. Inspection is for the purpose of insuring that the work of material shall come up to certain prescribed standards. Re- search is for the purpose of determining these stand- ards and for discovering possible improvements in the product or the manufacturing processes. Research is much like advertising; its value is cumulative. The first results are likely to be disappointing, and if the work is discontinued they are absolutely worthless. When the general plan of recording all results is fol- lowed, however, apparently useless results often prove of great assistance in the solution of future problems. The General Electric Company spends annually two and a half million dollars in making and developing inventions. In addition to its experts it employs a corps of twelve patent-attorneys and twenty-eight assistants. The Westinghouse Electric Company maintains a department almost as large and expensive. The Pennsylvania Railroad Testing Laboratories at the company's Altoona shops were established in 1875, and employ over 200 men. The American Telephone 296 SAVINGS IN TIME 297 and Telegraph Company, the Hoe Printing Press Company, and scores of smaller concerns carry a force of salaried men whose duty it is to make inven- tions and to develop their possibilities. 2. A large research laboratory. Probably one of the largest and best equipped commercial laboratories is that of the J. I. Case Threshing Machine Company, which makes every kind of machine used in threshing grain. It has its own facilities, but to offset the heavy expense of maintaining the laboratory, it does com- mercial work for other firms. The laboratory occupies four rooms in the com- pany's office building. One is the laboratory office, in which the reports are made up and the results of the various analyses and tests are recorded for use, reference and distribution. The office contains a library of several hundred volumes on subjects relat- ing to chemistry, physics, electricity, heat, power, manufacturing, etc. The fine microscopes, barome- ters, hygrometers, anemometers, machines for elec- trolysis, grease-testing machines, glue testers, etc., are also kept here. Among them are a number of very delicate scales, one sensitive to the 1200th part of a milligram. Samples of all kinds of minerals, paints, oils, drugs, paper, cloth, leather, rubber, cordage, fuels, clays, brick, etc., are kept here for reference, inspection and comparison. The collection of samples forms a basis of a valuable education not only for the chemists but for the shop foremen. i 298 FACTORY AND OFFICE ADMINISTRATION The system of record-keeping is careful and ac- curate, and data for years back are a very valuable fea- ture. One set of books is used for research work, one for recording chemical analyses, one for physical tests, and one exclusively for foundry work. 3. Commercial results. The head jof the labora- tory not only is an expert chemist, but he has had many years of practical experience in the iron and steel, rub- ber, leather, oil, paint and other industries. Being thoroly practical, he is able to judge of the value of any particular chemical analysis or physical test. This practical knowledge, of course, is essential in a laboratory of this kind, for while any chemist may be able to make an analysis, yet in applying chemistry to practical work he may be entirely at a loss, and thru lack of personal experience in the manufacturing or commercial side of the problem he may often do more harm than good. Each of the assistant chemists handles a special line of work, so that the laboratory runs in a systematic manner. A very important fea- ture of its work is the making of specifications for the raw materials which the company uses. This involves a great amount of testing and research work. Another feature is the investigation of the causes of failures and breakages and the solution of the diffi- culties. This is also an important part of the work of the Pennsylvania Railroad and of the Westing- house testing laboratories, and their procedure is al- most identical with that of the J. I. Case Company. Thus, if a threshing machine shaft, bearing or belt SAVINGS IN TIME 299 proves defective or breaks for an unknown cause it is shipped to the laboratory and carefully tested and ex- amined. If the fault is due to poor workmanship or defective materials, the chemist reports the fact and the part is replaced free of charge. If the examina- tion fails to show the cause, the foreman or chemist is dispatched to the locality where the trouble occurred to make a thoro investigation. If an inordinate strain has been applied or unusual conditions introduced, the investigator is in a position to suggest the necessary changes. Altho this method is expensive, the com- pany feels fully repaid in that such a plan insures the confidence of its customers and tends to improve fu- ture output. 4. Time-study. One phase of research work which has awakened a great deal of interest, and to which reference has been made in preceding sections, is time- study; that is, the scientific determination of the amount of time it should take a man to do a given piece of work. Frederick W. Taylor, who has been closely associated with time-study methods, describes this work as follows : l It has been the writer's experience that the difficulties of scientific time-study are underestimated at first, and greatly overestimated after actually trying the work for two or three months. The average manager who decides to undertake the study of "unit times" in his work, fails at first to realize that he is starting a new art or trade. He understands, for in- stance, the difficulties which he would meet in establishing a i Transactions, American Society of Mechanical Engineers, Vol. XXIV, p. 1423. 300 FACTORY AND OFFICE ADMINISTRATION drafting room, and would look for but small results at first if we were to give a bright man the task of making drawings who had never worked in a drafting room, and who was not even familiar with drafting implements and methods, but he entirely underestimates the difficulties of this new trade. The art of studying "unit times" is quite as important and as difficult as that of the draftsman. It should be under- taken seriously and looked upon as a profession. It has its own peculiar implements and methods, without the use and understanding of which progress will necessarily be slow, and in the absence of which there will be more failures than suc- cesses scored at first. In the course of this work Mr. Thompson has developed what are in many respects the best implements in use, and with his permission some of them will be described. The blank form or note-sheet used by Mr. Thompson, shown in Fig. 14, contains essentially: 1. Space for the description of the work and notes in regard to it. 2. A place for recording the total time of complete operations that is, the gross time including all neces- sary delays for doing a whole job or large portion of it. 3. Lines for setting down the "detail operations" or "units" into which any piece of work may be divided, followed by columns for entering the averages obtained from the observations. 4f. Squares for recording the readings of the stop- watch when observing the times of these elements. (If the squares are filled, additional records can be entered on the back.) The size of the sheets, which should be of best quality ledger paper, is 8% inches wide by 7 inches long, and by folding in the center they can be conveniently carried in the pocket or placed in a case containing one or more stop- watches. In the illustration the operation consists of a series of ele- ments. In such a case, the letters designating each elemen- tary unit are entered under the columns "Op," the stop-watch SAVINGS IN TIME 301 is thrown to zero, and started as the man commences to work. As each new division of the operation (that is, as each ele- mentary unit or "unit time") is begun, the time is recorded. During any special delay the watch may be stopped, and started again from the same point, altho as a rule Mr. Thompson advocates allowing the watch to run continuously, and enters the time of such stop, designating it for con- venience by the letter "Y." 5. Time-study reduced to formula. The elemen- tary operations are usually fewer in number than the complex processes of which they form a part. This greatly simplifies the problem. When the standard elementary times have been determined and tabulated, the standard time for any new work can be determined without making a special study, by combining the proper known elementary times. In fact, formulas can be deduced, exactly like other engineering formu- las, in which the varying quantities, such as the dis- tance traveled or the weight moved, may be substi- tuted, and which, when solved, give the standard time that the job should take. Any variation of this standard time from the actual time taken in doing the job represents avoidable loss. To eliminate the waste it is often necessary to change the workman's methods of doing the work or to re- design the machinery so as to facilitate operation. Where the operations run into the thousands the best results are obtained by grouping them into classes according to the similarity of design, shape and me- chanical operation of the machines, and then making an accurate study of each group. While it is prob- IV 21 302 FACTORY AND OFFICE ADMINISTRATION ably true that the deductions made from these tests will not be as thoro as those obtained by individual If I 11 > s tests, a systematic examination of such classes gives quicker and better results than could be gained by a haphazard examination of the whole field. SAVINGS IN TIME 303 6. Written aids, books, etc. Books on topics con- nected with management are of value as a basis for obtaining an education in fundamental principles or for convenient reference. The English philosopher, Dr. Samuel Johnson, has said that one-half of a man's education consists of knowing where to get informa- tion. To keep abreast of the progress in one's own field it is also necessary to supplement the information in books with periodical literature. 7. Periodicals. Among the most valuable sources of printed information today are the trade papers and the proceedings of the various technical societies. These supplement each other. The latter are some- what more general, in that the proceedings enumerate the theories, the discoveries, or the results of experi- ments conducted by the members. In the same class with the proceedings of the techni- cal societies must be placed the publications offered by the general and state governments. While the various departments of agriculture are doing the best work, much valuable information concerning business is contained in the publications issued by the bureaus of commerce and labor. A small charge is made for some of them, but the majority are issued free. Illinois has established an Engineering Ex- periment Station in connection with its school of engi- neering, and has investigated such important topics as fuels, building material and railroad equipment ; it has published its findings for the benefit of Illinois manu- facturers. 