/^ // v^.. Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/buyingbrainsfactOOsteirich BUYING BRAINS BUYING BRAINS FACTS REGARDING THE ESTABLISHING OF BETTER BUSINESS RELATIONS BETWEEN EMPLOYERS AND EMPLOYEES BY LEON STEIN ^ * • • • » » » >>,». »». »- » NEW YORK AUTHORS PRESS 1918 Copyright, 1918 BY LEON STEIN « c e • •» « c • •* • v^- HroocJU PREFACE The purpose of this book is to establish more friendly relations between the em- ployer and the employee, making work more profitable and pleasant for both. This may be accomplished by conduct- ing business on a scientific basis, eHmi- nating waste, encouraging proper de- velopment of employees and giving a fair deal for mutual benefit. Leon Stein ' > ; i! CONTENTS CHAPTER PAGE I. Scientific Management ... n The Growing Conflict — Produces Individuality — Planning the Work — Reward for Co-operation — The Capacity Becomes Known — The Taylor System — Scientific Calculations— Influencing the Employees — The Gantt Method — Increased Profits — Introduction of Scientific Management — Success of Scientific Management — Possibilities of Scientific Manage- ment — The Confusing of Science and System — Scien- tific Distribution — Scientific Advertising — Scientific Results — Avoidance of Dull Periods — Environment — An Understanding of Men — Testimony before Indus- trial Commission — Mr. Frederick W. Taylor. II. Service 36 Service Rendered by Bankers — Public Service — Service First — Confidence Established — Truth in Business — Honesty is the Best Policy — Good Will of a Business — Your Service Affects Others — Intelligent Service — The Connecting Links — A Permanent Foun- dation — Impression — Indifferent Service — Discon- tented Employers. A III. Employment 49 Hiring — Selection of a New Employee — ^The Em- ployment Manager — Must Please Both Parties — Spreading the "Good Feeling" Spirit — Filling Vacan- cies — Opportunity — Scientific Employment — Proper Fitness — Analyzing the Salesman — The Normal Indi- vidual— -"The Right Man in the Right Place"— Cita- tion of Cases— On the ''Right Road"— Tact and Talent— Other Methods— Health and Habit— Desir- able Applicants — Your Competitor — Policy — Obtain- ing Help — Agencies versus Advertising — Proper Attitude — Application Blanks — Bonding — Discharge — ^Transfers — Irregular Employment — Employment Manager's Test. 7 '8' ■'■ ■' ■•■•' •••' '; : ..; /-'GONTENTS << IV. Instructions / Training Employees — Proper Instructions — What Others are Doing— The Old Method— The Scientific Method — Planning — Accomplishing Results — A Sug- gestion — Thirty Per Cent Increase — Other Policies — A Side Light — Necessary Instructions — The Smaller Shops — The Salesmen — The Sales Man- ager — Generalities. 71 83 O V. Development The Start — Promotion — Study of Help — Encour- agement — Latent Powers — High Standards and Ideals — The Understudy — Bethlehem Steel Corpora- tion — ^Outside Help — Helping Employees to Help Themselves — "Live Wires" and Contests — Opportun- ity for Development — Post-Education — How Others Help Employees — Discipline — Fairness — Imposing Fines — Loyalty — Worthy Employees — The Law of Compensation — Interested in Their Work — Obtaining Maximum Results — The Giving of Suggestions — Generalities. VI . Compensation 104 Comparison — Personal Equation — Exertion and Results — Former Practice — Rewarding Conscientious Effort— If They Are Worth More to Others, They are Probably Worth More to You — The Weak and Inefficient — Capital and Labor — The Wage Problem — The Keeping of Records — 'Arousing Interest — Finan- cial Loss — Some Need Watching — "Fair Play" — — Improvement — Rewards — Various Plans — The Piece-Rate Plan — The Commission Plan — The Retail Plan — The Salary and Bonus Plan — The Scientific Plan — The Gantt Compensation Plan — The Gantt Idea Transplanted — Pay Day — The Purchase Power — The Minimum Wage — The Consumer to Bear the Burden — The Orphan — The Women — The High Cost of Living — Reduction of Wage — Workmen's Com- pensation — Liability — Various States — Other Insur- ance — Employers Awakened. VII. Profit-Sharing ....... 125 The Give and Take Principle — Not Philanthropic- Giving Just Rewards — Loyalty the Return — Sharing a Small Percentage — A Comparison — Formulation of CONTENTS Individual Plans— Not Charity— The Plans— Profit- Sharing "Ford"— The Test— Qualifications— Results — Dennison Manufacturing Company — Facts and Figures — Common Stock for Employees — Some Realty Firms — Capital and Labor — A Boston Con- cern — The National Biscuit Company — The Lowney Chocolate Company — Mr. Nelson — Profit-Sharing Still in Its Infancy — The Small Concern — Its Ad- vantage to a Small Concern — The Ambitious Em- ployee — Wasteful Competition — The Cause — Initia- tive Will Find Its Way — Logic — Pension Funds — Fixed Percentage — The Most Successful Method — Part Cash, Part Stock — Another Plan — Resume. VIII. Welfare 140 Radical Criticism — Personal Equation — An Indi- rect Benefit — Cleveland Chamber of Commerce — Isolated Factories — Company Stores Unfair — Bureau f/ of Labor Statistics — Safety of Employees — Committee of " Safety First" — Safeguards — Suggestion Box — Yearly Accidents — Hours of Labor — Maryland Sta- tistics — Book of Rules on Health — Ventilation — Tem- perature — Comforts of Employees — The Sick Room — Ideal Conditions — Comfort Stations — Dressing Rooms and Lockers — Lunch Rooms and Restaurants — Libraries and Reading Rooms — Education — Ath- letic and Social Clubs — Picnics and Outings — Vaca- tions — Savings Banks — Benefit Funds — An Inven- tory. /^IX. Unions i5o The Typographical Union — Relief of Its Mem- bers — No Evil Impression — Others Organize — De- structive Methods — How to Eliminate the Unions — Credit Due the Unions — What the Public Demands — The Fair and Square Deal — Both at a Loss — Arbi- tration — The Influence of Public Sentiment — The State Board — Strikes and Lockouts — An Action at Law — Signing the Application — Expert Assistants — The National Arbitration Board — Control of the Situation — Acts of Violence — A Noteworthy Case — A Weakened Attitude — Philanthropy — Getting in Close Touch with Employees — Working Hand in Hand — Improving the Standards — Some Objections — Opinions of Efficiency Engineers — Solution of the Problem — Granting Demands — Paid According to Time — Co-operation of Unions — Increasing Recog- nition. lo CONTENTS X. Co-operation i8i Pulling Together — Modern Ideas — Combined Efforts — Accomplishing Results — Profitable Mutual Advantage — Special Advantages — The Associated Advertising Clubs of the World — The True Value of Co-operation — Of Value to All Concerns — Service Departments — Retailers' Co-operation — Merchants' Co-operation — Co-operative Societies — Co-operation with Employees — Officers — An Individual Board of Trade — Loyalty and Fair Treatment — Negligence — A Stimulus Needed — Success Through Co-operation. XI. Elimination of Waste 200 Profits Derived from Waste— The "World War," the Greatest of Wastes — American Waste — Very- Few Succeed — 76 Reasons Why Merchants Fail — Waste of Time — Value of Time — Efficient Methods — Unsystematic Methods — Irregular Employment — Avoidance of Waste of Space — Analysis — Wasteful Buying — Conservatism — The Dangers of Subsidizing — Diagnosis — Economy — Comparisons — Wasted Op- portunities. XII. Buying Brains . . . . . . . 217 Consulting the Physician — The Counselor of Busi- ness — The Need of a Thinking Machine — Where the Scientific Man Shines — Confidence Begets Confi- dence — In the Limelight — Retrogression — If You Consider Your Prestige Worth Anything, Buy Brains — Records of Costs are Necessary — Carelessness in Credits — Generalities — Things You Should and Should Not Do. BUYING BRAINS CHAPTER I SCIENTIFIC MANAGEMENT SCIENTIFIC management, under the leadership of Mr. Frederick W. Taylor, has revolutionized the steel business and it has been successfully tried in many other important industries. While Mr. Taylor and his associates, during the past thirty years, have inaugurated his system in large concerns, it was not until recently understood by many individuals. Scientific management has long since passed the theoretical stage. Wherever it has been intelligently introduced, the results have been beneficial to both employer and employee. Scientific management has been well described in books by Mr. Frederick W. Taylor, Mr. H. L. Gantt, Mr. Harrington Emerson, and other distinguished writers. Many of their illustrations relate actual ex- periences and accomplishments in the large mills, fac- tories and railroads with which they have been con- nected. It has helped to elevate commercial standards to such an extent that several prominent writers, in discussing scientific management, have referred to ^'business as a profession." In the past, it has been the ambition of some of our most successful men to have their children learn a profession. In the future, it is hoped they will induce 11 12 BUYING BRAINS them to study scientific and modern business manage- ment so that they may improve the commercial foun- dations which have already meant years of effort, practice and self-sacrifice. Scientific management is regarded as a typical American movement, as indeed it is a universal neces- sity. Many European concerns have sent their best engin- eers to his Continent to study and investigate our methods of scientific management. The large capitalization of our industries and the steadily increasing population make it necessary that we supply a large portion of our own wants, as well as obtain a liberal share of foreign trade. The Ameri- can wage is so much higher than the scale in other countries, that, while our industries are protected to some extent at home, they are at a disadvantage when they seek trade elsewhere. To overcome the differ- ences in wages, the output per man per diem must be increased and the production cost reduced. This is exactly what scientific management has ac- complished — a lower production cost and a higher wage scale. By creating additional markets for Ameri- can products, it improves our trade balance and de- stroys the foremost argument of opponents of scientific management, that workmen will be thrown out of employment if the capacity of the individual is increased. While the recorded figures from the large indus- tries that have installed scientific management were naturally most startling, proportionate results have been discovered in smaller establishments. If only the larger concerns adopted the modern methods, they SCIENTIFIC MANAGEMENT 13 would continue to outgrow the smaller ones, and com- pel them to meet unfavorable markets and competition. The smaller employer coming in contact with his employees daily, has a personal influence which would make it comparatively easy to readjust working con- ditions to a more scientific basis. Scientific management analyzes what is to be done and carefully indicates the best way to do it; then helps to select the right man for the right place, and shows him the scientific method of performing the task. Every possible assistance is extended to him to simpHfy his work, to make it pleasant, and have him obtain maximum results with the minimum expenditure of energy. Scientific management thinks for and of the workman. The Growing Conflict. — There has been a growing conflict between the employer and employee. Scientific managment recognizes that the employer and the employee have a mutual interest at heart, and in order to lower the cost of production and increase wages, it is necessary that both accept working con- ditions that are equitable ; each to receive a fair return for his share in increasing the efficiency of an organ- ization. The employer must provide the proper as- sistance and pay a fair wage ; the employee must give his best efforts to the employer. In the past, both employer and employee considered only their individ- ual welfare, and each failed to recognize the harmoni- ous side and the rights of the other. In every struggle, whether commercial or otherwise, there must be leaders and there must be men; to win success, all must work together. The men must be loyal to the leaders, who in turn must be fair to the 14 BUYING BRAINS men. The employee is dependent upon the employer for his livelihood; the employer is dependent upon the employee for his profits. If the employee is dis- satisfied, he may change his employment and the em- ployer may change his employees if he so elects, but these changes will not alter the results unless the con- ditions are changed — by making the men satisfied, they in turn will appreciate the principle of fairness. Produces Individuality. — Scientific management encourages better work; it shows the workman the best method of performing his task and rewards him for his efforts. He is not judged by a few moments of observation or a prejudiced opinion; nor is he grouped with a number of workmen and paid an , average wage for the efficient and the inefficient. His ability is measured, recorded and paid for, according to definite results. Scientific management produces an individuality and raises the standard of men, workmen are not afraid of doing more than others receiving the same pay, and they are thus encouraged to do their maxi- mum and are proud of their achievements. There are employees who are excellent thinkers but poor work- ers, while others who do not think properly are ex- ceptional workmen. Scientific management separates the two classes, giving each an opportunity to bring his best qualities into play. Planning the Work. — Each factory has its plan- ners who study the work to be done and experiment 1 until they finally arrive at the best method of per- J forming the operation. An able workman is selected/ and tests made as to the time required by the average/ workman to complete a particular operation. The SCIENTIFIC MANAGEMENT 15 work is planned ahead, the material necessary is care- fully calculated and ordered for a definite delivery. In this manner the employer is enabled to accurately estimate the cost of the finished product, and the time that should be allotted for the completion of the work. It is a matter of calculation and there is no necessity for guess work. The workman does not accept antiquated instruc- tions from the foreman or other workmen, but before beginning a task, is given the benefit of the experi- ments and tests previously made. He is shown the standard way of performing the task, thus eliminating incorrect and needless motions. A workman does not waste his time and energy worrying over his inability but concentrates his entire attention and efforts to the carrying out of the in- structions given him. A workman is not expected to be an expert machinist nor supposed to do eflficient work with machines in poor condition. The machines are regularly inspected and kept in proper condition by machinists employed for that purpose. While the planners are employed to do the thinking for the workmen, the planners should not be arbitrary but must tactfully receive and test the suggestions made by men who are performing the work. Under customary management, the foreman is asked how long it would be required for a given task, and he makes a conservative guess; under scientific man- agement he is told the time allotted for the work. Un- der customary management, the foreman has a varied list of duties, some of which he is incapable of doing; under scientific management his work is simplified and carefully outlined for him. i6 BUYING BRAINS Men are not all equal, mentally or physically, and the responsibility of misplacing men is upon the man- agement; therefore the inefficient should be assisted in the performance of a task. On the other hand, if a man proves he is capable of doing better and more profitable work, an opportunity should be given him, thus not only satisfying the individual but stimulating others who are ambitious to improve and advance. The planners who stipulate an impossible task, or one which causes overwork or strain, do a great in- justice to employers and employees alike. Scientific management teaches fairness — an unfair planner or instructor has no right to be associated with it. Reward for Co-operation. — The compensation should be liberal, for workmen who co-operate with the management and are successful in performing their tasks. The saving effected by the elimination of waste should be divided. Workmen should not be expected to increase their capacity without receiving additional reward. Unscrupulous employers who expect to be the only beneficiaries, will discover that the workmen will be- come dissatisfied and will furthermore discourage more worthy employers from introducing scientific management. Under certain systems, some men are capable of do- ing more and better work than others, but scientific management enables all men to achieve greater results and the efficient man is encouraged to do his maximum amount of work. The inefficient workman receives great assistance as he has others to direct him intelli- gently and is relieved of his chief handicap. When SCIENTIFIC MANAGEMENT 17 each employee is endeavoring to give his best efforts, the capabiHty of a workman is increased and his possi- bihties are soon discovered. In this manner, men are selected for higher positions and the steady advance- ment has a tendency to make them maintain better habits and become more interested in their work. In- deed this principle becomes an important factor. The Capacity Becomes Known. — Most men, both employers and employees, are able to increase their energy and ability. Scientific management furnishes 1 the necessary assistance, incentive and co-operation, i The average person does not realize what he is capable / of doing, but is contented if he succeeds in matching the results of others. This is demonstrated when, if an unusually good workman is employed the increase of speed of the entire force in a department will be noticed. In customary management, there is too much in- decision ; everyone appears to be undecided as to how the work should be done, the time required, etc. Un- der scientific management, the work is arranged ahead, the plans are definite, and each employee has an indi- vidual task to perform. Each man's task consists of what he is capable of doing. Assistance is extended, and he knows what his reward will be if he succeeds. The workman has no opportunity to deceive the fore- man or the employer, his results are tabulated and recorded ; the planners know what similar work should cost and the time required for producing it. The Taylor System. — Under the Taylor System, in addition to the planners, instructors and foremen, there is the gang boss, the speed boss, the inspector, route clerk, time and cost clerk, who are necessary to i8 BUYING BRAINS properly conduct scientific management in a large shop on an elaborate scale. In smaller shops the expense of having too much non-productive labor would make it advisable to combine some duties, as the overhead charges would be in proportion to the capacity of the plant. In many instances, under scientific management, workmen have been able to more than double their output, therefore the expense of the planning depart- ment is a comparatively small item, when you consider the production cost is lowered, in addition to which there are the benefits derived by the employer and the employee. By teaching each man the proper method of per- forming a task, the product is also standardized and the quality and finish of the article will not vary. Un- der customary management, mistakes and misunder- standings constantly arise ; the responsibility is shifted from shoulder to shoulder, employees become angry with each other and results are unsatisfactory. Scientific management avoids many of these mis- takes and misunderstandings, specifies the duties of each man who usually measures up to his own responsi- bility. Scientific Calculations. — In the matter of con- tracts, scientific management is helpful to employers. Bids are not made ridiculously high, nor too low, the contracts are not awarded to concerns who will do the work without profit, or who find it impossible to meet their obligations. Contracts are based on past records and calculations are made intelligently. It is not unusual to have sales- men or even employers quote prices in various quan- SCIENTIFIC MANAGEMENT 19 titles, but who when questioned regarding delivery are unable to give a satisfactory answer. Under scientific management there is not only a cost system, but a time system and the date of delivery can be calculated with as much accuracy as the cost of the product. To merely determine a task which calls for an increase of effort, greater results cannot be calcu- lated without considering the source of the supply. Influencing the Employees. — Scientific manage- ment requires a readjustment of the compensation, which is the essential factor in influencing the employee to furnish the needed co-operation. If the compensa- tion is fair, the human mind which controls the muscles is satisfied and the maximum ability of the employee is thus obtained. Compensation means more to an employee than profits to an employer as it determines for the em- ployee how large a room he can afford to occupy, the quality of food he can purchase, the clothes he may wear and the recreation he can enjoy. Increased compensation means greater comfort, bet- ter nourishment, a satisfied appearance and develop- ment of the mind. Fair wages make employees enjoy their work and become interested in it, and it also has a tendency to stimulate the brain and quicken the muscle. Under scientific management employees receive higher wages because the able and ambitious types are attracted, and those who desire to be paid for work which they do not produce are driven away and greater profits are thus derived. Employees are naturally influenced by the attitude and speed of the men who surround them. It is quite 20 BUYING BRAINS simple to place a workman in a scientific shop, show him the correct method of performing a task and have him equal the performance of others. The Gantt Method. — Under scientific management, there have been various methods of compensation in- troduced, but the one most approved of is that sug- gested by Mr. H. L. Gantt. Each employee is paid a stated amount per diem, which should be the current rate for similar work, and if the specified task is com- pleted an extra bonus is given. The task should not be an impossible one, nor one that causes a strain, and if proper assistance is given under favorable condi- tions, workmen cultivate a habit of working at a regu- lated speed without undue exertion. Foremen and instructors who are instrumental in helping the workmen attain the desired results should also be proportionately remunerated so that they will render assistance where it is most needed. Increased Profits. — The increased capacity of the individual is but one of the many advantages that scientific management offers, eliminating, as it does, errors of omission and commission. The overhead ex- penses, cost of supervision, rental, heat, light and many other items are decreased. By increasing the output of a plant, the surplus pro- duction can change a loss into a profit, or may even double the profit. A firm selling approximately $200,000 annually^ making a comparatively small profit, was compelled to stop taking orders before the end of each season. By increasing its output 25 per cent, without requiring additional space or employees it earned nearly three times its former net profits. A concern must do a cer-. SCIENTIFIC MANAGEMENT 21 tain volume of business before the current expenses can be paid. If the capacity of the plant does not permit this, it is impossible to earn a profit ; if the pro- duction is increased and the overhead expenses de- creased, profits are made possible. Introduction of Scientific Management. — The in- troduction of scientific management into an industry requires tact, judgment and common sense. In several instances the introduction, of scientific management has failed, simply because the management would not give it a fair test. Many persons are sceptical of new ideas, especially when originating from one whom they consider antagonistic, and it is perfectly natural that when scientific management is suggested by an em- ployer, the employee regards it as a selfish advantage for the employer. All the members of a firm, or the directors of a corporation, must be thoroughly in harmony with the spirit of the movement. Do not expect to convince them of its benefits during the introduction. As you progress, their support and co-operation is needed in making it a success. After establishing harmony among the men who furnish the finances, scientific management should be explained to the heads of the various departments, and they should be shown the advantages it offers both workmen and employers. If you have been unfair to the employees during the past and intend to introduce scientific management with a spirit of fairness, inform them frankly of the changed attitude you contemplate in the future. The department heads are your representatives. You speak through them. If they believe in scientific management and have faith in your promises, they 22 BUYING BRAINS should be able to secure the co-operation of the em- ployees in their departments. In introducing scientific management, some em- iployers have considered it as a plan to be attended to in the spare moments, while others have done the re- verse, and tried to rush matters, thinking it advisable to ''press the button" and have it simultaneously start in every department. Select the department that will be most helped and i the results cannot be disputed by the most sceptical. I The employee who co-operates should receive a liberal I reward. The facts will shortly become known ' throughout the establishment and its introduction will be welcomed in other departments. In this manner you are not arbitrarily forcing upon them a condition that they do not want, but are grant- ing improved opportunities and increased earnings which they deserve. You cannot expect to obtain the maximum results at once; it will require some time before you win the men from taking their time and loafing periodically, to working steadily and at a greater speed. There is a decided advantage in having scientific management introduced by one who thoroughly under- stands its fundamental laws and principles, and one who has had no previous connection with the establish- 1 ment. He has made no enemies who will interfere with him, nor has he made previous errors that will make it difficult to suggest ideas that are directly op- posite to what he may have favored during the past. Those introducing scientific management, including the planners and instructors, should exercise the ut- most tact, and no attempt should be made to belittle or SCIENTIFIC MANAGEMENT 23 ridicule others for past performances, as one dislikes being reminded of inferior methods that he has prac- ticed daily for many years. A careful analysis should be made of any contem- plated change, thus affording no opportunity to the opposition or to the sceptic who will enlarge on any shortcomings. In making a time study, it is preferable to do so without standing near the men with a watch ; some men do not object to having their work timed and recorded but are opposed to a watchman counting every move- ment they make. Some employees imagine the entire saving should belong to them. It should be explained that the ex- pense of the planning department must be paid and that a portion of the saving effected belongs to the employers who furnish the capital that makes scientific management possible. If the introduction is conducted intelligently and the rewards are fair, the workmen will recognize its ad- vantages and will feel grateful and loyal to those who are responsible for it. Scientific management will not appeal to the "know- -it-alls," or to employers who are willing to follow the ilead of their competitors, but it will be introduced by progressive men with imagination who desire to ren- der greater service to their patrons, to improve the conditions of the employees and at the same time seek larger financial returns for themselves. Hon. Thomas Mott Osborne, retired manufacturer, formerly warden at Sing Sing prison, in an address at Chautauqua stated that "he was endeavoring to teach efficiency to the prisoners; he was determined 24 BUYING BRAINS that each man should be an efficient worker when he left the prison, no matter what work was undertaken, — even if 'cracking safes,' he should be able to do it efficiently." If prisoners, who include the lowest types of men, can be taught efficiency, it should be compara- tively easy to instruct the normal workmen who will receive equal benefits by its practice. Success of Scientific Management. — Scientific management has been tried successfully in most of the important industries of this country, which proves con- clusively that its principles are correct, that the em- ployers and employees throughout the country in the various occupations are very much alike, and that op- portunities for improvement of conditions exist if the employers will only take the initiative. Scientific management is now being conducted in some of the leading concerns in the following in- dustries : Agricultural implements, automobiles, building con- struction, book binding, brewing, beet sugar, boxes, buttons, bleaching and dyeing, cottons, clothing, cord- age, carriage and wagon building, electrical machinery, firearms, flour, food products, furniture, glass, hard- ware, lumber, locomotives, metal working, machine tools, printing, pianos, paper, pumps, rubber goods, sewing machines, shoes, soaps, steel, textiles, tin cans, tanks, typewriters, velvets and woolens, etc. Most persons connect scientific management with manufacturing because that branch of trade has been mainly helped by the advice, influence and assistance of the pioneers of the movement. It is fortunate for the steel, as well as other indus- tries, that Mr. Frederick W. Taylor devoted his life 1 SCIENTIFIC MANAGEMENT 25 to manufacturing, but the fundamental principles of scientific management have also been successfully ap- plied to distribution, retailing and managing an office. Possibilities of Scientific Management. — There are even greater opportunities and possibilities in dis- tribution than in manufacturing, to establish a better understanding and relationship between the employers and the employees. The workmen in the factories are largely organized, and they have demanded and obtained many conces- sions; they have had strikes, discussed their views publicly and many of their differences have been settled to the satisfaction of both parties. In distribution, the disputes remain unsettled and instead of settling their grievances, the employees spend a large portion of their time criticising their employers. While the organized employees conduct their strikes, thus causing temporary idleness, the others retaliate by limiting the quantity and quality of service they de- liver to the employer. If you would make a careful analysis of what the average employee accomplishes during a day and compare it with what he is capable of doing, the discrepancy totals a most pitiful loss. It may surprise you to know that the average em- ployee is only sixty per cent, efficient. Every business furnishes an opportunity to offer the proper incentive to employees to increase their energy and achieve better results. Any activity can be di- vided into its elements ; the work of an individual can be measured and compared and he should be equitably rewarded. There is a simple and correct method for the per- 26 BUYING BRAINS iformance of any task and the employee should be in- structed before attempting the problem. Every opera- tion should be carefully planned in advance, the under- taking should be analyzed, the calculations based on previous records and experimenting should be done before the task is assigned. The Confusing of Science and System. — Scien- tific management is often confused with systematic management. The scientific man should be systematic but the systematic is not always scientific. The one produces a saving of time and energy by discovering the simplest way of performing a task while the other often does quite the reverse by inaugurating too much system. There are many systems introduced that are not maintained for a long period, in fact a great many sys- tems are started which are stopped before they are completely installed. There is not sufficient thought or planning; therefore, before a new system is added, it should be scientifically analyzed to determine its fit- ness for the purpose intended. Its advantages and disadvantages must be considered, the time and energy saved and required, whether it will help to give better service or retard it. Scientific Distribution. — If a manufacturer effects a saving through scientific management in production and wastes an equal amount in distribution, he has not gained any advantage over a competitor doing the re- verse. Too great an expense in marketing a product and the neglect of too many opportunities for finding suitable outlets is a severe handicap. Before manu-. facturing an article you must be certain that there will be a demand for it and you must plan to supply the i \ SCIENTIFIC MANAGEMENT 27 demand without too large an expenditure. Of all the articles patented, there are less than five per cent, that are successfully manufactured and distributed. Manufacturers in some instances sell to jobbers when they should dispose of their product direct to the retailer; in other instances they attempt to save the jobbers' profits, when they are the ones to handle the product. Too frequently an attempt is made to sell both the jobber and retailer without affording the job- bers protection and giving them the assistance which they are entitled to receive. Before a campaign is started, plans should be care- fully analyzed and, after beginning, it should be scien- / tifically managed. There is too much action with too / little thought; often men act first and think after- / wards. The thinking should precede, not follow. The I checker player before making a move will consider the 1 effect of such a move. It is the same in business, you \ should not rush forward without calculating the pos- j sibilities and results of the next move. Executives often permit men not qualified to do the thinking, then abuse them for their mistakes. It is far better to advise them before the errors are committed. After a public calamity the people are aroused, new laws are quickly enacted to prevent a repetition ; but if our legislators studied the condition in advance scien- tifically, the calamity could have been avoided. . The sooner we realize there is a reason for every- V thing — both success and failure — there will be more \ successes and fewer failures. In selecting men to aid you in the distribution, their ability and experience must be taken into consideration and you should be certain that each man is fitted for his particular work. 28 BUYING BRAINS After he is selected, everything possible should be done to make his work simple, pleasant and successful. Sat- isfaction with one's labor proves mutually profitable. Men are promoted from one position to another because they have "made good," and when others are \ appointed to occupy their former positions they should I receive the advice and suggestions from those who I have been successful. An employee frequently fails / because he has had a bad start ; his beginning is marked f with disappointments which are the result of theoreti- cal practices. A solicitor for magazines made three small fortunes in obtaining subscriptions; each time he lost it in un- dertakings he did not understand or study before in- vesting his money. His last experience in soliciting was terminated by winning the first prize in a contest with hundreds of solicitors competing; he was re- quested to address the others, telling them how he suc- ceeded and the entire organization was helped by his knowledge and experience. In the meantime, hundreds of solicitors had become discouraged who would have succeeded if they had begun with the assistance they needed and deserved. It is the same in the distribution of any commodity; too many endeavors to distribute a product not under- stood, without assistance and knowledge that should first be given. Scientific Advertising. — In advertising a product, the campaign should be carefully planned, an appro- priation made and a definite programme followed ; there are many merchants who take "fliers," and nat- urally do not "land" safely. Do not condemn a paper, or a magazine for unsatisfactory results, your copy SCIENTIFIC MANAGEMENT 29 may not appeal, or probably you have selected the wrong medium for exploiting your product. Keying an advertisement determines the results, also the waste ; the latter may be so large that you will be compelled to discontinue a campaign that had large possibilities. Before employing a clerk or extending credit, you make inquiries; if the same principle were followed before making advertising contracts, unworthy me- diums would soon be eliminated as well as those that charge exorbitant rates for exaggerated circulations. Scientific Results. — Scientific management should not end with manufacturing and distribution, it should be accepted and practiced by the retailer, the owner of the large department store, or the little store around the corner. The number of recent failures among department stores makes us question whether they had been con- ducted scientifically or not. It is a generally conceded fact that only five per cent of the men who start in business for themselves actually succeed. Why so small a percentage? They probably lack one or more of the essentials necessary to success : finances, credit, knowledge of their business, ability, health, enthusiasm, attention and concentration, fairness of mind, sound judgment, common sense. Commune with yourself and try to pass the exam- ination in each of these essentials; be honest with yourself, endeavor to ascertain your weakness, and do everything possible to improve your negative qualities and there will be less chance of failure. If you contemplate becoming an employer, you should decide whether there is a deficiency in any direc- 30 BUYING BRAINS tion that would make success impossible. In selecting a location, you should not form a conclusion from a few moments' observation by watching the crowd pass on a busy day, or by guess work ; you should study the surrounding stores and observe the class of patrons visiting them and accurately estimate the number of possible customers passing the location during a defi- nite and extended period. Too much thought cannot be given to purchasing — you must be fairly conservative — remembering the class of patrons to whom you are catering. Most buyers do not realize that they personally cannot con- sume every article purchased. Retailers who visit the wholesale markets often do so without plans or definite calculations and the consequence is that they purchase too large a quantity of certain articles while in other instances they are too conservative. The improved methods of accountancy are helpful in scientific management as they enable one to accu- rately compare the results of the various departments for the different periods. By comparing sales, costs, profits, expenses, purchases, etc., the progress and weakness of your business can be discovered. Do not attempt to deceive or excuse yourself on account of bad luck or imaginary conditions; analyze your shortcomings, search for reasons, and the results will indicate an opportunity for improvement. Avoidance of Dull Periods. — One of the most im- portant problems for scientific management to remedy is to balance the business of a year, to avoid the ex- cessive rushes with dull periods that usually follow. There is nothing that so disorganizes a force as to dismiss a portion of the employees shortly after they SCIENTIFIC MANAGEMENT 31 have labored to a point of exhaustion. In the rush season, you are compelled to employ additional help, who are informed by the other employees that the employment is only temporary, and naturally, they become indifferent and disinterested in the welfare of the establishment. In the dull season you discharge employees with experience who cannot be replaced without considerable expense. The department stores have, to some extent at least, overcome this question of dull seasons, by regularly inaugurating the furniture and household sales in Feb- ruary and August, white goods sales in January and clearance sales before stock taking. The manufacturers and jobbers are in some in- stances adjusting the question more satisfactorily but there are still opportunities for improvement in this direction. An employee, if steadily employed, becomes more efficient; he does not drift from one trade to another and would prefer less wages and steady em- ployment so that his income would be a certainty throughout the year. Environment. — Too much attention and thought cannot be given to making the workrooms light, well ventilated and attractive to the employees. These have an important influence on the mind and will repay you for your efforts by increasing the quantity and improv- ing the quality of the work. An employee who finds the workroom more attractive than the home would naturally enjoy working. If the home is more pleas- ant, he will dislike the workroom and will be anxious to return to the place that is more attractive. An Understanding of Men. — Mr. Osborne, the employer, before becoming a Warden, volunteered to Z2 BUYING BRAINS serve as a prisoner, asking no special favors to be granted to him; he desired an opportunity to study the weakness from the inside of the prison system. In a speech at Chautauqua he said : "This experience had been helpful to him, as he could understand the prisoners better by associating with them, and that most persons have a mistaken idea regarding them. The prisoners are human beings like all of us, subject to shortcomings by inheritance, environment and lack of training." Within a few days and from the same platform. Judge William L. Ransom stated, in part, "We have had during the past a wrong impression of our courts. We are beginning to see that our courts are just departments of government, the judges are se- lected from the people, and that the courts are to be judged by the same standards as other departments of government." Upon leaving Chautauqua, the writer had a pleas- ant discussion along these lines with Judge Ransom at the station, which was followed by occupying a seat next to a typical-looking outdoor laborer who had taken the wrong train to Chicago. During the conversation he stated, that "He worked in the oil fields of California, and had just returned from a trip to England. He had spent his savings and risked his life during the submarine warfare, to visit his mother who had been very ill, and to make provision for his only other relative, a brother, who was deaf and dumb. "He thought it was the only decent thing to do as he might never see his mother again, and he wanted to provide for his brother, as the same affliction might have happened to him instead of his brother, He SCIENTIFIC MANAGEMENT 33 was returning to America because his earning was far greater in this country, and he could supply them with the money they needed. He worked twelve hours a day, seven days a week, unless there was a 'lay off/ The work was quite a distance from the city ; they did not have theaters, but they had plenty of recreation and the Sunday papers were received from Los Angeles and San Francisco. Most of the men would subscribe for a few magazines and would then ex- change them among each other." He spoke intelligently of the ownership of the oil fields, the liquor question, the reason for so many acci- dents and his last words before parting at Buffalo were, "You cannot do too much for your parents, especially your mother." After listening to these three remarkable men, War- den Osborne, Judge Ransom and this oil worker, the natural conclusion was that we make a grave mistake in thinking some men less human and others more than human. When we meet each other on a common footing, neither looking upward nor downward, but face to face and eye to eye, we shall then begin to un- derstand one another. This lack of understanding is one of the causes of the conflict between the employer and the employee. The autocratic employer is largely responsible for the existing condition; as soon as he becomes more democratic, the relationship will be improved. Testimony Before Industrial Commission. — The testimony of Mr. Andrew Carnegie before the Indus- trial Commission was quite interesting, when he in- cluded in his remarks, that "He had understood his men and they understood him. He did not want them 34 BUYING BRAINS to mutter 'Here comes Mr. Andrew Carnegie/ but was delighted when he was referred to as 'Andy.' He Hkened labor, capital and business as a three-legged stool, 'each necessary for the other and all equal' He was glad when his workmen had come to him with their grievances, he knew that they would always part as friends." Miss Ida Tarbell, in her testimony before the same Commission, said : "There is a growing feeling going on in American industry, that the common man is worth a good deal more than any employer or manager ever dreamed. There is an increasing desire to give him full justice and the idea is steadily at work. It is coming out fundamentally in what is called the science of management. "This breaks away entirely from the old ideas. It means better earnings, shorter hours, and most im- portant of all, the development of man as a worker. One reason scientific management is so important is that it requires co-operation and concerted action to make it successful. Under it every man must be heard, whether his complaint is silly or otherwise, either as an individual, or through his representative." Miss Tarbell also stated, "She had seen the system at work in a half dozen big factories," and laid stress upon its "power to push men out of their ruts." Mr. Frederick W. Taylor. — "System" Magazine submitted a series of questions to workmen in various factories, and the replies indicated that 95 per cent, favored scientific management, and none were op- posed to it, yet 5 per cent, knew nothing about it, and yy per cent, were unacquainted with the name of Frederick W. Taylor. SCIENTIFIC MANAGEMENT, 35 A German, upon coming to help market a European product in this country, was surprised that so few Americans knew of Mr. Taylor, who, he claimed, was better known in Germany than in his own country. It would be impossible to think of scientific manage- ment without associating with it the name of Fred- erick W. Taylor. He inaugurated it, struggled for it and through his activity and guidance has, with his associates, greatly assisted hundreds of employers and thousands of em- ployees the world over. The merits and advantages of scientific management were not understood by many until a few years before Mr. Taylor was compelled to leave his magnificent work, and he, like many of our great writers and artists, will be better appreciated in generations to come. CHAPTER II SERVICE Q ERVICE is the keynote to success. It Is impos- sible to succeed permanently without rendering in- telligent and profitable service. A satisfactory trans- action merits continued patronage, without which no business can be successful. The men who think of their individual interests exclusively, and do not con- sider the welfare of their patrons may have a tempo^ rary success, but they destroy future opportunities. It has been concisely stated by Madeline Bridges, who said, " Give to the world the best you have and the best will Ebme back to voti '* • The most successful men in every locality and every industry are the ones who have served the best. Ren- dering service to your customers is the start of an endless chain. Each time you fail to serve satisfac- torily means a break in the chain. Marshall Field and John Wanamaker have been regarded as excellent types of successful merchants, neither have been excelled in serving their patrons in an honorable and intelligent manner. The employers who first inaugurated the "one-price" and "money-back" policies became the most successful in their communities. The "one-price" system meant a fair profit and equal service to all — the shrewd buyer had no advantage over the innocent purchaser. The "money-back" agreement inspired confidence and the customer was not compelled to keep an article that was unsatisfactory. SERVICE Z7 Abraham Lincoln said: "You cannot fool all the people all the time." It is folly to attempt to fool them at any time. During the period of depression at the beginning of 191 5, President Wilson delivered a message to the employer which should be observed by all. He said in part : "You should give a full equivalent in service for the money you receive, and not try to skimp in the service to increase profits. The game of business re- quires a certain kind of conscience in business. The conscience is the motive spring of the whole thing — it is the spirit of the service you render — you want to see that the thing you do for the public and get money for is the best of the kind that you can do." These facts should always be remembered. Service Rendered by Bankers. — The Harriman National Bank, of New York, inserted an advertise- ment with the heading, "Co-operation and Service." It read : "Modern business sISccess is characterized by co-operation and service. These two things animate the policy that governs the Harriman National Bank. We regard our business as that of a merchant dealing in credit, money and service as stock in trade. The depositors who we serve are on a basis of reciprocity." The Bankers' Trust Company made a similar ap- peal in an advertisement during the same year. With a heading of only the word "Service" it read as fol- lows: "Of the three great essentials, strength, organ- ization and service afforded to clients by this Com- pany, service is not the least important. The Com- pany's entire organization is permeated with the spirit of service. It is not enough to accept and safeguard the banking and trust business of clients; every effort 38 BUYING BRAINS IS put forth to be of additional active service within the Company's proper sphere." These banking institutions include in their direc- torate some of the most successful men in this country, and they are supporting a policy which made it pos- sible for them to attain their present position. Public Service. — ^Until recently many of the rail-, road officials have catered to the legislators and ignored \ the wishes of the public, who were compelled to con- j tribute to the support of the companies, but the offi- / cials are beginning to realize that the public has become/ more enlightened. In contrast with the service rendered by some of the companies operating near New York is the man- agement of the McAdoo system; the employees are courteous, the service is intelligent, and the comfort of the passengers is given proper consideration. On the morning that an announced change was to become effective in regard to the fares and the pur- chase of tickets, officials of the company were at the various stations to assist the employees in directing the passengers to avoid the usual confusion which takes place when similar changes are made on many other lines. Service First. — The United Cigar Stores Company have established in a brief period a chain consisting of hundreds of stores scattered from coast to coast. The founder and president retired and placed the man- agement in the hands of the men, who, he states, have co-operated with him and made the success possible. The rapid growth was probably due to a combina- tion of progressive ideas, but the slogan they adopted and instilled in the minds of employees was one of I SERVICE 39 the important factors in achieving such a phenomenal success — "Service First." They had contests of dif- ferent kinds; the salesmen were encouraged to sell cigars by the box where advisable, but were impressed with the idea that at no time should they increase business at the expense of "service." Confidence Established. — Why do Sears, Roebuck & Company sell annually over one hundred millions of dollars worth of merchandise? Why are people compelled to judge the merchandise from photographs and descriptions? And why do the people send them money in advance when they do not know the own- ers, and have never even viewed the establishment? Because they have inspired confidence in the public by their performances, and with a liberal policy to refund the money on unsatisfactory purchases without any expense to the customer. Merchants throughout the country have been af- fected by the growth of the mail-order houses and have been fighting them by appealing to local citizens for their assistance, and offering excellent reasons why the money should be spent where it is earned. Such arguments for patronage have not brought the desired results. Appeals of this nature are considered by many as an acknowledgment of the supremacy of the mail- order house. Does the retailer patronize a distributor who appeals for business on the grounds of sympathy or for sentimental reasons? The local merchants should have competed with the mail-order houses by giving better service, and by adopting more liberal policies. They should have or- dered for their customers any article desired with the distinct understanding that the article would not be 40 BUYING BRAINS ^ delivered unless it was entirely satisfactory when seen in the store. The advantages of dealing with the local merchants are many, and the correct appeals should have been steadily advertised in the local papers. It is a waste to attract patrons unless you are determined to render them satisfactory service. Truth in Business. — The majority of successful concerns have been materially helped by advertising liberally. The opportunity of obtaining a large vol- ume of patronage through printer's ink has not only attracted the honest merchants, but it has opened new avenues to the unscrupulous, and the men who have continued to trade as was customary years ago, seek- ing to obtain as high a price as possible, handling mer- chandise of questionable character, believing that the purchasers were responsible for their own decisions. The unworthy advertiser to a considerable extent has made the public sceptical, partly destroying its faith in advertisements. It is generally known that the honest advertisers are judged by the company they keep in advertising columns. This condition was growing worse until recent years, when the "truth in business" became widespread. This was largely due to the efforts of the Associated Advertising Clubs, who have adopted the word "Truth" as their standard. Local advertising clubs include not only men who dispose of advertising, but number among their mem- bers the purchasers of advertising. The advertising clubs have been instrumental in having laws enacted in many states making dishonest advertising and mis- representations a criminal offense, and throughout the country they have advocated and improved the ethics of business. SERVICE 41 The advertising clubs have done their work so re- ligiously that it has been customary during the past few years to have prominent members of the clubs occupy the pulpits on the Sunday preceding their an- nual convention. The advertising clubs are rendering a service to the public, to the honorable merchant, to the press and to the men associated with advertising. The newspapers and magazines should do their duty and fulfill their responsibility to the readers by rejecting advertise- ments that contain untrue statements, or offer for sale anything that will not give satisfaction to the pur- chaser. They will not only restore the confidence of the public, but will assist the honest advertisers, who will receive better results and make larger appropria- tions. This will naturally offset the financial loss caused by rejecting unworthy advertisements. A publisher has no more right to offer the public a dishonest advertisement than a merchant to offer merchandise which he knows will not give satisfac- tion. The endorsement of the publisher, or the mer- chant, helps to deceive the public and encourages the unscrupulous advertiser and manufacturer to continue their sharp practices. Honesty is the Best Policy. — ^Without even view- ing business from an ethical standpoint, it is poor policy not to render satisfactory service to your patrons. The successful men have followed the straightforward path, but many park benches are oc- cupied by shortsighted men who had excellent oppor- tunities and who possessed unusual abilities. They could only gauge the profits of to-day and could not picture the prospects of to-morrow. It is a pitiful 42 BUYING BRAINS sight to meet matured men who in their prime were connected with undertakings that were profitable, but did not give satisfaction, and now that their activities are curtailed, find themselves in a helpless condition. If you are engaged in a business that does not merit future patronage, or if you are ashamed to meet your former patrons, you should adjust your affairs to change the policy of your business, or enter another field that makes honest methods possible and profitable. "Get Rich Quick Wallingfords" are quite numerous in the larger communities, but a considerable percent- age of them do not attain the coveted goal. They have ability in abundance, are mentally and physically in- dolent, and do not possess conscience; they destroy their opportunities and waste the savings of those who work conscientiously. In the end they have nothing to show for their ill-gotten gains. The schemer, the promoter, and the merchant who handles unsatisfactory merchandise attract some of the most clever employees, because they pay the largest commissions, receiving money in exchange for worth- less securities and articles, but in the aggregate the employees earn less than they would if they had de- voted their time to honorable business. The service rendered by employees is usually the kind of service that the employer demands for his patrons. It is just as easy for an employee to be courteous, to be truthful and fair, if the employer wishes him to act in such a manner; if the employer considers only the sales and the profits of the day, the employee will use his efforts to enlarge the sales and profits without consideration of the customer. An establishment, like the individual, has good and SERVICE 43 bad habits. You like a concern the same as you are attracted to an individual for his personal qualities. If we are mistreated or deceived, we avoid him in the future ; if an old friend or a merchant with whom we have been trading for a number of years makes an unintentional error and is willing to rectify it, we will naturally excuse him. Good Will of a Business. — **In making represen- tations to your customers, never lie, for a lie is a lia- bility, and the truth is an asset/' — Hubbard. The good will of a business becomes an important question, if you change your location, or if you desire to dispose of your business, or an interest to your associates. If you have treated your patrons fairly and they are satisfied with your service, they will follow to your new location and in some instances at great inconvenience. If you desire to dispose of your business, the assets are worth much less than inventory if there is no good will; but if you have a large and satisfied patronage, your business may be worth con- siderably more than the amount of your stock. Recently a small stationery store with a newspaper route was sold for ten thousand dollars; about the same time another store with stock three times as val- uable was disposed of for twenty-seven hundred dollars. In purchasing the good will of a business, the value of the good will is affected by the service rendered by the successor. Patrons do not object to a change of management, but they seriously object to receiving inferior service. It is far better to start a new busi- ness in a new location than to succeed a merchant who gave unsatisfactory service, as a clean record is better 44 BUYING BRAINS than one that has been tarnished by the acts of an unfit predecessor. Your Service Affects Others. — The service you render not only affects you, but often has an indirect effect on others in the same city, state or community. You often hear of a state being favorably known for its fruits or vegetables, a city for its furniture or clothing, a community for its stores. Twenty-five American tourists visited Paris. One of them purchased an article in a small shop for about five dollars that had been originally quoted at nearly twice the amount; a similar article was seen a few moments later in a department store for less than three dollars. That evening the story was related at the hotel, and the entire party decided to confine most of their purchases to the department stores. The un- fair method of one dealer affected the business of other merchants, who doubtless deserved a share of the patronage. Intelligent Service. — In many establishments both employers and employees aim to be fair and honor- able, but they do not give intelligent service. Money is cheerfully refunded on unsatisfactory purchases; mistakes are rectified, and all disputes are adjusted to the satisfaction of the customer. Patrons appre- ciate a satisfactory adjustment, but what they prefer is an avoidance of the mistakes. Complaint depart- ments should have a two-fold purpose — one to satisfy the complainant and the other to discover and remedy the defects of the business. Complaints should be tabu- lated and the errors remedied for all time ; if a business continues to suffer from a disease, or a complication of diseases the very life of an establishment becomes SERVICE 45 polluted and imperilled. The owner of a department store told the buyer of a comparatively new depart- ment that the number of complaints against the de- partment had doubled the record of the preceding year. The buyer replied that the volume of business had also been doubled; to which the proprietor answered that he would prefer less business and fewer complaints. The Connecting Links. — The manufacturer, job- ber and retailer are connecting links in serving the cus- tomer. If any one of the three does not measure up to its responsibility the others may be indirectly af- fected. The manufacturer is responsible for the fin- ished article. If he fails to make the product what it should be, or misrepresents it, the jobbers, retailers and consumers are all losers thereby. The jobber is expected to be more of an expert than the retailer, and he is supposed to examine and detect any defect in the manufactured article. Manufacturers and jobbers are beginning to follow the example of the reliable retailers in offering stand- ard merchandise, and assuring the merchant of satis- factory service. They are not seeking sensational sales- men who are capable of overloading the merchant, but prefer salesmen who are consistent workers ; who study the needs of their customers and sell them only the articles in such quantities as they can profitably handle. The salesman who serves his patrons fairly and in- telligently serves his employer best. Just as the re- tailer relies on the better judgment of the jobber, the consumer places confidence in the retailer. It is a foolish policy to dispose of any article in small or large quantities that will not give entire satisfaction to the purchaser. 46 BUYING BRAINS A Permanent Foundation. — If you have made a mistake in your purchase, it is far better to take a loss, give plausible reasons for the sacrifice and let the purchaser know that defects exist. This kind of ser- vice means pleasant relationship with one another, also building continuous patronage on a lasting foundation. To succeed you must purchase correctly. There is an old saying that "goods well bought are half sold." The other half — the selling — must be done scientifi- cally. Fair prices are also necessary to success. You may deceive a customer in a single transaction by ob- taining an unfair profit, but he will eventaally dis- cover his mistake and patronize others in the future. Impression. — The window is the facial expression of a store, yet merchants who shave every morning will allow their windows to be unwashed for a week or more ; others who change their neckwear daily and their suit every few days, permit their windows to remain unchanged for weeks, and when they are dressed it is done without thought or planning in advance. The impression, when one enters a store should be pleasing, the merchandise well displayed and the prices fair. The clerk should express the individuality, so to speak, of a worthy employer. He should be intelli- gent, enthusiastic and willing; he should wear a satis- fied look and try to please both the customer and the employer. Without this spirit you cannot permanently succeed, your personal ability and efforts will be wasted, because you will neglect to satisfy the em- ployee, and without his co-operation success is impos- sible. The small employer with a big policy will soon outgrow his quarters. SERVICE 47 Indifferent Service. — Salesmen, both retail and wholesale, frequently neglect to properly serve the patrons. It is much easier for them to say — "I am sorry, we do not have it," than to exert themselves by showing other goods. A Washington department store inserted a little folder in the pay envelope of their employees, the title page reading "Showing Goods." The inside read as follows: ''Don't hesitate to show goods. Remember that a great many customers have not decided on ex- actly what they want when they come to your depart- ment, and part of your value to the house depends upon your ability to serve and help them make decisions. The quickest way (most often) is to show goods — all they want to see — make them feel that you just delight in having them know how large and splendid a stock we have — they'll find it a great deal easier to buy and you'll find it easier to sell. "One of the best things a woman can say of our store, and of you, is *well, they are certainly willing to show goods.' Even if she does not buy to-day, she will not forget your willingness to 'show' her, and some day she will come back to have you 'sell' her. Show goods." Discontented Employers. — A large percentage of employers do not render maximum service because they have become dissatisfied with their occupations, often comparing the small profits and disadvantages of their business with the advantages of others. The reason for this conclusion is, that they only under- stand the other occupation from an outward appear- ance, while they study their particular field of en- deavor with a magnifying glass, learning all the dis- 48 BUYING BRAINS advantages. Do not consider yourself too big for your business until you become a leader in your class, whether it is shoe polishing, or shoe manufacturing. It is very pleasant to be able to serve better than your competitors. Arthur Frederick Sheldon says: "He who serves best profits most." J CHAPTER III EMPLOYMENT P^MPLOYING desirable help is probably the most "^ important function of an establishment, yet in many concerns very little attention is given to the sub- ject. It is often done in a haphazard manner; em- ployees are selected hurriedly and are not suited for the positions, while others are turned away who would have become valuable assets to the concern. Hiring. — Quite frequently the employment is done by various members of a firm, or by the heads of de- partments who have given no thought to the employ- ment problem '^scientifically," — and the employees include every possible type. Some of the most suc- cessful concerns in the country are now managed by men who not many years ago were employed for unimportant positions in the same establishments. Andrew Carnegie made millionaires out of men who started in menial positions, and who afterwards greatly assisted him. Charles M. Schwab, one of them, has followed the same policy, and in a few years converted the Bethlehem Steel Company, which was a financial wreck, into one of the most profitable and powerful concerns in the world. Mr. Schwab made Mr. Eugene Grace, who had been a laborer at the Bethlehem Steel Company, president of that corporation in 19 12 at the age of thirty-five. Mr. Schwab claims that Mr. Grace is the greatest steel man in the country, and one of the brightest men in the world. Marshall Field selected partners from 49 50 BUYING BRAINS his employees, some of them startiiig in small positions. Selection of a New Employee. — Extreme care should be exercised in the selection of the particular employee for each position; keep an accurate knowl- edge and record of them, help them advance and you will thus be able to develop them for higher positions. Less time and thought is often given to the employ- ment of a twenty dollar clerk, who represents an an- nual investment of one thousr.nd dollars, than to the purchase of an inexpensive article. The investment in a new employee, the cost of his hire and training, and his possibilities should be given greater consideration. The Employment Manager. — In every concern, large or small, the employment should be centralized and done by an individual, or through a department with a competent employment manager, understanding vocational guidance, at its head. The employment manager should have the confi- dence and support of the chief executive, and should select only such types of employees capable and will- ing to co-operate, in maintaining the policy of the concern. The employment manager should be thoroughly qualified for the position and should be a good judge of human nature, know the environment and require- ments of the various positions and have an accurate knowledge of the capabilities of the employees. He should be friendly with the heads of the departments and exchange information regarding various em- ployees. He should treat the heads fairly and squarely, also see that justice is given to each individ- ual. He should use his best judgment in employing and placing the employees ; he should not be arbitrary. EMPLOYMENT 51 but recognize and rectify his own mistakes. In short, he should be diplomatic and wilHng to receive suggestions from the heads in the proper spirit, and his actions should be guided by the thought that the employer and the employee should be fair to each other. While he should not permit his sympathies for the employees to interfere with the performance of their duties, he should treat the employees fairly, and have them properly regard the welfare of the employer. Must Please Both Parties. — The employment manager, who always agrees with the executive, the members of a firm or the officers of a corporation, may please them personally, but he will fail in his mission and serve them poorly, if he disregards the interests of the employees. A frequent mistake made by men when they become employment managers, is to make drastic changes too quickly and in this manner disrupt an organization. It is far better to go slowly, analyze the industry, the requirements of the various positions and the capabilities of the employees. The employment manager should maintain an open door to the employees, allowing them to come with their disputes and grievances, and should always be willing to listen and adjust any differences that may arise. In every establishment there is occasional fric- tion among the employees. Petty quarrels that can be settled in a few moments to the satisfaction of all concerned, if allowed to go unsettled, will frequently extend to larger proportions and be detrimental to the establishment. It is not uncommon that heads of departments and employees in the same departments become angry with 52 BUYING BRAINS each other and not on speaking terms for long periods, preferring to neglect their duties rather than aid each other. If an employee has a grievance against the head of a department or the concern, it is better to allow the employee a hearing; if the complaint is justifiable it should be remedied; if otherwise, the employee should be convinced of the error. By extending this privi- lege you keep him in a pleasant frame of mind, and may detect mistakes in management and be frequently able to avoid the continuance of them. Spreading the "Good Feeling" Spirit. — In meet- ing the employees personally and being fair to them, you not only have the advantage of coming into per- sonal contact with them but they will assist you in spreading a spirit of good feeling and co-operation throughout the establishment. The employment manager will find his work inter- esting and enjoyable, if he can understand the em- ployees in the different stations of life and can make them feel comfortable in his presence. He will soon discover that the average employee knows more than he is given credit for, and is inclined to be fair, not only to the other employees, but to his employer. In centralizing the employment, you relieve the heads of departments of work for which they are not mentally equipped. It saves their time, besides, they individually do not possess the facilities for making inquiries regarding references and similar details. Filling Vacancies. — A knowledge of all the em- ployees is vested in one department, under the super- vision of the employment manager, who is able to' fill vacancies and make transfers when the occasion arises. I EMPLOYMENT s^ Furthermore, the head of a department frequently does not Hke to admit his mistakes, and may continue the services of an unfit employee if employed by him, while he would not hesitate to inform the employment manager, if he had made the selection. It also places the employee under an obligation to the head of the department who may act in an independent manner, believing the employees in his department would sup- port him in any disputes with the management. The employment manager should realize his respon- sibility. He may select the future executive of his own concern, or he may reject an applicant who may assist an important competitor. He plays not only an important part in the results of to-day, but in the future of his employer; he should employ young men who will be capable of filling the higher positions in years to come. The employment manager should spend a portion of his time visiting the different departments, which gives him an opportunity to see the employees at work, as well as obtain a personal knowledge of the require- ments for vacancies that may arise. It should be his duty to engage help, mostly for the lower positions — the higher positions should be re- served as a reward to the employees who have faith- fully performed their duties in the past. It is very discouraging to employees who have patiently waited for promotion, to have a coveted position given to an outsider. You cannot expect conscientious service if your employees do not get any advancement, or if they are waiting for an opportunity to work for a com- petitor. Each employee should be given the highest position he is capable of filling, providing suitable va- 54 BUYING BRAINS cancies occur. An employee should be permitted to ask for promotion; they usually will not make such request unless they believe they are capable and you have the opportunity of ascertaining their fitness, at the same time giving- them a word of encouragement. Opportunity. — If an employee is given a position that is requested, and which is congenial, he will en- deavor to measure up to the responsibility to prove his assertions and show his appreciation for the chance given. In the larger concerns, requisitions for em- ployees to fill vacancies are usually sent by the head of the department to the employment manager. In the smaller establishments the vacancy is discussed by the two personally. In many instances it is customary to mention the number of employees required without giving any special information as to the type preferred, or a clear understanding as to the duties they must perform ; the consequence is, that the employment man- ager selects applicants without much thought as to their fitness for the positions they will occupy. Scientific Employment. — Under scientific manage- ment, where the records of individuals are kept, it is possible to determine the particular type of employee who obtains the best results in the performance of any given task. When a vacancy occurs the first thought should be of advancing an employee from a lower position, and if possible, promote another holding a still lower position to the one made vacant by the ad- vancement. In this manner, one vacancy causes the promotion of several employees and it gives encour- agement to the others, and at the same time has a tendency to make them ambitious and eager to exert themselves to their maximum abilities. EMPLOYMENT 55 It is much easier to determine the fitness of an employee for a position, if you have had an oppor- tunity to study him in another position, than to select an individual you have never seen at work and who must be judged by his claims, his record in the em- ployment of others and by your personal observation of a few moments. Proper Fitness. — Each employee should be fitted for the particular task he is assigned to perform. If he is not capable it is unsatisfactory to the employer and a hardship to the employee. If he is able to do better work than that given him, he will shortly become dissatisfied and will work with an indifference that will lower his standard, and it will have a detrimental influence on the other employees around him. A man is best fitted for the work he delights in and loves. A man's love for his position is half the battle won. The position should be carefully analyzed, divided into its elements and a conclusion should be formed as to what type of an employee can best perform the work. The applicant should also be analyzed, and should possess the essential qualities and experience required to fill the position satisfactorily. The reason so many changes in employment are made is that em- ployees are engaged to do work for which they are not mentally or physically fitted. This is costly to the employer as well as to the employees. The employer by making constant changes has the additional expense of employing and training, and suffers from the errors of new employees; the employee loses considerable time in looking for new employment, is often rejected if he has held too many positions, and wastes the time and experience gained in one industry when he enters another. 56 BUYING BRAINS A great many persons are daily performing duties for which they should never have been selected; it is pitiful to see men doing physical work who should be doing clerical work or selling and a great many attempting to become salesmen who would make far better mechanics. Analyzing the Salesman. — If you want to hire a salesman, you should select a man of personality, dig- nity, aggression, determination, aspirations, a good talker, one who understands a variety of subjects, a quick thinker, one who can analyze his proposition, and will give his customer and his firm a square deal. A partial analysis is as follows : — A man of per- sonality is one Vv^ho not only makes a presentable ap- pearance, but whose whole make up has the stamp of character and ability to please. For determination, look for the broad, square jaw, or the high top head, which is an indication of will power. For one with aspirations, seek ye a head that is high above the ears. A good talker is one who is familiar with a variety of subjects. For one who can analyze his proposi- tion, look for a good development of the upper central forehead. The Normal Individual. — This will furnish you with an idea of how some of the different characteris- tics work out, and every normal individual is born with a number of mental faculties, some of which are stronger in one individual than in another. Every person born into the world is good for some line of work and can perform that better than another, be- cause he may have been bom for that particular "niche" or vocation. Character comes from two sources. First, it may I EMPLOYMENT 57 be a native or hereditary gift; second, it may result from education and physical development. Nature gives us the groundwork, and education develops, directs and thereby increases the powers of our natural gifts. A man has three ways of showing his character: first, what he thinks he is ; second, how he shows him- self ; third, what he really is — and it never fails, "as a man thinketh, so he is." Emerson said, "Men are to me what they are ; they wear no mask with me." In some of our institutions, boys and girls are taught the same studies and trades in groups irrespective of their individual ambition, ability and fitness; the con- sequence is that they are sent out into the commercial world to battle with the wrong ammunition. "The Right Man in the Right Place."— Young men and girls often fall into, or obtain their first position accidentally and without thought as to their adaptability, and if they are misplaced may continue for years, failing to achieve satisfactory results. Vocational study is not only helpful to an employ- ment manager, but is beneficial to the hundreds that may be employed by him. An employment manager who can in a few moments "size up" and determine the physical and mental weakness and strength of an applicant renders a service to both the employer and the employee. It is folly to condemn an employee for poor results if you have selected him to do work that he is incapable of performing. There is a place for every man and a man for every place. You cannot be expected to have a position for each applicant. You should, however, select the right person for each position. If you have employees who 58 BUYING BRAINS are willing and ambitious and are not performing their work satisfactorily, you should endeavor to transfer them to more suitable positions. Citation of Cases. — A mechanic working for a small salary was discharged for talking too much. A month later he was earning more than double his previous salary as a salesman without experience. He was capitalizing his talk! A special officer in a small theater lost his position and was looking for a similar place, as he had done such work for years. He pleaded with the writer that he had tried a number of places without success. He was told that "It was exceedingly fortunate, as he was above his work. He should have been a salesman, because he made a good appearance and was a very convincing talker." Six months later the writer hardly recognized him when he saw him. He had taken the advice and had just returned from a successful trip and his only re- gret was that some one had not put him on the right track years ago. On the "Right Road." — The employment man- ager should see that each employee is on the right track. Those who are not should be side-tracked. You cannot expect the employees to complete their tasks satisfactorily and on time otherwise. Each employee holding an important position should have an assistant, or there should be one who is ca- pable of performing his duties in times of sickness, or vacation, or in case he should leave on short notice. An employment manager, who is familiar with the requirements of the various positions and knows the capabilities of the employees, has no cause for excite- EMPLOYMENT 59 ment in times of emergencies. A captain deserves no special credit for steering a ship safely in clear weather, but if he is calm when the weather is rough, is worthy of his assignment. Tact and Talent. — Unusual tact is required by an employment manager when applicants are recom- mended by the officers of a concern, heads of depart- ments, customers and friends. If he employs them he may disrupt a department; if he refuses them employ- ment he may cause the enmity of the endorser. In employing help under such circumstances, extreme care should be exercised in finding a suitable position for the applicant with a distinct understanding that no special favors shall be granted. If such an employee is not satisfactory, the employment manager is in a worse predicament than if he had not employed him ; it is more unpleasant to dismiss an employee so recom- mended than to have rejected his application originally. Unless there is a complete understanding at the time of employment the employee may break rules and commit objectionable acts, thinking his position as- sured regardless of his actions. A favored employee has a demoralizing influence on others, especially if he is advanced on recommen- dation of the endorser, and not as a reward for effi- cient service; it is discouraging to those who are am- bitious to prove their fitness for the higher position. Other Methods. — When employees are needed to fill vacancies that cannot be given to those already employed there are a number of desirable methods of obtaining them which depend largely upon the type of workers required and the community wherein the concern is located. 6o BUYING BRAINS Establishments that are fair to the employees usu- ally have a waiting list, receiving applications from relatives and friends of the employees ; also others who quickly learn of the relationship existing between the employer and the employees. Such concerns attract the better type of employees, who on account of their ability and efficiency can be more independent and particular as to the selection of their employer. Firms that are unfair in their poli- cies soon become known to the workers in an indus- try or community, and usually receive applications from the least desirable types, who find it impossible to obtain employment with the more favorably known concerns. Applicants recommended by other employees with whom they associate can, to some extent, be judged by their endorser; ambitious, sober, and industrious persons usually spend their evenings with others of the same type. Married men are usually steadier and more industrious than single men, as they realize their responsibilities and are willing to exert themselves to make a provision for those dependent upon them. These facts are worthy of serious consideration. Young men affiliated with the Young Men's Chris- tian Association, churches, gymnasiums, and similar organizations, generally lead cleaner and more regular lives and are better employees than those who spend their evenings on the comers and in the pool rooms. Health and Habit. — While we sympathize with those who do not possess good health, it is a necessary requirement for an efficient physical or mental worker. In rush seasons, when the employees are heavily taxed, those who are blessed with good health demonstrate EMPLOYMENT 6i their superior value to the employer and show more endurance. Modern business is a physical strain and every effort should be made to develop one's self in body and mind. Health has its influence on the mind as well as on the body and perfect health is the proper basis for right thinking. It gives clean, clear thoughts and happy ones, when coupled with cheerfulness. Right thinking, deep breathing and exercise are the necessary adjuncts to every individual looking for success in the world. Perfect health makes for power. Power gives one the opportunity to adjust himself to things. Power gives one the ability to adapt himself to any situation. Employers can avoid a great deal of sickness by looking after the welfare of their employees and mak- ing the office, shop or factory more healthful and con- genial. If they would but look into the question of proper sanitation so as to get maximum results it would automatically revert to their own interests. Desirable Applicants. — While the changing of po- sitions too frequently is often the fault of the em- ployers who misplace men, it is far safer to employ those who have not made too many changes. An em- ployee who brings a reference of long standing from his former employer is a desirable applicant. Em- ployees can be instructed, developed and improved, but the preference should be given to those who have a natural ability and display a willingness to exert them- selves. There are a number of persons who are chronic antagonizers and have a soured disposition written on their countenances ; be sure to avoid them, as they will destroy the usefulness of many others. 62 BUYING BRAINS There is also the unreliable class, who consider their employment secondary to their pleasures and individ- ual comforts; they will remain away for the slightest reason, and when you require them most they will be at home with a headache or cold, or, possibly, attend- ing a baseball game. The employee who probably causes the most friction in your establishment is the tricky man; the one who will deny anything discreditable and be willing to take the credit for everything that proves satisfactory. He will tell you falsehoods about himself and others and for a brief period deceive you with regularity. Truth should be a keynote in your business. Personal appearance is an important consideration when the employee comes into contact with customers ; an attractive personality is a valuable asset. A person with personal magnetism is the winner of the day. A number of positions can be filled by male or female employees, such as typewriting, bookkeeping, clerical work and filing. If the position does not afford an opportunity for promotion into a more profitable po- sition, it is advisable to employ female help, as young men who are industrious and ambitious will become dissatisfied more quickly. A great many employers have the absurd idea that an applicant out of employment is unworthy. Before passing judgment the circumstances should be well weighed. Some of our greatest men have had periods of depression and disappointment. Your Competitor. — An employment manager de- serves no special credit for taking an employee from a competitor by offering financial inducements. ' The employment manager who can discover and recognize EMPLOYMENT 6^ ability under any condition is the only hope of those who are temporarily embarrassed. Offering a position that is out of proportion to the capability of an applicant may relieve him of financial distress, but he will hold the position only as a step- ping stone to secure a better position elsewhere. Policy. — National and religious questions should never be discussed in any establishment, as they are bound to cause friction and cliques; fanatics should be grouped together in the same department and should work under heads of departments who are in sympathy with them. If the head of a department has any prejudices, after investigating the situation thoroughly, he should be dismissed, or you should employ under him those who shall be given a fair trial. Relatives should not be employed in the same depart- ment. They cause disputes, cover up mistakes of one another and usually leave the employment at the same time. Refined and coarse types should not be grouped together; it is far better to have all of one class de- pendent upon the requirement of the work. Persons of refinement cannot be expected to enjoy their work, or be satisfied, if they are continually meeting objec- tionable associates. Vulgar employees should be excluded and those leading immoral lives should not be employed under any circumstances. They frequently influence others who have come to you in the hope of earning an hon- orable living. It is your duty to protect your em- ployees from evil temptations. Do not make false promises to applicants. A man out of employment is looking for a position and it is unfair to make impossible promises, attempting to 64 BUYING BRAINS deceive him and obtain his services for less than his real value. Do not employ temporary workers, giving them the belief that the position is permanent. If they are out of employment it is unnecessary; if they are working you have no right to employ them temporarily. Flowery speeches and untrue statements may secure the services of an applicant at your own figure, but the real truth will be revealed within one week after the new employee is in your establishment. The older employees will volunteer to furnish the inside informa- tion and he will soon learn whether or not you are truthful and fair. Obtaining Help. — One of the handicaps in secur- ing suitable employees is that the heads of departments do not anticipate their wants. They will order mer- chandise and other supplies in advance, but they will not send the requisitions for additional employees until the last moment. An employment manager who must select employees hurriedly will often engage one of a lower caliber than he would if sufficient time had been allowed. In securing employees when there is no waiting list, it is customary to advertise in the papers or communi- cate with the employment agencies. By advertising you will probably have more of a selection of suitable employees, as the help wanted columns are not only read by those out of employment, but by those who are dissatisfied, or ambitious to secure better positions. The selection is of vital importance. Agencies versus Advertising. — Employment agen- cies conducted under the proper ethics can save con- siderable time of both the employer and the applicant. They can be helpfut in placing the right man in the EMPLOYMENT 65 right position, but unfortunately, the ethical agencies have many unworthy competitors. In the smaller communities it is advisable to state in your advertisement the name and address and have the applicants call personally. In larger cities, where the distances are greater and the number who respond too numerous, it is preferable to have them write, an- swering your advertisement with sufficient particulars that you may eliminate those who for some reason are unfit. Your advertisements should be specific as to the work, compensation and requirements, to avoid receiv- ing and reading applications from the incapable, thereby saving the time and expense of those who are out of employment. Interviews should be arranged so that applicants are not compelled to wait too long, as a few moments may cost them an opportunity else- where. Proper Attitude. — Do everything possible to make the applicant comfortable and normal; you cannot judge him fairly if he is nervous or afraid of your personality. Some employment managers who have the natural ability and are of a sympathetic nature make the applicants feel at ease; others could easily do it if they realized the importance of making a proper estimate of the capabilities of the applicant. While it is impossible to employ every applicant, it is possible that every caller is extended the proper courtesy. It is discouraging to one out of employment to be handled in a rough, impolite, indifferent manner when he is trying to sell his services. Quite often a smile, an encouraging remark, a word of advice, or a suggestion may mean much to the applicant who is seeking to dispose of his only asset. When an appli- 66 BUYING BRAINS cant IS interviewed, a number of pertinent questions should be asked regarding his past experiences, habits and capabilities. Application Blanks. — If the applicant impresses you favorably he should then be given an application blank, containing spaces for his name, address, age, married or single, with whom he resides, names and addresses of former employers, periods of employ- ment, the reasons for leaving, salary received and ex- pected, personal references and such questions in ac- cordance with the requirements of the position and other information desired. Some of the larger con- cerns make a mistake by having a uniform blank for all employees. They should have several forms that vary according to the class of employees required. After reading the application blank, if you still think favorably of the applicant, you should ask such questions as will relieve you of any doubt as to the fitness of the applicant for the position. Before ac- cepting the applicant, it is well to ask additional ques- tions that will have an important influence on him during his employment. Such questions as "Are you always on time in the morning?" ''What time do you retire at night ?" "Do you always make sure you are right before doing anything?" These questions when properly asked make a permanent impression and often prove valuable suggestions to the new employees. The references received and letters of recommenda- tion are sometimes helpful but they are often indefinite and misleading. Some employers believe that an em- ployee should receive a letter of recommendation, un- less he has done something dishonorable or conspicu- ously bad; other employers do not give a written ref- EMPLOYMENT 67 erence except upon request from a prospective em- ployer. A great injustice may be done to the former employees as well as other employers, unless complete records are maintained of the employees in regard to the beginning and termination of employment, the ability, habits and conduct during employment. While an employer should be willing to give this information in a confidential manner, he should be perfectly fair and just to a former employee, giving him the benefit of any doubt and not allowing personal prejudices to become a barrier and prevent a former employee from securing employment under possibly better and fairer working conditions. When considering an applicant for an important position, a tactful representative should call and obtain the references, as employers will often furnish information that they would hesitate to write. It is unsatisfactory to employ applicants through correspondence exclusively. They are frequently as- sisted in their writing and you do not have the ad- vantages of studying an applicant that a personal in- terview offers. There is no reason for employing one in this manner if he resides in the same community and utmost care should be exercised before bringing one from another city as a moral obligation is assumed and the services of one may be obtained who is not entirely satisfactory. Bonding. — Many of the larger concerns have their employees bonded, especially those who handle money ; this acts as a safeguard to the employer and has a tendency to make an employee more careful in his accounts. Bonding companies investigate the record of an applicant more carefully than the average em- 68 BUYING BRAINS ployer and their request for references are usually given greater consideration. Employees know when they are placed under a bond that the bonding com- pany will not extend any sympathy in case of default and it has a good moral influence over those who might not resist a temptation otherwise. Discharge. — The employment manager should have the power of discharge, with such limitations as the circumstances may prescribe. By having this power it gives him the opportunity of making transfers when it is preferable. In many concerns the power of discharge is divided among too many and employees are dismissed too hastily. A valued employee is occasionally discharged for a slight offense and if the authority was vested in an individual who had a complete record of the em- ployee, he would not have dismissed one with so good a record unless he persisted in committing an inex- cusable act after being warned. In discharging an employee needlessly, an injustice is not only done him, but it is very costly to the employer. The cost of em- ploying and training is sacrificed and the employee you may substitute is an unknown quantity and may be less valuable. The discharged employee is humiliated, suf- fers a loss while out of employment and has a record which may interfere with his obtaining future employ- ment. The continual change of help not only has a bad influence on the other employees but when new employees discover that they are associated with others of brief employment, they assume the attitude that the position is probably for a short period and they do not take their work seriously. Transfers. — Frequently an employee, complained of EMPLOYMENT 69 by the head of a department, becomes very useful and capable if transferred, or is employed under another person with a different temperament and new environ- ment. If an employee is discharged after receiving his instructions and training, there is a total loss of the investment in him; if he can be transferred there is only a partial loss, as the information gained in re- gard to the rules and policy of the concern is retained. Irregular Employment. — The irregularity of em- ployment is what causes many workmen considerable anxiety and loss of money. Employees are often com- pelled to spend their full earnings for their mainte- nance and when unemployed they run in debt or live on the charity of others. Looking forward to a period of unemployment naturally worries an employee; af- fects his mental and physical self and he is not able to give his best efforts. According to the census of 19 10, the employees of steel works and rolling mills were employed 75.8 per cent, of the time; foundry and machine shops 80.7, while many of the other important industries averaged about 90 per cent. This practice means additional space and ma- chinery required for short periods and the employ- ment of inexperienced workmen. Periodical unem- ployment encourages the practice of shifting from one employer to another, from one trade to another and often necessitates going from one community to another. In periods of depression it is better for the employer, employees and the community, if the men are em- ployed on part time in preference to dismissing a por- tion of the employees entirely. The working organ- yo BUYING BRAINS ization is kept intact and the employees may be able to decrease their expenses temporarily, and then they do not become dependent upon the public. Employment Manager's Test. — The employment manager can test his own ability by the results of his work. He can record the number of persons em- ployed; the percentage that have proved capable, and the reasons that others have failed. Also study the types who do the best work in the various positions. If he judges fairly he can discover whether the fail- ure of an employee was due to his error of judgment, or the conditions which confronted the employee. Mis- takes should be signs of warning in making future selections and unfair conditions should be quickly remedied. CHAPTER IV INSTRUCTIONS IF YOU were visiting a strange city and desired to see the places of interest (without having previous instruction) you would naturally make inquiries, which would necessitate a number of stops and prob- ably some of the information would be misleading. The result would be that considerable time would be wasted and likely visiting some of the more important places would be neglected. Before rnaking the trip you might have inquired from a friend acquainted in that city, who probably would have given you the desired information, but if you had received the correct instructions in writing, to which you could have referred when in doubt, you would be independent of others and able to visit the places of interest without loss of time. It is practically the same when a new employee en- ters an establishment. If he is not given written in- structions he will waste time, make many mistakes, be dependent upon others who may misdirect him and will accomplish little with a great expenditure of effort and at the same time be an annoyance to others. If he is told of the rules and policies of the concern, in addition to the method of performing his work all at one time, he will forget part of his instructions, become confused, make mistakes and be dependent upon others. But if the instructions are written he is independent of others and can refer to them when in doubt and devote his spare time to studying them. 71 72 BUYING BRAINS Training Employees. — One of the greatest assets to any concern is having men who are well trained. The success of an estabHshment depends largely upon the training of its employees. When the men have been carefully selected for positions and the chances are that they will succeed, you can afford to devote more time and money to giving them the proper in- structions. It is far better to have a new employee spend a week preparing for a new position than to have him per- forming his work poorly for many weeks. A new employee must receive the necessary instructions before he starts to work or he will be compelled to acquire his information gradually by making inquiries, or being corrected for mistakes. Employees are frequently criticised and often dis- charged for committing offenses when they were doing what they considered was right. An average employee cannot be expected to have the judgment of the men who make the rules, but each employee can be expected to study a book of rules and act accordingly. This would make a wide awake employee more proficient, and he would commit fewer errors and omissions, as well as require less supervision. An employee is more valuable when the necessity for supervision is di- minished. Proper Instructions. — In our large department stores, many clerks reply, *1 don't know, but I will find out for you," to hundreds of questions, and the floorwalkers are continually answering the same ques- tions. If the necessary information had been furnished the employees, the time of the customer, the clerk and the floorwalker would have been saved. INSTRUCTIONS 73 New employees should be properly instructed by persons employed for that purpose and not by those who may be jealous of new employees or who may for some reason take a dislike to them. Employees receiving the same instructions from a competent in- structor have an equal and a fair opportunity. If they fail in the performance of their work, they should be corrected and shown how to guard against a similar occurrence. What Others Are Doing. — The telephone com- pany, before assigning work to the operators, have them instructed and they must be capable of operating properly, otherwise it would be impossible for them to render satisfactory service. The United Cigar Stores Company have their applicants work in a demonstration store equipped for giving instructions and they must average a fixed percentage before they are permitted to become a clerk in one of their stores. The stenographers of a large automobile concern were shown how the automobiles were constructed, so that they would become familiar with the technical terms, which would enable them to know when the thoughts were properly expressed. It made their work easier and more interesting and they could often offer valuable suggestions to the salesmen. You would not use a word if you did not know the definition, yet employees are often expected to discuss subjects intel- ligently when they do not understand thern. The Old Method. — Under customary management, a new employee is taken to the head of a department and in a few moments is told what is expected of him, but no attempt is made to show him how to perform his duties. He is thus placed at the mercy of other em- 74 BUYING BRAINS ployees who often refuse to assist him if he is too clever, and ridicule him if he is inexperienced, or stupid. The consequence is that he will do the work as he was accustomed to in his former employment, or will imitate one of the other employees who may be inefficient. The result is that employees doing exactly the same work perform the task in a number of differ- ent ways and those who have equal capacity, if prop- erly instructed, will vary considerably in both the quantity and quality of the particular character of work. The Scientific Method. — The methods of scientific management are extremely helpful to a new employee. The instructor immediately shows him the best known method of performing his task and he is able to begin work with the same knowledge as the more experienced employees, is able to concentrate his entire attention by following instructions definitely and in a short period should equal the capacity of the others. In every field of endeavor, we should accumulate the knowledge and experience that has preceded and by capitalizing and improving, we come nearer to the goal of perfection. Planning. — It is natural that an industry having the same task performed daily by a large number of employees should conduct experiments and plan to do the work in the best possible manner and, having dis- covered what is considered the correct method, the knowledge should be imparted to each individual and the analysis and synthesis thoroughly explained. A planner may, in a few days, save the workmen many days of unnecessary labor if they are compelled to re- peat the same tasks continually. INSTRUCTIONS 75 Good planners are not always satisfactory instruc- tors. Spending a large portion of their time thinking and experimenting, some of them become too technical to properly explain to the workmen how the plans should be followed. Planners and instructors are often regarded as non-producers. If they are efficient they are time-savers and great profit producers. The experimental work is done by those mentally equipped for same and the workmen are relieved of that responsibility. In scientific management, the em- ployee will enjoy his work when he knows he is doing it correctly and will appreciate the spirit of helpfulness derived from his employer. Accomplishing Results. — Workmen can often double their capacity when they are free from worry and confident that their work is being performed satis- factorily. A competent instructor can frequently help an individual overcome a weakness and should quickly discover if an employee is not fitted for his task. Under scientific management the work becomes stand- ardized and the product being made in the same man- ner becomes a standard product. In addition to a demonstration, instructions should be furnished in printed form. This enables one who is ambitious to study at home, or refer to them when in doubt. The chief objection to verbal instructions is that in repeating the orders from the executive or planner to the workmen, they are finally given in an entirely changed form from that which was originally intended. Employees should be convinced that the instructions are meant to be helpful and are not intended to deprive them of their former privilege but comprise a co- 76 BUYING BRAINS operative plan to make them more valuable employees — and they should be fairly rewarded for their co- operation. A Suggestion. — The best method of to-day does not indicate that it should he the approved plan of to- morrow. Employees performing a task should be en- couraged to make suggestions which should be grate- fully received, and if possessed of any merit, should be tested by the planners and a suitable bonus given to the one suggesting same. Thirty Per Cent. Increase. — The average workman does not realize his productive capacity and is usually unable to measure how much real work can be accom- plished during a day. It has been proved in many manufacturing concerns that under ordinary condi- tions, the average employee's capacity is only 60 per cent, productive. Under scientific management this can be increased by 30 per cent. Scientific management not only furnishes a work- man with the necessary instructions but also informs him as to the time allotted for performing a specific task. Under customary management, the head of a department is occupied with the more important func- tions and cannot have a correct knowledge of what the employees in his department can do, or are accom- plishing. A number of workmen will take advantage of this. Others often assume the attitude that it does not pay to be conscientious, as the head of a department does not give them credit for doing more than others who earn the same wages. Employees should not only be instructed but their work should be accurately measured and a proportion- ate reward should be given those who follow the in- INSTRUCTIONS ^7 structions and achieve satisfactory results. Scientific management does not aim to cause overwork, but it calls for instructions that will eliminate needless mo- tions and wasted efforts; its object is to increase pro- duction without an unfair increase of energy. The ma- jority of workmen approve of instructions that will increase their capacity if they are able to earn higher wages. In any employment, the employee deserves the knowledge and information that has been accumulated, which can assist him in higher achievement. By fur- nishing the employee with this information you make him a more intelligent workman and consequently, will be well repaid by obtaining from him maximum results. After an applicant is employed you should give him such instructions as will assist him in solving future problems. The difficult situations should be antici- pated and he should be given directions that will enable him to render decisions and guide him in his actions. While occasionally there are new experiences in every establishment, most of the occurrences are a repetition of what has happened before and you should capitalize previous experiences and avoid the repetition of past mistakes. Other Policies. — The book of rules furnished by Marshall Field & Company to the employees has often been referred to as an exceptional example of how the employee should be properly instructed. Instructions of that character mean uniform service throughout an establishment; the value of the employee is largely dependent upon how well he follows the instructions. The Marshall Field book of rules impresses upon 78 BUYING BRAINS the employees how they should address the patrons, how to be courteous, how to adjust any differences, the proper attitude toward their fellow-workers, the correct attire and hundreds of important questions an- swered. Determining a policy counts for very little unless the employees are instructed and made to under- stand it; the store is not judged by the intention of the executive but by the actions of the employees. You can visit a United Cigar Store in any part of the country and you will face the clean, tidy clerk who will greet you pleasantly; he will be courteous and thank you for your purchase. He will not discuss politics with you nor will he encourage you to pay a social visit in order that he may have a gathering as was customary in the average old-fashioned cigar store. This uniformity of service is not because they have selected only individuals of the same inclinations but is the result of having supplied the new employees with a book of instructions, and insisted upon a strict obedi- ence of the rules outlined. In many well-regulated concerns each new employee is requested to place his signature on the dotted line of a "Rules and Regulations" book and is given ample time to read it carefully before affixing his signature. A Side Light. — A new employee working in a de- partment store with an unusual reputation for re- liability made a sales record surpassing all the older employees in his department for daily sales. He had not been instructed otherwise and was telling patrons of reductions that had never been made. They pur- chased liberally, not questioning the salesman'^ ve- racity. He was securing increased patronage at the INSTRUCTIONS 79 expense of the policy and the reputation that had made the store's success possible. Necessary Instructions. — Both retail and whole- sale salesmen are often expected to dispose of articles which they know less about than do many of the cus- tomers. They are given articles to sell but receive no instructions as to how they are manufactured or for what uses they are intended. It is embarrassing at times to the salesmen and the loss of many sales is the result of this lack of knowl- edge. Salesmen often reply in the affirmative or nega- tive rather than admit their ignorance and reluctantly misrepresent. Clerks are employed without experience and are transferred from one department to another and no information or instruction given them as to the merchandise they are expected to sell. If an employee is hired to sell gloves, shoes, hosiery, or millinery, there is general information that should be available and each employee should receive instruc- tions as to the intent of the articles they are handling and how to sell them and above all, to satisfy patrons. New employees fail continually and they drift from store to store and department to department without gaining real knowledge, and after years of unpleasant experiences they remain unthinking and unknowing employees. The buyer of a department frequently receives as large a salary as that earned by several clerks. He should not alone purchase the merchandise but also impart some of his superior knowledge to the clerks. The Smaller Shops. — Many persons prefer patron- izing the smaller shops to the department stores be- cause they usually receive more intelligent service from 8o BUYING BRAINS the proprietor or his clerks. In these, the proprietor often confides in his employees ; is surrounded by them when he makes his purchases, and while their informa- tion is gradually collected, it is superior to the knowl- edge gained from the department store clerk who often is not supposed to know anything except the price of the article. The Salesmen. — The average wholesale salesman is better informed than the average retail salesman, but instead of selling the consumer, is meeting the retailer, who possesses greater knowledge than the consumer, and is expected to have technical information which should materially assist the retailer. The customary plan is to furnish the set of samples and a price list and satisfactory results are expected. The outside salesman is practically "his own boss" and his own teacher. For years he continues to waste time, efforts and opportunities, believing he had adopted the correct method of selling. Often no attempt has been made to instruct him in the art of selling. No suggestions have been given him as to planning his daily or season's programme and no information supplied him in regard to the mer- chandise he is handling. The prospective purchasers are the only persons who listen to him trying to dispose of his product. He has no knowledge of the methods adopted by other sales- men and for a long period continues to repeat the same blunders. Salesmen representing the same con- cerns and visiting similar trade, vary in their sales to such an extent that it is not unusual to have one repre- sentative sell more than three or four others com- bined. It is often stated that salesmen are born and INSTRUCTIONS 8i cannot be made — but they certainly can be improved. The Sales Manager. — Frequently a successful salesman becomes a sales manager and has charge of many salesmen. He criticises them for their poor showing instead of outlining for them better methods. Why not accumulate his experiences and give the sales- men the benefit of it? Why not explain how he made a success ; tell them how to arrange a programme for each day, how to approach a prospective customer and show his samples, analyze his proposition, appeal to the customers and, in proper manner, close a sale. The sales manager should furnish detailed infor- mation regarding the merchandise. Explain why one article costs more than another. Compare the product with that of competitors so that your representatives may successfully overcome competition. Your salesmen should represent you intelligently. Let them meet your prospective customers with a su- perior knowledge, give them the necessary confidence in themselves and their firm and the customers will respect and be glad to meet them. Some of the most successful concerns have con- ducted schools for their salesmen and have them visit the factories at regular periods. They have continued the practice for many years and in the meantime the industries have grown larger and the employees have become more efficient. You should assemble the repre- sentatives and have the most successful salesmen in the various branches inform the others how the results had been accomplished. You would then establish a clearing house for the best ideas and raise the effi- ciency of each individual. Generalities. — Each employee in every position, no 82 BUYING BRAINS matter how simple the task may be, should have a fair start and not be handicapped by lack of knowledge. You would not engage a lawyer who had not received his legal training. You would not send for a physi- cian who had not obtained medical instruction. You would not have a tooth extracted unless the dentist had his diploma, but employers continue to have em- ployees represent them without training or instructions. You must not only employ the correct type of em- ployees and place them in the proper positions but you should have them start with the required instruc- tions. A proper start makes the right finish. CHAPTER V DEVELOPMENT AFTER having carefully selected the employees for the various positions and furnished them with proper instructions, the next step is an important one — the development of the employees. You should not only develop them so that they are capable of filling their present positions but they should be further de- veloped so that they may occupy higher positions at a future time. A successful man stated that he would prefer his son to be employed by a certain employer without com- pensation rather than receive a high wage working elsewhere. The Start. — In many instances, it is far better to have a child work for inadequate reward under proper management to gain the right kind of training. The first lessons in business have an important effect on a young man's actions in life. Getting a good start in business is very helpful in shaping the character, habits and ideals of the individual. This is only one of the reasons why it is an advan- tage to a concern to start its future executives at the bottom; give them the proper training, inculcate in them the highest ideals and make them fitted for higher positions. When you are looking for an executive, instead of employing one trained by your competitor whose ideals and poHcies are different, it is far better to promote one from your own commercial family. 84 BUYING BRAINS Fver}' employer who selects the right type of young men and helps them develop intelligently should have available material for higher positions. Promotion. — This method of promotion encour- ages the employees to look into the future with a hope of obtaining a higher position and it usually does much good towards developing the employee and bringing out the best that is in him. The same employee will produce different results under various employers. Quite frequently the em- ployee will increase both the quantity and quality of his work under different men in the same establish- ment. There is a science in handling employees and no stereotyped method is successful, because each in- dividual should be treated according to his particular traits and adaptability. It is impossible to develop employees to their maximum ability unless they are convinced of your interest in them and your sincerity and fairness. When they like you personally, they will endeavor to please you by following your instructions and prove that they are deserving of the interest you take in them. Study of Help. — ^You should be tactful in talking to employees. Do not disregard their feelings by tak- ing advantage of the higher position you may occupy. If you make a study of your employees and understand them, you will discover that it will be helpful to them and profitable for you. You should be truthful to your employees, making only such promises that you will be able to fulfill. A promise to them should have the same consideration as any contract you sign. You cannot expect the em- ployees to have confidence in you and believe what you DEVELOPMENT 85 say if you have an established reputation for breaking promises. Encouragement. — Employees should be encour- aged to think about their work. If they acquire this habit they will at some future time think correctly, will be helpful to your organization and a credit to you and themselves. Do not regard your employees as inferior persons ; instead of ridiculing them for their shortcomings, which are probably due to a lack of training or proper environment, you should sympathize with them and help overcome their weaknesses. This is not philanthropy, it is a good business policy. The same traits and habits cannot be expected of em- ployees in their various stations but their ability can be improved to some extent, whatever it may be. Latent Powers. — Thexe is hardly a normal person — regardless of the type — who cannot be stimulated if the proper appeal is made to him. Many a man has risen to a high position just because his employer was good enough to awaken him to the discovery that his latent powers were lying dormant. Do not attempt to develop your employees with an iron hand because they will only please you on the surface but at the critical moment will disregard you and your interests. You cannot expect to develop your employees, if you lack faith and the essentials to develop yourself. The ideals of the employees are seldom higher than that of the management. Raise your own ideals and you will help elevate those of the employees. If you are careless and indifferent, or if you do not serve your patrons honorably and intelligently, you cannot hope to have your employees do otherwise. High Standards and Ideals. — The example you set 86 BUYING BRAINS for the employees should be of high standard and ideals that will be an inspiration to them. A number of employees regard their employer as their ideal and attempt to imitate and interpret his many acts. The younger employees especially think what the employer does is proper, and are greatly influenced by his ex- ample. Older employees often follow the fashion of the employer, thinking it will please him. Some of the most successful merchants are among the first to reach their establishments, knowing that it will influence the employees to be on time and that they might feel ashamed if their employer continually arrives before they do. Other employers are extremely courteous to customers making small purchases, demonstrating to the employees that each patron, re- gardless of the size of the purchase, should receive the proper courtesy and attention. If you have a task that must be finished hurriedly, there is no greater incentive than to help personally, or have one in a higher position assist the workmen, which immediately impresses them with the impor- tance of a speedy completion. The examples of John D. Rockefeller, Andrew Car- negie, Marshall Field and such leaders of men, were followed by those surrounding them, who in turn set a similar example to those with whom they came in contact. In this manner the ideals of an employer extend throughout a concern, and they can be recognized by the actions of the employees. You can walk into an establishment, or receive a number of communications from a concern, and generally judge the executive and form a correct opinion of the management. DEVELOPMENT 87 The Understudy. — The development of employees for higher positions and the selection of lieutenants is of utmost importance. Employers often imagine that they do not have the material to fill such positions and are at a loss when the vacancies occur. The em- ployees in the lower positions may be compared to raw material and the finished product is largely the result of the training they receive. Each employee holding a position of any consequence should have an assistant or understudy, one who is capable of assuming the duties, if the one holding the higher position is ab- sent, leaves or should be promoted. The understudy should be made to believe that he may be called upon to occupy the higher position and should acquire the necessary knowledge and develop himself so that he may creditably substitute for the man he assists. A number of employees dislike and become jealous of a capable assistant, thinking he may some day be selected for that position. If the policy of a concern is fair, and the employee is performing his duties in an able manner, he should not have such a thought. In such cases, one is very profitable to his employer and valuable to himself; the employee, thinking his understudy may take his position, will inevitably make for the highest in efficiency and produce results to hold his own. With few exceptions, every actor and actress, including such stars as Sarah Bernhardt, John Drew and George Cohan, have understudies so that an audi- ence will not be disappointed if the stars are disabled. In every establishment the lieutenants and stars should have understudies that the business may be conducted without interruption or disappointment if any individ- 88 BUYING BRAINS ual is unable to attend to his regular duties. In pre- paring for an emergency and developing men for higher positions, you not only safeguard against the future weakness of an organization but you stimulate the employees who look forward with hope and ambition. Bethlehem Steel Corporation. — The history of the Bethlehem Steel Corporation, which was converted from a financial wreck into a great power within a few years, is the best known example of how men can be selected from your own organization to occupy the responsible positions. Mr. Charles M. Schwab, who is responsible for this remarkable success, in an interview published in the New York Herald, stated : "I am not a believer in genius. I believe the world is filled with such men, who can do as Mr. Carnegie and others have done if they have a similar opportunity, even though it comes under high pressure and is brief. I believe it is just as full of men who can do as well as the greatest in all walks if they are given the chance and the proper development. Acting upon this belief, I determined to train the prospective heads of the Bethlehem Steel Corporation, as Mr. Carnegie had trained his boys. I selected for the fourteen heads I required, boys who already were at Bethlehem. Most of them were born there. I felt sure that under different direction they all would make a signal success. I took them all from minor positions. "I pulled them together in a spirit of harmony. I imbued them with the idea that sentiment should have just as fixed a place in the management of the place as hard work. Not one of these boys has slipped a DEVELOPMENT 89 cog. To-day every one of them is sure of a comfort- able future. They are the Hfe and soul of the Bethle- hem Steel Corporation. They are all directors of the company. They meet every day and decide the policy of the company as a unit. They surcharge every busi- ness transaction with sentiment and their associations with the pleasantries and familiarities of affection.'* Outside Help. — A man trained and developed in an organization is, naturally, better acquainted with the details of the concern. He is more loyal and should be more valuable than one who has been developed by a competitor. Employers often consider it easier to engage lieutenants trained by others ; the result is that those employers who should be friendly with each other are continually antagonizing one another by en- gaging their employees after they have acquired the experience and training. The employees frequently are not so valuable under changed management. The employers and employees suffer from this method of filling the higher positions. Fair treatment, proper environment and having each individual employed in a position for which he is fitted, have a marked influence on the ability of the employee. Unless an employee is satisfied with his position and has hopes of obtaining a better one in the future, it is impossible for him to do justice to his employer. Helping Employees to Help Themselves. — You cannot expect an employee to perform his duties in a satisfactory manner unless he has been instructed and trained. The employer who can select the right man for the right job and develop him for the higher posi- tion, is rendering a service to the employee and will be rewarded for his efforts. 90 BUYING BRAINS Employees are very grateful to the employer who develops them and makes it possible for them to oc- cupy higher positions. During recent years machinery has been invented and improved. We are now de- veloping men to handle the machinery in an efficient manner. You cannot develop the men mechanically. The human being must be managed by one who works with a humane spirit. "Live Wires" and Contests. — Employees are fre- quently developed unconsciously by placing among them a worker with unusual ability. He demonstrates what is possible and the workmen will endeavor to imitate him. The capabilities of the employees, in an entire department, are often dependent upon the ability and actions of the head of that department. New em- ployees often imitate the one instructing them. It is a good plan to have the best workman within view of a new employee. Wages is not the only incentive to employees. They like recognition and often prefer more responsible po- sitions at the same wages, rather than to work for a long period without promotion. Contests appeal to those who are ambitious to demonstrate their superior ability. Though the prizes have a small monetary value, they develop employees and increase their performances. The United Cigar Stores Company have contests between employees of the various stores, both in sales and distribution of a specified class of merchandise. A number of concerns have inaugurated contests among their salesmen. The competition makes, the ambitious more industrious and the indifferent men become aroused, as they are anxious to make a satis- DEVELOPMENT 91 factory showing when their records are compared with others. However, unless the contests are fairly arranged and managed with the proper spirit, a great injury can be done if the contestants are embittered against each other. Opportunity for Development. — Most employees are anxious to become efficient. If they understand and are interested in their work, they will develop into more able employees under the right type of manage- ment. No management can be entirely successful un- less it contains the human element. A smile, a pleas- ant word and a "Good Morning" to all, from an em- ployer, is appreciated by the employees ; it makes them enjoy their work and they become more industrious. Employers receive a profit from the services of the employees. They should, in addition to their wages, be profited by development which makes higher wages possible. The shorter working day furnishes an op- portunity for development that was in former years a hardship and in many instances almost impossible. Ambitious employees are taking advantage of the extra hours by attending night schools, taking special courses and devoting a portion of their spare time to reading. The leading merchants are encouraging the em- ployees in this educational spirit by establishing schools for them, conducting special instruction and in many ways furnishing avenues of development which are mutually beneficial. Smaller merchants who cannot afford such methods of assistance are advising their employees as to what branches they should study for their future welfare. 92 BUYING BRAINS The trade and industrial schools are preparing the children for later employment. These schools can be greatly assisted if the employers in the various com- munities would become interested in an advisory ca- pacity, informing the instructors as to the requirements of the children when employed later in life, and by co-operating with the school they could select those who had been trained in accordance with their sug- gestions. In the schools no attempt should be made to develop a child for work for which he is not mentally or physi- cally qualified. Vocational study is helpful in start- ing the child on the right road to success. Post-Education. — Employees leaving school at an early age thus gain in commercial training. They should also receive the "after education," which is necessary that they may occupy higher positions. Employers who become sufficiently interested in their employees to ascertain the positive and negative qualities, can offer valuable suggestions as to what studies will materially aid them to attain the higher standards. An employee selected for promotion after having been developed in such manner, serves as an in- spiration to the other employees, who will be anxious to study for similar promotion. Employers who subscribe for trade papers, technical magazines and books for their own development, can perform a great service by loaning them to the em- ployees, who can thus improve conditions by reading them. A great many persons waste a large portion of their spare time because they are not sufficiently interested in their work, while others would be re:- ceptive if they were properly impressed with the ad- DEVELOPMENT 93 vantages of mental development and were shown the proper course to pursue. Every mind is a warehouse wherein knowledge can be stored, to be recalled when the opportunity re- quires it. How Others Help Employees. — ^The National Cloak and Suit Company has a school for employees who are taught by twelve teachers, headed by a prin- cipal who was formerly a school superintendent. The New York Board of Education became interested and furnished three public school teachers, and one hour a day of the employer's time is given to study. The John Wanamaker Commercial Institute was established by Mr. Wanamaker to educate the young men and women in his employ who were prevented by circumstances from attending other schools. The courses are to prepare them for commercial life. Dur- ing 1 9 14 nearly four hundred studied in this institute. The Department Store Educational Association of New York, which provides vocational and salesman- ship training, recently presented forty-four saleswomen at Stem Brothers with diplomas, they having mas- tered the various studies. Discipline. — Discipline is necessary in every concern, and as the management improves, the requirement for discipline is lessened. In well-managed establishments with the rules determined and known to the employees, very little discipline is required. If an employee en- joys his work, desires to retain his position, and is hopeful of promotion, he will endeavor to conduct him- self in a manner that will please the management. In former years, the parent would thrash a child, the teacher had a special rod for the mischievous boy. 94 BUYING BRAINS Both the parent and the teacher have changed their methods, have become more human and intelHgent in the handling of children. Autocratic employers have not acquired the wisdom of the parent and teacher, still clinging to antiquated tactics in handling employees, grasping every oppor- tunity to abuse those employed. The mental thrashing of an employer leaves more lasting hatred than the physical beating of the parent or teacher. The result is that the employees become untruthful, deceive their employers and welcome a chance to repay them for their hostile attitude. You cannot compel an employee to give his best ability by abusing him. He can be improved through instruc- tion and fair treatment, and will then willingly give what you most desire. The best intentioned employee will make mistakes. He should be corrected to avoid a recurrence and discipline should be exercised to make him a better employee so as not to destroy his loyalty, enthusiasm and willingness. Discipline should be administered in such a manner as to make the employee regret his error and thankful to you for the manner in which you have criticised him. Without proper discipline the employees may not realize their mistakes. It is folly to attempt to conduct a business without it. Continually finding fault and seeking occasions to belittle the employees is even more foolish. You should not abuse an employee before his fellow-workers. He becomes humiliated, dislikes you, and his mental and physical self will fail to respond to higher achievements. Employees have a feeling of sympathy for each DEVELOPMENT 95 other. Your attack will be resented by others and they will regard you as a tyrant. They may attempt to please you while you are present but when you are absent they will give you what they think you deserve. Do not criticise a head of a department in front of the employees under him, else he will not be able to command their respect and will lose control over them. It is not unusual to have employees thank you for your criticism when they are convinced that you do not take a pleasure in reprimanding them and the advice is sound and reasonable. Do not expect impos- sibilities and never condemn an employee for commit- ting an offense unless you are prepared to suggest the proper procedure. Do not attempt to scare an em- ployee by screaming at him. Talk to him in a rational way ; it will have a better effect. In some concerns the employees are disciplined in such a quiet and unassuming manner that others never know when it takes place and the criticism is regarded as friendly advice for their mutual welfare. It is claimed by some employers that all employees cannot be treated in this manner. Those who will not accept the milder discipline should be discharged. You are not obliged to retain the services of those who will not do as they are told. Modern manage- ment directs you to treat your employees in a humane manner. It is always a good policy to mention to the employees that they should not commit such offenses. Explain the detrimental effect — in other words, trace the cause and show the effect. Educate your employees to do right, reward them for faithful services. Those who are worth retaining will obey your instructions and use their best judgment 96 BUYING BRAINS to give satisfaction. When a mistake is discovered, do not wait for a repetition by others, but warn them in advance with a proper notice. The best leaders are not those who make the em- ployees afraid to do wrong. No, they are the em- ployers who influence them to do right. Fairness. — Discipline should be twofold. Em- ployees should be complimented when they do some- thing exceptionally well, and welcome criticism when they are in error. If the executive is fair and con- siderate to the heads of the departments, they will likely follow his example in their treatment of other employees. If the discipline is just, the relationship between the employer and the employee is pleasant; friction is almost unknown, an intelligent understand- ing prevails and harmony exists. In many establishments every employee knows what is expected of him and is ashamed of his own errors. They all work together with an ambition to help their friend — their employer. If you keep an accurate record of the employees' performances, mistakes and neglect of duty, you are enabled to form an intelligent opinion as to their capabilities and are able to render equitable decisions in regard to promotion, or dismissal when the occason arises. Frequently the head of a department will take a dislike to an employee and make an exaggerated or unjust complaint against him. Still the records, if properly maintained, ensure the employee a fair deal, and you are not misled in your action. This is one of the many advantages of scientific management. . No discipline has such a beneficial effect as showing an employee a bad record and comparing it with the DEVELOPMENT 97 records of others performing similar work. An em- ployee will usually admit that he is ashamed of such a record and will volunteer to improve it in the future. Imposing Fines. — In many concerns a system of imposing fines is in vogue for mistakes, lack of re- sults, lateness and other causes. A fine imposed is very effective and prevents the commission of similar offenses, but it embitters the employees and has a detrimental influence on their minds and they will cease doing more than is actually required to retain their positions. It is preferable to warn them of their mis- takes, and if they do not discontinue them, it is far bet- ter to dismiss the employees than to have them remain and be antagonistic. If fines are imposed, under no circumstances should the fines collected be kept by the employers. The employees would naturally question the justice and object of the fining system. It is a good plan to have the fines returned in some manner for the benefit of the employees. Allow a committee composed of employees to decide as to the proper distribution of the fines collected. Employers who have never worked for a wage, or who in times of prosperity may have forgotten their struggling days, may not realize what these small fines mean to an average employee. You must have disci- pline, your rules should be obeyed, the employees are expected to be industrious and careful; at the same time you should be just, considerate and fair with those less fortunate than yourself. Loyalty. — Employers who are loyal to employees usually have loyal workers. You cannot expect loyalty unless you inspire and deserve it. By developing an 98 BUYING BRAINS employee and being fair to him, he is grateful to you and is anxious to repay you by showing his loyalty. In times of emergencies or reverses, the real test of loyalty of employees can be properly estimated. In some concerns employees willingly work extra hours and make every possible effort to be of value when strenuous conditions require it, while in other establishments, the employees are indifferent as to the condition of the business, shirk their duties, disregard the interest of the employers and are unwilling to per- form any task that is not specified and included in what they are supposed to do. A loyal employee uses every effort to please a patron, knowing it is helpful to the management, believing he will receive an indirect benefit. Employees have been known to work when they were quite ill, against the wishes of their family and physician, thinking that their presence was required to complete certain tasks. Loyal workers are proud of their concern and their employers during working hours and after hours they are constantly thinking of the betterment of their estab- lishment. Employees often ridicule the management to one another, and frequently make known their grievances to customers. When you are really inter- ested in the welfare of the employees, develop, assist, advise and help to educate them, a loyalty is inspired that is remembered many years to come. Worthy Employees. — Employees who start in the lower positions and are gradually advanced to posi- tions of authority are genuinely interested in their concern and encourage loyalty among others. The attitude of a head of a department toward a firm has a remarkable influence on the employees in his de- DEVELOPMENT, 99 partment. An infant knows by intuition when persons really care for him and the feeling is reciprocal. The employee realizes when an employer is friendly and thinks of him beyond the mere results he produces, and in turn naturally thinks of the employer further than the wages he receives. Loyal employees perform their services as conscientiously whether you are at lunch, in a hospital, or on a vacation, just as though you were constantly watching them. The Law of Compensation. — A young man of twenty years was sent for and offered a more lucra- tive position than the one he was holding with an employer who was closing out his business. He stated that "He could not accept it for two months as his employer would not be closed out until that time." When the prospective employer told him "the offer was conditional that he accept at once," he replied that "he would not desert an employer who had en- gaged him five years ago and had always treated him fairly, he would prefer walking the streets." He was not compelled to do this. His employer heard of the incident and secured for him a suitable position when he discontinued business. There is no fixed rule for producing loyalty. It is the natural result of an unmentioned understanding between the employer and the employee to help one another. The spirit of loyalty figures prominently in the success of a concern. Many of the failures are due to the lack of it. Interested in Their Work. — In order to have your employees interested in their work, it is essential that they should enjoy it. You should assign to each indi- vidual a task that he is capable of performing, the en- loo BUYING BRAINS vironment should be such as to make his work pleasant. Employers and employees can become so attached to their place of business that they will be eager to arrive and work cheerfully throughout the day. A prominent banker who had two days of holiday said: "He could hardly wait for the opening hour of business as he became irritable and nervous when he remained away from his office for too long a period." Employees who are given responsibility and obtain satisfactory results often find more enjoyment in their work than in their hours of recreation. By develop- ing employees and making them satisfied with their positions, a feeling of interest and enjoyment is in- spired. In some establishments, where the proper spirit exists, the employees derive real pleasure from their employment. Obtaining Maximum Results. — It is impossible to obtain maximum results unless the employees enter the establishment in a right frame of mind and leave it at night with pleasant thoughts. At a subway station, a merchant was heard to say to a young lady, "I am indeed glad you like your position and enjoy your work. I wish you a pleasant day." Several young men who overheard the conversation smiled at each other; evidently they were employed under different circumstances. There is no reason why the employees should not enjoy their work if they are properly assigned and have connected with the right type of employer. You should help your employees enjoy their tasks; the re- suits will bear the tags of satisfied workers. The Giving of Suggestions. — A fixed rule in many printing shops is to "follow copy," no matter where DEVELOPME^JT , , ,,,,,,, ,;^oi '. > />\ ', ' '' { } ''>' ^ V it leads you. In many concerns it is understood that the employees must follow instructions, regardless of the consequences. In other concerns, the employers and department heads issue instructions but are open minded and willing to receive suggestions. A number of leading firms have suggestion boxes where the employees may deposit suggestions for im- provement in the service or management. In some instances they keep a record of the suggestions made and adopted, giving those who offer the valuable ones the preference in promotion, while others give cash prizes, or stated amounts for the suggestions ap- proved. The concern that will not listen to the sug- gestions of the employees cannot successfully compete with an establishment of right-thinking employees. The minds of many will outweigh the thoughts of the few. Fire Commissioner Adamson, of New York, made an offer of an "administration medal" to the fireman who made the best suggestion for the improvement of the fire-fighting efficiency of the force. Five thou- sand firemen sent in their ideas. A number of the suggestions were considered valuable and have since been adopted. Twenty-three of the firemen received honorable mention for their ideas. Receiving so many replies, it was difficult for the committee to decide as to the selection of the best suggestion. The fireman awarded the prize had suggested that it was unfair not to keep a definite record of the effi- ciency of the members of the department. If they did anything unusually heroic in the Hfe-saving way it was noted; and if they did anything unusually bad it was noted, either by dismissal or by some punishment, but .TQ2 . . . ^ . . . . , BUYING BRAINS between two extremes there was no system of records. The other suggestions included the exercise of the firemen during leisure hours; the kind of sprinklers to be used under cornices; how to prevent hydrants from freezing, the cutting off of the gas supply, and many others of sufficient value but too numerous to mention. In your establishment you probably have employees who have ideas and thoughts that would prove val- uable to you. Furnish them an outlet and receive their suggestions in such a manner as will encourage them to think about their work. All of the suggestions can- not be adopted, but you can give them consideration and decide which will be helpful to the management. You should also have your employees ask questions about their work; in their indecision they will often act according to what they think the better way, rather than ask your advice. The employees should not pro- ceed with a task if they are doubtful as to the proper course. If they are in doubt allow them the privilege of inquiring about it. The F. B. Stearns Company, of Cleveland, Ohio, makers of the Stearns-Knight cars, hold meetings after five o'clock, which are attended by the officials and department heads ; the mechanics are privileged to ask questions and make suggestions. This arrangement was made, as the department head is often too busy during the regular hours to give the employees the consideration they should have. Co-operation of this nature is beneficial to both the employees and manage- ment, it can be followed profitably by many others. When George J. Whelan retired as president of the United Cigar Stores Company, he stated that 'This DEVELOPMENT 103 company was built up by the men in it, and not by me. I get the credit for it but I didn't do it. Practically everything in this company, even the auditing system, was invented by somebody else. I simply let them go ahead and do it." Generalities. — Too much attention cannot be given to the workrooms, the arrangement, surroundings and environment. A study of the conditions may reveal that the temperature can be changed so that the em- ployees enjoy better health and are able to accomplish superior results. The lighting system ought to be such that the light is as evenly distributed as possible. There should not be an unnecessary strain on the eyes. Workers can improve the quality and increase the quantity of their work, if they are not compelled to depend upon arti- ficial light. A noise of any kind distracts an employee. The passing of others disturbs those who are attempt- ing to concentrate. The proper wearing apparel is essential. If the em- ployees cannot work advantageously in their street attire, there should be a suitable room where they can change their clothes. Employees know and appreciate when you are thinking of their welfare and are trying to improve their working conditions. Some employers do not consider it necessary to cater to the employees. They imagine the employees should be glad to have a position. You are willing to cater to the customers to increase their patronage. Why not cater to the employees to improve their ability and make each unit a solid link in the chain of success ? ''Employees are what they were when you employed them plus what you have made them," CHAPTER VI COMPENSATION SCIENTIFIC management, instructions and de- velopment are all important factors to increase the ability and worth of an employee, but these helpful movements must be coupled with fair compensation if you desire the co-operation of the employee and seek to obtain maximum results. Many employees are will- ing to overlook objectionable features of their employ- ment if they receive a fair remuneration for service rendered. Welfare work, liberal treatment and in- structions have a tendency to make an employee more loyal and industrious, but without a fair reward for services rendered, the time and money expended in other directions is largely wasted. Comparison. — No matter what position an em- ployee occupies, he determines by a comparative basis whether he is paid as well as friends doing similar work in other places, or if his wages are in proper proportion to that received by others in the same estab- lishment. You cannot expect to have an employee permanently satisfied with his position unless he is paid a fair wage for his services. The wage problem has not been given ethical con- sideration by either the employer or the employee, con- sequently each party is seeking to obtain an unfair advantage over the other. The employer pays as little as he imagines will retain the services of an employee 104 COMPENSATION 105 who is determined not to give an over-measure for the money he receives — but this must be remedied. Personal Equation. — A large percentage of em- ployees are underpaid for what they are capable of producing; conversely an equally large percentage are overpaid for what they really produce. It is far better to encourage an employee to accom- plish his maximum capacity by paying him an ade- quate wage for what he produces. The reason scientific management is welcomed by employees, and is profitable to employers is that in- stead of paying a man for his time, you pay him for the work he performs. If a fair rate of compensation is established in addition to the assistance rendered by the management, he has no complaint to make — draw- ing his wage on the strength of his own ability. Exertion and Results. — Employees prefer exerting themselves and receiving higher wages to taking their time and being paid a lower wage. Paying for results and allotting time for a task permits you to intelli- gently estimate on contracts to be undertaken. Pay- ing for time and receiving money for production makes the calculations difficult and inaccurate. // an employee is paid for time he watches the clock; if he is compensated for performance he watches his work. It is only natural when employees receive the same wage, regardless of the quantity and quality of their work, that there is no incentive to exert themselves mentally or physically. Neither the employer nor the employee will secure his full share of prosperity unless the employee pro- duces his maximum capacity. There has been a more io6 BUYING BRAINS equitable adjustment of compensation in the trades and industries than in distribution. In most industries, the rate of compensation for the same work in differ- ent concerns does not vary to such an extent, but in distribution it is not uncommon for a clerk to receive double the wages of the man across the street holding a similar position. Former Practice. — In former years it was the prac- tice of the merchant to dispose of his merchandise at prices as high as possible. A salesman was judged by the size of the profits he obtained. The progressive merchants, however, decided that it was preferable to ask a fair profit and retain the good will of their patrons. The same principle is true in determining the compensation of employees, but the employers are tak- ing longer to recognize this fact. The employee and the customer may be deceived for a short period but will eventually learn that an unfair advantage has been taken and finally the em- ployer will be the loser. Rewarding Conscientious Effort. — Fair compen- sation is the most convincing argument that an em- ployer's prosperity is of special interest to the employee and he will endeavor to increase the earnings of the concern. Employees should be rewarded for conscientious services ; the best method is to develop them for higher positions and increase their wages in accordance with their promotion. A business does not usually permit a continual advance of wages for the lower positions, therefore it is a good plan to start your employees at the bottom, eliminate the inefficient and assist the am- bitious and capable to attain the higher rank. Every COMPENSATION 107 time an employee is engaged from the outside to occupy the more important positions, you lessen the distribu- tion of rewards for those already employed. If you have waited in line for a long period to gain admission to a meeting or purchase tickets and had some person from the outside step in front of you, your feeling on such an occasion is quite similar to that of an employee waiting for promotion and then having an outsider obtain the position desired. When an employee makes a request for an increase, do you con- sider whether he is worth more than he is receiving, or if you can retain his services without granting the increase ? If They are Worth More to Others, They are Probably Worth More to You. — Your employees should not be compelled to seek employment elsewhere to secure fair compensation, and then have you offer them higher wages when they have another opportunity and want to leave you. When an employee starts searching for other employment he loses interest in your establishment, and if he secures a higher wage under such circumstances when leaving your employ, he does not fully appreciate or feel grateful for the increase, and the spirit of co-operation may never occur to him in the future. A manager of a department store boasted that he could always tell when an employee was approaching him for a raise and he would walk in another direction. The result was that the more efficient employees be- came disgusted with his actions; they also walked in another direction and obtained employment where the conditions were more favorable. Some of these em- ployees have since held responsible positions in com- io8 BUYING BRAINS peting concerns; this formerly prosperous department store has discontinued business and its patrons are now being served by other growing stores with fairer methods. The Weak and Inefficient. — By continually refus- ing to promote help and increase wages, the services of those who are not ambitious, or are not capable of se- curing employment elsewhere will be retained, and the best types of employees will leave and be employed by others. Do not attempt to make your labor pay the penalty of your inefficiency and losses in the manage- ment, purchase, sales and other departments. Each division should be so perfected as to be able to pay adequate compensation for services rendered. Labor must always be justly rewarded. The introduction of scientific management in busi- ness makes it possible to develop employees so they can earn and receive higher wages. No concern can afford to pay its employees a more liberal amount than they earn and successfully compete with others, but the con- cern can increase the earning capacity of its employees and retain more able workmen than the employers who are less scientific in management. The success of a concern becomes known to other workmen; the best types fully realize that there are greater opportunities with well-managed concerns and naturally seek em- ployment with them. Capital and Labor. — The disputes between capital and labor include a variety of differences, but the chief cause of conflict is the question of compensation. Whenever the two parties attempt to arbitrate, each is often willing to grant other concessions, if the wage rate can be determined satisfactorily, the employee de- COMPENSATION 109 manding as high a wage as he can secure, and the em- ployer anxious to pay as low a rate as he can. The Wage Problem. — The average employee has nothing else to convert into cash than his services and naturally wants to dispose of them at a reasonable price. He cannot expect to receive a higher price than its real value permanently, but offer him fair compen- sation and he will be entirely satisfied with his transac- tion. If he knows he can increase his selling price by increasing the value of his services, he will aim to be- come more valuable to you, as scientific management will prove. The Keeping of Records. — The usual mistake of many employers is to keep no accurate records which would enable one to properly recognize work of su- perior quality. Efficient employees will finally con- clude that it is wasted effort if they do not secure pro- motion or higher wages than those who are indifferent and less capable. Efficient employees must be rewarded to retain their efficiency, in addition to increasing the ability of those who would be contented with their present wage — unless there was an incentive to arouse them. An increase in wage furnishes an exceptional opportunity to inject the personal element and secure the loyal support of the employee by inspiring him to continue to improve himself for still greater achieve- ment. Arousing Interest. — There must be an incentive that appeals to the individual if desired to influence him to exert himself — the greatest incentive is addi- tional compensation. In work and in play, most per- sons are inclined to take it easy unless they are stirred or aroused to do otherwise. Men of wealth often play no BUYING BRAINS games for a small amount, believing that there is an added interest and effort when they are playing for money. In baseball we have the post-season series, which enables the players of the leading teams of the two leagues to earn additional compensation. It adds interest to the game ; it has an influence on the playing of the clubs and the habits of the players who do every- thing that is possible to share in the post-seasons' receipts. In a holiday rush the employees often imagine that they are imposed upon and have a tired appearance, but when they receive a stated salary and secure extra compensation for additional sales, an expression of satisfaction can be noticed; the employees are en- thusiastic and are sorry that the holiday rush does not extend over a longer period. Financial Lross. — When an employee is carefully selected for a position, and is furnished with the neces- sary instructions, considerable has been invested in him. Unless the investment yields satisfactory re- turns, you become dissatisfied with the investment, let the employee go and suffer a financial loss. After hav- ing invested in an employee, everything possible should be done to have him produce satisfactory results, and the best method is to furnish him with the incentive to do it. In some concerns, the lavatories and secluded cor- ners are the meeting places for employees who take periodical rests, believing that the compensation will be the same, whether they take it easy or otherwise. The theaters, ball parks and pool rooms are filled with employees who are supposed to be selling, collect- ing or doing other outside work. The employees con- COMPENSATION in elude that these habits are maintained by others who receive as much compensation as they do and the wages will be the same as if they spent their entire time work- ing. If the incentives offered were sufficient that they would appeal more strongly than the temptation to attend a matinee or a ball game, the men would work more steadily whether they were watched or not. An employer who has not done similar work himself, or who has not made tests of the capabiHties of the men and does not keep accurate records of results, is con- stantly deceived by employees. Some Need Watching. — Workmen who are not satisfied with their positions and are not offered in- centives sometimes work three times as quickly when an employer pays the department an occasional visit. New employees are often cautioned by others not to do too much work. They are told that they will not be rewarded for increased efforts and that it reflects unfavorably upon the balance of them. A new traveling salesman for one of the largest wholesale concerns in the country was called aside and told *'never make more than one town in a day, be- cause if you ever begin covering two towns in a single day, they will expect all of us to do it and will reduce the sales force." A draftsman holding a new position asked one of the employees for information regarding his work. His question was answered on condition that in the future he would not turn out as much work as he had done the first few days of his employment. These and similar occurrences are the result of employers being unfair to the employees, or not offer- ing them proper incentives. 112 BUYING BRAINS "Fair Play." — The manager of a small concern (which was controlled by a very successful man) was relating an arrangement he had made with a new em- ployee and described the advantages of it. His lis- tener, who had become a leader in his industry, from a humble beginning, remarked, "You are only consid- ering our advantages and not his interests." A good bargain is one that is fair to both parties, otherwise the arrangement will be of short duration and very unsatisfactory. Improvement. — It is conceded by most employers that employees must expect a reward in some form to have them increase their energy and ability ; otherwise they will not attempt to improve themselves. All con- cerns do not permit the same kind of reward. A plan that is suitable in one place is not applicable to another, but the underlying principles are similar in both cases. There must be constant thought imbued in the mind of the employee that it will be beneficial to exert him- self. The prospect of promotion and higher wages will stimulate some employees, while others can be better influenced by knowing the individual act will be re- warded by immediate returns. Rewards. — A great many persons cannot picture the future and become impatient waiting for something that they have no assurance will ever take place. This class of employees will produce better results if they obtain a definite reward the following pay day. A number of plans of compensation vary in both method and results ; one plan may preserve the quality and create a better co-operative spirit, another may increase the quantity at the expense of quality, while the plan which is considered ideal, improves the quality. COMPENSATION 113 increases the quantity, and has a tendency to establish a better relationship between the employer and the employee. Whatever plan is undertaken, the employee must be assured that all promises will be kept and that the rewards will be promptly given. It is far better not to inaugurate a plan than to start it and not execute it exactly as agreed and understood. Various Plans. — In the factories we have the piece- rate plan ; in distribution the commission, and in both manufacturing and distributing the salary and bonus plan is being used extensively. All these are steps in the direction of paying for results instead of hours of labor, but if these plans are not properly applied they can do a great deal of harm and injustice. In some instances the piece-rate and the commission basis may be effective and beneficial, but in many cases they will increase the quantity and sacrifice the quality of ser- vice. The effect of the piece-rate in the industries and commission in distribution is quite similar. The employer is conservative and merely pays for what is actually earned by the employees. But these plans have a tendency to make the employer and em- ployee both lack a feeling of mutual interest and co- operation. The employee believing that he is only paid for what he produces has an independent spirit and resents criticism and interference by the management. The employer only paying for what is accomplished does not extend the necessary assistance and appears unconcerned as to what the individual performs. The Piece-Rate Plan. — In manufacturing, certain standards should be maintained. The employer and the employee continually disagree with each other a& 114 BUYING BRAINS to the quality that should be required. The employees not receiving the proper instructions continue to per- form their tasks in a tiresome or improper manner for long periods without being corrected or otherwise shown. Employers fail to realize when they calculate the overhead charges, that the inefficient employees are a distinct loss to them. The piece-rate causes con- tinual disputes and many employers think that em- ployees doing a certain kind of work are not entitled to earn over a fixed amount. The employers quite frequently readjust the piece-rates and the employees conclude that it is useless to exert themselves as there will probably be another reduction in the rate. There is probably a greater strain under the piece- rate system than any other plan. Employees desiring money for a fixed purpose will often attempt to do more than they can physically endure. There is no loyalty and co-operation under the piece-rate plan and it is considered by many as a poor substitute for the stated salary. It insures full service for money received, but is far from ideal when the employer and employee are indifferent to the welfare of each other and neither is willing to co-operate or assist. The Commission Plan. — The commission plan in distribution increases the efforts of the salesmen, but has a detrimental effect on present profits and future results. It is true that a salesman will have larger sales on a commission basis than he would on a stated salary without an expectation of increased compensa- tion based on his annual sales. A commission salesman will naturally consider his individual interest, may disregard the welfare of his COMPENSATION 115 employer and feel independent to work without con- stant interference. A commission salesman may make sales to cus- tomers when he is sceptical of their financial condition and attempt to convince his employer that the prospec- tive customer is financially sound. The commission salesman may pay scant attention to the small buyers of to-day who may be large consumers in the near future. The struggling young merchant who is conservative in his purchases appreciates cour- tesy and attention, but receives very little of either from the average commission salesmen. The Retail Plan. — The commission basis is not in vogue to such an extent in retailing as in wholesaling. Frequently when it has been tried in retailing the re- sults have been discouraging. The retail salesman purposely avoids those making small purchases and the customer who requires half a yard of silk to match the style recently purchased is promptly informed that they do not have it in stock. Any compensation plan that does not permit the employer to demand sendee in addition to results, lacks the fundamental essentials necessary to success. The Salary and Bonus Plan. — The salary and bonus plan has been tried successfully in both manu- facturing and distributing and is considered more ideal and nearer perfection than any other plan suggested. It insures a stated salary to the employee and removes the uncertainty and worry when an employee knows the minimum compensation he will receive. Employers paying a salary, feel sufficiently interested to co-oper- ate and assist the employee, so that he will earn at least as much as the agreed compensation. The salary ii6 BUYING BRAINS should be the current rate that average employees would earn performing such work under customary management. The salary should be sufficiently large enough for the employee to defray his necessary ex- penses for food, raiment and shelter, and should be a fair return for the results expected of an employee who does not earn a bonus. The bonus will stimulate the employee as much as the piece-rate as it has the advantage of the piece-rate, without including the dis- advantages. The Scientific Plan. — ^Under scientific manage- ment, thousands of employees are earning much higher wages than they would otherwise receive, and the em- ployers are more prosperous than those who are still clinging to the antiquated methods. The most successful compensation plan in connec- tion with scientific management has been the one in- troduced by Mr. H. L. Gantt. The plan is both ethical and equitable. It stimulates the workmen ; it is fair to both the employer and the employees. Mr. Gantt recognizes that a workman should be paid a reasonable wage for his hours of labor ; that he should be given a bonus if he performs a task measured up to the stand- ard. The task should not be too hard, nor too easy, the employee should be neither overworked nor under- worked. The Gantt Compensation Plan. — The Gantt Com- pensation Plan has been instrumental in making the Taylor Scientific Management what it is to-day. The two combined ensure efficient service and fair com- pensation. Scientific management records what an employee does (the results determine compensation), furnishes COMPENSATION 117 an accurate record for the employee and shows the workman what he has accompHshed. Under the Gantt system, tests are made as to what an average workman can do in a day and he is given that task to perform. If the workman fails he is still given the stated wage for his day^s work, if he succeeds he receives the bonus. In this way the employee becomes interested and is assisted in his work, if he fails in the performance of it the foreman extends the necessary help. In order that the foreman will not overlook those who are un- able to succeed, he receives a proportionate bonus if all workmen perform their task