Cornell University Library TS 155.K75 1919 Organization and administration, 1924 002 381 204 ^ V t . > ■ ■>''- \ '}u' , ') C,"'. ' '•- :- ', ■'-> ; I THE LIBRARY OF THE NEW YORK STATE SCHOOL OF INDUSTRIAL AND LABOR RELATIONS AT CORNELL UNIVERSITY Cornell University Library The original of tliis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924002381204 FACTORY MANAGEMENT COURSE AND SERVICE A Series of Interlocking Text Books Written for the Industrial Extension Institute by Factory Man- agers and Consulting Engineers as Part of the Factory Management Course and Service INDUSTRIAL EXTENSION INSTITUTE INCORPORATED NEW YORK ADVISOEY COUNCIL Nicholas Thiel Fickee, Pees., Chaeles P. Steinmetz, „ T, -r-, o, CMeJ Consulting Engineer, Chaeles E. Funk, Secy., General Electric Co. Chas. a. Beockawat, Teeas., Alwin von Auw, Gen. Mgr. Boorum-Pease Co, Charles C. Goodrich, Goodrich-Lockhart Co. Willaed F. HnsTE, Consulting Appraisal Engi- neer. Chief Gas Engr., Public Service Comm. N. r. Jeevis R. Haebeck, Tice-Pres. American Can Co. Benj. a. Franklin, Tice-Pres. Strathmore Paper Co., Lieut. Col. Ordi- nance Dept. Chaeles B. Going, Formerly Editor, The Engi- neering Magazine. Con- sulting Industrial Engi- neer. STAFF. C. B. Knoeppel, Pres. C. E. Knoeppel & Co., Consulting Engineers. Meter Bloomfieij), Consultant on Personnel. Geobge S. Armstrong, Consulting Inausvrial Engineer. H. B. TwYFORD, Purchasing Agent, Xichols Cop- per Co. Nicholas Thiel E^cker, Consulting Industrial Engineer. DWIGHT T. Faenham, Consulting Industrial Engineer. WiLLARD L. CASE; Pres. Millard L. Case & Co., Consulting Engineers. David Moffat Myers, Griggs & Myers, Consulting Engineers. .TOSEPH W. EOE, Prof. Machme Design, Sheffield Scientiflo' School, Yale Vniv. Albert A. Dowd, Consuting Engineer. WnjJAM F. I-lTJNT, Consulting Inaustrial Engineer. Charles W. MoKat, Appraisal Engineer, Cooleg & Marvin. Organization and Abministra- TION. Labor and Compensation. Planning and Time-Studt. Pttbchasing and Storing. Industrial Cost Finding, Executive Statistical Controi, The Factory Building. The Povcer Plant. The Mechanical Equipment. Tools and Patterns. Handleng Material in Factor- ies. Valuing Industrial Properties. ORGANIZATION AND ADMINISTRATION BY C. E. KNOEPPEL Anoc. Mem. A. S. M, K., Mem. Site. JiuIm. Engrt., WesUm Effic. Hoe. , Am. Fdymen"* Att'n, ConmUing Engineer in InduHrial Organization and Admini*tralion VOLUME 1 FACTORY MANAGEMENT COUltSE PROPERTY OF LfPRARY m YORK STATE SCHOOL mmmi asd lao:;: eelations CORNELL UNIVERSITY INDUSTRIAL EXTENSION INSTITUTE INCORPORATKD NEW YORK CoRyright, 1919, bv INDUSTRIAL EXTENSION INSTITUTE INCOBPORATED PREFACE When I was asked to write a book on "Organization and Administration" I demurred at first, realizing that the sub- ject would be a difficult one to handle in a practical and com- prehensive manner. At the same time I was fully aware of the importance of such a discussion, especially in its relation to industry, so I consented to make the best effort I could to reduce the results of my experience to a concrete and tangible form, in which I trust they may serve in some degree to point the way toward more efficient administration. Experience with a large variety of manufacturing concerns has convinced me that the difference between the successful and the unsuccessful concern is simply the difference between the right and the wrong consideration of that most important of all factors in industry — the human factor. The more I analyze matters, the more certain I become that man is the real investment in business. Money is of course important, materials and machinery have to be purchased, but beyond and above all these things stands man. The success of an enterprise depends entirely upon the men who are charged with the care and handling of the material resources. In other words, a wise investment in men insures a good return in dollars and cents, and a poor investment in men means, sooner or later, the failure of the concern. So I determined to make the central thought of this whole treatment the following very important working theory : As you develop men you strengthen tJie organization, and con- versely, as you strengthen the organization, you develop men. vi PREFACE In writing this book I have been ably assisted by several of my principal associates, and I desire to acknowledge here my debt to W. A. McCall, one of the members of my firm, who rendered valuable aid in connection with the chapter on ' ' Records, ' ' and to the following Senior Engineers : G. Sumner- Small (Laws of Organization and Staff) ; A. H. Riehl (Con- trol), and W. G. Scott (Standardization). Charles Edward Knoeppel. TABLE OF CONTENTS. CHAPTER I THE LAW OF PROGRESS PAGE Lessons 1 Learn from the Past 2 A Lesson from the Egyptians and Babylonians ... 3 A Lesson from the Aryan Race 3 Four Stages — The Race, The Individual 5 Four Stages — ^Finance, Industry 6 The Age of Prevention 7 CHAPTER II A CYCLE OF PROGRESS AHEAD The Present Era 9 The Era Just Past 10 Development After the European War 10 Conditions Before the War 11 The World Conflict Inevitable 13 Development and Refinement Follow Conflict ... 14 Organization All-Important 15 CHAPTER III MAN-BUILDING Developing the Human Factor 17 Placing Individuals Properly 17 The Organization as a Factor ........ 18 Improper Organization 21 vU vin TABLE OF CONTENTS Proper Organization The Men and the Organization . PAGE 21 24 CHAPTER IV ESSENTIALS IN MAN-BUILDING Management and Workers . . 26 Man-Building Begins with " Those Higher Up " . . 27 Co-operative Management 28 The Next Era One of Co-operation . . . .29 What Man-Building Includes 30 Fatigue and Physical Welfare 30 England's Experience 31 Education as a Factor 32 Essentials to be Considered 33 Ability to Induce Efficiency in Others . . . . 34 Functions of the Executive 36 Efficiency plus Contentment . . ... .37 CHAPTER V THE COERECT TYPE OF ORGANIZATION Principles of "Efficiency 38 Ideals of Organization 39 Organization of the Human Body 39 The Human Body a Model 40 Line and Staff . 41 The Business 'Organism .... . . 41 Executive and Advisers . . . ... 42 Executive Organism 46 The Executive 46 Centralized Authority 48 Real Executive 48 Promotion and Conservation 49 Staff 51 TABLE OF CONTENTS IX PAGE The Function of Staff 51 Staff Limitations 53 Conferences and Committees 53 Divisions of an Organization 54 Summary 55 CHAPTER VI THE SIX PRINCIPLES OF ORGANIZATION Fundamental Principles 56 Principals and Laws 56 Surveying My Day 57 First Principle — Investigation ........ 58 Second Principle — Organization 59 Third Principle — Records 64 Fourth Principle — Planning 69 Fifth Principle — Standardization 70 Sixth Principle — ^Incentives 71 CHAPTEE VII THE LAWS OF ORGANIZATION The Working Laws of Organization 73 First Law— The Objective 73 Second Law — Greatest Complication 75 Third Law — Concentration 83 Fourth Law — Individualism 86 Fifth Law— Mental Capacity 88 Sixth Law — Specialization 90 CHAPTER VIII THE LAWS. OF ORGANIZATION (Continued) Seventh Law — Responsibility 92 Eighth Law — Permanency 95 Ninth Law — ^Functional Co-ordination ..... 96 Tenth Law — Relationship ......... 98 z TABLE OF CONTENTS PAGE Eleventh Law^ — Personnel ... 99 Twelfth Law — Co-operation 100 Thirteenth Law — Instructions 103 Fourteenth Law — Conferences 104 Fifteenth Law— Staff 105 Application of these Laws 107 CHAPTER IX PEEPARATORY STEPS IN RE-ORGANIZATION First Essentials 108 Careless Methods 109 Ten Preliminaries: 110 Ideals 110 Conception Ill Status Ill Permanent Carrying on of Work 112 Proper Start 112 Views of the Management 113 Local Conditions 114 Program 115 Presentation of Facts 116 Plant Ideals 117 CHAPTER X FIRST PRINCIPLE— INVESTIGATION- MAKING THE SURVEY The Trained Investigator 118 Management . . 120 As to Building 120 As to Organization . 120 As to Employees 121 As to the Office 123 Office and Accounting Methods 123 TABLE OF CONTENTS xi PAGE As to Accounting . 124 As to Methods 126 As to Books of Accounting 126 As to Correspondence 127 As to Customers' Orders 127 As to Invoicing 128 As to Voucher System 128 As to Payrolls 129 As to Cost System 128 As to Inventory 130 Production 131 As to Product . 131 As to Planning 132 As to Material „ . 132 As to Purchasing 133 As to Receiving Department 133 As to Operations 134 As to Inspection 134 As to Deliveries 135 As to Employees 135 As to Employment 136 As to Equipment 137 As to Belting 138 Distribution 138 As to Salesmen 138 As to Territory 138 As to Sales Product 139 As to Sales 139 As to Prices 140 As to Market ........... 140 As to Advertising .......... 141 As to Records ........... 142 As to Competitors 142 xii TABLE OF CONTENTS CHAPTER XI FIRST PRINCIPLE— THE INVESTIGATION-^MAKING A DIAGNOSIS PAGE Analyzing the Survey . . . ... 144 Co-ordination . ... 148 Records 148 Production Control . . 148 Standardization .... 150 Incentives 151 CHAPTER XII FIRST PRINCIPLE— INVESTIGATION— MAKING THE REPORT Form of the Report 152 Order of Arrangement .... 152 Typical Reports .... 153 Report of Co-ordination 153 Report on Rejection 164 Report on Employment 168 Report on Idle Time of Machines 171 Report on Production Control 172 Waiting for Purchased Materials .... 176 Receiving Parts Which Cannot Be Used . . 177 Making Special Cars 179 Waiting for Manufactured Parts .... 180 Report on Planning 186 Report on Standaffdization 192 Report on Incentives . . 199 CHAPTER XIII SECOND PRINCIPLE— CO-ORDINATION Importance of Co-ordination 203 Factors of Co-ordination . . 205 Making the Organization Effective 206 TABLE OF CONTENTS xiii PAGE Essentials in an Investigation 207 Divisions of Business 207 Production System 207 Go-operation of Department Heads 207 Analysis of Important Records 208 Actual Condition of Orders . 211 Chart of Present Organization 211 Essentials of Organization 213 Organization of Plant Prior to Co-ordination . . . 214 Organization of Plant After Co-ordination .... 215 Proper Type of Organization 216 Another Proper Type of Organization 218 Line and Staff Committee Organization ..... 219 Organization of Drafting Department ..... 220 Organization of Purchasing Department 221 Reasons for Division 222 Responsibility in Organization 222 Principles of Organization ......... 223 Aims of Good Organization 224 Aims of Co-ordination 224 Methods and Men 228 CHAPTEE XIV THIRD PRINCIPLE— EECOEDS The Need of Records 229 Four Primary Divisions 229 Statistics and Accounts . 230 Controlling Accounts 231 General Controls 232 General Records 232 Faulty Cost Systems 232 Inadequate Supervision • • 233 Correlating the Records ........•• 234 TABLE OF CONTENTS Engineering and Accounting Distributing Costs Fallacy of Averaging Overhead Rates Standards of Operation .... Standard Rates Analysis of Costs Efficiency of Worker and Operation Charging the "Accidentals" Compiling Cost CHAPTER XV FOURTH PRINCIPLE— CONTROL Production Control . Lack of Control . Planning Production Laws of Control . Manufacturing Control . Material Situation Material Control Sheet . Importance of Control . Progress Control . Planning Department . Scheduling the Operation The Machine Board . Determining the Date Ordering the Jobs Cheeking the Progress . Value of Control . CHAPTER XVI FIFTH PRINCIPLE— STANDARDIZATION Standardization Too Greatly Neglected Divisions of the Field Design of Product PAGE 235 236 237 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 260 260 261 262 263 263 TABLE OF CONTENTS xv _, . PAGE Design of Buildings 265 Machines . 266 Tools and Supplies 271 Raw Materials . . . ■ 275 Operations of Manufacturing 277 Policies and Methods 280 Accomplishments 282 CHAPTER XVII SIXTH PRINCIPLE— INCENTIVE The Desire and Willingness to Serve 284 The Best Kind of Worker 285 The "Human Investment" 286 Profit-Sharing in Proportion to Individual Attainment . 287 Profit-Sharing at Frequent Intervals 288 Profit-Sharing Irrespective of Company's Earnings . . 289 Worker's Share on Basis of Factors within His Control . 289 Other Points to be Considered 290 Laws of Profit-Sharing 290 Applying the First Laws 292 The Second Law Applied 294 Applying the Third Law 294 The Fourth Law in Operation 295 Use of a "Sliding Scale" 295 Two Practicable Plans 297 CHAPTER XVIII SUCCESSFUL USE OF ORGANIZATION PRINCIPLES Efficient Organization 299 Direct and Simple Organization 299 Investigation 300 Co-ordination 301 Records 303 Planning 303 xvi TABLE OF CONTENTS PAGE Standardization 304 Incentives 305 Laws of Organization — Objective ... ... 305 Greatest Complication . . 307 Concentration 307 Individualism 307 Mental Capacity ... 308 Specialization 308 Responsibility 308 Permanency ... 308 Eelationship 309 Personnel ... .... 309 Co-operation 310 Instructions . 310 Conferences 310 Staff ' 310 Type of Organization 311 CHAPTER XIX DETERMINING DUTIES AND FUNCTIONS Range of Investigation 312 Excessive Costs 313 Estimating 314 Failure to Consider Instructions . 316 Rejections 317 Faulty Planning 318 Inspection Reports 319 Sales 323 Boiler Shop Tool Room 325 Control of Shipments 327 Careless Workmanship ,,....,... 328 TABLE OF CONTENTS xvii CHAPTEK XX THE MANUAL OP ORGANIZATION INSTRUCTIONS PAGE Importance of Written Instructions . . . . . . 334 Laws of the Plant 335 Sample Instructions for Personnel 335 Executive Positions 336 Direct Subordinate Positions 337 Supervision of Maintenance 337 Supervision of Design 340 Indirect Subordinate Positions 342 Pattern Shop Functions 342 Sample Instructions for Methods 347 Anticipative Inspection 347 Reporting Unnecessary Use of Power 349 Making Up Bills of Material 351 Identifying Material 352 Repairing and Storing Tools 354 CHAPTER XXI THE COMMITTEE PLAN IN ORGANIZATION Defects of Committees 355 Faults of Conferences 355 Advantages of Conference 356 Committee Ideals 357 Rules of Procedure 358 The Use of Betterment Records 361 CHAPTER XXII STAFF ORGANIZATION Line and Staff Compared 367 Analogy to the Human Organism 367 Functions of the Staff 369 Inter-Departmental Relations 370 xviii TABLE OF CONTENTS PACE General Manager and Staff 371 Organizing the Staff 372 Personnel of the Staff 374 Postering Co-operation 374 Staff Problems : Individual Departments . ... 375 Staff Problems; Relations Between Departments . . 377 CHAPTER XXIII THE PROPER SELECTION OF PERSONNEL Qualifications versus Requirements 378 . The Executive .378 Latent Ability in Existing Personnel : . 379 The Man and the Job 382 References and Previous Records ....... 382 Selecting Personnel : Three Methods . ... . . , 383 The Executive's Assistants . . ^ 384 Complementary Function of- Assistants 385 Co-operation 386 Aptitude of Employees 387 Sizing up Applicants 388 Presenting the Opportunity 390 CHAPTER XXIV INDUSTRIAL ADMINISTRATION Men, the Primary Factory 391 Spirit 393 Good Leadership 396 Disputing Authority 397 Details 400 Contact 401 Simplicity 402 Change 402 Counsel 404 Approach 405 TABLE OF CONTENTS xix PAGE Initiative 406 Action and Reaction 407 Progress of the Individual 408 Executive Direction 409 Recapitulation 414 CHAPTER XXV INDUSTRIAL RELATIONS The Worker and His Endowments 416 Employer and Employee 417 Ambitions of the Wage-Earner 417 Employer's Responsibility to the Worker .... 418 Resources, Methods, and Men 419 The Mental Phase 420 Eliminating Strenuousness 421 Leadership 422 Good Faith 422 Inefficiency 423 Increased Exertion 423 Worry a Drawback 423 Distributing Responsibility 424 Habit 424 Strikes 424 Selecting Employees 425 Labor and Capital 425 Cutting Rates 426 Fatigue 426 Welfare 426 Stimulation . ... 426 Wage Payment 427 Right Relationship 428 Responsibility of Executives 429 ORGANIZATION AND ADMINISTRATION CHAPTER I THE LAW OF PROGRESS Lessons. — From the time the baby begins to walk — and, in falling, learns cautiousness — until death makes its claim, life is one gigantic school in which are taught lessons that are eloquently, sometimes cruelly, illustrated. The youth jokingly refuses to consider the advice of his father, thinking that he himself knows more than his sire. In later years he realizes — when it is too late — ^how much better he '-"ight have succeeded had he barkened to the kindly promptings of one, who, having been over the road, could have piloted wisely. The nation, prone to feel itself able to cope with the conditions that have been stumbling blocks to antiquity, ignores the teachings of the past, fails to learn its lesson, and regrets when it is too late. What, indeed, are lessons for, if not to profit by? Why are people so wilful that they tolerantly con- sider the importance of a truth, and then pass it up to the other fellow for attention? Is it because we ourselves are not serious enough to consider well the teachings of the past, or because the importance of a lesson is not made sufficiently impressive? 2 ORGANIZATION AND ADMINISTRATION An insult to a woman stirs us to immediate action, and we see to it that the offender is punished. Some- times we even do the punishing ourselves. An un- friendly act on the part of foreign power, and we all clamor for war. Ill treatment of the old by the young is sternly rebuked. Lessons of this kind are learned because the truths make the impressions that compel the serious side of our natures to act. Why should not all lessons be considered in the spirt of earnest receptivity? Learn from the Past. — To understand the present, as well as to anticipate the future, we must accept the past as pointing out innumerable lessons. To get results in the present and build constructively for the future, we must profit by the teachings gen- erally accepted as wise. It seems sometimes, as we review the past, as if we had swung in circles instead of really progressing. Of course, we know that this is not so, for each era of development has proved better than the one preceding. Nevertheless, the les- sons have been many in which the elements that stood for progress carried with them elements which, like weeds in the garden, gradually eliminated the upbuilding factors, until the result was degeneration and decay. I am far from being a "calamity-howler." My aim is not to denounce or to abuse. I should rather build up than tear down. But I most emphatically insist that until, as individuals and as a people, we seriously consider the lessons of the past — and this is to be noted well — we shall not be in a position to measure up to the limit of our possibilities or to leave THE LAW OF PROGRESS 3 to posterity a heritage of accomplishment upon which they can build infinitely better structures than we ourselves have built. A Lesson from The Egyptians and Babylonians. — The Egyptians believed in a future life. They built tombs and made preservatives whicli should keep the body intact after death. To live the future life they broadened the mind, and respected and cultivated virtues. They left us the pyramids, the Sphinx, and pottery proving beyond question a marvelous de- velopment, .considering the period in which they lived. Yet as early as B. C. 2200 they had become a weak and easy-going people as a result of formality, "priestly caste, and the pursuit of ease and pleasure. The Babylonians established astronomy, recorded the movement of the stars, built canals, by means of which they reclaimed barren lands, and as early as B. C. 2250 developed a code of laws that contained provisions wiser than some we have today. Yet luxurious surroundings and the chase for ease and pleasure sapped the moral fibre of the people, and in time they gave way to the Assyrians — a hardier and fiercer race, who, however, in adopting the customs of the Babylonians, became even more ardent followers of comfort, and even more degenerate. A Lesson from the Aryan Race. — The white race seems to have been divided into three classes: — Hamites — E gyptians Semites — Babylonians, Jews, and Arabs Aryans — Hindoos, Persians, Greeks, Latins, Celts, Ger- mans and Slavs Philology tells us that the home of the Aryan 4 ORGANIZATION AND ADMINISTRATION branch was in Asia, in a higli altitude and bracing atmosphere, which no doubt bred courage and bold- ness. As early as B. C. 3000 they had a fair sort of civilization. They built houses, plowed the ground, established family relations, and even had a credit- able sort of government. Unable to resist the "call of the wild," the race split into tribes, and one made its way into India, another to Persia, and still others to Europe. Those who went into India founded a mighty na- tion, but the hot climate, together with a priestly caste even more arbitrary than that of the Egyptians, ultimately had its effect, and from a position as the foremost of Aryan tribes, the Hindoos sank to de- generacy. The Persians, after a series of long wars, helped to destroy Assyria, overthrew the second Babylonian Empire, and then conquered Egypt. Lazy splendor and a life of ease, and the hot climate were factors in their downfall. Those Aryans who settled Europe had the advan- tage of more temperate climate. The Greeks became a strong, alert, and independent race. Adopting the alphabet of the Phoenicians and the records of Egypt, they became writers of history and were noted for their mental development. The Latins also pro- gressed and, 3fter a revolution, founded in B. C. 510 the Eoman Republic. In time Eome overcame Greece, but her very triumphs proved her undoing, and, de- spite all her power, her brilliancy, and the culture that Greece taught her, she was finally crushed by the wild German tribes. It is not necessary to trace the evolution of the THE LAW OF PROGRESS 5 race from this point. Interesting as the review would be, it would not emphasize one whit the les- son that can be learned from what has already been pointed out — a lesson which serves to indicate, as we review the past, that any period of development which preceded degeneracy and decay, followed a period of conflict, trickery, barbarity, and cruelty. Success- ful conquest seemed to turn the mind and desires of the people toward ease, comfort, and pleasure, toward a life in which self was worshipped, with the result that the moral strength of the race became slowly undermined and the way was paved for its own downfall. As soon as enemies from without were conquered, enemies from within arose to give battle. Four Stages — The Race, The Individual. — ^Even if the past should teach us nothing more than the fact that each era has been one of conflict, development, refinement, and decay, wei* should have learned a most important principle — we should have an eloquent re- minder that the future demands serious attention. Each stage of the past has been better than the one preceding, until today we unquestionably have con- ditions much superior to anything the past can show. Yet we cannot afford to sneer at the ancient civiliza- tion of the East, for as early as 2250 B. C. the Baby- lonian law provided that the community should re- imburse the man whose house had been robbed, and that a broker should return to his client the money entrusted to him for investment, if the investment proved an unwise one. In life we find a conformity to the principle above outlined. Study the child, his relation to his parents 6 OEGANIZATION AND ADMINISTKATION and his teachers, his combative and sometimes sav- age nature, his days of the "gang" period, his reck- lessness and tempestuonsness in the first years of school life — and you find an excellent illustration of the conflict period in human progress. The youth be- comes serious. He studies, goes through college, and begins his career in business. This is his develop- ment period. Then follows the period of refinement, in which the man builds well on the training re- ceived, becomes successful in his work, perhaps amasses a fortune. And finally, at the height of his power, he begins to wear out, his energies begin to fail; he is then in the retrogression period, from which none of us can escape. Four Stages — Finance, Industry. — ^Whether you study progress as revealed in the transition from bicycle to automobile to airship; from horsecar to trolley to subway train; from dugout to sailboat to gigantic steam vessel; from steam locomotive to the electrical and oil burning types; or from hut to house to skyscraper — in any case you discover the fact that the mastery of factors about which we knew little was the first essential — the conflict stage. Then came the period of development, the period when results began to be realized, when success was within reach. Following this there comes the period of refinement, of efficiency, of maximum attainment. When this period is reached retrogression sets in, and the con- flict period of a new era is in the making. In other words, nothing is ever final in itself. There is no ultimate attainment. Eoger W. Babson, who is doing excellent work in THE LAW OF PROGRESS 7 placing before the business man of the country a summary of fundamental conditions expressed in the form of composite plots, outlines the following four financial cycles, which conform to the principle of progress outlined. Opposite the names of the stages that he defines I have placed the names of those that I have just discussed. 1. A period of Depression — Conflict 2. A period of Improvement — ^Development 3. A period of Prosperity — Refinement 4. A period of Decline — Retrogression The Age of Prevention. — There is a wonderful fu- ture ahead of this great nation and it remains for us to say whether we will do everything to realize as quickly as we can the benefits that it is possible to obtain, or whether, through passiveness, doubt, ob- structive measures, and ridicule, we will delay the march of progress. It is. for us to say whether the cycles shall be made up of long abnormal swings, as in the past, or whether, because of a sincere desire to accomplish, we will contribute materially to the elimination of the abnormal swing of the curve. It is for us to say whether the normal line of progress shall maintain the same angle, or whether, as a result of a quickening of our thought and activity, it shall follow a sharper angle. "Westward the Star of Em- pire" has been making its way. Will this star stop in its progress while the Latin, the Greek, the Slav, the Celt and the Teuton are being merged to work out a new and better civilization? Or will it pass on across the Pacific, and come to rest over the land of the Yellow race, while they develop and progress 8 OKGANIZATION AND ADMINISTRATION under the light of its rays? The answer is largely- one for us to make, ourselves. As one who has been a worker, and an intense student and observer of industrial conditions in a variety of lines, at close range, I make the plea for a more intelligent and unbiased study of our . condi- tions with a veiw to their betterment. Let us con- sider the era upon which we are entering as "the age of prevention", a period in which the elimination of abuses, faults, and unfairness can be arranged for. From the broad-minded men of high ideals, of fore- sight, and of love for all human kind — and there are many of them — I ask an earnest consideration of this discussion, which has been dedicated to the cause of industrial betterment, of greater efficiency, of better relations between man and man, and of gain mentally, morally and physically, to our people. CHAPTER II THE CYCLE OF PEOGRESS AHEAD The Present Era. — Let us take an inventory and, ask ourselves — like the sleepy Congressman who awoke in the midst of a speech — "Where are we at?" In these times introspection will be good for all of us, for there is no question about it, on the stage of time this little old world of ours is doing a St. Vitus 's dance. To know what is ahead of us is therefore of fundamental importance. We must learn what cycle of the four — conflict, development, refine- ment and retrogression — -^e are in, and, having found out we must order our lives accordingly. The Great World War saw most of the people of the earth stark, raving mad and at each one another's throats; with nearly all of the nations of the globe divided into two gigantic camps, each trying to anni- hilate the other; with both sides spending money like drunken sailors, and destroying life and property as if there were no such thing as posterity to bear the horrible load; with each side trying to outdo the other in the display of cunning, and of devilish skill in developing mechanisms to kill and destroy. A safe conclusion would be that this was not the period or cycle of refinement. 10 ORGANIZATION AND ADMINISTRATION The Era Just Past.— Nor were we in the refinement period prior to the war. Socialism was on the in- crease and steadily gaining supporters. The syndi- calist doctrine, which preached the making of industry unprofitable to the owners, and which advocated sabotage, a weapon more powerful than the strike, attracted the attention of many workers. The cost of living, in a country of wonderful resources and teeming with plenty, was a decided burden to thou- sands of people — and still is, for that matter. Graft, rottenness in politics, the Great White Way parades, no longer gave the shocks they used to give us. We were confronted with great questions — the tariff, currency reform, suffrage, the Mexican and Japanese situations, immigration of undesirables, in- come taxation, and regulation of big business. We had strikes and almost continuous industrial clash and warfare. We were startled by the revelations as to the white slave traffic but did little to check it. There was too much woman and child labor. In many industries, the hours of work were too long, while in others there was too much enervating labor. The right selection and training of our workers was only beginning to receive our attention. After the European War Development. — ^If present conditions and those existing just prior to the great European war indicate that we have not been going through the cycle of refinement, was it the period of development, which precedes it! It does not seem so, as this presupposes a cycle of conflict immediately before. If we consider that the Napoleonic Wars, our Civil War, and the Franco-Prussian War constituted CYCLE OF PROGRESS AHEAD 11 a world cycle of conflict, and the reconstructions which followed were the era of development, then the time between these reconstructions and the Great War must have been the refinement cycle. If so, then the war period itself must have been either the retrogression period of the one series of four cycles, or the conflict period of a new series. Before the war the whole world was looking dis- aster in the face. France, England, Eussia, Germany and America were considering problems that seemed impossible of solution. It seemed as if every nation had got about all possible good from the conditions that existed before, and were groping blindly for bet- ter things, looking for a new era which would be vastly superior to the one before. In other words, the end of the refinement cycle had been reached, and the world was going through a breaking down pro- cess — the cycle of retrogression or decay. Comparatively, a trifling incident touched the match to the magazine, and, in starting this world •conflagration, closed the major cycle — of which the four mentioned may be considered minor cycles — and started the universe on a new one, of which conflict was the beginning. The post bellum era will therefore be the develop- ment cycle, and it is with this period that I shall be chiefly cpncerned in the present discussion. Conditions Before the War. — It is because we all have in us the subtle scheming propensities and the aggressiveness of past generations, and because we are the product of past environments, that I overlook combativeness and destructiveness in men and realize 12 OEGANIZATION AND ADMINISTRATION how inevitable conflict is in proper development, whether of war, nation, individual, or industry. For the same reason I feel that war is really a blessing in disguise, visited upon us by an all-powerful, wise, and far-seeing Providence, for our own betterment", for our purging through fire. Did we really need a conflict period? Could not the refinement period have continued indefinitely, with retrogression and conflict to follow later in a peaceful way? Let us see. Under the title, "Unsolved Problems", Hearst's Magazine some time ago contained some interesting information. It was stated that 37,000 horsepower in our streams could be made available for use — an amount equivalent to 800,000,000 tons of coal. Our coal is mined so badly that in one year the waste aggregated 250,000,000 tons. Further, the coal that has been left in our mines, because of conditions which make recovery improbable, is not less than 5,000,000,000 tons. Moreover, when we use the coal, we utilize not over 11 per cent of its energy. Ac- cumulations of scale on locomotive boilers is esti- mated to cause a waste in energy equivalent to 15,000,000 tons of coal per year, not counting the loss in boiler effipiency. It is further estimated that the discharge of sul- phur dioxide from the burning of coal would pro- duce probably 8,000,000 tons of sulphuric acid. In the conversion of coal into coke, nearly $40,000,000 worth of recoverable products are wasted annually. For every dollar we spend to produce light, we ob- tain only 3 to 5 cents worth of this commodity. In- CYCLE OF PKOGRESS AHEAD 13 sect pests cause an annual loss in farm and garden crops amounting to $420,000,000. Of the 29,000,000 workers in this country, over 500,000 are killed or crippled yearly as a direct result of the occupations they are engaged in. These problems — and thousands of others, which could be mentioned if space permitted — all of which have to do with conserving and using efficiently our immense resources, both physical and human, are not among those that solve themselves. While it is true that progress has been made, it has been slow, and in many eases unsatisfactory. Impatience, restless- ness, extravagance, waste, the love of ease, and the chase for the pleasurable things of life, all have con- tributed to relegate to the rear the consideration of the vital factors that demand attention. The World Conflict Inevitable. — Consequently, when the ordinary activities of peace times fail to arouse in all of us that desire to see the "fair deal" the basis of everyday conduct; when we hardly give waste, poverty, and disease a second thought; when our blood does not leap at insult or wrong-doing, and we become hardened and calloused, whether as a na- tion or as individuals — then something must happen to focus our attention and concentrate our efforts on those matters that need betterment. That "something" is war — social, national, or international. And under such circumstances, war is justifiable, and will continue to be resorted to until we find a substitute that will accomplish the same end. It is my sincere conviction that a substitute will be found, and this book is dedicated to the principle 14 ORGANIZATION AND ADMINISTRATION that every individual should do all in his power to outline fundamental and basic factors that will bring about the greatest results from the development and, to some extent, the conflict cycles. Development and Refinement Follow Conflict.