304 FACTORY AND OFFICE ADMINISTRATION 8. Government publications. The Superintendent of Documents, Washington, D. C., publishes two monthly catalogs listing all publications of the Fed- eral government. In addition to making use of the library facilities of the community, many companies find it advisable to maintain special libraries of their own, either sepa- rately or in connection with their testing laboratories. These libraries also collect special material, which can- not be secured thru the regular channels and which in- cludes the literature of their competitors, forms, formulas and the like. 9. Study of competitive methods. Another source of information is data obtained from competitors. When the Pennsylvania Railroad considered the ques- tion of pensions, a special committee on Superannu- ation and the Pension Fund was appointed by the advisory committee of the relief department. The committee examined and reported upon the various systems of pensioning in operation on more than sev- enty of the leading railroads of Europe, America, Asia, Africa and Australia. When the Weston Electrical Instrument Company resolved to build its new plant at Newark, N. J., it sent three practising engineers on a year's tour of American plants, two of the engineers to study mechanical features and one to discover what arrangements other companies were making for their employes' comfort. Mr. C. B. Anel, Assistant Manager of Works, Westinghouse Electric and Manufacturing Company, SAVINGS IN TIME 305 in a recent speech before the National Machine Tool Builders' Association, said: Recognizing that methods of manufacture which had in the past been satisfactory for their needs were proving inade- quate to handle the increasing volume of business, for the reasons already stated, the Westinghouse Electric and Man- ufacturing Company spent considerable time in investigating the methods of other large companies in similar lines of busi- ness, with the result that it was believed advisable to modify the original scheme in favor of the so-called "factory system." In a recent article in the American Machinist ap- peared this significant paragraph: The firm stands ready to furnish information concerning its experience in this line which may be useful for others who are thinking of establishing laboratories for themselves. 10. American readiness to supply information. The liberality with which American companies are willing to share their experiences has often excited the surprise of European visitors, since abroad the methods of doing business are zealously guarded from all outsiders. In fact, so general is the "get-together" idea in American industry that a firm's willingness to give information is a fair indication of the value of the information that it has to give. Small concerns are often opposed to giving away "trade secrets," whereas the large corporations are glad to show vis- itors thru their works and to furnish any information within reason. Conversely, many of them make a practice of sending their foremen and department heads to visit other factories. One method which has proved effective in writing 306 FACTORY AND OFFICE ADMINISTRATION to a competitor for information is to state, "This is the way we are now handling the matter; if you have a better method we should like to hear of it." Another method when an extended investigation is planned, is to state the fact and offer to give other companies copies of the results, provided they will cooperate by describing their methods. A recent inquiry of this kind addressed to fifty firms concerning their method of applying the "suggestion" system brought thirty- five replies. 9. Consulting experts. Specialists exist in almost every line of business. There are consulting engi- neers, certified public accountants, testing chemists and patent-lawyers. In the steel business there are agencies which will inspect the work in the mills, while there are advertising and sales experts and informa- tion bureaus without number. This specialty work is now being systematized by many agencies, so that the business man may secure information more readily than he ever could before. REVIEW How is the manager of a factory aided by its research de- partment ? Why should the manager of a testing or research bureau have a strong appreciation of commercial values? The last few years have seen much attention given to time- studies. How could you show that investigation along these lines belongs to the research department? Could you show also what the relation of time-study is to inspection ? Discuss the value of books, trade papers, etc., as aids in the saving of the manager's time and control of a factory or office. Why should a company be willing to aid its competitors in every way possible in the matter of laboratory or research work ? CHAPTER XXIII SAVINGS IN TIME ROUTING 1. Time-saving by "routing." London and Paris first learned of the death of Pope Leo XIII from New York, altho New York is 3,000 miles farther from Rome than either of those two cities. This was because the Associated Press had routed the news. As a courtesy to the Church, in order that Cardinal Rampolla might have time to notify the papal dele- gates, the Italian Minister of Telegraphs refused to allow any news of the Pope's death to pass until two hours had elapsed. When the Pope died, an attache immediately telephoned the Associated Press repre- sentative two miles away, who in turn cabled to the New York manager personally, .as had been previ- ously agreed, "The number of the missing bond is 404 Montefiore." To avoid any suspicion, the number which gave the time of the Pope's death was to be written backward, as 352 for 253, or 53 minutes past 2. It happened that this made no difference. When the telegram arrived in the New York office its con- tents were shouted to the sending room and each oper- ator flashed the news over his circuit. Altho the mes- sage was relayed at Havre and again at the French Cable Company's office in New York, the New York 307 308 FACTORY AND OFFICE ADMINISTRATION papers knew of the Pope's death nine minutes after it had happened, and the San Francisco papers, eleven minutes. The foreign newspaper agents in New York sent the news to their respective cities long be- fore these cities had heard directly from Rome. In the Associated Press methods we find an admir- able illustration of efficiency gained thru careful plan- ning and routing. The routing of news seems easy, perhaps, because of the nature of the substance routed. The routing of materials over a line of railway is the next best illustration. Since the elements here involved per- tain to industrial routing as well as to transportation it is well to study them carefully. 2. Essentials in routing. Railroad dispatching has three factors: 1. A route carefully laid out. 2. A prearranged time schedule of all trains, based on the experience of the road. 3. A train dispatcher, whose duty it is to keep the trains moving according to schedule and, if this is not possible, at least to move them to the best possible advantage. The proper routing of work thru shop or office is characterized by the same three features : 1. A prearranged route. 2. A predetermined time schedule. 3. A dispatcher. A near approach to the railroad schedule in the com- ROUTING 309 mercial world is the delivery-routing system of a big retail store. 3. Securing a good plant layout. The physical routing of the work in a business is determined mainly by the plant layout, in exactly the same way that the railway train route is determined by the track, and the same care should be given to laying out the plant that is given to a railroad survey. Mechanical helps are of great assistance in arriving at the best solution of the factory problem just as the chart is of great assistance to the railroad man in connection with his time-table. It is well to cut tem- plets to the scale of the machines, including their nec- essary clearances and working spaces, and then to shift these until the best departmental arrangement is found. A symmetrical arrangement means always the most economical use of space. Then cut templets of each department and fit them into one another in the same way as in determining the complete layout. It is much easier to shift paper than to carry the idea in one's head or to work up a sketch with pencil and rubber. Another method is to prepare several dis- tinct layouts on tracing paper and then, by superim- posing them, make a final sketch including the best features of each. This method is followed by most architects. When the ultimate solution is determined by the site, as in a city lot or in rented quarters, this method works well ; but where perfect freedom is pos- sible it is not likely to give so good a layout as the 310 FACTORY AND OFFICE ADMINISTRATION first method, since it works from the wrong end. The ultimate solution of the layout problem of any busi- ness will be determined by the interplay of the same four factors, work to be done, straight-line movement, gravity and cost. But while this is true in general, differences in application of the principles arise as soon as they are applied to industrial conditions. 4s. Straight line between terminals. All manufac- turing touches the outside world at two points the receiving and shipping departments. These are the terminals of the road; and the simplest and best lay- out, other things being equal, is a straight line between these two points. Where the plant has only one con- nection, as one street or one railroad siding, the routes must generally constitute a circle, so that the start and the finish will be at the same point, or a U or series of U's, both ends of which touch the outside world. When, however, other exits are possible, re- ceiving and shipping need not unduly influence the routing, but may be located so as to facilitate manu- facture. As soon, however, as these elementary con- ditions of the location of the "industrial terminals'* are passed, there appear more important complica- tions which affect the routing. 5. Various types of manufacture. All manufac- turing is analytic, continuous, assembling, or more often a combination of all three processes. Thus the work of the United States Steel plant at Gary is ana- lytic, in that it breaks the coal up into coke, gas and tar, each of which must then be handled separately. ROUTING 311 The next operation is to unite the coke, ore and lime- stone, which must be received separately and united in the blast furnaces. It is then analytic again, in that it separates the iron from the slag, which is sub- sequently manufactured into cement ; and finally it is continuous, in that the iron continues without further additions until it emerges as bars. 6. Analytic manufacture. The analytic type of manufacture is one in which the main material is gradually dissected to form many products, one of which is, however, usually of predominating impor- tance. The best illustration is the meat industry, where the carcass is broken up into beef, hides, bones, etc., each of which is treated separately after it leaves the main stream. The important point in such industries is to provide means of taking away the parts that are removed, so they will not collect and block the main stream of work. 7. Continuous manufacture. In the continuous manufactures the mass remains the same thruout the process, being merely acted upon and changed in form. This is by far the simplest kind and might be compared to a canal where the entire bulk of the water enters at one end and leaves at the other. In weav- ing, the thread enters at one end of the loom, and after the application of labor alone, emerges as cloth at the other. In milling, the wheat enters at one end and the flour emerges at the other. 8. Assembling manufacture. By means of the assembling process many different materials are re- 312 FACTORY AND OFFICE ADMINISTRATION ceived, worked upon and gradually brought together to make the finished whole. Building is the best illus- tration because it is exclusively an assembling oper- ation. It assembles the bricks, cement, plumbing and other manufactured products into a house. The im- portant thing in assembling is to see that the neces- sary parts come together at the right time and place, for all subsequent movement must wait until all the parts arrive. 9. Passageways must be provided. Whatever the type of manufacture, sufficient room must be allowed to provide convenient access to all parts of a machine, and to allow for the removal of any machine whenever necessary. Sufficient area must exist for the storing of as large a supply of working material and finished material as may be necessary, without interfering with the passageways. Storage facilities must be provided at each point where the flow of work is likely to be interrupted and wherever two streams unite. In order to minimize this area, the most economical method of stocking should be determined and the space should be allotted accordingly. 