up to the standard. The Gantt system contains the human element, is help- ful to the employee, beneficial to the employer and makes higher wages possible for efficient services. The employee is given the opportunity of earning ad- ditional compensation, is assured of a fair wage and appreciates the co-operation and assistance. The employer obtains the maximum ability of the employee, reduces the cost of supervision and is able to increase his output without an increase of invest- ment. You should be entirely just and reasonable in determining the standard task and should not expect to continually increase the task, or begrudge the em- ployees the bonus they earn. The Gantt Idea Transplanted. — The salary and bonus plan proved so effective in manufacturing that a number of wholesale and retail concerns have intro- duced similar plans. The workman may be ''physically'' lasy, the sales- man may he "mentally'' lazy. Both, however, can he aroused hy the incentive to earn a honus, if they in- crease their efforts. ii8 BUYING BRAINS The owners of large department stores who have adopted the salary and bonus plan have been in some instances greatly surprised at the increased sales, never realizing the capabilities of their employees. A salesman in one of the department stores, on a disagreeable Saturday prior to Christmas, remarked that "the inclement weather that day would cost him personally ten dollars." You can be assured that he was making the best of the situation and that he was doing everything in his power to make the sales that day as large as possible. The B. Altman Foundation has made liberal allow- ance for a bonus to be paid their sales force. This naturally has a tendency to attract the unusual type of employees. The manufacturers and jobbers have been well pleased with the salary and bonus plan wherever the arrangements have been intelligently made. It is possible while talking to the average salesman to de- termine by his attitude whether he is receiving a fixed salary, or if he is earning an additional amount on the individual transaction. The salesman working for a bonus is enthusiastic, energetic, willing and shows a desire to serve and satisfy his patrons. He cultivates the habit of thinking what each sale he consummates means to him personally. Many of the employees who would not save any money if they were receiving a stated salary or com- mission, use their salaries to defray necessary expenses and deposit their bonus regularly in the bank. Pay Day. — While it is easier and more simple for concerns to pay monthly than semi-monthly or weekly, it is often quite inconvenient for employees. If an individual has been out of employment and secures a I COMPENSATION 119 monthly wage, he may be compelled to borrow in ad- vance against his wages and contracts a habit that may continue during his period of employment. It may be necessary for him to borrow from a loan broker at an exorbitant rate of interest, or patronize such firms who charge extravagant prices for the privi- lege of extending credit. It is a well-known fact that where pay days are not frequent, a large percentage of employees come to work with soiled linen and with- out proper nourishment and a number of them often become careless with their money when they receive a monthly wage at one time. The Purchase Power. — The wages received by the employee must be in proportion to its purchase power. This question should be given greater consideration by the owners of chain stores, factories located in differ- ent sections and concerns doing an interstate business. While the employees may be rendering similar ser- vice and receiving the same wages, the purchasing power of the compensation may be entirely different in the various sections. The manager of a store in a small city, receiving twenty dollars, may be able to save a portion of his income while the manager of a similar store in a large community may find it difficult to live satisfactorily on the same wage. The Minimum Wage. — The minimum wage law has been advocated by some of the leading students of industrial problems, but several prominent merchants have predicted it as a detrimental influence upon com- mercial interests. A number of them are anxious to leave the question alone, as they are afraid of the judgment of the state legislators, who are frequently I20 BUYING BRAINS extreme and incompetent to pass on industrial issues, many of them not having had commercial experience. There is certainly a need for the enactment of mini- mum wage laws, not too severe to work a hardship on the employers, but to include minimum compensa- tion that will ensure the necessities of life to those who are compelled to depend upon their own resources for their livelihood. A minimum wage law would be a protection to the employers who desire to pay living wages, but who will not attempt it as long as their competitors do not. The employees receiving sufficient compensation to purchase the necessities of life would be healthier, happier and more efficient and the employers would receive proportionately better returns for their money. The Consumer to Bear the Burden. — Before the New York Factory Investigating Committee some of the department store heads complained saying, that "the increased wages would have to be borne by the consumer." The increased efficiency should balance the increase in wage. If otherwise, the percentage of increase to the consumer would be so trifling that it would not affect the distribution of merchandise and the consumers generally will gladly pay the price that will furnish labor with an adequate living wage. Under a minimum wage law, all competing estab- lishments would be subject to the same rulings and it would be more preferable than present conditions, un- der which unfair employers may take advantage of the employers who may be more just. The Orphan. — The compensation should be so ad- justed that orphans leaving institutions and those who must support themselves, will receive sufficient wages COMPENSATION 121 for their efforts to entitle them to a decent living; otherwise they must continue to be dependent upon charitable organizations or be deprived of a fair chance in life's battles by being handicapped in attempting to labor without sufficient nourishment. The Women. — The fair wage for women is a ques- tion that is distasteful to many employers, but the situation must be faced sooner or later. Scientific management measures production and pays a compara- tive wage. The achievements of the male and female should also be compared and the women should re- ceive a fair wage for what they produce. Competition in many instances makes the price and this is often true in determining the wage for women. The High Cost of Living. — In former years, most of the fathers supported their families and the girls would remain at home to assist their mother. As the living expenses grew, many fathers did not earn suffi- cient salaries to furnish the necessities for their fami- lies and the daughters applied for employment with the thought that whatever they earned would relieve the financial condition at home. Frequently they were not expected to pay board but merely to clothe themselves and contribute a few dol- lars toward the rent. In competition with them there were others looking for employment such as widows or orphans, or those forced to support families where the head of the house was incapacitated. Reduction of Wage. — The wage scale for women was consequently reduced to the lowest possible level, not because the majority of women were not self-sup- porting, but on account of the competition of the mi- nority who were contented to work for less than living 122 BUYING BRAINS wagesf. It is no secret that hundreds of girls who were willing to work honorably for an honest living have been tempted to immoral places in order that they may have better clothes, nourishment and reasonable com- fort. Any business worth conducting can and should pay an equitable wage to women; in determining their compensation the qnality and quantity of their work should be considered and a just reward given for what they produce. Workmen's Compensation. — Legislation in regard to workmen's compensation for industrial accidents has been introduced in more than forty foreign coun- tries including all European countries, excepting Tur- key. The United States was behind others in adopting laws that would insure relief to the injured workman and the family dependent upon him. During the past, the burden of the accidents fell upon the workmen who were not prepared to bear it and their families were either in want or had to seek aid from charitable organizations. Liability. — The employers carried liability insur- ance to protect themselves against lawsuits, but dis- regarded the interests of employees who were com- pelled to collect damages from a third party who took advantage of technicalities to evade payment of claims of the injured workmen. Employees were compelled to sue for damages and were handicapped by not being able to employ counsel of the same caliber as those engaged by the insurance companies and being in im- mediate need of money were tempted to settle their claims at the figures offered by the companies. COMPENSATION 123 Various States. — The schedule of compensation for specified injuries varies in different states which have adopted compensation laws. The fixed amounts (whatever they may be) are an improvement over the former method of determining the amount of dam- age after an employee is injured. The Workmen's Compensation Laws as enacted in some of the States, are considered by many employers as an added expense and a hardship, but it is certainly a fair and proper solution of an important question. Other Insurance. — Employers do not hesitate to carry insurance for fire, life, credit, glass and other forms, which gives them relief in times of disaster. Why then should they not carry insurance for their employees that will be beneficial to them when acci- dents occur ? The workmen who have met with accidents have received very small amounts, or have waited long pe- riods for settlement so that the money received did not materially assist them when they needed it most. In- juries to the workmen in the performance of their du- ties should be borne by the employer and the expense of the insurance should be added to the cost of the mer- chandise. Employers Awakened. — The compensation laws have not only provided a more substantial amount to the injured workmen, but have awakened the employ- ers to the need of offering greater protection to the lives of their employees. Regular inspection of various industries have dis- closed the fact that safety devices and r^les of caution have greatly reduced the number of accidents. There still remains much to be done in this direction. 124 BUYING BRAINS An investigation of 928 buildings in New York where garments were manufactured disclosed that 91 per cent, were without fire alarm systems and in 98 per cent, no fire drills were held. Sprinkler systems were not installed in many of the buildings where they were required by law, and the stairways of a number of structures were not enclosed in accordance with the statutes. It is not sufficient that proper laws should be enacted to protect the employees. Such laws should be rigidly enforced. The employers who co-operate to reduce the number of accidents, lessen the cost of their insurance, and the payment for injuries sustained should not prove a burden but he regarded as an industrial necessity. CHAPTER VII PROFIT-SHARING TF EMPLOYEES receive fair compensation and -*- proper working conditions more can hardly be demanded. Profit-sharing is what a large percentage of the em- ployees would like to have, but they have no right to ask for it. Profit-sharing should not be introduced by the employer as a substitute for something to which the employee is entitled, but as an additional incentive to arouse him to higher accomplishments for mutual benefit. No matter how large a salary an employee receives, or what position he may occupy, he imagines he is playing the game for his employer; but give him a share of the profits and he at once assumes the atti- tude that he is playing the game for himself. Profit- sharing and scientific management have both scored a number of failures as well as successes, which proves conclusively that both can be conducted successfully if they are inaugurated with sufficient intelligence and forethought. The Give and Take Principle. — Selfish motives frequently have been instrumental in defeating the pur- pose of profit-sharing — giving little and expecting much — and resulting in receiving less than was antici- pated. It seems impossible for a certain type of em- ployers who really believe in modern methods of con- ducting business, to bring their plans to a satisfactory termination. In perfecting the profit-sharing plans, they constantly think of their interests, and how they 125 126 BUYING BRAINS will derive a benefit without considering the effect it will have upon the employees who are supposed to be the beneficiaries. The plans are sometimes tied with a number of strings which make the employees conclude that they are too complicated and not worth while untangling. Not Philanthropic. — Profit-sharing is not philan- thropy and shares should not be distributed with such a thought. Employees are not looking for charity and naturally resent propositions which have the philan- thropic flavor. Employees who receive a share of the profits of a concern are ambitious to increase the earn- ings so that they will receive a larger amount for themselves, and with the desire of repaying the em- ployer for his fairness. Men who are an asset in creat- ing excess profits are really entitled to more than mere wages. After current expenses are paid and capital is re- paid by liberal dividends, a small share of the net profits should be given to those who have assisted in making such a condition possible. This is neither a new thought nor socialism; it was practiced to some extent by Andrew Carnegie, John D. Rockefeller, Marshall Field, Charles M. Schwab and other success- ful men. They took with them into partnership the leading men of their organization, in order that they might permanently retain the services of such able em- ployees. Why should not the same principle be ex- tended so as to include other worthy employees ? Give Just Reward. — Employees who have helped to carry out your ideas (those who have assisted to build a successful business around you) should receive a few crumbs from the plate of success. PROFIT-SHARING 127 While it is true that present employees can be re- placed with others who will gladly accept the positions, faithful and conscientious services cannot be secured by the shifting of employees. If a concern is properly conducted, each year means added loyalty and an in- creased spirit of co-operation. Loyalty, the Return. — Employers frequently re- mark that the employees do not take interest in their work, but if you give them a share of the profits and make them feel that the business partly belongs to them, their changed attitude will be a great surprise to you. Employees will naturally waste opportunities, material and time, if there is no incentive to do other- wise but let them fully realize that by saving the wastes, you can afford to give them more than mere wages and every employee will be watching and think- ing about your interests. Profit-sharing does not necessarily mean the giving away of present profits but it affords the employees an opportunity of paying themselves out of the addi- tional profits they create. Sharing a Small Percentage. — If your merchan- dise costs you 75 per cent, of your selling price and your expenses are 15 per cent., your net profits should amount to 10 per cent. If your employees are wasteful your net profits may easily be reduced to 5 per cent, or less; if they are economical and assist to increase the volume of business, considerably more than 10 per cent, may be earned on your sales. It is perfectly fair and proper that you should claim the credit and are entitled to receive the major portion of the profits of a business that you have financed and guided into a safe port, but the men aboard who have helped you 128 BUYING BRAINS land safely should be given a just share of the gain. A Comparison. — Profit-sharing to some extent can be compared with the giving of trading stamps. One is the giving of stamps to retain steady patronage and increase volume, the other is to retain steady employees and increase profits. Trading stamps are a poor substitute for quality of merchandise and profit-sharing should not be substi- tuted for fair conditions. A number of right-thinking employers desire to inaugurate profit-sharing plans with their employees but do not fully appreciate that the average workman has not the same business reason- ing and commercial experience that they and their associates may possess. Instead of making the plans extremely simple, they are in many instances more intricate than the agree- ments entered into among the employers. Profit-sharing plans that will appeal to and be under- stood by one class of employees will not bear the de- sired effect if adopted for another class. Formulation of Individual Plans. — Henry Ford's profit-sharing plans were formulated to include a large number of workmen, the plans were simplified and pre- sented in such form that the workmen thoroughly understood the conditions and appreciated them. The Ford plan is not possible nor advisable for every concern that desires to introduce profit-sharing, but the frankness and fairness of the plan should be a guide to others. The majority of workmen who re- ceived (for several years) a share of the profits — ^the amounts having been stated in advance — ^will consider it as part of their compensation and be disappointed if they did not receive that amount continuously. PROFIT-SHARING X2g Not Charity. — It is important that the employees be convinced that employers are not distributing profits as an act of charity, nor as additional wages, but that they are sharing in the earned profits because their employers considered that they were entitled to do so, and that in times of depression, or when profits do not exist, they cannot expect them. Profit-sharing will accomplish most and be more appreciated among enlightened employees who fully realize that energy, loyalty and service will help create and preserve profits and that it is possible for them to produce greater results for mutual benefit. If the employer afterwards alters the original con- ditions of the plans, or practices deception, the detec- tion will have a disastrous influence on the employees and he probably will regret having introduced profit- sharing. The Plans. — The plans should conform with the laws of the State, be extremely simple and should be honorably inaugurated and executed. It is well to take into your council several of the representative em- ployees and present the plan in a tentative form before it is finally introduced in your establishment. In this manner you will receive criticism from the employees' viewpoint; it would show the sincerity of your pur- pose and these men will become your spokesmen, and at the same time explain and convince the other em- ployees that you are endeavoring to furnish them with a new and better opportunity. It should not be for- gotten that when profit-sharing plans are introduced employees are taken into partnership — deal with them frankly and fairly. Profit-Sharing "Ford." — Henry Ford is the most I30 BUYING BRAINS conspicuous man in the automobile industry. He has furnished individuals of moderate means throughout the world with a simple and satisfactory automobile at a nominal price. He has also solved the profit- sharing problem in a masterly manner. His plans have been an inspiration to other employers. Every Ford automobile is a running advertisement for profit-shar- ing. It was predicted by many that he would regret his introduction of such a liberal policy, but his testi- mony before the Industrial Commission in 191 5 showed that he was well pleased with the results. The Test. — In making a comparison of figures be- fore and after profit-sharing was inaugurated, he quoted from the records of March, 191 3, and March, 1 914. The statistics showed 165 discharged instead of 1276, 115 quit, instead of 870, 166 five-day men or "floaters," leaving without notice compared to ^156 during the same month of the preceding year. These comparative figures sliould be a sufficient answer as to whether the introduction of profit-sharing was success- ful or otherwise. Qualifications. — The qualifications necessary to participate in the Ford profit-sharing plan clearly demonstrate the human element that can be injected into industrial life. Those qualified for participation in profits were of three classes : 1. Married men living with, and taking good care of, their families. 2. Single men over 22 years of age who are of thrifty habits. 3. Young men under 22 years of age, and women, the sole support of some next of kin. The person must be in the employment of the com- PROFIT-SHARING 131 pany six months before he can participate in profits. Wages and profits are paid every two weeks in cur- rency. Results. — The efficiency of the men under the plan has increased from 15 to 20 per cent, with reference to work produced in an eight-hour day versus the com- parison in a nine-hour day. Daily absentees from work decreased from a total equivalent to 10 per cent, of the working forces under old conditions to three-tenths of one per cent. Mr. Ford stated *'that the plan was adopted because of the knowledge that the market rate of wages was not sufficient for men to properly care for self and de- pendents, and that the environment in which its em- ployees were thus made to live, gave rise to mental anxiety and a physical condition that made it utterly impossible for the human agency to deliver all the effort of which it was capable in fulfilling the best and large functions for which it was designed to work at home and in the community. The institution of a new order, treating men like men in man fashion, has brought out much of human salvage and proven that barriers between employers and employees, thought to exist and often existing, can be removed." Dennison Manufacturing Company. — In April, 19 1 5, the Supreme Court dissolved the Dennison Manufacturing Company, of Massachusetts, and cleared the way for this concern with assets of many millions of dollars to turn over its property to its 2400 employees in a profit-sharing plan more radical than that of Henry Ford's. The plan under which the Dennison Company is be- ing operated is, that the stockholders elect the directors. 132 BUYING BRAINS The old stockholders — with holdings amounting to $4,500,000 — have no voice in the affairs of the new company. They became preferred stockholders en- titled to draw 8 per cent, on their investment and no more. All the common stock was turned over to the men and women actually working in the plant. How- ever, not all of the 2400 became holders of the com- mon stock, although all of them share in the profits. Workers to hold common or voting stock, must re- ceive at least $1200 a year. Under this rule 200 of the 2400 are common shareholders and participate in the actual administration of the corporation. Before the Dennison Manufacturing Company had introduced their present form of management, they had for a number of years shared their profits with employees earning over $1200. A few months prior to the inauguration of their latest and more liberal plan, the writer had discussed profit-sharing with one of the Dennison employees, who spoke enthusiastically of what profit-sharing has meant to both the company and the employees. He explained that * 'there were various committees composed of employees who were helpful to the man- agement. The employees who did not share in the profits were hopeful that some day they would be in- cluded in the profit-sharing class. The spirit of inter- est and co-operation was contagious and those who did not share in the profits appeared to be as earnest and conscientious as the others." Facts and Figures. — E. I. Du Pont De Nemours Powder Company in their 19 14 annual report stated, "The following record showing the number of stock- holders and the percentage who are employees of the PROFIT-SHARING 133 company, in comparison with similar conditions in past years : Year Stockholders 1907 809, of whom 218, or 27 per cent., were employees 1908 955, of whom 250, or 26 per cem., were employees 1909 1,335, of whom 524, or 39 per cent., were employees 1910 1,695, of whom 764, or 45 per cent., were employees 1911 2,163, of whom 990, or 45 per cent, were employees 1912 2,697, of whom 1,440, or 53 per cent, were employees 1913 2,935, of whom 1,047, or 36 per cent., were employees 1914 3,093, of whom 1,184, or 38 per cent., were employees Common Stock for Employees. — The plan of dis- tributing bonus common stock to deserving employees and of offering preferred stock for subscription has proved satisfactory. Under this plan, 12,722 shares of common stock have been awarded and 12,403 shares of preferred stock have been subscribed and are being paid for under the requirements of the plan. They say in part : "In this connection it is a great pleasure to call attention to the loyalty and satisfactory service of the employees of the company. We thank them for their co-operation and work, which has shown its results in the gratifying and continuous prosperity of the company's interests and investments." The dividend record of the company is as follows: Preferred Stock Annually, since organization in 1903 — 5 per cent. Common Stock 1904 — y2 per cent. 19 10 — 12 per cent. 1905— 3>^ 1906 — 6y2 1907—7 1908 — 7 1909—7% 1911 — 12 1912 — 12 1913— 8 1914 — 8 134 BUYING BRAINS If you analyze the figures given in this report you will notice that in the three years 1910, 191 1 and 1912, when there was the largest percentage of employees among the stockholders, the dividends amounted to 12 per cent., which is quite in contrast with 1905, when a dividend of 3>^ per cent, was declared. Some Realty Firms. — A number of the important realty firms of New York have instituted profit-sharing plans, among them being Douglas Robinson, Charles S. Brown Company, Douglas L. Elliman & Company, and M. Morgenthau, Jr. Company. Capital and Labor. — Mr. Carnegie recently stated that "He considered the plan of the United States Steel Corporation to make workmen shareholders, the greatest of all forward steps yet taken for bringing workmen and capitalists closer together." A Boston Concern. — William Filene's Sons Com- pany, of Boston, who have inaugurated a number of movements for the benefit of its employees, have also a profit-sharing plan. Certain department executives, buyers, assistant buyers, floor superintendents and executives, share in the merchandise profits. The cor- poration gets its profits in merchandise discounts. The plan is, that after a certain fixed profit has been paid to the holders of the capital stock, the profit over and above this amount is divided among this group of employees. The National Biscuit Company. — The National Biscuit Company has no profit-sharing plan, but the company have assisted the employees to become own- ers of the preferred stock of the corporation. Fifteen years ago they introduced a plan that permitted the employees to purchase stock on the installment PROFIT-SHARING 135 plan. In 19 10 out of 7500 shareholders, 2528 were employees. The Lowney Chocolate Company. — The Lowney Chocolate Company distribute a bonus of five per cent, of the annual wages to employees connected with the firm for one year. Similar customs are in practice in the confectionery trade. Mr. Nelson— Mr. N. O. Nelson, of the N. O. Nel- son Manufacturing Company, has written an article on profit-sharing published in "System," the magazine of business. He not only related his experience in connection with sharing profits, but well explains the advantages of conducting business with many partners instead of limiting ownership to the few. The N. O. Nelson Manufacturing Company was on.e of the pioneers of the profit-sharing movement in this country, having adopted plans in 1886 and continuing them since that time. The capital at the beginning amounted to one hundred thousand dollars and the employees numbered about two hundred. The capital and surplus is now about two million dollars and there are one thousand employees. Liberal dividends have been paid, but in the years following the panic of 1893, dividends were suspended; they were afterwards regularly declared and a divi- dend of four per cent, allowed on the years that divi- dends were suspended. Profit-Sharing Still in its Infancy. — While the suc- cess of profit-sharing in many other large concerns could be quoted, it is believed that profit-sharing is still in its infancy and in the near future many other pro- gressive concerns will inaugurate profit-sharing plans. The Small Concern. — Employers conducting small 136 BUYING BRAINS establishments read of profit-sharing and conclude that it is an excellent idea for the large corporations to adopt but fail to recognize the advantages it offers for their own business. Some of the most successful stores include a father and several sons who divide the management and the ownership, the customers of which are certain to have one of the owners give them the proper attention. If the proprietor has no relatives with whom to divide the ownership, there is no good reason why he should not have his clerks feel that they are part of the man- agement and take a real interest in the welfare of the business, receiving in return a share in the profits. Its Advantage to a Small Concern. — The decided advantage that profit-sharing will prove to a small mer- chant is, that ''his clerk of to-day is likely to be his competitor of to-niorrow/' Offer him a share of the responsibility and pay him a portion of the profits and he will be content to remain with you. The Ambitious Employee. — Owing to the fact that the capital required to open a small store need not be large, the employee, out of his savings, inherit- ance or ability to borrow, soon becomes ambitious to have his name over a door and immediately proceeds to take the patrons away from his former employer. In the majority of instances he is unable to succeed for lack of capital, or for various reasons, still he has remained in business long enough to dissipate his money and attract sufficient trade from his former em- ployer to make that business less profitable. A share of the profits will frequently retain the ser- vices of valuable employees and prevent destructive competition, thereby saving loss of profits, probal^le PROFIT-SHARING 137 loss to the employees (who become proprietors for a short period) and in many instances loss to the whole- saler. Wasteful Competition. — There are too many small stores and the wasteful competition not only keeps them small, but produces innumerable failures and dis- appointments. It is not uncommon to see four or five stores in a single block catering to a similar patronage in the same line, all of whom have a hard struggle for existence. If they were combined they would have a profitable business that would not only repay the in- terest on the capital invested, but leave a handsome profit to be divided among the various proprietors and worthy employees. The majority of small merchants pay dearly for their independence, give little attention to their homes and are usually involved in debt; are constantly wor- ried and receive only a bare living from the business, which represents mere wages and not even the interest on the capital invested. The Cause. — The unfair attitude of employers is the strongest force in the driving of men into business frequently when they are not mentally, physically or financially equipped to conduct business successfully. A small merchant will grow when he allows the em- ployees surrounding him to grow with him. The most successful men who made millionaires out of some of their former employees did not sacrifice their indi- vidual profits but gained additional revenue by win- ning the support of the right types of men. Initiative Will Find Its Way. — One cannot expect an ambitious, able person to be satisfied very long with a mere wage, and you cannot afford to have a valuable 138 BUYING BRAINS employee leave and become one of your competitors. His services can be retained and his ambition satisfied v^hen permitted to feel that he is part of the concern and is given a small portion of the profits he creates. Logic. — The volume of business can frequently be increased 25 to 30 per cent, without materially in- creasing the expenses, yet this increase may more than double the profits. If the right type of employees are retained (and are interested in their work) it is an easy matter to steadily increase a business through courtesy, rendering service and having the employees take a personal interest in the management and patrons. Pension Funds. — A number of the larger corpora- tions contribute annually toward pension funds. This is regarded by many as profit-sharing yet it contains elements that are diametrically opposite to the princi- ples of profit-sharing. The pension system influences employees to remain with a concern even though they become dissatisfied with the management, but profit- sharing has a tendency to retain the services of em- ployees by making them satisfied. Fixed Percentage. — Some concerns distribute a fixed percentage of the salary annually ; several of them have abandoned this practice as employees expect to receive the stated amount regularly, regardless of their efforts. Frequently, this does not act as an incentive to have the employees produce their maximum results. The Most Successful Method. — Of the various forms of profit-sharing introduced, the distribution of dividend-paying stocks has been the most successful, because employees owning stock become vitally inter- ested in the company and are ambitious to help increase the amount of dividends. Precaution should be taken PROFIT-SHARING 139 that the minority of stockholders do not cause em- barrassment to the management, and that the stock be redeemed if the employee leaves the concern. Part Cash, Part Stock. — A fixed percentage of the profits payable in part cash and part stock is an excel- lent plan, the employee receiving additional cash to defray unusual expenses or to place the cash on de- posit for emergency, thus being able to see a tangible reward. The stock that he secures makes him doubly anxious to perform his work conscientiously. Another Plan. — Another plan is to distribute a per- centage of the profits in cash. This will appeal to the employer who does not care to have employees enjoy the rights of a stockholder and will please the em- ployees who prefer handling and investing, in their own way, the profits received. It is true many illit- erate employees do not comprehend stock transactions and to such it is preferable to give a bonus payable each pay day. Resume. — It should be remembered that profit- sharing is not a scheme ; it is purely a business transac- tion between the employer and the employees. It is unnecessary to have a lengthy contract with needless restrictions. It should not contain clauses that have loopholes or features appearing in small print. A profit-sharing plan should be a simple, fair and equi- table agreement; an understanding between the em- ployer and the employee to divide the profits. - The owners should receive the large portion of the profits in return for the capital invested and their guidance, and the employees are entitled to a minor portion for their co-operation and faithful services. CHAPTER VIII WELFARE TXT' ELF ARE work, like profit-sharing, is a poor ^^ substitute for equitable wages and fair treat- ment. Welfare work should be an additional advantage — it cannot take the place of a square deal. There is a realization that the average employee does not secure for himself the proper recreation, there- fore the capitalists and employers are attempting to plan and finance pleasures for him. While welfare work has been condemned by those who have believed that the cost of it has been deducted from the wages, or could be added to the compensation, many of the acts regarded as welfare work are in reality rights and justice due employees. Some employers, especially those catering directly to the consumer, have advertised their welfare work. This has a tendency to make the employees regard it as charity received from the employer of whom they may not have the highest opinion. While the motives of such concerns are naturally questioned, it is generally admitted that welfare work has been beneficial to employees and has helped to create a better feeling toward the employer. Radical Criticism. — The radical labor leaders criti- cise welfare work, claiming that it prevents strikes. If it does this without sacrificing the rights of employees it is most commendable. Before giving consideration to the employees' lunch hour and evenings, it is well 140 WELFARE 141 to make the working conditions as enjoyable as pos- sible. Some employees are glad to be at work, the work- ing conditions being more inviting and preferable to their living conditions, while in other instances it is quite the reverse. Personal Equation. — Greet your employees in the morning with a pleasant word and a smile; it is con- tagious and your leading employees will follow your example. If you see an employee in a public place, or meet him socially, do not attempt to evade him or fail to recognize him. It is absurd to annoy employees and worry them into sickness and then attempt to play the "Good Samaritan." After granting your employees equitable wages, proper working conditions and fair treatment, if you are sufficiently interested in their welfare, you can materially help to make their lunch hour, recreation and living more enjoyable. In every concern there are individual cases which require special attention and speedy assistance, and when you or your representative investigate such cases and furnish the needed relief, it is not only appre- ciated by the individual, but by all the employees. Right here is a close bond of sympathy between all of them that makes for loyalty. The most praiseworthy assistance is that extended from one employee to an- other. In times of emergency an employee willingly sacrifices necessities and personal comforts so that he may relieve the distress of a fellow-workman. Many employers will tell you that there is no sentiment in business, and business cannot be conducted as a chari- table organization. Employers in such a frame of 142 BUYING BRAINS mind usually do not grant the employees even proper conditions. An Indirect Benefit. — Welfare work is helpful to make employees healthier, happier and more efficient, and the employer always receives an indirect benefit. The mental and physical condition of employees is reflected in the character of their work. A large per- centage of mistakes is the result of a discontented mind. Many accidents are caused by employees when they become fatigued or dissatisfied. If employees re- ceive proper nourishment and rest during their lunch hour, their afternoon's work will compare favorably with that of the forenoon. If the ventilation is good and the environment pleasant, the employees do not become depressed and tired but are full of vim and give the benefit of their normal powers. A number of concerns have given welfare work serious consideration, and the fact that it was not only inaugurated, but has been continued on a broader scale, indicates that they have been well pleased with the result of welfare work and its accomplishments. When smaller merchants are told of the welfare work of the larger concerns they frequently remark that such work is impossible for them to establish. This may be true to some extent, but on the other hand, there are many practices of welfare that can be insti- tuted by the smaller employer who comes in daily con- tact with his employees. In some trades a number of the competing employers have conducted welfare work jointly and with considerable success. Cleveland Chamber of Commerce. — The Cham- ber of Commerce of Cleveland, as far back as 1899, appointed a committee to assist in bettering the rela-. WELFARE 143 tions between employer and employee. The commit- tee insisted that the basis of all welfare work must be founded on fair wages, reasonable hours and sanitary conditions for labor. The plans of their work in- cluded the following features : "General improvement in the environment and sur- roundings of workmen being of greatest importance." *'Clean windows and floors, light and well ventilated workrooms, and adequate sanitary arrangements, forming the basis of further improvement. These are usually at small expense, but of greatest effec- tiveness." * 'Dressing rooms in which employees may remove clothing worn in the shop and don that which they can, with self-respect, wear in the street or in the car. In these are often found : "Individual lockers of wood, iron or steel wire." "Toilet facilities, including well-equipped lava- tories." "Baths, both shower and tub, where the nature of the work is such as to make them advisable." "Lunch rooms in which the employees can eat lunch brought from home, or restaurants, where meals are furnished at cost by the firm." "Rest rooms where the employees may go after lunch or in case of sudden illness." "Reading rooms and libraries, usually in connection with the rest rooms." "Mutual benefit associations in which the payment of regular dues on the part of the members — a sum often increased by contributions from the firm — in- sures, in case of illness or death, a benefit to the men or their families." 