The Psychology of Management Part 27

(c) personal; that is, individual, a reward for that particular man for that particular work.

(d) fixed, unchanged. He must get exactly what it has been determined beforehand that he shall get.

(e) a.s.sured; that is to say, there must be provision made for this reward before the man begins to work, so that he may be positive that he will get the reward if he does the work. The record of the organization must be that rewards have always been paid in the past, therefore probably will be in the future.

(f) the reward must be prompt; that is to say, as soon as the work has been done, the man must get the reward.

This promptness applies to the announcement of the reward; that is to say, the man must know at once that he has gotten the reward, and also to the receipt of the reward by the man.

POSITIVE REWARD AROUSES INTEREST AND HOLDS ATTENTION.--The benefit of the positive reward is that it arouses and holds attention. A fine example of a reward that is not positive is that type of "welfare work" which consists of simply providing the worker with such surroundings as will enable him to work decently and without actual discomfort. The worker, naturally, feels that such surroundings are his right, and in no sense a reward and incentive to added activity. The reward must actually offer to the worker something which he has a right to expect only if he earns it; something which will be a positive addition to his life.

PREDETERMINED REWARD CONCENTRATES ATTENTION.--The predetermined reward allows both manager and man to concentrate their minds upon the work. There is no shifting of the attention, while the worker wonders what the reward that he is to receive will be. It is also a strong factor for industrial peace, and for all the extra activities which will come when industrial conditions are peaceful.

PERSONAL REWARD CONSERVES INDIVIDUALITY.--The personal reward is a strong incentive toward initiative, towards the desire to make the most of one's individuality. It is an aid toward the feeling of personal recognition. From this personal reward come all the benefits which have been considered under individuality.[1]

FIXED REWARD ELIMINATES WASTE TIME.--The fact that the reward is fixed is a great eliminator of waste to the man and to the manager both. Not only does the man concentrate better under the fixed reward, but the reward, being fixed, need not be determined anew, over and over again; that is to say, every time that that kind of work is done, simultaneous with the arising of the work comes the reward that is to be paid for it. All the time that would be given to determining the reward, satisfying the men and arguing the case, is saved and utilized.

a.s.sURED REWARD AIDS CONCENTRATION.--The a.s.sured reward leads to concentration,--even perhaps more so than the fact that the reward is determined. In case the man was not sure that he would get the reward in the end, he would naturally spend a great deal of time wondering whether he would or not. Moreover, no immediate good fortune counts for much as an incentive if there is a prospect of bad luck following in the immediate future.

NEED FOR PROMPTNESS VARIES.--The need for promptness of the reward varies. If the reward is to be given to a man of an elementary type of mind, the reward must be immediately announced and must be actually given very promptly, as it is impossible for anyone of such a type of intellect to look forward very far.[2] A man of a high type of intellectual development is able to wait a longer time for his reward, and the element of promptness, while acting somewhat as an incentive, is not so necessary.

Under Scientific Management, with the ordinary type of worker on manual work, it has been found most satisfactory to pay the reward every day, or at the end of the week, and to announce the score of output as often as every hour. This not only satisfies the longing of the normal mind to know exactly where it stands, but also lends a fresh impetus to repeat the high record. There is also, through the prompt reward, the elimination of time wasted in wondering what the result will be, and in allaying suspense. Suspense is not a stimulus to great activity, as anyone who has waited for the result of a doubtful examination can testify, it being almost impossible to concentrate the mind on any other work until one knows whether the work which has been done has been completed satisfactorily or not.

PROMPTNESS ALWAYS AN ADDED INCENTIVE.--There are many kinds of life work and modes of living so terrible as to make one shudder at the thoughts of the certain sickness, death, or disaster that are almost absolutely sure to follow such a vocation. Men continue to work for those wages that lead positively to certain death, because of the immediateness of the sufficient wages, or reward. This takes their attention from their ultimate end. Much more money would be required if payment were postponed, say, five years after the act, to obtain the services of the air-man, or the worker subject to the poisoning of some branches of the lead and mercury industries.