10. Transportation. Adequate transportation fa- cilities must be provided. The open areas must be wide enough to permit the passage of two trucks in the aisles and for the sidetracking of trucks around machines. A truck system involving the retention of the material in the trucks, with as little unloading as possi- ble, is an important feature and one deserving attention in an establishment. It involves the building of a considerable number of trucks, and departmental supervision, but is likely ROUTING 313 to result in economy. In some instances trucks are desirable, built so as to pick up and deliver a sheet-steel keg for hold- ing work in progress. An ample supply of metal "tote boxes" for holding small parts will facilitate stock-moving and lessen losses of small parts. 1 Derricks, traveling cranes and industrial railroads are a great convenience in the handling of heavy ma- terials and are often a necessity. Belt, link, gravity and pipe lines are serviceable where the material is uniform or will flow. Where the plant consists of several buildings it is customary to connect them by a system of tunnels radiating from the power house. These tunnels have cement floors, and brick and ce- ment walls, waterproofed with asphalt. They are large enough to accommodate the trucks used and to allow a man to stand upright. They usually carry the electric and water pipes but no drainage. All service departments, such as stock rooms, draft- ing rooms, tool rooms, and wash and locker rooms, should be centrally located so as to be equally access- ible from all the departments which they serve. Certain departments are by their nature mutually exclusive. Obviously it would be inconsistent to have a saw mill in the same room, or enclosure, with departments for shellacking and final finishing of wood surfaces, as good work of this character cannot be performed where the surrounding air is carrying even a small amount of dirt or grit. 2 Some work, on the other hand, is better done in con- junction with other work of the same kind. Stiff hats 1 Hugo Diemer, "Factory Administration," p. 15. 2 Day, "Industrial Plants," p. 51. 314 FACTORY AND OFFICE ADMINISTRATION are dried four distinct times during their manufacture and it would be uneconomical to equip four separate drying rooms in order to prevent retracing one's steps. 11. Growth must be allowed for. Railroads are now accustomed to look into the future and build their bridge piers and terminals to accommodate the expected increase of traffic. The first requirement for systematic expansion is land. One of the main reasons why big businesses are moving from the cities to the suburbs is that they must provide for future growth. It is essential, however, that a growing con- cern shall not burden itself at the beginning to provide for future prospects. One of the surest plans a concern can follow to prevent it from ever requiring expansion room is to incur too heavy an expense in securing a location that will permit fu- ture growth. 1 12. Expansion not to interfere with flow of work. The buildings should be designed to permit expan- sion without disturbing the flow of the work. The simplest style is the one-story building taking its light from the roof. This can expand indefinitely in all four directions. In all multiple-story buildings, side- lighting must be provided for and so growth is made possible only by extending the ends or by erecting separate additional buildings, much as a filing cabinet is built up by adding units. This is possible only in schools or textile mills where the work is uniform and can be shifted from building to building without i Duncan, "Principles of Industrial Management," p. 34. ROUTING 315 loss. Where the movement is in a straight line from the receiving room to the shipping room the lateral growth will add capacity without changing the method. An example of this system is the plan of the United States Steel Corporation's plant at Gary. Ship Canal To be filled in to Provide Land for Lateral Expansion Present S'lore Line Receiving and Storage V Blast Furnace Soaking Pits v Rail and Plate Mills Shipping by Rail FIGURE 15.^ GENERAL LAYOUT OF U. S. STEEL PLANT AT GARY. The same idea in multiple-story buildings is shown in the plant of the Wagner Electric Manufacturing Company of St. Louis and the Allis-Chalmers Corn- Receiving and storeroom Machinery etc. Machin- ery etc. Assembling Future Bldgs. FIGURE 16. LAYOUT OF A PLANT WITH MULTIPLE-STORY BUILDINGS. 316 FACTORY AND OFFICE ADMINISTRATION pany. The idea underlying all such building is to have the work which may need the most room in the future, touch the growing end. i Dept. 3 Dept. 2 Dept. 4 Dept. 1 FIGURE 17. CORRECT LAYOUT OF DEPARTMENTS. By arranging the departments as in Figure 18, the management would exclude growth in department 2 or3. Dept. 1 Dept. 2 Dept. 3 Dept. 4 FIGURE 18. INCORRECT LAYOUT OF DEPARTMENTS. 13. Taking advantage of gravity. The force of gravity being universal, it influences manufacturing no less than railroading. Every time a load is brought down stairs and taken back again, energy is wasted. There are two ways to avoid this waste. The mate- rials may be taken directly to the top floor and al- lowed to work back systematically to the first thru ROUTING 317 the manufacturing processes, or they may be started on the ground floor and systematically worked up to the top. The finished product may then be brought down. The first way is usually the better as the energy stored in moving the materials to the top may be economically used to transport them thru the man- ufacturing processes back to the shipping room on the ground floor. Gravity should be recognized in small individual operations as well as in a great mass. In the best or- ganized shops machine tenders are no longer allowed to drop their product on the floor. They take it from a movable table at machine height and pass it thru the machine to another movable table so that when the work is finished the materials can be rolled to the next operator, with a saving of lifting and carrying. The trucks should have large wheels and large beam- ings. Lifting goods to a car or truck is unnecessary ; the shipping room should be level with the floor of the car or truck. 14. Time element in routing. Routing, however, involves not only materials and locations but time as well. Much routing in a high stage of development has gone unrecognized because business time sched- ules are not often recognized as such, being expressed as quantity of output. The time schedule of the Car- negie Steel Company, for instance, had a constantly increasing number of tons of steel per week, and every superintendent who fell below this mark was expected to explain. When analyzed, "5,000 tons IV 22 318 FACTORY AND OFFICE ADMINISTRATION per week" simply means that 5,000 tons must be com- pleted in 7 X 24 or 168 hours; in other words, that the production of a ton must never take more than 16 %ooo, or .0336 hours. 15. Two types of routing. From the time sched- ule standpoint there are only two classes of manu- facture : 1. For stock; that is, the factory turns out the same thing continuously, throwing on the sales department the responsibility of finding a market for the product. This class includes textiles, typewriters, shoes, furni- ture, clothing, pianos and most of the ordinary goods which are consumed in quantity. Quantity time schedules are adequate for manufacture for stock. 2. For specific contract; that is, a single object is made to a customer's order. This class includes re- pair work on orders from the general shops, but its most important feature is the assemblage of large engineering products such as locomotives, large ma- chinery, steamboats and buildings. Making connec- tions is the important thing in manufacturing, as it is in railroading, for one late part will stall the entire work. A premature arrival is as bad as a delay. If the steel for a modern skyscraper arrives before the foundations are complete, chaos ensues, for it is con- stantly in the way, retarding the work which must be done before the steel can be set. It may take a month or more to straighten out the confusion. It is there- fore necessary to figure out the time necessary to manufacture each separate part, and to schedule the ROUTING 319 starting date of each succeeding operation accord- ingly. These time schedules resemble ordinary rail- road time-tables. For example, in the Thompson-Starrett schedule for the construction of a New York office building, shown in Figure 19, on page 322, it will be noticed that the foundations start 11-1 (November 1), the day the excavation is finished, and not sooner, and that the steel erection starts 11-24 (November 24) , the day the foundations are finished. The supplying of the granite, however, depends not only upon the com- pletion of the steel construction, but upon the finish- ing of the foundation walls, and so the granite starts as soon as they are brought to grade, 12-8 (Decem- ber 8) . The limestone follows the granite 12-10 (De- cember 10) and the brick succeeds the limestone 12-15 (December 15). The floor arches, however, depend again on the steel and follow right behind the rivets before the steel work is complete, and so thruout the building. The difference of a day or two between operations is to allow the time necessary to get the material on the job so as to be able to start at once. ' REVIEW Compare the essential features in the preparation of a train schedule with those in the establishment of a routing schedule in a factory or an office. What mechanical aids may be used in working out the best routing schedule for a factory? Classify the following manufactures according to the types mentioned in this chapter: the manufacture of slices, of gas, of ships, of wall-paper, of flour, of steel, of automobiles, the build- ing of a house. 320 FACTORY AND OFFICE ADMINISTRATION A carriage manufacturer located a department for sawing in the same room with one for the shellacking of wood surfaces. What principle of organization did this plan violate? An engineering concern bought a building in the heart of New York. The company grew rapidly. What difficulties were likely to arise in regard to location? What manufacturing elements or classes should be kept in mind when the subject of time-schedule in routing the material is up for determination? CHAPTER XXIV SAVINGS IN TIME-DISPATCHINGAUXILIARY APPLIANCES 1. When special dispatching is necessary. As in railroading, so in manufacturing the time schedule is the important thing, and the more spectacular method of special dispatching is resorted to only when unfore- seen circumstances occur. Therefore, personal dis- patching is of comparatively little importance in man- ufacturing for stock, especially where automatic machinery is used which sets the pace for the oper- ator. It is, on the other hand, an important adjunct to manufacturing for specific orders, because the gen- eral and repair work, on account of its irregular na- ture, cannot be mapped out in advance and because the elaborate schedule of a building or other work may be entirely invalidated by the carelessness of one worker. Like the train dispatcher the industrial dis- patcher must know his shop, its exact condition, its capacity, special characteristics, of men and machines and the amount of work and materials he has on hand. 2. How to plan the routing. But the dispatcher, or the order-of-work clerk, is not supposed to work out his schedules alone. The planning department provides him with all the necessary information as 321 TIME SCHEDULE Class Office-Loft THOMPSON-STARRETT COMPANY BUILDING 123 WILLIAM STREET No. 2*6 Date Dec.1, 1909. OFF CE8CHEOUL E JOB SC HEDUUE n MUST BC LCT Ft* WORK START F,N,SH ARCHITECT'S DRAWINGS WRECKING EXCAVATION 10-10 11-1 DRAINS AND WATER 10-10 10-20 CAISSONS-FILES FOUNDATIONS -CONCRETE 11-1 11-25 WALLS TO GRADE 11-25 12-8 WATERPROOF 11-CS 2-10 10 GRILLAGE-COLUMN BASES 11-10 11-20 9-10 9-20 11 STEEL ERECTION- STACK 11-21 1-1 10-10 10-15 12 ORNAMENTAL IRON-STAIRS-PLAIN 12-5 1-10 13 FINISH 2-3 3-10 10-10 10-20 11 ELEVATORS-GUIDES-TEMP.-CAR 12-20 1-25 15 " CAR-SIGNAL-TEST 2-20 3-20 10-10 10-15 16 BOILERS 12-5 1-5 11-1 11-15 1? PUMP-TANKS 1-8 1-20 10-20 10-28 18 ARCHES 12-8 1-10 10-20 10-25 19 PLUMBING-GAS-ROUGH-TEST 12-3 1-20 20 " FINISH-FIXTURES 2-10 3-15 10-20 10-25 21 HEAT-VENTILATION-ROUGH 12-3 1-20 22 " REGULATION-FINISH 2-10 3-15 HnSr- 11-25 21 FIXTURES-MOTORS 2-10 3-15 10-25 11-2 25 COMMON BRICK WALLS 12-16 1-20 9-25 IV-o 26 GRANITE 12-6 12-10 10-1 10-15 27 BLUESTONES- 12-6 12-10 10-1 10-15 28 LIMESTONE-MARBLE 12-10 12-16 9-25 10-1 29 TERRA COTTA 12-20 1-20 10* 10-25 30 FACE BRICK- ENAMELED 12-15 1-12 10-5 10-25 31 SPECIAL BRICK-MOLD- FIRE-HOLLOW 12-15 1-12 10-25 11-5 32 WOOD FRAMES-SASH 12-16 1-20 10-25 11-2 33 METAL FRAMES-SASH 12-16 1-20 10-25 11-2 34 PULLEYS-WEIGHTS-CHAINS 12-16 1-20 11-15 11-25 35 GLASS 1-7 1-20 11-10 11-20 36 HOOF COVER 1-8 1-25 11-10 11-20 37 SHEET METAL 1-8 1-25 11-10 11-20 38 BUCKS 12-26 1-25 11-15 11-25 39 STRIPS AND FILL 12-28 2-1 11-22 11-28 10 PARTITIONS AND FURRING 1-1 2-5 12-5 12-15 11 GROUNDS AND LATH 1-10 2-12 11-20 12-1 42 PLASTER- PLAIN 1-19 3-1 43 < ORNAMENTAL 2-1 3-1 11-5 11-15 44 MARBLE WALLS-TILE 2-1 3-1 45 " FLOORS-TILE, MOSAIC, TERRAZZO 2-10 3-10 11-5 11-15 46 HARDWARE-FINISH 1-28 2-18 11-15 11-25 47 TRIM-WOOD 2-10 3-20 18 " CALCIMINE 2-10 3-20 11-25 12-5 19 PAINT-DECORATION 2-20 3-20 12-1 12-15 50 FINISH FLOOR-WOOD-CEMENT 2-20 3-20 51 MAIL CHUTE 12-20 2-28 52 REVOLVING DOOR 1-10 1-15 53 PAVING-SIDEWALK-CURB 2-16 3-8 51 VAULT WORK 55 FILTER 56 SPRINKLER-PNEUMATIC-SWEEPING 57 ICE PLANT 58 LAUNDRY-KITCHEN 59 ENGINES-GENERATORS GO 61 52 53 61 FINISH BUILDING- SCHEDULE TIME 3-20 65 " CONTRACT TIME 4-1 FIGURE 19. 322 SAVINGS IN TIME DISPATCH 323 to what work is to be routed and how it is to be routed. The order-of-work clerk dispatches his jobs in ac- cordance with these instructions. He must keep in mind a multitude of details regarding the machines, the men and all the jobs which have been routed for him, for it is his duty to keep the work moving. Ac- cordingly, he is supplied with a dispatch or "route" board, the instrumental means by which the planning room controls the operating departments. 3. What the route-board is. The route-board, which contains many groups of hooks each group being composed of three sets, placed one above the other shows the progress of all work and the move- ment of all material from point to point. When a job is assigned to a machine, the operation card is hung on the lowest one of a series of three hooks, each machine or working area in the shop being represented on the bulletin board by one of these sets of hooks. Thus the assignment of a job to a machine shows that all drawings, instruction cards, etc., are ready; that the materials are on hand and everything prepared for the machine to begin its work. It is then that the "operation order" which covers a given operation goes on hook No. 3, the lowest hook and the one which represents all "jobs ahead in the shop" for that ma- chine. Next, when the materials have been moved to the machine, the operation order is put on hook No. 2, "jobs ahead at machine." Finally, when the job is actually begun the operation order is moved to the top hook, No. 1, "job on machine." 324 FACTORY AND OFFICE ADMINISTRATION The order-of-work clerk, or for that matter any person interested, can follow the movement of a job thru the shop by watching the operation orders on these three hooks. If the job should be moved to an- other machine, then the operation order would be as- signed to another group of three hooks, corresponding to the second machine. 4. Planning -board signals all movements. Thus the planning-board signals the movements and in- dicates the sequence in which the jobs are done. This it does for the planning room ; but the man in the shop must also be informed of these movements, for his activities depend on them. He must know whether he is to work at the same machine or at a different one after one job is completed. He cannot run to the planning room every time. Hence a miniature bulle- tin board is placed in the shop ; and when an order in the planning room goes to hook No. 2, "jobs ahead at machine," a duplicate order goes upon the shop bulle- tin board notifying the worker what jobs have been planned ahead for him. 5. Questions answered by route-board. By means of this route-board, a whole series of questions vital to the management can be answered immediately: (1) what job shall be done first; (2) if a machine breaks down what other machine can do the work; (3) if a man .is absent what other man can do the job; (4) what is the cost of any operation on any machine for any hour, or what is the total cost of all operations going on at all machines in any hour. SAVINGS IN TIME DISPATCH 325 jj 5 4 h - - K 3 d a =1 * el 5) ,. * - s? i * . . 00 Sjj i i -r - (2 S 5 - - x, I 1 i ^5 - ~. K ,2 = i . I 5 ;'. s ** " -r fl 8 "* ^ gj 3 =; "' s -i ^ 1 C g -i - o" .* 2 ='. ' h g 2 - : s a s? S -5 3 S S i 5*5 = - : - 1 - -00 =' is** 1 - - - 3~ . - h ?J :; - 5* N r - M ^ i - - - j i s Z^ - 2 Z S 2 : s a 2 2 - a S5 s ?a 1 5 i 2 !l i i i i ? 1 l^ UJI t. *t* toVHl^d M| Jna IBCHl loo lpn .q,JO >i onS BlPIoa |- 9a333:asSBRHiicai t- P z I ! g i 4 ^ FIGURE 21. RECORDS AS USUALLY KEPT.I i Reprinted by permission from H. L. Gantt's "A Graphical Daily Bal- ance in Manufacture," in Transactions, American Society of Mechanical Engineers, Vol. XXIV, p. 1324. 328 FACTORY AND OFFICE ADMINISTRATION the different operations follow one another in regular sequence. If any department holds up the work the fact is shown, for in such an event the figures do not follow those of the preceding department. The information with which to keep such a report up to date may be obtained from the shop by means of the coupon form of order (Figure 22). This order, which follows, and which is usually wired fast to the piece, with a coupon for each department, resembles a railroad ticket. When the work in any one depart- ment is completed a coupon is detached and returned to the dispatcher, who enters the fact on his report. In this way it is possible to know by noon of any day the exact state of all work in progress up to quitting time of the day before, and so it is possible to push work which is falling behind. But in shops where the planning department is fully developed, the state of work is indicated on a "progress-of-work sheet" by the record clerk when the job is given out and when the ticket is returned by the worker. In outside work and work done by contractors it is customary to get the information by personal inspection. Thus one of the most important duties of Thompson- Starrett's "chasing department" calls for regular visits to the subcontractors and exact reports as to how their work stands with reference to the time schedule. 7. How to route office work. The New York Clearing House illustrates the value of routing in office work. Each bank has a numbered desk and is represented by a delivery clerk and a settling clerk. 1 1 If i *il * ferf *1 **< i it ^ ! a Ill Si 3 1 * e I sa i S 05 ij 'S 1*1 3 3 -4J IS t s 4 1 (^ 1 J> 2 a 2 i 05 i & 1 * I I i * eg I 5 i g a i s ! 329 330 FACTORY AND OFFICE ADMINISTRATION The settling clerk remains at the bank's desk and receives, records and receipts the checks returned by the other banks. The delivery clerk takes his place in front of his bank's desk, and on the man- ager's signal moves to the desk on his left, delivers the packages of checks, drafts, etc., drawn on that bank and deposited in his own bank, and after re- ceiving a receipt for the package moves forward to the next desk, and so around the room. By this method the banks are enabled to exchange over $300,000,000 in about ten minutes. 8. Time schedule of the clearing house. The dis- patcher is the manager of the clearing house. He directs the operations from his raised balcony at the end of the room. The following schedule indicates the promptness with which business is done : 9 :59 Clerks must be in their places. Failure will be punished by fine. 10:00 Delivery starts. 10:45 Time up for making proof. Fines will be imposed for all mistakes remaining unlo- cated. 11 :15 Fines will be doubled for all mistakes remain- ing unlocated. 12 :00 Fines will be quadrupled for all mistakes re- maining unlocated. 1 :30 Time up for settling debit balances. A fine will be imposed on all debtor banks that have failed to settle their accounts with the clearing house. SAVINGS IN TIME DISPATCH 331 1 :30 Credit balances will be paid by the clearing house, but no credit balances will be paid until all the debit banks have settled. The efficiency of this schedule is proved by the fact that altho the annual clearings have sometimes ex- ceeded $100,000,000,000, the greatest annual total of all the fines imposed was $1,422 (1889) and it has fallen as low as $280 a year (1904). 9. How organization saves time. The purpose of organization is to enable each employe to work under the best possible conditions of team-play. The man- agement should remove all obstacles to the workman's best performance and supply all the aids necessary. Delays not only waste the workman's time but shut down his machine. It is well to remember that an employe is not working for himself, and any assistance which an employer can give him enables him to do the concern's business more intelligently. The workman needs certain aids in doing his work. These include power, machinery, tools, materials and the cooperation of his fellow-employes and the man- agement. The need for supplying machines and power is so obvious that it hardly calls for mention. What needs emphasis is that the workman must be continuously supplied with power and equipment ; in other words, that he must be protected from delays due to breakdowns, etc. 10. Substitute power equipment. The commonest method of guarding against power shortage is to pro- 332 FACTORY AND OFFICE ADMINISTRATION vide substitute power equipment. Many of the New England mills operated by water-power find it neces- sary to have steam plants to help out during periods of drouth. Similarly, many concerns in New York City using electric power find it advisable to continue their old steam equipment, even tho the Edison Com- pany offers to buy it up. Substitution is a valuable preventive in all lines, even tho the substitute is sometimes more expensive than the thing it replaces. The difference in cost will be more than offset by the saving of time, the most expensive factor in business. 11. Equipment tickler. An ounce of prevention is worth a pound of cure. The most efficient mainte- nance is the replacing of a part before it actually breaks. A tickler system is a valuable aid. The best type of tickler is one which has a portfolio for each day in the year, large enough to hold all reminders. Notices should be placed in the tickler in advance to come out at proper intervals thruout the year for the examination and repairing of parts of machines, boil- ers, engines, belts, etc., likely to wear out or otherwise give trouble. 