144 BUYING BRAINS "Entertainments and suppers given by the firm." "Prizes for suggestions as to the business, or as rewards for long and faithful service." *'Outings, picnics and classes in various subjects pertaining to the business." The efforts of the Chamber of Commerce have been beneficial to both the employers and the employees, and Cleveland is regarded as an ideal city for both the manufacturer and the workman. With the administra- tion of this welfare work, Cleveland has surpassed other cities both in wealth and population. Other Boards of Trade, Chambers of Commerce and organizations should adopt similar resolutions and assist its members to inaugurate welfare work intelli- gently. Isolated Factories. — Some of the concerns that have their factories located in isolated districts have assisted their employees in procuring homes at a low cost. Others built homes and flat houses and rented them to employees at low rentals, giving the employees an opportunity to live comfortably at little expense. Company Stores Unfair. — In contrast with such helpful co-operation, a number of concerns conduct company stores, selling the necessities of life to their employees at exorbitant prices. This method of squeez- ing the workmen out of their earnings is most abom- inable. The company stores should be managed for the convenience of the employees, and not conducted for profit or to satisfy the avarice and greed of the employers, or any person connected directly or indi- rectly with the management of the industry. These stores are in some instances a necessity and should not be expected to pay the promoters more than a nomi- WELFARE 145 nal dividend. The prices should be adjusted with that object in view and excessive profits should be returned, in some manner, to the employees. In many of the isolated districts, the employees have no other source of supply except the company stores, and in some factories where the pay day is monthly (with a week or more intervening between the pay roll period and the pay day) it becomes necessary for the workmen to use store orders to provide the necessi- ties of life. In such places where outrageous charges are made for house rentals in addition to supplies, it becomes almost impossible for the workmen to save any money from their wages. The customary plan is to use "store orders," or "O. K. slips," which ere issued in accordance with the wages due and are only valid at the company's stores. These stores, directly or indirectly owned by the management, have every advantage for profit with- out offering any inducements, with the exception of extending credit that is guaranteed by wages already earned. One company which was afterwards succeeded by another, with an increased capitalization out of its earnings, started with a capital of $75,000. This con- cern paid in dividends from 1898 to 19 10 nearly five millions of dollars and had total assets amounting to approximately $1,400,000. This represents a profit of over six millions of dol- lars, the major portion of which does not rightfully belong to the promoters. This excessive profit meant suffering and sacrifice to thousands^ of employees. Should such conditions be permitted to exist? No 146 BUYING BRAINS fair-minded person or employee should begrudge em- ployers a just reward for their energy and thrift, but we should not be contented to allow those financially strong and powerful to extort money in such a manner from the helpless workman. Bureau of Labor Statistics. — That you may know the kind of welfare work conducted by some of the leading concerns of the country, the writer will not confine the citing of individual cases, but will include a portion of the statistics published in a bulletin issued by the United States Bureau of Labor. Safety of Employees. — The safety of employees is receiving, annually, more attention from manufacturers in many of the large industries who have made a scien- tific study of the accident causes, established rules to prevent the repetition of similar accidents, safeguarded the machinery, and attempted to educate the employees not only to become more careful, but to exercise ex- treme care to save the lives of others. The International Harvester Company has adopted standard guards for the various machines. The emery wheels have steel coverings and the operators must wear glasses to protect their eyes. The foundry men wear congress shoes and hard cloth trousers to protect the feet and legs from burns. A pamphlet of rules and instructions printed in different languages points out the dangers of the various machines. In each plant a "safety" inspector must be appointed by the superintendent, who regularly inspects each department to see that the machinery is properly guarded and that the rules are enforced. Committees of Safety First. — At the Wisconsin Steel Company a committee of three workmen is ap- WELFARE 147 pointed by the superintendent of each department, to make a thorough inspection of their department and to suggest any measures which they think might reduce accidents. These committees go over their depart- ments once a month. The value of these recommenda- tions may be judged by the fact that out of 448 sug- gestions 404 were adopted. Notices of accidents and how they occurred are posted, and when a workman is disabled the committee investigates and makes sug- gestions to prevent a repetition. Safeguards. — C. L. Close, Manager of the United States Steel Corporation's Bureau of Safety, Sanita- tion and Welfare, stated that "while the company had spent $2,003,712.29 in safeguarding against acci- dents in five years, it had saved $4,775,692.64 in cas- ualty expenses, making a net saving of $2,771,980.35." These figures represent the saving in dollars and cents to the company without consideration of the increased efficiency of the employees when they know their lives are being properly protected during the performance of their daily tasks. It has also meant the saving of untold suffering, the lessening of widows and orphans and the perpetuation of families whose members were compelled to accept hazardous employ- ment, that they may provide for themselves, and those dependent on them, the necessities of life. Suggestion Box. — The anthracite coal producers in Pennsylvania have posted notices offering cash prizes of $100 for those making the best suggestions to re- duce accidents. At each colliery of the Lackawanna Company a box has been placed marked "Safety First Suggestions," and a series of committees are at work to carry out the accepted suggestions. 148 BUYING BRAINS Safety books are distributed with photographic illustrations showing the right and safe way, also the wrong and dangerous method of doing the various work in the mines. While it must be admitted that a great many accidents are due to the negligence of em- ployees, workmen employed in dangerous occupations should have the co-operation of their employers to minimize the number of accidents. A large number of laws have been passed in the different States making it necessary for the employers to adopt such practices that will protect the lives of employees. Many of the laws are constantly violated either through ignorance of existing laws or by a de- sire for a financial saving of expense which these laws would entail. i Yearly Accidents. — The importance of tlie ques- tion of the prevention of accidents may be judged by the fact that in the various occupations there are ap- proximately 25,000 fatal accidents a year and about 300,000 serious injuries. A large percentage of ac- cidents is caused toward the end of the day, during overtime work or when one is fatigued. Employees should not be permitted to do dangerous work for a long period without proper rest. I Hours of Labor. — The hours of labor is a most important question. A great many accidents, consid- erable sickness and permanent diseases are often the result of overtaxing the mental and physical strength. Night work or extra hours should be avoided when- ever possible. The work done in the after hours is inferior and that done the following day is negatively affected. I Additional employees for a rush period are usually WELFARE 149 more economical and profitable to employers and it is beneficial to the regular employees. When a New York State senator advocated the amendment of a law that permitted women and chil- dren in the canning industry to work exceptionally long hours during the canning season, he took the oc- casion to criticise the Brooklyn Rapid Transit for working their men twelve hours a day, eighty-four hours a week, unless the. men wanted to take a day off at their own expense. Maryland Statistics. — According to a recent report of the Maryland Bureau of Statistics and Labor in Baltimore, the city of the writer's birth, over 10,000 children were licensed to work ; more than half of them were said to be girls. It is pitiful that children are compelled to work before they are physically and men- tally equipped. It is also unfortunate when employees are required to overtax themselves beyond their strength and vitality. Book of Rules on Health. — The Department of Health of the City of New York published and dis- tributed booklets containing suggestions for the bet- terment of the health of both indoor and outdoor workers. They recommend breathing fresh air, having light properly placed, and working in such a position not to let one's body become deformed. They also mentioned the requirements of rest, recreation and physical exercise, the proper food and nourishment and the avoidance of the * 'bracer" at noon. Ventilation. — The ventilation of a factory is very important to the workers where so many are employed breathing the same air, and especially so in certain industries where there is considerable dust and in some ISO BUYING BRAINS instances the atmosphere is, in fact, ahnost poisonous. The Brown & Sharpe Manufacturing Company, of Providence, has the work rooms artificially ventilated, the air being changed every forty minutes. The emery wheels are supplied with blow pipes. The Shredded Wheat Company at Niagara Falls has a system of ventilation that changes the air throughout the entire building every fifteen minutes. They do not have a crowded work room and they make the working conditions as comfortable as pos- sible. In New York there is a law which reads : *'The owner, agent or lessee of every factory shall provide, in each room thereof, proper and sufficient means of ventilation by natural or mechanical means or both, as may be necessary, and shall maintain proper and sufficient ventilation and proper degrees of tempera- ture and humidity in every work room thereof, at all times during working hours." A provision is also made that *'if impurities are generated or released in the course of the business carried on in any quantities tending to injure the health of the operators, the owner or lessee should provide suction devices that will re- move these impurities from the workroom." A very small percentage of the employers in the State know that such a law was enacted and a visit to many of the factories will convince you that what is most needed is not the passing of a number of laws but more attention to the obedience to many excellent laws already written on our statute books. Temperature. — During a summer when one of the proprietors of a large factory purchased a number of electric fans his partner considered him extravagant WELFARE 151 for the amount of money he had expended. Within a few weeks the concern had been repaid for the amount of the expenditure by receiving more and bet- ter work from the operators. The employees also appreciated the thought fulness of their employers and were naturally in a pleasant frame of mind through- out the season. Comforts of Employees. — Considerable attention in many concerns is given to the comfort of the em- ployees, not only providing rest rooms for the lunch hour, but which are visited by employees in many es- tablishments that have rest periods once or twice a day. In some factories employees are occasionally taken sick and proper care should be given them. This is not only appreciated by the one who is ill, but is quite a relief to the other workers to know that their co- worker is receiving the necessary attention. The Sick Room. — The National Cash Register Company, of Dayton, Ohio, has a hygienic department of four rooms, under the charge of a physician who comes one hour a day. A nurse and assistant are in attendance constantly. The physician examines all applicants for employment, which prevents the spread of contagious disease, as well as having employees do- ing work that they are not physically able to perform. Ideal Conditions. — William Filene's Sons Com- pany, of Boston, is regarded as an ideal department store for employees. The comforts for the employees are usually decided upon and managed by the em- ployees. They have allotted space liberally for recrea- tion, lunch room, a smoking room with games for men, a library and a dance room. The Health Committee has charge of the health of the employees. Two physi- 152 BUYING BRAINS cians come twice a week and employees may consult them without expense. In the warmer months many employees become ex- hausted unless proper provisions are made for their comforts. You should make your establishment a pleasant place for the employees. They will do their work in a superior manner if their comforts are given consideration by the management. Every possible thought for the comfort of the em- ployees is in evidence at the Curtis Publishing Com- pany. At the entrance in the basement there are lock- ers and cloak rooms, an umbrella checking system and an arrangement for drying damp clothing which pre- vents much sickness. At Marshall Field & Company there are two medical rooms, one for men, and the other for women, in charge of a nurse to attend those who may be sud- denly taken ill. The nurse is often sent out to take care of those who are ill at home. Comfort Stations. — Ample toilets and lavatories convenient to the employees are a necessity. Most concerns, especially those occupying modern build- ings, have made correct provisions for these rooms. In New York State during a single year, there were 4,621 orders issued, of which there were 1,793 orders to clean them. A number of them were found to be in a filthy condition, which not only spread disease, but their appearance made many of the employees abstain from using them. The wash rooms seem to inspire the poets, scrib- blers and those of vulgar minds to deface the walls. A notice appealing to their better instincts and men- tioning that the rooms are maintained for their use, WELFARE 153 will often curb their literary ambitions in this direc- tion. Dressing Rooms and Lockers. — The work in many establishments makes it necessary for the employees to change their garments at the beginning and end of the day. Many concerns have suitable dressing rooms and lockers, which enable the employees to make the changes. In building a plant or renting a space, proper consideration should be given to this subject, as em- ployees are justly entitled to proper accommodations for such a purpose. Self-respecting persons want to present a neat and clean appearance on the streets regardless of the nature of their employment. Some concerns have baths which employees may use, which is greatly appreciated by employees, many of whom do not have satisfactory bathing facilities at home. Lunch Rooms and Restaurants. — A number of the larger concerns have made liberal accommodations for employees in the matter of lunch rooms. While only a few serve lunch without charge, many of them furnish it at or below actual cost. There is a consid- erable difference between the cost and the prices usu- ally charged for a great many dishes. This means a daily saving to the employees and at the same time en- sures them satisfactory nourishment. The lunches purchased under such circumstances are quite a con- trast with those procured by other employees earning a similar amount who must pay the customary prices for their lunches. A proper lunch means not only better health to the employees, but is also a benefit to the employers who thus have their employees in a fit condition to perform their work. 154 BUYING BRAINS The Cleveland Twist Drill Company has separate lunch rooms for men and women where they obtain food at cost. Periodicals are subscribed for the men ; while a special rest and recreation room is provided for the women. The Lowe Brothers Company, of Dayton, Ohio, furnish and operate a lunch room for the women and give them coffee free. Coffee is taken out to the men in the shops. The H. J. Heinz Company, of Allegheny, Pa., was one of the pioneers in welfare work. This company has the walls of the dining-room covered with pictures, some of which are copies of famous paintings. Here coffee costs the female operators a penny a day. The Shredded Wheat Company has a lunch room equipped for the women employees where a hot lunch is given them. The prices are stated on the menu and each employee is allowed to have food to the amount of fifteen cents free. The men have a lunch counter where they can secure a luncheon of soup, meat, po- tatoes, dessert and coffee for ten cents. Adjoining the lunch rooms there is a large rest room comfortably furnished and attractive in appearance. The Curtis Publishing Company maintain a lunch room for the women where they may eat lunches brought from home or purchase hot lunches at low rates. The rest room is handsomely decorated, has lounging chairs, plants and fresh cut flowers and pre- sents the appearance of a hotel rather than a rest room for working girls. The Chicago Telephone Company discovered that the women would not bring nor purchase suitable lunches and that during the afternoon many mistakes WELFARE 155 were made. The company then started to furnish wholesome lunches, free, to the telephone operators. Libraries and Reading Rooms. — In many estab- lishments libraries and reading rooms are furnished the employees, where they can spend the noon hour comfortably. In a few instances, branches of public libraries are connected with the concern and the em- ployees are allowed to take the books to their homes. Some firms have furnished private circulating libraries and permit the employees to read books in the rooms, or borrow them. This is very commendable and is especially helpful in smaller cities that have no cir- culating library. The Curtis Publishing Company has a library with a librarian in charge and about one thousand books are circulated each week. Marshall Field & Company has a reading room where there are magazines, periodicals and several cases of books for men and women. The Chicago Public Library is made accessible when the company sign slips for their employees. R. H. Macy & Company, of New York, has about one thousand volumes that have been donated by the members of the firm. Employees are allowed to take books home for a week. The Metropolitan Insurance Company maintain, in its building at New York, an extensive library con- sisting of five thousand volumes and each month a bul- letin is published announcing the new books received. Education. — Circumstances compel many boys and girls to start working before they have received suffi- cient education to be properly equipped for life's strug- gle. There is a growing tendency on the part of the IS6 BUYING BRAINS more ambitious to study during the evenings; some attempt to educate themselves while others attend night schools. A number of employers encourage the em- ployees to do this while in some of the larger establish- ments schools are maintained for them. The Wanamaker department store of Philadelphia deserves especial credit for educational work. The John Wanamaker Commercial Institute has a staff of twenty-five instructors who teach arithmetic, geog- raphy, law, business methods, etc. They conduct school morning and evening. Children under sixteen years of age are required to attend school two even- ings each week, their supper being given to them after working hours. Athletic and Social Clubs. — The social and club life of a great many factory workers is rather limited, especially when the factory is located in the smaller communities. Some of the employers, realizing that the employees require recreation of the cleaner sort, have aided the employees to organize clubs of different kinds. In some instances the employers have built the club houses, donated the grounds, and subscribe an- nually for their maintenance. The United Shoe Machinery Company, at Beverly, Mass., built a handsome country club house at an expense of $28,000. The building has an auditorium with a stage, reading room, bowling alleys, billiard, pool and card rooms. A gun club and tennis courts are located near by. The membership fee is two dol- lars, which is considered within the reach of all the employees. The Deering Works Club House in Chicago repre- sents an expenditure of $27,000. For the convenience WELFARE :i57 of the employees there are ladies' rooms, reception hall, smoking rooms, gymnasium and an assembly hall seating six hundred persons. The foremen of the works arrange entertainments, dances, etc. Over twenty years ago, the Gorham Manufacturing Company, near Providence, built for the employees a club house and a casino was added later. Picnics and Outings. — Annual picnics and outings are growing more popular, and each year are looked forward to by many of the employees with much pleas- ure. These outings have a tendency to bring the em- ployees together socially, crystallizing a more friendly spirit, and making the employees who occupy the lower positions feel that once a year all employees, regard- less of their station, have an equal standing. The H. J. Heinz Company has continued the cus- tom of having an annual picnic for many years. On that day operations are suspended and about 4,500 persons participate in the festivities. The Commonwealth Edison Company, of Chicago, gives the women employees an annual outing and each employee may invite a guest. The expenses are paid by the company. In this connection it may be said that many of the concerns bearing the name of Thomas Edison, our great inventor, are unusually liberal to their employees. Vacations. — A vacation is beneficial to the employee and the employer alike, as the vacations are taken in the dull season and do not interfere with the running of a business. In many establishments one or two weeks are given in accordance with the length of employment. Some concerns through their associations provide for inex- 158 BUYING BRAINS pensive or free board ; this is quite helpful to the em- ployees whose circumstances would not permit them to leave the city otherwise. The Lyman G. Bloomingdale Vacation Fund fur- nishes the female employees of Bloomingdale Brothers of New York who have been employed one year, a week's board, wages and transportation. Marshall Field & Company give a two weeks' va- cation with full pay to employees who have been with the company for a year, and one week to those in their employ for six months. R. H. Macy & Company of New York has a va- cation house at Central Valley, where employees who have been with the firm for one year are given a week's holiday with full pay, transportation and board. The Metropolitan Life Insurance Company give each employee who has been with them one year, two weeks' vacation with full pay. Savings Banks. — A number of concerns have started savings banks to encourage thrift and to help employees purchase homes and, furthermore, to loan money to those who desire to borrow. While the intention is well meant and the benefits have been very great to many employees, in several instances the results have been quite disastrous. Sev- eral of the concerns who were not financially strong invested part of the savings in their own enterprises and severe hardship was caused to the employees who lost their positions and savings at the same time. For this reason it would be preferable that the employees deposit their savings in banks that are subject to the supervision of the State banking laws. Benefit Funds. — Benefit funds and associations are WELFARE 159 quite common in the larger concerns and are being started in many of the smaller establishments. A num- ber of employees whose salaries do not permit saving are able to pay a small amount each week, which gives them a weekly allowance in times of illness. Some of the concerns help the employees to manage these funds while others have started the associations with a sub- stantial amount, leaving the management to the employees. In 1 88 1, the Bloomingdale Brothers Mutual Aid Society was organized and a number of bequests have been left to it by the members of the Bloomingdale family. A graduated scale of payments from the em- ployees was instituted, beginning with ten cents a month, according to the wages received, and the sick and death benefits have been helpful to the employees of this department store. The employees of all the Edison interests have or- ganized a mutual benefit association and have branch associations at the various plants. The National Cash Register Relief Association, sug- gested by the company years ago, was assisted by the company until it became self-supporting. An Inventory. — References have been made to the introduction of welfare work in the larger concerns and it is by no means being confined to them. A number of smaller concerns throughout the country are also inaugurating welfare work. After having read this chapter, the writer suggests that you put the book aside and take an inventory. Think over the question of welfare, ask yourself what you have done during the past year and what you con- template doing in the future to make the lives of your employees more enjoyable. CHAPTER IX UNIONS TT WOULD be absurd to consider the relationship -*• between the employer and the employee or to write of the labor movement without a discussion of the unions. Contrary to the general impression, the his- tory of the unions dates from the revolutionary period. Several were organized shortly after the signing of the Declaration of Independence. The Typographical Union. — In 1800, the Typo- graphical Association prepared the first wage scale ever adopted and the New York printers inaugurated a strike for its enforcement. The Association demanded twenty-five cents per 1000 ems for piece workers, at least $7.00 per week in book and job offices and $8.00 per week on newspapers. On July 5, 1802, in com- memoration of the third anniversary of the Associa- tion, Thomas Ringwood delivered an address before the Franklin Typographical Organization which in- cluded the following : "Our institution is in a much more flourishing state than its warmest friends could have expected. In its infancy it had many difficulties to encounter, but its members, by a persevering spirit and propriety of con- duct, have rendered futile every obstruction opposed to it in its progress to maturity, and we may now con- sider it as established on a basis so firm as to warrant the most sanguine hopes of its durability." Relief of Its Members. — "The organization of a society which has for one of its primary objects the 160 UNIONS i6i relief of its members when distressed will be allowed by all to be a laudable undertaking, as there is no situ- ation in life which secures us from the arrows of ad- versity; to-day we may be blessed with the enjoyment of perfect health, to-morrow we may be laid on a bed of sickness. Unforeseen events may incapacitate us to meet such a misfortune in a suitable manner ; it there- fore behooves us to make some provision as a shield against calamity, and in what way can it be better done than by associating in the bonds of friendship and brotherly love?" ''Well regulated societies also have a tendency to correct and guide the conduct of their members, both in moral and professional points of view and in jus- tice to our employers, as well as to ourselves, is the professional tenet of our constitution. Great care should be taken to adhere to it strictly, as our associa- tion will thereby support that credit which it has grad- ually been attaining since its estabHshment." No Evil Impression. — "I believe I may with truth affirm that our conduct has effectually obliterated any evil impression which might have been entertained against us as a society. We have clearly evinced that we associated not for the purpose of extorting extraor- dinary salaries, but from motives widely different, and it remains with ourselves to maintain the ground we have gained, or deviate from the line of conduct we have hitherto pursued and fall into discredit." "From truly laudable and patriotic spirit, we are warranted in cherishing the expectation that the art of printing will shortly arrive to a degree of eminence in America equal (at least comparatively) to what has arisen in Europe." i62 BUYING BRAINS ''We are now, brethren, a numerous society; let us endeavor to conciliate the esteem of our employers; let us continue to be united as we have heretofore been and we shall soar above the malevolent attacks of any who may from principle or prejudice, profess them- selves our enemies." It is to be regretted that the thoughts so eloquently expressed over a century ago should not serve as a guide for the action of the unions of to-day. In the early half of the nineteenth century a number of unions and associations were organized but the modern labor movement had its inception in the closing days of 1849. Others Organize. — During the spring of the fol- lowing year, a number of associations were launched and the labor movement began to attract considerable attention. On June 5, 1850, a central association called the Industrial Congress was established and 83 dele- gates from 50 organizations were present, with the object of extending the activity of labor. Masons were receiving $1.50 per day until 185 1, but on March 26th the members were ordered not to work for less than $2.00 after the fourteenth of April. The em- ployers Conceded the increase and a few weeks later the masons marched through the principal streets of New York to celebrate the occasion. Practical House Painters' Benefit and Protective Society was organized on March 19, 1850. The Gas Fitters held a preliminary meeting April 22, 1851; The Stone Cutters' Union started June 28, 1850; The Journeyman Tailors' Union first met in March, 1850, and five months after had a membership of 2500. .'The Steam Boiler Makers, The United Order of Manu- UNIONS 163 facturing Jewelers, The Cabinet Makers, The CoacH Painters, The Dry Goods Clerks' Mutual Benefit and Protective Association, and many other organizations, representing almost every important industry, were formed during this period. While unionism has ex- isted for many years, the prevailing types of men con- trolling the unions were entirely different in the earlier periods. The unions were inclined to be reasonable in their demands and the employers generally met their requests in a fair manner. The present relationship between the employer and the employee is totally different, each party appearing to disregard the rights of the other. The union de- mands as much as possible for the workmen and the employers consider it good business not to pay a higher wage than is absolutely necessary. Destructive Methods. — The programmes of the earlier unions were constructive. Many of the unions now teach destructive methods. Without the union, the employees are at the mercy of the employers. The more capable workmen would prefer leaving their in- terests in the hands of the employers provided they would be treated fairly. When a scale of wages is prepared for a group of employees, regardless of ability, the efficient workman is the loser thereby. Unions have come to stay and while in a number of industries they may not gain a foothold or retain their present strength, they will always be an important fac- tor in the labor movement. How to Eliminate the Unions. — To keep union- ism out of your establishment, have your employees thoroughly contented. Grant the employees proper working conditions, pay them fair wages, adjust the 1 64 BUYING BRAINS differences and misunderstandings that may occur and treat your workmen with a humane spirit. Do not compel your employees to leave their unions, but volun- tarily establish such relations with them that they will ncft permit their unions to stir unnecessary strife. The best arguments in favor of scientific manage- ment and welfare work are, that it has been stated that a few of the union officials are opposed to such movements, as they have a tendency to make the work- men disregard the demands of the unions. In justice to the unions they must be given credit for many of the improved working conditions that have been help- ful to the workmen and have proved of material ad- vantage to the employer. Credit Due the Unions. — Reasonable working hours, sanitary workrooms and many other industrial reforms should be credited to the cause of the union. Unions properly administered are not only a protec- tion to the workmen, but they safeguard the interests of the fair-minded employer. The reputable concerns paying fair wages for a rea- sonable number of hours would find it difficult to com- pete with concerns who would underpay their work- men and compel them to work a greater number of hours. What the Public Demands. — The union officials must recognize that it is improper for them to make excessive demands, that the public sentiment is opposed to violence, and the workmen should be allowed to deliver their maximum ability ; also that strikes should be avoided whenever possible. The members of the unions must select as officials, men who are worthy of respect and such types that UNIONS 165 will deal fairly with the members as well as with the employers. The Fair and Square Deal. — The unions should not demand unreasonable wages for inferior workmen, but should devise ways and means and adopt plans to instruct, train and develop workmen who will become efficient and justly entitled to higher wages. The unions have the opportunity to help the workmen and make them acceptable to the employers, the majority of whom do not object to paying union wages if they receive the equivalent in services rendered. Let it be here understood that employers are not fighting the unions ; they are fighting the principles or lack of them. There seems to be no satisfactory solu- tion of the labor problem; no equitable division of the income of industry between those who control the industries and the men and women who perform the work. The employers claim that the workmen demand too much and accomplish too little; the employees think that too much is expected of them for the compensa- tion they receive. There is, in many establishments, a feeling of an- tagonism and distrust. The employees do not furnish their maximum ability and the employers are unwilling to be more liberal, believing that they are being im- posed upon by the workmen. Employees are com- pelled to work for a livelihood; employers require workmen to carry on their business. The two are de- pendent upon each other ; the success of the one should be the success of the other. Why not settle their dif- ferences equitably and peaceably ? Strikes are ordered, employers suffer financial losses which are frequently i66 BUYING BRAINS beyond recovery, and their inability to meet obliga- tions indirectly affects others who had no voice in the strife. Both at a Loss. — Employees usually suffer even more than the employers. They often forfeit every asset they possess, their savings and their positions, and not only suffer financially but frequently are de- prived of the necessities of life. The saddest part of these conflicts is the agony and suffering of those de- pendent upon the workmen; the wives and little ones must undergo this terrible ordeal, though they have no vote in the unfortunate affair. After weeks and months of this dreadful loss of money, energy and often lives, the two parties realize that they are depend- ent upon each other and frequently arbitrate their differences. The workmen are happy to return to their work, the employers are anxious to resume busi- ness, and both are in a weakened condition with an un forgotten hatred towards each other. Arbitration. — If an employee only wants what is reasonable, and an employer is willing to deal fairly, why not arbitrate their disputes without this dreadful waste? A community will not permit individuals to disturb the peace; society will not accept a man who plays unfair in sports. Why, then, should a com- munity countenance continuous labor disturbances? Why should society allow its members to deal unfairly with the less fortunate and helpless workmen ? According to the laws in most of our States, nothing can be done by the Labor Bureau unless the parties in dispute signify their willingness, excepting in such cases that affect the public service, and even in this respect its powers are Hmited. If transportation is UNIONS 167 stopped or becomes curtailed, the officials show signs of activity, but when fuel, ice and other necessities are affected by a strike, the officials consider that their hands are tied. The labor commissioners in the various States should be granted greater authority and should utilize it to reduce the labor conflicts. Making investigations and preparing reports is interesting reading matter, but the most important duty of a labor bureau should be the elimination of the greatest wastes, the settling of dis- putes between capital and labor. Conciliation and arbitration is the only answer to these terrible strikes and lockouts; fair opportunity to adjust the disputes and exposure of the unfair and unjust whether it be the workmen or the employers. The Influence of Public Sentiment. — Public senti- ment has a more important influence in our transac- tions each year; the millionaires and industrial giants who defied the public ten years ago are now spending their money and efforts to crystallize favorable public opinion. Workmen who were willing to be led in their unions are beginning to think for themselves ; they read papers and magazines and are inclined to be more reasonable. In the year ending September, 191 3, there were 268 strikes and lockouts in New York State alone, in- volving 286,180 workmen who lost 7,709,525 working days. This tremendous waste should not only awaken the citizens of New York State and elsewhere to avoid such a calamity, biit it should shock the capitalists and the working classes of the nation. While some of the disputes were settled through the assistance of the Labor Department of that State, i68 BUYING BRAINS many of them should have been arbitrated, and most of the strikes could have, and should have, been avoided. While it must be admitted that in Massachusetts during the year 19 13, there were 321 strikes affecting 30,000 workmen, these numbers would have been greater had it not been for the activities of the State Board of Conciliation and Arbitration. In attempting to solve the labor question, the law of conciliation and arbitration adopted in Massachu- setts is a progressive step and it is hoped that other States will enact similar laws and improve them if possible. The State Board. — The Massachusetts laws include the following provisions : "Section 10 : There shall be a State Board of Conciliation and Arbitration con- sisting of three persons one of whom shall, annually, in June, be appointed by the Governor, with the advice and consent of the council, for a term of three years from the first day of July following. One member of said board shall be an employer, or shall be selected from an association, representing employers of labor. One shall be selected from a labor organization, and shall not be an employer of labor, and the third shall be appointed upon the recommendation of the other two, or if the two appointed members do not, at least thirty days prior to the expiration of a term, or within thirty days after the happening of a vacancy, agree upon the third member, he shall then be appointed by the Governor. "Each member shall, before entering upon the duties of his office, be sworn to the faithful performance thereof, and shall receive a salary at the rate of two UNIONS 169 thousand five hundred dollars a year and his necessary traveling expenses and other expenses, which shall be paid by the Commonwealth. *The board shall choose from its members a chair- man, and may appoint and may remove, a secretary of the board and may allow him a salary of not more than fifteen hundred dollars a year. The board shall, from time to time, establish such rules of procedure as shall be approved by the Governor and Council, and shall, annually, on or before the first day of February, make a report to the General Court." Strikes and Lockouts. — *' Section 11 : If it appears to the mayor of a city, or to the selectmen of a town, that a strike or lockout described in this section is seriously threatened or actually occurs, he or they shall at once give notice to the State Board, and such notice may be given by the employer, or by the employees concerned in the strike or lockout. If, when the State Board has knowledge that a strike or lockout, which involves an employer and his present or former em- ployees is seriously threatened or has actually occurred, such employer, at that time, is employing, or upon the occurrence of the strike or lockout, was employing, not less than twenty-five persons in the same general line of business in any city or town in the Common- wealth, the State Board shall, as soon as may be, com- municate with such employer and employees and en- deavor by mediation to obtain an amicable settlement, or endeavor to persuade them, if a strike or lockout has not actually occurred, or is not then continuing, to submit the controversy to a local board of conciliation and arbitration or to the State Board. *'Said State Board shall investigate the cause of said I70 BUYING BRAINS controversy and ascertain which party thereto is mainly responsible or blameworthy for the existence or con- tinuance of the same, and may make and publish a report finding such cause and assigning such responsi- bility or blame. Said Board shall, upon the request of the Governor, investigate and report upon a con- trovers3% and, if in his opinion, it seriously affects or threatens seriously to affect the public welfare, the Board shall have the same powers for the foregoing purposes, as are given to it by the provisions of the following sections." An Action at Law. — "Section 12 : If a controversy, which does not involve questions which may be the subject of an action at law or suit in equity exists be- tween an employer, whether an individual, a partner- ship or corporation employing not less than twenty-five persons in the same general line of business, and his employees, the Board shall, upon application as here- inafter provided, and as soon as practicable, visit the place where the controversy exists and make careful inquiry into its cause and may, with the consent of the Governor, conduct such inquiry beyond the limits of the Commonwealth. "The Board shall hear all persons interested who come before it, advise the respective parties what ought to be done or submitted to by either or both, to adjust said controversy, and make a written decision thereof, which shall at once be made public, shall be open to public inspection, and shall be recorded by the secre- tary of said Board. "A short statement thereof may in the discretion of the Board, be published in the annual report, and the Board shall cause a copy thereof to be filed with the UNIONS 171 clerk of the city or town, in which said business is carried on. Said decision shall, for six months, be binding upon the parties who join in said application, or until the expiration of sixty days after either party has given notice in writing to the other party and to the Board of his intention not to be bound thereby. Such notice may be given to said employees by posting it in three conspicuous places in the shop or factory where they work." Signing the Application. — ''Section 13 : Said ap- plication shall be signed by the employer or by a ma- jority of his employees in the department of the busi- ness in which the controversy exists, or by the duly authorized agent or by both parties, and, if signed by an agent, claiming to represent a majority of the em- ployees, the Board shall satisfy himself that he is duly authorized so to do, but the names of the employees giving the authority shall be kept secret. "The application shall contain a concise statement of the existing controversy, and a promise to continue in business or at work without any lockout or strike until the decision of the Board, if made within three weeks after the date of filing the application. "The secretary of the Board shall forthwith after such filing cause public notice to be given of the time and place for a hearing on the application, unless both parties join in the application and present therewith a written request that no public notice be given. If such request is made, notice of the hearing shall be given to the parties in such manner as the Board may order, and the Board may give public notice thereof, notwithstanding such request. If the petition or pe- tioners fail to perform the promise made in the appli- 172 BUYING BRAINS cation, the Board shall proceed no further thereon without the written consent of the adverse party." Expert Assistants. — There is a provision made in "Section 14" for the employment of expert assistants to furnish information to the members of the Board. Local boards are authorized in accordance with "Sec- tion 16'' to arbitrate local disputes; such boards when duly appointed by the parties desiring arbitration and conciliation have similar powers to those given to the State Board. The National Arbitration Board. — In April, 191 5, the National Arbitration Board made awards affecting 64,000 locomotive engineers ; the railroads made four- teen concessions to the men, while a number of the demands of the engineers were rejected. It was per- fectly natural that both of the parties were disappointed with certain decisions of the Board, yet it was far wiser and better for all concerned than to tie up the railroads, affecting the stockholders and shippers, as well as throwing out of employment 64,000 engineers, and probably as many more workmen who may have been similarly affected through sympathetic strikes. Control of the