Lesson of Productivity Management Module of Industrial Engineering Online Course Notes
Chapter XIV
THE TWELFTH PRINCIPLE : EFFICIENCY REWARD
Chapter XIV
THE TWELFTH PRINCIPLE : EFFICIENCY REWARD
(Harrington Emerson - The Twelve Principles of Efficiency)
PUZZLES :— The themes of fairy tales ! To sort out the tangled skeins of silk, to
separate the colored grains of sand! Puzzles : — to decipher the hieroglyphs and the
cuneiforms, to tax all the powers of investiga-tion, of theories, of analysis, of philosophy, of
interpretation! Solutions, generalizations, are fascinating.
Books, encyclopedias of 50,000,000 words, 250,000 words in the English language, outside
of dictionaries scarcely 10,000 different — but only 26 letters of the alphabet ; these again re-
duced to three classes, labials, dentals, palatals, each shifting from dialect to dialect as in pater,
vater, father, all the languages of the world synthesized back to mama, dada, gaga, further
back even to the unconscious ejaculations of the newly-born child !
Millions and millions of different substances
in the world! There are countless different
kinds of oil alone, all consisting of carbon,
hydrogen and oxygen. Vary the proportions of
the elements, and the compounds shift into
alcohols, sugars, starches, dextrines, acids —
into essences, aromas, into dyes, drugs, poisons !
All the substances in the universe are but com-
binations of less than seventy elements, and it
is the dream, the expectation of modern chem-
istry to find whether these, if not but one, are
not at most three or four.
In the last analysis, it is the marvelous sim-
plicity of it all that enchants, almost stuns.
Gravitation holds solar systems in their paths,
carves the face of the land, calms the ocean's
unrest ! Crystallization gave us glacial epochs,
life gives us biology, zoology, history, philoso-
phy. Compared to life, physical, psychical,
mental, all else seems simple ; yet how few the
instincts to perpetuate and develop life! The
instinct for immediate life, the instinct for
eternal life, the preservation of the individual
and the race — yet both these instincts are main-
tained and stimulated by one single principle,
the last of the twelve, the principle of "EFFI-
CIENCY REWARD/'
For years there has been the unanswered
question : "What is the difference between the
dead and the living, between the animate and
the inanimate ?" Whatever responds to an
efficiency reward is alive ; what cannot respond,
is inanimate. There is a difference between the
drop of water in obedience to the law of gravi-
tation, descending from the mountain top to
the sea, and the pine tree growing tall and slim
that its needles may reach the light and live.
Darwin showed that life was preserved and
developed by the survival of the efficient, by
natural selection — -that individual variation
due to the survival of the efficient was trans-
mitted by sexual selection. Nature is accused
of caring nothing for the individual, of caring
much for the race, yet she moulds impartially
all individuals and all races by offering and
paying efficiency rewards. There is for every
individual, for every race, destruction, hell-fire
lurking everywhere, but it is the efficiency re-
ward that tempts us far from the danger zone.
Take away the stimulus of efficiency reward —
individual life and race life would vanish from
the earth!
We can smile at those who in their ignorance
try to nullify the principles of efficiency re-
ward, to banish it from human affairs. Yet
man, because he perversely went backward
into darkness rather than forward into light —
man who is what he is because of high reward
for individual efficiency — forgot the principle
that had made him, forgot that it was eternal
and that ever greater rewards were still ahead,
and tried to hold exclusively what he had and
to enhance its value by depriving others of
what had been given him. The priests of all
ages, those to whom it had been given to read
some pages of nature's open book, immediately
made mysteries of this knowledge, tried to put
the book under lock and key. Dynasties which
had reached their kingship through individual
efficiency — the Carolingians, the descendants of
the pawnbroking Burggrave of Nuremberg, the
Tudors, the Bourbons, immediately substituted
for the principle of efficiency the artificial
principle of the Divine Right of Kings, of king-
ship by the Grace of God. Men who, like David
and Solomon, ought to have known that there
was supreme joy in winning the love of one
woman, whether Bathsheba or the Queen of
Sheba, immediately laid in (by the mercenary
path, not by means of emotional efficiency)
whole harems of useless atrophying women,
David's chief pleasure apparently being to shut
them up in remote and distressful seclusion for
the mean pleasure of watching their lives waste
and of depriving other men of wives (see II
Samuel, 20:3). All nature shows that inno-
vating efficiency is the direct effect of reward,
but the history of human institutions shows
that these are chiefly devised by the selfish few
to appropriate rewards without efficiency, yet
coating the pill by holding out the lure of a re-
mote and hypothetical reward for efficiency to
those who bow the knee in service, to the de-
luded many.
Thus is offered by the priests the promise of
heaven to those who yield to the demands of
the church, by generals the promise of Para-
dise with houris galore to those who die in
battle, by kings the promise of occasional
largesse and festivities to those who pay taxes
and otherwise serve, by guilds commercial suc-
cess to members, by unions fixed wages for in-
adequate work to those who join them.
The early settlers in America had fled from
caste. They had left it behind them. The effi-
cient came to the new land of hardship and
promise, and the efficient earned their indi-
vidual rewards. When they set up their gov-
ernment, they made no provision for the State
churchy they abolished all titles and hereditary
offices, they provided for no standing army,
there were no interstate barriers to trade and
free movement, and there were no guilds. The
apprentice became journeyman, the journey-
man became master, the master became head
of a plant. There were so many opportunities
that the caste principle of fixed day's wage
without reference to performance was over-
looked. The master with his few workmen
under him could personally supervise and pro-
mote or discharge. Yet the iniquity of the
fixed rate per hour was clearly indicated 1,900
years ago, in the parable of the laborers in the
vineyard. A householder went out early in the
morning to hire laborers, and when he had
agreed with the laborers for a penny a day he
sent them into his vineyard; and he went out
at the third hour, and again at the sixth, the
ninth, and the eleventh hour and saw others
standing in the market place idle, and to them
he said, "Go ye also into the vineyard and what-
soever is right I will give you." This promise
of receiving what was right — pay on the basis
of performance, not on the basis of time —
stimulated the workers, and even those last en-
gaged did as much work before stopping as
those who had been making a slow pace
through the twelve-hour-long scorching and
burdensome day.
So when even was come, the lord of the vineyard
saith unto his steward, Call the labourers and give
them their hire. . . . And when they came that
were hired about the eleventh hour, they received every
man a penny. But when the first came, they supposed
that they should have received more; . . . and they mur-
mured against the goodman of the house. . . . But
he answered one of them, and said, Friend, I do thee
no wrong: didst not thou agree with me for a penny?
. . . Is thine eye evil because I am good?