If the prompt reward is incentive enough to make men forget danger and threatened death, how much more efficient is it in increasing output where there is no such danger.

IMMEDIATE REWARD NOT ALWAYS PREFERABLE.--There are cases where the prompt reward is not to be preferred, because the delayed reward will be greater, or will be available to more people Such is the case with the reward that comes from unrestricted output.

For example,--the immediacy of the temporarily increased reward caused by restricting output has often led the combinations of working men to such restriction, with an ultimate loss of reward to worker, to employer, and to the consumer.

REWARDS POSSIBLE OF ATTAINMENT BY ALL.--Every man working under Scientific Management has a chance to win a reward. This means not only that the man has a "square deal," for the man may have a square deal under Traditional Management in that he may have a fair chance to try for all existing rewards. There is more than this under Scientific Management. By the very nature of the plan itself, the rewards are possible of achievement by all; any one man, by winning, in no way diminishes the chances of the others.

REWARDS OF MANAGEMENT RESEMBLE REWARDS OF WORKERS.--So far the emphasis, in the discussion of reward, has been on the reward as given to the worker, and his feeling toward it. The reward to the management is just as sure. It lies in the increased output and therefore the possibility of lower costs and of greater financial gain. It is as positive; it is as predetermined, because before the reward to the men is fixed the management realizes what proportion that reward will bear to the entire undertaking, and exactly what profits can be obtained. It is a fundamental of Scientific Management that the management shall be able to prophesy the outputs ahead. It will certainly be as personal, if the management side is as thoroughly systematized as is the managed; it will be as fixed and as a.s.sured, and it certainly is as prompt, as the cost records can be arranged to come to the management every day, if that is desired.

RESULTS OF SUCH REWARDS.--There are three other advantages to management which might well be added here. First, that a reward such as this attracts the best men to the work; second, that the reward, and the stability of it, indicates the stability of the entire inst.i.tution, and thus raises its standing in the eyes of the community as well as in its own eyes; and third, that it leads the entire organization, both managed and managing, to look favorably at all standardization. The standardized reward is sure to be attractive to all members. As soon as it is realized that the reason that it is attractive is because it is _standardized_, the entire subject of standardization rises in the estimation of every one, and the introduction of standards can be carried on more rapidly, and with greater success.

REWARDS DIVIDED INTO PROMOTION AND PAY.--Rewards may be divided into two kinds; first, promotion and, second, pay. Under Scientific Management promotion is a.s.sured for every man and, as has been said, this promotion does not thereby hold back others from having the same sort of promotion. There is an ample place, under Scientific Management, for every man to advance.[3] Not only is the promotion sure, thus giving the man absolute a.s.surance that he will advance as his work is satisfactory, but it is also gradual.[4] The promotion must be by degrees, otherwise the workers may get discouraged, from finding their promotion has come faster than has their ability to achieve, and the lack of attention, due to being discouraged, may be contagious. It is, therefore, of vital importance that the worker be properly selected, in order that, in his advancement and promotion, he shall be able to achieve his task after having been put at the new work. He must be advanced and promoted in a definite line of gradual development, in accordance with a fully conceived plan. This should be worked out and set down in writing as a definite plan, similar to the plan on the instruction card of one of his tasks.

PROMOTION MAY BE TO PLACES WITHIN OR WITHOUT THE BUSINESS.--In many lines of business, the business itself offers ample opportunity for promoting all men who can "make good" as rapidly as they can prepare themselves for positions over others, and for advancement; but under Scientific Management provision is made even in case the business does not offer such opportunities.[5] This is done by the management finding places outside their own organization for the men who are so trained that they can be advanced.

SUCH PROMOTION ATTRACTS WORKERS.--While at first glance it might seem a most unfortunate thing for the management to have to let its men go, and while, as Dr. Taylor says, it is unfortunate for a business to get the reputation of being nothing but a training school, on the other hand, it has a very salutary effect upon the men to know that their employers are so disinterestedly interested in them that they will provide for their future, even at the risk of the individual business at which they have started having to lose their services. This will not only, as Dr. Taylor makes clear, stimulate many men in the establishment whose men go on to take the places of those who are promoted, but will also be a great inducement to other men to come into a place that they feel is unselfish and generous.

SUBDIVISIONS OF "PAY."--Under "Pay" we have included eight headings:

1. Wages 2. Bonus 3. Shorter hours 4. Prizes other than money 5. Extra knowledge 6. Method of attack 7. Good opinion of others 8. Professional standing.

RELATION BETWEEN WAGES AND BONUS.--Wages and bonus are closely related. By wages we mean a fixed sum, or minimum hourly rate, that the man gets in any case for his time, and by bonus we mean additional money that he receives for achievement of method, quant.i.ty or quality. Both might very properly be included under wages, or under money received for the work, or opportunities for receiving money for work, as the case might be. In the discussion of the different ways of paying wages under Scientific Management, there will be no attempt to discuss the economic value of the various means; the different methods will simply be stated, and the psychological significance will be, as far as possible, given.

Before discussing the various kinds of wages advised by the experts in Scientific Management, it is well to pause a moment to name the various sorts of methods of compensation recognized by authorities. David F. Schloss in his "Method of Industrial Remuneration" divides all possible ways of gaining remuneration into three--

1. the different kinds of wages 1. time wage 2. piece wage 3. task wage 4. progressive wage 5. collective piece wage 6. collective task wage 7. collective progressive wage 8. contract work 9. cooperative work

with

2. profit sharing, and 3. industrial cooperation. These are defined and discussed at length in his book in a lucid and simple manner.

It is only necessary to quote him here as to the relationship between these different forms, where he says, page 11,--"The two leading forms of industrial remuneration under the Wages System are time wages, and piece wages. Intermediate between these princ.i.p.al forms, stands that known as task wage, while supplemental to these two named methods, we find those various systems which will here be designated by the name of Progressive Wages."[6]

DAY WORK NEVER SCIENTIFIC.--The simplest of all systems, says Dr. Taylor in "A Piece Rate System," paragraph 10, in discussing the various forms of compensation "is the Day Work plan, in which the employes are divided into certain cla.s.ses, and a standard rate of wages is paid to each cla.s.s of men," He adds--"The men are paid according to the position which they fill, and not according to their individual character, energy, skill and reliability," The psychological objection to day work is that it does not arouse interest or effort or hold attention, nor does it inspire to memorizing or to learning.

It will be apparent that there is no inducement whatever for the man to do more than just enough to retain his job, for he in no wise shares in the reward for an extra effort, which goes entirely to his employer. "Reward," in this case, is usually simply a living wage,--enough to inspire the man, if he needs the money enough to work to hold his position, but not enough to incite him to any extra effort.

It is true that, in actual practice, through the foreman or some man in authority, the workers on day work may be "speeded up" to a point where they will do a great deal of work; the foreman being inspired, of course, by a reward for the extra output, but, as Dr.

Taylor says, paragraph 17--"A Piece Rate System," this sort of speeding up is absolutely lacking in self-sustaining power. The moment that this rewarded foreman is removed, the work will again fall down. Therefore, day wage has almost no place in ultimate, scientifically managed work.

PIECE WORK PROVIDES PAY IN PROPORTION TO WORK DONE.--Piece Work is the opposite of time work, in that under it the man is paid not for the time he spends at the work, but for the amount of work which he accomplishes. Under this system, as long as the man is paid a proper piece rate, and a rate high enough to keep him interested, he will have great inducements to work. He will have a chance to develop individuality, a chance for compet.i.tion, a chance for personal recognition. His love of reasonable racing will be cultivated. His love of play may be cultivated.

All of these incentives arise because the man feels that his sense of justice is being considered; that if the task is properly laid out, and the price per piece is properly determined, he is given a "square deal" in being allowed to accomplish as great an amount of work as he can, with the a.s.surance that his reward will be promptly coming to him.