Situation. — Frequently the de- mands of labor are unreasonable and it is impossible to grant them, but there are a number of instances where the requests are just and proper and the em- ployers refuse to arbitrate, claiming that they should be the sole judge of the working conditions in their own establishments, and they absolutely refuse to meet or discuss the situation with a representative of the employees. If they desire to treat their employees fairly, it is a poor excuse not to allow them a spokesman, or one UNIONS 173 who is capable of acting for a group of individuals who are not mentally or financially able to make the demand for their individual rights. Acts of Violence. — When a strike is called it ap- pears that both the employers and the unions often employ the worst type of men as strike breakers, who delight in conducting criminal campaigns. Property is destroyed, workmen are injured, and in some in- stances killed. This procedure, instead of opening the pathway for a speedy settlement, has a tendency to influence both parties to disregard their losses and fight each other to a bitter end. A Noteworthy Case. — The courts have in recent years been called upon to settle a number of questions affecting the unions. The one that attracted the most attention was the decision in regard to boycotting, which was averse to the union, and it greatly pleased the public generally, who have never approved of the method of boycott utilized by the unions. The fight lasting for years was carried on by D. E. Loewe & Company, hat manufacturers, and in later years sup- ported by the Anti-Boycott Association and they were finally rewarded by a decision in their favor. It was unfortunate that the verdict affected the 186 men in- dividually, who were compelled to suffer a great per- sonal loss, instead of it being a financial loss to the organization, which they represented. It is an excellent argument in holding the various unions responsible for the acts they recommend. The lack of responsibility by the unions and their officials makes them careless in their actions, and they permit the members to disregard their agreements, and con- duct the strikes without thought of honor, and without 174 BUYING BRAINS right and proper respect for the laws of the nation. A Weakened Attitude. — The cause of the unions is thereby considerably weakened as they do not in- spire the confidence of the employers or the public. The latter usually sympathizes with the less fortunate workmen unless they commit brutal or illegal acts. In our larger industries the conflict between capital and labor is frequently the result of absentee owner- ship. The actual owners are interested financially and the management is entrusted to others whose only de- sire is to make a satisfactory financial report to the directors. A number of the leading capitalists do not give any thought to the human element in the undertakings in which they are financially interested as they control a varied list of industries besides spending a large portion of their time in philanthropic work. Philanthropy. — Without belittling the noble work of the philanthropists, and fully appreciating their kindly efforts, it would be more economical and just if the leaders of commerce would adjust the working conditions in the concerns from which they receive financial returns so that the demands upon charitable organizations would be minimized. Nothing crushes the spirit of a person so completely as when forced into a position where charity must be accepted; noth- ing makes an individual so happy and contented as when he has been treated justly. During a recent industrial investigation, some of those who were questioned in regard to the industries they dominated, disclaimed any knowledge of the actual conditions existing. If men finance an enter- prise, or allow their names to be used in a directorate. UNIONS 175 there should be no excuse for accepting profits without knowing they have been fairly earned. Getting in Close Touch With Employees. — While it must be admitted that the leaders of the unions have become more powerful and their arbitrary attitude in many instances has been detrimental to the welfare of industry, their power has been increased .on account of many of the commercial leaders refusing to grant reasonable demands. The nearer the em- ployers come to the employees, the weaker the union officials become and the less power they possess. The workmen desire justice; the unions assist them to se- cure it. When the cause is removed the power is di- minished. Neither the employer nor the union officials must attempt to be arbitrary ; they must recognize the rights of each other. For a short period, either may secure an unjust ad- vantage, but this will later result in a conflict with a disastrous termination for all concerned. While some of the labor leaders have abused their power and in- fluence, it is an insufficient reason for denying all work- men the privilege to organize. Some of the employers have also abused the power of wealth, but this is no cause for condemning all of the leaders in commerce. Working Hand in Hand. — Fair-minded employers and properly conducted unions should be able to co- operate for mutual welfare, and unless the right spirit prevails it is utterly impossible to administer justice. Employers engaged in their various industrial prob- lems have centered their attention on achieving success, and many of them in their concentrated thoughts have 176 BUYING BRAINS innocently neglected to consider the welfare or rights of those who have been instrumental in helping them to climb the ladder of success. The unions have awakened them by voicing the needs of the workmen, who, individually, would not have had the opportunity or strength to arouse the employers to the realization of their moral obliga- tions to their employees. The unions having shortened the hours of labor, the workmen are able to work more strenuously and in some instances perform as much work in a shorter working period. They have raised the wage scale, which was necessary to keep pace with the steady in- crease in the cost of living. They have also added to the comforts of the employees who under such cir- cumstances can do more efficient work. They have prevented women and children from performing work for which they were not physically able. Improving the Standards. — The unions have had laws passed to make the working conditions more sani- tary, not only making the employees more healthy, but also improving the standards of output both in quantity and quality. It is true they have also de- manded unreasonable conditions, but unions, like em- ployers, are often mistaken in their opinions, and the two parties, meeting each other with a spirit of fair- ness, should adjust their differences, accepting that which is good and rejecting that which is otherwise. Some Objections. — Employees and employers thinking alone of their own interest fail to consider the effect of their demands upon the other party. The unions have been rightly criticised for limiting a work- man's output and objecting to the introduction of cer- UNIONS 177 tain types of improved machinery. The union officials imagined they were protecting the interests of the workmen but they antagonized the employers and such a poHcy would, in fact, make it impossible in many trades for American industries to successfully compete with foreign concerns paying a lower wage rate. Mr. Frederick W. Taylor was opposed to unions on account of their limiting the efforts of the workmen. He did not consider all men doing similar work as being born equal and was opposed to reducing the output of the efficient workmen to the level of the inefficient. He gave the unions credit for what they had accom- plished in other directions and believed they had a splendid opportunity to assist the workmen, if they would assume a different attitude. With the introduction of scientific management in so many of the important industries and with the in- creasing demand for efficiency engineers the question has arisen as to the attitude that the scientific managers will assume toward the unions, and how it will be re- ceived by the unions. Opinions of Efficiency Engineers. — Some of the efficiency engineers believe that by introducing scien- tific management a workman will increase his earn- ings, decrease his wasteful efforts and have more agree- able surroundings than the unions could have otherwise secured for him; therefore a workman should desert his union, which has lost its usefulness. This theory may be true in instances where the man- agement is willing to give to labor its fair share of the advantage gained by scientific management. Unscru- pulous employers, learning of the increased output and 178 BUYING BRAINS decreased cost of production, will attempt to fix a wage scale and even a bonus so that the workman will not earn more than he does under customary management. He will argue that better working condition for the employees is sufficient inducement and that the entire saving belongs to him, as he had furnished the capital and had introduced scientific management on his own initiative. Such a practice would give the unfair employer an advantage over the fair employer. Competition be- tween the two would make it necessary for many who are inclined to be just to follow the example of those who might adopt a more selfish policy. Solution of the Problem. — The new questions that arise through the introduction of scientific management must be solved equitably. The unions have an oppor- tunity of demonstrating their usefulness by studying the benefits that scientific management affords the workmen and by co-operating with the employers rather than opposing its introduction. Two objections have been mentioned in regard to scientific management: one is that it overworks the employee, the other is that by increasing the output it decreases the number of workmen required, thereby throwing out of employment the inefficient employees. The principles of scientific management do not in- clude the overworking of the employees but on the contrary, it simplifies and makes their work easier. Scientific management instructs the workman, plans his work for him, relieves him of duties he is other- wise not capable of performing and allows him to concentrate on individual tasks By increasing the out- put and lowering the production cost it creates new UNIONS 179 outlets for articles which were formerly considered prohibitive by many. It also increases the sale of our products in foreign markets and helps to overcome the disadvantages that we have suffered during the past. Granting Demands. — Scientific managerhent has made it possible to grant many of the demands of the unions, higher wages, shorter hours and a protection to the less able workman, by discovering his weakness and helping him become more efficient. If the unions oppose scientific management, they will lose the confidence of the workmen (the majority of whom desire its introduction), will be compelled to fight the employers, who are in a position to grant what the workmen have demanded for years, and will, furthermore, lose the sympathy of the public, who are beginning to realize what scientific management means to the employer, employee and consumer. The workmen should not be condemned for having joined the union to which they belong. They do not believe their interests would be protected otherwise. The unions should not be criticised for attempting to obtain for the workmen fair wages and proper work- ing conditions which would otherwise be unbearable in many instances. Paid According to Time. — It has been the custom for employers to pay employees a fixed wage for a cer- tain class of work, the wage scale being adjusted and paid according to time regardless of ability. This method has reduced the natural ability of the more capable who knew that increased production would not mean a larger income. There was no incentive for the employees, no records kept of their performances i8o BUYING BRAINS and the workmen were satisfied to do just enough to retain their positions ; but scientific management meas- ures their achievements, assists them to increase their production and rewards them accordingly. Co-operation of Unions. — The unions instead of attempting to Hmit the output should encourage greater accomplishments and co-operate to increase the earn- ings of the workmen. The unions have done considerable good, but as now constituted, many of them are a hardship and a handi- cap to both the employer and the employees. Men are not usually admitted to clubs and societies until they are passed upon as fit members. The unions should not accept members and demand a stated wage for them unless the men are capable of earning that wage. Increasing Recognition. — The unions can gain recognition and the respect of employers and em- ployees by raising the standards of their membership so that the employers would willingly give the pref- erence to union members, being assured that member- ship implied capability. When the unions demand excessive wages for in- competent service, they are weakening their cause and injuring the more capable workmen who are often judged by the company they keep. CHAPTER X CO-OPERATION COMPETITION develops by destructive methods; a small percentage survives and the survivor is often left in a weakened condition. Co-operation develops by enlightenment ; it preserves the better elements and eliminates what is harmful and wasteful ; it elevates all and destroys none. This is unquestionably the age of co-operation among individuals, organizations and associations, and institutions are co-operating with one another for their mutual welfare. A good fighter may outwit many competitors but eventually must travel alone, and he finds it impossible to compete with others who are con- tent to travel together. Without co-operation nothing worth while has been, or can be, accomplished. Individuals may undertake a task, but co-operation is essential to a successful termination of any magnitude. The average person is efficient in one respect and inefficient in many others. The co-operation of men raises the efficiency of an or- ganization. The President of the United States holds Cabinet meetings and each member is considered a specialist in one department of the government. The expert knowledge of the individual acts as a guide and the combined counsel of the other members furnishes the President with sound judgment. The co-operation of the members of his Cabinet makes it possible for the President to decide questions of every conceivable character. i8i i82 BUYING BRAINS Pulling Together. — Competitors instead of fighting each other as formerly, have changed their tactics and are working together to secure mutual advantages. Manufacturers, jobbers and retailers are co-operating w^ith one another and realize that their success is de- pendent upon the healthy growth of each other. Employers and employees are co-operating to a greater extent, employers being convinced that it is impossible to obtain maximum results without the sin- cere support and co-operation of employees. In former years each concern and every individual had a different method of performing the work ; a good idea was a secret and unknown to the others and the consequence was that the wasteful practices over- shadowed the few worthy ideas in each establishment. If a concern were unusually prosperous, it was con- sidered good business for others to secure an employee from it, who would divulge the secrets of his former employer. If a man had been engaged in business for any length of time he ridiculed and criticised a new com- petitor for encroaching on the rights of an established merchant. If a retailer required an article that would take considerable time to obtain from a factory, he would be compelled to purchase it from a competitor at retail price, and would consider himself fortunate if the competitor did not know to whom he was selling. Modern Ideas. — To-day we are laboring under dif- ferent conditions. While there are still many employ- ers who believe themselves superior to their younger competitors, or to those who have emigrated to this country a few years later than themselves, the ma- jority of merchants are becoming more broadminded CO-OPERATION 183 and are meeting the conditions that confront them in a square manner. In contrast with the former secrets of the trade, associations have been organized in the various indus- tries, chambers of commerce and boards of trade have been formed in the different communities where the employers assemble to exchange ideas, giving each other the benefit of their experiences and co-operating with all of the members for their general welfare. The employer of yesterday traveled in darkness and considered his personal experience his best and only teacher ; to-day the experience of one is the knowledge of all. Combined Efforts. — The accomplishments of a few of the associations would profitably fill a volume for the guidance of organizations to be launched as well as those that are now existing. In almost every im- portant industry there is at least one national associa- tion that includes the membership of local associations and holds annual conventions where they distribute literature and divulge information for the benefit of the entire trade. In every field of commerce there are handicaps, also conditions that should not exist and various issues that cannot be satisfactorily adjusted by the individual, but right here the moral and financial support of a large group is required to settle them. When an individual concern complains about these or other harmful conditions very little attention is given to its complaint, but when an association repre- senting the entire trade voices the sentiments of its members, the claims, if justified, are quickly adjusted. Unfortunately, there are too many employers who i84 BUYING BRAINS do not take active interest in their associations. They selfishly allow a few members to transact the business of the organization and are only too willing to accept the benefits accruing from the efforts of those who are active. Accomplishing Results. — Many employers often imagine that they are too large or too small to become actively interested in the formation of an association, or to the completion of its plans, but this has a detri- mental effect and the responsibility is usually shoul- dered by a minority. The more prosperous an employer is the more he should feel obligated to an association that has bet- tered trade conditions and his co-operation is both needed and rightfully expected. The smaller employer can frequently absorb much knowledge by associating with other members of his association but if he neglects the opportunity he does himself an injustice. At the meeting, ideas are ex- changed, styles and customs suggested and accepted, complaints adjusted and the members return to their industries materially benefited. Conclusions are no longer formed from actual experiences in their own industry but are arrived at by those of others ; instead of being antagonistic to their competitors, they are con- vinced that business is made more pleasant and profit- able by being helpful to each other. Profitable Mutual Advantage. — Probably one of the greatest benefits derived is in the exchange of credit information in regard to customers, whether they are consumers, retailers or jobbers. While such large mercantile agencies as Dun and Bradstreet are wonderful organizations and publish GO-OPERATION 185 books of extreme value, the credit information fur- nished by the various associations concentrates in a particular field and is a helpful adjunct. In many trades it is possible to estimate if a mer- chant is "overbuying," and learn how he pays his bills; in fact it has been helpful to prevent reckless purchas- ing in addition to considerably reducing the number of fraudulent transactions. The associations have greatly assisted the members to prevent fraud and have done a great deal to punish the perpetrators of such acts. And have thus contributed to improve conditions. In many instances investigations are made and a number of such transactions traced to bankruptcy law- yers in the larger communities who instruct their clients how to conduct profitable failures which are staged so perfectly that they would be a credit to Mr. David Belasco. Co-operation has eliminated this practice to some extent. The National Furniture Manufacturers' Protective Association was formed in 191 5 in order to save the wholesalers from losses such as they sustained through the failures of small dealers. In describing the conditions that led to the forma- tion of the organization, it was stated : — "It was found that the settlements made by the bankrupt dealers were, on the average, very much smaller during the recent year than formerly and in some cases fraud was discovered. "The association will first of all try to aid the dealer who is temporarily embarrassed through lack of ready cash by supplying him money enough to pay off his most pressing creditors. For this purpose a sinking fund will be arranged. In cases where the manufac- i86 BUYING BRAINS turers have reason to believe that a debtor has con- cealed assets, or is attempting to deceive his creditors in any other way, the association will investigate and prosecute the offender." The associations have been helpful to the retailers in determining credits. In a number of communities there has been an exchange conducted by the organ- ization furnishing the names and addresses of resi- dents who do not pay their obligations promptly. Special Advantages. — Many of the associations have been instrumental in preventing the merchants from being subjected to impositions. The members have been prohibited from advertising in special edi- tions published for the profit of the promoter and not the advertiser, from advertising in programmes of fairs, entertainments and similar functions which are usually regarded as donations. The associations in a number of cities have ap- pointed committees on charities to investigate chari- table societies and have arranged to have the contribu- tions made through the association, thereby saving the members a continual annoyance and embarrassment as well as eliminating such philanthropic undertakings as are poorly managed, or conducted mainly for the benefit of the collectors of the funds. Some of the associations have been extremely suc- cessful in influencing important industries to locate in their cities, thus creating a greater prosperity for their merchants. Excursions from nearby localities have been helpful in securing considerable new patronage for the mem- bers of various associations. Better roads arid im- proved transportation have frequently been advocated CO-OPERATION ' 187 and they have added to the profits of the merchants in many cities. It is frequently remarked that our legislatures are controlled by the representatives of large interests. It is equally true that the many smaller concerns have practically no voice in the legislative programmes. Every local association should have a committee on legislation to enlighten its representative on the com- mercial needs of its community, and to attempt to se- cure the enactment of laws that are just and not detri- mental to the interests of the employers to conduct their enterprises on an honorable basis. The Associated Advertising Clubs of the World. — Probably no association, in such a short period, has attracted so much favorable attention as the Asso- ciated Advertising Clubs of the World. Their efforts have not only rewarded their members but have been a distinct benefit to the consumer, merchant and worthy publisher. The True Value of Co-operation. — If the retailers in an industry form an association and the manufac- turers in the same field should organize, there should be co-operation between the two associations, as the success of the retailers largely influences that of the manufacturers. The retailer, jobber and manufacturer should co-operate with each other for their mutual benefit. The question of credits previously discussed opens an avenue for co-operation that has been tested with satisfactory results. While credit information and sound judgment will prevent many failures, there will be instances where changed conditions or circumstances make it impos- i88 BUYING BRAINS sible for many merchants to meet their obligations in accordance with the terms of sale. Credit is an important asset. It is more valuable than a limited amount of cash; it is a privilege that is granted — do not abuse it. If you are temporarily embarrassed, go to your largest creditors and explain to them the true conditions that exist — it is to their interest to see that the proper assistance is extended. If there is a co-operative spirit between the debtor and his creditors, a trustee may be appointed at a creditors' meeting, who safeguards the assets and guides the debtor in his daily acts, converts the assets gradually into cash, paying the creditors in installments, and quite frequently not only pays all his creditors in full, but leaves the business in such a healthful condition that the debtor is able to continue his business with confi- dence re-established and in better circumstances than he had enjoyed for many years. This is but one of many ways in which the wholesale and the retail mer- chants should co-operate with each other. Of Value to All Concerns. — Many merchants who conduct small establishments are closely confined to their business ; their knowledge is limited in many di- rections and to be successful they require the co-opera- tion and assistance of others. The manufacturers and larger employers usually possess superior knowledge and generally employ a few men of greater ability than the customers; such men are able to furnish advice and suggestions to the patrons that will be helpful to them and through in- creased patronage and loyalty the concern receives an indirect Ijnefit. Just as the merchandise is sold at wholesale, knowledge and assistance can be extended CO-OPERATION 189 wholesale, which can thus prove mutually beneficial. It is surprising that more of our mammoth concerns have not inaugurated co-operative programmes; it is, figuratively speaking, not an expensive plan when prop- erly executed and its advantages are far greater than imagined by many persons. The writer has personally tested this suggestion by having published a book of "Selling Plans" for the retailers in the trade in which he was interested. The book was not only well re- ceived but proved extremely helpful to the members of the trade who were ambitious and desired to conduct campaigns that would have been almost impossible without such assistance. Service Departments. — Every large concern should have a service department where information and co- operation will be cheerfully extended to the patrons. It is surprising how easy it becomes to detect the weakness of an individual and in a few moments his commercial life may be changed, making his business more pleasant and profitable. Co-operative plans of scientific management, advertising, window and store display, methods of bookkeeping and collection can be conducted profitably for all concerned. The retailer who increases his business will create a larger market for the product of the wholesaler. If a business is managed scientifically, the wastes are naturally eliminated; if the retailer collects his money more promptly, he is in a better position to meet his obligations in accordance with his promises. The proprietor of a chain of grocery stores in a recent speech stated that if he were marketing a new article he would include in his advertising campaign a sample package to be distributed to each clerk in the stores I90 BUYING BRAINS where the article was handled. Clerks usually do not purchase new articles in stock and when customers inquire regarding an advertised article they cannot con- scientiously recommend what is contained in a sealed package the contents of which they have neither ex- amined nor tasted. Frequently questions are asked salesmen, both whole- sale and retail, regarding various products, which they cannot intelligently answer. The retailer handling many articles sells some of which he knows absolutely nothing; he will ignorantly recommend and sometimes reject articles through a lack of knowledge. The salesman and the consumer should receive detailed information regarding what they sell or purchase ; furthermore, you cannot ensure complete satisfaction nor justice for your product un- less literature is included which enlightens each person purchasing or selling it. Manufacturers and distributors imagine when buy- ers are informed as to the manufacture of an article and a sale is consummated that they have completed their portion of the distribution. The manufacturer should explain to the wholesaler how the product is made and what it contains ; the distributor should not only educate the retailer, but should assist him in the sale of the products. A few years ago an article was extensively adver- tised which was superior to many similar brands and a higher price asked for it. The salesmen in several prominent stores were asked by a prospective purchaser whether the article was really better and worth the difference in price. He was told in each instance that they could not explain why the higher price was de- CO-OPERATION 191 manded. This information should all go with service that is to give satisfaction to the end. Retailers' Co-operation. — Probably the greatest opportunity for the retailers to co-operate is to extend more courtesy and give a proper hearing to the repre- sentatives who call upon them. One of the largest items of expense to the distributor is the salary and incidental charges of the traveling salesman. This can be materially reduced if the retailers would co- operate. In many lines salesmen travel a small fraction of the year and waste a large portion of their time. Salesmen require annual incomes for the compara- tively short time they travel, in addition to other ex- penses, such as hotel, transportation and many smaller items. A salesmen earning $3,000 annually, who ac- tually travels 150 days, receives a salary of $20 daily for services exclusive of other items, which may amount to $10, making a total of $30 daily. It is not unusual to meet a dozen salesmen in the lobby of a commercial hotel, who are waiting for customers who do not keep their appointments or who are not courte- ous enough to telephone and inform the salesmen when they will arrive, or if they have any intention of keep- ing their engagements. Salesmen are often treated dis- courteously after having been kept waiting an hour or more for an interview. A buyer cannot purchase from all salesmen who call, but their time should not be wasted, and being away from home for a long period is distasteful enough without receiving sarcasm from those whom they may meet. Successful merchants and buyers receive valuable suggestions and information from traveling salesmen 192 BUYING BRAINS who accumulate considerable knowledge of the exist- ing conditions in the various communities and are the first to learn of the innovations in their industry. Merchants should wisely cater to them and assist in making their work more pleasant and less expensive. The expense of selling is added to the cost of the mer- chandise and when the waste of time is eliminated and the cost of selling is reduced to a minimum, the selling price can also be lowered. Several of the large department stores make it com- pulsory for the buyers to give the salesmen an audience and examine each line that is offered for sale. Merchants' Co-operation. — The merchant may also co-operate when he begins to realize that the credit extended to him should not be abused and that the money he receives for his stock does not belong to him unless his debts have been fully paid. It is not unusual to see a merchant purchase property, stock, or invest in other enterprises with the money that does not rightfully belong to him. Nothing is so distasteful to a creditor than to dis- cover that the inability of a customer to meet his obligations is because of an investment in real estate or securities which cannot be converted into cash when the bill has matured. Co-operative Societies. — Co-operative societies ( formed for the purpose of sharing profits or reducing prices among the dealers in the various industries) have not met with as much success in this country as in Europe. Probably the reason lor this is, that the aver- age American prefers the independence of trading with such concerns as he may select, independent of their financial atfiiiations. CO-OPERATION 193 However, the possibilities oi such societies have been demonstrated by the success of a concern like the American Druggists Syndicate, which has in a few years grown from a small beginning to a factory and output of mammoth proportions. Such societies may in the future become compulsory in several trades so that the individual may compete with the chain stores which are able to obtain price concessions by purchasing in very large quantities or by manufacturing their own products. In industries where the retailer purchases a large number of articles in small quantities from many concerns, it would be better and more economical if he would purchase his supplies from a co-operative society at lower, or even the same prices. Co-operation With Employees. — While the dif- ferent methods of co-operation referred to are impor- tant, many concerns have neglected to co-operate along the lines suggested and have been fairly successful but one form of co-operation that is essential to permanent success is the co-operative spirit between employer and employees. In recent years the growth of so many concerns and the consolidation of others has destroyed the personal relationship that existed when employers and em- ployees came into daily contact with each other. While the number of factories in many industries is decreas- ing, the number of employees and amount of produc- tion are steadily increasing. The men controlling the industries are fewer in numbers and the actual man- agement is frequently in the hands of high salaried employees. The officers of large concerns not meeting employees 194 BUYING BRAINS personally, deal with them through a representative. The employer's treatment of the employees is sometimes influenced by the advice of the representative and it frequently lacks the human element that existed and still exists in the smaller establishments. Many firms fail, others find their competitors grow- ing more rapidly than themselves and search for rea- sons and invent excuses, while the real cause is lack of co-operation. When employers and employees do not co-operate in such instances, it is perfectly natural that the employees do not co-operate with each other. Each individual is considering personal gain and no one has any regard for the interests of the concern. If the proper co-operation exists, each employee is thinking and working for the advantage of the em- ployer, feeling confident that his personal interests will be safeguarded by him. If perfect co-operation is desired in an industry it must begin at the head. Officers. — The directors of a corporation or the members of a firm must be honorable and fair to each other. They should have an equitable agreement and understanding; they should work together harmoni- ously for the welfare of the concern and if disputes arise or a question of policy is considered, there should be an earnest discussion without unnecessary excite- ment and each individual should subscribe to a common interest with unselfish motives. The duties of the various officers should be outlined so there will not be a conflict of authority. The offi- cers should, directly or indirectly, consult with the heads of departments, not only to give instructions but to learn the effect of such instructions. There should be a spirit of co-operation among the CO-OPERATION 195 employees holding the higher positions. Frequently there exist petty jealousies and bitter hatred among them, but a keener spirit of co-operation will eliminate the feeling. In many concerns employees who should be working harmoniously are making the tasks of each other un- pleasant and impossible of worthy achievement. Pe- riodical meetings of the important employees either with or without the members of the concern, create an excellent influence which results in a better under- standing and more harmonious relationship. An Individual Board of Trade. — The executives of the John Wanamaker store comprise a Board of Trade and in addition to the regular meetings they have an annual dinner at one of the leading hotels. The membership of the organization is composed of the heads of the various sections, including the general manager and chief of publicity. One of the purposes of the organization is to exchange ideas for the betterment of the business. When such co-opera- tion exists a similar spirit is instilled by the heads of departments into the minds of the employees in their respective departments. In some establishments the employees are conscien- tious in their endeavors, willing to assist others and extend a hearty welcome to the patrons, while in other concerns the employees merely do what they are told, and in a sulky manner, disregarding the wishes of other workers and meeting the customers with a very indif- ferent attitude. Co-operation is largely the result of loyalty to the employer. Loyalty and Fair Treatment. — Loyalty to the con- 196 BUYING BRAINS cern is usually the result of fair treatment to the em- ployees. If co-operation is expected without deserv- ing it, you will be sadly disappointed. Unless the em- ployees co-operate and are loyal to the concern, it is impossible to present a united front that will satisfy the patrons and achieve maximum results. The at- tention that a customer receives in trivial transactions is what is mostly appreciated. The work of the em- ployees is more pleasant and the tasks are much easier if they are intensely interested in what they are per- forming. Some employers assume the attitude that if they give fair remuneration, the employees are ex- pected to perform their duties. This presumption is correct, but show them an interest in their welfare and they will do more than their prescribed duties. There are many occasions when an employee can render exceptional service if co-operation is inspired, and the average employee under such conditions will measure up to the opportunity. Many executives and foremen in establishments have the personality that will influence the employees to become interested in their work while the same em- ployees in the same concern, under different authority, will show a lack of interest. Nothing will make an employee more loyal than to help him improve him- self for his own advantage. The average employee is very grateful to those who demonstrate to him how to develop his ability and obtain promotion. Co-operation can be secured in large or small estab- lishments if the executive desires it and encourages the others to think it, teach it and act it. When some concerns are entered it may be breathed in the atmos- phere, and if there are any in your employ who attempt CO-OPERATION 197 to prevent it, they should be either converted or dis- missed. Destroying factors should be eliminated. Negligence. — The managers and clerks in some stores do not furnish information that will be helpful to the other departments and are only interested in the success of their individual departments. Clerks pur- posely neglect to deliver messages or complete orders promptly for employees whom they dislike. Buyers refuse to allow idle employees to assist in other depart- ments that may be exceedingly busy and require their services. A soda dispenser in a large New York drug store was asked if the Sunday laws prohibited the sale of shaving articles. He replied that he did not know, and the customer left without further inquiry or mak- ing a purchase. Employees enlarge on the mistakes of those whom they dislike and correct the errors of others with whom they are friendly. The advertising manager and win- dow dresser may not give one department a fair chance while other departments receive too much attention. The superintendent furnishes exceptional employees to one foreman, and another is treated with unjust dis- crimination. Hundreds of such instances could be related, but these few are sufficient to demonstrate that many employees commit acts to satisfy their personal gratification and handicap those to whom they may be antagonistic. They do not realize that they are all employed by the same concern and unless each individual has the in- terest of the concern at heart he is indirectly affecting his own future. The personality of the employer must conquer the very souls of the employees so that the 198 BUYING BRAINS admiration for him and the desire for the concern's success will destroy such germs as previously men- tioned. A Stimulus Needed. — The minds of employees should not become so diseased as to allow their mental vision to become imperfect. Brighten their lives, make their hearts rejoice, teach them good fellowship, help them enjoy their tasks ; regardless of what clouds may appear, they should have confidence in you — the Cap- tain of the ship. Misunderstandings among employers and employees will occasionally occur, but there is no excuse for not adjusting them. You do not lower yourself or your position when you give an employee a hearing, judge the facts fairly and render a square decision. Em- ployees know when you are endeavoring to be just. Your own mistakes will be excused if you show right intentions. Co-operate with your employees and you will derive the real pleasure of success. Success Through Co-operation. — Spread the seed of contentment and there will he a growth of co-opera- tion. Even scientific management fails completely when it is attempted without the co-operation of the em- ployees. Good intentions are frequently repulsed when they are delivered in an arbitrary manner. George J. Whelan retired from the head of the United Cigar Stores Company with the statement that "the success of the company was largely due to the co- operation of the employees." Charles M. Schwab said, '* brains are a bigger asset than money, and that he gladly paid a bonus of a CO-OPERATION 199 million to one man and six hundred thousand dollars to another, during the year 191 5, who co-operated to make the Bethlehem a greater success." Andrew Carnegie, Marshall Field, John D. Rocke- feller, and most of the very successful men received the co-operation of their employees and they deserved their success. You should have employees work conscientiously for your success, think for it and fight for it. Let the commercial battle be fought with you in the lead and every employee a soldier who believes in you and is satisfied with your leadership. CHAPTER XI ELIMINATION OF WASTE T^ VERY employer is, to some extent, guilty of two •*-^ forms of waste — commission and omission. Waste enters into every establishment like dust creeps into a home. To reduce this waste you must constantly be alert — wherever you turn waste can be discovered; that of itself may amount to little but in the aggregate totals an important sum. The net profits of concerns are usually a very small percentage of the receipts with the exception of mo- nopolies or articles controlled by patents. The elimi- nation of a portion of the wastes may double the net income or change an unprofitable enterprise into one giving a reasonable profit. Several large fortunes have been accumulated out of what was considered waste material thirty years ago. In the future many fortunes will be made out of the wastes of to-day. The beef packers have organized a number of sub- sidiary companies that have been extremely profitable and have utilized materials that had been regarded as waste products. Profits Derived from Waste. — Formerly it was customary to pay to have waste paper removed. Now the privilege is paid for. The papers are assorted and forwarded to different mills where good use is made of the stock; the owner has been paid, the dealer has earned a profit and the mill has effected a saving. It is not uncommon to see tugs or cars loaded with old 200 ELIMINATION OF WASTE 201 tin cans that have been accumulated and shipped to the factories to be made use of again. During the World War, owing to the scarcity of wool, scrap and samples of woolens in quantities were in great demand and were sold at three or four times what they would bring in normal markets. In almost every industry there is waste material which can be re-used and the money obtained for such product is a net gain and should receive careful consideration. The "World War" the Greatest of Wastes.