Based on Frederick Taylor's Piece Rate System - 1895 - Part 3
Frederick Taylor established the first department in factory doing industrial engineering work of process improvement for increase in productivity and cost reduction. The name he gave it to the department is "Elementary Rate Fixing." Its function is to breakdown the process into elements and find the best way of doing each element by observing number of persons doing the same element and finding the best way through time study. The next step is to find science behind the way of doing the elements. Then from the best ways of doing each element, a new process is developed and the operators are trained in it. The final step of rate fixing refers to specifying the time required to do each element and the piece rate for it. The Piece rate of a component is fixed by first developing the detail at element level. The operators are provided the instruction sheet at the element level so that they know the time specified for each element and make effort to do it in that time. Taylor stated that operators are motivated to do well when they know the goal clearly and receive feedback quickly. The elementary rate fixing department has the responsibility to develop productivity science, do productivity engineering and do productivity management.
Based on the statements of Taylor, we can say elementary rate fixing department was established in 1885 by Taylor at Midvale Steel.
35. When we recognize the real antagonism that exists between the interests of the men and their employers under all of the systems of piece-work* in common use, and when we remember the apparently irreconcilable conflict implied in the fundamental and perfectly legitimate aims of the two, namely, on the part of the men, —
And on the part of the employers, —
THE DESIRE TO RECEIVE THE LARGEST POSSIBLE RETURN FOR THE WAGES PAID ;
What wonder that most of us arrive at the conclusion that no system of piece-work can be devised which will enable the two to cooperate without antagonism, and to their mutual benefit?
36. Yet it is the opinion of the writer that the system which harmonizes the interests of the two and becomes the basis for harmonious cooperation lies must be based on the two following facts :
First . That the workmen in nearly every trade can and will materially increase their present output per day, providing they are assured of a permanent and larger return for their time than they have heretofore received.
Second. That the employers can well afford to pay higher wages per piece even permanently, providing each man and machine in the establishment turns out a proportionately larger amount of work (gives more productivity.
37. The truth of the latter statement arises from the well recognized fact that, in most lines of manufacture, the indirect expenses equal or exceed the wages paid directly to the workmen, and that these expenses remain approximately constant, whether the output of the establishment is great or small.
From this it follows that it is always cheaper to pay higher wages to the workmen when the output is proportionately increased : the diminution in the indirect portion of the cost per piece being greater than the increase in wages. Many manufacturers, in considering the cost of production, fail to realize the effect that the volume of output has on the cost. They lose sight of the fact that taxes, insurance, depreciation, rent, interest, salaries, office expenses, miscellaneous labor, sales expenses, and frequently the cost of power (which in the aggregate amount to as much as wages paid to workmen), remain about the same whether the output of the establishment is great or small.
38. In our endeavor to solve the piece-work problem by the application of the two fundamental facts above referred to, let us consider the obstacles in the path of harmonious cooperation, and suggest a method for their removal.
39. The most formidable obstacle is the lack of knowledge on the part of both the men and the management (but chiefly the latter) of the quickest time in which each piece of work can be done; or, briefly, the lack of accurate time-tables for the work of the place.
40. The remedy for this trouble lies in the establishment in every factory of a proper rate-fixing department; a department which shall have equal dignity and command equal respect with the engineering and managing departments, which shall be organized and conducted in an equally scientific and practical manner.
41. The rate-fixing, as at present conducted, even in our best managed establishments, is very similar to the mechanical engineering of fifty or sixty years ago. Mechanical engineering at that time consisted in imitating machines which were in more or less successful use, or in guessing at the dimensions and strength of the parts of a new machine ; and as the parts broke down or gave out, in replacing them with the stronger ones. Thus each new machine presented a problem almost independent of former designs, and one which could only be solved by months or years of practical experience and a series of break-downs.
Modern engineering, however, has become a study, not of individual machines, but of the resistance of materials, the fundamental principles of mechanics, and of the elements of design.
42. On the other hand, the ordinary rate-fixing (even the best of it), like the old-style engineering, is done by a foreman or superintendent who, with the aid of a clerk, looks over the record of the time in which a whole job was done as nearly like the new one as can be found, and then guesses at the time required to do the new job. No attempt is made to analyze and time each of the classes of work, or elements of which a job is composed ; although it is a far simpler task to resolve each job into its elements, to make a careful study of the quickest time in which each of the elementary operations can be done, and then to properly classify, tabulate, and index this information, and use it when required for rate-fixing, than it is to fix rates, with even an approximation to justice, under the common system of guessing.
43. In fact, it has never occurred to most superintendents that the work of their establishments consists of various combinations of elementary operations which can be timed in this way ; and a suggestion that this is a practical way of dealing with the piece-work problem usually meets with derision, or, at the best, with the answer that “ It might do for some simple business, but my work is entirely too complicated.”
44. This elementary system of fixing rates has been in successful operation for the past ten years, on work complicated in its nature and covering almost as wide a range of variety as any manufacturing that the writer knows of. In 1883, while foreman of the machine shop of the Midvale Steel Company of Philadelphia, it occurred to the writer that it was simpler to time each of the elements of the various kinds of work done in the place, and then find the quickest time in which each job could be done, by summing up the total times of its component parts, than it was to search through the records of former jobs and guess at the proper price. After practising this method of rate-fixing himself for about a year as well as circumstances would permit, it became evident that the system was a success. The writer then established the rate-fixing department, which has given out piece-work prices in the place ever since.
45. This department far more than paid for itself from the very start ; but it was several years before the full benefits of the system were felt, owing to the fact that the best methods of making and recording time observations of work done by the men, as well as of determining the maximum capacity of each of the machines in the place, and of making working-tables and time-tables, were not at first adopted.
Foot Note
1 The writer’s knowledge of the speed attained in the manufacture of textile goods is very limited. It is his opinion, however, that owing to the comparative uniformity of this class of work, and the
enormous number of machines and men engaged on similar operations, the maximum output per man and machine is more nearly realized in this class of manufactures than in any other. If this is the
case, the opportunity for improvement does not exist to the same extent here as in other trades. Some illustrations of the possible increase in the daily output of men and machines are given in paragraphs 78 to 82.
Subsequent events.
Taylor became a management consultant in 1893.
1895. He employed Sanford E. Thompson who developed slide rules for machine tool cutting parameters calculation and developed time study tools.
1897 - He introduced functional foremanship in Simonds Rolling Machine Company. Started formal planning department.
1898 - Consultancy assignment in Bethlehem Steel. Russell Davenport now in Bethlehem, former boss of Taylor at Midvale was instrumental in Taylor getting that consultancy assignment. Taylor started the assignment in April 1898.
1901 - Gantt's liberal approach in machine shop of Bethlehem. Task and Bonus system.
Source: Taylorism and the Workers at Bethlehem Steel, 1898-1901
Daniel Nelson
The Pennsylvania Magazine of History and Biography
Vol. 101, No. 4 (Oct., 1977), pp. 487-505 (19 pages)
https://www.jstor.org/stable/20091205
List of 29 Companies in which scientific Management was introduced uring 1901 to 1916
Table 1 in JOURNAL ARTICLE
Scientific Management, Systematic Management, and Labor, 1880-1915
Daniel Nelson
The Business History Review
Vol. 48, No. 4 (Winter, 1974), pp. 479-500 (24 pages)
https://www.jstor.org/stable/3113537
Engineering Elements Examined by Taylor apart from Task Elements.
Ud. 21.8.2022, 6.3.2022
Pub: 8.11.2021