The day-wage system, contrary as it is both to the underlying principle of efficiency reward
and also to all principles of equity, since it lacks any intelligent relation between pay and
performance, is doomed, in spite of hoary cus-tom, current practice, in spite of combined
(although opposed) efforts of unions and em-ployers' associations. Compensation for work
cannot remain an exception to the general law that there must be a definite equivalent, based
on the two elements of quantity and quality; and our ability to measure accurately both
quantity and quality, whether the weight in carats of the diamond and its blue-whiteness,
whether the weight of coal and the heat units per pound, is one of the measures of civiliza-
tion. In iall the ten-thousand years before coal, during which the human race warmed itself
and cooked with wood fires exclusively, there is probably not a single instance in which any
exact heat-unit equivalent and price demanded or paid was determined. The same happy-go-
lucky vagueness was transmitted to coal pur-chases, and even yet most coal is purchased
without reference to analysis.
Wiser buyers, large consumers, purchase on
specification sustained by analysis and verified
by test. A coal that looks like another may be
worth only one-tenth as much. Before Archi-
medes discovered the relation of weight to bulk,
the principle of specific gravity, before he ex-
perimentally determined the relative weights
of water, gold, and silver, goldsmiths had a
joyous time swindling their customers, since it
was only by color that the value of the worked-
up metal could be judged. It speaks well for
the general honesty of the ancient coiners that
the old silver and old gold coins are so pure.
This blind trust as to quality would not work
today as to metals, does not work as to coal,
will soon not work as to wages. It was pon-
dering on the problem of detecting a suspected
swindle that led Archimedes to the discovery
of specific gravity.
Efficiency rewards hold good for nearly every worker in life except the day worker.
The girl who makes a business of it, secures a
valuable husband, an enormous and permanent
reward for a very few days of competent en-
deavor. This is the oldest competitive business
of all, and results in a trust greater than the
Standard Oil, greater even than the Catholic
Church.
The hunter who starts early, who has prac-ticed much, who works hard, brings home the
game. The farmer who selects his seed care-
fully, tills and fertilizes his crops scientifically,
secures twice the yield per acre ; the merchant
who hits the fancies or the necessities of the
buying public becomes rich; the lawyer who
wins cases charges heavier fees; the doctor
who has made a name for himself charges
fancy prices for very simple operations; the
clergyman who is eloquent receives a call to a
larger church ; the politician who stands in with
the boys attains ultimately to a senatorial toga.
Everywhere— except for almost the largest
class of all, the men who work with their
hands — there is special and closely connected
reward for individual efficiency. Are the toil-
ers to have no efficiency reward? The induce-
ment is held out that if they join unions they
will receive day wages — high day wages — short
hours, and that they will not have to work
hard. Permanence of pay, which is far more
vital than rate of pay, is not guaranteed. It is
the earning in a working lifetime, divided by
all the days, that counts, not the nominal wages
per day. In the modern industrial state initia-
tive must not be destroyed, separate action
must exist ; there must be individual as well as
collective bargaining; the individual must also
count; the guild is not everything. I have no
antagonism to unions. They have been and
are still very necessary; they have mitigated
the tyranny of the employer and of his irre-
sponsible foremen over helpless, because di-
vided, workers. Unions should be supported
in their every effort to make the work of
women and children unnecessary. Unions have
demonstrated in many instances that very high
rates of pay per day are compatible with flour-
ishing business for the employer. By estab-
lishing and maintaining a scale they have done
an eminent service in preventing a blind slash-
ing of wages below the living limit, in order to
lessen costs, high for reasons not connected with
wages. Unions have accomplished much. Com-
ing to the subject from a different point of
view, I agree with them in their attitude to-
ward piece rates, which are intended to stimu-
late strenuousness, often harmful strenuous-
ness, the exact opposite of efficiency ; but as to
a fixed rate of pay per hour or day without
reference either to equivalent or to individual-
ity, the whole teachings of the ages, the whole
tendency of the time, are against it. We can
well excuse churches which try to maintain
their tottering sway; we can excuse dynasties
who inculcate the divine right of kings ; we can
excuse guilds like the stock exchange which
attempt to limit all the business of its kind to
their own members ; but it is one of the trage-
dies of this era of discovery and invention, this
era of the looting of natural resources of the
universe for the sake of man, that justice,
the protection of equivalent, should be denied
both employer and employee, and the reward of
individual excellence be denied the worker.
Never before were fairness, justice, knowl-edge, accuracy, so much needed. A hundred
years ago, except for a few sailing ships, wind-
mills and waterwheels, and a very few cards
steam-engines, all the workable energy of the
world came from the muscles of men and
domesticated animals, the slow man and the
slower ox or ass. Men and animals ate today
what the season's sun prepared for them. The
energy was incarnate. In the last hundred
years we have tapped the reservoirs of energy
accumulated, stored by the sun in former ages.
We are like a young man until recently on scant allowance who has suddenly inherited an
immense fortune. In the United States the
uncarnate energy used is thirty times as great
as was the incarnate energy sixty years ago ; it
is as if each head of a family had inherited
thirty slaves forced to labor for him without
pay beyond the obligation to maintain. It is
increasingly less the hard muscular labor of the
hands and body that counts, it is more and more
the intelligence to direct mechanical slaves that
counts. The man who smashes a machine be-
cause he fears it will take his job, the man who
refuses the promotion due him for efficient con-
trol, misses the richest gift that any generation
has ever been offered.
Efficiency reward cannot be equitably offered to the worker until equivalency is first conceded
and established. The basis of equivalency is of
little importance compared to the principle.
There is no moral objection to employers and
employees agreeing on a minimum wage rate
and maximum length of workday, but never-
theless an equivalent for the day's pay should
be set up in work — a definite, carefully deter-
mined equivalent. In bricklaying, for instance,
if 400 bricks is agreed to as a layer's output
for a day, and $4.00 is the wages for 400 bricks,
and if it is further agreed that he may not
lay any more, then, if with the help of modern
science he can lay the 400 bricks in a single
hour, let him lay them in that time and return
to his garden or to the companionship of his
wife and children, and let other workers take
his place during the daylight hours.
In the words of that three-thousand year old proverb, "Whatsoever thy hand findeth to do,
do it with thy might, for there is no work, or
device, or knowledge, or wisdom in hell."
The trouble with piece rates was that they attempted to solve, by a crude application of
the principle of strenuousness, not an efficiency principle, a number of problems that could be
solved only by the application of many effi-ciency principles. Ideals were not clearly seen,
common-sense was not invoked, competent counsel was not secured, discipline and the fair
deal were equally neglected, as cases are known in which piece workers had to begin work at 5
a. m. in order to make a day's wage. Reliable records were lacking, there was no planning,
no despatching, no standardized conditions and no standardized operations — only arbitrary
piece-rate schedules, a day rate of average cur-rent wage to the phenomenal worker being the
ultimate measure of the piece rate.
