Although these three classes of expense are so different there are some general economic laws which apply to all of them and it is quite certain that what we have learned to accept as to materials, may have some lessons applicable to personal service and to equipment charges. When our building materials consisted of prairie sod the problem was simple, we picked out the best sod in sight, plowed it up, hauled it to one side and erected it into walls. When the task is to build an automobile the handling of materials is not so simple.
In automobile plants the engineering department designs what is wanted, then draws up specifications, precise and scientific specifications; steel that will test under tension or torsion so many thousand pounds, steel balls, that are so round, so hard, so even in size, bronze, that is so resistant, copper that is so pure, etc.
The purchasing department then calls for tenders or for bids. Samples or specimens are submitted for test and these go into the testing laboratory where they must come up to specifications. The purchasing agent says: How good a wire can you sell me for $0.10 a pound? What will the price be on wire testing 200,000 pounds?
The materials having been tested and bought are put into the storehouse under a competent storekeeper. It is his business to see that they do not spoil, that they are not wasted or stolen. He issues only on requisition, the requisition specifying the proper quality and quantity. When the materials go into use they are continually inspected during the progress of the work.
There is therefore an inspection department. Engineers have learned that it is not the price of materials that counts but the quality. As quality goes up quantity goes down and price goes up but not as fast as quality. Although steel wire is dear and cast iron is cheap, we build bridges out of steel wire. Although we can buy carbon steel for $0.14 a pound, we pay $0.60 a pound for high speed alloy steel because it works faster and so much more powerfully that it would be cheap at $800 a pound if we could not get it for less.
As to complex modern materials we need therefore an engineering department to design and specify, a testing department to test and analyze, a purchasing department to buy at the best price and on the best terms, an inspection department to watch results from day to day, hour to hour; a storekeeping department to hold and to conserve, to issue carefully and economically.
Modern personal service is more complex than modern materials. How can we afford to omit as to personal service any of the safeguards found necessary as to materials? These necessary safeguards we apply through a very highly organized employment department directed and managed by specialists of the higher class and a corps of assistants.
In the employment department all these methods so necessary as to materials, we apply also to personal service control, whether we are securing a factory superintendent or a shoveler of sand. First of all an organization is outlined. It is evident that to perform certain kinds of tasks there is only one best organization. Battleships are a modern development, they have been slowly evolved. America started it when the Confederate Government sheathed the Merrimac with railroad rails and sank all the wooden ships. As the London Times editorially said, “The Merrimac made all the navies of the world obsolete.” Great Britain, Germany, France, Italy, have helped develop battleships, but the organization controlling every battleship in the world, whether Japanese, Chinese, Russian, Turkish, Chilean or American, is substantially the same. An American officer could be transferred to a foreign navy and find himself at once. Naval organizations the world over are interchangeable. The ordinary manufacturing concern has no standardized organization, it has generally grown like Topsy. Positions are ill defined and generally worse manned. The first duty, therefore, of a modern employment department is to outline the organization, the one best organization for the business in hand.
Its second duty is to specify the essential and required qualities for each position.
There are three different ways of filling positions: