There are, however, certain other policies of
handling labor without particular stress on the method of
paying wages which have many strong and interesting char-
acteristics and are worthy of notice, even in an elementary
review.
The first of these is connected with the name of Frank B.
Gilbreth, 1 a disciple and adherent of the Taylor doctrine,
whose methods have been developed and applied chiefly in
connection with building and general contracting. Gilbreth
maintains that not even " time study " is the limit of ele-
mentary scientific analysis that back of that is " motion
study." His best known work has been in the simplifica-
tion of building operations by very skillful and very inter-
esting eliminations of traditional but needless wastes of ef-
fort or method. His practice in handling labor is
characterized by four major principles : First, the separation
of the work so that, as far as can possibly be managed,
each man works separately and individually that is, so
that his separate individual performance can be distinguished
and measured. Second, constant observation by a sufficient
force of timekeepers to record individual performance from
hour to hour. Third, conspicuous and immediate posting
of these records so that comparison between man and man,
or, if unavoidable, between gang and gang, can be made
every shift, if not indeed every hour. Fourth, reward of
1 His principal publications descriptive of his methods are " Brick-Lay-
ing System," Myron C. Clark ; " Field System," the same ; " Motion
Study," D. Van Nostrand Co.
some kind (and experience shows that it may be of the most
varied kind so long as it is positive and conspicuous) for the
best performance or performers, and admonition for the
poorest. In brief, it depends largely upon the stimulus of
emulation, of competition, and it consists essentially in pro-
viding conditions under which emulation can work most
actively and in providing prizes, either substantial or senti-
mental, to be competed for.
The next to" be mentioned is the policy or method con-
nected with the name of Charles U. Carpenter, 1 which has
the following characteristics: First, great emphasis is laid
upon a committee system, by which officials responsible for
the prosecution of the work are brought into frequent meet-
ings to report upon existing conditions and to furnish esti-
mates or commit themselves to agreement as to what can
be accomplished in the immediate future. Second, an im-
mediate record is made of these reports and undertakings,
usually on a blackboard, so that the official goes down in
black and white before his fellows, and knows that the
record will confront him at the next meeting. Third, this
system of conference and consultation, with some attendant
emulation, is carried down even to assistant foremen and
job bosses. Fourth, a system of individual reward by a
slight increase of wages or small promotion is used to en-
courage and distinguish the man who strives for and attains
more than ordinary efficiency.
Neither of these systems is as automatic in its action as the
wage systems previously described, but both aim at the same
purpose, which runs through all the methods considered
the restoration of individuality to the workman, who has
been so largely unindividualized by the major tendencies of
the modern industrial system.
Profit-sharing is frequently spoken or thought of as if
it were some sort of wage system, and is mistakenly classed
with premium and bonus plans.
It is not naturally related to these systems, either in
method of administration or in philosophy. It lacks com-
pletely the individualizing action, which, as previously urged,
is one of the fundamental qualities of the premium, bonus
and efficiency plans generally. By profit-sharing, as the
term is now used, is meant the policy of paying to labor, at
rather long intervals usually a year, although sometimes
six months or even three months a dividend related in
some way to the net profits of the business for the same
season. A typical instance in this country is that of the
Procter & Gamble Co. Profit-sharing has been in effect in
the Ivorydale factories for a good many years, the practice
being to pay to a selected class of the workpeople, as a
dividend, a percentage of their wages equal to the rate de-
clared on the common stock of the company. The practice
is more widely used in England than in the United States,
perhaps because the piece-rate, bonus, and premium systems,
originating here, anticipated the profit-sharing system, and
already occupied the place it might possibly otherwise have
taken.
The difference in idea and in operation scarcely needs to
be pointed out.