The first strike recorded in history was a strike against a cut in piece rates.
And the Egyptians made the children of Israel to
serve with rigour: And they made their lives bitter
with hard bondage, in mortar, and in brick, and in all
manner of service. . . . And Moses and Aaron went
in and told Pharaoh, Let the people go, that they may
hold a feast. . . . And the king of Egypt said unto
them, Wherefore do ye ... let the people from
their works? ... ye make them rest from their
burdens. And Pharaoh commanded the same day the
taskmasters, . . . saying, Ye shall not more give
the people straw to make brick, as heretofore. . . .
And the tale of the bricks which they did make hereto-
fore, ye shall lay upon them; ye shall not diminish
ought thereof: for they be idle; therefore they cry,
saying, Let us go . . . Let there more work be laid
upon the men . . . and let them not regard vain
words. Pharaoh said to the children of Israel, Ye are
idle, ye are idle: ... Go therefore now and work;
for there shall no straw be given you, yet shall ye de-
liver the tale of the bricks.
What followed is a matter of history. They walked out and stayed out for forty years, and
then their descendants got other and better jobs. Piece rates, resting on a wrong and vicious
principle, are too crude a device ever to be per-manently satisfactory. The time required for
a given task varies with the general overhead conditions, varies with the condition of the ma-
chine, varies with the quality and excellence of the tools, varies with the hardness of the ma-
terial worked, varies with the number of pieces to be made, and finally varies with the experi-
ence, strength and skill of the operator.
If all conditions have been standardized, if rates have been based on times carefully, scien-
tifically, and impartially determined, if there is a guaranteed rate per hour in case piece rates
are for any accidental cause too low — then an efficiency piece-rate system may with difficulty
be made tolerable.
A profit-sharing plan is not an efficiency re-ward. Out of the eighteen items of operating
costs or manufacturing costs, as distinguished from selling costs, only one is directly influ-
enced by the worker, and that is the time-quality of his work. For the other seventeen
items the management is partly responsible, but often many of them are beyond the control
of either manager or worker — the prices of materials, for instance. These are often the
largest part of the cost.
In building locomotives the costs of direct labor are 15 per cent, the overhead expense 15
per cent, and the material cost 70 per cent.
This does not include any general office ex-
penses or selling expense or profit. In another
plant the raw materials amounted to $32,000,
000 a year, the labor costs to $600,000, over-
head to $400,000. In this latter case, assuming
a manufactured product of 360,000,000 pounds
worth $0.10 a pound, and a selling cost of
$1,000,000, there would be a profit of $2,000,-
000 or 5.5 per cent, about $0,005 a pound. Let
prices drop five mills and profits are wiped
out; let prices rise five mills and profits are
doubled; let an efficient management reduce
material wastes one per cent and the added
profit is $360,000. Let labor deliver twice as
much work for the same wages and the gain
is only $300,000.
Equity demands direct connection between efficiency reward and efficiency quality. A dis-
tribution pro rata to wages at the end of the
year, to bad and good alike, of a profit due
always in largest part to causes over which the
worker has no control, is illogical although it
may be kind. What direct incentive is there to
a good worker to put forth special effort when
all the efforts of all the workers can be nega-
tived by a slump in the market price? What
direct incentive to put forth special effort when
the laziest and the most wasteful will be given
the same proportionate reward? An efficiency
reward is one which the worker can see and
grasp during the effort, one that is paid to him
for his individual excellence in that for which
he is individually responsible. What incentive
would there be to owners and jockeys of race
horses if instead of stakes, competed for and
won at the post, a small portion of the gate re-
ceipts were distributed pro rata at the end of
the season to all, including the also rans ? What
incentive would ball players have to manifest
individual excellence if, at the end of the sea-
son, all shared pro rata in a bonus more de-
pendent for amount on the weather than on
their efforts ? Would it be an efficiency reward
to offer fruit packers a bonus based on the
price of the yield when a single frost may de-
stroy the whole crop, or suitable weather
double it, with prices affected by competitive
product grown three thousand miles away, as
Idaho and Washington apples competing with
New York fruit?
Profit sharing is not inequitable as are piece
payments ; it is an amiable kindness on the part
of the plant owners, but it is not efficiency
reward.
There are, however, forms of bonus above guaranteed wages that are free both from the
inequities of piece rates and from the colorless
amiability of profit sharing.
The worker sells two different possessions, both his own — his time and his skill. He should
be robbed of neither. Time payments which
make no allowance for skill are wrong; skill
payments which make no provision for time are
also wrong. It is easy to measure time. We
can do it with the watch that made the dollar
famous. In horse racing, time is used exclu-
sively to measure skill. The horse that is able
to clip a fifth of a second from a world's record,
may by that act add $10,000 to his value. Skill
may also be measured in time. In the battle
practice of the American fleet it is more im-
portant to fire 120 rounds an hour and make 10
per cent of hits, than to fire 12 rounds an hour
and make 50 per cent of hits.
Mr. F. A. Halsey, in his premium plan under which he guarantees compensation per hour
irrespective of product, and in addition pays a
premium of one-third pay for all time saved
over previous records, laid the foundation for
rational efficiency reward. As usually put into
practice the plan is imperfect, because the di-
viding point between day wages and premium
addition is carelessly accepted without scientific
or reliable accuracy. It reminds one of the
German's measure of road distance, the Stunde,
or hour, which conveys no meaning unless one
knows what kind of an animal and the habitual
speed shown for an hour. In the centuries
before Stunde was a measure of distance,
Caesar's millia passuum — the thousand steps of
the soldier — were used as a measure of time;
very accurate as to distance, not bad as to time,
as there were no railroad trains to catch ; but
before the days of clocks, a. measure of distance
based on guess of time on a cloudy day was not
a unit of record either reliable, immediate or
adequate. There are minutes that seem like
hours, so wearily do they drag ; there are hours
that fly like minutes, each minute holding more
than other days.
F. W. Taylor's immense merit was that above everything else he insisted on the necessity and
possibility of determining very closely the upper limit of high and rapid performance
under normal conditions, a performance that could be kept up for years or for a working
lifetime without detriment to the worker, yet that eliminated the flagrant or avoidable waste.
Taylor thus laid the foundations for equitable bonus for each operation to each individual.
Gantt was the first to evolve and use in the compensation of workers a plan that retained
full pay by the hour (therefore pay for time quantity, a definite original recompense) and
pay for time quality, for a specific task, for which a most carefully ascertained time had
been determined. No reward was paid unless full time quality was realized. It was on the
principle that a fisherman either caught his fish or he did not ; there were no half or quarter fish
for near skill in angling.
