Wednesday, July 13, 2016

The Twelve Principles of Efficiency - Part 2

1. Clearly defined ideals.
2. Common sense
3. Competent counsel
4. Discipline
5. The fair deal
6. Reliable, immediate and adequate records
(Principles 1 to 6 covered in Part 1)

7. Despatching
8. Standards and schedules
9. Standardized conditions
10. Standardized operations
11. Written standard-practice instructions
12. Efficiency-reward



THE SEVENTH PRINCIPLE: DESPATCHING


Despatching is used to denote shop planning by Harrington Emerson. Efficiency of the shop can be improved by shop planning by increasing on time deliveries and also reducing idle time of the equipment.

Emerson described a locomotives repair shop wherein he introduced despatching system. The first plan was to despatch the repairs as a whole, locomotives to be returned to service in 12 days, 18 days, 24 days, according to the class of repair. The second plan, worked in with this, was to despatch each separate item of work and to pick out those items which, taken at the proper time, in the proper
order, and in the proper sequence, would result in completing a locomotive in the shortest time.

Marine-repair despatching was found to be superior over locomotive-repair despatching. A big vessel will be put in a dry dock, at $5,000 a day charge perhaps, and be completely scraped, repainted, new propeller and rudder fitted, new plates inserted, in perhaps three days. Complete circulating pumps, from drawing to installation, will be completed in three days. Emerson reasons that, it is hard to defend a longer time than 72 hours for most locomotive repairs.

It is also interesting to note that in the sister branch of railroad maintenance, namely, track
repairs, stupendous tasks of snow and landslide removals, bridge rebuilding, etc., are commonly
accomplished in hours rather than in days or weeks.


A new plan was gradually substituted for the old plan. In the railroad shop major schedules
were worked out and put into effect by despatching; minor and subsidiary schedules were made out for each job, each man, and each machine, the lesser jobs fitting like parts of a puzzle into the larger schedules, and on the basis of schedules, however often they were changed, men, machines and jobs were despatched. All work, instead of passing directly from foreman to worker or to gang, passed through our despatch board. Practice was perfectly elastic, but procedure was not. Schedules could be changed on a moment's notice and also the sequence of despatching, but not the fact of despatching. The particular shape and size and location of despatch board is unimportant, the essential being that it is suited to the work. Whether the despatch board is covered with parti-colored strings, or made up of hooks, clips, or pockets to receive cards, is also unimportant in principle, but not in practice, since a method under which many of your despatching cards blow out of the window soon becomes inoperative.



The name despatching was adopted from train despatching, and train operation organization was adapted. The foreman corresponded to the engineer, a new official was created corresponding to the despatcher, a messenger and telephone service kept the despatcher's office in touch with the work. Despatching records, however, were adapted from bank practice. The receiving teller takes in money,
he enters the amount in the depositor's time book, he credits the bank's cash book with the amount received, but he also credits the ledger account of the depositor. When the depositor draws a check it is presented to the paying teller who hands out the cash, charges the cash account, charges the depositor's account. At the end of any day the total cash in hand must correspond with the sum of the balances in all the accounts. Similarly the despatching board, like the cash book, is filled with prospective work. As fast as any item is performed it is charged to the order. The operator is charged
with the pay he draws and credited with the work he performs.

There must be at the day's or week's or month's end a perfect balance between all work credited to operators and charged to orders, also a perfect balance between wages and other accounts charged and totals credited to work in progress and delivered since last balance. The records are immediate, absolutely accurate, and wholly adequate.

In practice it has proved more important to despatch unstandardized work than to standardize undespatched work, even as on railroads it is more important to despatch trains even if
there is no adherence to schedule than it is to run trains on time without despatching.

Despatching, like other principles, is a subdivision of the science of management, a part of planning; but while visible to the eye as a distinct pattern, it ought, like inlaid work, to be intactile. If we are well nothing is more beautifully despatched than the food we eat, from plate to building up of depleted hidden tissue. We are conscious only of the pleasure of the first taste, not conscious of the admirably regular way by which each molecule is ultimately despatched to its destination.


THE EIGHTH PRINCIPLE: STANDARDS AND SCHEDULES - Harrington Emerson

Standards and Schedules ! These are of two kinds, the physical and chemical standards discovered and established in the last century, standards and schedules as exact as mathematics, and those other schedules resting on standards whose upper limit we do not yet know.