— As an illustration of how well and how quickly we get real development, and later, refinement, through con- flict, the case of England is striking. Before the war, labor was better organized and more powerful than in any other country. The unions had limited the production of labor to a point well below the aver- age production per man in the United States. They had forced about all the wage raises that the in- dustries could stand, and they had regulated the hours of labor and controlled its employment. In spite of all these accomplishments, the condi- tions of labor were unsatisfactory to the trade-unions themselves, for wages were low in comparison with prices, and there was plenty of unemployment. Labor and capital were in constant warfare, al- though capital was suffering through inability to re- taliate against the powerful trade-unions except by raising prices. The cost of manufacture, owing to the low production, was so high that English goods were unable to compete with foreign goods; sales were low and falling off; fewer and fewer men were being employed; and more and more were emigrating to the English Colonies. The statement was made to one of our engineers by several manufacturers whom he visited in England, that if conditions continued as they were, they would be forced^ to discontinue business. CYCLE OF PROGRESS AHEAD 15 But war came, and I can explain what happened no better than by quoting William Hard, who wrote as follows on the subject, in the Metropolitan Maga- zine: The trade unions of Great Britain stepped up to the altar of the war and placed on it all their hard-won rules and rights and privileges, all their restrictions on output and on employ- ment. What was the consequence? Immediately, in thou- sands of factories all over Great Britain, there was a revolu- tion in methods of production. Instead of old, awkward ma- chines, operated exclusively by union members, by skilled craftsmen, there came to be long rows of new, improved ma- chines, operated not merely by skilled craftsmen, but by men semi-skilled and by men unskilled, and by women. For some years the world will be in the melting pot, and after the dross has been burned off and the refined gold is left, it will be a fit place to live in. It is evident, if we consider that the nations of the globe, China included, are literally being "born again," that it would have taken a hundred years for the same results to be achieved had the Great War never occurred. Organization All-Important. — So, you see, war con- stitutes the conflict period that precedes the develop- ment cycle. The years that have gone belong to the old order of things. The new major cycle is with us, and what we shall make of it depends entirely upon ourselves. The power behind what we do during the period of development which follows the period of conflict, is the power of organization. 16 ORGANIZATION AND ADMINISTRATION Let me explain what I mean by organization. Everything that we do or say, everything that we use or make, is the product of the brain. In the last analysis, the human being is the power behind everything. The coal, oil, and iron would stay in the ground, the lumber would remain in the tree, and electricity in the air, if man, with knowledge and initiative, did not take them and use them for his ends. Organization, therefore, is the proper adjustment of the relationship between human beings, in an ef- fort to accomplish certain definite ends in life. If this adjustment is faulty, then we have an inefficient organization, incapable of making a success of what it undertakes. But if it is correct, logical, and estab- lished along sound lines, then success is bound to re- sult. A few years ago, I looked upon organization work as a cold-blooded adjustment of departments. Today I consider it as something wonderfully well worth while — as the making over of human beings, as "man-building." The adjustment of the human factor to new and better conditions, the betterment of the relationship between men, and the efficient use of our resources, both physical and human, will be the work of the development . cycle. The problem that is involved will be solved by means of proper organization and efficient administration. CHAPTER In MAN-BUILDING Developing the Human Factor. — The greatest prob- lem in commerce, in industry, and in government af- fairs today, is the problem of developing the human factor, and our progress in the future is going to depend entirely upon the extent to which we give it our attention. The idea that seemed to be so im- portant in the past, that man was simply so much bone and muscle, is giving way to the realization that man is brain and initiative as well, and that the product of bone and muscle is in direct proportion to the use of the brain and the initiative. The moral is, that . development and conservation of brain and ini- tiative are absolutely essential. Placing' Individuals Properly. — In the analysis of the organization of a large number of concerns, the trouble found in the majority of cases was not so much inefficient individuals as the improper placing of efficient individuals. In one place would be a man with every quality of leadership, who had become a "leaner" because of the type of organization of which he was a part. In another place, a man who, according to every indication, was only a good follower, would be in a position of authority. In a splendid article, which appeared in the Amerl- 17 18 ORGANIZATION AND ADMINISTEATION can Magazine, entitled on "Are You a Caretaker or a Promoter," the following statements appeared which may well be given as the text for this book on "Organization and Administration." Alexander was a promoter of the first order ; he conquered the world. But where were the caretakers, to conserve and consolidate and solidify! They just weren't, that's all; and Alexander's empire fell to pieces almost before his ashes were cold. A few hundred years later, Caesar conquered the world, and his empire stood for generations. Why ? Because Augustus, one of the great caretakers of history, followed Caesar. Moses^ — and Joshua. David — and Solomon. Washington, —and Adams. Everywhere that men have erected an insti- tution of permanency and power, you find them indissolubly yoked together, the promoter and the less spectacular, but ■none the less essential, caretaker. The one reaching out, dreaming dreams, hurling himself and his followers into the future without reckoning the means or the cost. The other conserving, consolidating, caretaking. Mutually dependent, each helpless without the other. In other words, a good organization is a happy combination of leaders and followers. The ineffi- cient organization is one in which leaders are work- ing as followers, with followers who possess quali- ties of leadership. The Organization as a Factor. — Let me give you an example from real life of what I mean by this big thing — Man-Building. Nearly ten years ago betterment work was started in a plant whose sales manager, from the standpoint of the usual tests, was considered a failure. His MAN-BUILDING 19 heart was not in his work. He did not seem to take the interest in things that a man charged with the responsibility for disposing of the plant product is expected to display. He was very irregular in his hours — he arrived late or left early. He had no plan with reference to sales campaigns or trips; he did very little advertising. The man seemed content to cut down the grass that grew, without sowing any new seed. As a result, the sales of the company suffered, and on several occasions it was recom- mended that this manager be dismissed. He was such a fine fellow, however — ^liked by all he came in contact with, a real prince among men — that in view of the fact that he was "just getting by," the man- agement refused to turn him adrift. Some years later the general manager of this com- pany died, and the man who had been treasurer was placed in charge. The change in the sales manager under the new regime was startling. He became in- tensely interested in his work, in fact enthusiastic. He worked hard and long, took extended trips, planned sales campaigns, advertised, and put snap and ginger into his work. He was practically every- thing he had not been before. In other words, he measured up to the very standard by which a suc- cessful manager is gauged, with the result that the sales grew rapidly and consistently in volume. What caused this decided change? "What was there is the man's make-up, if anything, that would make him passive and inefficient at one time, and active and efficient at another? Was the change due to the difference in the second general manager, or 20 ORGANIZATION AND ADMINISTRATION to the difference in tlie type of organization that he instituted? Something fundamental and basic must have been responsible, for if it had not been that the looks of the man had not changed, a person would not have recognized in the live sales manager the man who a few years before had "gone stale on the job." Let me say, also, that the sales manager was really closer in a social way to the former general man- ager than to the new one and, in a measure, he was also temperamentally and in a business way more in tune with that executive. In brief, the indica- tions were that he should have been more success- ful under the old management. An analysis of the sales manager under the old conditions revealed that, while he possessed good judgment and was reliable, he had only fair execu- tive ability, little initiative, and, lacking energy, had only a slight amount of aggressiveness. The conclu- sion was that he was not capable of self-direction and that, although he was not at the time over- worked, he should not be given greater responsibilty. He vras considered good as regards co-operation, ability to think for himself, willingness to accept criticism, and constructiveness in what he did ac- complish. As can be seen, the man seemed to pos- sess an unusual combination of strengths and weak- nesses. The reason for this sales manager's failure in the one ease and his success in the other, was nothing more or less than the difference between the types of organization of which he was a part. I can best MAN-BUILDING 21 indicate this difference by an analysis of the two cases, which are illustrated by the charts on pages 22 and 23. (See also Charts 12 and 13, pages 208 and 209.) Improper Organization. — ^In case one, the sales manager was only one of a large number of people directly under the general manager, whose policy of management was to look over and approve every- thing before a subordinate could go ahead with his duties. I have seen the machine-shop foreman waste both his time and that of the general manager in getting the latter to approve a requisition to have the machine-shop clock repaired. The general man- . ager attempted to carry the load of every man on his shoulders. He tried to get into all the details, and, while he felt he was doing things efficiently, the fact was that he overlooked many of the big things. By trying to supply all the brains, all the initiative, he secured only fair results from those under him. Most of his men became "leaners," seeing things through the eyes of the general manager, and accepting his conclusions in most cases without giving them suffi- cient analysis. Naturally, many mistakes were made. The organization, as a whole, was both weak and in- effective as a working unit. Proper Organization. — The second case forms a strong contrast. A new general manager took hold. He determined to change the policy to one whereby the business would be divided into a few logical func- tions, each of which would be in charge of a man who would be given full responsibility, and authority to secure results. The business was studied, was 22 ORGANIZATION AND ADMINISTRATION tfasae si^^= ■ .| GENERAL MAJMOEIi 1 llllllllllllllllll r 1 ^ L »J 1 ^ 1 1 ^ 1 - lllllllili ' 1 - i 1 '1 1' 1 ' 1 1 « 1 1 ^ 1 1 - 1 1- 1 1 -H II 1 ^a 1 - 1 ^" 1 1 /« 1 1 -"1 1 -H II 1 CHART 1. IMPROPER ORGANIZATION planned according to Chart 2, and the functions, duties, and relationships were established for each of the four divisions. The head of each department was given a clear-cut outline of what was expected of him, and, possessing the requisite authority, de- veloped confidence, executive power, and greater ability to handle big things. Today this concern MAN-BUILDING 23 CHAKT 2. PROPER ORGANIZATION with two additions is doing a capacity business, in which there have been no war orders. Little new blood was brqught in from the outside after the reorganization. The feeling was that those in the employ of the company at the time, should be given an opportunity to measure up before being "al- lowed to resign." This plan worked admirably for all along the line — men measured up to the greater 24 ORGANIZATION AND ADMINISTRATION responsibility — and as an experiment in Man-Build- ing it has proved profitable to both the men and the company. I might say, incidentally, that a close study of both the figures that I have given will prove exceedingly interesting. The Men and the Organization. — ^I feel fortunate indeed in having been able to study this business under the two types of organization so briefly de- scribed. A close analysis of the transition of this firm from one that was unsuccessful to one which has not only wiped out losses but which has made large profits and at the same time made men, has given me much in the way of organization principles and practices that will prove of value to students, man- agers and executives. My purpose is to pass the in- formation along for what it may be worth. Herman Schneider, of the University of Cincinnati, has written as follows, very much to the point, in the American Magazine: A man is most efficient when he is doing the work that gives liim the greatest satisfaction. From the laborer to the busi- ness executive, every man should get three things out of work : a decent living ; development and discipline ; and satisfaction in the doing. If your job gives these to you, give back to it the best work of your hand and brain. If it fails to give you these, face the fact that you arc a misfit, and seek your appointed place. You -have no right to let life remain separated from its two handmaids — "liberty and the pursuit of happiness." In closing this chapter I will say that my experi- MAN-BUILDING 25 ence to date has convinced me that man-huilding is the real purpose of organization development; that in so far as you develop men, you develop the organiza- tion; that as you make work profitable to your men, you make it profitable to the organization. CHAPTER IV ESSENTIALS IN MAN-BUILDING Management and Workers. — In industrial organi- zations there are two classes of individuals to con- sider: A. The foreman, managers, and executives constituting the management. B. The workers. If any real results are to be secured, there must be a proper relationship and adjustment between these classes. An efficient management with ineffi- cient workers can get little further than an organi- zation of excellent workmen directed by a loose-run- ning and inefficient management. A long experience in industry, both as a worker and as one who has been in the councils of management, has convinced me that the inefficiency met with in industry and in government is not so much that of the workers as that of the managements and executives, who are, of course, responsible for directing the activities of subordinates., Gantt put the matter well in his ar- ticle, "What is Preparedness?" Without efficiency in management, efficiency of the work- men is useless, even if it is possible to get it. With an effi- cient management, there is but little difficulty in training the workmen to be efficient. I have proved this so many times, and so clearly, that there can be absolutely no doubt about it. 26 ESSENTIALS IN MAN-liUlLDING 27 Our most serious trouble, \h incomix'tcMcy in high places. A^; long as that remains uncorrected, no amount of efficiency in, the workmen will avail very much. Man-Building Begins with "Those Higher Up."— My feeling has always been that to study the. workers without first making an analysis to ascertain th*; strength or weakness of tho organization, of which the workers are a part, is lil<(^ throwing' a lot ol' ma- terial together to build an engine helori; chisigninK the engine and delniling it all on paper, in the form of speeifications. That this conviction is sound was made plain to me after the Efficiency Society of N(!W York made an analysis, some years ago, of the or- ganization in thirty -five plants. One of their con- clusions was this; Taking into account, nn a normal (condition, that the flow of influence in an organization iw from the top down, it would seem evident that increased efficiency will be soonesl Hccured by applying efflcicncy [)rineij)lcH initially to 1 Ik^ personal oper- ations of the managers, rather than to those of the workers, aH has NO ol'ten Ix'cn done. In other words, organization und administration must h(! made right, and man-hnilding must start here. 1 do not Ix-lieve there has ever l)een a time in our history wiien real statestrninship and (?ffici(uit leadershi[) were as tiecc^ssary in industry and in gov- ernment us they are in these times. Oni' real ncnul is best expressed by Fetielon's definition of th(! real statesman, which applies ecpinlly well to the real ex- ecutive, whether in cnmmcvc.c, in industry, or in poli- tics. IJere is the definition: 28 OEGANIZATION AND ADMINISTRATION The real statesman, while doing nothing himself, causes everything to be done; he contrives; he invents; he foresees the future ; he reflects upon what is past ; he distributes and proportions things; he makes early preparations; he inces- santly arms himself to struggle against fortune as a swimmer Lgainst a rapid stream of water ; he leaves nothing to chance. "Co-operative Management." — Do not think for a moment, however, that I am attempting to argue that man-building is confined strictly to managers and executives. It is just as necessary among the workers, and I believe that when the time comes, as come it will, when both sides get together on this important question of human development, progress will be both rapid and lasting. I have never i.'ked the terms "scientific manage- ment" and "efficieiicy engineering" and I am going to propose for the consideration of my readers the term "co-operative majiagement." The system would be everything that the n.^me implies — a plan of man- agement in which co-opeiation between worker and employer would be the basic consideration of all trans- actions. Imagine what would happen if a body of workmen should go to their employers end say: "We have made a careful study of this new science of man- agement. We want to assist in 'lettering working conditions; we want to help you reduce your costs so you can increase your sales, knowing that in so doing we can increase our earnings, rnd you your dividends. What do you M^ant us to del" It would not be long before there would be a relationship be- tween capital and labor that would mean low costs, ESRKNTfAL.S IN M.\N-Br:iLDI\G 2'.) high earnings, th^ b<'fft kind of wages, shorter hourf^, and a spirit that would make for permanent Ix'tier- inent. The Next Era One of Co-operation. — I sorrifitirrxH wonder why it in that tlione of the labor leaders who have viKion, who are actuated by high ideals and excellent motix^H, have not forne forward and ur^ed their follosvjng to take an active part in this import- ant work. I wonder why tli'^y do not errjploy coun- sel or management, showing their emplojers where wante exints, for more often than you have any idea of, the workmen know where to put their fingers on loKBeK. It seeniK to me that the next era in manage- ment will Bee both sides, shoulder to shoulder, de- vising and installinj^ betterments, and if tliis shall be one of tlie by-produets of the great European war, that war will not have been without its compensa- tions. Would it not be better for the employer and the worker to get together and, with the h''lp of outside counsel, effect the kind of eompromiBe that would enable both to work in harmony, rather than in dis- cord? It would be better — would it not? — for thone on both nirles to give up, for the time at least. Home of their aims, if neeesnary, and workinji; as one, make consistent progrens toward better eonditionn, rather than to fight for 100 per cent of the tilings they want — for they will probably never g<'t them all under pren- ent conditions. tTie best evidence that such a condition will conif is the following gem of thought, contributed by a worker who is alno a Socialist: 30 ORGANIZATION AND ADMINISTRATION I firmly believe, unless the spirit of hostility can be replaced by the spirit of co-operation — we are in for some sorry times. I also believe it behooves every individual and every organiza- tion that cares for their country and their fellowmen to use every effort to avoid any conflict whatever. We cannot ex- pect to climb the hill to sun-crowned heights with industrial strife on our backs. What Man-Building Includes. — ^By man-building I mean both physical and mental development and conservation. In industry 35,000 workers are killed yearly and 700,000 injured. Each one of our 30,000,000 workmen loses nine days each year through sickness — a loss in productive effort of 270,000,000 days per year. Speaking on this important subject, Frederick W. Loghran said in the N. Y. Times Sun- day Magazine: It is a generally accepted principle of modern sanitary sci- ence that a large amount of sickness, in industry and other- wise is preventable and that the average duration of life can be materially prolonged by deliberate and rational methods of personal, social and industrial hygiene. It is safe to assume that at least 25 per cent of the sickness among workers can be prevented, thus diminishing present losses by about 67,500,000 days a year, resulting in a saving to workmen of $168,750,000, plus the gain in productivity of $337,500,000, making a total economic gain to the nation of $506,250,000. Fatigue and Physical Welfare. — ^In the next cycle of development, in which man-building will be the objective, fatigue of workers and the use of the stop- watch will have to be considered. Workers in' the industrial engineering field have repeatedly called at- tention to the effect of exertion and fatigue upon the ESSENTIALS IN MAN-BUILDING 31 worker, and, while some attention has been given to the matter, it has not been all we desire. If the , physical condition of a worker is worth consideration in peace times, it is certainly of fundamental import- ance in war times, when under the natural stimula- tion due to the call to arms, men and women will, go to the limit of their physical endurance, if not be- yond it. It has been seen that three to five men in industrial pursuits are required to maintain one soldier on the firing line. An army of from one to two million men places an enormous drain on industry, and to make good part of their loss from industrial fields, woman labor, and in some cases even child labor, may be utilized. In such cases, the question of fatigue and physical welfare is all the more important. England's Experience. — ^England performed won- derful work along these lines. In that country, early in the war the subject received scientific attention, with the government behind the movement. Three different investigations were conducted by the Home Office, the British Association and the War Office, and the Committee on the Health of Munition workers, respectively. It was found that work done at night, on Sunday, and after hours caused an in- crease in sickness and a falling off of both man and woman labor. In one case-— a works employing 36,000 hands — sickness increased from 2.9 to 4 per cent. In two departments, the sick rate among men on overtime was 5.5 per cent, as against 3.7 per cent for those on double shift. In addition, it was found in the case of 1,000 of the men that the rate 82 ORGANIZATION AND ADMINISTRATION was as high as 8 per cent, owing to the greater age of the workers, a fifteen-hour day, Sunday work, and the natural strain of wartime production, which was decidedly enervating. Trained investigators studied output in a careful manner. One of the experts. Professor Stanley Kent, found that, considered in groups, employees lost from 18 to 27 per cent in time because of fatigue caused by continuous overtime and lack of a weekly day of rest. Another expert, H. M. Vernon, stated that women workers, engaged in moderately heavy labor, increased their output 8 per cent when hours were reduced from 68 to 59 a week. In the confusion contingent on rapid mobilization of industrial workers, whether men, women, or chil- dren, the war showed that the question of hours, rest periods — ^both daily and weekly — and the effect of night work, Sunday work, and overtime can not be overlooked. In such times, an enormous responsibility rests upon the shoulders of the workers, and the man- agement should secure for them the kind of condi- tions that enable them to maintain their physical fit- ness, and at the same time insure a maximum pro- duction of the proper quality. Education as a Factor. — Another most important factor in this question of developing the human fac- tor is the part that education will have to play. Ac- cording to Richmond P. Hobson, an analysis of the antecedents of 10,000 leaders in all the walks of American life — as compiled in "Who's Who in America" — shows that the boy who stops his edu- cation with the grammar school has only one chanoc ESSENTIALS IN MAN-BUILDING 33 in 9000 to become a leader, the boy who completes high school has one chance in 400, and the boy who goes through college has one chance in forty. The average American boy leaves school before his twelfth year. In Germany every boy is required to go to school until he completes his sixteenth year, and he generally attends vocational night classes after that. Industry is full of men, both employees and ex- ecutives, who have only the one chance in 9000 of becoming leaders, and it will be part of the work of the reorganization of industry to work" out plans, in some manner, for giving these men what they did not secure before entering the industrial field. Essentials to be Considered. — Among the essentials we must consider with reference to our workers, are these: 1. The mental side of our workers must receive more attention than it has been given in the past. 2. We must eliminate strenuousness in work. 3. Force and drive must give way to the leadership which inspires men to accomplish things. 4. The faith of man in man must be a greater part of our industrial life than it is today. 5. There must be a separation of the inefficiency of men and management. 6. More consideration must be given to the problem of increasing exertion. 7. Worry on the part of our workers must be eliminated. 8. There must be a more equitable distribution of re- sponsibility. 34 ORGANIZATION AND ADMINISTRATION 9. The question of habit must receive proper consider- ation. 10. There must be a more intelligent selection of em- ployees.' 11. There must be fewer strikes and less industrial war- fare. 12. Labor and capital must view things more from each other's standpoint. 13. There must be more attention given to industrial and vocational education. 14. Rest and fatigue must receive greater consideration. 15. Work that stimulates must take the place of enervat- ing work. Ability to Induce Efficiency in Others. — With ref- erence to man-building as it pertains to the managers and executives, certain essentials have been discov- ered after a long study of the managements of in- dustry. It has been found that the man with the highest type of initiative is the one who sees things to be done, without being informed, and who then delegates to others the task of doing the work. The man with the next highest type of initiative is the one who sees things to be done without being in- formed and who then does the work himself. The next in order is the man who sees things to be done, after being informed, but who does the work without being told. I need not mention any other classes. In other words, you can measure a man's power in business by the extent to which he induces efficiency in others and at the same time gives the least possi- ble attention to duties other than his own. You will ESSENTIALS IN MAN-BUILDING 35 realize that this is a good business law if you will but consider that there is a limit to the amount of detail that a man can handle, but practically no limit to the amount of supervision that he can exercise, because in supervising he is merely guiding others. Would Lloyd-George in England, or Von Hindenburg in Ger- many, have been the powers they were in their coun- tries, if they had attempted to supervise and handle details at the same time? It is, of course, true that a man of strong, forceful personality desires to do things himself, since he feels that he can do them better than another. In a sense he may be right, but if he is wise he will not attempt too much. If he does, however, he not only limits himself, in that he cannot plan and scheme and do at the same time, but he is failing to develop initiative in those about him, and in time he will have a force of "leaners." I believe that we shall all agree that no man knows what he can do until he has had a chance to demon- strate what is in him, and that there is no man who is not able to do more than he believes himself capable of. I have time and time again found a man of only average ability who was a "leaner," but who de- veloped unusual ability when given definite responsi- bility and the necessary authority whereby to get results, with the understanding that if he failed he should make way for some one who could "make good." Executives sometimes fall into the error of med- dling with subordinates, to the extent sometimes of determining the manner in which details should be 36 ORGANIZATION AND ADMINISTRATION handled. The important consideration is to get the thing done — get "the message to Garcia." If I send a man from Buffalo to New York, I do not care when he goes or how he goes, so long as he gets there at the appointed time. It is achievements which count — not excuses. An officer once reported to General Kitchener that he had been unable to carry out an assigned task, and gave his reasons. Kitchener made this reply: "Your reasons for not doing it are the best I ever heard. Now go ahead and do it." Imagine what happens to the imagination and orig- inality of a man who has a brain of his own, but who constantly has to see things through the eyes of an- other, until, in time, he accepts one conclusion after another without giving matters any particular thought. Any system that makes such an automaton is not fair to the man. He becomes a machine, and there is dan- ger that some time he will do a wrong thing simply because he has quit doing his own thinking. Functions of the Executive. — My experience has shown that the real functions of an executive or a de- partment head are the following: 1. To exercise general supervision over the business or the department. 