Many of nature's efficiency rewards are of this character, and it is a strong, virile principle.
The author, owing to the nature of the work in the plants he was counseling, found it unde-
sirable to make the line of demarcation so sharp between efficiency and inefficiency, and there-
fore followed nature's softer plan of efficiency reward. Every plant or animal must maintain
a certain minimum of efficiency or it dies; atrophy results in extinction; but above this
lower limit, reward is proportioned to effi-ciency^-small reward to the less efficient,
special honors to the most efficient.
The principle of the wage target with a small bull's eye is applied. Shots outside of the
bull's eye but in the target also count.
In the original plan, while certain operations averaged four hours under the same workman
working with the same diligence, on one occa-
sion the time would be five hours and on an-
other three hours, owing to conditions over
which the worker had no control. It was highly
desirable to maintain the interest of the oper-
ator in the discouraging jobs, so while a stand-
ard bonus of 20 per cent was paid for attain-
ing standard time, while 10 per cent bonus was
paid for attaining 90 per cent of standard time
and 3.25 per cent bonus for 80 per cent of stand-
ard time, bonus stopped at 67 per cent of
standard. If less time than standard was
used, the worker was paid at his full hourly
rate for all the time he saved, and. was paid in
addition 20 per cent bonus for the time that he
worked. A workman had to be very inferior
who could not regularly earn some bonus. A
further step to eliminate accidental and inevit-
able time variations was suggested and worked
out by two advisers, Mr. Playfair and Mr.
Whitef ord, who have both made for themselves
names in efficiency work. Under the new plan
the worker is charged with all the hours he
works in any selected period, week, month, etc.,
and he is credited with and paid for all the
standard hours of work which he turns out.
The bonus, whether for job, for day, for month
or longer period, is paid on the efficiency rela-
tion between actual and standard. If a worker
is present 250 hours in a month and turns out
250 hours of work in 250 hours actual time, his
efficiency is 100 per cent, and he earns 20 per
cent bonus on wages; but if in the same time
he turns out 300 hours of work, his efficiency
40 per cent on his wages.
The standard times are most carefully deter-mined by time studies, by observations, by the-
oretical considerations, by demonstrations, using every available method to establish fair
and correct standards. If the performance is walking on a good road and the time eight
hours, we settle on 24 miles a day as an easier task than a quarter of a mile each quarter hour as in some of the monotonous beats
of sentries or policemen. If the performance is
to be 24 miles, we desire to take for it neither
16 hours a day nor yet 4 hours, but a time be-
tween 6 hours and 9, according to the prefer-
ence of the worker; and it is further realized
that the best standard of efficiency is not a
maximum of muscular effort for a short time,
nor a maximum of physical wear for a long
time, but a combination of mental and physical
exhilaration which leaves the worker in best
condition at the end of the accomplishment,
whether the unit of time be a few seconds, a
day, a month, a year, or a lifetime.
Therefore, in this particular very limited ap-plication of efficiency reward the ideals are : —
(1) A guaranteed hourly rate.
(2) A lower limit of efficiency, which, if not attained, indicates that the worker is a misfit
and requires either special training or change of occupation.
(3) A progressive efficiency reward, begin-ning at a requirement so low that it is inexcus-
able not to average it.
(4) An efficiency standard established after careful and reliable investigations of many
kinds, including time and motion studies.
(5) For work to be performed, a time stand-ard that is joyful and exhilarating, therefore
intermediate between depressing slowness and exhausting effort.
(6) A variation in standards for the same work for different machines, conditions and in-
dividuals, the schedules therefore being indi-vidual.
(7) The determination for each worker of an average efficiency for all jobs over a long period.
(8) A continuous correction of time stand-
ards and of wage rate to suit new conditions.
This is essential and inevitable. Wage rate rises
f under the new conditions more skill or greater
effort is required. Time standards have noth-
ing to do with wages. They are not changed
to affect earnings either one way or the other,
but to be accurate and just. The time standard
for covering a mile for a man on foot is inev-
itably less for a man on a bicycle, inevitably
less for a man on a motor cycle than for a man
on a bicycle.
(9) The worker must have the personal op-
tion of working not to a standard time, but be-
tween limits on each side of standard time. If
he does not consider standard time fair, he can
take his assumed hourly rate and show lower
efficiency, which greatly enhances the cost to the
employer, whose self-interest has so to improve
physical or psychical conditions as to induce the
worker to attain standards.
Efficiency constitutes 9 out of the 18 elements of cost — efficiency of quality and quantity and
overhead for materials, for labor and for fixed charges. It has been found exceedingly satisfac-
tory and convenient to base efficiency rewards on the cost of efficiencies, the method being so
flexible as to be applicable to an individual oper-ation of a few minutes' duration, or to all the
work of a man for a long period, or to all the work of department or plant.
Nevertheless, these various forms of bonus
are but devices of great practical value, just as
a foot rule or the multiplication table is of
practical value, but for importance they are not
to be compared to the broad principle of effi-
ciency reward which is far above any particular
device. It is therefore absolutely impossible
for any combination of workers to prevent the
application of the principle of efficiency reward
if any management chooses to adopt it.
Efficiency reward is not a money payment, this is only one of its myriad forms. Men have
been willing to die for a smile. Hobson relates that one man offered to forfeit a year's pay if
they would but allow him to be one of the crew to sink the "Merrimac" across the entrance to
Santiago harbor. Garibaldi offered his hearers hunger, thirst, hardship, wounds, prison and
death, and in a frenzy of eagerness they fol-lowed him.
Highest efficiency is easily stimulated, al-though there is often no more direct connec-
tion between act and reward than in profit sharing which does not stimulate. In Jack Lon-
don's elemental tale of the miner of Forty Mile, the girl he fought for was the direct prize. He
would have had to fight if there had been no girl and he would have lost, but in Victior
Hugo's "Toilers of the Sea," the man single-handed saved the wrecked steamer, not that he
might profit, but that he might win a girl's love. The bitter tragedy lies in the fact that
he had striven for a reward, made its hope the inspiration of his work when he should have
known that it could not be attained in that manner.
Twelve principles of efficiency! We began with ideals, we end with ideals. Men must have
ideals or they cannot do good work ; there must be possibility of highest efficiency reward or
neither senses, nor spirit, nor mind is stimu-lated.
He who would take ideals from the world's workers, he who would deprive them of the lure
of individual reward for individual efficiency, would indeed make them brother to the ox.
