Increasing Human Efficiency in Business / A Contribution to the Psychology of Business

by Walter Dill Scott

In actual practice the man ``paid off'' is sometimes retained and the foreman, on the evidence of prejudice, bad temper, or other incompetency, is discharged. In consequence every workman knows that his place does not depend upon the whim of his immediate superior, but that faithful service will certainly be recognized.

Furthermore, this department assumes the task of shifting men from one department to another and thus minimizing the misfits which lower the efficiency of the whole organization. Records of each man's performance are kept, and promotions and discharge are more nearly in accord with facts than would be possible in a large house without some such agency. In too many big establishments the individual feels that he does not count in the crowd and that he is helpless to do anything to advance himself or to protect himself against an antagonistic foreman. In large measure, such a department reduces this feeling and bridges the chasm between the men and the firm.

In its effect on the attitude and efficiency of employees, the method of fixing and ad- <p 150> justing wages is no less important than the wages themselves. The steady trend of the labor market has been upward and always upward; it is one of the notable achievements of trade and industry that this constant appreciation in the price of man power has been neutralized by increase in the efficiency of its application. This increase in earning capacity has been secured not alone by the development of automatic machinery, but by the division of labor, the subdivision of processes, and the education of workers to accept the new methods, and acquire expert skill in some specialty.

Hardly a generation has passed since one man, or perhaps two working together, built farm wagons, steam engines, and a thousand other articles entire. Now a hundred mechanics or machine tenders may have contributed to either wagon or engine before it reaches the shipping department. Three fourths of these workers are paid piece rates. The substitution of these piece rates for day wages, the striking of a satisfactory balance between production and compensation, and <p 151> the endless changes in the scale as new parts or faster or simpler processes are invented— have all been operations in which the tact and man-handling skill of executives have played a significant part.

In the larger organization this knowledge or skill is often supplied by a manager who has ``come up through the ranks'' and has not forgotten his journeyman's dexterity on the way or neglected to keep in touch with improved methods.

Frequently the advantage of a small industry or trading venture over its larger rivals depends on the owner's mastery of all the processes or conditions involved and his ability to deal with his employees on a personal plane in fixing wages or in establishing the standard day's work.

In a stove factory where four fifths of the processes are paid by piece rates, it was necessary, not long ago, to fix the remuneration for the assembling of a new type of range. Most of the operations were standard; the workmen and the management differed, however, on what should be paid for the setting and fas- <p 152> tening of a back piece with seventeen bolts. The men asked fifteen cents a range. When refused, they named twelve cents as an ultimatum. The company was willing neither to pay such a price nor to antagonize the workmen.

The dispute was settled by a demonstration. The superintendent was himself a graduate from the bench and had been an expert workman. The company's contract with the assemblers' union set $4.50 a day as the maximum wage. To prove his contention that even twelve cents was too great a price, he set the back pieces on ten ranges himself, under the eyes of a committee, and proved that at six cents a range he could easily earn the maximum day wage. The price agreed upon was eight cents, little more than half the original demand. Without the demonstration the men would have accepted twelve cents reluctantly.

In the course of the interviews with employers, it became evident that there was agreement on one point—to educate the worker to realize that the house's policy in <p 153> handling its men gave added value to the sums paid out in wages.

The shiftless or unskilled man works mainly for the next pay envelope, with little or no regard for the continuity of employment, the possibility of promotion, of pension, of sick or accident benefits, of working conditions, or the like.