In the wage systems which we have already discussed,
the increased earnings are directly proportioned to the in-
creased effort of the workman, and are received promptly in
connection with his regular payment for that effort. The
connection between extra diligence and extra reward is in-
stant and obvious. If a man works hard he receives all the
benefit. If he does not gain any bonus or premium he
usually has only himself to blame. In profit-sharing, the
dividend comes after the lapse of a long period of time, and
the conditions leading up to it are more or less obscure. It
depends upon the net earnings of the business, which are
affected by many elements, of which labor in total is only
one, and the work of any single individual is an extremely
small fraction. The man who has worked very hard may
be disappointed because losses through bad debts, errors of
business judgment, or an unforeseen change in the markets,
have cut into the profits of the concern and no net earnings
are shown. There is too much bookkeeping between the
individual worker and the company's published report, and
the man is always inclined to think that accounts are being
juggled so as to deprive him of his dividends. Lastly, the
extra payment is either divided among all employees, effi-
cient and inefficient alike, or else the employees are graded
into classes, not automatically by the inerrant justice of their
time and job records, but arbitrarily by the ruling of some
superintendent or foreman.
Profit-sharing, therefore, while it is to be respected as
an earnest attempt to harmonize labor and capital, is
not a very logical or very successful attempt. When all is
said and done, it has the air of being a sort of gratuity and
it is not properly speaking an advanced method of wage pay-
ment. The same thing seems to be true in part of the plan
for selling stock of a corporation to the employees which
seems to be finding favor nowadays. There is no neces-
sary, automatic, and manifestly just relation between an
employee's efficiency or faithfulness and his ability to save
money and invest in stocks. The most deserving man in
the company's service may have a large family, or a sick
wife, or dependent parents, and he may have to turn aside
from the opportunity to become an investor and see it go to
someone whom he knows (as perhaps only one workman
can know another) is less worthy. The plan of course
creates a body of employees whose interests are financially
interlocked with the interests of the company, and to this
extent it tends to " harmonize capital and labor," but this
body is necessarily small and is not necessarily formed on
logical lines.
Before leaving the subject of labor, it is expedient to
say something upon an aspect of the treatment of labor in
industrial plants which has recently been advanced promi-
nently into public view. This is what is generally known
as betterment or welfare work, and it covers all sorts of
institutions for the hygiene, comfort, pleasure and instruc-
tion of the workers. 1 These institutions are outside of con-
tract relations between employer and employee, but installed
or promoted by the employer with motives in which altruism
and enlightened selfishness are compounded in various pro-
portions. Usually it is frankly admitted that the purpose
is to provide a healthy physical and moral atmosphere in
which the employee may naturally develop his highest effi-
ciency, to make conditions so pleasant that good men will
naturally incline to remain permanently in the service rather
than to rove, and to establish a feeling of friendliness and
good will to which the employee will respond by willing
loyalty to his work and his employer.
There is great diversity in opinion as to how far work
of this kind may advantageously go. Comparatively few
years ago there was generally very great indifference on the
part of manufacturers as to the physical well-being of their
workpeople, and conditions of light, heat, ventilation and
sanitation were often completely ignored. While the newer
movement has gone to perhaps extravagant extremes in cer-
tain cases, there is no doubt whatever that it has exercised
an excellent influence in awakening shop managers to a
realization that employees should be surrounded with condi-
tions of ordinary decency and comfort at least, and that the
money so expended yields large return in improved output
and quality of work. One of the ablest works managers
I ever knew used to say: " We must give the workmen a
comfortable shop, well lighted, well ventilated, warmed if
necessary to a point comfortable for physical exertion; we
must give him a place to change his clothes, to wash with
proper regard for his individual self-respect. We must
have well kept lavatories and sanitary conveniences. Why
because we love the workman? No, but because, like
all other machines, he works best when he is kept in the
best condition." This is a very utilitarian statement, and
perhaps it expresses the lowest limit to which welfare work
should certainly go. It must be admitted that where con-
ditions of peculiar discomfort are attendant upon the work
conditions which the employee alone is unable to remedy
the employer may well go to considerable length in over-
coming them or in supplying offsetting comforts. I noticed
recently in a trip over the Santa Fe road l that reading and
recreation rooms at division points, especially across the
desert, were throngingly patronized by the men. The outfit
was very simple; merely a couple of rooms with plain tables
and chairs, the principal monthly and weekly magazines,
and dailies from the larger cities along the road; oppor-
tunities for playing cards, checkers or other games, and
perhaps a piano. At larger points they might have a bil-
liard table or a bowling alley. Unquestionably, in those
crude desert towns, devoid of any other wholesome interest,
the Santa Fe reading rooms were not only a strong force for
law, order, and morality, but also a great advantage in keep-
ing men from that extreme of discontentment which would
have made them a fickle and unreliable class of employees in
the service of the road.
Beyond this we might go with hesitation. There are,
however, a number of companies and corporations which
have attracted wide notice by a series of provisions for com-
fort, instruction, and recreation of their workpeople both
in and out of working hours. It would be rash to claim an
ability to speak the final word on the question, but under
average American conditions, it is probably best for both
employer and employee to rest content with the lower limit
herein suggested that is, thorough, honest, earnest at-
tention to intra-plant conditions of hygiene and safety
accompanying a mode and scale of payment which enables
the employee to realize the largest earnings possible to his
capacity.
1 " A Piece- Rate System," by Fred W. Taylor ; Trans. Am. Soc. M. E.,
June, 1895.
1 " A Rational Basis for Wages," by Harrington Emerson ; Trans. Am.
Soc. M. E., June, 1904. Also " Efficiency as a Basis for Operation and
Wages " ; The Engineering Magazine.
1 For a full exposition, see his book " Profit Making in Shop and Fac-
tory Management," The Engineering Magazine.
1 A very large number of examples are assembled in " Social Engineer-
ing," by Dr. W. H. Tolman, McGraw-Hill Book Co.
1 See "Methods of the Santa Fe," by Charles Buxton Going; The En-
gineering Magazine.
handling labor without particular stress on the method of
paying wages which have many strong and interesting char-
acteristics and are worthy of notice, even in an elementary
review.
The first of these is connected with the name of Frank B.
Gilbreth, 1 a disciple and adherent of the Taylor doctrine,
whose methods have been developed and applied chiefly in
connection with building and general contracting. Gilbreth
maintains that not even " time study " is the limit of ele-
mentary scientific analysis that back of that is " motion
study." His best known work has been in the simplifica-
tion of building operations by very skillful and very inter-
esting eliminations of traditional but needless wastes of ef-
fort or method. His practice in handling labor is
characterized by four major principles : First, the separation
of the work so that, as far as can possibly be managed,
each man works separately and individually that is, so
that his separate individual performance can be distinguished
and measured. Second, constant observation by a sufficient
force of timekeepers to record individual performance from
hour to hour. Third, conspicuous and immediate posting
of these records so that comparison between man and man,
or, if unavoidable, between gang and gang, can be made
every shift, if not indeed every hour. Fourth, reward of
1 His principal publications descriptive of his methods are " Brick-Lay-
ing System," Myron C. Clark ; " Field System," the same ; " Motion
Study," D. Van Nostrand Co.
some kind (and experience shows that it may be of the most
varied kind so long as it is positive and conspicuous) for the
best performance or performers, and admonition for the
poorest. In brief, it depends largely upon the stimulus of
emulation, of competition, and it consists essentially in pro-
viding conditions under which emulation can work most
actively and in providing prizes, either substantial or senti-
mental, to be competed for.