All around us, everywhere nature has been showing us that increased result comes from lessened effort, not from greater effort, but we have been too stupid to understand.

This law of the reduction of effort for greater results crops up in the most unexpected places, so that engineers have evolved the definite critical speed, the speed of maximum result for relatively least expenditure.

To establish rational work standards for men requires indeed motion and time studies of all operations, but it requires in addition all the skill of the planning manager, all the skill of the physician, of the humanitarian, of the physiologist, of the psychologist ; it requires infinite knowledge, directed, guided and restrained by hope, faith and compassion.

The promise already partly fulfilled and clearly held out as to the future is that greater and greater results shall follow constantly diminishing effort.

THE NINTH PRINCIPLE: STANDARDIZED CONDITIONS

Standardizing is used as planning the conditions by Emerson.

There are two distinct methods of standardizing conditions — to standardize ourselves so as to command the unalterable extraneous facts, earth, water, air, gravity, wave vibrations; to standardize the outside facts so that our personality becomes the pivot on which all else turns.

The easiest way for any individual to live his own life in fullest measure is either to standardize himself to suit the environment or to standardize the environment to suit himself.

Roads were built that a barefooted multitude might travel in slow comfort. Ater a standardized path had been created, a bright mind evolved the idea that a revolving wheel would be more adapted to the road than alternating footsteps, so we had the roller, the cart, the wheelbarrow, and at last the bicycle
was perfected.  In the bicycle man still used the alternating swing of the legs, but he propelled himself nearly seven times as fast, so that one travelled 323 miles in 16 hours and 45 minutes, at the rate of 19.8 miles an hour.

But why should a man use his own efforts ?  He had already used steam to propel locomotives on their more minutely standardized road, so he finally attached an explosive reciprocating engine to his road vehicle, an engine capable of making 1,200 strokes a minute for each of four, eight, fourteen, cylinders, as compared to the 140 strokes of each of two legs ; an engine capable of kicking 100 pounds per square inch for as many inches as the piston surface has area, as against the man's total power of push of less than 200 pounds. So that in his cushioned seat, with mere pressure of hand or foot, Gabriel, in the race from Paris to Madrid, made Bordeaux in 5 hours 13 minutes, or at the rate of 62.5 miles an hour.


The principles under which the methods and practices of efficiency are grouped have been
compared to the skeleton framework of a dome. The ribs of the dome are the principles, but
the first layer can be started with one part of each rib in place, and with filling of various de-
vices to complete the circle. As layers are added the ribs rise until they come closer together and
at last coalesce. Some ribs may be carried to the top, others may stop part way up, their
burden carried by others. In this series of essays each of the earlier ribs has been separately carried to the top, so that now there is less space for the later principles, much of their duty having been transferred to the principles already in place. To maintain reliable, immediate and adequate records we must have standardized conditions; to put in schedules we must have standardized conditions; so the standardizing of conditions should precede schedules. But unless we have already adopted
ideal schedules, how do we know what conditions, and the extent to which they must be standardized? Also, unless we have ideals as to standards, how can we create a high schedule?

It is perhaps because schedules (plans) and conditions (you can say organization of resources) react so on each other that progress is so disappointingly slow. We make a mean little schedule and meanly standardize conditions to suit.

Records are again broken by effort, far less at its maximum than on the old schedule, but
nevertheless discountenanced by the conservatives, until conditions are again restandardized
and effort is still further diminished. Who has the harder time, the runner who precedes the
cavalcade of an Oriental magnate, or the engineer of our fastest trains ? Who puts forth the
greater effort, the peon who twelve hours a day carries load after load of ore in sacks on his
back up a notched pole out of a deep Mexican mine, or the fireman who for two hours and a
half between New York and Albany, calling it a day's work, shovels coal for the fastest train ?
In the locomotive runs across Arizona where oil burners are used, even the fireman's work,
usually so hard, has been converted into watching the water glass, watching the smoke, and
with his fingers turning on and off water and oil supply.