12. Other methods to avoid shutdowns. Another method of maintenance is the annual shutdown of the plant as practised by the National Cash Register Com- pany, the Remington Typewriter Company and other large concerns. All the operators are given their va- cations at the same time, the plant shuts down and the entire equipment is overhauled. In the steel in- SAVINGS IN TIME DISPATCH 333 dustry it has been found advisable to relieve the fur- naces each Sunday, whether they need it or not, so as to prevent their burning out during the week. In the same way ships find it advisable to overhaul all machinery while in port and to replace worn parts, even tho they might last another trip, rather than take chances on breaks in mid-ocean. No matter how carefully things are watched, occa- sional breakdowns are bound to occur, and the best way to minimize the loss is to be prepared for them. The stock room should always carry a supply of repair parts, and the plant should have adequate wrecking equipment, such as traveling cranes and hoists for taking out and replacing the broken machinery. REVIEW In dispatching work thru the factory or office what information is of paramount importance to the man who plans the schedule? Study your own department and develop a "route-board" by means of which you could control the movement of material from point to point. What questions are answered (or should be) by the route- board? Design a production-sheet for some product with which you are familiar. How do some concerns avoid the losses due to shutdowns, va- cations, power shortage, etc.? IV 23 CHAPTER XXV SAVINGS IN MATERIAL STOCKKEEPING 1. Stockkeeping system a necessity. In order to guarantee sufficient and proper tools and materials, it is essential to have a modern stockkeeping system. The duty of a stock or tool department, as described by Harrington Emerson, is to supply the right mate- rial, at the right place, at the right time, of the required quality, in the minimum necessary quantity and at the lowest cost. In addition to preserving the materials from deterioration, loss and waste, the stockkeeper must anticipate the shop's needs so as to prevent any loss of time from waiting for supplies. The supplies are furnished to the workman at his machine or desk, which he is not allowed to leave. His duty is to run that machine, for when he is away getting supplies or gossiping with other workmen at the storeroom win- dow, his work is being neglected. 2. Tool room in charge of expert. The tool room should be in charge of a tool expert who has the care of all tools and of sharpening and keeping them in shape. No workman is allowed to stop and sharpen his own tools. He must call for new ones ; he is sup- plied with a call bell so that he does not have to go after the tools but has them brought to him. The 334 SAVINGS IN MATERIAL 335 workman quickly realizes the justice of this plan, and when he knows that his bonus depends on his efficiency, it is interesting to see how he makes the helpers step around. Some companies even go so far as to supply each man with a standard kit of hand tools which he must use constantly, and a locker in which to keep them, instead of letting him furnish his own. For these he gives his receipt, promising to return them or their value on leaving the company's employ. The advantages of this method are : 1. It reduces the number of tools required. 2. It enables the shop to obtain exact standards. 3. It assists the shop in dictating the exact method of doing the work. 3. Three rules of storekeeping. The interest on the capital released by a maximum and minimum stores system will often pay the entire expense of the department. The stores materials are commonly subdivided into tools, rough stores or raw materials, and finished stores ready for shipment. Often they are still further divided into finished parts awaiting assemblage, or possibly further divisions, as occasion demands. However, the principles of handling these classes are the same and are very simple. There are only three operations in storekeeping: the receipt of goods, the issuance of goods to workmen and the preservation of the remainder on hand. There are only three rules of stockkeeping : 1. A receipt is to be given for all goods received. 2. A receipt is to be taken for all goods delivered. 336 FACTORY AND OFFICE ADMINISTRATION 3. Someone must be responsible for stores on hand, just as a cashier is held responsible for all cash. 4. Receiving supplies. Goods are received from only three sources. The first, and by far the largest portion, is purchased from outsiders. Before being placed in stock these goods must be carefully checked as to quantity and quality, for after they are placed in stock their identity is lost. In order that the re- ceiving clerk may do this intelligently he must be supplied with a duplicate copy of the purchase order. Where he does not have such a copy he is sure to accept shortages and wrong goods. The discrepancy may be subsequently caught by the accounting de- partment, in checking receipts with the original or- ders, but after the goods have been received and placed in stock it is much more difficult to rectify mis- takes and, consequently, it is less likely that any at- tempt will be made to do so. It is customary, how- ever, to omit the price, which does not concern the storekeeper. Some suspicious purchasing agents blank the quan- tity, thus making sure that the receiving clerk actually checks the quantity received. In all cases it is neces- sary to give the unit of measure ; %" nickel-plated ells are purchased by the piece, W galvanized ells by the pound. Unless the order states which unit is em- ployed the check may be entirely useless, and no sec- ond checking is possible. Where goods are purchased or issued according to weight the stock clerk should be supplied with a scale. This seems obvious, yet such SAVINGS IN MATERIAL 337 simple provisions are often neglected. The best prac- tice is to have two scales, one for heavy weights and one for light, thus securing the maximum accuracy. Some accountants advocate placing in stock all goods received for whatever purpose and then charg- ing them as they are issued. This is unnecessary. Where goods are ordered for special purposes it is much more direct to charge them at once according to those purposes. The order should specify for what they are to be used and where, so that the receiving clerk may be able to forward them to the proper de- partment at once with a minimum amount of handling and delay. 5. Receipting for goods. There are two methods of issuing receipts for goods received. One is to give a formal receipt to the person making the delivery. This receipt gives the order number, the date when the article was received and a description. A carbon copy is sent to the purchasing department. The sec- ond method is to O. K. and return the stock room copy of the original purchasing order. The second method would appear the better, especially in small concerns, in that it reduces the clerical worry in regard to both receiving and checking bills. The practice is, how- ever, divided. One company, for instance, uses the original order in its electrical department, but inde- pendent receipts for its general purchasing. The second source of supply is the manufacture of goods for stock. The production order should cover this class without any additional formalities. The 338 FACTORY AND OFFICE ADMINISTRATION third source is unused materials returned by work- men. Credit memoranda should be issued for this class of receipts. They should be distinguished from requisitions by the color of the paper or of the print- ing. A common custom is to use red ink for all credit items so as to prevent confusion. 6. Issuing supplies. Tools, as a rule, are easily distinguishable from materials ; but they run together in such articles as brushes, files and rubber boots. Altho generally considered as tools, these articles are worn out so quickly that many managers invariably classify them as materials and charge them out as such. Each of these three classes of goods mate- rials, tools, consumable tools should be distinguished and issued accordingly. 7. How to use requisitions. There are two princi- pal systems of issuing materials. The first corre- sponds with banking practice. If a depositor wishes cash at a bank he must issue a "counter check" on the paying teller. This is the requisition system. The storekeeper issues stores on the presentation of a regu- lar order or requisition signed by any responsible per- son (Figure 23). In office stockkeeping it is often advisable to combine the requisition with the stock ledger by providing columns in the ledger for the name of the person authorizing issue and for the sig- nature of the receiver. This lessens the clerical work and since all office supplies are charged to expense there is no object in charging the items separately. 8. Bill-of -materials. The second method is to issue SAVINGS IN MATERIAL 339 the materials called for by a bill-of -materials prepared by the designing or the production department. This has the advantage of more closely meeting the actual Form F-108 REQUISITION No, FOR DEPARTMENT SUPPLIES ORIGINAL TO DEPT. Please furnish the following for Department. V Quantity DESCRIPTION " ni ' Price Amount 1 2 3 4 5 G 7 8 Date Wanted (Date of Requisition Goods Delivered Entered Entered Entered Stores Ledger Stock Ledger Cost Dept. impossible to fill his requisition by he above date no- tify this depart- iwntjmrnediately, FIGURE 23. REQUISITION FORM. requirements and so conserving material. It assists the storekeeper in keeping up his. stock and preparing for future requirements. It lessens the accounting because it eliminates the listing and totaling of many small individual requisitions. 340 FACTORY AND OFFICE ADMINISTRATION 9. Combination systems. Other systems, however, use a combination of these two methods. The bill-of- material should generally be used, with the requi- sition as the flexible element to meet emergencies and to offset clerical errors in bills. Some managers think it is better policy to issue material when it is called for by a responsible department foreman, and to adjust later any discrepancies between bills-of-material or other specifications and the foreman's statement as to his requirements. Under no circumstances should production be stopped pending adjustment of tech- nicalities as to quantity of material. 1 If a foreman is to be held responsible for results he must be given a certain amount of freedom. Under either method the man actually receiving the materials should be re- quired to sign for them so that he may be expected to explain any overissue which may occur. To secure a new consumable tool the workman must return the worn-out tool that he has. To get a new brush, for instance, he must return the old one ; to get a new pair of boots he must return the worn-out pair. This plan prevents the workman's being able to get new tools from the storeroom any time that he loses his old ones, and also gives the purchasing department a basis for judging the wearing quality of the goods. Replacement of defective materials and issuance of materials on account of spoiled work should be made by this method. 10. Complete and simple system. The J. L. Mott i Diemer, "Factory Organization," p. 118. SAVINGS IN MATERIAL 341 Company's tool-room system is complete and simple. Each man is given twelve checks which have the same number and are specially made from a reversed steel die bearing the firm's initials so they will not be dup- licated. Each tool in the department is represented by a 3 x 5 filing card. When there is more than one tool of a kind there is a corresponding number of cards. A two-drawer card-index cabinet is used. In drawer No. 1 the guide cards represent the shelv- ing, bins, drawers, etc., of the tool room. Behind these the tool cards are placed. In drawer No. 2 there is a guide card for each man, numbered to corre- spond with his checks. When a man presents his check for a tool at the window, the check is hung on the checkboard and the tool card is taken from its regular place, drawer No. 1, and placed back of the workman's guide card in drawer No. 2. When the tool is returned the man receives his check and the tool card is put back in its proper place in drawer No. 1. If a tool is broken or lost the card is taken out of drawer No. 1, and after being marked "broken" or "lost" is placed behind a guide marked "broken or lost" in drawer No. 2. Thus the checkboard shows at a glance how many tools a man has and the total num- ber of tools out. Drawer No. 2 shows what tools are in the shop and thus the need of referring to the shelves is obviated. 