He who believes the road behind humanity registers but a fraction of what is still to be
attained, seizes on the principle of efficiency re-ward to bring to their highest development ma-
terials, muscle, mind, and above all, spirit
Commentary by KVSSNRao
Emerson quoted Taylor and Gantt in this chapter
PUZZLES :— The themes of fairy tales ! To sort out the tangled skeins of silk, to
separate the colored grains of sand! Puzzles : — to decipher the hieroglyphs and the
cuneiforms, to tax all the powers of investiga-tion, of theories, of analysis, of philosophy, of
interpretation! Solutions, generalizations, are fascinating.
Books, encyclopedias of 50,000,000 words, 250,000 words in the English language, outside
of dictionaries scarcely 10,000 different — but only 26 letters of the alphabet ; these again re-
duced to three classes, labials, dentals, palatals, each shifting from dialect to dialect as in pater,
vater, father, all the languages of the world synthesized back to mama, dada, gaga, further
back even to the unconscious ejaculations of the newly-born child !
Millions and millions of different substances
in the world! There are countless different
kinds of oil alone, all consisting of carbon,
hydrogen and oxygen. Vary the proportions of
the elements, and the compounds shift into
alcohols, sugars, starches, dextrines, acids —
into essences, aromas, into dyes, drugs, poisons !
All the substances in the universe are but com-
binations of less than seventy elements, and it
is the dream, the expectation of modern chem-
istry to find whether these, if not but one, are
not at most three or four.
In the last analysis, it is the marvelous sim-
plicity of it all that enchants, almost stuns.
Gravitation holds solar systems in their paths,
carves the face of the land, calms the ocean's
unrest ! Crystallization gave us glacial epochs,
life gives us biology, zoology, history, philoso-
phy. Compared to life, physical, psychical,
mental, all else seems simple ; yet how few the
instincts to perpetuate and develop life! The
instinct for immediate life, the instinct for
eternal life, the preservation of the individual
and the race — yet both these instincts are main-
tained and stimulated by one single principle,
the last of the twelve, the principle of "EFFI-
CIENCY REWARD/'
For years there has been the unanswered
question : "What is the difference between the
dead and the living, between the animate and
the inanimate ?" Whatever responds to an
efficiency reward is alive ; what cannot respond,
is inanimate. There is a difference between the
drop of water in obedience to the law of gravi-
tation, descending from the mountain top to
the sea, and the pine tree growing tall and slim
that its needles may reach the light and live.
Darwin showed that life was preserved and
developed by the survival of the efficient, by
natural selection — -that individual variation
due to the survival of the efficient was trans-
mitted by sexual selection. Nature is accused
of caring nothing for the individual, of caring
much for the race, yet she moulds impartially
all individuals and all races by offering and
paying efficiency rewards. There is for every
individual, for every race, destruction, hell-fire
lurking everywhere, but it is the efficiency re-
ward that tempts us far from the danger zone.
Take away the stimulus of efficiency reward —
individual life and race life would vanish from
the earth!
We can smile at those who in their ignorance
try to nullify the principles of efficiency re-
ward, to banish it from human affairs. Yet
man, because he perversely went backward
into darkness rather than forward into light —
man who is what he is because of high reward
for individual efficiency — forgot the principle
that had made him, forgot that it was eternal
and that ever greater rewards were still ahead,
and tried to hold exclusively what he had and
to enhance its value by depriving others of
what had been given him. The priests of all
ages, those to whom it had been given to read
some pages of nature's open book, immediately
made mysteries of this knowledge, tried to put
the book under lock and key. Dynasties which
had reached their kingship through individual
efficiency — the Carolingians, the descendants of
the pawnbroking Burggrave of Nuremberg, the
Tudors, the Bourbons, immediately substituted
for the principle of efficiency the artificial
principle of the Divine Right of Kings, of king-
ship by the Grace of God. Men who, like David
and Solomon, ought to have known that there
was supreme joy in winning the love of one
woman, whether Bathsheba or the Queen of
Sheba, immediately laid in (by the mercenary
path, not by means of emotional efficiency)
whole harems of useless atrophying women,
David's chief pleasure apparently being to shut
them up in remote and distressful seclusion for
the mean pleasure of watching their lives waste
and of depriving other men of wives (see II
Samuel, 20:3). All nature shows that inno-
vating efficiency is the direct effect of reward,
but the history of human institutions shows
that these are chiefly devised by the selfish few
to appropriate rewards without efficiency, yet
coating the pill by holding out the lure of a re-
mote and hypothetical reward for efficiency to
those who bow the knee in service, to the de-
luded many.
Thus is offered by the priests the promise of
heaven to those who yield to the demands of
the church, by generals the promise of Para-
dise with houris galore to those who die in
battle, by kings the promise of occasional
largesse and festivities to those who pay taxes
and otherwise serve, by guilds commercial suc-
cess to members, by unions fixed wages for in-
adequate work to those who join them.
The early settlers in America had fled from
caste. They had left it behind them. The effi-
cient came to the new land of hardship and
promise, and the efficient earned their indi-
vidual rewards. When they set up their gov-
ernment, they made no provision for the State
churchy they abolished all titles and hereditary
offices, they provided for no standing army,
there were no interstate barriers to trade and
free movement, and there were no guilds. The
apprentice became journeyman, the journey-
man became master, the master became head
of a plant. There were so many opportunities
that the caste principle of fixed day's wage
without reference to performance was over-
looked. The master with his few workmen
under him could personally supervise and pro-
mote or discharge. Yet the iniquity of the
fixed rate per hour was clearly indicated 1,900
years ago, in the parable of the laborers in the
vineyard. A householder went out early in the
morning to hire laborers, and when he had
agreed with the laborers for a penny a day he
sent them into his vineyard; and he went out
at the third hour, and again at the sixth, the
ninth, and the eleventh hour and saw others
standing in the market place idle, and to them
he said, "Go ye also into the vineyard and what-
soever is right I will give you." This promise
of receiving what was right — pay on the basis
of performance, not on the basis of time —
stimulated the workers, and even those last en-
gaged did as much work before stopping as
those who had been making a slow pace
through the twelve-hour-long scorching and
burdensome day.
So when even was come, the lord of the vineyard
saith unto his steward, Call the labourers and give
them their hire. . . . And when they came that
were hired about the eleventh hour, they received every
man a penny. But when the first came, they supposed
that they should have received more; . . . and they mur-
mured against the goodman of the house. . . . But
he answered one of them, and said, Friend, I do thee
no wrong: didst not thou agree with me for a penny?
. . . Is thine eye evil because I am good?