2. To analyze results critically. 3. To put new problems before his men for their con- sideration, advice, and action. 4. To criticize subordinates when results are not forth- coming, setting forth the reasons why. 5. To see that prescribed practice is lived up to. In "The Pharaoh and the Priest," by Glovatski, ESSENTIALS IN MAN-BUILDING 37 are these words of the priest to Pharaoh, which con- stitute the best description of efficient adjustment and relationship that I have ever seen: Draw on the earth, Lord, a square, and put on it six million unhewn stones; they will represent the people. On that foundation place sixty thousand hewn stones; they will be the lower ofiRcials. On these put sixty covered with carv- ings; these will be thy most intimate counselors and chief leaders. And on the summit place one monolith with its pedestal and the golden image of the sun ; that will be thyself. Efficiency Plus Contentment. — ^We may not need the greatest army or the greatest navy in the world, hut we do need the greatest efficiency and the greatest contentment on the part of our people. Contentment and lazy living, without efficiency, will lead only to our own undoing. Efficiency without contentment would, in time, make us a race of human machines. We do not want them separately — they must he har- nessed together, and it will be the real function of man-building, in the next era, to accomplish this. CHAPTER V THE COERECT TYPE OF ORGANIZATION Principles of Efficiency. — ^Harrington Emerson, the author of ' ' The Twelve Principles of Efficiency, ' ' con- siders Ideals as the first principle. The more I study this book (and I get new light from it each time I read it) the firmer is my conviction that Ideals is not a principle of efficiency at all, but the desired attainment, realized through the use of correct prin- ciples and laws — the ultimate end sought for. It is true that a burglar is remarkably efficient — he has to be — and while his ideals are wrong and against the laws of society, he uses definite principles like planning, standardization, organization, to attain his ends. The Germans have enjoyed the reputation for being remarkably efficient and this efficiency strikingly was manifested in their struggle with practically the en- tire non-Teuton world. The success so far as achieved was a real and terrible tribute to their genius for organization. Unfortunately their ideals as stated — the domination of the entire world and the extension of German Kultur — were unworthy a civilized nation, and they lost the respect of the outside world who felt towards them the same as towards the burglar yflao in the long run is caught and punished. Ideals 38 CORRECT TYPE OF ORGANIZATION 39 is the thing sought after whether high or otherwise. Ideals of Organization.— What then are the real ideals of organization development? Man building — nothing could be higher as an ideal. To make this ideal practical however, it must find expression and attainment through a type of organization which will recognize and use correct principles, laws and rules. Where will we look for such a type of organiza- tion, the ideal of which is man building? To Man himself. Organization of Human Body. — For years I have been an exponent of osteopathy, which recognizes the spinal column — a continuation of the brain — as the controller of good health. My doctor became inter- ested in my work as I in his. We were surprised to find how closely our professions paralleled. Together we analyzed the human body from an organization or business standpoint. There was the brain as the guiding factor or leader — the chief ex- ecutive of the bodily mechanism. There were the involuntary organs — stomach, heart, liver, kidneys and the like — the human machinery which supplied the motive power, working day and night, whether asleep or awake, conscious or unconscious. There were the voluntary organs — arms, hands and fingers, legs and feet — the organs with which we actually accomplish things. Then there were the five senses — taste, touch, smell, hearing and sight — as the staff organization, the advisors to the brain, which told the brain what to do or not to do, or was told by the brain to carry out certain definite tasks like listening 40 OEGANIZATION AND ADMINISTRATION to an unusual conversation, or trying to perceive an object far away, or to taste a certain food to ascer- tain if it were palatable. He gave me a chart show- ing the relationship of the brain, spinal column and the bodily organs, from which I worked up Chart 3, herewith. 1 Biain 1 1 Senses 1 ■ Vertebra ot Spine \ Involunlary Organs Voluntaiv Organs CHART 3. THE OEGANIZATION OF THE HUMAN BODY The Human Body a Model. — At a National Con- ference on "The Human Factor in Industrial Pre- paredness," held under the auspices of the Western Efficiency Society, it was my good fortune to hear Mr. Emerson in his characteristic style, expound ex- actly the same theory, in practically the same man- ner. He felt it sheer folly, to attempt to develop new types of organization or improve on those in operation, when one of such efficiency as that of the human body could be so easily patterned after with excellent results. His division was: 1. Organs of growth and upkeep, the earliest activ- ities in every life, the breathing, circulative and CORRECT TYPE OF ORGANIZATION 41 digestive apparatus— the maintenance section in other words. 2. The senses as the counselors, the business of which is to cull from everything that is happening, those particular facts which may be useful to the directing brain. 3. The directing brain, a single even if complex organ, which unlike other departments is never in direct contact with the outside world. The brain is not self-sustaining, nor self-counseling nor self- achieving. It simply co-ordinates and directs. 4. The organs of creation, of achievement, of doing, carrying out the orders of the brain or directing agency, as the hands, feet, mouth and generative organs. Line and Staff. — ^A close study of the foregoing conclusively indicates the wisdom of following the human body as closely as we can in determining the correct type of man building organization. First in order of importance is the executive, or director of activities, or guide, or co-ordinator, or whatever you choose to call him. Then comes the staff, the coun- selors who advise, criticise, prescribe and assist the executive in directing and co-ordinating. Now comes the question of adjusting the remaining two classes of organs, the organs of growth and upkeep and of creation and achievement * as Mr. Emerson defined them, or the involuntary and voluntary organs as I had come to consider them, to the staff and the executive. The Business Organism. — If we consider the line organization as made up of two classes of workers — those who carry on more or less of the same kind of 42 ORGANIZATION AND ADMINISTRATION work constantly, whose work is a matter of routine, like a workman or cost clerk or order clerk, and those whose work is more of a voluntary nature, work re- quiring individual initiative, where there is less routine, where judgment is constantly needed in mak- ing decisions, then we have the business organism cor- responding to the involuntary and voluntary organs of the human body. If we chart this thought, we would have a diagram similar to that shown in Chart 4. (nvoluniary 1 Oata rram an Available louiu . Executive Sraln n~ I r Sensei staff 1 Superintendenls & Foreman Voluntary Orgartism Line OrBanizatlon Clerks, Assislant ManagefS. Assistant Foreman - Worhmen CHART 4. BUSINESS ORGANIZATION MODELED FROM HUMAN ORGANISMS Executive and Advisers.— Looking at it another way and we would have the executive as the direct- ing head, with the staff as the advisory function. The organs corresponding to the hands, feet, mouth and the like would be the 'line members who actually do the things necessary to carry on the business suc- cessfully. The organs of growth, upkeep and main- tenance corresponding to the' heart, stomach, kidney and liver would be the purchasing, cost, order and niaintenance divisions, power plant — the functions CORRECT TYPE OF ORGANIZATION 43 wnich enable the line to properly do its work, when charted would be as shown in Chart 5. There is so little difference between the two that it is a case of taking your choice, at any rate, as one studies the question of the correct type of organ- ization in industry, it becomes more and more ap- parent, that the human body is a good model to pat- 1 Data from ill Available Source It Organs of gniwtb and upkeep. S Exteutiw eral 1 r Sensas Slifl 1 . Organtiation Departments keslitlng ip setting' business, maintaining plant and transacting routine busness roramen, AsslstanI Foreman * and Workmen. Organs of Achievemenl CHART 5. ALTERNATE ORGANIZATION MODELED FROM HUMAN BODY tern after and warrants us in accepting it as our ideal in approaching the problem. If we desire to avoid undue refinement, we can classify as line functions, the organs of growth and upkeep and of achievement, or the involuntary and voluntary organs which would make three main divi- sions : Executive organism- Staff organism Line organism -the brain -the senses -voluntary and involuntary members of the body. 44 ORGANIZATION AND ADMINISTRATION The following reference to the human body as an organism — quoted from Casson's "Factory Efficiency" — will be found interesting in this connection : The most perfect type of organization is your own body. In spite of Mechnikoff, the Parisian scientist, who says that the body is packed with imperfections, it is still true that the human body is Nature's masterpiece. The body is organized on staff and line principles. It is operated by the sensory nerves and the motor nerves. The body learns and acts, as every organized thing must do. The secret of the perfection of the body is that its work is divided up into functions. The body is mechanical, chemical, and spiritual. It is the most complete organization in the world, and the most wonderful. The Heart.— Here is a pump that drives a gallon of blood every four minutes; that works for seventy years night and day at the rate of seventy- two strokes a minute ; that is auto- matic, self-repairing, and self-driving. No engine made by man can compare with the marvellous Ituman Jieart. The Blood Corpuscles. — Here are millions of tiny motor vehicles running here and there in the blood — three ten- thousandths of an inch long, carrying oxygen wherever it is needed. The Eye. — Here is the most amazing of cinemas, with its colored moving pictures carried to the brain whenever the eyelid curtain is raised. The Ear. — Here is the original wireless receiving instru- ment, turning into sound the slightest vibrations of the air. The Spine. — Here is the basic mystery of the body, serving as a sort of telephone switchboard, and giving unity to the whole structure. What I want you to notice is that the body is run by efficiency experts. The ear is an expert. The eye is an ex- CORRECT TYPE OP ORGANIZATION 45 pert. The heart is an expert. The liver is an expert. Every function of the body is a skilled function, doing something which it has been fitted to do. Take the matter of digestion; first the food is chewed, or ought to be ; the salivary glands help on this point ; then the starchy matter is changed into malt sugar by the skillful ex- perts of the stomach. The gastric juices attack the proteids. The secretions of the intestines change the sugar into glu- cose. The liver secretions attack the fatty matters. The spleen does something else — we are not exactly sure what. Finally the lifeless food becomes part of the living body — exactly where and how, we may not know. But it is all ex- pert service. As for Civil Service, the body knows nothing of it. The body would not run for one day on Civil Service lines. What would happen 1 The ear might be made the Minister of Diges- tion. The thumb might be made the Minister of Optics. The liver might be made the Minister of Locomotion, and the big toe might be made the Home Secretary. Such would be the predicament of the body if it were run as a political bureau. As to this matter of seniority, the body knows nothing of it. The body does not favor its older parts. It does not ask about age; it asks about fitness. Every atom of the body is changed every seven years, showing that the body prefers, in general, the new to the old. It may be useful to ue to know how the body is governed. We have a three-fold brain — (1) Cerebrum, the center of thought and will. (2) Cerebellum, the center of voluntary conscious work. (3) Medulla Oblongata, the center of unconscious routine work. The method of the body is that all matters are first dealt with by the cerebrum, then turned over to the voluntary de- partment until the actions become automatic, after which the 46 ORGANIZATION AND ADMINISTRATION matters are handled by the routine department. It is the aim of the body to make as many things automatic as possible. When we breathe, or walk, or digest, or play a familiar piece of music on the piano, we do so automatically. Executive Organism. — As in the human body there is only one directing brain, so in organization, there must be one controlling member. The success of Schwab, Carnegie, Eockefeller and Gary is due to their acceptance of this truth — this law of individualism, or of one man control, referred to elsewhere in this dis- cussion. No business can be as successful as it is pos- sible to be, with two or three heads running things. There must be a single co-ordinating and directing function. A chart illustrating this type of organization — this centralization of direction — is shown in Chart 6 on the opposite page. The Executive. — That this type of organization goes back to ancient times is evident from the quota- tion by Glovatski in Chapter IV. Please note the sixty hewn stones covered with carvings, represented the most intimate counselors (staff) and chief leaders (line). A modern illustration of the definition by Fenelon of the executive (Chapter IV) is Sir Douglass Haig, Commander of the British forces in the European War. Writing about him in "Everybody's Maga- zine," Isaac F. Marcosson spoke of his executive talent as follows: In scientific distribution of labor and systematic economy of operation, the British army represents a thousand United COEEECT TYPE OF ORGANIZATION 47 1 EXECUTIVE 1 Assistant to Executive 1 1 — 1 r- 1 1 DhriBion 1 1, "^ 1 1 1 ' 1 1 Diviaion 1 1 ' 1 \ II lis4t.li II II II II II 1 1 1 1 1 ' 1 1 1 1 1 1 1 NOTE 1 1 |A8stSupt.| B^vy lines indicate centralized control. 1 1 1 1 1 no cross lines indicating conflict in authority. 1 1 1 1 1 1 1 CHART 6. AN IDEAL ORGANIZATION PLAN States Steel Corporations, piled on end and then some. The cohesion that binds it, the £nergy that galvanizes it, the fervor that animates it, and the pure genius that drives it night and day would stoke an empire — almost reorganize the world. Gear all this concentrated force up to a constructive business enterprise and it would show a balance sheet dripping with profit ! You have only to carry the commercial analogy one step further to discover the thing that dominates and makes pos- sible every important American co-operative undertaking, namely, a highly centralized direction vested with complete authority. In this case it happens to be the Commander-in- Chief, or in plain business terms, General Manager, of the British Armies, unlimited. 48 ORGANIZATION AND ADMINISTRATION Centralized Authority.— Did you get the real sig- nificance of the above— a highly centralized direction vested with complete authority. Northcliffe was asked why he fought so hard for a small war cabinet. He in turn asked if 23 Lincolns could run the United States government during the Civil War, or 23 Grants win it. The reply was, No. "Well," snapped Northcliffe, "there's your answer." This same Northcliffe, one of the real powers be- hind the British conduct of the war, is by the way, another example of this definition of Fenelon's. Mar- cosson said of him in "Everybody's Magazine": Strip away the glamour of the whole Asquith upheaval and you discover that it was merely a translation of the Northcliffe system of efficient team work into terms of national administration. Northcliffe demanded a small, compact cab- inet, that would get things done Ask Northcliffe what he thinks the ideal newspaper should be and he will put it like this: "Let one man — the controller- be in final authority; give him the best experts obtainable and let them alone. A newspaper should be the concensus of the best brains of the best specialists — the clearing house of the quickest and most accurate news from all theatres of world events, it should have the judgment of daily consulta- tion." Here agaiij we have direct evidence of line and staff as well as conferences or relationship between line and staff. The Real Executive. — The real executive in other words, is one who co-ordinates and directs the activ- ities of others; who selects line leaders and staff counselors, from among men who know more than he CORRECT TYPE OF ORGANIZATION 49 does about a particular subject, each one however subordinate to him. The most unfortunate trait an executive can possess, is to select men to aid him who know less about the work he engages them for, than he does, and yet this condition is often met with in industry. How such a man can expect to secure real assistance from inferior brains on a given subject, is something I will never be able to fathom. A man knows himself even if no one else does, and his par- ticular aim should be to pick men who can offset his weaknesses — who can supplement his general informa- tion with exact knowledge. Promotion aoid Conservation. — ^In the "American Magazine" appeared an article on "Are you a Care- taker or a Promoter" which contains the very thought in mind as follows: For three weeks I drifted about town, dazedly looking for a new business foothold. Then one day I ran plump into the arms of Bud Filcher. Bud had come back here five or six years before and had driven his way to the top in a company that competed with the Universah I had seen him occasion- ally, but we had never resurrected our old intimacy. I had been hearing rumors that Bud's company was in difficulties. That night Bud told me the whole story. A single paragraph will sum it up. "I'm a nervous wreck, Red," he said, "and the company is ready to hit the rocks. A good business, sound enough, ought to make a hundred thousand a year, and ready to go on the rocks. Why? I'll tell you why. Because it's a one- man concern, that's why. Because, every darn thing in it, every man and every operation hangs right around the neck of old Bud Filcher. It's wrong. Red, all wrong. I know my strength; so dcRR@-p^F?^>go^jten, ^goes^ the pep and ginger 50 ORGANIZATION AND ADMINISTRATION you have. If I were to wake up to-morrow and find I'd in- herited a circus, I'd think of ten new ways of selling pink lemonade before noon. But I 've got my weaknesses, too ; and you know it. I know it. What's worse, the banks know it. "I'm flighty. I fly off at a tangent. Out of my ten ideas one is good and nine are rotten ; and I 'm just as likely as not to spend money on the nine rotten ones like a drunken sailer. I can get a crowd of salesmen to work their blamed heads for me; but I'd rather be tied up to a wall and shot than to have to cheek up their expense accounts. Yesterday, the bank put it up to me flat. Not another cent, unless I get someone in as a financial man, a balance wheel. I've had five men in four years, and every one of them a failure. Meeting you is a godsend, Red; it's a message from heaven. If we disregarded it, we'd be flying in the face of providence. You and I need each other; you're going to be secretary and treasurer of our company, and your salary starts to-night. Not to-morrow — ^to-night. ' ' So it was agreed, and so it is. Bud Fileher is president, and I am secretary-treasurer. He is the promoter; I am the caretaker. He is the optimist; I supply enough pessimism to keep his feet on the ground. He is the action; I am the reaction. Bud is all dynamite and enthusiasm. I have seen him jump from his chair at the impact of an idea, and sketch it so convincingly that he swept everything before him. My inning comes in the day of decision, when I have to put the microscope to Bud's visions, or weigh the arguments of other men who are trying to interest us in propositions of their own making. After fifteen years of costly experience I have learned my lesson. I am caretaker by nature, and a caretaker I shall always be. And, incidentally the earnings of the company last year were all that even the bankers thought they ought to be. CORRECT TYPE OF ORGANIZATION 51 Staff. — Tlie question is often asked — wliat is staff? When, a man whether during all of the time or part of the time, asks himself the following questions, regarding any point: 1. Why are we doing a thing this way? 2. Is there a better way to do it? 3. How can we work out this better way! it can safely be said that he is doing staff work, a definition of which is: That function in a business which is advisory, analytical, critical, suggestive and investigative in character, which studies the business at aU points, at any time and which out- lines or formulates what standard practice should be. Let us consider a moment what constitutes the out- put of the executive, staff and line function. The executive function receives information regarding re- sults from the line function. The product of the line is accomplishment which, when studied, results in problems — the product of the executive function. If our conception of staff is correct, then it seems ob- vious that problems should be referred to staff for consideration, the product of which would be formula- tion, or as shown in Chart 7 on the following page. The Function of Staff, — Staff should be created to accomplish the following: 1. Determine the results which should be ac- complished. 2. Determine the best means of accomplishing. 3. Outline the methods to be used. 52 ORGANIZATION AND ADMINISTRATION r<»n.ul«ta ,,„, , ' runrtoo 1 Protl«nii (nnruallana \ \ =»"L 6 ■d Confirwcw 1 CHAET 7. FUNCTIONS OF LINE AND STAFF NOTE :— Observe that the flow Is continuous and always in the same direction, regardless of the starting point. 4. Outline the definite duties necessary to insure the methods being carried on as prescribed. Frederick Palmer in writing about the work of Sir Douglas Haig in the great European War, in "Col- liers," hit the nail on the head with reference to staff when he said: The Kitchener System which kept specialists to their last, still held. This was the secret of the Kitchener organization; indeed of all organizations of modern times perhaps. For example, for or five British officers might be on the same steamer bound to America, without anyone knowing of the others' presence. One was an expert in automobiles going to buy cars, another in clothing going to buy uniforms. They had been found in the ranks of the new army and immediately put to the task that each best understood, and kept there. That "and kept there" is the nub of the whole thing. CORRECT TYPE OF ORGANIZATION 53 Staff Limitations. — ^Because staff cannot and should not be final in itself; because in many instances there has been clash between staff and line; because the executive function should not be forced to consider all staff matters, because it seems desirous to concen- trate the best brains of the organization, who may not be staff members, on a given problem, it is neces- sary to provide some mechanism that can either be interposed between line and staff, or co-ordinate the work of the two in addition to the efforts of the executive function along this same line — some mech- anism that can act in a judicial capacity; consider pros, and cons.; merge the practical with the theo- retical; render it difficult to determine where staff advice ends and line acceptance begins. Conferences and Committees. — This spells confer- ences — the daily consultations Northeliffe was quoted as considering necessary to' the successful conduct of a newspaper, as previously mentioned in this chapter. Yes, I know that many conference plans have been failures. At the same time committee conferences can be made to yield excellent results if the work is handled properly, as will be shown in another chapter. (See Chapter XXI.) Committees should be created to accomplish the fol- lowing: 1. Obtain the concensus of opinon of those quali- fied to know most about a given subject. 2. Bring together various department heads to consider those matters which are common to all of them, so that the methods determined 34 OEGAMZATION AND ADMINISTRATION upon shall take into consideration the require- ments and welfare of the departments con- cerned. 3. The submission to the staff of those problems which require more attention than the line organization is equipped for, or has the time to make. 4. To consider staff formulation. The dotted line in Chart 7 shows the relationship between staff and line. Divisions of an Organization. — Now that the ques- tions of executive control, staff, line and relationship between staff and line, have been considered, it seems logical before concluding this chapter on the type of organization, to consider what its logical divisions should be. Obviously a business must start with money with which to conduct its business; it must know what to make as well as how to make it; it must make and sell the product and adjust the relations between the employees themselves and between employer and em- ployee. This gives us: Finance — Supplying the capital. Development — Determining what to make. Engineering — Determining how to make. Operation — Manufacturing what is to be made. Distribution — Disposing of what is made. Industrial Eelations — Considering the human ele- ment. CORRECT TYPE OF ORGANIZATION 55 Summary. — To sum up, a business needs a single executive control (the brain); it needs counselors or staff (the senses) ; it needs a strong line organization (the involuntary and voluntary organs); it needs a mechanism that will properly tie together line and staff, and the division of the organization must be logical and along sound lines. This chapter using the human body as a basis will assist the student of organization as well as the exe- cutive who seeks to better his type of organization, in forming a better idea of basic functions and rela- tionships that are so vital in industry. CHAPTER VI THE SIX PRINCIPLES OF OEGANIZATION Fundamental Principles. — The predominant fact in every form of human activity that principles not only underlie but must govern all things is often lost sight of, while man, individually and collectively, concerns himself with detail not infrequently of minor importance. A basic principle of the American form of Government is that all men are created free and equal. On the other hand the underlying fact of German political philosophy was that all men exist for the state, which is supreme. The Constitution of the United States is an elabor- ation of the principle above mentioned, and all laws passed must conform to it or be declared unconsti- tutional. Principles and Laws. — In industrial organization there must be both principles and laws. In an earlier book* I set forth the principles of organization, co- operation, planning, standardization and incentives. Later I took the stand that co-operation was a law and not a principle; that good principles could be used without co-operation, as for instance, in the case of the burglar who co-operates with no one — who works alone, with everyone's hand against him, his * Installing Efficiency Methods, The Engineering Magazine Co., New York. 56 THE PRINCIPLES OP ORGANIZATION 57 success depending entirely on how well he uses prin- ciples of universal application. Six Principles. — As a result of the above reason- ing, whether logical or faulty, I decided oij. Inves- tigation, Organization, Records, Planning, Standard- ization and Incentives. Subsequently the second prin- ciple was changed to Co-ordination, for inasmuch as these were principles of organization I desired to avoid duplication of terms. In putting these principles be- fore my readers I know of no better way than to use the paper on "Surveying My Day" by Harry A. Hopf of the Phoenix Mutual Life Insurance Com- pany, Hartford, Conn., for while it was written purely for insurance salesmen, yet it is an excellent treatise in personal efficiency and also outlines the practical application of the principles I have enunciated, the last four of which are contained in Harrington Emer- son's famous "Twelve Principles of Efficiency." The paper in question is as follows: Surveying My Day. — "Perhaps the simplest way to present the factors which enter into the survey we are about to undertake, is to set forth the conception of the individual as a business organization. It is evident that in order to achieve success you must capitalize yourself as a business undertaking, and you can do this no better than to apply the six funda- mental principles which operate in the investigation and development of any business organization. "In the very interesting book on Industrial Pre- paredness, by C. E. Knoeppel, a well-known organiza- tion specialist, these principles are described as fol- lows: 58 ORGANIZATION AND ADMINISTRATION First: Second: Third: Fourth: Fifth: Sixth: Investigation: Finding out what to do. Obganization* : Building the machine that will properly carry out what should be done. Records : Gathering facts and statistics to be used by this organization in arriving at the right kind of conclusions in carrying out what should be done. Planning: Logically arranging and co-ordinat- ing all details so that the various steps can be rapidly and efficiently carried out. Standardization: Carrying out the steps deter- mined or actually doing the Vork in a proper manner. Incentives: The results of the successful appli- cation of the other five. "With the aid of these six principles, you, though an individual, may nevertheless project yourself into the future as a business enterprise. By applying the principles in your daily work, you will be able to build up your business so as to return to you a con- tinually increasing measure of profit. "Let us now examine these principles more closely and see how they may be made to do service in your cause." First Principle — Investigation. — "Finding out what to do." "As a life insurance salesman, it will not require much investigation on your part to come to the con- clusion that your 'what to do' embraces the problem of successfully serving an increasing number of * This has been since changed to Co-ordination. — C. B. K. THE PRINCIPLES OF ORGANIZATION 59 patrons in the matter of life insurance. But to rest with this statement of your function as a business enterprise, would he to grievously understate the true condition. "Every individual, irrespective of his line of busi- ness, has a three-fold duty, i.e., to himself, to his family, and to the community. Should he slight any one of the three, he is bound to find his development warped and his aspirations militated against. His duty toward his family requires that he give them generously of his time and attention, and that busi- ness be not placed above his family obligations. Great is the temptation to neglect one's family when en- gaged in the life insurance business, which can be followed at all hours of the day or night, whenever a prospect's ear can be reached. "The duty of the individual to give of his time in service to the community is obvious, and it is an encouraging sign, as far as our business is concerned, to see an increasing number of life insurance sales- men rendering themselves conspicuous in public serv- ice. It is a fine thought that man-building must pre- cede salesman-building, and that in the development of the man lies the greatest assurance of success in the vocation of salesman. "So then, with a recognition of the work to be done, and the threefold duty to be performed, we may pass to a consideration of the second principle- Organization." Second Principle — Organization. — "Building the machine that will properly carry out what should be done." 60 ORGANIZATION AND ADMINISTRATION "Our discussion of the principle of Organization, as applied to the individual, may naturally be divided into two sections, the mental and the physical. 