DANGER OF RATE BEING CUT.--Piece work becomes objectionable only when the rate is cut. The moment the rate is cut the first time, the man begins to wonder whether it is going to be cut again, and his attention is distracted from the work by his debating this question constantly. At best, his attention wanders from one subject to the other, and back again. It cannot be concentrated on his work. After the rate has been cut once or twice,--and it is sure to be cut unless it has been set from scientifically derived elementary time units,--the man loses his entire confidence in the stability of the rate, and, naturally, when he loses this confidence, his work is done more slowly, due to lack of further enthusiasm. On the contrary, as long as it is to his advantage to do the work and he is sure that his reward will be prompt, and that he will always get the price that has been determined as right by him and by the employers for his work, he can do this work easily in the time set. As soon as he feels that he will not get it, he will naturally begin to do less, as it will be not only to his personal advantage to do as little as possible, but also very much to the advantage of his fellows, for whom the rate will also be cut.

TASK WAGE CONTAINS NO INCENTIVE TO ADDITIONAL WORK.--What Schloss calls the Task Wage would, as he well says, be the intermediate between time or day wage and piece wage; that is, it would be the a.s.signing of a definite amount of work to be done in definite time, and to be paid for by a definite sum. If the task were set scientifically, and the time scientifically determined, as it must naturally be for a scientific task, and the wage adequate for that work, there would seem to be nothing about this form of remuneration which could be a cause of dissatisfaction to the worker. Naturally, however, there would be absolutely no chance for him to desire to go any faster than the time set, or to accomplish any more work in the time set than that which he was obliged to, in that he could not possibly get anything for the extra work done.

WORTH OF PREVIOUS METHODS IN THE HANDLING.--It will be noted in the discussion of the three types of compensation so far discussed, that there is nothing in them that renders them unscientific. Any one of the three may be used, and doubtless all are used, on works which are attempting to operate under Scientific Management. Whether they really are scientific methods of compensation or not, is determined by the way that they are handled. Certainly, however, all that any of these three can expect to do is to convince the man that he is being treated justly; that is to say, if he knows what sort of a contract he is entering into, the contract is perfectly fair, provided that the management keeps its part of the contract, pays the agreed-upon wage.

In proceeding, instead of following the order of Schloss we will follow the order, at least for a time, of Dr. Taylor In "A Piece Rate System"; this for two reasons:

First, for the reason that the "Piece Rate System" is later than Schloss' book, Schloss being 1891, and the "Piece Rate" being 1895; in the second place that we are following the Scientific Management side in distinction to the general economic side, laid down by Schloss. There is, however, nothing in our plan of discussion here to prevent one's following fairly closely in the Schloss also.

THE GAIN-SHARING PLAN.--We take up, then, the Gain-sharing Plan which was invented by Mr. Henry R. Towne and used by him with success in the Yale & Towne works. This is described in a paper read before the American Society of Mechanical Engineers, in professional paper No. 341, in 1888 and also in the Premium Plan, Mr. Halsey's modification of it, described by him in a paper ent.i.tled the "Premium Plan of Paying for Labor," American Society of Mechanical Engineers, 1891, Paper 449. In this, in describing the Profit-sharing Plan, Mr. Halsey says--"Under it, in addition to regular wages, the employes were offered a certain percentage of the final profits of the business. It thus divides the savings due to increased production between employer and employe."

OBJECTIONS TO THIS PLAN.--We note here the objection to this plan: First,--"The workmen are given a share in what they do not earn; second, the workmen share regardless of individual deserts; third, the promised rewards are remote; fourth, the plan makes no provision for bad years; fifth, the workmen have no means of knowing if the agreement is carried out." Without discussing any farther whether these are worded exactly as all who have tried the plan might have found them, we may take these on Mr. Halsey's authority and discuss the psychology of them. If the workmen are given a share in what they do not earn, they have absolutely no feeling that they are being treated justly. This extra reward which is given to them, if in the nature of a present, might much better be a present out and out. If it has no scientific relation to what they have gotten, if the workmen share regardless of individual deserts, this, as Dr.

