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THE TECHNICAL WORLD MAGAZINE
VOL. XV MARCH. 1911 NO. 1
RAISE WAGES AND CUT COSTS
'* IVE an American a few
m tons of dynamite and a
I mountain to bore through
% T in a month and he is
V^_^^ happy," said an efficiency engineer to me the other day. "Americans love to do big things in a great hurry. They despise small things. A structural shop orders the supplies from a rolling mill. The big beams are promptly shipped. The angles and smaller pieces do not come for weeks or months. The superintendent of the structural shop pleads for permission to begin work immediately on material not deliverable for three months. If permitted to do the work ahead of time he clamors for permission to ship it. He is always ahead on big work, always behind on small work, and this means a great waste of time and energy."
But we are coming to the day when the smaller things will be recognized as of as much importance in the problem of production as the larger, the day when the man beside the machine and his capacity for work and wage will be more closely considered. In fact, in certain centers where the big activities hold sway there is already a mighty and successful effort toward right planning, right execution and right reward for the toiler. In these places such marvels of economy are being wrought by bright
master minds as to stagger the imagination of the men of the old school of wasters whose motto was "Get there," and who recked not of the cost.
Yes, the science of business and industrial efficiency, scoffed at by the headlong egoists who thought they were doing big things in the best way, but often were only misdoing and wasting, has been tried out and may be definitely and demonstrably -declared to have won.
The science of efficiency! Here is a new, big, vital and tremendously important subject that is engaging the best minds in some of the great industrial plants of the country, and has been taken up by some of the railroads which are emulating the luminous example of the Santa Fe, a railroad company that has done wonders in conserving its own forces, saving millions of money and organizing its workmen on a system that is nothing short of altruistic.
Who conceived this principle of efficiency, the thing that is now so intensively engaging the master minds of industry? Well, of course the idea of economy in production has always been insisted upon by the heads of great plants, but time has shown that it has not always been intelligent and successful economy, and as for humane dealings with employees, they rarely have been considered in the scale. But think of
Copyright. 1911, by Technical World Company.
an economy both intelligent and successful and in which the idea of the fair deal is always uppermost; for without the fair deal there can be no economy and no efficiency. Let us give credit where credit is due. After a careful study of the genesis of this great movement I find that to Frederick W. Taylor, formerly chief engineer of the Midvale Steel Works, belongs the honor of introducing scientific efficiency in this country. Some of the men who are doing things in his line call him "the Father of Efficiency," and lie deserves the title.
Scientific labor management had its first successful demonstration at the Midvale Works in the latter eighties.
but it is only of recent years that it has received its great impetus. Taylor introduced a differential rate system for the employees by which those that could do a certain amount of work in a day received a certain amount for each piece, while those that were not capable of reaching the standard were given a smaller rate. Under the old piece work plan, a man that had been turning out five pieces a day received $2.50. Under the new system when they turn out ten they receive $3.50. Thus the total cost of a piece was reduced from $1.17 to 69 cents while the daily pay of the man was $1 more.
Then Taylor introduced into the same plant a method of dividing the work of tire-turning into a number of short operations, fixing a certain time and pay for each. This new system increased the output from the tire department fully thirty-three per cent.
So successful was Taylor at Midvale with his new ideas of industrial economy that other manufacturers employed him to improve conditions in their shops and factories. He w-orked quietly and nearly always made marked improvements. Meantime he devoted himself to the study of efficiency, both for the benefit of employer and employee. Other men, followers of his, have gone farther in this line and made more famous successes, but such distinguished students of efficiency as Louis D. Brandeis. Frank B. Gilbreth. Harrington Emerson, and H. L. Gantt acknowledge themselves as disciples of Frederick W. Taylor.
It has taken a good many years to get the idea of scientific efficiency into the minds of our captains of industry. A large proportion of them still adhere to the old methods and are not willing to let the "theorists" run their shops. But where those "theorists" have been given full sway, as they have in some places during the past few years they have confounded the scoffers. For one thing they have obliterated from the toiler's list of maxims the first and most obnoxious one from the master's point of view—"The least service for the most pay." If the theorists had done nothing more than that they would be entitled to wear wreaths and halos. But they have done much more.