1. Mental: — "Hugh Chalmers tells the story of a convention of National Cash Eegister salesmen in Germany, which he attended some years ago. Among the delegates was a Mr. Peterson, who had led his particular division in sales for ten consecutive years. Mr. Chalmers asked Mr. Peterson to tell the sales- men assembled to what cause he attributed his long maintained leadership. The answer was brief and to the point: Said Mr. Peterson: 'I do not know that I can attribute my success to any definite cause, but I do know that no man can ask me any question about the National Cash Eegister which I cannot answer.' This is triking testimony to the value of a complete knowledge of the technical phases of one's business, and it is this knowledge which I desire to set forth as the first requisite among the mental abilities of the life insurance salesman. "I desire, however, to go a step further and to speak of the life insurance salesman as a business adviser. So many men appear content to act merely as life insurance specialists and overlook the larger returns which would undoubtedly come to them were they qualified to act in the broader capacity indi- cated. A firm grasp, to be acquired by study, of the fundamental principles underlying all business, will aid in the development of an intelligent understanding of the particular needs of business concerns requiring service in the matter of insurance protection. Is it not distinctly worth while to view business in its THE PRINCIPLES OF ORGANIZATION 61 broader aspects, and to gain the confidence of intend- ing clients by your mastery of their problems? "It is almost trite to speak of the development of man-building qualities as the next feature to be em- phasized. And yet, how supremely important is the building up of all the personal qualities and the cor- rection of known weaknesses. Time will not permit of any detailed reference to these qualities, but in pass- ing I should like to speak of the cultivation of just one, namely. Poise. I cannot give you a satisfactory definition of Poise, but all of you have felt its subtle influence and have seen it combined with a certain clearness of insight which has enabled the possessor to avoid every unnecessary effort and to make every stroke tell. Poise is a universal characteristic of the so-called captains of industry, and I believe it should rank high among the necessary qualities of the life insurance salesman. "Much could be said about the establishment of ideals, the clear perception of the goal toward which you are striving, and the willingness to submerge yourself in the group of your associates for the sake of teamwork, having always the success of the entire group in mind. The study of human nature and the development of the ability to accurately interpret the minds of those with whom you come in contact, are important additions to your mental equipment. "What you cannot acquire through personal obser- vation, endeavor to master by pursuing a thoroughly arranged reading course, in which biography and psychology should be given prominent places. Study the lives of the world's great men and grasp the 62 ORGANIZATION AND ADMINISTRATION fundamental principles of psychology, the science of the mind. Above all, have an intelligent and well- worked-out plan of self-improvement, to be put into effect during your personal over-time. Bead Edward Howard Griggs on *The Use of the Margin.' 2. Physical: — "Let us now turn from questions of the mental and delve into the realm of the physical. Here the influences at work, either for or against success, are more or less visible, and therefore lend themselves more readily to development and control. "In the matter of physical health, I can touch only upon a few points. All of you appreciate the value of good eye-sight, but how many of you submit your- selves at regular intervals to examinations by special- ists? Aren't you at times the victims of procrastina- tion in this respect, to the detriment of your health and of your work? ^ "How many of you have definite agreements with your dentists to notify you at least twice a year that you shall submit yourselves to a thorough examina- tion of your teeth? When the notification comes, do you always go promptly, or does procrastination get in its fine work again? "What attention do you pay to the condition of your feet and to the purchase of efficient footwear? To my mind .the latter is a matter of considerable importance, in view of the large amount of walking the average life insurance salesman has to do during the day's work. It seems to me that the best shoes money can buy are not too good for the salesman. If necessary, they should be made to order, under the advice of an orthopedic surgeon. The proper care THE PRINCIPLES OF ORGANIZATION 63 of the finger nails is highly essential, if for no other reason than to make a favorable impression on the prospects with whom you come in contact. "Now let us consider the matter of personal hygiene. I need hardly emphasize the value of fre- quent bathing, both internal and external. Not so generally recognized, however, in practice is the necessity of fresh air and deep breathing. Prepara- tion for the business day should begin on the night before. The sleeping rooms should be thoroughly ventilated and the windows kept wide open. "Springs and mattress on the bed should be the best money can buy. Deep breathing and regular exercise should be practiced in the morning. Fre- quent changes of clothing should be made. "Brief references should also be made to personal habits. Eating is the most important, and probably the habit in the exercise of which the greatest indis- cretions are committed. Breakfast and luncheon should be as light as possible; dinner in the evening may be hearty. Nothing has a greater effect in de- tracting from working efficiency than a heavy lunch. "As far as drinking is concerned, I personally be- lieve in total abstinence, as a matter of efficiency. A world of statistics is available to prove the danger of the use of alcohol. Smoking, while not necessarily harmful, belongs to the class of mild vices, and con- stitutes a nuisance to the good hausfrau as well as those who desire to keep their offices clean. Under no circumstances should a life insurance salesman appear with a lighted cigar in the presence of a prospect. 64 OKGANIZATION AND ADMINISTRATION "Let me dismiss the subject of physical organiza- tion of the individual with a mention of the value of relaxation. Psychologists agree that it is a good thing to have at least fifteen minutes' relaxation in the middle of the afternoon, and some very inter- esting studies have been made demonstrating the value of rest periods. "If conditions are such that you can completely relax for a few minutes during the afternoon, you will find that you will be able to throw off the in- creasing fatigue, and maintain yourself in a position to do efficient work for the balance of the day. As far as relaxation in the evening is concerned, it is not necessary to demonstrate the value of such a practice. ' ' Third Principle — Records. — "Gathering facts and statistics to be used by this organization in arriving at the right kind of conclusions in carrying out what should be done." "Our discussion of this principle may also be divided into two sections, namely, personal and busi- ness. 1. Personal: — "In the group of personal records, the most important are those which pertain to your per- sonal finances. Because of the fact that a life insur- ance salesman's income is uncertain, at least as to time of receipt, it is very essential that a complete record of expenditures be kept, so that a definite idea may be obtained as to the probable fixed charges during the course of the year. "Without this information it is impossible to dis- tribute the income so as to meet the obligations as THE PRINCIPLES OP ORGANIZATION 65 they accrue. A budget of your probable expendi- tures should be constructed, and this will enable you to forecast your financial circumstances with a reasonable degree of accuracy. There should be set aside a fixed sum for your household expenses, and in addition you should pay an allowance for personal expenses to the business manager of your home. "Your calculations should be based upon the as- sumption that you are going to save a certain sum of money per annum, and this should be set aside religiously in monthly instalments. Forms for bud- gets and records of personal expenditure are readily obtainable, and their use constitutes a source of per- manent satisfaction to those who have tried them, "A somewhat difficult problem is to construct a daily schedule of your activities, and then to live up to it. Nevertheless, if you succeed in this direc- tion, you will have accomplished a big step forward, because by the adoption of a daily schedule you will have established certain fixed points around which all your activities may turn, thus enabling you to utilize your time to best advantage. "Just imagine that you are scheduling your activ- ities like you would your golf game, and see how much more real fun and value you will get out of the former than you sometimes do out of the latter, "From the educational standpoint, you will benefit greatly if you will keep records of your reading and make brief digests of books of importance. Nothing is of greater help in making the contents of the books you read a part of yourself than this matter of brief- ing. Besides, in course of time you will accumulate 66 ORGANIZATION AND ADMINISTRATION a valuable reference file by arranging your briefs according to subject. 2. Business: — "This reference to briefs brings us to our second section, the records of business. One of the most important adjuncts to your work is the maintenance of a file of information, classified accord- ing to subject. "With a little perseverance, you will be able to collect, as a result of your reading, a host of clip- pings from newspapers and magazines relating to the subjects in which you are interested. These should be filed in folders, arranged in alphabetic order ac- cording to subject, and you will be surprised to see the profit which a little investment of time will yield in that direction. "Your main record, as a life insurance salesman, will naturally be your list of prospects. This is a familiar subject to all of you, but it is worth men- tioning that, according to a somewhat extended ob- servation, relatively few life insurance salesmen real- ize the importance of keeping their records of pros- pects in such shape as to be able at all times to ex- tract the greatest degree of value from them. I haven't the time to dwell on this point further, but I shall be glad to go into the matter in detail at some other time with anyone present who may be specially interested. "To a life insurance salesman, the problem of ob- taining a working knowledge of what constitutes an insurable risk is of vital importance. I know of no way whereby the necessary information may be ob- tained, except perhaps to study the articles by author- THE PRINCIPLES OF ORGANIZATION 67 ities which appear in technical periodicals and jour- nals, and to keep a careful record of all the bits of information which may come to the salesman through the medium of company correspondence in connec- tion with risks submitted. "All company rulings should be carefully pre- served, and the field man can do himself no better service than always to have before his mind, when soliciting, the question of determining, at least to a limited extent, whether or not his prospect is insur- able. "Comparative records of progress, kept in loose- leaf form, provide good material for study by the life insurance salesman. To a man who is constantly endeavoring to beat his prior performances, such records constitute a fine stimulus. "At this point I want to take a few moments to speak of the benefits of a survey of your efficiency in the use of one week's time. "We have had prepared a blank (see page 68), ruled off according to the days of the week, and has been subdivided into hourly periods from 8 A. M. to 6 P. M. Each such period is again divided into four squares representing fifteen-niinute periods. At the foot of the blank you will notice a classification of typical 'daily' activities, under six different head- ings. To each of these activities a certain symbol has been assigned, as indicated in the column 'For Home Office Use.' "It is our belief that these symbols, as listed, will suffice to indicate practically all the activities in which you may engage during any week. We desire 68 OEGANIZATION AND ADMINISTEATION 1 - .1 X s X X f X fe o *fc X ., X it 1 * X X X 1 o X X 1 X o * X X 4fc n X * X X * •* X 1 X X * X 1 X X X X X X — H % X X X — % X * X * II X II X II 1 II X 11 11 II I - II II X II II 1 2 II II X 11 X ^k X II X o X o X X o X o a X * X * X X X * * *; 1 X X 1 * X i X X X * X X X s X X o X X X R * X X X X * X X X X 1 X X X X X 2 1 X X o X X 1 «■- « 1 * X 1 * X 1 * X s 1 u S 1^ K, > 1^ t :? :: S! "■■ ''i ^ a, ^ * X 4t * * c ^' ^ fc ^ * *. • — — — — — — — — \— — — S f^j iq. 00 (O 00 'O h- fta «i ^ -s >. (\j 'CM -i 5 1 5 i I- - - ^ _ 1 \» ■< a (H S o Z {x] ^ M m ^ % m ffl % -4 I n >> H ■*. Oj n. » V 1 w W H ^ < >< ,WI hJ n t4 n ^ H > ° m THE PEINCI^LES OP ORGANIZATION 69 that during a certain week, viz., Ocober 16 to 21, you make a careful analysis of the use of your time and record it by means of appropriate symbols on the blanks with which you will be supplied. Our purpose in asking you to do this is two-fold: first, we feel that you personally will derive much benefit from a study of the results of your analyses; secondly, we ourselves shall be much interested in tabulating the detailed time studies from all the blanks, and shall try to establish certain standards which may be of future help in developing among our field men greater efficiency in the use of their time. "We invite your earnest co-operation in this ana- lytical study, and feel sure that you will be repaid for your slight trouble in the matter by the facts which the study will reveal." Fourth Principle — Planning. — "Logically arranging and co-ordinating all details so that the various steps can be rapidly and efficiently carried out." "If the principle of Planning, the fourth in our discussion, means anything to you, it must impress you with the importance of dominating your day's work and not allowing your work to dominate you. From the moment you are ready to begin the day's work, 'the principle of planning should be allowed to operate. "Perhaps the most immediately helpful effect from planning is in the direction of greater desk efficiency. It has been my observation that very few life insur- ance salesmen are alive to the importance of making their desks a working machine instead of a store- house for miscellaneous odds and ends. 70 ORGANIZATION AND ADMINISTRATION "Much could be said on the subject of desk efe- ciency, but time does not permit. I must, therefore, content myself with the statement that the difference between an efficient and an inefficient desk arrange- ment may easily account for fifty per cent of the time which you are obliged to spend in desk work. "Eouting your calls so as to cover the territory with the least possible waste of time, is another illus- tration of the benefits of planning. "Above all, the importance of planning your inter- view and carefully thinking out beforehand exactly what you intend to say and propose to your pros- pect, must be apparent to you. I do not mean, how- eer, to indicate that you should not adjust yourself to unforeseen contingencies which may arise in your interviews. By planning your salestalk and develop- ing every phase sf it, you will be able quietly to dominate the interview and to guide the conversation into channels which will be helpful to your cause." Fifth Principle — Standardization. — ^"Carrying out the steps determined, or actually doing the work in a proper manner." "A short time ago, I had some correspondence with Mr. Harrington Emerson concerning a course of lectures which he had given at Johns HopkiQS University. In response to my request that he fur- nish me copies of the lectures in question, which had not as yet been published, he stated that they were lying in the form of unprinted manuscript on his table. And then he added this interesting comment: 'I plan far more than I can carry out.' "Coming from one of the leading efficiency engineers THE PEINCIPLES OF ORGANIZATION 71 in the country, this statement is delightfully human and sheds a significant light on the causes for non- performance of which so many of us are guilty. To most of us there is a wide gap between planning and performance, and the best we seem able to do is to strive against letting this gap become too large. "The principle of standardization, the fifth in the series of six which we are discussing, is practically the only one which may be applied, not alone to the work in hand, but also to the other principles. In- vestigation, Organization, Records, and Planning may be standardized, and thus will add to the force with which the principle of standardization may be car- ried into effect. The best that can be hoped for in the matter of standardization, is constant hammering away along the path of progress and a gradually increasing rec- ognition on the part of the individual of the benefits of standardization as applied to his own work. Sixth Principle — Incentives. — "The results of the successful application of the other five." "Much could be added to what has gone before, in taking up for discussion the sixth principle — Incentives. Education, environment and personal circumstances all supply incentives of varying kinds and degrees to the individual who is struggling for- ward in the battle of life. "This much, certainly, is true — that the whole pur- pose and plan of efficiency fall absolutely to the ground unless in the general scheme of things it is recognized that the contentment, prosperity and prog- ress of the individual are to be promoted. 72 ORGANIZATION AND ADMINISTRATION "Happiness of the individual must be the prime object of efficiency; in other words, efficiency is sim- ply a means to an end. In the prosecution of your service to yourself, your family and your community, you will derive the strongest kind of incentive to greater efforts through the realization that the in- tangible and not the material things are the ones most worth while, and that mental and spiritual progress should be cherished above financial and soeial. "It behooves us to have supreme confidence in ourselves and our ability to master the problems which confront us, and we should be possessed of the determination to continue the struggle and ever push forward, no matter how slow the progress; for there is no such thing as a standstill." It is felt that a study of the above principles, so clearly expounded by Mr. Hopf, as they apply to human conduct, will give the reader, interested in Industrial Organization, a good working conception of them, leaving it to subsequent chapters to discuss them from the standpoint of their practical application to industry. CHAPTER VII THE LAWS OF ORGANIZATION The Working Laws of Organization, — It is my sincere conviction that the time has arrived for a determination of clear, workable definitions of the working laws of organization, presented from the standpoint of what should be done, rather than from that of what should not be done. In this discussion, it has been my aim to lay down the principles of organization, which, you will remem- ber, embraced: — Investigation, Co-ordination, Records, Planning, Standardization and Incentives. I have already given a description of the essentials to be considered before active work is begun. I shall now treat as thoroughly as I can in two chapters, the laws of organization, leaving it to those whose books are later in this Course to discuss the various applica- tions of these laws. I shall take up these laws in regular order. First Law — ^The Objective. — ^If an engine designer should be called upon to design an engine, he would have to know whether it was going to be a gas, steam, oil, or gasoline engine — simple, tandem, com- pound, or duplex — ^two-, four-, six-, or eight-cylinder. In other words, he would have to have some objective in mind before he could begin his work. 73 74 OEGANIZATION AND ADMINISTEATION So in organization work, some tentative plan must be worked out and decided upon. The ultimate objective cannot be agreed upon at the outset — owing to the presence of unknown factors, which cannot be determined in advance — in fact, it will be well toward the completion of the work before the final type of organization can be settled upon. No plan can be worked from the top down in its entirety, nor should one be worked altogether from the bottom up, for this would result in a development lacking co- ordination. The game should be one of "playing the ends against the middle." The reorganizer should therefore arrange to de- velope a tentative plan of organization, based on such knowledge as he has been able to secure from his investigation and his preliminary campaign. This plan will be subject to change as he gathers facts which warrant a change. As will be seen later, development is taking place from the bottom up, so that ultimately he can merge sectional development into divisional development, divisional development into departmental development, and then make a combination to form a general organization. In short, there is the necessity of developing tentative plans around which, the work may center. Thus, we have the law of objective. Let us take, as an example, the case of the en- gineering department of a large manufacturing com- pany. It designs and constructs buildings; designs, makes, and installs machinery; generates and trans- mits steam and electric power; maintains buildings and equipment, and takes care of the clerical details THE LAWS OF ORGANIZATION 75 in connection therewith. It may do many more things, but, assuming that the functions listed are those of the department in question, a tentative plan could be worked up as shown in Chart 9. This plan is our objective, or our starting point. ■ Depntmenl ( 1 aonrtuetton ~ 1 •«-™. Msiimnaftea 1 Chrkal _J CHART 9. ORGANIZATION OF ENGINEERING DEPARTMENT OF A liARGE MANUFACTORY Second Law — Greatest Complication. — ^A student in school or in college will devote (or should, at any rate) the major part of his time to his most difficult subject, as a result either of his own initiative or of pressure exerted by his instructors. The evolution of industry from a one-man stage to that in which many men are needed for the handling of specific things, has been based, consciously or otherwise, on this "law of greatest complication." In manufacturing, for instance, there was no doubt a time when the same man could both design and sell what was to be made and then go out in the shop and make it. But as the knowledge required of a man to design, sell, and to make, became greater and more complete and intricate, it became necessary 76 ORGANIZATION AND ADMINISTRATION to form two sections or departments, eacli of which took over one of the functions named above. Each department was placed in charge of a specialist, and both departments were supervised by the man who formerly handled all the details himself. This law, that is involved, applies not only with reference to a business as a whole, or to a single department of a business, but to any division of any department. In the illustration of the working of the law of objective, there were five divisions of the department in question. To apply the law of com- plication, it would be necessary, first, to determine which of those five divisions was the most com- plicated, which sections of the divisions were the most complicated, and so on. Let us assume that the maintenance section is the most complicated, and that it has four sections — inspections, repairs, shops and utility divisions, also that the construction section is the one next in order of complication, with two main divisions — design and outside-work — and that the power falls into two classes, steam and electric. The chart of organization would then be as shown in Chart 10. There are several reasons for establishing this law: first, to guard against putting more work on the shoulders of a man than he has the knowledge and ability to handle; second, to make it possible to pick out the hardest job first; to make possible the selec- tion of that work which will yield the greatest returns in the shortest possible time. Let us take as another example the case of a pro- fessional industrial engineering firm. Obviously, THE LAWS OF ORGANIZATION 77 Engineering Dept. Construction Design Outside Work Power I Steam | | Electricity Mfg. Maintenance | Clerical | Inspection Repair Gangs Utility Crews Shops CHAKT 10. DETAILED ORGANIZATION OF ENGINEERING DEPARTMENT since no one man is in a position, in a concern of any considerable size, to handle all the details himself, a division of some sort is necessary. What shall it be? Before work can be done at all, men must be secured, trained, and assigned to contracts. There- fore a department on "Men" is created. To get business that will enable the firm to utilize the serv- ices of its men, requires investigations or surveys; it is therefore logical to create a division of "Inves- tigation." With business secured and men assigned to the work, supervision is essential to the satisfac- tory progress of the work — hence a department of "Supervision" is instituted. 78 ORGANIZATION AND ADMINISTRATION The result of work done by a consulting firm is data, standard practice, methods, and the like, which, if not co-ordinated and put in proper shape, will con- stitute a decidely unsystematic mass of details. As the "Chief of the Engineering Staff" cannot give more than a part of his time to this work, he creates a department of "Standardization," the function of which is to establish standard practice. The mechan- ical development in a professional firm is also im- portant — a fact which will .be appreciated by any one who had had to do with engineering installations — so a "Mechanical" section is provided, as well as a "Eeports" section, in order that results of investiga- tions, supervisions, and actual work may be set forth in an intelligent manner. The organization plan would then be as shown in Chart 11. In other words, the "law of greatest complication" demands that instead of trying to find a man who can handle all the work himself, it is better to create a department divided into the most difficult functions which the man in charge will be called upon to cover. As an illustration of the practical working of this principle, let us consider the case of a shop that manufactures a complicated machine. The most difficult function of the organization would be in connection with the method of manufacturing all the intricate parts of which the machine is composed. If organization were effected with the idea of having each workman build a complete machine, from start to finish, it would most certainly be necessary to hire unusually talented workmen. And even then, they could hardly be expected to do efficient work, for THE LAWS OF OKGANIZATION 79 Industrial Engineering Firm Development | Engineeriiig | £ Men I I Sttpervisions | 1 I Offiiie I I Investigation . [ Staodardization | Mechanical Beporta j CHART 11. ORGANIZATION PLAN OP CONSUUXING ENGINEERING FIRM they could not be expected, if they could perform many different operations, to be extremely proficient in performing any one of them. If, however, the most difficult function — which we might call the knowledge of all the intricate parts — ^is divided, and each workman is expected to make only one of the parts, or perhaps to perform only one of the opera- tions in connection with one of the parts — under such circumstances a lower class of labor can be used, and each man will specialize and become very proficient in performing his particular operation. I am going to cite, as another example of this division of functions, the case of the layout of a cer- tain shop that came under my observation. In this 80 ORGANIZATION AND ADMINISTRATION shop all the machines of a similar kind were grouped and placed in charge of a foreman for that type of machine. The lathe department did the lathe work in connection with all orders in the shop. Work for this department frequently came from the farthest part of the shop, and had to be sent to a distant point when the operation was completed. Not only did every part on which a lathe operation had to be per- formed have to come through this department, but the foreman had to be familiar with the construction of all these parts in order to direct intelligently the work in his department. Naturally it was difficult to secure a foreman with this degree of ability. As all lathe operations on repair work were preformed in this department, it was practically impossible to schedule work, for it was continually being side- tracked for rush repairs. The consequence was that the department had to be run on an inefficient repair- shop basis. A study was made of this shop and it was found that the work could be grouped into four classes that were dissimilar. The organization plan was there- fore changed. The lathe department was divided into four sections, and each section was to handle one of the classes of work. The machinery was re- arranged in aiccordance with sequence of operations, and each section was given equipment of all kinds necessary for the class of goods that it manufactured. By means of this arrangement the following advan- tages were gained; each foreman became a specialist in the particular class of work he handled; work passed through the shop by the shortest route; the THE LAWS OP OEGANIZATION 81 work was planned and run on a more efficient basis than was before possible; and each foreman was justly held responsible for the complete manufacture of one class of goods. The mistakes that had been made in laying out this shop was to divide the department into sections corresponding to types of equipment used. The most difficult function was not in connection with the knowledge necessary to run the various types of machines, but in connection with the knowledge of all the products manufactured. Another instance of this sort occurred in the sales and order departments of a large manufacturing plant. The products turned out were of many thou- sands of types, kinds, sizes, and qualities, and it was almost impossible for any one person to be thoroughly familiar with all of them. As a result, the necessity for this knowledge was the most difficult factor in the work. The sales force was divided into territorial division except in one or two cases in which special departments had been started to carry on the sale of specialties. The organization of the clerical depart^ ment consisted of the establishment of the following divisions — order-transcribing, pricing, unfilled orders, stock record, billing, claim, filing, and statistical. The company was rather proud of this plan of organization, for they felt that they had economized by grouping all similar operations. Investigation revealed that prior to the change, an order took an average of three days to reach the factory; that the percentage of mistakes was extremely high; that the service to customers was not satisfactory; and that 82 ORGANIZATION AND ADMINISTRATION serious mistakes were made in filling orders sent to the factory — ^mistakes both in pricing and in billing. The reason given to explain why the mistakes oc- curred, was that it seemed to be impossible to get high grade clerks in the vicinity. It is an invariable rule that poorly organized departments always com- plain of the poor class of labor that they employ. The fact is, the work is so difficult that the average clerk is unable to handle it right. The pricing department furnishes a good illustra- tion of the faults in the organization of this depart- ment. Here orders were priced from voluminous files by one set of clerks, and were repriced, by way of a cheek, by another set of clerks, and still, with all these precautions, there was frequently an average of ten per cent of mistakes. The trouble was that each clerk handled the prices of such an enormous variety of goods that it was impossible for him to become familiar with them all and he consequently made mis- takes in classifying them. The difficulties of this whole department, and of the sales department, were finally overcome by entirely reversing the organization. The sales depart- ment was divided according to product, and each sales section was assigned its portion of the clerical department. By means of this arrangement, the order-interpreting, factory-order-writing, pricing, fol- low-up, claim, and statistical work for each product was done in the sales department which handled that product. Some of the sales departments would have only two clerks handling all these operations, but as these men handled only a limited number of products, THE LAWS OF ORGANIZATION 83 they became thoroughly familiar with them; con- sequently they performed their work rapidly, and seldom had to refer to their files for price data or other information. It was no longer necessary to double-check prices, there were few mistakes, and consequently the checking clerks were eliminated, and the total number of clerks was reduced. Since orders were no longer delayed in passing from de- partment to department, it was possible to get all orders to the factory the same day they were re- ceived. The sales departments were also much benefited, for their clerks were now familiar with all details of their customers' orders, and the service to customers was improved accordingly. Third Law — Concentration. — Each section, division, or department of a business should be so arranged as to contain all the factors which will effect the per- formance of only its own function. If such a plan is adopted, the head of the work can be held strictly responsible for the successful conduct of his depart- ment, as he controls all the factors in connection therewith and can therefore be given to understand that he will stand or fall according to his showing. For instance, in one case it was found that the purchasing agent of a large company was also the sales manager. Not only was this arrangement con- trary to all the laws of good organization, but it was incorrect in principle. A purchasing agent must of necessity be a pessimist — cautious, "from Mis- souri," able to drive a hard bargain, and, in some instances, absolutely cold-blooded. On the other hand, a sales manager must be an optimist — whole- 84 ORGANIZATION AND ADMINISTRATION souled, cheery, a good fellow, and willing to "give and take" if necessary. You cannot find such directly opposite characteristics in any one individual. And even if you could, it would violate the "law of con- centration" to have one man hold both positions, for the reason that you cannot hold him responsible for doing two such important things at the same time in a business of any considerable size. As a matter of fact, this man just mentioned was either a good pur- chasing agent, or he was not; he was a good sales manager, or he was not. If he was efficient in neither position, he should have been dismissed. The solution of this firm's problem was worked out on this basis. In an engineering department of a certain large company it was found that the same man was handling power and maintenance. Study showed that the power division was in good shape — ^but the same could not be said of the maintenance section. The man was one of the best power engineers in the country. Power was the thing he was most interested in. It was therefore a violation of this law of concen- tration to put him in charge of a division of no less importance than the power section. Then, too, this man was methodical, deliberate, thorough — he always insisted that things be done just right. It is all right to place such a person in charge of the power section. The maintenance division, however, needs a man of quick action, one who will fix things in "any old way" to get a machine running after a breakdown, and then put in the permanent repair later. It is easy to see, then, why this firm's maintenance division was not up to par. THE LAWS OP ORGANIZATION 85 In another case, the designer of the product was the production manager — and the company was always in hot water. One day, he would think out a new device; the next, he would have it made; the day after, he would change his mind, scrap the part, and have the improvement made. The result was that the shop resembled a junk pile — all kinds of obsolete parts were lying around the floors. Of course, there was no standardization, and the lack of system was decidely costly to the concern. The man was not concentrating. It was a case of dual per- sonality. When it was put up to this manager that he must be either the designer or the production manager, he resigned. The designing was put in the hands of one man, the production in charge of another, and the difficulties were solved, first of all because there was concentration, and secondly, because there was logical relationship between departments. If the production manager considered a design impractical — or if he believed it was practical, but next to impossible to make economically — he had recourse to the man higher up. So did the designer, when he felt that in the production of the work, quality was being sacri- ficed for quantity, or that the design called for was being altered. The strict observance of this law when organiza- tion is being effected greatly reduces the amount of supervision required, and also tends to develop and strengthen the men in the concern. If a man is given full charge of a division or section of a business, and controls every factor that affects the successful per- 86 ORGANIZATION AND ADMINISTRATION fomiance of the main function of tliat division or sec- tion, he can be held wholly responsible for that func- tion. If, however, other men besides himself have charge of some of the factors affecting the success of that function, it is impossible to hold him solely responsible for it. The only method of supervising him, under such circumstances, will be to hold him responsible for all the operations he has charge of that affect the performance of his function, and then to check him up carefully. Such a system involves an excessive amount of work in supervising, and al^o forces the man himself to follow personally all the details of the work he supervises, in order that, when called to account for them, he may be familiar with their condition. Any one, under such a handicap, will naturally become absorbed in details, to the detriment of his executive work. In the machine shop previously mentioned — ^in which the organization conformed to the type of mechanical equipment — ^if a completed machine was wrong, it was necessary to trace out the operations that caused the trouble, before the blame could be placed on the lathe foreman or the milling-machine foreman as the case might be. After the shop was reorganized, when a machine was wrong the foreman in charge of the manufacture of that class of machine was to blame, and he was the one who had to remedy the mistake. Fourth Law — ^Individualism. — A battle cannot be won by half a dozen generals, all of whom have equal authority^ There must be one-man control. There is nothing more confusing in an organization THE LAWS OF ORGANIZATION 87 than for employees to have more than one man to whom they are directly responsible, and nothing that so quickly destroys dicipline as to have a manager go over the heads of his subordinates and give orders direct to the men under those subordinates. Yet these are among the faults we find most frequently in organization work. On one occasion, while I was walking through a department of a large candy- manufacturing firm with the foreman, the latter stopped to "call down" a workman for not doing a piece of work the way the foreman had told him to do it. The workman's answer was: "You go to h — , the general manager was just through, and told me your way was wrong and to do it this way. If you don't like it, tell it to him." This workman should have been discharged, and yet he was not so much to blame as the general manager. The manager deserved reprimanding, and if he persisted in going over the heads of his subordinates, he should have been "allowed to resign." My associates and I were rather surprised, while investigating a certain large company, to find, when we asked several minor executives whom they were directly responsible to, that they seemed rather doubtful just who it was, and ended by naming several men from whom they took orders. Needless to say, the departments were not efficiently run. A man can serve only one leader; if he has more, there will simply be confusion of orders, and the minor execu- tive will be unable to establish and adhere to a def- inite policy and mode of operation. Too many men are hired and placed in organiza- 88 OEGANIZATION AND ADMINISTRATION tions and left to work out their own salvation. When a man enters an organization, his duties and all matters which he is to be held responsible for should be definitely stated to him. In addition, he should be told who the head is to whom he is responsible for carrying out his duties, as well as who the men are that will be responsible to him. Fifth Law— Mental Capacity.— When a department or business is reorganized, division should be made with reference to the knowledge and ability that will be required of the man who shall supervise the work, as well as with respect to the knowledge and ability that those men must have who shall actually carry out the work. Then, too, what is to be done must be within the capacity of the average types of men who are fitted to fill the various positions. Few concerns realize that it is possible to make the various positions in an organization difficult or easy to fill, according to the way in which the concern is organized. It is for this reason that you so often hear the statements "There is plenty of room at the top," and that concerns have great difficulty in pro- curing men to fill their executive positions. When you do hear these statements you may be sure that the concern is poorly organized. Two concerns start in business in the same town, and in a short time one has a set of live, enthusiastic executives, while the other has a lot of overworked, worrying, struggling executives who lack ginger. Both the concerns had the same class of men to draw from, and the same opportunities, at the start. But one organized cor- rectly and arranged its work so that the men hired THE LAWS OP ORGANIZATION 89 could "walk away with their jobs," while the other organized so that each man's work was so difficult that the best men they could hire were soon enmeshed in routine work and lost their "pep" and their initiative. In the machine shop mentioned, the foremen had been "grinds" under the old arrangement, but under the new they were given the opportunity to become specialists in the manufacture of certain limited types of equipment. Consequently they soon became so ex- pert that their work was easy for them. In the sales and clerical departments before men- tioned, each department formerly ground out its rou- tine work. But under the new arrangement each department became expert in a particular product, and did its work with the definite object of boosting that product above all the others, handling its order better than the other dep'artments, and giving the snappiest service to customers. Also, since the pro- ducts that each department handled were few in num- ber, they soon became thoroughly familiar with the line, and the jobs became easy, where before they had seemed hopeless. If an organization is divided according to its most difficult function so that the knowledge required for each position will be as little as possible, and the positions are arranged so that each executive has complete control of all the factors affecting the suc- cess of his function, the executive jobs, as a rule, can be well handled by average men. If, however, the organization is incorrectly divided, and each execu- tive is given a slice of this and a part of that, and 90 ORGANIZATION AND ADMINISTRATION the success of each man's job is dependent on the successful handling of a lot of work that is handled by other executives, then there will be great difficulty in obtaining executives who can produce satisfactory results. Even if the company, under such circum- stances, does hire executives of proved ability, they will soon deteriorate under the bad form of organiza- tion, will lose all their initiative, and will become worthless in a few years. Sixth Law — Specialization. — An organization should be divided so as to develop specialists. To this end, care must be taken that one department head shall not duplicate the work of another. Specialists are developed by allowing men to work in a limited field of knowledge. In other words, a man is so developed that instead of knowing many things superficially, he will know a few things ex- tremely well. If the knowledge necessary to manu- facture and market a number of products is divided up into a number of limited fields of knowledge, as it were, and one man is put in charge of all the work in each of these fields of knowledge, these men will be- come specialists. Now if, under each of these men, each of the sub-heads is in charge of all the work representing one portion of that field of knowledge., then there is an organization of specialists. If, instead of making a division like that just sug- gested, each executive were given part of his work from one field of knowledge and part from another, until he had a group of small jobs all requiring dif- ferent classes of knowledge, the result would be an organization whose executives would have to be jacks THE LAWS OF ORGANIZATION 91 of all trades. These executives would be overworked, and would never deliver very satisfactory work. This unfortunately is the most common type of organiza- tion! If you build up an organization of specialists you will have no difficulty in finding men to fill compe- tently your executive positions, for the average man with executive ability can handle efficiently a large amount of work in a limited field of knowledge. CHAPTER VIII THE LAWS OF OEGANIZATION {Continued) Seventh Law — Responsibility. — ^An executive should be held responsible for the total proven results, or for inability to secure results, and not for the details of the methods that he uses in trying to secure these results. It is a frequent fault in organizations that the big- ger executives — especially those who, when the con- cern was small, followed all details — ^judge the execu- tives under them by various details that they find wrong, instead of judging them by the total proved results in that section of the business for which those minor executives are directly responsible. If an executive is interested in sales, he will frequently follow up complaints from customers. He will fuss because Jones & Company complain that their order was not shipped when promised, not knowing that Jones, of that company, failed to get his specifica- tions in on tjme, or changed them when the work was half done, or sent his order in late after having re- ceived his promise — or a hundred and one other things. He will complain because, in walking about the factory, he found this or that machine running slowly, not knowing that it was not in repair, but that it was nevertheless necessary to run it on work 92 THE LAWS OF ORGANIZATION 93 that had to be gotten out, or that a poor lot of mate- rial necessitated slow running, or that the machine had just been repaired and was being warmed up be- fore throwing on the full load. The chief executive will call his subordinates up for these fancied troubles, and perhaps, with much trouble, they will discover the reason and report to him. Or perhaps they will be unable to find out the reason and will take the "call down" and say nothing. Lots of executives keep their men chasing details in this way, and manage also to keep them constant- ly irritated and unhappy, and prevent them from de- voting their time to important matters. After men have been called to account for details a few times, although they have been in no position to know the facts, and have also been called to ac- count for not knowing them, as a matter of self- protection they begin to follow up all the details of their departments so as to be familiar with them when called on to explain this or that to the manage- ment. They naturally become overburdened with de- tail work and neglect to spend any time on their most important work, which is the study and im- provement of the departments in their charge. In two of the largest concerns of their kind in the world I have found conditions so bad, that a new man of unquestioned ability and with an extremely successful past, could within two years become en- grossed in detail work, lose his initiative, and have whipped out of him all those qualities on account of which he was hired. In both these concerns, men would be hired for 94 ORGANIZATION AND ADMINISTRATION their ability to run certain sections of the business, but, when hired, they would not be trusted, and would have to obtain executive approval on each move they desired to make. Unfortunately the ex- ecutives thought it their duty to change any plans brought to them, and to question severely any pro- posed expense, and they never had the time to go into the propositions thoroughly enough to pass in- telligent judgment. Consequently they gave snap judgments, the new men would find that all their plans to run successfully the departments supposedly put in their charge, were made futile because the man- agement insisted upon altering these plans. In a short time these men would become discouraged and resign, or else, sacrifice their character and cater to the desires and foibles of the management and be- come useless. While the chief executives were incom- petent, they were men of considerable ability, and their incompetence was due to their unwillingness to delegate responsiblity, so that it was necessary for them to cover so much ground that they could not cover it all well. This fault is frequently met with, A man who handled all details when a concern was small is naturally inclined to try to cover the same ground when the concern has outgrown the limits of a one-man nfanagement. If a concern is to be properly organized, records must be divised that will show at monthly intervals — or more frequently — ^the accomplishment of the various sections of the business. Moreover, the man- agers of these sections should be held to account for the accomplishment shown, but they should be given THE LAWS OF ORGANIZATION 95 the greatest possible latitude in regard to the means that they shall use in getting results. Eighth Law— Permajiency. — ^What would happen if, during an engagement, a member of an artillery squad, or of a gun crew on a battleship, should sud- denly be killed, and none of the others should know what to do in his place? The consequences would be serious indeed. And yet in industry we find many cases in which no provision has been made for training men to fill the positions of their superiors, in case anything should happen to the latter. A man may at any time be transferred, or he may die, or be taken sick, or resign his position, or take a vacation, or be dis- missed from the employ of the company. In any of these cases, it will be the duty of some one else to fill the gap at least temporarily — perhaps permanently — and if no one has been trained to take over the new work, results are bound to be unsatisfactory, if not disastrous. Sometimes an assistant is slated in advance to take another's place, although he has had no training whatever for the new work. A case in point is that of the Vice-President of our country. If the Presi- dent dies, the Vice-President succeeds him — witness Theodore Roosevelt's succession to the presidency when President McKinley was assassinated. Yet our Vice-President, although the presiding officer of the United States Senate, is not even a regular member of the President's Cabinet, in which body he would receive the very training that would acquaint him with the affairs of the nation, and best fit him for the 96 ORGANIZATION AND ADMINISTRATION responsibilities that would be Ms should he be sud- denly called upon to become President. As a matter of fact, the Secretary of State is in a much better position than the Vice-President to take the place of the President, in case of the latter 's death or im- peachment. Here is a distinct violation of the lavr of permanency, and one example of the lack of proper organization in our government. There is another factor which is connected with this law of permanency. Some executives can leave their work at any time without their absence being noticed in any marked way. Others can never get- away. The reason many men make slaves of them- selves in business, and never take a vacation for fear something might happen while they were away, is simply that they have never trained any understudies to take their places. We have all seen the over- worked mortal, buried in papers, trying to attend to everything himself, frantically attempting to do this, that and the other thing, and doing his best to keep in touch with every detail. What is the trouble? The answer is, "no understudies." Where this condition is found, there you will find a disorganized concern. Ninth Law — Functional Co-ordination. — One of the greatest causes of friction, jealousy, and constant ir- ritation in business is the failure of men really to appreciate the difficulties that confront others with whom they come in contact. A storekeeper once called to my attention a serious delay in shipping an order, and stated that the material was not ordered on time because the purchasing department had been "asleep at the switch." I quietly began an investi- THE LAWS OF ORGANIZATION 97 gation, and found that the purchasing department had ordered promptly on receipt of information from the engineering department, and that the engineer- ing department had prepared specifications and draw- ings as quickly as it could after getting the order. But when the engineering department was about to turn over to the purchasing department those draw- ings and specifications, it was advised by the cus- tomer to hold up all work, pending some important changes in design, which neither the purchasing de- partment nor the storekeeper knew anything about. The storekeeper in making his criticism, had simply jumped at conclusions through failure to appreciate the difficulties in the way of others. The storekeeper had no personal grievances. He thought he knew who was to blame, and was undoubtedly sincere in his conclusions. Again, a planning supervisor will have constant clashes with a shop foreman because neither appre- ciates the difficulties of the other. If each could take the other's job for a few weeks, they would be pals forever after. To criticise is the easiest thing in the world. The best means of prevention is functional co-ordination, a difficult thing to bring about perhaps, but decided- ly necessary nevertheless. I once knew a man, sub- ordinate to the general manager, who was always crliticising this policy and that action. But when he was made general manager, he came to appreciate the fact that his predecessor had had no "easy row to hoe," and accordingly became considerably more tolerant of the views of others. 98 ORGANIZATION AND ADMINISTRATION It is my sincere conviction that those whose work is directly related — as, for example, storekeeper and purchasing agent, planning supervisor and foreman, head of the engineering department and planning chief — should, for at least a month during each year, have an opportunity to act as an assistant to the one whose work most directly concerns him. What a difference there would be in the general spirit! There would certainly be far fewer criticisms. Tenth- Law — Relationship. — A business is nothing more or less than the adjustment of individuals,, to the end that all may follow a definite policy, or line of procedure. One of the weaknesses in business is the almost universal practice of giving an individual only the most general kind of instructions concerning what to do and how to do it. The general superintendent of a certain large con- cern once showed me his letter of instructions which he received when he accepted his position. It was a letter of only two hundred words, stating in the most general way that he would be in charge of the manu- facturing end of the business. He told me that he never knew where he stood, and that he had to get the official sanction of the management every time he had anything important to do. We have all seen many times, also, the poor fellow who is supposed to be in charge of something or other, but who never had any proper information con- cerning his relation either to his superiors or to those subordinate to him. I have often heard men severe- ly censured for failure to do something they had not been told to do, a procedure which is like whipping THE LAWS OF ORGANIZATION 99 a child for doing something it has never been told not to do. A man is engaged to do a definite "something," and just what that something is should be known by all with whom he comes in contact; otherwise he cannot be held responsible for results. His functions in the business, his duties in performing this func- tion, and his relation to others and of others to him, should be sufficiently defined so as to enable him to work efficiently. Eleventh Law — Personnel. — The question of select- ing the personnel of an organization and of training those who compose it, is something about which sev- eral books could be written. I am familiar with the works of Walter Dill Scott and Miinsterberg. I have read the books written by Dr. Blackford on ' ' Charac- ter Analysis," and the one by Kemble, on "Choosing Employees by Test." Still, I must confess that the deeper I go the more out of breath I am when I emerge. There is, however, no getting away from the fact that many men engage employees as they select a cigar — they base their choice on the advice of some other person; then, if they are satisfied, all well and good; if not, they make another selection. A man is wanted for a certain place, and appli- cants are examined. The usual method is to size up each man, listen to his story, ask some general ques- tions, and look up his references — which sometimes amount to little as an indication of his real worth. If engaged, the man may be successful, and he may not. loo ORGANIZATION AND ADMINISTRATION My study of the subject of selecting personnel con- vinces me tliat we generally fail to have a set of spe- cifications covering what we really want. Hiring men is — or should be — ^like purchasing materials, in that there should be, first of all, definite knowledge of what is required. After all, it is a case of match- ing qualifications against requirements. If we know what we want, we can check the merits of the mate- rial that we examine. For instance, if a position de- mands close application, long hours, and indoor work, it is sheer folly to engage a man who loves the open and therefore detests confinement and close applica- tion. He would naturally be inefficient because dis- contented and unhappy. One of the first things I ask applicants for posi- tions in my organization, is whether or not they want to follow professional work. If a man prefers a lo- calized field, or managerial work, or dislikes the con- stant traveling that falls to our lot, it would be unfair to both of us to let him enter my employ. If it is essential in buying a machine, to lay down certain specifications, and then make sure that the machine measures up to them, it is just as important to have specifications in regard to the men we shall engage, in order that we may check their qualifica- tions against them. Twelfth Law— Co-operation. — More advice has been given on this important subject of co-operation, and less of the advice has been followed, than is the case with respect to any other one phase of organization work. The cause, as I see it, is a disease called "de- partmentitus," the symptoms of which are to be THE LAWS OF ORGANIZATION 101 found when there are department ideals instead of plant ideals; under such circumstances there are, in the main organization a number of little organiza- tions, each jealous of its own prerogatives. A works manager once made the following statement to me: "We have seventeen departments, and they are all competing against each other so strenuously that, if they were not under the same roof, they could easily be taken for seventeen different companies." The wonder is that there can be any success at all. Healthy competition is certainly a good thing, but it becomes a positive detriment when it fosters such a desire to put a department on the best possible basis, that the work of other departments is inter- fered with. A man is hired and placed in charge of an import- ant function. He is pounded for results. His costs of maintaining his departifient must be kept down to the lowest possible point, or he is criticised. It often happens that one department, at slight additional cost, could so facilitate the work of another as to effect some substantial gains for the whole organiza- tion, but the head of that department is reluctant to authorize this extra cost, since, according to the usu- al way of judging results, such procedure would operate against him. What a pity it is for a shop foreman to tell you that he could have dispensed with some high-priced productive workers by substituting common labor, but that he was afraid to do so because if he had taken this action non-productive labor would have increased and he would have been censured. 102 ORGANIZATION AND ADMINISTRATION There is also the "fence-building" type of depart- ment. The head of, a chemical laboratory, we shall say, is asked by the manager for some data on costs. The chemist cannot answer the question, but decides that the next time he is asked regarding costs, he will have data on hand, so he begins to collect cost information, with the result that in time he is run- ning a small-sized cost department as a side issue. Or the purchasing agent will be asked regarding the progress of orders in the shops, and so he maintains records concerning the conditions of orders, and thus duplicates the work of the order, the planning or the production department. This is lack of co-operation in its worst form, for each man is "building fences" and duplicating the activities of others in some form. There must be more "give and take" in industrial, management. An engineering department, at slight additional cost, by making drawings clearer and more workable can save the shops considerable time (which is money). A purchasing agent looking after mate- rial properly, can aid the plaiming department to a considerable extent. A little more work on the part of a planning department, as, for instance, ia taking over some of the shop detail that would not ordinari- ly function as planning department work, would facilitate the manufacturing materially. It is all a question of plant ideals versus depart- mental ideals, and if a manager can inculcate the former in his organization, he will find that his ac- complishment has been both worthy and profitable, and without any loss of departmental prestige. THE LAWS OF ORGANIZATION 103 Thirteenth Law — Instructions. — ^A ship without a compass would not be used in ocean transportation; a boiler without a safety valve would not be used in a steam plant. And yet in industry there is little, in many plants, that corresponds to compass and safety valve; or, in industrial terms, there is a lack of in- structions and charts. Anything worth defining is certainly worth record- ing and yet we have all seen organizations of people working together without any guide whatever in the form of standard practice — ^no definite idea of func- tions and duties, no charts showing relationship. The difference between having such charts and not hav- ing them is simply the difference between organiza- tion and disorganization. The concern that insists on properly issuing com- plete written information covering the material it buys or the product it sells, will deem it unnecessary to have written instructions- and charts covering the operations of the people who use the material and make the product. I often find it difficult to convince a manufacturer that he needs these things. Most manufacturers will agree that as a nation we need definite laws of pro- cedure to govern the dealings of man with man. But when it comes to a consideration of the laws of the plant — ^the standardized procedure — too many feel that these represent only so much red tape, or that they are unnnecessary, or that they are too difficult to maintain — or give other reasons that are simply excuses for not establishing and maintaining stand- ards. 104 ORGANIZATION AND ADMINISTRATION Contact of man with man in business is based on men's acceptance of some basic rules or considera- tions; otherwise it would be impossible for them to work together. It is easy to see, then, that this law of definite instructions must be applied in industry, in order that there may be system and order. Fourteenth Law — Conferences. — In all organizations there are many matters which affect equally several departments. Order systems, cost systems, and planning effect a number of departments. Many de- partments obtain goods from stores, or purchase goods, through the same departments and by the same methods. There are also many forms which pass through a considerable number of departments. If the systems are to be devised and run to give the greatest possible benefit to all departments, the de- partments affected should have the opportunity of adjusting the systems to their needs. These matters can best be handled through a committee comprised of all the heads of the departments interested, It is best to have a committee for each of the questions to be considered, unless there are several subjects that would interest all the members of the same com- mittee. Some committees, to be sure, need not meet more than once or twice a year. For instance, a com- mittee to consider the order system would seldom have to meet, since it is doubtful whether, after the system was once adjusted, it would be necessary to make even minor changes in it more than once or twice annually. Other committees can be formed and called to meeting by any member — according to the requirements of his department — when he finds that THE LAWS OF ORGANIZATION 105 some adjustment is necessary in the matter which it is the committee's duty to consider. By means of these committees all matters of the inter-relation of departments can be handled to the satisfaction of all concerned. Committee meetings should be short and to the point. Sometimes there will be doubt concerning the wisdom of a decision, and further investigation will be required. In such an event, the committee should be empowered to call on the staff to make a thorough investigation of the matter in question; the staff should then report to the committee when the in- vestigation has been completed. Not only should the heads of the main departments have their committees, but the sub-heads of depart- ments should have committees for settling matters within the various sections of departments. The executive directly over the various men serving as members of a committee, should be notified of all committee meetings, and of their purpose, in order that he may attend the meetings if he desires to pre- sent his personal opinion or to influence decisions. Fifteenth Law — Staff. — The average executive of a manufacturing plant is usually so engrossed in the routine of getting out production that he has not the time to make a detailed, painstaking study of the ■warious methods and systems in his department, with a view to making any necessary improvements. It is for this reason that the use of staff men, who are kept free from routine duties, and who are able to devote their entire time to the study of one problem after another, has come into well-deserved favor. 106 ORGANIZATION AND ADMINISTEATION Unfortunately the use of the staff has in many eases been undiplomatic, Men lacking diplomacy, and frequently young engineers lacking the ex- perience necessary to qualify them for such a posi- tion, have been appointed as members of the staff, under the general manager. These men have been sent into the various departments to "find what they could find," and, in the opinion of the department managers, have merely "spied around" trying to "get something on" those managers. The chief of staff should be a man of experience, tact, and exceptional analytical ability. Every de- partment manager should have the right to call on the staff to assist him in the solution of his problems, and to have them make detailed studies of any sec- tions of his department that are not running satis- facorily. If the managers can be induced to make such calls on the staff freely, the results obtained will be satisfactory, but if staff advice has to be forced on them the results will be poor. Staff consulation should never be forced on a manager except when the reports from his department show decidedly poor results and he does not call on the staff for assistance. In these cases it should be suggested that the staff assist him, and if he refuses to take the suggestion, he should be forced to accept their co-operation. The staff should work as far as possible through the department managers and the committees, report- ing their findings to them and securing action directly. This is by far the most diplomatic and suc- cessful way of obtaining results. The staff, however, should give copies of all reports to the general man- THE LAWS OP ORGANIZATION 107 ager, and should take up with him, and at the same time with the department manager concerned, all mat- ters concerning which there is disagreement. Application of These Laws.— These laws which I have so briefly defined are important in any campaign of organization development. Considered together, they are of far-reaching importance in this great work of "man-building." For the real aim in using them is to increase the efficiency, the happiness, and the earning power of the individual, by making the relationship such as to enable each man to give his best, without injury to his health of body or mind. By themselves, these laws sound cold and perhaps harsh, but work the fifteen into an industrial fabric, and they are then to industry what the Ten Com- mandments are to religion. CHAPTER IX PEEPARATOEY STEPS IN EEOEGANIZATION First Essentials. — ^A close study of the develop- ment of industrial engineering to date indicates quite clearly that insufficient attention is given to the mat- ter of making a proper start when an industrial re- organization is undertaken. In some cases the en- gineers have been to blame for this, in other instances the clients. Why it is that some executives will de- cide to have efficiency methods installed, and then insist on putting in a cost system, or starting plan- ning methods, or forcing the engineer to put in time- study and bonus work or piece-work, before consider- ing other important steps, is something I have never been able to understand. The same executives, if they were going to put out a new product, would be very careful to see to it that a comprehensive design was first worked out. Then details would be considered, and tests and experiments would be made before the product was turned out, in order that a first-class article might be placed on the market. Is it not just as important to have a design and complete specifications when the decidedly important question of an industrial reorganization is contem- plated? Before attempting to produce a play, the play- 108 STEPS IN REORGANIZATION 109 Wright will first determine his plot, select certain characters, and then write. Then comes the selection of actors to fill definite requirements, the stage and scenic effects, the costumes, and so on. Behind all is a well-defined and well-detailed plan and specifica- tion. The same principle must be practised in organiza- tion work, or there will be more failures in the future. Oh yes, I know what incompetent engineers can do to a business, but I am not giving this point consideration, for if an executive, at this stage of the work, cannot find the successful professional engineer or firm, or a competent man on his payroll to take up the work, he has no one to blame but himself if the work is a failure. What I am aiming to do in this chapter is to urge upon executives the importance of considering es- sentials which, if made a part of the work, will not only "show up" the incompetent, but will make the work easier for the successful engineer — and less costly to the concern! Since this is true, results will certainly justify the consideration of such essentials. Careless Methods. — I once received from a manu- facturer a letter in which he made the following statement: We think that what we really need more than anything else, is a foreman who can produce results, and we are now trying out a man who thinks he can do this. Please note that this concern "thinks" its problems will be solved by "putting it up to" a sadly over- worked foreman, perhaps, to secure maximum results, 110 ORGANIZATION AND ADMINISTRATION and that it is "trying out" a man who in turn "thinks" he can secure them. The real situation be- hind this letter is the absence of a definite and com- prehensive plan, a lack of specifications in regard to the kind of man who could produce results, lack of any definition of "results" — and lack of standards. And yet it is this type of firm which will undertake a betterment campaign, and which will yell in sixty days because production has not been increased 25 per cent. I realize, of course, that the burden of proof is on the engineer. Because that is true, the time is com- ing, if it is not already here, when the competent en- gineer will refuse to go ahead on a piece of better- ment work until the essentials herein indicated have been properly considered by the management, just as a reputable lawyer will not stand for the interference of his client in the handling of a lawsuit. Ten Preliminaiies. — There are ten important parts in this preliminary stage which precedes active reor- ganization, and I would urge engineers and execu- tives alike to give them careful attention by way of a real "preparedness" campaign. These ten parts, or elements I shall now take up in turn. Ideals. — There are two ideals to consider in any- manufacturing business, and the first step is to ascer- tain to what extent the management is in sympathy with them. They are most important, as they con- stitute the basis of all work to be done. Briefly stated, they are these: (a) The time to consider what is to be built, from the standpoint of appearance, cost, operation, and saleability, is before the order is taken. This is the selling ideal. STEPS IN REORGANIZATION 111 (b) The time to insure the margin of profit needed to conduct a business properly, is before the work of manufac- turing IS started in the plant. This is the manufacturing Conception.— When I ask what a plant manufac- tures, I usually receive the answer — engines, or boil- ers, or castings, or metal furniture, or other things. As a matter of fact, what is made into the finished product and sold, is time; and this question of time, whether that of the salesman, the department head, or the worker, is what we must keep in mind in con- nection with the increase of efficiency. The problem is to study those departments of a business in which time is being lost or wasted, and to build up an or- ganization that will increase the production and re- duce the costs, without in any way impairing the quality of the product. After the engineer has given the management some idea of the real ideals behind the work to be done, the correct conception of things must be put before all heads of departments in order that, with ideals and conception out of the way, the next points may be considered. Status. — ^In many plants, those in charge of the work are given no authority whatever, with the re- sult that the ultimate achievement is not satisfactory to either the client or the engineer. I was once ap- pointed superintendent of a certain plant, with the result that all expected me to act as any superintend- ent would. I was expected to hire and discharge, set rates, look after quality, follow production, take care of the discipline, and so on — ^the procedure customa- rily followed by a superintendent. As an engineer, I 112 ORGANIZATION AND ADMINISTRATION had entirely different ideas, which concerned a con- structive policy. Naturally, the organization did not consider me a successful superintendent, since I was not performing any of the functions I was expected to perform. In another plant I was given the title, "Assistant General Manager in Charge of Production," with the result that the organization co-operated with me to the best advantage. In a more recent case, I have been given the title, "Assistant Treasurer," and the very title has enabled me to accomplish things that would be impossible under the usual arrangement, which does not give the outsider the right kind of status. Permanent Carrying on of Work. — Some competent man from the organization, or from outside, should be assigned to the engineer in charge of a reorganiza- tion as soon as possible after the work has been be- gun. If this is not done, the client runs the risk of suffering considerable loss, for after the engineer leaves there are few in the organization who thor- oughly understand the methods, or who are in a posi- tion to carry the work on to a successful conclusion. Proper Start. — ^It is also essential that some consid- eration be given to the matter of the right kind of start. If work is begun in a haphazard fashion, the expected results will not be forthcoming. One, or both, of two things may be done: (a) Announcement may be made to the various heads of the organization, in a letter, concerning the nature of the betterment work that is about to be undertaken. STEPS IN REORGANIZATION 113 (b) A meeting may be called of the heads of the depart- ments, at which time a general talk may be given to them by the management, as well as by the engineer in charge of the work. By this plan all may be informed as to what the desires of the management are, what the work is ex- pected to accomplish, and what the organization is ex- pected to do by way of co-operation. Views of the Management, — The next step is to sound out the management of the particular com- pany, as regards its particular views in connection with the work to be undertaken. In one plant, the management wanted standards before planning, some- thing both impractical and illogical. In another, the management expected a "slam-bang" type of organi- zation, expecting that within two or three months the increase in efficiency would be about 30 per cent. In another plant, the executive changed his mind re- peatedly, with respect to wage-payment methods, as follows: (a) In favor of the day-work plan. (b) In favor of the bonus plan. (c) In favor of making time-studies, getting the men to attain the standards set for day wages without bonus. (d) Then advocated straight piece-work. (e) Believed that a classified wage plan was a good one ; the foreman of the department to tell what the various men were entitled to. (f) Finally, concluded that the day-work plan was the best after all- in still another plant, the management thought it should have planning, and after the start was made 114 OEGANIZATION AND ADMINISTRATION and considerable work was under way, concluded that it was too much trouble, and recommended the dis- continuance of the work. It is therefore well for the engineer to have a frank talk before much is done, in regard to what the man- agement feels should be undertaken. Such a discus- sion will give those in charge an opportunity to con- sider what factors are important and should there- fore be looked into, and at the same time will enable them to combat any suggestions that might prove detrimental to the ultimate success of the work. Local Conditions. — A certain case that came within my personal experience will serve to illustrate the in- fluence of local conditions. In one New England town, considerable bad feeling was caused by the or- ganization of a club in a plant, composed of the fore- men, their assistants, and such of the office workers as cared to join. A chairman and a secretary were appointed after a few meetings, and it so happened that both of the men selected, were Catholics. As 20 per cent of the foremen were North-of-Ireland men, you can imagine the effect in a .plant that employed three thousand men. I am not a Catholic, but I was accused of being a member of the Knights of Colum- bus, and therefore in sympathy with the Catholics in the plant. Both the chairman and the secretary were willing to resign, in order to stop the talk and agita- tion. I refused to accept their resignations, however, as I did not intend to be a party to a religious squabble. In another city, , the plant superintendent with whom I was working, informed me that if I would STEPS IN REOKGANIZATION 115 join their Club, the methods I stood for would be adopted — which was equivalent to saying that if I did not join, I should meet considerable opposition. I mention these two cases as warnings, in order that you may give such attention to local conditions aa will enable you to avoid any pitfalls. Program. — ^In any work of reorganization, it is very necessary that a definite program be arranged as quickly as possible. In one plant, after several months of hard work on the part of the engineer, the attitude of the client was this: (a) He was opposed to planning. (b) He was not in sympathy with bonus. (c) He would not agree to a belt department. (d) He did not believe in individual-job tickets. (e) He would delegate no authority. (f) Time-study conclusiojis were met with "I don't be- lieve it." (g) He did not believe in keeping track of the idle time of machines. (h) He would not consider overhead or equipment time saved as an indication of the value of betterment methods. Savings on direct labor were all he considered as a guide. (i) He did not feel that power costs were worth con- sidering. (j) He was opposed to spending money in the tool room. (k) He was not interested in compiling costs. As you can readily appreciate, the time of the en- gineer in this case was absolutely wasted, as was also the money spent by the client, all because there was no definite program to begin with. If this matter of 116 ORGANIZATION AND ADMINISTRATION program had been considered at tlie start, the engi- neer and the client would have parted company, satis- fied, at the end of the first thirty days. Presentation of Facts.— Great care should be taken in the presentation of facts. I know of one case in which the management claimed that earnings would exceed $700,000 in one year. It was revealed, how- ever, that it made $138,000, or less than one-fifth of the original estimate. In another plant, I was in- formed that 50 per cent of the orders were incorrect. Analysis revealed that only 5.6 per cent were incor- rect. In still another plant, the statement was made that the overhead was only 15 per cent. Investiga- tion proved that in the calculations $190,000 had not been considered at all. It is essential to bear down, at times, on the big things that are unearthed. By this, I do not mean hitting the high spots, as is so often done in this work, but impressing the organiza- tion with the facts that are discovered. In one plant, it was found that the concern was estimating on 50 per cent of its capacity, with the result that they were not getting anything like their share of new business, because they were working far below nor- mal capacity, and naturally the overhead rate was excessive. In another plant, we found, with respect to the sales, tliat 15 inquiries out of 100 resulted in orders, and that of the 85 per cent that were lost, 80 per cent failed to materialize on account of excessive prices. By emphasizing these two points in the dif- ferent plants, we were able to convince the manage- ment and the heads of departments that there was some good in the methods we stood for after all. STEPS IN REORGANIZATION 117 Plant Ideals. — In one plant that I have in mind, a large contract was received, and the chief engineer was instructed to keep his force at work on it until the work should be finished. He objected strenuous- ly, saying he could do better by working on the con- tract, stopping, and then resuming work again. The superintendent of the plant, however, was able to prove that continuous work in the engineering de- partment would mean substantial savings in the shop. A conference was arranged for between the superin- tendent, the chief engineer, and myself, and after a careful discussion had been held, departmental ideals gave way to the plant ideal. CHAPTER X FIEST PRINCIPLE— INVESTIGATION— MAKING THE SUEVEY The Trained Investigator. — The organizer, whether he is from the outside, or on the payroll of the com- pany, must know the business from A to Z. I do not mean by this that he must be familiar with all the actual practice, but he must be able to read the busi- ness like an open book. I have seen too much of th is looking - wise - spend - a - few - days-and-let-us-start- planning way of going at things. There is much more to this matter of investigation than most people think; or, to put it another way, few people know how to investigate. We are very apt to be careless regarding details, and to overlook much that is pertinent. For instance, I will defy a man to answer offhand all of the following questions: First : How many buttons are on your vest? Second : How many stairs lead from the first floor of your house to the second? Third: How iflany windows are in your offices? Here are a few excellent tests of observation and perception: Examine a machine you are unfamiliar with, de- termine its purpose, and understand its parts and re- lations. When you have analyzed for a sufficient 118 THE SURVEY 119 length of time, close your eyes and mentally take it to pieces, and then put the parts together again. Gaze steadily at a man working on an unfamiliar operation. Keep your mind on the object, with in- tentness. Close your eyes and, after consideration, write all the details in connection with what you ob- served. Sit quietly and exclude all thoughts from your mind, and then consider an operation you are famil- iar with, to the exclusion of everything else. How long can you do it? Gaze straight in front of you, with every power of attention alert, and without turning your eyes, ob- serve as many things as you can within the immedi- ate range of vision, while counting ten slowly. Write what you saw, without again looking, and then check the results. I have mentioned these problems to indicate that the human brain, unless trained, is not the power that we imagine it is. The question is, How can we assist it? Let us assume that we are investigating a business, with a view to reorganizing. The following are the four factors which should be considered in ascertain- ing the real conditions: 1. Management 2. Office and Accounting Methods 3. Production 4. Distribution 120 ORGANIZATION AND ADMINISTRATION The following factors are some of those that should be considered in ascertaining the real conditions: MANAGEMENT As to Building: — Location of factory? Branch factories, if any ? Are buildings old or new? Nature of building construction? Is plant well laid out? Yes or no. Have you a set of floor plans which show the lo- cation of departments and machine ? Yes or no. Outline your general impressions as to: — A — Lighting. B — Heating. C — Ventilation. D — Generation and transmission of pneumatic power. E — Power transmission. P — Trucking and conveying. 6 — Hoisting. H — Storage, handling and piling of materials. I — Sanitation. As to Organization: — Is the type of organization: — The usual one, leading from general manager to superfhtendent, to foreman, to men? Functional or Taylor? Yes or no. Staff or Emerson? Yes or no. Legislative ? Yes or no. Combination, and, if so, of what nature? Does the General Manager have a free hand ? Yes or no. Does he only carry out the wishes of the officers and the directors? Yes or no. THE SURVEY 121 Can General Manager engage or discharge a foreman or purchase a machine on his own initi- ative? Yes or no. Have you a chart drawn up covering the exist- ing organization ? Yes or no. As to Employees: — Do you have Superintendent, Foreman and As- sistants ? ' What is the duty of Superintendent? What is the duty of Foreman? Who hires the men? Do you know what the men are producing? Yes or no. Are employees skilful and highly paid? Yes or no. How many men do you employ? Is the work of your men enervating, sapping energy, or energizing, stimulating energy? Efficiency of men: — ^Are they working A — ^In a leisurely way? Yes or no. B — At a very low efficiency? Yes or no. C— At fair efficiency? Yes or no. D— At high efficiency? Yes or no. Are employees paid by: — A— Day rates? Yes or no. B — Piece rates? Who makes your piece rates? C— Premium plan? Yes or no. D— Bonus plan? Yes or no. E — ^In what departments do the rates apply? Are the rewards given on the basis of factors within a worker's control? Yes or no. Do they receive the reward as soon after it is earned as possible? Yes or no. Are the rewards in proportion to the attain- ment? Yes or no. 122 OEGANIZATION AND ADMINISTEATION What are the average earnings of men by de- partments ? Do your workers hold back, to influence rates? Yes or no. Make a list of the various members of the or- ganization, and ascertain, as to each : — What does he cover? Whom does his work influence? How is he influenced by others, and to what extent ? As to each person — study him at his work, in conversation, in disputes and quarrels, by inter- viewing his superiors. Then, eliminating all per- sonal bias, and giving each person the benefit of any doubt, answer the following questions: — What other work is the man qualified to cover? Who else in the organization can assume his duties ? Is he responsive to suggestions? Yes or no. How does he take criticism? Is he spasmodic or consistent? Does he think for himself, or depend upon others? Is he a keen, deliberate thinker, or quick to jump at conclusions? Is he overworked ? Yes or no. Is he capable of self -direction? Yes or no. Considering ability as poor, fair, good, or ex- cellent, how do the following check up in the case of each man? Judgment Accuracy Executive ability Initiative Co-operation THE SURVEY 123 Energy Aggressiveness. Have you any man in your organization: Who is opposed to planning? Yes or no. Who is not in sympathy with bonus ? Yes or no. Who would not agree to the installation of a belt department ? Yes or no. Who does not believe in individual- job tickets ? Yes or no. Who will delegate no authority? Yes or no. Who meets time-study conclusions with, "I don't believe it." Yes or no. Who does not believe in keeping track of the idle time of machines ? Yes or no. Who will not consider overhead- or equip- ment-time saved as an indication of the value of betterment methods. Who will consider only savings in direct time as a guide ? Yes or no. Who does not feel that power costs are worth considering ? Yes or no. Who is opposed to spending money in the tool room? Who is not interested in the compilation of costs ? Yes or no. OFFICE AND ACCOUNTING METHODS As to the Office: — Where is the Home Office? Where are the Branch Offices? Who is directly responsible for the financial matters ? What authority? The duties of all heads of departments, and as- 124 ORGANIZATION AND ADMINISTRATION sistants, should be ascertained, as this informa- tion furnishes a complete outline of exactly what is done by the people employed in responsible posi- ' tions. The following questions will serve for this investigation : — Concerning what matters do you receive corres- pondence ? ' Concerning what matters do you dictate corres- pondence ? From whom do you receive orders or instruc- tions, and concerning what? To whom do you issue your orders or instruc- tions, and concerning what? What information, outside of correspondence, do you receive, and from whom? What information, outside of correspondence, do you supply, and to whom? What are the main functions or work performed by you or your department? What permanent records or files do you main- tain? Are there any matters which you attend to that you feel should be attended to by another employee or department ? Yes or no. Are there any matters attended to by other em- ployees or departments that you feel you should attend to? * Yes or no. What conditions beyond your control, if any, either interfere with your routine or prevent you or your department from obtaining the best possi- ble results? As to Accounting: — Chief Accountant — To whom is he responsible T THE SURVEY 125 Receipts — ^What course do they follow? Disbursements — How are they made? Remittances. Who enters in Cash Book? Who deposits? What comparisons or checks are used to safe- guard remittances? Who signs checks? Are employees bonded? Yes or no. Are books audited? Yes or no. If so, by whom? Insurance — Is this looked after by Accounting department? What is the plan — Stock Companies or Factory Mutuals ? Are notes, if any, discounted through note broker or with bank direct? Have you ever had an appraisal made? Yes or no. How many creditors have you? How many are active in the month ? How many customers have you? How many are active in a month ? Are goods sold on time — 30 days — 60 days — 4 months? Do customers settle invoices promptly at maturity ? Yes or no. Do customers discount invoices ? Yes or no. How do you watch customers' maturities? Do you receive many notes in pajrment of cus- tomers' accounts? Yes or no. Do you discount customers' notes? Yes or no. Are you able to tell monthly what you have made or lost? Yes or no. Do you figure Loss & Gain yearly ? Yes or no. 126 OEGANIZATION AND ADMINISTRATION Are monthly percentage sheets prepared for the use of Executives? Yesorno. What are the office hours? Who purchases stationery? Do you use Mechanical Office Devices? Yesorno. If so, what? As to Methods: — Secure a copy of each form used, and discover as to each: A — ^Who uses it? B — Who supplies the information from which the form is made out? C — In what manner is the information fur- nished? D — ^Who gets the forms? E — ^What other forms are affected? F — What use is made of the information? G — What is the relation between the forms? Forms : Are they standard size and uniform? Yesorno. Is a systematic sales-cheeking record kept? Yesorno. As to Books of Accounting: — Do your books of Accounting cover : Sales — Cash? Purchases — Journal ? Credit— Bills Payable? Bills Receivable — Trial Balance? Control Record? Do you classify Expense Accounts? Yesorno. Do you use Controlling Accounts? Yesorno. What kind of ledgers do you use for cus- tomers' accounts? THE SURVEY 127 Are sales analyzed? If so, how? Do you use Ledger Accounts for Purchases ? Yes or no. Is the advertising appropriation carried on as an expense or an investment? Are mistakes of the sales department charged to advertising expense ? Yes or no. As to Correspondence: — Incoming Mail : Who opens it ? How is it disposed of after receiving at- tention ? Orders : What distinction is made between these and other mail matter? How are outgoing letters copied ? How is mail dispatched? Is there any check on letters — i. e., as to promptness in reply, etc.? Yes or no. Filing and Mailing: What filing system is in use — ^i. e., vertical or flat, alphabetical or numerical? How is matter for files received in File De- partment? Do filing clerks dispatch mail ? Yes or no. Is filing concentrated at one point ? Yes or no. Are extra carbon copies made for any purpose ? Yes or no. As to Customers' Orders: — How are they passed for credit and entry ? How are they entered ? What forms are used ? Hew are they filed, pending shipment? What is the general routine from office to works? 