Taylor says, paragraph 27 in the "Piece Rate System," is the most serious defect of all, in that it does not allow for recognition of the personal merits of each workman. If the rewards are remote, the interest is diminished. If the plan makes no provision for bad years, it cannot be self-perpetuating. If the workmen have no means of knowing if the agreement will be carried out or not, they will be constantly wondering whether it is being carried out or not, and their attention will wander.

THE PREMIUM PLAN.--The Premium Plan is thus described by Mr.

Halsey--"The time required to do a given piece of work is determined from previous experience, and the workman, in addition to his usual daily wages, is offered a premium for every hour by which he reduces that time on future work, the amount of the premium being less than his rate of wages. Making the hourly premium less than the hourly wages is the foundation stone upon which rest all the merits of the system."

DR. TAYLOR'S DESCRIPTION OF THIS PLAN.--Dr. Taylor comments upon this plan as follows:

"The Towne-Halsey plan consists in recording the quickest time in which a job has been done, and fixing this as a standard. If the workman succeeds in doing the job in a shorter time, he is still paid his same wages per hour for the time he works on the job, and, in addition, is given a premium for having worked faster, consisting of from one-quarter to one-half the difference between the wages earned and the wages originally paid when the job was done in standard time," Dr. Taylor's discussion of this plan will be found in "Shop Management," paragraphs 79 to 91.

Psychologically, the defect of this system undoubtedly is that it does not rest upon accurate scientific time study, therefore neither management nor men can predict accurately what is going to happen. Not being able to predict, they are unable to devote their entire attention to the work in hand, and the result cannot be as satisfactory as under an a.s.signed task, based upon time study. The discussion of this is so thorough in Dr. Taylor's work, and in Mr.

Halsey's work, that it is unnecessary to introduce more here.

PROFIT-SHARING.--Before turning to the methods of compensation which are based upon the task, it might be well to introduce here mention of "Cooperation," or "Profit-sharing," which, in its extreme form, usually means the sharing of the profits from the business as a whole, among the men who do the work. This is further discussed by Schloss, and also by Dr. Taylor in paragraphs 32 to 35, in "A Piece Rate System"; also in "Shop Management," quoting from the "Piece Rate System," paragraphs 73 to 77.

OBJECTIONS TO PROFIT-SHARING.--The objections, Dr. Taylor says, to cooperation are, first in the fact that no form of cooperation has been devised in which each individual is allowed free scope for his personal ambition; second, in the remoteness of the reward; third, in the unequitable division of the profits. If each individual is not allowed free scope, one sees at once that the entire advantage of individuality, and of personal recognition, is omitted. If the reward is remote, we recognize that its power diminishes very rapidly; and if there cannot be equitable division of the profits, not only will the men ultimately not be satisfied, but they will, after a short time, not even be satisfied while they are working, because their minds will constantly be distracted by the fact that the division will probably not be equitable, and also by the fact that they will be trying to plan ways in which they can get their proper share. Thus, not only in the ultimate outcome, but also during the entire process, the work will slow up necessarily, because the men can have no a.s.surance either that the work itself, or the output, have been scientifically determined.

SCIENTIFIC MANAGEMENT EMBODIES VALUABLE ELEMENTS OF PROFIT-SHARING.--Scientific Management embodies the valuable elements of profit-sharing, namely, the idea of cooperation, and the idea that the workers should share in the profit.

That the latter of these two is properly emphasized by Scientific Management is not always understood by the workers. When a worker is enabled to make three or four times as much output in a day as he has been accustomed to, he may think that he is not getting his full share of the "spoils" of increased efficiency, unless he gets a proportionately increased rate of pay. It should, therefore, be early made clear to him that the saving has been caused by the actions of the management, quite as much as by the increased efforts for productivity of the men. Furthermore, a part of the savings must go to pay for the extra cost of maintaining the standard conditions that make such output possible. The necessary planners and teachers usually are sufficient as object-lessons to convince the workers of the necessity of not giving all the extra savings to the workers.