11. Single and double check system. The simplest method of issuing tools is to give each workman a sup- ply of brass checks, say ten. When the man gets a 342 FACTORY AND OFFICE ADMINISTRATION tool he hands in a check which is substituted for the tool. This is the single-check system. In the double-check system, which is in common use, each man is represented by two adjacent hooks on the tool-room checkboard. Ten round checks are issued to the man when he starts work, and ten square checks bearing the same number are hung on one of his hooks. When he calls for a tool he presents one of his round checks. This is then placed on the hook from which the round checks were taken. At the same time one of the square checks is taken off and placed in the tool rack, case or drawer from which the tool is taken. When he returns the tool he is given back his round check, and the square check is taken from the rack, case or drawer in which it had been placed as a substi- tute for the tool. This system enables the tool-room foreman to tell by the number of round checks hang- ing on any man's hook just how many tools he has out, but it does not show what tools they are, as does the Mott Company's system. 1 12. Responsibility for remainder on hand. In or- der that the stockkeeper may be held responsible for the stock and tools on hand he must have complete authority. The stock room must be under lock and key and no one except the storekeeper should be al- lowed access. This is essential. Unless he is thus protected, the storekeeper cannot justly be held ac- countable for the stores. If two men have joint charge, each can blame the other and it is never pos- i Diemer, "Factory Organization," p. 159. SAVINGS IN MATERIAL 343 sible to place the responsibility absolutely. Thus, we see separate cash registers in large stores. Each clerk has a cash drawer of his own and so is responsible for any shortage in his own drawer. 13. Stock room protects goods. The stock room must also protect goods from depreciation. Only heavy goods of little value should be stored out of doors, and these should be protected from the weather by sheds or tarpaulins. Finished surfaces should be greased to prevent rust even if they are kept under cover. The Robert Gair Company, paper goods manufacturers, state that one of the advantages of their new concrete building is that it annually saves fully $5,000 which it formerly lost thru damage done by vermin. Fire is, however, the main cause of loss, and special precautions should be taken, especially with respect to goods of value and all records. Thus in Armour and Company's office building and in other modern build- ings there is a built-in fire-proof vault for office rec- ords. In the American Bridge Company's drafting room there is a fire-proof vault for drawings. Such practice is becoming universal. Where records and drawings are not thus protected a duplicate set should be kept somewhere outside the office building, as an in- surance measure. To prevent goods from being kept too long the Watertown arsenal introduced the so-called two-bin system. Two bins, A and B, are provided for each article. While the goods in A are being used, all new 344 FACTORY AND OFFICE ADMINISTRATION goods received are put in B. When A is empty, B is started and new goods are put in A. Thus the ma- terial is used in the order of its receipt instead of its being possible for old material to collect at the bottom of the bin, as is the case when new material is dumped in on top of the old. The two-bin system is especially applicable to the handling of stationery, which yel- lows with age, so that often under the old system the bottom of a pile has to be thrown out. 14. Classification by kind. Materials should be classed by kind, not by size. Some unit, such as 24 inches, should be adopted, and the shelves should be divided into square compartments. These compart- ments can then be subdivided, as the necessity arises, without changing the shelving. There are two sys- tems involving such arrangement. The way to number bins in stock warehouses is to divide the whole cubic volume of the house into spaces and allot a certain number of spaces to each volume, whether the volume is to contain large or small bins. In this way, no matter what changes or rearrangement in the sizes of the bins there may be, the same number will always designate the same space in the warehouse. For instance, all bins numbered in the ten thousands would represent bins in aisle 10, those be- ginning with 10,500 representing the bins on one side of the aisle, and those beginning with 10,000 the bins on the oppo- site side of the aisle. If the bins are large, of course, a great many numbers will not be used. This is practically the same principle that has been finally adopted as the most satisfac- tory method of numbering houses in city streets, and will be found equally satisfactory in storage and warehouses. 1 i Diemer, "Factory Organization," p. 114. SAVINGS IN MATERIAL 345 The placing of even numbers on one side of the aisle and odd on the other, as is done, for example, in the numbering of theater chairs, has, however, some ad- vantages over this method. It is also well to place near the delivery point those goods which are much used and to locate at the back of the storeroom those which are seldom used. Where this system is adopted it is necessary to have "finding lists" or card indexes giving the location of the sup- plies. Where the stock room is large or where there are several floors, it will save time to have several such "finding lists" at convenient points. The second method is alphabetical and calls for an arrangement in accordance with the material or tool symbols. These symbols are marked on the end of the tiers so that anyone, even if he is not familiar with the stock-room layout, can find anything in stock ex- actly as he would locate a name in the city directory. This system follows the general tendency to simplify the work and eliminate the index which is discernible in loose-leaf ledgers, in card systems and in the open- shelf fiction classification of the public libraries. The procedure is the same whether a lead pencil or a blow valve, a box of envelops or a rough casting is cata- loged. Of course some kind of symbol system is a prime requisite. 15. Size materials when checking. The handling of materials is facilitated by sizing materials the first time they are checked; this eliminates the need of doing it again. The Salford Rolling Mills, Man- 346 FACTORY AND OFFICE ADMINISTRATION Chester, paint the weights on all castings when they leave the foundry. The Thompson- Starrett Com- pany paint the length of all heavy timbers on both ends so that one can tell just what is in the yard by looking at the ends of the piles. Some companies indicate the kind of steel by painting one end a certain color. The Tabor Manufacturing Company of Phil- adelphia paint their bolts, washers, clamps, etc., used in setting up work in machine tools, with bright colors, such as red, blue, green, which immediately designate them as tool equipment. Adequate hoists, tool boxes, etc., for the handling of the material should be pro- vided. 16. Stock ledger and inventory-taking. The stock ledger is usually kept in the dispatching or planning department to facilitate routing. Where the system of dispatching has not yet been introduced, the stock ledger is usually kept in a card or loose-leaf ledger. Standard designs are carried in stock by most of the manufacturers of loose-leaf and card systems. A useful stock form of the C. E. Sheppard Company is shown in Figure 24. The sequence of the items varies in different companies. C. B. Cottrell & Sons place the balance between the received and delivered col- umns. The C. W. Hunt Company places the order number after the amount delivered but before the balance on hand. The Wells Brothers Company provides separate date columns. In order to verify the stock on hand, the balance-of-stores clerk spends an hour a day in the storeroom checking up. 25 ) J 5 8 Zt z _ < fct 8 ?, g j Q !| 51 es 9 Sg o^' CO 5H Q g ^s 3- a 5 f 8 WHERE DELIVERED 1 b CATION OF ST 11 o z | i o h 347 348 FACTORY AND OFFICE ADMINISTRATION Each day he takes a certain number of items and counts and weighs them, comparing the results with the figures on his sheets. To go thru the whole stock room requires six months, so that during the year two full inventories are taken. 1 Another method is to check each article when the quantity on hand is low; this system involves a mini- mum of work. Slight discrepancies are bound to oc- cur, because fallibility on the part of a stock clerk is far more common than infallibility of records. When discrepancies are marked, or appear as continual shortage in the more valuable materials, they should, of course, be investigated, but in general they should simply be written off. In either case, that bugbear, the annual "taking account of stock," is entirely un- necessary. 17. Losing time on cheap rather than expensive operations. If two men are dependent upon each other, the less expensive must wait upon the more expensive. Theoretically it should be possible for them to exactly tie into each other. Practically this is not so. Unless the cheaper serves the more expen- sive, the more expensive man or machine will do the waiting. For instance, if men were loading trucks with dirt, it should be possible to proportion them ex- actly so that one truck would drive on to be loaded while the one ahead was driving away full. As an actual fact it is not possible and under such circum- stances the men will be waiting for the trucks or the trucks will be waiting to be loaded ; they will be wait- i E. M. Woolley in System, June, 1911. SAVINGS IN MATERIAL 349 ing for one another during different parts of the day. It is therefore necessary to decide which of the two causes of delay is the more expensive, and supply either enough men to keep the trucks moving or enough trucks to keep the men busy. 18. Principles of general application. These prin- ciples apply thruout business. If the man's time is more valuable than the material used, he must be given a leeway; otherwise he will have to adapt himself to the material. If the material is more valuable than the man's time, he must adapt himself to the material ; otherwise he will waste it. Such is the case in gold- smithing; the workbench is laid out, not so much for the man's convenience, as to save the gold filings. This reasoning applies with special force to office work. If an executive's time is worth more than a clerk's he must be supplied with a sufficient clerical force; otherwise he will be doing the clerical work himself at the expense of more important work. The less expensive unit should be made to wait upon the more expensive. REVIEW A visitor in a large manufacturing plant noticed that workmen were running here and there looking for materials, tools, etc. In what way could the stockkeeping department aid in cutting down the time lost by these workmen in leaving their work? Why do some purchasing agents blank the quantity on an in- voice which goes to the receiving clerk? What economical method of issuing receipts for goods received would you advise for a small concern? A depositor goes to a bank to draw money. He writes out his check for the amount and presents it to the cashier. What IV 24 350 FACTORY AND OFFICE ADMINISTRATION suggestion is there in this transaction for the office or factory manager who permits employes to get their materials, tools, supplies, etc., without going to the expense of having a stores clerk look after them? How does a bill of materials affect the stockkeeping depart- ment? the accounting department? How do some managers check the discrepancies between a bill of materials or other specification and the foreman's statement as to his requirements? Devise a general policy for the stockkeeping department, of such a nature that by means of it responsibility can be placed for the stock and tools, and depreciation due to exposure of materials, etc., can be held