Take as a luminous example, the work of Harrington Emerson in bettering conditions on the Santa Fe system. There had been a disastrous strike in the shops, and when Mr. Emerson was set to work to straighten out conditions most of the employees were very hostile to the management. No one could have gone to work to carry out the principles of scientific efficiency under more unfavorable, or, indeed, demoralizing conditions than those that confronted Mr. Emerson when he faced the situation. It was a man's game and it was played by men. Here were twenty shops, large and small, scattered along nine thousand miles of railroad in twelve different States, with twelve thousand disgruntled mechanical employees to deal with and fifteen hundred locomotives and fifty thousand cars to care for and keep running.
President Ripley, a man of clear vision, who had come to have full confidence in Emerson and his theories, after several interviews with him, made him consulting engineer to study conditions and advise betterments, and VicePresident Kendrick rolled up his sleeves and went to work with him.
The crying need was to get the equipment in shape. Emerson did not begin to megaphone orders to everybody. He went quietly into the main shop at Topeka and began to study mechanical conditions. The first thing he found out was that something was wrong with the belts that carried the power to the machines. Now belting is an insignificant item in railroad operation, but much turns upon it, literally as well as figuratively. In the Santa Fe shops belting was nobody's care. The only official who showed any interest in it was the claim agent who on one occasion had induced
the shop men to take a lot of singed and water-soaked belts from a wreck after they had been refused by a consignee. The belts were constantly breaking and every break entailed a loss of time to machine anil mechanic, and what "was more important, held locomotives in the shops, preventing the movement of trains and decreased revenue. Under the old system a premium—overtime— had been offered on breakdowns. New belts of the best quality were put in and the cost for belt repairs was reduced in one year from $12,000 to $630, while the saving in time and increase in revenue from that source alone was many times the original sum.
But the belt demonstration was only the razor edge of the entering wedge. The system was extended to the maintenance of all shop machinery and tools. In the year 1903-4, which included only a month or so of the Emerson efficiency
work, what is known as the unit cost of the maintenance was $10.31. By June, 1907, this cost was reduced to $4.89 and in 1909-10 it dropped to $3.24. With a 60 per cent, increase of work, maintenance costs dropped 51.4 per cent.
Meantime improvements were going on in other directions all along the line— the revision of grades, new designs for locomotives and cars, water purification, welfare work that decreased and finally eliminated the hostility of the workman to the company, and most humane of all. a pension system for wornout employees.
Like all men of broad vision, Emerson has faith in men. He believes in their heart-in-heart goodness and he knows that the main cause of their hostility to their employers is mismanagement. It was his belief in the men of the Santa Fe, from top to bottom, that more than anything, has resulted in his great victory over bad conditions on that system. Ten thousand pamphlets conveying the principles of standard practice instruction were distributed among the employees of the road. The mottoes were: "Fairness, not favoritism; efficiency not drudgery: individuality, not subserviency." The generous attitude of the company is set forth in the following opening sentences of this booklet:
"The employee wants as high wages as he can get. The employer wants his output to be as cheap as that of his competitors. Both desires are reasonable and the problem is to reconcile them without injustice to either party.
"An absolutely clear understanding of the problem by both parties is necessary.
"The worker cannot be expected to work for one employer for less pay than is paid under similar conditions for the same work by another employer. The wage payer will not pay higher wages
than the current rate or than the business conditions permit. There may be, however, quite a gap between the wages paid by competitors and the higher wages the employer would be willing to pay if it can be proved to him that it is to his advantage to do this. Wages above current rate should result from individual effort."
The men liked the ring of these words and all the competent ones were pleased by the individual appeal that was afterward made to them. For example, instead of "pooling" locomotives the Santa Fe assigned each engine to a regular and competent crew. By this system the engineer was made to feel an individual interest in his machine and an individual responsibility and anxiety for its condition and repair. Engine "failure s" were thus reduced from 11,880 in 1907 to 6,952 in 1908. On the Santa Fe an engine failure m e a n s any trouble with a locomotive that causes a delay of five minutes or more to a train, and every failure is followed by an investigation. Twenty-five per cent, of the power was formerly out of service, but this percentage was reduced to thirteen.
Not alone to individual responsibility, but more to efficiency reward does the Santa Fe owe the great success of its experiment. Each man is employed at a definite and equitable hourly rate of wage, paid to him without regard to his efficiency. Definite time unit equivalents are stated in advance for each operation assigned, by which the man must give a fair hour's work for a fair hour's pay. This fair hour's work for a fair hour's pay is called 100 per cent, efficiency, and if he attains this efficiency the worker is paid a bonus of 20 per cent. As efficiency diminishes the bonus diminishes. At 90 per cent, efficiency the bonus paid