The grub acquiesces in the obvious ; and until the last century, all but very few men acqui-
esced in the obvious. By force of ancestral habit this acquiescence is still the curse of most
of us. Our ideals, our schedules, have been and are too low instead of too high. The 18-hour
trains between the two largest American cities are on the highest regular long-distance sched-
ules thus far attained; but on an open speed-way not comparable to the steel track in smoothness, an automobile with its little engine, and one man guiding, ran faster and longer, so that in comparison 18 hours seems slow; and, quite surely somewhere, some time — perhaps in China or Africa — Brennan's gyroscope car on a monorail, indifferent to both grades and curves, shortening distances one-fifth, will do in 8 hours what now takes 18.

In planning for standardized conditions, it is difficult not to skip the present and plan for the
future; but even in the greatest American plants, the conditions imposed by an ignorant
and inefficient past are accepted, schedules are toned down, and painful effort crowds out in-
telligent control. In one large plant where the heaviest and slowest piece took only 40 days for
completion, the managers acquiesced for many years in a 9-month schedule, and after much
special work felt pride instead of humiliation in a 6-month schedule. A 15-day schedule for
general repairs to a locomotive is considered fast time and the average is more nearly 30,
but if the time for each item is separately entered in a summary, it is hard to discover why
3 days would not be enough.

The battleship "Kansas" of the American Navy under an eminent efficiency commander
went into dry-dock, water was pumped out of the dock, hull cleaned, scraped, painted, rudder
post repacked, and the vessel floated again in less than 24 hours. For a steamer immediate
repairs are otherwise important than for an isolated locomotive. The railroads, on the other
hand, show marvelous speed, generally of the main-strength order, in clearing away a wreck
or an earth slide or opening a snow blockade.

Ideals of standardized conditions are not Utopian, but are immediately and intensely
practical, but ideals must precede selective action.

The artist must have aesthetic ideals, the musicians, musical ideals ; but the man who would
bring about standardized conditions, either in himself or in his surroundings, must have con-
ceptions of time, of effort, of cost; he must instinctively recognize that for each operation
there is one combination of these three that is best for the ideal result.The ideal result
may be the destruction of an enemy's battleship, twelve million dollars sunk in five min-
utes, by guns loaded, accurately aimed, and fired so as to hit, at the rate of two salvos a minute.
Time minimum at whatever cost and effort !

In our individual lives, in our shops, in our nation, what are we trying to accomplish ? Are
we taking too much time, is it costing too much, are we squandering our strength? Are we
standardizing conditions so that time will not be wasted, so that money will not be thrown away,
so that effort will not be in vain?


THE TENTH PRINCIPLE: STANDARDIZED OPERATIONS

Commentary by KVSSNRao

Planning pays; the application of all the principles of efficiency pays; but standardized operation is the principle that most appeals to the individuality of the man, of the worker. Ideals are passive, common-sense is passive, planning in all its phases is passive, but standardized operation becomes an individual joy with its wealth of active manifestation.

 Nature has ultimate ideals, but nature's creatures are not habitually idealists, reverent, kindly, clean, chaste, or honest. Ideals are so obscure that most of us do not know what ideals we hold.

We begin indeed with ideals ; we expect end results; we leap over the intervening stations
of the preceding nine principles, much as if we expected a train to run from New York to San
Francisco with one helping of coal, water, lubrication, with one train crew. The rope is
made of many minor strands ; these are twisted from the numerous threads, and these in turn
have been spun from broken and carded fibres. The sheep's fleece is a unit, a matted mass that
adheres and forms a whole, not because it is woven like a blanket, but because of its inter-
woven confusion and tangle. There is no popular English word for a single thread of wool.
Pull one lock and the whole fleece comes, not because of orderly connection, but because of
disorderly tangle.


Once a day should the 40,000 operations of the shop be straightened out in accordance
with a general plan. Ladies take care of their 40,000 hairs every day with a comb with a general plan.

A comprehensive shop plan, graphically expressed, looks like a flattened tree. Each leaf,
the separate operations, must be in order in its appointed place; each twig, with its own
definite length, must reach in sequence into the main branches, these in turn being distributed
at determined intervals along the main stem and trunk.

The trunk grows upwards and outwards, from the force implanted in the seed, the
original ideal of the tree, but there is a reverse flow of imprisoned sunlight and captured car-
bon from the leaves back into the roots. The separate operations in a shop must flow into
the final output ; but from the expected output backward, there must be a plan that reaches
back to each detail of every operation.