within reasonable limits. Devise a stock-ledger form that would enable you to control the balance of stores without taking an inventory. INDEX Accounting Department, Analysis of, as a unit of management, 95-96, 120, 122 American Bankers' Association, Educa- tional institute provided for em- ployes, 255 Anel, C. B., on ' 'The Work of Shop In- spection," 290, 304-05 Association of Employes, Educational courses of N. Y. Edison Com- pany, 253-54 Blumenthal, O. A,, Application blanks and self-analysis, 249-51 Carpenter, 0. U., on Standardizing products, 197-98; on Standard assembling time, 223-24 Chalmers, Hugh, Methods of select- ing employes, 24749 Collaboration, and Centralized control, 17-20; Distribution of detail, 26-29; Reorganization problems, 31; Re- sponsibility distributed, 36; As- sociated interests and efficiency, 44-45, 52; Specialization and science of management, 71-81; Committee system of manage- ment, 113-14, 133-34; Produc- tion clerk's duties, 152-53, 154- 55; Organization saves time, 331 Commission on Standardization, Sav- ings effected in New York City, 194 Committee on Employment Plans, Re- port on labor turnover, 51 Committee System, Methods of, 113-14; In office management, 13334 Competition, Eliminating wastes, 48-49; Unsys- tematized type of management, 109-10; Speed and work records stimulate incentive, 275-76 Control of Labor Selection and Training, Selecting applicants, methods by 351 Control of Labor continued Chalmers and Taylor, 247-48; Self-analysis in application blanks, 249-51; Written and oral tests, 251-52; Physical and moral qualities analyzed, 252 ; Education for separate industries, 253, 255-56; Commercial and technical courses, 253-63; Met- ropolitan Life Insurance Com- pany's business course, 254; Training schools, types of, 254- 63; Firms give specific training, 256; Manuals educate employes, 256-57; Department Store Edu- cational Association, 260; Na- tional Commercial Gas Associa- tion, educational courses, 260 63 Control of Labor Wages, Records and Promotions, Man-power costly, 26566; Science of labor control, 266-68; "Mis- fit" employes, 267; Fatigue and rest, science of, 268-69; Wages determined by output, illustra- tions, 269-72; Rates of increase of wages, 272-73; Wages the chief incentive, 273, 274; Short- period records a stimulus, 275 76; Environment affects effi- ciency, 27678; Efficiency records valuable, 278-81; H. L. Gantt on records, 280 ; Permanency of em- ployment, and pensions, 28182; Advancement, and rule of senior- ity, 282-83 Corporate Organization, Managerial unit for directing finances, 86- Day, Charles, on Routing methods in "Industrial Plants," 313 Democracy in Industry, Professor Carver on, 53-54 Departmental Grouping, Cooperation and specialization, 70 76; Organization analyses, 86- 99 See also What Management Involves 352 INDEX Department Store Education Associa- tion, Training employes, 260 Derby Desk Company, Mnemonic sys- tem valuable, 203-05, 206-07 Diemer, Hugo, on Routing methods, 312-13; on Stock-keeping methods, 340, 344 Distinctions Between Economics, In- dustry and Business, 85-86 Duncan, J. C., on Industrial expan- sion, 314 Economics, Dominating forces, and business planning, 5-6; Planning prob- lems, and copartnerships, 2122; Industrial auditing and labor turnover, 47-51 ; Human en- gineering, 6063 ; Economic units, and fundamental branches of, 83-85; Systematized manage- ment advantageous, 11213; Planning department promotes efficiency, 142, 146-51; High cost of man-power, 265 et seq. See also Organization of Adminis- tration Education, Basis of Control, Commercial and technical training, 25363; Proceedings, and aids in management, 299, 303-04 Emerson, Harrington, on Efficiency standards, 190; on Ef- ficiency tests, 268; on Stock- keeping, 334 Engineer and Manager, Commercial appraisal and technical judgment, 67-68 Era of the Administrator, Industrial expansion, 1-2; Com- plexities of business administra- tion, 2-3; Responsible policy needed, 34 ; Presumptive per- sonality, 4; Economic forces to dominate, 4-5; Present-day op- portunities, 5-6; Social trend of specialization, 67; Organizing ability and division of labor, 7- 8; Executive ability and leader- ship, 89 ; Administration im- plies successful conduct of af- fairs, 8-9; Scale of responsibil- ity varies, 9-11; Thought, basis of administration, 11-13 See also Factory Management and Office Management See also Organization of Adminis- tration Executive Ability, Definition of, 9; Subordination of Executive Ability continued responsibility, 26-32; Wise pol- icy in planning, 33-34; Func- tional planning, and efficiency, 107-09, 115 See also Planning See also What Management In- volves Executive Orders, and Collaboration, 24-25; Funda- mentals in organization, 25-26; Subordination of detail, 26-27; Classes of, and examples, 27-30; General and special, 28-29; Im- practical methods of control, 30- 31; Improvised administration, 31 Executive Supervision, Function in leadership, 33 ; Thoughtful reasoning more expe- dient, 33-34; Administrative lim- itations, . 34-35 ; Grades of au- thority, 35; Boundaries of au- thority, 35-36; System and the "Master's eye," 36-37; Ele- ment of surprise, 37-38; Inspec- tion and control, 38-39; Sympto- matic details, 39-40 Factory Management, Government practice and red tape, 101-02; Essentials of organiza- tion, 103-04; Organization types designated, 104-05; Staff and military methods, 104-06; Sher- win-Williams Company's staff and line control, 106-07; Duties of foreman, 10708; Functional foreman, a division of labor, 108; Planning department foremen, 109; Unsystematized plants in majority, 109-11; Systematized types, features of, 111-12; Cost records, and efficiency, 112-13; Work of committee system, 113- 14; Divisional and departmental problems, 114-17; Planning in advance, 117; Subordinating po- sitions, 118; Primitive form of management, 118-19 See also Planning Production The Factory See also Types of Management Factory Financial Department, Analysis of, as a unit of management, 94, 120, 122 Forms and Records, Cost records in factories, 11013; INDEX 353 Forms and Records continued Office records and departments, 121-22; Organization records, 14243 ; Factory planning meth- ods, 161-68; For office data, 179-80; Time standards and ef- ficiency, 219; Record systems aid employes, 275-76; Time-study formulas, 299-302 ; Dispatching and progress reports, 321-29; Requisitions and stock ledgers, 338-39, 346-48 Functional Type of Organization, In factory management, 10709; Specific office tasks, 130-32 Gantt, H. L., Production sheet rec- ords, 325, 327 Gilbreth, Frank B., Time study and wage systems, 233, 235 Gilbreth, L. M., on Planning, 169 Graphs and Statistics, Sources of in- formation, 285-95 Halsey, F. A., Halsey-Towne pre- mium system of wage rates, 232, 240-41 Hathaway, H. K., on Shipment dates, 156; on Stand- ard time in handling, 221 Human Engineering, Conserving the working force, 60-63 Industry, Types of business expansion, 1-2; Administrative problems of, 1-3; Rewards and penalties, 42-54; Organization factors, 103-04, 120; Staff and military types of management, 104-06, 113, 129- 30 ; Foremen ; old and new types, 107-09, 130; Unsystematized versus systematized plants, 109 13; Committee system, 113-14, 133-34; Special types, synopsis of, 114-17; Organization charts for scientific management, 132, 139-41 ; Planning department to promote output, 145-51; Plan- ning department of a factory, 152-70; Wage systems, 226-37; 239-46; Control of labor, prob- lems of education, 247-63; Graphic charts and statistics, 285-95; Inspection methods of Westinghouse Company, 29093, 296, 305; Analytic manufacture, Industry continued 310-11; Continuous manufacture, 311; Assembling manufacture, 311-12; Schedules and progress reports, 321-31; Avoiding power shortage and shutdowns, 331-33; Economics of shop and office, 351-59 See also Labor See also Organization of Adminis- tration See also Rewards and Penalties See also Standardization and La- bor See also What Management In- volves Instruction, and Science of management, 75- 81; Duties of cost clerk, 168; Factory performance, 170; St'and- ard times, 219-20 See also Education, Basis of Con- trol Invention, Applied to administrative problems, 6, 8 ; Specialization and science of management, 6881 ; Scientific methods of fixing wages, 232- 87, 239-46 Labor, Employment specialist and audit analysis, 46-47; Trade-union's in- fluence upon employes, 46-47, 52-53; Discharge and testimo- nials, 48; Factory turnover and waste, 49-51; Wage adjustment, and the unions, 52-53; Identity with capital and ' land, in man- agement, 57-60; Specialization in management, 6981; Organi- zation charts, 132, 139-41; Planning department increases output, 145-51; Planning de- partment, functions of, 15270; Standardization, and efficiency problems, 190 ; Wage systems and standards, 226-37, 239-46; Routing, to save time. 308-19; See also Control of Labor See also Factory Management See also Industry See also Standardization and La- bor "Limiting Dimensions," and Stand- ardization of parts, 199 Managerial Units, Corporate, staff and line organization, 86-94, 97-99 354 INDEX Manufacture, See Industry Materials and Stores, See Savings in Material Stock- keeping See Standardization Materials and Equipment Military Type of Organization, In factory management, 104, 105 OG ; Department heads control, 129-30 Modern Aids in Management Plan- ning, Policies, not details, 138; Adjust- ing authority to responsibility, 138-39, 141; Organization charts requisite, 13941; Records sup- plement charts, 142-44; Con- fusion thru lack of control, 144; Nonproductive labor, 145 ; Plan- ning and specialization, 14647; Planning department expenses, 146-48; Output increased by planning specialists, 147-48; Evolution of planning depart- ment, 148-51 Monetary Savings Due to Standard Materials, 194, 197, 198 Napoleon, Military principles the basis of administrative planning, 15-18, 24 National Metal Trades Association, and Industrial training schools, 254 Orders, See Executive Orders Organization, Types of industrial enterprise, 12, 5, 78 ; Planning and centralized control, 1420 ; Economic prob- lems and cooperative schemes, 2122; Subordination of author- ity divides responsibility, 25-27, 36; Military tactics and collabo- ration in planning, 2832; Spe- cialization makes complex, 68 71, 74-76, 79; Technical experts for, 91; Management types of control, 103-05; Military and staff control. 