The day-wage system, contrary as it is both to the underlying principle of efficiency reward
and also to all principles of equity, since it lacks any intelligent relation between pay and
performance, is doomed, in spite of hoary cus-tom, current practice, in spite of combined
(although opposed) efforts of unions and em-ployers' associations. Compensation for work
cannot remain an exception to the general law that there must be a definite equivalent, based
on the two elements of quantity and quality; and our ability to measure accurately both
quantity and quality, whether the weight in carats of the diamond and its blue-whiteness,
whether the weight of coal and the heat units per pound, is one of the measures of civiliza-
tion. In iall the ten-thousand years before coal, during which the human race warmed itself
and cooked with wood fires exclusively, there is probably not a single instance in which any
exact heat-unit equivalent and price demanded or paid was determined. The same happy-go-
lucky vagueness was transmitted to coal pur-chases, and even yet most coal is purchased
without reference to analysis.
Wiser buyers, large consumers, purchase on
specification sustained by analysis and verified
by test. A coal that looks like another may be
worth only one-tenth as much. Before Archi-
medes discovered the relation of weight to bulk,
the principle of specific gravity, before he ex-
perimentally determined the relative weights
of water, gold, and silver, goldsmiths had a
joyous time swindling their customers, since it
was only by color that the value of the worked-
up metal could be judged. It speaks well for
the general honesty of the ancient coiners that
the old silver and old gold coins are so pure.
This blind trust as to quality would not work
today as to metals, does not work as to coal,
will soon not work as to wages. It was pon-
dering on the problem of detecting a suspected
swindle that led Archimedes to the discovery
of specific gravity.
Efficiency rewards hold good for nearly every worker in life except the day worker.
The girl who makes a business of it, secures a
valuable husband, an enormous and permanent
reward for a very few days of competent en-
deavor. This is the oldest competitive business
of all, and results in a trust greater than the
Standard Oil, greater even than the Catholic
Church.
The hunter who starts early, who has prac-ticed much, who works hard, brings home the
game. The farmer who selects his seed care-
fully, tills and fertilizes his crops scientifically,
secures twice the yield per acre ; the merchant
who hits the fancies or the necessities of the
buying public becomes rich; the lawyer who
wins cases charges heavier fees; the doctor
who has made a name for himself charges
fancy prices for very simple operations; the
clergyman who is eloquent receives a call to a
larger church ; the politician who stands in with
the boys attains ultimately to a senatorial toga.
Everywhere— except for almost the largest
class of all, the men who work with their
hands — there is special and closely connected
reward for individual efficiency. Are the toil-
ers to have no efficiency reward? The induce-
ment is held out that if they join unions they
will receive day wages — high day wages — short
hours, and that they will not have to work
hard. Permanence of pay, which is far more
vital than rate of pay, is not guaranteed. It is
the earning in a working lifetime, divided by
all the days, that counts, not the nominal wages
per day. In the modern industrial state initia-
tive must not be destroyed, separate action
must exist ; there must be individual as well as
collective bargaining; the individual must also
count; the guild is not everything. I have no
antagonism to unions. They have been and
are still very necessary; they have mitigated
the tyranny of the employer and of his irre-
sponsible foremen over helpless, because di-
vided, workers. Unions should be supported
in their every effort to make the work of
women and children unnecessary. Unions have
demonstrated in many instances that very high
rates of pay per day are compatible with flour-
ishing business for the employer. By estab-
lishing and maintaining a scale they have done
an eminent service in preventing a blind slash-
ing of wages below the living limit, in order to
lessen costs, high for reasons not connected with
wages. Unions have accomplished much. Com-
ing to the subject from a different point of
view, I agree with them in their attitude to-
ward piece rates, which are intended to stimu-
late strenuousness, often harmful strenuous-
ness, the exact opposite of efficiency ; but as to
a fixed rate of pay per hour or day without
reference either to equivalent or to individual-
ity, the whole teachings of the ages, the whole
tendency of the time, are against it. We can
well excuse churches which try to maintain
their tottering sway; we can excuse dynasties
who inculcate the divine right of kings ; we can
excuse guilds like the stock exchange which
attempt to limit all the business of its kind to
their own members ; but it is one of the trage-
dies of this era of discovery and invention, this
era of the looting of natural resources of the
universe for the sake of man, that justice,
the protection of equivalent, should be denied
both employer and employee, and the reward of
individual excellence be denied the worker.
Never before were fairness, justice, knowl-edge, accuracy, so much needed. A hundred
years ago, except for a few sailing ships, wind-
mills and waterwheels, and a very few cards
steam-engines, all the workable energy of the
world came from the muscles of men and
domesticated animals, the slow man and the
slower ox or ass. Men and animals ate today
what the season's sun prepared for them. The
energy was incarnate. In the last hundred
years we have tapped the reservoirs of energy
accumulated, stored by the sun in former ages.
We are like a young man until recently on scant allowance who has suddenly inherited an
immense fortune. In the United States the
uncarnate energy used is thirty times as great
as was the incarnate energy sixty years ago ; it
is as if each head of a family had inherited
thirty slaves forced to labor for him without
pay beyond the obligation to maintain. It is
increasingly less the hard muscular labor of the
hands and body that counts, it is more and more
the intelligence to direct mechanical slaves that
counts. The man who smashes a machine be-
cause he fears it will take his job, the man who
refuses the promotion due him for efficient con-
trol, misses the richest gift that any generation
has ever been offered.
Efficiency reward cannot be equitably offered to the worker until equivalency is first conceded
and established. The basis of equivalency is of
little importance compared to the principle.
There is no moral objection to employers and
employees agreeing on a minimum wage rate
and maximum length of workday, but never-
theless an equivalent for the day's pay should
be set up in work — a definite, carefully deter-
mined equivalent. In bricklaying, for instance,
if 400 bricks is agreed to as a layer's output
for a day, and $4.00 is the wages for 400 bricks,
and if it is further agreed that he may not
lay any more, then, if with the help of modern
science he can lay the 400 bricks in a single
hour, let him lay them in that time and return
to his garden or to the companionship of his
wife and children, and let other workers take
his place during the daylight hours.
In the words of that three-thousand year old proverb, "Whatsoever thy hand findeth to do,
do it with thy might, for there is no work, or
device, or knowledge, or wisdom in hell."
The trouble with piece rates was that they attempted to solve, by a crude application of
the principle of strenuousness, not an efficiency principle, a number of problems that could be
solved only by the application of many effi-ciency principles. Ideals were not clearly seen,
common-sense was not invoked, competent counsel was not secured, discipline and the fair
deal were equally neglected, as cases are known in which piece workers had to begin work at 5
a. m. in order to make a day's wage. Reliable records were lacking, there was no planning,
no despatching, no standardized conditions and no standardized operations — only arbitrary
piece-rate schedules, a day rate of average cur-rent wage to the phenomenal worker being the
ultimate measure of the piece rate.