The next to" be mentioned is the policy or method con-
nected with the name of Charles U. Carpenter, 1 which has
the following characteristics: First, great emphasis is laid
upon a committee system, by which officials responsible for
the prosecution of the work are brought into frequent meet-
ings to report upon existing conditions and to furnish esti-
mates or commit themselves to agreement as to what can
be accomplished in the immediate future. Second, an im-
mediate record is made of these reports and undertakings,
usually on a blackboard, so that the official goes down in
black and white before his fellows, and knows that the
record will confront him at the next meeting. Third, this
system of conference and consultation, with some attendant
emulation, is carried down even to assistant foremen and
job bosses. Fourth, a system of individual reward by a
slight increase of wages or small promotion is used to en-
courage and distinguish the man who strives for and attains
more than ordinary efficiency.
Neither of these systems is as automatic in its action as the
wage systems previously described, but both aim at the same
purpose, which runs through all the methods considered
the restoration of individuality to the workman, who has
been so largely unindividualized by the major tendencies of
the modern industrial system.
Profit-sharing is frequently spoken or thought of as if
it were some sort of wage system, and is mistakenly classed
with premium and bonus plans.
It is not naturally related to these systems, either in
method of administration or in philosophy. It lacks com-
pletely the individualizing action, which, as previously urged,
is one of the fundamental qualities of the premium, bonus
and efficiency plans generally. By profit-sharing, as the
term is now used, is meant the policy of paying to labor, at
rather long intervals usually a year, although sometimes
six months or even three months a dividend related in
some way to the net profits of the business for the same
season. A typical instance in this country is that of the
Procter & Gamble Co. Profit-sharing has been in effect in
the Ivorydale factories for a good many years, the practice
being to pay to a selected class of the workpeople, as a
dividend, a percentage of their wages equal to the rate de-
clared on the common stock of the company. The practice
is more widely used in England than in the United States,
perhaps because the piece-rate, bonus, and premium systems,
originating here, anticipated the profit-sharing system, and
already occupied the place it might possibly otherwise have
taken.
The difference in idea and in operation scarcely needs to
be pointed out.
In the wage systems which we have already discussed,
the increased earnings are directly proportioned to the in-
creased effort of the workman, and are received promptly in
connection with his regular payment for that effort. The
connection between extra diligence and extra reward is in-
stant and obvious. If a man works hard he receives all the
benefit. If he does not gain any bonus or premium he
usually has only himself to blame. In profit-sharing, the
dividend comes after the lapse of a long period of time, and
the conditions leading up to it are more or less obscure. It
depends upon the net earnings of the business, which are
affected by many elements, of which labor in total is only
one, and the work of any single individual is an extremely
small fraction. The man who has worked very hard may
be disappointed because losses through bad debts, errors of
business judgment, or an unforeseen change in the markets,
have cut into the profits of the concern and no net earnings
are shown. There is too much bookkeeping between the
individual worker and the company's published report, and
the man is always inclined to think that accounts are being
juggled so as to deprive him of his dividends. Lastly, the
extra payment is either divided among all employees, effi-
cient and inefficient alike, or else the employees are graded
into classes, not automatically by the inerrant justice of their
time and job records, but arbitrarily by the ruling of some
superintendent or foreman.
Profit-sharing, therefore, while it is to be respected as
an earnest attempt to harmonize labor and capital, is
not a very logical or very successful attempt. When all is
said and done, it has the air of being a sort of gratuity and
it is not properly speaking an advanced method of wage pay-
ment. The same thing seems to be true in part of the plan
for selling stock of a corporation to the employees which
seems to be finding favor nowadays. There is no neces-
sary, automatic, and manifestly just relation between an
employee's efficiency or faithfulness and his ability to save
money and invest in stocks. The most deserving man in
the company's service may have a large family, or a sick
wife, or dependent parents, and he may have to turn aside
from the opportunity to become an investor and see it go to
someone whom he knows (as perhaps only one workman
can know another) is less worthy. The plan of course
creates a body of employees whose interests are financially
interlocked with the interests of the company, and to this
extent it tends to " harmonize capital and labor," but this
body is necessarily small and is not necessarily formed on
logical lines.
Before leaving the subject of labor, it is expedient to
say something upon an aspect of the treatment of labor in
industrial plants which has recently been advanced promi-
nently into public view. This is what is generally known
as betterment or welfare work, and it covers all sorts of
institutions for the hygiene, comfort, pleasure and instruc-
tion of the workers. 1 These institutions are outside of con-
tract relations between employer and employee, but installed
or promoted by the employer with motives in which altruism
and enlightened selfishness are compounded in various pro-
portions. Usually it is frankly admitted that the purpose
is to provide a healthy physical and moral atmosphere in
which the employee may naturally develop his highest effi-
ciency, to make conditions so pleasant that good men will
naturally incline to remain permanently in the service rather
than to rove, and to establish a feeling of friendliness and
good will to which the employee will respond by willing
loyalty to his work and his employer.
There is great diversity in opinion as to how far work
of this kind may advantageously go. Comparatively few
years ago there was generally very great indifference on the
part of manufacturers as to the physical well-being of their
workpeople, and conditions of light, heat, ventilation and
sanitation were often completely ignored. While the newer
movement has gone to perhaps extravagant extremes in cer-
tain cases, there is no doubt whatever that it has exercised
an excellent influence in awakening shop managers to a
realization that employees should be surrounded with condi-
tions of ordinary decency and comfort at least, and that the
money so expended yields large return in improved output
and quality of work. One of the ablest works managers
I ever knew used to say: " We must give the workmen a
comfortable shop, well lighted, well ventilated, warmed if
necessary to a point comfortable for physical exertion; we
must give him a place to change his clothes, to wash with
proper regard for his individual self-respect. We must
have well kept lavatories and sanitary conveniences. Why
because we love the workman? No, but because, like
all other machines, he works best when he is kept in the
best condition." This is a very utilitarian statement, and
perhaps it expresses the lowest limit to which welfare work
should certainly go. It must be admitted that where con-
ditions of peculiar discomfort are attendant upon the work
conditions which the employee alone is unable to remedy
the employer may well go to considerable length in over-
coming them or in supplying offsetting comforts. I noticed
recently in a trip over the Santa Fe road l that reading and
recreation rooms at division points, especially across the
desert, were throngingly patronized by the men. The outfit
was very simple; merely a couple of rooms with plain tables
and chairs, the principal monthly and weekly magazines,
and dailies from the larger cities along the road; oppor-
tunities for playing cards, checkers or other games, and
perhaps a piano. At larger points they might have a bil-
liard table or a bowling alley. Unquestionably, in those
crude desert towns, devoid of any other wholesome interest,
the Santa Fe reading rooms were not only a strong force for
law, order, and morality, but also a great advantage in keep-
ing men from that extreme of discontentment which would
have made them a fickle and unreliable class of employees in
the service of the road.
Beyond this we might go with hesitation. There are,
however, a number of companies and corporations which
have attracted wide notice by a series of provisions for com-
fort, instruction, and recreation of their workpeople both
in and out of working hours. It would be rash to claim an
ability to speak the final word on the question, but under
average American conditions, it is probably best for both
employer and employee to rest content with the lower limit
herein suggested that is, thorough, honest, earnest at-
tention to intra-plant conditions of hygiene and safety
accompanying a mode and scale of payment which enables
the employee to realize the largest earnings possible to his
capacity.
1 " A Piece- Rate System," by Fred W. Taylor ; Trans. Am. Soc. M. E.,
June, 1895.
1 " A Rational Basis for Wages," by Harrington Emerson ; Trans. Am.
Soc. M. E., June, 1904. Also " Efficiency as a Basis for Operation and
Wages " ; The Engineering Magazine.
1 For a full exposition, see his book " Profit Making in Shop and Fac-
tory Management," The Engineering Magazine.
1 A very large number of examples are assembled in " Social Engineer-
ing," by Dr. W. H. Tolman, McGraw-Hill Book Co.
1 See "Methods of the Santa Fe," by Charles Buxton Going; The En-
gineering Magazine.
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