128 ORGANIZATION AND ADMINISTEATION What is the policy with respect to the promise and tracing of shipments? "Who routes shipments? Is an order register kept? Yes or no. As to Invoicing: — Is there a well-defined Order and Invoice De- partment ? Yes or no. If so, who is in charge? To whom is that department responsible? What is the method of invoicing? How are orders priced for invoicing? How are they checked? How are they charged? How are they mailed? As to Voucher System: — How are credits passed? How are they allowed? How are charges made to customers? How are remittances handled and safeguarded? How are collections made? Are drafts issued? Yes or no. Have you a monthly balance sheet? Yes or no. Have you a Monthly Loss and Gain Statement? Yes or no. As to Payrolls:— Who is pa3Tnaster? Where and how is the payroll made up? When are wage payments made? How is pay distributed? As to Cost System: — Do you use a time-clock? Yes or no. Do the men make out their own time reports? Yesorno. THE SURVEY 129 Do you analyze the time the men report ? Yes or no. Does the total amount, as shown by the time re- ports of the men for a period of a week or a month, balance with the amount you spend as shown by your payroll ? Yes or no. Do you figure your burden or overhead ex- penses ? Yes or no. Do you figure a rate for your machines that would cover repairs, depreciation, power, supplies, and the like ? Yes or no. Do you make a comparison of the daily produc- tions per man ? Yes or no. Do you maintain a continuous inventory of your materials ? Yes or no. Do you know what you make or lose on the vari- ous classes of goods you manufacture? Yes or no. Have you a system of ascertaining Production Costs? Yes or no. Are your Cost Figures part of your Accounting System? Yes or no. Do you ascertain facts, as to Departmental and General Overheads, suitable for comparison for the purpose of keeping down Overhead Costs ? Yes or no. Are your overheads distributed by Depart- ments? Yes or no. Are your overheads distributed by operations? Yes or no. Do you distribute overhead on labor? Do yoit distribute overhead on labor and machine hours? Yes or no. Do your Cost Records give you the value of Work in Progress? Yes or no. Are you recording time against Production Or- ders ? Yes or no. Have you complete checks on Material used? Yes or no. 130 ORGANIZATION AND ADMINISTRATION Do your Cost Figures enter into your Loss and Gain Statement ? Yes or no. Are your Costs compared with estimates upon which prices are based? Yes or no. Are facts, as to manufacturing details, in the heads of your men — or a matter of record, like your drawings 1 Yes or no. Are you figuring machine-hour rates against costs of production? Yes or no. Are you distributing costs of Production, for your own use, against Departments? Yes or no. Are you using Standing Orders for work done on Production for your own use and for Indirect Labor? Yes or no. What are your cost-finding methods? What prevents the men from putting down in- accurate time ? Just how do you compile the costs from the cards? How do you compile material costs? What is your power cost? What figures concerning your idle equipment do you compile? Are cost reports prompt, reliable, and compre- hensive ? Yes or no. What real use is made of cost statistics, and by whom? As to Inventory: How is inventory taken? When? By whom? Do you take your inventory as of one date? Yes or no. Do you close down the plant to take inventory? Yes or no. How is inventory recorded — on cards, sheets, or in loose-leaf books? How is it priced, and by whom? THE SURVEY 131 How is it checked and approved? How long does the inventory process take? How are betterments treated? How is depreciation treated? Are there any reserve accounts? Have you a running inventory? Yes or no. PRODUCTION As to Product: — What is the class of product? Is it made: — A — In stock quantities? Yes or no. B — To specification only? Yes or no. C — By a combination of methods A and B ? Yes or no. Which grade do you prefer to produce ? How could the goods be improved ? Do you study carefully the following : — Rejections? Yes or no. Complaints from customers? Yes or no. Overhead or expense labor? Yes or no. Waste reports? Yes or no. Inspection reports ? Yes or no. Employment records? Yes or no. Delayed shipments ? Yes or no. Materials overdue ? Yes or no. Delays in shop? Yes or no. Idle equipment time ? Yes or no. Are your processes and products subject to con- stant chemical supervision and control, both dur- ing operation and after the product is completed ? Are there no by-products in your process which might possibly be utilized profitably? 132 ORGANIZATION AND ADMINISTRATION As to Plamiing: — Do you have regular advance planning! Yes or no. Who does the planning ? How is it done? How far in advance is it done? What records are used? Is material furnished in advance of require- ments? Yes or no. Is supply adequate? Yes or no. How about the handling? What delays are noticeable? What is the cause of the Mays? Is material handled unnecessarily? Yes or no. Do you employ time-study methods? Yes or no. Is there a "next job" for every machine, with everything in readiness for the work? Yes or no. Are tool shapes and angles predetermined? Yes or no. Do you undertake work in any department of the plant without an order in writing? Yes or no. Are the workmen given definite tasks with in- structions regarding the way to do the work? Yes or no. Could your machines be idle part of the time without your knowing it? Yes or no. Are breakdowns of machinery anticipated ? Yes or no. Who runs the machine when the operator goes for material, fixes the belt, or waits for a job? As to Material: — What are the principal materials used in manu- facture? Are materials the best? Yes or no. Have you efficient Store Rooms for raw material and finished parts? Yes or no. Is there plenty of material ahead? Yes or no. THE SURVEY 133 In what places does material run low ? What steps are taken to replenish a low stock? What time elapses between depletion of mate- rial and replenishment? Is material piled in an orderly manner ? Yes or no. Is material easily accessible to the workmen? Yes or no. Who is responsible for moving materiial, and how does he get his orders to move it? Are any of your raw materials so affected by high prices that you would be interested in other materials suitable for replacing these? As to Purchasing: — Is there a well-organized Purchasing Depart- ment? Is this department managed by a Purchasing Agent or by a Clerk? To whom is this man responsible ? What form of Purchase Order is used? Are records of prices and quotations kept? Yesorno. How are Vendor's Invoices handled? Are Cash Discounts taken ? Yes or no. Are your supplies purchased upon specification and test? Yesorno. As to Receiving Department: — Do all goods go through the hands of the Receiv- ing Clerk? Yesorno. How is he notified of goods ordered? To whom is he responsible ? Where is he located? To whom are made reports of "Goods Re- ceived"? 134 OEGANIZATION AND ADMINISTRATION What is the method of inspection and count? How are claims for shortage reported, and to whom? How are "Goods Returned" reported and dis- posed of? As to Operations: — How are the departments divided as regards se- quence of operations? A — ^What is the nature of the work done in each? B — What is the number of men employed in each? To what extent are labor-saving devices studied and installed? How is the jigging of the work handled? Describe fully the tool room arrangement and the system used. To what extent is multiple machine-work done? Db men work to drawings or to gauges? Does work necessitate much filing and fitting? Yes or no. Who looks after the speeds and feeds? Do men grind their own tools? Yes or no. Does each man or machine work with reference to other men or machines ? Yes or no. Make a detailed analysis of several orders, to determine — Time in transit between shipment by one de- partment and receipt by the succeeding depart- ment. Time order is held up before being started on by operators; and the time actually in process. As to Inspection: — What are the methods of inspection? THE SURVEY 135 A — ^Who is responsible for inspection? B — Is there inspection of raw material ? Yes or no. C— What disposition is made of raw material not up to specification? D — ^What is done with incorrect drawings? E — ^Are first pieces of any operation inspected as completed? Yes or no. F — ^Is there inspection upon completion of a lot of pieces before they are moved to the next operation? Yes or no. As to Deliveries: — What proportion of orders are shipped on or before date wanted? If there are delays, what are the reasons ? How well do you keep up with regular orders? Are your shipments made promptly ? Yes or no. Do you ship goods the day the order is received? If not, how long after? How long a time, on an average, do you ship after a special order is received? What increase in the volume of business could be handled in the coming year? Do you check, by analysis and by other tests, deliveries made to you, to see that you are getting what you pay for? As to Employees: — Is your condition one of high wages or low cost? Do your employes co-operate to the extent you desire ? Yes or no. How many valuable suggestions have you re- ceived from your men during the past year? Are your men satisfied and contented ? Yes or no. 136 ORGANIZATION AND ADMINISTRATION Are rest and fatigue of the worker studied ? Yes or no. Is strenuousness fostered, or is the attitude one of preparedness, care, and system? Is the plant union or non-union? If union, in what departments? What have been your past labor troubles? What caused them, and how were they settled? Is there any agitation at present, or is any in prospect t As to Employment: — What is the nominal force employed? How many men are hired per month? How many men quit per month? How many men are discharged per month? What proportion of your force has been with you one year, five years, ten years ? If there is any dissatisfaction among men, what is the cause? Are piece rates cut without change in the meth- od of working? Yes or no. Do you study economy in time, and as carefully as you study the design of your product? Yes or no. Do you provide for investigation and better- ment of unfair conditions ? Yes or no. Do you placa before your men ideals that they can readily comprehend? Yes or no. What do you do with reference to training your men so as to make them efficient and desirous of remaining with you? How do you overcome the inertia of your men due to habit? Do you allow your men to complain about what THE SURVEY 137 seems unreasonable, and, if so, what attention do you pay to such complaints? What do you do with the inefficient men? As to Equipment: — What type of power do yon use? Do you manufacture by hand, by power, or by both? Is the coal which you are using of the type and quality best adapted for highest efficiency with your equipment ? How many tons do you burn per day ? How much horsepower is developed ? What kind of coal do you use? How much does it cost? What is the method of firing? Do you use a feed-water heater? Yes or no. Do you use an economizer ? Yes or no. Do you use motors or batteries on individual machines ? Do you have boiler tests and evaporation tests made in order to make sure that your steam equip- ment is doing its best, that it is being handled in the best possible manner, and that you are getting the most possible out of the fuel which you are paying for? Have you had a careful investigation made of your lubrication system ? What is the evaporation of water per pound of coal? What is the stack temperature? What is the proportion of C0«? 138 ORGANIZATION AND ADMINISTEATION As to Belting: — A — ^Are belts tight or loose? B — Are they laced properly? C — Are they clean, or in dirty, greasy con- dition? D — What is the alignment of shafting and pulleys ? E — Do belts ride true, or against cone stops ? F — Are belt records maintained ? Yes or no. Gr — Who looks after work, and when? H — How many belts are in use? DISTRIBUTION As to Salesmen: — Are you handicapped for lack of salesmen? Yes or no. Are the salesmen making good ? Yes or no. Do they send out advance cards, or are the cards sent out for them from the factory? How many salesmen have you on the road? What months do the salesmen travel? If the salesmen are not making good, is it their fault or the fault of the goods ? How are the salesmen selected and trained? Is there any Record kept of lost orders? If so, are the reasons for the losses made clear ? As to Territory: — Is all available territory covered by salesmen? Yes or no. Are your salesmen going into competitors' terri- tory with satisfactory results? Yes or no. What foreign markets do you serve? THE SURVEY 139 As to Sales Product: — Have you patents or copyrights on most of your products ? Yes or no. Does your product benefit the consumer ? Yes or no. Is it seasonal ? Yes or no. How does it compare in the public mind with others like it? What lines do you prefer to push? At what season do you push them ? How long a time is actually required for buyeri to realize satisfactory returns on your goods? Is the line high-, medium-, or low-grade as com- pared with others? In what ways has the product individuality ? Are the sales and manufacture subject in any way to climatic or weather conditions? Do you give any guarantee with your goods ? Yes or no. What do you do to add new lines of work? Do sales evidence popular preference for your products, or for those of your competitiors? Is the demand for your goods influenced either by a bad reputation of a similar line or a bad rep- utation of former articles turned out by this firm? Is your product desired mainly for appearance or for serviceability? As to Sales: — Which article or articles sell the best? Which are sold with the greatest difliculty? What were your sales last year? Two years ago? What is your method of distribution? Is the selling organization able to sell more than the plant can make ? 140 ORGANIZATION AND ADMINISTRATION What methods of sales promotion have suc- ceeded? What have failed? Can you give the reason in each case? How are the selling policies determined, and by whom? How is sales efficiency determined? Is the bulk of your business based on the good will of your customers, or are low prices the in- ducement? As to Prices: — Do you cut prices ? Yes or no. Do you give discounts for time limits? Yes or no. Do you offer generous contract terms? Yes or no. Are the catalog prices set for the consumer, the retailer, or the wholesaler? Are they fixed, or variable according to market and territory? What determines selling prices? Are they made on a legitimate profit above cost or on logical profit on price? Are they adjusted to secure maximum results or legitimate profit? Are prices quoted in catalog net or gross? How are selling prices fixed, and by whom? As to Market: — Are the foreign markets familiar, as a riJe, with goods of your manufacture ? Yes or no. Is your product in steady demand ? Yes or no. To what degree do you control the market — Poor, fair or good? What percentage of the product is marketed through the jobber, and what percentage through the retailer? THE SURVEY 141 Is the demand for your product increasing or decreasing? What are the natural limits with respect to the use of the product? What particular classes ? Men, women, children, heads of families, mothers, wealthy, middle class, poor, city people, mechanics, farmers, property owners, educators, religious officials, students, pro- fessional men, technical men, sportsmen? What others ? To what section does your product go — North, East, South or West? What is the market betwen manufacturer and jobber? What class of retail stores handle your com- modity? Have you any retail stores of your own ? Yes or no. How is unexpected competition anticipated? As to Advertising: — Do you offer special inducements to inquirers? Yes or no. What authority has the Advertising Manager? To whom is he responsible? Does the product make a human-interest appeal to the universal sentiment in any way? Yes or no. Have you gained the public confidence? Yes or no. Do you make a practice of exhibiting products? Yes or no. Do you circularize the trade for the benefit of your salesmen? Yes or no. Is the advertising designed to get only direct and immediate returns? Yes or no. Have you made claims in your advertising which you were unable to live up to? Yes or no. Have you noted, thus far, any cumulative value in your advertising? Yes or no. 142 ORGANIZATION AND ADMINISTRATION What is your chief difficulty in getting the pub- lic interested? How do you ascertain public opinion? What is your chief selling point? What is the strength of your appeal from a pub- licity standpoint? What classes of publications have you used in advertising, in the past? During what months have you advertised? What months pay best? What classes of advertising have brought the best results — Publications, direct-mailing litera- ture, billboards, street car, novelties, house organs ? Have you any other classes of advertising? What was your average cost of inquiry last year? How many letters or pieces of literature are there in your inquiry follow-up system? Have you testimonials from satisfied customers? Yes or no. What services do you expect or demand of your advertising agency? How many advertising agencies have you done business with during the last five years? As to Eecords: — Do you keep systematic inquiry-checking records ? Yes or no. What facilities have you for handling follow- ups? As to Competitors: — What is the greatest difficulty you have to meet in the way of competition? Are your competitors using unfair means? Yes or no. If so, what? What are the principal competing articles? THE SURVEY 143 In what points are they weak? In what points do they excel ? Do they interfere in any way with your patents or copyrights ? Have there been any recent litigations tending to jeopardise your business? These questions, with the many others that would naturally suggest themselves in the course of an in- vestigation, will serve to cover the field in such a manner as to enable the person in charge to secure information upon which a constructive program of betterment may be based. CHAPTER XI FIEST PEINCrPLE— INVESTIGATION— MAKING A DIAGNOSIS Analyzing the Survey. — It is evident to anyone who has given careful thought to the broader appli- cation of efficiency principles that nothing can be done in a constructive way until the results of a care- ful survey of the business have been thoroughly analyzed or diagnosed. The previous chapter out- lined the means by which a survey could be made. This one will treat on the methods suggested for efficiently using the results of the analysis. Let us assume that certain questions from the list shown in the previous chapters have been answered as follows: Q. Have you in writing an analysis of parts and groups with reference to importance to assembly and erection? A. No, we do not have such an analysis in writing. Q. Have you in writing the operations in sequence of the various parts and sub-assemblies? A. Yes, our records show operations in sequence. Q. Do you have, estimated or standard times covering the various operations? A. No, the figures we have are actual times turned in by the men and used by our cost department. Q. Do you route parts and sub-assemblies in advance to ma- chines and gangs? A. In no systematic manner. 144 THE DIAGNOSIS 145 Q. Do you have a next job ahead for the various men and machines, Avith everything in readiness for the work? A. Our foremen take care of this. Q. Do you know what is the congestion or unused capacity of machines ? A. We do not. Q. What methods do you use to insure accuracy in the count of material on hand ? A. Our inspectors' count gives us control of this. Q. What governs the size of the lots to be carried through a plant? A. We have no rule regarding this. Q. In putting work through the shop is it with reference to erection and assembly first — then machine — then purchas- ing department and foundry — ^then the engineering depart- ment, or the reverse, starting from the engineering depart- ment through to erection ? In other words, is work drawn through or pushed through? A. No, we put work through the shop on what you call "push" type of flow. Q. Do you recognize the law that no successive operation should be started when its ratio to the preceding operation is less than 1 to 1 ? A. No. Q. Have the functions and duties of the executives and heads of departments been definitely prescribed? A. No. Q. Are they in writing and kept up to date? A. No. Q. Are the duties understood? A. We believe our people know their duties. Q. Are they performed as laid out? A. We think so. 146 ORGANIZATION AND ADMINISTRATION Q, What are the causes which interfere with the efficient per- formance of duties ? A. We do not know ; that is why we sought outside advice. Q. Does your chart of organization show how things ought to run or as they actually run? A. As they actually run. Q. Is your type of organization the Taylor, Emerson or Com- mittee plan? A. We do not believe we would classify under any of these types. Q. Do you analyze rejections? A. The foremen are supposed to do this each day. Q. Do you employ time study methods? A. No. Q. Who grinds the men's tools? A. The men. Q. Who determines shapes and angles of tools? A. The tool department is responsible for determining the size, angle, and shape of tools. Q. Do you anticipate break-downs in machinery? A. Our millwright department is constantly watching to anticipate troubles of this kind although we do not have anticipative records. Q. Who fixes belts? A. This millwright department. Q. Who moves material from machine to machine or from gang to gang? A. A regular moving gang. Q, Who looks after speeds and feeds? A. The foremen. Q. What proportion of orders are shipped on time? A. We have no records as to this. Q. What is your labor turn-over ? A. We do not know. THE DIAGNOSIS 147 Q. Is fatigue of workers studied? A. No. Q. How are the men paid? A. Day rate mostly, some piece work. Q. Is shop union or non-union? A. Non-union. Q. Are piece rates, if used, ever cut without changing the method of working? A. Yes. Q. Do you maintain belt records? A. No. Q. Who hires men? A. The foremen. Q. Do you know what the men actually produce as compared to what they should produce? A. "We think so, as our foremen are instructed to watch this and we are constantly crowding them for results. Q. Do men make out their own reports or use a clock? A. Use a time clock. Q. Are time reports analyzed and compared? A. No systematic comparison. Cards covering same opera- tions are filed together and can be referred to and studied whenever desired. Q. How do you arrive at your burden costs and how are they apportioned to labor? A. We figure our burden monthly and apportion it to labor on the dollar basis. Q. Is your burden figured as a rate covering the entire plant or by department or according to machines ? A. We use a general average. Q. Is your material inventory a perpetual one? A. Yes. 148 ORGANIZATION AND ADMiNiSTKATlON Q. Are your costs part of your regular accounting system? A. No. (?. Do you analyze your orders in advance as to the estimated times that should be taken? A. No. Q. Do you keep data as to idle time of equipment? A. No. Q. Do you figure depreciation? A. Yes. Co-ordination. — In reviewing the above answers, the general conclusion of the investigator with reference to the principle of co-ordination is that the institution is disorganized, or that it lacks proper organization. From these general questions and many others which would naturally suggest themselves, he may secure much additional information of value, all of which seems to convict the concern of violating this impor- tant principle. Records. — ^With no analysis of rejections ; not know- ing the proportion of orders shipped on time nor the labor turnover; without comparison and analysis of time reports; by using a general average overhead rate instead of a departmental rate; with costs not a part of the general accounting system and with no data as to idle time of equipment, it would not require much of an investigation to conclude that records were a long way from being on the most efficient basis. Production Control. — Here the investigator finds that there is no regular written analysis of parts and groups with reference to their importance in assembly and erection. This indicates to him that a regular and proper flow of parts and groups cannot THE DIAGNOSIS 149 lie under control. Then as he knows this would be necessary in order to predetermine the logical sequence of work through the plant, he concludes that without estimated or standard times that there can be no efficient way to schedule jobs in advance against machines. This also is borne out by the fact that the parts and groups are not routed to machines and gangs in a systematic and regular manner. An- other evidence of lack of production control is that the responsibility for having a "next job" ahead is in the hands of a foreman instead of a regular production or planning department. The investigator realizes also that without knowl- edge of congestion or unusual capacity of machines, the shop does not know whether it is keeping ma- chines busy or not, or whether it can tomorrow or next day take advantage of some unusual capacity to schedule some important work. That there is no systematic means for carrying lots through the machines is evidence that the determination of the number to carry through is the matter of guess work, which is further borne out by the fact that work may be released from one operation to another with- out considering the law that no work should be re- leased from one operation to another when the ratio of an operation to the preceding one is less than one to one. The investigator finds further, the familiar "push" type of putting work through the plant, which oper- ates without reference to the assembly, erection and shipment, as far as actual knowledge of results is concerned. He knows this to be wrong; that if ship- 150 ORGANIZATION AND ADMINISTEATION ping, erection and assembly dates were properly scheduled, then machine and sub-assembly work, purchasing, foundry and forge shop work and engi- neering would all be planned with reference to these dates, in other words the work would be drawn through, the "pull" type of production control. Failure to analyze orders in advance of starting work, in order to estimate the time the job should take, leads him to conclude that there is little in the way of advance planning, as this knowledge would be absolutely necessary to properly dispatch jobs in the shop. He therefore concludes that the shop man- agement has little real control of production and de- cides to submit his findings accordingly. Standardization. — The investigating engineer does not find in the plant the standard practice that should be a part of a well-managed business. The men grind their own tools with the obvious result that in time there are in actual practice no standards maintained as to shapes and angles of tools, even though such standards may have been determined and on record in the tool room. With no belt record or anticipative inspection records covering equipment, the fixing of belts and the repairing of machines following breaks by the millwright department is evidence to the in- vestigator that conditions are unstandardized. He is further of the opinion that as he found the fore- men much overworked due to the many other things they were responsible for, an inevitable result of the placing of feed and speed control in their hands is that the operations themselves are also unstandard- ized. THE DIAGNOSIS 151 Incentives. — ^With no time study methods; with failure to consider fatigue of workers in a systematic way and paying men by the day work plan — some on piece work, the rates, however, being subject to cut if the men make too much money and without know- ing whether men can produce hourly an amount which compare favorably with pre-determined stand- ards, the conclusion is reached that the proper incen- tives are not placed before the workers. Summing up he finds: 1. Faulty Co-ordination. 2. Lack of efficient records. 3. No efficient production control. 4. Lack of standardization both as to operations and conditions. 5. Failure to provide adequate incentives. Having made the survey and diagnosed his find- ings, the next task of the investigator is to put his conclusions and evidence in writing. CHAPTER XII FIEST PRINCIPLE— INVESTIGATION- MAKING THE EBPORT Form of the Report. — The investigator, in order to place his conclusions, evidence and recommendations properly before his employer or client, must after a survey and diagnosis, place his findings in writ- ing — in report form. It must be so prepared as to stand both the anal- ysis of his superior or the executive who engaged him and the criticism of those whose activities are most influenced by his conclusions. What is said may have a decided bearing on whether or not a constructive program is to be carried on. Every statement will be closely scrutinized and if the in- vestigator cannot defend his position, every step of the way, with facts and sound logical conclusions, he may run the risk of being considered a discredited specialist. Hen(!e the necessity for a careful presentation of the results of the investigation. It is difficult, how- ever, to prescribe any set rules covering the prepar- ing of an important report, as each case has its own special conditions. The following may prove at least a lead — a thought starter. Order and Arrangement. — There is always some reason for making a survey, and it will be found 152 THE REPORT 153 good practice to start by stating the purpose of the investigation, after which a concise statement of con- ditions found can be presented. Following this there should be listed the conclusions that have been ar- rived at, with reasons therefor. Next would come his recommendations, after which he should outline a definite program. The form to follow would be : 1. Purpose of investigation. 2. Statement of conditions. 3. Conclusions. 4. Recommendations. 5. Program. Typical Reports.