It is one thing to build a battleship taking up details as they occur — the haphazard method; it is another thing to make the plan first, place all the details where they belong in time,
space, relation and perfection, and have them drop into place with the accuracy of a watch
movement — the difference, in fact, between the running of sand through an unstandardized
aperture, and the precision of the chronometer. Good results are not achieved by chance.

I have before me one volume of the standard-practice instructions covering the manufactur-
ing of the gasoline automobile truck car. It contains 278 isometric designs or illustrations,
314 pages of printed matter, and spaces for the times and rates of 1,231 distinct operations.
Each one of these operations was preceded by many designs until one was accepted as ap-
proximately good. The design was split up into its component parts, investigation made
as to material of each piece, how strong it should be, what heat treatment should be given,
on what machines it should be shaped, in what sequence, by which worker. As to each piece
and operation many time studies are made, and finally from the mass of accurately ascertained
or available information, a carefully pre-studied work-instruction card is made out. All these
items of planning must precede the time and cost ratings. Are you appalled at the mass of
detail that precedes the making of a book? If we have but 100 copies to print it is cheaper,
quicker, and better than manuscript duplication; if we have 3 copies to make it is better
to choose the typewriter and provide carbon manifolds than to write it out by hand. If we
want only 300 screws and it takes 3 hours to set up the automatic machine and only 3 min-
utes to run out the screws, it is better to use the automatic. A modern activity, whether the
operation of an industrial shop, or a railroad, or of the turrets and guns of a battleship, is
part of a gigantic, automatic machine; and it pays to plan in advance, not to trust to the hap-
hazard.

Probably the most marvelous and valuable example of standardized operations anywhere
in the world is on our American fleets in battle practice.  A Dreadnaught makes all the navies of
the world without Dreadnaughts obsolete, because such a battleship with its ten 12-inch
guns, can fire a broadside from all of them at once while steaming at 21 knots. One modern Arkansas or Wyoming, with twelve 12-inch guns, firing four times as fast and hitting four times as often,
will, for the time being at least, be sixteen times as effective. These big guns are loaded,
aimed, and fired twice in a minute. The practice drill is only half this time, and this prac-
tice drill is of two kinds. There is the physical act of loading the heavy gun, there is the more
important act of pointing it. Two opposing ships are 10,000 yards apart (about 6 miles)
steaming at 18 knots in diverging directions.

Thus gradually, from all sides — from the watch and sewing-machine and typewriter factory, from the race-track, from the fire-fighters, from the manipulation of the big 12-inch guns, from schedules, despatching, standardized conditions and standardized operation in some shops — the methods of efficiency are spreading.

Planning pays; the application of all the principles of efficiency pays; but standardized operation is the principle that most appeals to the individuality of the man, of the worker. Ideals are passive, common-sense is passive, planning in all its phases is passive, but standardized operation becomes an individual joy with its wealth of active manifestation.

Let none hesitate because we cannot standardize each new operation. We cannot standardize every errand boy's every trip ; we cannot standardize every naval battle; but we can so
inspire both errand boy and admiral that each will always do his best, we can give them train-
ing, knowledge, help, and incentive; and if we do this for them and for all other workers,
even though we cannot drill and redrill as to the performance of the occasional operation,
we can be absolutely sure that no savable time will be wasted nor effort lost in performing it.


THE ELEVENTH PRINCIPLE: WRITTEN STANDARD-PRACTICE INSTRUCTIONS







Pumpelly tells a story of a Japanese student of metallurgy, who about 1870 possessed an
English work on blast furnaces, an English-Dutch dictionary, and a Dutch-Japanese dic-
tionary, and with these as guides he constructed and operated a fairly successful blast fur-
nace for smelting iron ore. This shows what can be done by Standard Permanent Written
Instructions.

We have no accurate description of the engines of destruction invented by Archi-
medes for the defense of Syracuse against the Romans. They must have been interesting
since they lifted whole ships and dropped them endwise into the sea or onto the rocks.

Maps and charts  are useful. A stranger on an unknown coast, in an unknown land, an unknown city,
knows more about it if he has a good chart or map than the native.


Roaming and navigating savages who really need maps are very skilful in drawing them.
Sir Edward Parry discovered Hecla Strait from a map drawn off-hand for him by an
Eskimo woman ;






American law is in most States the out-growth of English common law, and in our
Spanish and French States, of Roman law. The common law in England is the outcome of
custom finally passed on by the courts or defined by acts of Parliament. In many of our
State codes we have attempted to reduce the principles to statutes governing particular
cases. This is often helpful and often not.

Lord Wolseley credits Napoleon with the greatest intellect the human race has ever pro-
duced* Bonaparte, First Consul, personally worked over the wording of the Civil Code, He
wanted its provisions so clear that even the most ignorant peasant could understand. As
French is an admirably definite and clear language, as the French have a passion for logic,
as the greatest legal minds of France aided and were aided by Bonaparte in evolving this
code, it furnishes an admirable example of Permanent Written Standard-Practice Instruc-
tions. It was, moreover, only one of seven great organizing acts which he made into spe-
cific standard-practice instructions, these instructions having persisted almost unchanged
to the present time.

The standardizing operations, the ratchet action, is of very great importance.

An American weakness is to be discouraged by difficulties and to back-water instead of
overcoming troubles and going forward. All the world knows that compound steam-engines
use less coal and water than simple engines. The compound principle was successfully ap-
plied in France and Germany to locomotives. The steam pressures were naturally much
higher. American railroads rushed into compounds with inadequate preparation, knowl-
edge, or designs. Difficulties of all kinds developed, due partly to the high pressures, partly
to the added dependent and increasingly inefficient sequences. A case dwells in memory in
which it took 80 hours to renew an intermediate packing. Compounds as tried proved ex-
pensive and troublesome both to operate and to repair. Instead of being perfected as in France
and in Germany, in order to gain the advantages of the principle, they have been aban-
doned by American roads almost without exception. Temporary expediency governs — not
ideals.

The marvelous results due to standardization of gunnery practice in the American fleet have
already been referred to. These results were achieved by the ratchet process, by holding
onto every gain and by never allowing any slip back, these results being secured by a volumin-
ous book of instructions and suggestions. In this book best ways as ascertained to date are
specifically prescribed, by written, permanent standard-practice instructions, but these in-
structions are subject to a bombardment of suggestions and all these suggestions, however
foolish, are tabulated, printed, and confidentially published.



It is not only in its charts, in its naval gunnery, in its agricultural department, that the
United States Government has established permanent written instructions.

The specifications of the purchasing department of the navy are at once the most com-
plete, the most modern, and the best I have ever seen. That the plans were evolved and per-
fected by graduates of Annapolis speaks highly for the practical value of the general education
there imparted.

There are many hundred different specifications covering everything that the navy regu-
larly uses; the specifications for eggs covered several pages; the specifications for potatoes
are as follows:





When advances are not only definitely recorded but when the best practice is carefully
and systematically reduced to writing, progress made is held and built upon in an industrial
plant or any other undertaking. Every shop, every institution, has its great body of common-
law practices that have gradually crept in, common law variously understood and variously in-
terpreted by those most affected. Often the traditions of the past are treasured up in the
brain of some old employee, who transmits them, much as the memories of old bards were
formerly the only available history.


Each one of the ten preceding efficiency principles can and should be reduced to written,
permanent standard-practice instructions so that each may understand the whole and also
his own relation to it. In some plants the only rules obtainable or visible are certain subsi-
diary conduct rules, offensively expressed and ending with the threat of discharge.

 The ideals of a plan or undertaking can be expressed in a few words. One of the
mottoes of American naval practice is: "Efficiency and Economy." This is amplified into
special rules governing all kinds of activities. I have before me the following :



Discipline and the fair deal do not require voluminous initial instructions, although both
discipline and the fair deal should curtail automatism.

Standard-Practice Instructions are the permanent laws and practices of a plant. What
these laws, practices and customs are should first be carefully ascertained and be reduced
to writing by a competent and high-class investigator, and it will be all the better if he has
had legal training. It will take considerable work to find out what the practices are, as dif-
ferent officials from president down may have different opinions and theories and also the
practice may vary from month to month. It is quite usual to find the actual practice quite
different from what the general manager or president supposes it is. Men do what they can,
not what they have been told. The purpose is to find out what current practice is, not what it
is supposed to be.