104, 105, 106, 129; Foremen specialists, 107-09, 130; Unsystematized plants in major- ity, 109-11; Committee systems, 113-14, 133-34; Divisional types of management, 114-17; Charts and records to define groups, 132, 139-44; Planning depart- ments, 142, 146-51; Planning Organization continued department of a factory, 152-70; Clerical work and functional con- trol of, 172-84; H. A. Hopf on office planning, 185-86; Time schedules and routing, 321-31 See also Organization of Adminis- tration Organization of Administration Principles and methods of manage- ment, 82-83; Determining eco- nomic units, 83-84; Industrial units, 84; Economics, industry and business, 85-86; Managerial units, 86-90; Manager's cabinet of experts, 90; Industrial prog- ress and expert organization, 90-91; Relation of experts to general manager, 92-94; Analy- sis of financial department, 94; Analysis of sales department, 94-95; Accounting department responsible for records, 95-96; Production department, 96 ; Chart necessary to an organiza- tion, 97 ; Corporate management duties, 98-99 See also Era of the Administrator See also Executive Orders See also Principles of Business Management See also Rewards and Penalties Pensions, and Permanency of employment, 281-82; Pennsylvania Railroad pioneer in establishing, 304 Performing Department, Planning in factories, 170 Personal Leadership, Napoleon exemplifies, 15-18; Col- laboration in planning, 19-20; Executive committee substituted for, 20; Three functions in, dis- cussed, 33 Planning, Need for preparation, 58 ; Admin- istrator 's importance in, 12; Military and business administra- tion analogous, 1419; Napoleon an exponent of, 15-18; Details adjusted, 16; Collaboration and centralized control, 17-19; Per- sonal leadership and modern methods, 19-20; Economic prob- lems, three classes of, 21-22; First function in leadership, 33- 34, 37, 39; Department foremen and work assigned, 107-09, 130; INDEX 355 Planning continued Advantages of, 117; Scientific wage systems, 23146; Routing methods, 307-19; Dispatching and routing, 321-29 See also Modern Aids in Manage- ment Planning See also Planning the Clerical Work See also Planning Production The Factory Planning Production The Factory, Clerks, and subdivisions, 152 ; Pro- duction clerk, coordinating duties of, 152-53, 154-55; Sales-delivery dates, 153-54; H. K. Hathaway on delivery of products, 156; Route clerk, 156-59, 163; Foun- dry clerk, 159-60; Balance-of- stores clerk, 160-62; Time-study clerk, 163; Instruction-card clerk, 163; Route-file clerk, 163- 64; Order-of-work clerk, 164-66; Recording clerk, 166; Cost clerk, 166-68; Timekeeper, 168; L. M. Gilbreth on planning, 169; Per- founing department, functions of, 170 See also Planning Planning the Clerical Work, Office systems reorganized, 172-73; Functional control in offices, 173- 74; Planning department, 174 75, 184-86; New policies involve new methods, 175-76; Keeping the organization in order, 176 78 ; Department records and standards, 178-84; Office manual for records, 179; Special data book, 179; Instruction cards, 179-80; Standardization of equip- ment, 181-82; Developing' bet- terment plans, 183; Welfare pol- icies, 184; H. A. Hopf on plan- ning, 185 See also Planning Porter, H. F. J., on Management, 97 Premium Systems, Scientific wage fixing, 229-37 See also Wage Systems Principles of Business Management, Essential elements of, 55; Energy a vital force, 56; Capital, labor and land the sources of manage- ment, 56-58; Manager directs forces, 58-60; Conserving the human product, 60-62; Mechan- ical invention and conservation of energy, 62-63; Purpose of en- terprise is profits, 63-64; Paying Principles continued dividends cuts future profits, 64- 65 See also Types of Management See also What Management Involves Prizes and Distinctions, Rewarding la- bor, 42-44 Production Department, Analysis of, as a unit, 96, 120 Profit versus Management, 63-65 Research, Savings in time effected by, 296- 306; J. I. Case Company's lab- oratory, 297-98 Responsibility, Scale of, proportionate to duties, 9- 11; Administrative planning, 14- 22; Division of, constitutes or- ganization, 25-32; First princi- ple of supervision, 35-36; Moral tests, 45; Difference between manager and engineer, 67; Spe- cialization complicates, 68-72, 76; Cooperation and science of management, 74-76 ; Functional foremen, 10709; Organization charts to define, 132, 138-42; Planning departments, 142, 146- 51 Rewards and Penalties, Fear and interest, motives to action, 42-43; Ruling by division, 42; Prizes and distinctions, 43-44; Associated interests, 44; Disci- pline and internal impulse, 44- 45; Moral responsibility, 45; Em- ploying labor, 46; Industrial au- diting, 46-48; Changed attitude toward employes, 48 ; Turnover wastes, and cases of, 49-51; Re- port of Committee on Employ- ment Plans, 51; Labor a rela- tionship, 51; Wage adjustment, and influence of trade-unions, 52- 53 ; Professor Carver ' on de- mocracy, 53-54 Routing, Time-saving methods, 307- 19 Ruling by Division, 42-43 Sales Department, Analysis of, as a unit, 94-95, 120 Savings in Material Stock-keeping, Expert storekeepers, 334; Stock- keeping rules, 335-36; Checking supplies, 336-37; Receipting for goods, 337; Requisition ays- INDEX Savings in Material continued terns, 338-39; Combination sys- tems, 340; J. L. Mott Company's tool-room system, 340-41; Single and double check system, 341 42; Storekeeper's responsibility, 34243 ; Storage, and two-bin system, 343-44; Classifying materials, 344-45; Stock ledger and inventory, 346-48; Expensive unit and service, 34849 Sayings in Time-Dispatching; Aux- iliary Appliances, Special dispatching, 321; Planning, and the route-board, 321-24; Progress reports, 325-28, 329; Routing office work, 328, 330; Clearing-house schedules, 330- 81; Organization saves time, 331; Substitute power equip- ment, 331-32; Maintenance, and shutdowns, 332-33 Savings in Time; Research and Rec- ords Value of research, 296; J. I. Case Company's laboratory, 297-98; Time-study methods by F. W. Taylor, 299-300; Formulas for time-study, 301-02; Educational aids, 303-04; Competitive meth- ods studied, 304-05 ; American firms supply information, 305-06; Consulting experts, 306 Savings in Time-Routing, Associated Press methods, 307-08; Essential factors in, 308; Plant layouts, 309-10, 315; Types of manufacture, 310-12; Storage and passageway, 312; Hugo Die- mer in "Factory Administra- tion," 312-13; Transportation facilities, 312-13; Allowing for business growth, 314; Building expansion and layouts, 314-16; Gravity utilization, 316-17; Time schedules, and classes of manu- facture, 317-19 Science of Management, Relation of manager to organiza- tion, 58-61; Industrial special- ization and reorganization, 67- 81; Experiment and analysis, 72 78; F. W. Taylor's experiments, 73, 77-78; Cooperation in fit- ting men into jobs, 74-75, 80- 81; Cooperation and instruc- tion, 75, 80-81; Theories in- volved, 76; Standards of ef- ficiency sought, 77-79; Corpo- rate, staff and line organization, Science of Management continued 86-96; Divisional control, 114- 17; Office standards, and bonus systems, 127-29; Organization charts and records, 132, 139 44; Balance-of-stores records, 160-62; Brandeis on standard routine work, 20910 ; Inspec- tion and research, 296-306 See also Organization of Adminis- tration See also Savings in Time See also What Management In- volves Sources of Administrative Informa- tionStatistics and Inspection, Use of statistics, 285; Graphs and statistics, 285-86; Graphic charts, 286-88; Time compari- sons and curves, 28788; Re- ports, time schedule for, 289; Inspection methods of Westing- house Company, 290-93; Quali- fied inspectors needed, 29394; Information from outside sources, 294; Inspection by percentage system, 295 Specialization, Organizing ability developed by, 7; Outcome of supervision, 35; Em- ployment expert, 46-48; Com- plicates management, 68; De- partment specialists, 69, 70, 71; Departmental grouping, and Fierce-Arrow Company, 70-71 ; Factory management and co- operation, 71-72, 74, 80-81; Administrative specialists, 88- 96; Staff and military manage- ment, 104-07, 129-30; Planning department a requisite, 145-51 Staff and Line Organization, Re- lation of experts to general man- ager, 92-94 Standardization, Efficiency tests by F. W. Taylor, 77-80; Office efficiency and bonus systems, 12729; Office func- tions and equipment, 178-82; Wage fixing, 226-37, 239-46 See also below Standardization and Labor, Machine versus hand labor, 213-14; Factors conditioning output, 214- 15; Processes unlimited, 215; Determining time standards, 216 19; Handling time, divisions of, 220-22; H. K. Hathaway gives data on handling time, 221; Material-handling time, 222-23; INDEX 357 Standardization and Labor continued Assembling time wasted, 223-24 Standardization and Rate-Fixing, \Vages determined by standard time, 226-27; Moral responsibil- ity of inspection, 227-29; Trade- union opposition, 229; Premium systems, methods of determining, 229-32, Employe as rate-fixer, 230 ; Employer as rate-fixer, 230-33; Wage systems in Eng- land, 230, 233-37; Halsey-Towne premium system, 232; F. W. Tay- lor and piece-rate system, 232, 235; S. E. Thompson in time- studies for wage payments, 233; Progress of management, 23335; F. B. Gilbreth and motion study, 233-35; Rate-fixing, English and American practice, 23537 Standardization Materials and Equip- ment, Correct standards basis for judg- ment, 188; Management prob- lems, 188-89; Determining ef- ficiency, and Carnegie Steel Com- pany, 189 ; Harrington Emerson, on "Twelve Principles of Ef- ficiency," 190, 192; Labor ef- ficiency, 190 ; Improving stand- ards, 191; Adopting efficiency standards, 191-92; Standard .materials, 192-93; Standard quantities, 193; Commission on Standardization effects savings, 194; Office material and draw, ings, 194-95; Machinery and re- pair parts, 196; Delivery systems, 197; C. U. Carpenter on inter- changeable parts, 197-98; Engi- neering Standards Committee find- ings, 198; Joseph Whitmore on interchangeable parts, 198; "Limiting dimensions" system, 199 Standardization; Symbols and Boa- tine, Symbol systems standards of mea- sure, 201-02; Mnemonic systems valuable, 202-04; Derby Desk Company system, 203-05, 206- 07; Symbols for manufactur- ing, 205-06; Newer methods of grouping, 207; Time-study and experience, 207-08; Establishing routine, 209; Brandeis on "Sci- entific Management," 20910; Technical societies promote uni- formity methods, 210; Records and manuals of routine, 210-12 Standards of Efficiency, Records and bonus systems, 12729, 143; L. M. Gilbreth on planning, 169; H. A. Hopf on office or- ganization, 185-86; Standard times and output, 213-25 Supervision, Responsibility of the administra- tor, 5-13; Centralized control and collaboration in planning, 17- 20; Division of control, 26-32 See also Executive Supervision See also What Management In- volves Symbols and Routine, See Standard- ization; Symbols and Routine Taylor, F. W., On Science of investigation, 73, 77- 78 ; Piece-rate system of wage rates, 229, 232, 241-42, 243; Methods of selecting employes, 247-48; Determination of work and rest periods, 269; Factors in- fluence wages, 273; Time-study methods, 299-300 Thompson, S. E., Time studies fix wage rates, 233; Time-study implements, 300-01 Trade-Unions, Selection and turnover of em- ployes, 46-47; Wage adjust- ment, 52; Relations involved, and growing influence, 53; Rate-fix- ing opposed by, 229, 231 Types of Management The Office Function of the office, 120-22; Ele- ments of management applied, 122-24; Duties of office head, 124-25; Selection and handling of employes, 125-27; Welfare movement, 127; Standards, and bonus systems, 127-29; Military type of organization, 12930; Functional type of organization, 130-32; Committee system, 133- 34; Suggestion system, 134; Ar- rangement and lighting of of- fice, 135-37 Wage Systems, Rewards and distinctions, 43 ; In- dustrial counselors, 4647; Ad- justment problems and the unions, 5153 ; Cost records, and scientific management, 112; Planning production, 147-48; Standard time records, 224; Day INDEX Wage Systems continued and piecework plans, 239; Pre- mium plan, 240 ; Halsey time plan, 240-41; Taylor differen- tial system, 241-43; Efficiency plan of bonus payments, 242- 43 ; Emerson and Taylor plans compared, 243; Fundamental rates compared, 244^, Time- study and premiums," relation between, 245 ; Simple bonus plan, 24546; Efficiency, and wages proportionate to, 246 See also Standardization and Rate Fixing Welfare. Conserving human energy, 61-62, 266-69, 276-78; Policies for, in factory and office, 127, 184; and Educational control, 25363; Pension funds, 281-82, 304 Westinghouse Electric and Manufac- turing Company, Inspection Westinghouse Co. continued methods of, 290-93, 296,. 305 What Management Involves, Manager and engineer, difference in abilities, 67; Managers over- taxed by specialization, 68; Specialization in management, 69; Departmental grouping, 70-71 ; Cooperation complements special- ization, 7172; Scientific inves- tigation of men and matter, 72 74; Continual study and prog- ress, 74-76; Instructors for workers, 75, 80-81; Science of management, what it involves, 76; F. W. Taylor, and science of shoveling, 77-80, 215; Reor- ganization for new standards, 79 Whitmore, Joseph, on "Uniform Sys- tem of Screw Thread," 198 Woolley, E. M., on Stock ledgers, 346, 348 UNIVERSITY OF CALIFORNIA LIBRARY Los Angeles This book is DU.E on the last date stamped below. Form L9-32m-8,'58(5876s4)444 000506082 7 TS 155 G13f