The first strike recorded in history was a strike against a cut in piece rates.
And the Egyptians made the children of Israel to
serve with rigour: And they made their lives bitter
with hard bondage, in mortar, and in brick, and in all
manner of service. . . . And Moses and Aaron went
in and told Pharaoh, Let the people go, that they may
hold a feast. . . . And the king of Egypt said unto
them, Wherefore do ye ... let the people from
their works? ... ye make them rest from their
burdens. And Pharaoh commanded the same day the
taskmasters, . . . saying, Ye shall not more give
the people straw to make brick, as heretofore. . . .
And the tale of the bricks which they did make hereto-
fore, ye shall lay upon them; ye shall not diminish
ought thereof: for they be idle; therefore they cry,
saying, Let us go . . . Let there more work be laid
upon the men . . . and let them not regard vain
words. Pharaoh said to the children of Israel, Ye are
idle, ye are idle: ... Go therefore now and work;
for there shall no straw be given you, yet shall ye de-
liver the tale of the bricks.
What followed is a matter of history. They walked out and stayed out for forty years, and
then their descendants got other and better jobs. Piece rates, resting on a wrong and vicious
principle, are too crude a device ever to be per-manently satisfactory. The time required for
a given task varies with the general overhead conditions, varies with the condition of the ma-
chine, varies with the quality and excellence of the tools, varies with the hardness of the ma-
terial worked, varies with the number of pieces to be made, and finally varies with the experi-
ence, strength and skill of the operator.
If all conditions have been standardized, if rates have been based on times carefully, scien-
tifically, and impartially determined, if there is a guaranteed rate per hour in case piece rates
are for any accidental cause too low — then an efficiency piece-rate system may with difficulty
be made tolerable.
A profit-sharing plan is not an efficiency re-ward. Out of the eighteen items of operating
costs or manufacturing costs, as distinguished from selling costs, only one is directly influ-
enced by the worker, and that is the time-quality of his work. For the other seventeen
items the management is partly responsible, but often many of them are beyond the control
of either manager or worker — the prices of materials, for instance. These are often the
largest part of the cost.
In building locomotives the costs of direct labor are 15 per cent, the overhead expense 15
per cent, and the material cost 70 per cent.
This does not include any general office ex-
penses or selling expense or profit. In another
plant the raw materials amounted to $32,000,
000 a year, the labor costs to $600,000, over-
head to $400,000. In this latter case, assuming
a manufactured product of 360,000,000 pounds
worth $0.10 a pound, and a selling cost of
$1,000,000, there would be a profit of $2,000,-
000 or 5.5 per cent, about $0,005 a pound. Let
prices drop five mills and profits are wiped
out; let prices rise five mills and profits are
doubled; let an efficient management reduce
material wastes one per cent and the added
profit is $360,000. Let labor deliver twice as
much work for the same wages and the gain
is only $300,000.
Equity demands direct connection between efficiency reward and efficiency quality. A dis-
tribution pro rata to wages at the end of the
year, to bad and good alike, of a profit due
always in largest part to causes over which the
worker has no control, is illogical although it
may be kind. What direct incentive is there to
a good worker to put forth special effort when
all the efforts of all the workers can be nega-
tived by a slump in the market price? What
direct incentive to put forth special effort when
the laziest and the most wasteful will be given
the same proportionate reward? An efficiency
reward is one which the worker can see and
grasp during the effort, one that is paid to him
for his individual excellence in that for which
he is individually responsible. What incentive
would there be to owners and jockeys of race
horses if instead of stakes, competed for and
won at the post, a small portion of the gate re-
ceipts were distributed pro rata at the end of
the season to all, including the also rans ? What
incentive would ball players have to manifest
individual excellence if, at the end of the sea-
son, all shared pro rata in a bonus more de-
pendent for amount on the weather than on
their efforts ? Would it be an efficiency reward
to offer fruit packers a bonus based on the
price of the yield when a single frost may de-
stroy the whole crop, or suitable weather
double it, with prices affected by competitive
product grown three thousand miles away, as
Idaho and Washington apples competing with
New York fruit?
Profit sharing is not inequitable as are piece
payments ; it is an amiable kindness on the part
of the plant owners, but it is not efficiency
reward.
There are, however, forms of bonus above guaranteed wages that are free both from the
inequities of piece rates and from the colorless
amiability of profit sharing.
The worker sells two different possessions, both his own — his time and his skill. He should
be robbed of neither. Time payments which
make no allowance for skill are wrong; skill
payments which make no provision for time are
also wrong. It is easy to measure time. We
can do it with the watch that made the dollar
famous. In horse racing, time is used exclu-
sively to measure skill. The horse that is able
to clip a fifth of a second from a world's record,
may by that act add $10,000 to his value. Skill
may also be measured in time. In the battle
practice of the American fleet it is more im-
portant to fire 120 rounds an hour and make 10
per cent of hits, than to fire 12 rounds an hour
and make 50 per cent of hits.
Mr. F. A. Halsey, in his premium plan under which he guarantees compensation per hour
irrespective of product, and in addition pays a
premium of one-third pay for all time saved
over previous records, laid the foundation for
rational efficiency reward. As usually put into
practice the plan is imperfect, because the di-
viding point between day wages and premium
addition is carelessly accepted without scientific
or reliable accuracy. It reminds one of the
German's measure of road distance, the Stunde,
or hour, which conveys no meaning unless one
knows what kind of an animal and the habitual
speed shown for an hour. In the centuries
before Stunde was a measure of distance,
Caesar's millia passuum — the thousand steps of
the soldier — were used as a measure of time;
very accurate as to distance, not bad as to time,
as there were no railroad trains to catch ; but
before the days of clocks, a. measure of distance
based on guess of time on a cloudy day was not
a unit of record either reliable, immediate or
adequate. There are minutes that seem like
hours, so wearily do they drag ; there are hours
that fly like minutes, each minute holding more
than other days.
F. W. Taylor's immense merit was that above everything else he insisted on the necessity and
possibility of determining very closely the upper limit of high and rapid performance
under normal conditions, a performance that could be kept up for years or for a working
lifetime without detriment to the worker, yet that eliminated the flagrant or avoidable waste.
Taylor thus laid the foundations for equitable bonus for each operation to each individual.
Gantt was the first to evolve and use in the compensation of workers a plan that retained
full pay by the hour (therefore pay for time quantity, a definite original recompense) and
pay for time quality, for a specific task, for which a most carefully ascertained time had
been determined. No reward was paid unless full time quality was realized. It was on the
principle that a fisherman either caught his fish or he did not ; there were no half or quarter fish
for near skill in angling.