The next step in the work is to harmonize the discrepancies, to cut out what is useless or
harmful, and to supplement the resultant body by needed additions.

When this constructive work has been per-formed there will be a preliminary code. In
actual practice it will be found that it is still defective, incomplete or contradictory. It is. to
be made workable not by throwing it to the winds and reverting to the previous state of
semi-anarchy every time a difficulty arrives, but by carefully considered amendments. The
code being made up of a number of different statements and enactments can be amended by
sending out notice of withdrawal of any enactment, at the same time issuing the amended
enactment, the substitution being effected as in the illustration that follows : —


 It is pathetically and ignorantly supposed that standard instructions destroy a
man's initiative and make of him an automaton. Compared to the drop of the sparrow through
the air, or the scamper of the squirrel down a tree, a staircase does indeed limit the initiative
of a man going from the roof to the ground. He who prefers it may let himself down from
the window by a rope. I prefer the limitation, common-sense, safety and ease of the staircase.
A ferryboat limits the initiative of a commuter entering the city and a tunnel even more limits
this initiative. Those who prefer it are welcome to the right to swim the Hudson or to use
a small skiff of their own. The flanges of the locomotive and car wheels confine the train to
the steel rails, and this is a great curtailment of initiative compared to the free path of the
buffalo or of the bull-whacker across the plains.

The fact is that the limitation of initiative professedly so dreaded is wholly imaginary. To
follow the better and easier way is to lessen effort for the same result, to leave more oppor-
tunity for higher initiative to invent or evolve still better ways.

The aviator flying 72 miles an hour is the greatest initiator in the world to-day, yet to a
degree never before experienced he is limited by his engine, and nothing would be so welcome
as standard-practice instructions that would help keep his engine going, as automatic stabil-
ity for his plane, gladly relinquishing his own initiative in favor of tested standard practice
in both these respects.

Any undertaking run without written standard-practice instructions is incapable of progressive advance, but by means of written instructions advances far more rapid than those attained by insects and birds are possible. Wireless telegraphy is but suggested, experi- ments described, and inside of ten years our coast is fringed with the masts of rival systems and messages are transmitted across the ocean !

The first flights of aeroplanes were but eight  years ago, and to-day they are carrying twelve
passengers or flying 72 miles an hour. Five years of planned, attained, and recorded prog- ress will accomplish more than twenty years of rule of thumb tucked away under the hats of shifting employees.


Commentary by KVSSNRao

Any undertaking run without written standard-practice instructions is incapable of progressive advance, but by means of written instructions advances far more rapid than those attained by insects and birds are possible.

With the above statement, Emerson brings into picture knowledge management, a popular theme today.

THE TWELFTH PRINCIPLE : EFFICIENCY REWARD



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/'









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 remote and hypothetical reward for efficiency to
those who bow the knee in service, to the deluded 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 Paradise 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 success to members, by unions fixed wages for in-
adequate work to those who join them.




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 custom, current practice, in spite of combined
(although opposed) efforts of unions and employers' 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 purchases, and even yet most coal is purchased
without reference to analysis.



Efficiency rewards hold good for nearly
every worker in life except the day worker.


The hunter who starts early, who has practiced much, who works hard, brings home the
game. The farmer who selects his seed carefully, 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 toilers 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 irresponsible 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 flourishing 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. Coming to the subject from a different point of
view, I agree with them in their attitude toward piece rates, which are intended to stimu-
late strenuousness, often harmful strenuousness, 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.




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.



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 efficiency 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 current 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 (by Jews in Egypt).


A profit-sharing plan is not an efficiency reward. 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.





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 negatived 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 dependent 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 destroy 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 important 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 dividing 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 founations 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 prin-
ciple.

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 efficiency^-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 operator in the discouraging jobs, so while a stand-
ard bonus of 20 per cent was paid for attaining 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 determined 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 quar-
ter 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 preference 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 application 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, beginning 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 standard 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 individual.

(7) The determination for each worker of an average efficiency for all jobs over a long period.

(8) A continuous correction of time standards 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 nothing 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 inevitably 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 option 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 operation 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
 foot rule or the multiplication table is of  practical value, but for importance they are not
to be compared to the broad principle of efficiency 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 followed him.

Highest efficiency is easily stimulated, although 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 stimulated.

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 reward 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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