— The greatest waste ever known is the "World War." It is not only a hardship for the millions of Europeans and Americans but will be a burden for the generations who will follow. The tremendous loss of lives and property may sufficiently impress the rulers of the va- rious nations that a World Congress may be established to settle future disputes so that the large armies and navies may be abolished. If such would result, the yearly waste of the future may be eliminated and the war sufferers would feel that they have accom- plished something worth while and that they have not sacrificed their health and property without some bene- fit to the generations to come. When the chief topics in the papers have been read, it leaves an impression of a large picture of daily waste, both national and international. American Waste. — In times of peace Americans waste more than many countries spend, accumulating tremendous debts for future generations to pay while the revenues in most instances should be sufficient to defray current expenses. Even the investigating com- mittees are frequently accused of wasting appropria- tions allotted to them for their necessary expenses. 202 BUYING BRAINS During an investigation of the Interbo rough Rail- ways of New York, a small boy remarked, as he was being shoved into a subway car, that "he never knew before what became of his nickels." The wastes of the public service companies, as large as they may ap- pear, can be discovered in the same proportion if you investigate smaller concerns. Owing to the size of the concern and the amount of the waste they do not attract so much attention, nor make the same impression, but usually exist and greatly affect the growth of the establishment. Very Few Succeed. — It is frequently stated that less than five per cent, of those who enter into business really succeed. Many of the merchants last less than a year and the business dies as an infant; others exist a few years and pass away in the childhood stage, but very few die of old age. A great many merchants who remain in business cannot be termed successful. They merely exist, earn- ing a bare living for themselves. The concerns which meet their obligations (but are not able to accumulate a surplus) do not harm anybody but themselves; those which cannot pay their indebtedness indirectly affect others who are not responsible for the improper man- agement. Some of the failures are largely the result of a single weakness while others can be traced to a combination of causes. While the buying and selling methods are indirectly responsible for many failures, incompetent management, poor judgment in credits and careless collections figure prominently in the disas- trous ventures. The National Cash Register Company had a poster which included 76 reasons why merchants fail. A ELIMINATION OF WASTE 203 number of them referred to the use of the cash register and the list will be found well worth reading, as it may suggest defects in your business. Seventy-six Reasons Why Merchants Fail. — 1 Worry 2 Indecision 3 Dirty Floors 4 No Records 5 Poor Buyers 6 Poor Health 7 Poor Location 8 Careless Clerks 9 Excessive Drink 10 No Organization 1 1 Poor Equipment 12 Written Receipts 13 Don't "Think" 14 Too Conservative 15 Bad Store System 16 No Receipt Given 17 Give Short Weight 18 Dissatisfied Clerks 19 Clerks not Trained 20 Self Consciousness 21 Poor Management 22 Open Cash Drawer 23 No Plans for Future 24 Too Many Mistakes 25 Advertise in No Way 26 Wasteful with Goods 27 Clings to Old Methods 28 Carelessness of Clerks 29 Give Too Much Weight 204 BUYING BRAINS 30 Poorly Arranged Stock 31 Dissatisfied Customers 32 Never Say "Thank You" 33 Clerks Run the Business 34 Fail to Read Trade Papers 35 No Definite Object in View 36 Slow Service to Customers 37 Too Many Bills Paid Twice 38 Discourteous to Customers 39 Bad Odor from Spoiled Stock 40 Not Enough Help 41 Creeds, not Deeds 42 Obsolete Methods 43 Dimly Lighted Store 44 Purchase Too Heavy 45 Clerks Not Interested 46 Windows Not Washed 47 Dishonesty of Employees 48 Take Too Many Chances 49 Unsystematic Deliveries 50 Will Not Consider Anyone's Advice 51 Too Much Attention to Details 52 Extravagance Outside of Store 53 Stock Not Moved Often Enough 54 Too Much Credit on the Books 55 Not Acquainted With Customers 56 Unsalable Stock on Back Shelves 57 Try to Follow Everybody's Advice 58 Not Enough Attention to Business 59 Too Much Red Tape in Store System 60 Ask Too Much Profit on Their Goods 61 Fail to Profit by Experience of Others 62 Forget to Charge Goods Sold on Credit ELIMINATION OF WASTE 205 6^ Show Windows Not Used to Advantage 64 Won't Try Anything New Nor Investigate 65 Customers' Interests Not Borne in Mind 66 Fail to Profit by Their Own Experience 67 Not Enough Profit Asked for Their Goods 68 Fail to Carry What Their Customers Want 69 No Time for the Bigger Business Problems 70 Fail to Realize the Value of Cash Customers 71 Spend Too Much Time in Unprofitable Adver- tising 72 Antiquated System, Unfit for Increased Busi- ness y^ Money Paid on Account not Properly Credited 74 No Advantages of Jobbers' and Factories* Ad- vertising 75 Will not Take Suggestions from Clerks and Customers 76 Believe in the Worn Out Proverb, "Let Well Enough Alone" This list was probably prepared with the retailer in mind. Many of the causes for failure referred to may be applied to other concerns, regardless of the particu- lar field they may cover. Waste of Time. — If the writer had compiled the list of why merchants fail, it undoubtedly would have been shorter and with fewer suggestions, but the first item would have been "waste of time." In former years employers and employees worked longer hours as it was customary in most instances to remain until the duties of the day were fully performed. Many of the smaller employers lived above or in the rear of their stores; they visited other employers and enter- tained their friends during business periods. 2o6 BUYING BRAINS The hours of both the employers and employees have been shortened; the business and social life has been separated and now every moment of business is utilized for commercial purposes. Employers with equal ability vary in their accomplishments in accord- ance with the actual work they perform. The average employer really works about one-half of the time he assigns to business, as he is accountable only to himself and maintains this practice for years without realizing how much time he really wastes. The example of the employer is imitated by his employees who think it perfectly proper to merely perform their prescribed duties, but in their desire to take it easy, overlook many opportunities for improvements and better service. In the larger establishments employees will be dis- covered in one department with sufficient work to oc- cupy less than half of their time while in another de- partment it is impossible for the employees to complete their tasks at the appointed time. A shifting of em- ployees for temporary periods may adjust the situa- tion so that new employees will not be required for brief terms. This would result in a distinct saving. Value of Time. — Many employers not only waste their own time but disregard the time-value of others. Persons calling to see them are frequently kept wait- ing an hour or more for a few moments' interview; others may call constantly before meeting them as many employers have no regular hours or days set aside when they may be seen. The average employee starts wasting his time from the moment he enters the establishment. It takes many of them a quarter or half an hour before they realize that the business day has begun. It is perfectly nat- ELIMINATION OF WASTE 207 ural that most employees should take it easy when no record is kept of their work and no incentive offered to make them industrious. The average employee can double the amount of work and will do it if his results are recorded and sufficient encouragement given for maximum achieve- ment. Efficient Methods. — Scientific management has in- troduced efficient methods which have largely elimi- nated waste of time. In many concerns tasks are un- dertaken which are never completed. Much time and effort are wasted as the idea was not carefully con- sidered and analyzed before an attempt was made to execute it. Scientific management teaches us to analyze, to think, to know the reason why, to calculate in advance, and if we would only apply scientific thought to our actions and decisions, we would waste less time and effort. Before starting any plan, no matter how trivial, mental calculations should be made, and a care- ful, intelligent study of the problem and both the possibilties and the difficulties pictured. It is fre- quently remarked that a "bridge should not be crossed before coming to it," but it is far wiser to know that the bridge exists and to be prepared when approach- ing it. Employees who follow a careless executive and are compelled to retrace their steps continuously do not take their work seriously and have little confidence in the judgment and leadership of their executive. Some employees perform their work in a systematic manner while others do everything in a haphazard way. The former accomplish much more with com- 2o8 BUYING BRAINS parative ease while the latter create considerable ex- citement without obtaining any results worth men- tioning. Having a definite place for each article is a habit easily cultivated and it saves many disputes as well as a great amount of time which otherwise would be wasted. Unsystematic Methods. — A lawyer who was con- sidered rather brilliant had the habit of accumulating a number of letters and documents on the top of his desk and would often consume half an hour locating a single paper. This attorney could have utilized this tremendous waste of time and made a more careful preparation of his legal papers while both he and his client would have been materially assisted. The salesman can only visit his trade certain hours in the day (he usually wastes his spare time) and when he pleads his case he is often totally unprepared to furnish the desired information or answer questions asked him. He does not appreciate that he is the law- yer in the case; unless he presents his proposition in a clear and concise manner and is fully prepared to respond to the cross examination of his prospect, he may lose an opportunity. It is not always the salesmen or the employers who have the greatest ability who achieve the greatest suc- cess. Irregular Employment. — Every industry should attempt to readjust conditions so that the employee may obtain regular employment. Many workmen ac- quire their worst habits in times of idleness. It is a pitiful condition to have workmen attempt to perform impossible tasks in a few months to be followed by ELIMINATION OF WASTE 209 several months of idleness. It is costly to the employer and demoralizing to the employee. Many machines and a large space are required in the rush season which are non-productive and an expense in the periods of idleness. Avoidance of Waste of Space. — Before erecting a building or leasing premises, plans should be carefully studied so that each department has ample room and that none of the space shall be wasted. It is consid- ered preferable in most instances to have less floors and a larger space on each floor so that the various departments are more accessible to each other. When a crowded thoroughfare is visited it will be noticed how each square foot is utilized. There are many fixtures for sale and others that can be constructed so that not only the floor space is avail- able, but the upper portions of a room may become valuable. In apportioning the expenses of the various depart- ments, it is far better to charge each department with the actual space occupied than to have them share a percentage of the overhead expenses. Under such cir- cumstances the manager of a department will not de- mand more space than is required and will attempt to be economical with the space allotted. Analysis. — In equipping a factory or purchasing the fixtures for a store do not install an equipment without careful thought and calculation. Many machines are invented that are not practical ; others are suitable for one concern but are wasteful to other establishments. It is deplorable to see so many machines installed at a great expense only to be discarded in a short time. The owners of many factories purchase more machines 2IO BUYING BRAINS of certain types than are actually required and that are used only a fraction of the day. The cost of maintenance, interest on investment and incidental charges render them an expensive burden. Consid- erable work done by hand labor can be done on a ma- chine at a great saving. The cost of the machine may appear extravagant but when the saving effected is calculated it is dis- covered that the machine can be paid for in a short period by the saving in labor charges. The writer saw a machine installed at a cost of $650 that saved the employment of four boys receiv- ing a total of $30 weekly. In less than six months the saving of wages paid for the machine, after which there was a yearly saving of over $1500. Shortly afterwards another machine was secured for $250 that did the work that required four young women. In recent years many machines of value have been invented for the busy office; they enact not only a great saving in labor, but make it possible to complete a large amount of work in a limited time. It is ad- visable before purchasing such machines to inquire of others, and see them in actual operation-, or have them installed on trial, as there are many machines that look well on paper, and "sound well" when listening to the exaggerations of an enthusiastic salesman, but do not measure up to expectation when placed in use. Too often we form hasty conclusions when we do not go below the surface and when the magnifying glass may reveal glaring defects. Wasteful Buying.— Manufacturers, jobbers and re- tailers are compelled to purchase materials in the raw ELIMINATION OF WASTE 211 or finished product and similar elements enter into each business. As trading is the buying and selling of merchandise, the methods of buying are important factors in determining the success of a business. By being too conservative an opportunity may be wasted in selling; if reckless, or careless, unsalable stock may accumulate which will affect the profits made on the sales. It is important to turn stock over frequently; this does not mean purchasing the best sellers every week and disposing of other merchandise once a year. Many buyers do not make their purchases scien- tifically, do not calculate their needs accurately, fre- quently purchase some articles too extensively and often too conservatively. A buyer should consult his past sales and purchase records and know why merchandise previously ordered was not salable, otherwise he will repeat similar mis- takes. A buyer should co-operate with the salesmen who come into direct contact with the customers and who are informed as to what the patrons desire in ad- dition to the objections to the merchandise oflFered for sale. Wasteful purchasing is usually the result of poor judgment of merchandise, lack of facts and records or favoritism. The safest plan in purchasing is to con- centrate on the merchandise under consideration and forget the personality of the salesman. Conservatism. — A young man was employed to purchase supplies for a large concern and was am- bitious to save at least his salary by buying judiciously, economically and honestly. He was unfamiliar with most of the articles he was to purchase so he decided 212 BUYING BRAINS to analyze the different purchases and obtain knowl- edge regarding the supplies by receiving competitive prices. His assistant told him that he was learning considerable by listening to the conversations of the different salesmen and that he never heard any person ask "why" so often. Before ordering an article he would study the past records, showing the quantity used and the price paid. He would give the preference (if the price and quality were similar) to those who had previously supplied the article. Various representatives told him that their prices had never been questioned and quantities or- dered during the past were much larger, saying "I have been selling your house for so many years and I am a friend of an officer of the corporation." He played no favorites, but purchased conscientiously ; his actions were upheld, and it may be mentioned that he saved his salary for his employers. Buying from friends for sentimental reasons may be excused but placing orders for personal profit is unpardonable. The Dangers of Subsidizing. — An act of one of the buyers in a department store was recently discov- ered. This buyer received a fixed amount on each piano purchased and it was related in the press as an exceptional case. This practice is not only indulged in by many buyers, but leading officers of large cor- porations often collect considerable revenue from such sources. At the beginning of the World War some of the foreign agents who were entrusted with the power to purchase for their respective countries demanded enormous fees and commissions. Quality and price were ignored and contracts were given to concerns that ELIMINATION OF WASTE 213 would conspire with the agents to defraud their own governments. It was stated that an order for 100,000 pairs of shoes was placed with the understanding that the agent was to receive 25 cents for each pair, or a total of $25,000 for the single transaction. Diagnosis. — While the ''World War" has been beneficial to many concerns and industries, the com- mercial stagnation that arose shortly after war was declared created an alarm among many merchants who discovered that they had been extremely wasteful. In normal times when business conditions are satis- factory, little attention is given the wasteful practices. When dark clouds appear, we begin to think, analyze, calculate and eliminate wastes. A person enjoying fair health does not appreciate it fully, is liable to cultivate injurious habits and only when he becomes ill realizes the value of good health and resolves not to neglect it in the future. It is quite similar when an enterprise becomes finan- cially ill; you then begin to examine, investigate and diagnose the business. A person dies of a single disease, and a business may be ruined by a single weakness. An organisation is no stronger than its weakest link. You should not be too contented with your achievements, but should dis- cover the mistakes in normal times and thus be better able to withstand the panics and periods of depression. Entirely too much is left to the imagination and guess- work. Records should be kept and an accounting should indicate where the weakness exists. If you would consult your records, the waste in time would be detected, also the equipment and the results of errors would show on the surface. 214 BUYING BRAINS Economy. — Factories which maintain three shifts, the machinery being thus used continuously, effect a great saving when compared to other concerns who have the customary run of only eight to ten hours. If machines are used only a fraction of a working day and records are kept, they should inform you of the waste and you should then attempt to eliminate it. As the wastes grow the overhead expenses become proportionately greater, thereby reducing profits; otherwise higher prices must be charged than that of a scientific competitor who is in a position to undersell. Factories conducted scientifically lower the cost of supervision, maintenance and labor. When failures are diagnosed, it is frequently stated that the concern made money in most of the departments, or on most of the articles handled, but that the failure was the result of losses in other departments. Some of the most profitable concerns are the resur- rections of wrecked estabHshments with the wastes eliminated. Comparisons. — Comparisons are often made be- tween the business of yesterday and to-day. The de- fenders of past methods claim that many concerns became very successful without science or system. The statement is correct, but the merchant of yesterday did not have as a competitor the scientific merchant of to-day. In former years business was conducted more loosely and men were successful in spite of neglected oppor- tunities and wasteful methods. Each succeeding year will find us working more scientifically with a larger portion of the wastes eliminated. Persons who are satisfied with inherited methods will eventually de- ELIMINATION OF WASTE 215 stroy the value of their inheritance. Putting new blood into a business should mean the entrance of those who are not satisfied with antiquated ideas but who believe a programme is satisfactory merely until a better plan can be devised. A young man who was about to return home to enter into partnership with his father remarked, "Father is going to make me a partner ; before doing so he sent me out into the commercial world to learn the modern methods. He expects me to bring into the business such knowledge as he had no opportunity to acquire.*' Do not cling to the ideas that made you successful; accept such information as will strengthen them and make your success permanent. It is needless to repeat the wastes in employment, development and training of employees; the wastes caused by strikes are well known. There are hundreds of forms of wastes which can be eliminated, if the habit of detecting them be cultivated. Wasted Opportunities. — Wastes of commission can be corrected; wastes of omission may not be dis- covered until a long period has elapsed. Many a per- son will tell of a neglected opportunity and how he allowed a fortune to slip from his hands — but you must be able to grasp an opportunity when it appears. Opportunity may knock at the door but if you dis- regard the sound of the knock, others who are alert will probably take advantage of it. Every new idea appeals to some persons; others prefer to let well enough alone. Every opportunity cannot be seized, but you cannot afford to ignore every innovation. You must be able to analyze a new proposition by making calculations similar to your arithmetic problems in 2i6 BUYING BRAINS your school days. It is merely a question of addition and subtraction. Add the advantages together and sub- tract the disadvantages and the problem is solved by •finding the sum total. Each year brings forth a new crop of speculators the majority of whom lose their fortunes in the stock market ; while a few professionals continue to trade in stocks year after year with phenomenal success. The average individual thinks certain corporations will earn large dividends. Yes, but the professional trader obtains all available information and makes a mental calculation before investing. Ignorance contests with knowledge, guess-work with calculation, carelessness with science, and yesterday with to-day, and you will discover that the person with knowledge who calcu- lates and works scientifically with the methods of to- day, will be the victor. CHAPTER XII BUYING BRAINS A FEW years ago the writer was seated at a table -^^ in a suburban hotel with several grain brokers. The orders for dinner were taken by the waiter who returned a few moments later greatly confused and served the wrong dishes to each. The writer re- marked, "There appears to be a shortage of brain this season." The brokers misunderstood and quickly ex- plained the reason for the shortage of grain. There was a lack of brain on the part of the waiter in this particular instance. In every concern it can be discovered in various directions. It is the one neces- sary element for which the demand is always greater than the supply. The physical possibilities of man may be limited, the mental achievement unlimited. It is not difficult to secure physical workers but to obtain the mental man to direct the physical workmen is not so simple. For every man who is physically lazy there are dozens who are mentally lazy. Employers and employees perform their daily tasks in a routine manner without giving their actions any mental consideration; persons read the papers, magazines and books without thinking about what they are reading. Very often new employees have been sent out by others to purchase buckets of electricity, left-handed hammers and many other non-existing articles, and when the individual has returned after a long search, has found the others laughing at his ignorance. 217 2i8 BUYING BRAINS Consulting the Physician. — If you are 111 you con- sult your physician. He may tell you that you smoke, drink, eat, or worry too much. He diagnoses your case and will probably inform you of a reason for your illness which you know to be true. You have not given yourself serious thought and you have continued habits that were detrimental to your very existence. He has discovered your weakness for you. He con- vinces you of the importance of changing your habits. The difference between the physician and you is that you pay him to think for you. He has capitalized his brain, while you unconsciously knew what ailed you but did not use your mentality. The Counselor df Business. — It is the same in busi- ness, mistakes are repeated. You may fail to serve properly, are not careful about credits, fail to place orders in advance, do not concentrate, are satisfied to leave well enough alone, do not develop your organiza- tion, do not analyze your business, or on the other hand your establishment may suffer from a dozen other ailments. During the past it has been customary to continue such practices for years until they were discovered by a receiver when it was too late to restore the business to life. To-day we see the birth of a new profession, the industrial doctor, the mercantile counselor, the efd- ciency engineer, or whatever you prefer to call him. In former years the merchant was very reticent about his business. He seldom confided in any person ex- cept his lawyer who frequently was unable to advise him regarding commercial problems. Not having had industrial experience, many lawyers were unacquainted with mercantile affairs (except BUYING BRAINS 219. from a legal aspect), and naturally could not furnish the assistance that was actually needed. When Mr. Frederick W. Taylor first expounded the principles of scientific management, many of the lead- ing engineers refuted his claims and a very small per- centage of employers gave his ideas any consideration ; nevertheless, we have witnessed the possibilities of scientific management. Many concerns have introduced it in their industries and others will be compelled to adopt scientific methods if they desire to compete with those who have accepted modern ideas. Do not imagine that your business is different from all others, that it cannot be conducted scientifically or that there is no opportunity for improvement. The Need of a Thinking Machine. — A new sales- man for a house organ that was syndicated remarked that "He was surprised at the comparative ease of in- terviewing some of the most important men in New York," and added that **It is not difficult to submit new ideas to the really big men, but the men who think they are big are the hardest to interview." Executives and employers who are too busy to devote any portion of their time to improvements should em- ploy some person within, or on the outside, to do such thinking for them. Many persons, both employers and employees, become accustomed to perform their duties in a perfunctory manner and convince themselves that it is the best and proper way of doing it. Very few organizations are strong in every depart- ment. The weakness must be found and corrected. The most successful concerns have been the first to consult outside specialists. The larger concerns that 220 BUYING BRAINS have brainy men on their pay rolls are the most liberal in this respect; the smaller and less successful establish- ments are the most reluctant to engage specialists to assist them in correcting their errors and improving their business. In the smaller concerns an individual is often com- pelled to perform a varied list of duties, for many of which he has had no training and is not mentally equipped. The small merchant frequently considers it a needless expense to employ any person in an advisory capacity. He expects to purchase brains, combined with muscle, by the week. He does not realize that a single thought or idea may change his entire commercial life. Where the Scientific Man Shines. — Not only the largest industrial concerns have engaged specialists but the leading railroads and our government also have employed efficiency engineers to suggest and plan improvements. The man who thinks he knows it all eventually dis- covers how little he knows, and when it is almost too late he is anxious to buy brains. A great many concerns are guided by men who are not aware of what is going on in their own establish- ments, much less what is being done by progressive competitors. Improvements to some of our greatest inventions are being registered in the Patent Office and the inventors are not satisfied to let well enough alone, though their inventions have made their product prac- tically a monopoly. Large concerns employ their own accountants and have certified accountants calling periodically to ex- amine the work of the regular accountant. Smaller BUYING BRAINS 221 concerns that cannot afford accountants daily, have them call weekly or monthly to simplify the bookkeep- ing and show the result of actual records, such as sales, expenses, purchases, profit or loss, and submit com- parative figures for corresponding periods. To be successful, you should be able to read figures accurately, and you must have accurate figures. The accountant points out in figures what has taken place during the past week, month or year. He places before you the mirror of your business and gives you an opportunity for thought and reflec- tion, when he shows you your actual worth. The mercantile counselor or efiiciency engineer, the new adjunct to business, assists you to improve condi- tions so that the figures will prove more satisfactory. Do not confuse these two — the one improves, and the other shows you the improvement. The writer, while walking through a bankrupt es- tablishment, overheard the following conversation: One of the clerks stated that '^changes had been sug- gested by an efficiency expert.'' The other, who was a younger man, asked, "What is an efficiency man sup- posed to do ?" The older clerk replied, '*He is engaged to go through the store, discover the mistakes and im- prove the system." The younger employee looked astonished as he said, That certainly is an easy berth; it is a *cinch' to find hundreds of mistakes here. I wonder why they waited until they failed before they got a man to show <:hem their mistakes ?" Since hearing this conversation, the writer has been thinking of the same thing every day, *'Why do so many concerns wait until they are bankrupt before they look for their mistakes?" 222 BUYING BRAINS The efficiency engineer, by rendering service to many, is able to accumulate considerable knowledge and in- formation, and his varied experiences broaden his views and open his mind so that he may increase his usefulness and make use of his resources for your good. He may not understand the details of your particular business as well as you or your humble em- ployees, but he possesses the power of detecting errors and is able to show you the simple methods of improv- ing conditions. Confidence Begets Confidence. — Do not employ an efficiency man unless you and your associates have confidence in him and are ready to co-operate with him. The efficiency engineer who causes discord to accom- plish results has failed in his mission. Scientific management, like any business, is impos- sible of success without co-operation. The reason rail- road officials and employees attempted to block efficiency engineering was because it was asserted that the railroads could save a million a day. They were unwilling to permit the stockholders and the public to believe that they had been so wasteful in their practices. The successful efficiency engineer is unassuming and tactful, and does not make unnecessary exaggerated claims. His accomplishments should be such that they speak for him — and they usually do. The efficiency engineer will not only obtain satisfac- tory results, but will study his results so that he may continue to increase them. This is the day of the specialist; employers should not leave too much to imagination or guess work. They should have their problems analyzed scientifically and should invite expert advice. BUYING BRAINS 223 In the Limelight. — This scientific method of con- ducting business is making it more profitable and pleas- ant, the employer works with an understanding, with all of the lights turned on, as he is tired of groping in the dark. Scientific management is regarded by many persons as merely common sense management properly applied. The lack of common sense in so m^any of our actions makes it necessary for us to conduct our acts scientific- ally. When scientific management is introduced, the ad- justment of wages may require an outsider to help determine the compensation to be paid, as you may be too vitally interested to decide upon an equitable basis. Many a business is ailing; others are neglecting golden opportunties. Most concerns are not receiving the full earnings that are within their reach, and it is for the specialist to awaken them so that they may ob- tain maximum profits. Some employers refuse to entertain ideas or sugges- tions from humble employees, judging every thing and every person from a monetary standpoint; they fail to recognize intelligence among their own employees. The efficiency expert could assist such employers to develop the employees and welcome their suggestions. Retrogression. — Many employers of yesterday are employees of to-day, and some are among the unem- ployed. Formerly, loose management competed with similar practices in other establishments, but to-day antiquated methods make it impossible to compete with scientific and progressive management. In every community and in each industry we have leading concerns of twenty years ago going into 224 BUYING BRAINS bankruptcy or discontinuing business. They failed to recognize the change going on in business, and the un- heard-of concerns of twenty years ago are now taking their places. You often hear of a concern putting young blood in the business, or that it is the young man's day. The reason for this is that many of the older men refuse to change their methods and adhere too closely to prec- edent. The older men who are progressive, open- minded and willing to adjust themselves to new condi- tions, have not only the advantages of experience, but in addition, have many other valuable assets that youth does not possess. You must go forward or backward; you cannot stand still for a long period; standing still is usually followed by a backward slide. If You Consider Your Prestige Worth Anything, Buy Brains. — If you have an organization and com- mercial prestige, you have a nucleus for greater possi- bilities ; it is for you to collect all of the profits that are within your grasp. You should keep abreast with the times, judge your- self correctly, and above all, do not hesitate to buy the brains that will help you overcome your weaknesses. The egotist of ten years ago refused to consult specialists, and to-day recognizes his error and wel- comes them with open arms. The egotist of to-day may not be in a position to employ an expert ten years hence. Edward N. Hurley, of the Federal Trade Commis- sion, said, ''The astonishing thing is, that of 250,000 business corporations in this country, over 100,000 have no net income whatever. In addition, 90,000 BUYING BRAINS 225 make less than $5,000 a year, while the 60,000 remain- ing are the more successful ones and only make $5,000 a year and over." These figures may startle you, but you must remember that this list represents the survival of the fittest. Many thousands of corporations that have passed out of existence have had a weakness that they failed to discover even at the crucial moment, but which if unearthed would have saved the enterprise. The R. G. Dun Company show the figures for a period of nine months, during which 12,841 firms failed, with liabilities aggregating $271,918,021. Bradstreet's claim that nearly thirty per cent, of the failures are due to incompetence, the same percentage fail for the lack of capital, seven per cent, from per- sonal extravagance, and five per cent, on account of inexperience. As ten per cent, of the failures are attributed to fraud, a much larger percentage of those who are only partially successful show the result of incompetence. It is surprising how few manufacturing retailers have an accurate cost system, and many of them often sell the finished product at a loss when they imagine they are making a profit on the transaction. Records of Cost Are Necessary. — In the printing business it is not uncommon to have estimates vary considerably, and some of the largest users of printing have abandoned conducting their own plants as they discovered it is less expensive to have the work done by others. The merchant who has no accurate cost system not only injures himself but he is a detriment to others in the same industry and contributes to a demoralization of trade conditions. 226 BUYING BRAINS Many of the smaller merchants do not make proper allowances for overhead charges, depreciation of stock and machinery, and losses through credit as well as other items that affect their individual business. For every merchant who buys too conservatively we have as many who overbuy. They do not accurately calcu- late their needs and make their purchases only through guess work. Many merchants grant credits and make collections in a haphazard manner and are unable to meet their obligations through their ignorance and indifference to an important factor in their business. Carelessness in Credit. — A prominent merchant was asked to withdraw his application for membership in an exclusive club, being informed that "it did not care to open its doors to tradesmen." He withdrew his application and stated, "He could afford to retire if all of the members of that exclusive club would pay him their indebtedness." An honorable and successful merchant is on an equal footing with the banker, lawyer or doctor, A man should not he judged with a group of men hut hy his individual acts and achievements. The career that you may select, or that which is determined for you by your parents or guardians, is frequently beyond your control ; the important question is, "Are you a credit to your occupation whatever it may he?" Generalities. — There are a number of positives and negatives that enter into a business, the same as the qualities of an individual, and it is for you to reduce the negative and increase the positive in your establish- ment. BUYING BRAINS 227 // you fail to discover your weakness, or are unable to cope with the conditions, you lack judgment, will power or brains. The men in your employ should be of such types as can be helpful to reduce the negatives. If they do not measure up to the demands, you should employ as many brainy men as you can afford, either permanently or temporarily. Brains rule the world and everything therein. Brains make the man, the merchant, the corporation, the state, the nation. Your brain may be small in dimension and light in weight, but it is your gray mat- ter that determines what you are. Your brain has placed you in your present position, whether it be high or low. Your brain should direct you and tell you why you are failing. If your brain has too much consideration for you, then your brain should direct you to select others who will supply the brain power and furnish you with that in which you may be deficient. Surround yourself with brainy employees, associate with brainy men, read good literature that will feed your brain with the thoughts of men who have brains. Cultivate the habit of learning from others, be a good listener, and remember that which is worth while and cast aside thoughts that are not worth recalling. When you do the talking, the time is occupied by telling others what you already know ; give the others a chance to converse and you may learn facts that are new to you and worth knowing. It would be folly to attempt to estimate the value of the brains of such men as Frederick W. Taylor, Harrington Emerson, H. L. Gantt and other success- 228 BUYING BRAINS ful engineers who have saved and created miUions for the concerns that employed them. There have been many who have disposed of their brains to the advantage of hundreds of industries. Among them are men whom you probably could not afford to employ permanently, but in some instances a single idea from them has transformed an industry. Things You Should and Should Not Do.— This is the day of the specialist in all fields of endeavor, among commercial men and in professional Hfe. If you want your windows attractive and do not employ a person capable of trimming them properly you should have a window dresser call at regular in- tervals to do the work. If you desire to advertise and do not employ an ad- vertising man, don't spend a week attempting to write an article that will not produce results — engage a specialist who ''knows how." If your books do not tell you what you ought to know send for an accountant. If your factory or business is not producing maxi- mum results employ a specialist who will show you the way. Do not bury your head in your desk, do not pace the floor, do not lie awake at night when you should be resting your brain for the next day's work. Buy brains that will assist you to overcome obstacles so that you will not spend your time in worry and indecision. It is essential that you devote your entire energy to direct- ing and acting wisely for therein lies your success. While the Bethlehem Steel Company was busy mak- ing millions of dollars' worth of ammunition in addi- tion to completing many other huge contracts, Charles BUYING BRAINS 229 M. Schwab had time to speak at luncheons in New York and elsewhere. Brainy men employed by him were managing this gigantic industry during his absence ; he knew he had selected the right type of men. Mr. Schwab stated that ''brains are a bigger asset than money" and as heretofore mentioned, that "during the preceding year he had paid a million dollars to an assistant as a bonus in addition to his salary; he had distributed fifteen to twenty per cent, of the profits to brainy executives before he had paid any dividends to the stockholders." He recognized the value of employing brainy men and paying them liberally for what they produced. Men of brains do not hesitate to buy additional brains. Brains are the life of your business. It is far better to have brainy men employed regularly, so that you may have their counsel continuously and absorb a por- tion of their knowledge. IF THERE IS A SHORTAGE, DO NOT HESITATE TO GO OUTSIDE AND BUY BRAINS. THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW AN INITIAL FINE OF 25 CENTS WILL BE ASSESSED FOR FAILURE TO RETURN THIS BOOK ON THE DATE DUE. THE PENALTY WILL INCREASE TO 50 CENTS ON THE FOURTH DAY AND TO $1.00 ON THE SEVENTH DAY OVERDUE. ) 1 FEB :11939 MAR m 1939 •»- APR 18 1939 DEC 12ig4l)lvi ^ oc; 19^^ py^ a^ ^^ 1 t^.ie- ^^^ t ' L-/ \^y^ I v^i <:7\, --- UNIVERSITY OF CALIFORNIA LIBRARY