Many of nature's efficiency rewards are of this character, and it is a strong, virile principle.
The author, owing to the nature of the work in the plants he was counseling, found it unde-
sirable to make the line of demarcation so sharp between efficiency and inefficiency, and there-
fore followed nature's softer plan of efficiency reward. Every plant or animal must maintain
a certain minimum of efficiency or it dies; atrophy results in extinction; but above this
lower limit, reward is proportioned to effi-ciency^-small reward to the less efficient,
special honors to the most efficient.
The principle of the wage target with a small bull's eye is applied. Shots outside of the
bull's eye but in the target also count.
In the original plan, while certain operations averaged four hours under the same workman
working with the same diligence, on one occa-
sion the time would be five hours and on an-
other three hours, owing to conditions over
which the worker had no control. It was highly
desirable to maintain the interest of the oper-
ator in the discouraging jobs, so while a stand-
ard bonus of 20 per cent was paid for attain-
ing standard time, while 10 per cent bonus was
paid for attaining 90 per cent of standard time
and 3.25 per cent bonus for 80 per cent of stand-
ard time, bonus stopped at 67 per cent of
standard. If less time than standard was
used, the worker was paid at his full hourly
rate for all the time he saved, and. was paid in
addition 20 per cent bonus for the time that he
worked. A workman had to be very inferior
who could not regularly earn some bonus. A
further step to eliminate accidental and inevit-
able time variations was suggested and worked
out by two advisers, Mr. Playfair and Mr.
Whitef ord, who have both made for themselves
names in efficiency work. Under the new plan
the worker is charged with all the hours he
works in any selected period, week, month, etc.,
and he is credited with and paid for all the
standard hours of work which he turns out.
The bonus, whether for job, for day, for month
or longer period, is paid on the efficiency rela-
tion between actual and standard. If a worker
is present 250 hours in a month and turns out
250 hours of work in 250 hours actual time, his
efficiency is 100 per cent, and he earns 20 per
cent bonus on wages; but if in the same time
he turns out 300 hours of work, his efficiency
40 per cent on his wages.
The standard times are most carefully deter-mined by time studies, by observations, by the-
oretical considerations, by demonstrations, using every available method to establish fair
and correct standards. If the performance is walking on a good road and the time eight
hours, we settle on 24 miles a day as an easier task than a quarter of a mile each quarter hour as in some of the monotonous beats
of sentries or policemen. If the performance is
to be 24 miles, we desire to take for it neither
16 hours a day nor yet 4 hours, but a time be-
tween 6 hours and 9, according to the prefer-
ence of the worker; and it is further realized
that the best standard of efficiency is not a
maximum of muscular effort for a short time,
nor a maximum of physical wear for a long
time, but a combination of mental and physical
exhilaration which leaves the worker in best
condition at the end of the accomplishment,
whether the unit of time be a few seconds, a
day, a month, a year, or a lifetime.
Therefore, in this particular very limited ap-plication of efficiency reward the ideals are : —
(1) A guaranteed hourly rate.
(2) A lower limit of efficiency, which, if not attained, indicates that the worker is a misfit
and requires either special training or change of occupation.
(3) A progressive efficiency reward, begin-ning at a requirement so low that it is inexcus-
able not to average it.
(4) An efficiency standard established after careful and reliable investigations of many
kinds, including time and motion studies.
(5) For work to be performed, a time stand-ard that is joyful and exhilarating, therefore
intermediate between depressing slowness and exhausting effort.
(6) A variation in standards for the same work for different machines, conditions and in-
dividuals, the schedules therefore being indi-vidual.
(7) The determination for each worker of an average efficiency for all jobs over a long period.
(8) A continuous correction of time stand-
ards and of wage rate to suit new conditions.
This is essential and inevitable. Wage rate rises
f under the new conditions more skill or greater
effort is required. Time standards have noth-
ing to do with wages. They are not changed
to affect earnings either one way or the other,
but to be accurate and just. The time standard
for covering a mile for a man on foot is inev-
itably less for a man on a bicycle, inevitably
less for a man on a motor cycle than for a man
on a bicycle.
(9) The worker must have the personal op-
tion of working not to a standard time, but be-
tween limits on each side of standard time. If
he does not consider standard time fair, he can
take his assumed hourly rate and show lower
efficiency, which greatly enhances the cost to the
employer, whose self-interest has so to improve
physical or psychical conditions as to induce the
worker to attain standards.
Efficiency constitutes 9 out of the 18 elements of cost — efficiency of quality and quantity and
overhead for materials, for labor and for fixed charges. It has been found exceedingly satisfac-
tory and convenient to base efficiency rewards on the cost of efficiencies, the method being so
flexible as to be applicable to an individual oper-ation of a few minutes' duration, or to all the
work of a man for a long period, or to all the work of department or plant.
Nevertheless, these various forms of bonus
are but devices of great practical value, just as
a foot rule or the multiplication table is of
practical value, but for importance they are not
to be compared to the broad principle of effi-
ciency reward which is far above any particular
device. It is therefore absolutely impossible
for any combination of workers to prevent the
application of the principle of efficiency reward
if any management chooses to adopt it.
Efficiency reward is not a money payment, this is only one of its myriad forms. Men have
been willing to die for a smile. Hobson relates that one man offered to forfeit a year's pay if
they would but allow him to be one of the crew to sink the "Merrimac" across the entrance to
Santiago harbor. Garibaldi offered his hearers hunger, thirst, hardship, wounds, prison and
death, and in a frenzy of eagerness they fol-lowed him.
Highest efficiency is easily stimulated, al-though there is often no more direct connec-
tion between act and reward than in profit sharing which does not stimulate. In Jack Lon-
don's elemental tale of the miner of Forty Mile, the girl he fought for was the direct prize. He
would have had to fight if there had been no girl and he would have lost, but in Victior
Hugo's "Toilers of the Sea," the man single-handed saved the wrecked steamer, not that he
might profit, but that he might win a girl's love. The bitter tragedy lies in the fact that
he had striven for a reward, made its hope the inspiration of his work when he should have
known that it could not be attained in that manner.
Twelve principles of efficiency! We began with ideals, we end with ideals. Men must have
ideals or they cannot do good work ; there must be possibility of highest efficiency reward or
neither senses, nor spirit, nor mind is stimu-lated.
He who would take ideals from the world's workers, he who would deprive them of the lure
of individual reward for individual efficiency, would indeed make them brother to the ox.
He who believes the road behind humanity registers but a fraction of what is still to be
attained, seizes on the principle of efficiency re-ward to bring to their highest development ma-
terials, muscle, mind, and above all, spirit
Commentary by KVSSNRao
Emerson quoted Taylor and Gantt in this chapter
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