— Instead of here attempting to work up a sample report that would conform to the above outline, I have decided to present a number of extracts from actual reports which will consider the various principles of organization, as in this way I can better convey to my readers their significance and treatment. Report on Co-ordination. — "In drawing up the present organization, there was some confusion be- cause the authority of the members of the organ- ization had never been definitely outlined. For in- stance, while the Purchasing Department was drawn up as directly under Mr. A., we understand that as a matter of fact the policy of purchasing was fully under the control of Mr. B. In the new organization, the responsibility for purchasing has been entirely removed from the jurisdiction of the Treasurer, and has been placed under Mr. A. The reason for this change was that the characteristics and qualifications 154 OEGANIZATION AND ADMINISTEATION which make a good Treasurer, are exactly the oppo- site of the qualifications which made ^ good Purchas- ing Agent, and for that reason it is impossible to have the two conducted efficiently under one man. In addition we understand from Mr. B, that he is attempting to withdraw from his more active duties. "In the suggested organization we have combined purchasing, traffic, yard, shipping, receiving and stores all under one head. The purpose of this change is to put the responsibility, and the means of accomplishment, for the buying, delivery, storage and supplying of materials to the manufacturing de- partments as needed, under one man. By this means the Purchasing Department can no longer blame the Traffic Department or the Traffic Department the Yard or Stores for delays, nor can they blame the systems which make up their relations, for it will all be under one man who will have the complete authority for changing any methods or systems where necessary for producing the results he desires. All relations between these departments and all changes of methods now have to be taken care of by Mr. A., and the time which he now devotes to these matters will be released for work more in accord with the position which he holds in the company. "In the present organization Mr. A. supervises directly fourteen departments, and is responsible for the relations between these departments. For in- stance, when the steel work for a building is fabri- cated, the Estimating, Engineering, Purchasing, Traf- fic, Yard, Stores, Structural Shops, Shipping and Outside Erection Department all have a hand in the THE REPORT 155 work. If the building is to be gotten out in accord- ance with a delivery schedule, planning must be done, and all these departments must work in ac- cordance with these plans. At the present time there is no one with either the authority to lay out the plans or to see that the various departments live up to their schedules, unless Mr. A. takes all this work on his own shoulders, and if he did attempt to plan all work properly, he would find that the planning for the structural end only would take up all of his time. "In the suggested organization the whole organ- ization under Mr. A. has been divided into six divi- sions, with a manager in charge of each of the divi- sions, who is directly responsible to Mr. A. These divisions have been so arranged as to collect together all the little related departments under each man- ager, and to divide the plant into three sub-plants, namely a structural plant, a foundry, and a machine and forge shop. Serving each of these sub-plants is a power and maintenance plant that supplies them power and keeps their equipment in repair, a mate- rials division that supplies them materials in accord- ance with their requirements, and the delivery dates which they specify, and an accounting division which maintains records of their accomplishment. "Under this arrangement, as the manager of the structural division has full charge of all departments engaged in structural work, he is enabled to plan all structural work and to see that these plans are carried out. When he has determined on a schedule, he supplies to the Purchasing division a schedule for 156 ORGANIZATION AND ADMINISTEATION the delivery of the materials, and if they are unable to meet the schedule they inform him to that effect and he adjusts his schedule in accordance. Where castings are needed or where machine or forge work is needed on structural work, the manager of the structural division orders the work required from the foundry or the shops divisions as he would from an outside concern, informing them of the dates on which he requires delivery of the materials ordered. "These six heads will relieve Mr. A. of all the detail work which he now attends to and in addition will attend to the detail work of planning which is now neglected. "As was mentioned before, the duties and respon- sibilities and authority of the various positions in your organization are not definitely outlined, and there seems to be considerable doubt in the minds of many of your employees as to their responsibil- ities. In one instance there was considerable doubt as to the person to whom Dept. No. 1 Foreman was responsible. In the chart of your present organiza- tion he was placed as under the Foreman of Dept. No. 2. Mr. A. was certain that the Foreman of Dept. No. 2 could not fire the Foreman of Dept. No. 1 and was doubtful as to just how far he could go even in making him do his work in accordance with his ideas. In the final analysis, about all the Foreman of Dept. No. 2 could do was to tell him when he wanted certain work, and he had no means of forcing him to comply with this. Naturally, as neither of these men know their exact relation, there is great opportunity for friction in case the Foreman of Dept. THE REPORT 157 No. 2 issues orders which the Foreman of Dept. No. 1 feels he had no authority to issue. "Another point is, that the Purchasing Depart- ment was responsible in some things to Mr. B. and in some things to Mr. A. In our investigation of the records of stock structural material, we found that the Engineering Department and the Purchasing De- partment both knew it was inaccurate, and were each partly responsible for that inaccuracy, yet, neither of them felt that they had the authority to change them or that the responsibility of having these records accurate was up to them. "It is very necessary that the authority of the various executives in your concern be definitely drawn up. Each man in your organization should be responsible to a certain man and responsible to him only, and should be definitely instructed to that effect. No orders should be issued by executives over the heads of their subordinates. "It is very necessary that the matters which each man in the organization is responsible for, should be clearly outlined and issued to him as permanent instructions. Every matter in the concern that has to be attended to should be definitely assigned to some individual or committee and the responsibility for carrying it out should be entirely in their hands. No matter is ever properly attended to where the re- sponsibility is in two or three hands, as was shown in the illustration of the structural shop records." "We dropped in on you as any outsider would do, 158 ORGANIZATION AND ADMINISTEATION with the possible exception that we were determined, for your own good, to be hypercritical.' During the two weeks which followed we interviewed twenty or more foremen, department heads and other staff mem- bers. Collectively, they impressed us as competent only to a mediocre degree and very weak on co- operative effort, both as between departments and individuals. Then, too, the organization lacks ag- gressiveness and the right kind of confidence in the policies and future of the company. There is also considerable overlapping of authority and function all the way down the line, meaning that every so often various members get their wires crossed, and you know what that leads to. "Individually, perhaps, the organization does not loom up as badly as we have painted it in the pre- ceding paragraphs. Loyalty, for instance, is con- siderable of an asset in a man and cannot be dis- counted, especially as it is found in some of your members. Take for example the case of Mr. A. His loyalty and conscientiousness are beyond reproach, despite the handicaps of his being naturally too mild- mannered and peace-loving and lacking in aggressive- ness. These drawbacks can, no doubt, be offset by having him work under a man of the opposite type; the kind who can inject snap and vim into the account- ing and purchasing and give these phases the proper balance. "Then there is the case of Mr. B. He is on the job practically morning, noon and night, and always striving for the best interest of the company. His chief drawback seems to be a lack of executive abil- THE REPORT 159 ity, for his word does not seem to bear tlie proper weight with some of the men under him. At times he is also prone to agree too readily with the opin- ions of others, especially his superiors, even though his own ideas may be well-founded. He sometimes carries this to such an extent that it borders on in- sincerity. However, his heart seems to be in the right place, and, as in the case of Mr. A., the proper man placed over him can play to his weak and strong points. Mr. B.'s value as a superintendent can be enhanced by divorcing him from the estimating end of the business. This should be done immediately, and later in this report we have outlined a manner for dealing with this situation. "The main thing which we found lacking in Mr. C.'s make-up is the entire absence of creative and constructive ability and his l^ck of imagination. He is also delinquent when it comes to aggressiveness, but this we feel is due more to the lack of proper coaching than to any inherent weakness. We are not reticent in saying that at present Mr. C. is not giving the company the best that is in him. He seems dis- satisfied, and the company probably is just as much to blame for this as any one else. Our suggestion would be to give him the title of General Sales Man- ager, putting it up to him in the light of a promo- tion and at the same time increase his salary to $ per month — a nominal salary at that for a Sales Manager, and what is in a title anyhow? This is the height of Mr. C.'s ambition and it will be the means of his taking a new lease on life. Even at that he never will be able to take care of the con- 160 ORGANIZATION AND ' ADMINISTRATION struction end of the sales game, so that this also will probably have to fall on the man higher up. "We are not so sure that Mr. D. is the man for the place when it comes to taking charge of the engineer- ing department. He is of the "fussy" type, putter- ing his time away on the small things and letting the big things slide. In other words he does not possess the power of discrimination, as evidenced by his repeated failures to get the work out of his de- partment. If he could be made to display a little more life it probably would have the same effect on the men under him. A good heart to heart talk along these lines would surely do no harm, and probably a great deal of good. "In the case of Mr. E, we find him to have several good traits, but wholly misplaced when it comes to his present station. His unfortunate personality handicaps him in getting the proper co-operation and assistance, without which the work that he is attempting can never be a success. Two courses are open in his case, either to dismiss him outright or to use his services on work where he is not compelled to "rub elbows" with the men. For instance, how would it be to try him out on estimating work? He has a pretty fair knowledge by this time of the nature of your work and the operations involved. Above all, use him somewhere to advantage, that is, if it is possible to do so, for your company has in- vested several hundred dollars in educating him up to this point. "In Mr. F. we feel that this company has one of the few strong men in the factory. He has often been THE REPORT 161 accused of being stubborn, unresponsive and non-co- operative, but in our dealings with Mm we did not find him so. It probably is true that he is naturally firm in his opinions and convictions and that he has been passively opposed toward several innovations which were attempted, but we will wager that had he been properly consulted and dealt with on all of these points that he would have been considerable of a booster by this time. For some reason or other he seems to bear an indifferent or resigned-to-his-fate attitude toward his direct superiors, due probably to his belief that they are his superiors only in name. After Mr. Gt. has been dealt with, we would recom- mend that Mr. H. be given the title of Assistant Super- intendent in charge of the Machine Shop. In talking this over you will remember that Mr. B. suggested that under this arrangement Mr. F. be given jurisdic- tion over the Machine Shop, Maintenance and the Erecting Floor. We agree heartily with this sug- gestion." • « » "As will be noted in your organization chart, our thought is to give Mr. A., as Vice-president in charge of the Machine Shop Division, an assistant through whom he could deal with the various departments. This would tend to strengthen Mr. B., giving him greater responsibility and at the same time increase Mr. A.'s efficiency due to his being able to take up the larger problems, knowing that in Mr. B. he would have a man who could ably carry out his wishes. "We would advise that the Inspection Department now under Mr. C be placed under Mr. D. Our ex- 162 ORGANIZATION AND ADMINISTRATION perienee indicates that it is mucli better to have the department which creates a standard see to it that the standard determined upon is maintained in actual manufacturing, rather than having the department making a product, check up its own work. "We would also advise that the stores now under Mr. E. be placed under Mr. F. Our feeling with reference to this is that Purchasing, Eeceiving and Stores are too closely allied to divorce them, and as Mr. F. does your purchasing, better results would be secured if he also controlled stores. "In this connection we feel that Mr. A. should be in touch with the Traffic, Cost, Stores and Purchas- ing Departments, which we have indicated by a dotted line. This would mean that while these departments would be under the direct charge of Mr. G. and Mr. F., Mr. A. would have a point of contact on all machine shop matters. "Perhaps the most important step we would ad- vise would be the reorganization of your Planning Department, placing it under the direct charge of Mr. C. This could still be called the Planning De- partment, or you could call it the Production or Con- trol Department. This department would be respon- sible for the planning, routing and scheduling of all production details in connection with machine shop and erection shop manufacture, and would co-ordi- nate the work of the Engineering, Purchasing, EoU Shops, Foundry and Machine and Erection Shops. "The orders issued by both Mr. G. and Mr. F. cov- ering EoU Shop and Foundry work not made for machine shop manufacturing should, for the sake of THE EEPORT 163 efficient handling, clear through this department. The relationship under the manufacturing section is shown by full and dotted lines. "In order to enable Mr. C. to carry on his work to best advantage this Planning or Control Department should be divorced entirely from the Cost Depart- ment and placed in his full charge. Mr. H. should be retained by Mr. E. as an assistant on costs. You cannot have any divided authority with reference to this important work and at the same time secure maximum operating efficiency. As we informed you, our feeling was that Mr. C. seemed to be a better man on mechanical matters than along lines of organ- ization or administration. At the same time, in justice to him, we feel that he has not had the opportunity as yet to demonstrate his ability along these lines. He should be given this opportunity. At any rate the Planning or Control Department logically functions under manufacturing, and our recommendation is that your development take the form mentioned and that Mr. C. be given every assistance possible to carry on that work. "In addition to organizing a Planning Department under Mr. C, the following departments should be created and organized: 1. A Rate Setting Department — ^to study operations, out- line standard practice and set times or piece rates. 2. A Department of Speeds and Feeds to standardize your machine tools with reference to their maximum operating efficiency while running. 3. A Trucking Department — ^to move materials efficiently in and between departments. 164 OKGANIZATION AND ADMINISTRATION 4. A Department of Machine Repairs — to keep at a mini- muin delays due to repair and belt troubles. "The logical functions of a machine shop are: planning, tools, speeds and feeds, rates, trucking and repairs, in addition to operating. Provide Mr. C. with properly organized divisions as outlined, and he can either do his best work or demonstrate his incompetency. "It is very important to have a correct relationship between departments, as well as a definition of de- partment functions, and a fairly comprehensive out- line of duties of department heads. We would, there- fore, advise that this question of organization be con- sidered, and a plan worked up which would place the individual on his own feet, with responsibility clearly defined, and such authority arranged for as would give each man an opportunity to do his best work. A manual of standard practice instructions should be worked up in this connection to cover decisions, rules and policies, so that the operations of the ma- chine shop division would be a matter of record." • • • Report on Rejections. — "I generally find the re- jections of a plant a profitable source of information, I compiled the bad casting reports for 20 weeks, from January 11 to May 24, during which time you mixed your own metal, which showed that the melting loss was 4.39 per cent as distinct from bad casting loss. "For the twenty weeks from July 11 to November 21, during which time you were using mixed metal, your results were: Good castings Bad THE REPORT 389,890 pounds 40,939 165 90.5 per cent 9.5 " " Total 430,829 pounds 100.0 per cent Melting loss was 4.46 per cent. "As you will note, the bad castings increased from 5.75 per cent to 9.5 per cent, an increase of 65 per cent. How much of this increase is due to using mixed metals and how much due to lack of proper control of melting in the foundry, is difficult to determine. I am of the opinion that it is a little of both. "In an effort to determine the real situation with reference to quality and workmanship, I had a very careful analysis made of rejected work for the period of one week, with the results as shown in the following, which includes rejections both in Brass Foundry and Brass Finishing Departments charge- able to Brass Foundry: Pounds Per cent Sand holes 548.72 221.64 32.8 Core shifts 12.6 Blow holes 97.63 100.76 5.2 Crush 6.0 Cold shut ^ 54.08 3.2 Misrun 235.51 14.0 Shrink 40.38 2.4 Castings too thick or too "thin 17.06" 16.20 rint slinrl: Bent 16.90 11.60 5.0 Core Broke Unable to Classify 314.64 18.8 Total 1,675.12 100.0 166 ORGANIZATION AND ADMINISTEATION "With reference to the principal causes I might say that the following are general reasons: Sandholes : These are caused by metal being too hot. "Where joints are not tight or there are soft spots in the mould, this metal cuts the sand away and it is found in the castings. This can be classed as a loss due largely to metal, and as you will note, is responsible for one-third of the rejec- tions. I feel confident that a better control of melting by keeping the temperature within certain limits would reduce this item of loss materially. MiSEUN: The next largest item is the rejections due to misrun of metal, amounting to 14%. This is due to cold or sluggish metal which does not run into the moulds properly. CoEE Shifts: This cause is responsible for 12.6 per cent of the re- jections, and is due to failure to set or secure cores properly, or to cores which do not fit as they should. This item is largely within the control of the men. Blow: This is caused by wet sand or hard cores; an item more or less within the control of the men. Crush : Failure to set cores properly, or carelessness in putting on weights or in handling moulds is responsible for the loss of work due to crush. Greater care would reduce this loss. Cold Shut: Cold metal or careless pouring will cause cold shut. Shrink: This is due to cold or inferior metal. THE REPORT 167 "i 'Classifying these rejections according to metal and men, we have: Metal Sand holes 32.8% Misrun 14.0 Shrink 2.4 Cold shut 1/2 1.6 Total 50.8% Men Shift 12.6% Blow 5.2 Crush 6.0 Cold shut 1^ 1.6 Miscellaneous 5.0 Total 30.4% Total of rejections due to metal and men, 81.2%. "Classifying according to hot or cold metal, we have: Hot Sand holes 32.8% Cold Misrun 14.0% Cold shut 1/2 1.6 Shrink 2.4 Total 18.0% Total due to metal being too hot or too cold, 50.8%. "The above clearly establishes the need for better methods of controlling metal as well as closer super- vision of work done by men." * * * 168 ORGANIZATION AND ADMINISTRATION Report on Employment.— Referring to this impor- tant matter the following report may be cited: "We analyzed your methods of employment to some extent, as we consider this an important factor. We submit the following: Men Employed between March 31 and August 31 110 Discharged, account of no work 38 Left 50 Laid off 6 Discharged various causes 50 Total 144 Women Total 77 187 16 54 42 92 , , 6 6 56 64 208 < and without criticising this man for his inability to get results, despite the fact that he had enough rec- ords, methods, and clerks in his department almost to run the railroads of the country? The trouble was not with this man, but with the management which permitted such a condition to exist. In another case I was impressed by the very pro- nounced overlapping of authority and functions by practically all the members of the organization, from the vice-president down through to the respective foremen. This meant a continuous "crossing of wires, "^ with a consequent loss of effectiveness all the way down. The best procedure would be to divide the organization, first into its various functions and CO-ORDINATION 205 then to assign to each the right man qualified to handle it, vesting in him the proper authority so that he can be held strictly responsible for securing re- sults. Factors of Co-ordination. — To co-ordinate properly, consideration must be given to three factors: 1. Type of Organization: The mechanism or ma- chine through which members work. 2. Plan and Policies of Organization: The estab- lishment of relationships, logical grouping of parts, and furnishing the mechanism with motive power. 3. The Personnel of Organization: The people who use the mechanism and motive power to best advan- tage. To concentrate on personnel first is like building a roof before starting the cellar. For instance, you would hot think of hiring an engineer until you had first designed the engine. It could be a turbine, Corliss, or simple type of steam engine, or it could be a gas, gasoline or oil engine. The type of machine would define the nature of the motive power, which would govern the kind of an engineer to engage. Another illustration — that of staging a play, for example — ^will indicate the logical nature of the three factors. The plot is first decided upon, then the de- tails are thought out, and the play written. Costumes, stage effects and scenery are then determined, all of which govern the kind of actors to look for and select, which means: 1. Plot and supplying details (Type of organization). 206 ORGANIZATION AND ADMINISTEATION 2. Writing play, costumes and scenery (Plan and policies of organization). 3. Actors (Personnel of organization). No playwright would think of selecting some actors indiscriminately and then writing his play around them. It is true he might build a plot around some particular actor as a star, but even in cases like this the other actors are selected with reference to certain distinct requirements. The play and the ideals be- hind it would govern the kind of people to be re- cruited. Making the Organization Effective. — As explained in Chapter III, the difference between a sales man- ager under one type of organization and then under another,, convinced me that there was infinitely more to this work of industrial betterment than just plan- ning, cost systems, time study, or bonus. This be- came a firm conviction after operating for a time in another and larger plant managed by three men. After investigating this plant, my assistant said that he felt the company would expect us to recommend planning, or time study, or bonus, or costing, but that the real troubles would not be corrected through the use of those tools. His conclusion was that the place was disorganized from the top down, and the correc- tion of this condition would smooth out or eliminate many of the other faults. After going over the find- ings, we decided to submit our conclusions to the man- agement on this basis, and we told these three men that the real trouble lay with them as executives. After we submitted our, facts they agreed with us, and we CO-OEDINATION 207 were told to go ahead and make further recommenda- tions on this basis. As a result, after investigation, they took up co-ordination, and this concern is securing real results as a consequence, which would not have been the case if we had started with the third, fourth, fifth, or sixth principle first. Essentials in an Investigation. — The investigation gave attention to the following points, which, while a repetition of some of the things contained in Chap- ter X, will prove of interest because of the more specific nature of the treatment than contained in the chapter mentioned. Divisions of Business. — ^In order to know the busi- ness the scope of the work should be ascertained and the number of people and what they do deter- mined, which can be secured through the following questions: Name of department. Name of department head. What he does in a general way. Under whose direction. Average force employed. Production System. — A sample of all forms used in engineering, storekeeping, timekeeping, shops should be obtained to find out: What the form covers. How used. Relation between forma. By whom they are used. What is done with forms. 208 ORGANIZATION AND ADMINISTRATION ' n Stdckhotders Directors General Maoager 1' 1 1 1. 1 1 Accounting Costs Fitimatins Sales Older Purchasing 1 1 1 1 1 1 a..»«n8 Yard D,Bln»,tag and drafting eollir Shop Machint Stop Patlflm Shop 1 1 1 1 1 1 1 j Foundry Carpentei Shop Smith SHOP Warehouse Maintenance Powv Kous^ 1 gHAET 12. ONE-MAN ORGANIZATION (see also CHAET 1, PAGE 22) Co-operation of Department Heads. — A letter should be issued to each head of department soliciting a full and complete answer to the following: What matters do you attend to which should be looked after by some other department? What matters are looked after by some other department which should be looked after by you? "What conditions are there, if any^ beyond your control which interferes with the attainment of maximum results? Analysis of Important Records. — Considerable can be found in the way of troubles and delays by analyz- ing the following: CO-ORDINATION 209 210 ORGANIZATION AND ADMINISTRATION CO-ORDINATION 211 Complaints from customers. Eejections in shops. Burden reports. Inspection records. Delayed shipments. Idle equipment time. Cost records and overhead expense statements. Delays in shops. Actual Condition of Orders. — To get some first- hand information regarding shop troubles and as a basis for outlining betterments, make an analysis of orders in the shops, as follows : List of orders. Condition as regards completion. Delays. Reasons for delays. Length of time in shop. Chart of Present Organization. — To have a picture of actual conditions, make a chart of present organ- ization. To have a picture of the plant, make a floor layout showing location of departments, ma- chine, floors and benches and the flow of product through plant. Go thoroughly into the methods and practice of the following departments: Engineering Department. Experimental Department. Tool Room and Storage. Inspection Department. Planning Department. Cost Department. Testing Department. 212 ORGANIZATION AND ADMINISTRATION m m 1 ^ ^ f 'ANY eh man general r, r A LARGE COMI will show how ea the heads of the H 1 1 ® t^ r "i ^ Mt 1 j ! fn: 2 " u . \fgj^_ "iiX Uj ^ i| |||~^ T-IJ Li ORGA tudy < ment, mans F ^^^^ jjj U_j| H '"^a BarT^aJr™ ■ » %E§ rpli J liK " u _r 1 ^ K OF CO-OKDINATION I th equal authprity. A direct touch with everj superintendent and dep ^M kr ^ 15. LAC heads w to be in : D mi M W ART hree pted _ = Ct w Ha L" Uf LU Li CO-ORDINATION 213 In taking up constructive work tlie first step should be a consideration of the first three laws of organ- ization — objective, greatest complication, and concen- tration — which have to do with the what, where and how of developing the industrial mechanism. To illustrate: In the plant mentioned in Chapter III, the organization was found to be as indicated on Chart 12, in which each of the 18 heads of depart- ments were directly subordinate to the general man- ager — ^who incidentally was so overworked that he could not do any more than cover things in a most superficial way. After an investigation was made, it was found that there were logical groupings of activ- ity or sections which should be considered. Each section was in turn divided into the number of divi- sions necessary properly to carry on the work of efficiently running the business, as shown on Chart 13. Men were placed in charge of the divisions, given definite status, outline of functions and relation- ship, and all instructions were put in written form. Essentials of Organization. — That this was a sound development is borne out first by the soundness of the principle and by the results which were subse- quently attained. With reference to the necessity for sound principles, Hugo Diemer said in an article on "The Essentials in Shop Management," in the "Amer- ican Machinist": Organization consists of the laying out of the scope and limits of action of the various individuals and groups of individuals whose work is required for carrying on the ob- jects of the establishment. It consists further of the uniting of these individuals and groups of individuals in such a 214 ORGANIZATION AND ADMINISTEATION 1 i J_ ^ II ^1 1 r si ' 11- ' g !! ki CO-ORDINATION 215 216 ORGANIZATION AND ADMINISTRATION CO-ORDINATION 217 manner as to co-operate for the common good. There Is no greater source of economy than conservation of human energy through efficient organization. To obtain the largest possible return from a given expenditure of capital and labor, indus- trial management must be logical, systematic and scientific. Organization is distinct from system and management. An industrial establishment may have excellent filing and ac- counting systems, but no well defined lines of organization. Again there may be cleslrly defined organization, but very poor management. The distinction between organization, management and system is important and must be fully ap- preciated. We organize to manage. We manage through system. With reference to results as an essential of organiza- tion, Chart 14 will show the nature of the results secured by this particular business. Let us take a more complicated case, illustrating co-ordination — or better, the lack of it. Chart 15 is an organization chart covering a large company, a study of which will indicate quite clearly a very pronounced disorganization. In this case the work was divided into logical functions and the work handled as in the case of the plant shown in Chart 13. Charts 16 and 17 illustrate conditions before and after co-ordination of a large plant, a study of which will prove interesting. Charts 18, 19 and 20 will also illustrate proper types of organization. In these charts, line, staffs and committee organizations have been shown and will give the student and executive an idea regarding their relationship. Organization of a Section. — The charts so far shown considered organization from the standpoint 218 ORGANIZATION AND ADMINISTRATION CO-ORDINATION 219 220 ORGANIZATION AND ADMINISTRATION litiMR o S m S's .i-Si Irriil CO-ORDINATION 221 n Purchasing Depaitmeni 1 1 Purchastng Data Racing of Order* Followlnf 1 1 1 SDurcas of Haurlal Cataloguas Requiiitioii Records Oi«'s follow up f 1 QuAlHton fuaiualMj Inwotce RKonli CiTore Csmplilnit cv^UlKll SUU-M ■ _ ' ■MKi MslariaK Iteeimi" 1 1 Aaporti Cowarins Rcuipts Btcwtk J CHART 22. DETAIIiED ORGANIZATION OF THE PUKCHASINQ DEPARTMENT of co-ordination entirely. To furnish some idea of the manner that sections of an organization are handled Chart 21 of the Drafting Department and Chart 22 of the Purchasing Department are shown. Reasons for the Charts.— A few words regarding the reasons for the charts may be worth while at this time. In the first place an organization has to do with people— human beings — rather than with systems or things. It can be called the art of welding humans into a composite and smoothly-running whole. The acts of a nation or a community are the acts of the 222 ORGANIZATION AND ADMINISTRATION people making up that nation or community. So with industry. If men perform their work in a disjointed, hit-or-miss, aim-at-nothing-in-particular sort of fash- ion, the end or final results are bound to be below par. It is within the province of organization to unify, co-ordinate, and direct the actions of the people in a plant. Reasons for Division. — The reason for dividing the work into logical sections and each section into divi- sions, is to give due consideration to the question of authority and responsibility. If all direction and power is placed in one set of hands and one head, as shown in Chart 12, the person becomes a "de- tail chaser," jumping from one thing to another, living a butterfly life and never having time to plan and really direct his subordinates. This is what I call the "leaner" type of organization and is never efficient. If on the other hand there are no restric- tions placed on the action of the members of an organization, the tendency is towards aimlessness, too much individual initiative, and the result is an ex- plosive, strenuous, individualistic type of organiza- tion. Responsibility in Organization. — The desired goal lies between 'the two extremes just mentioned, and experience indicates that the most efficient type of organization would conform to the following: 1. Some person in complete control of things who dictates the policies of the company, to whom all other heads are responsible. This individual would not be self-achieving, nor self- CO-ORDINATION 223 counseling, but would direct, co-ordinate and de- cide as between the two sides of a problem. 2. Division or Department Managers who, in turn, will have complete control of a distinctly defined section of the business for which they are held responsible, with authority and status. Ee- sponsibility without authority is only a figure of speech. 3. A Committee for handling matters where re- lationship is involved, and having for its mem- bers only the heads of those departments con- cerned plus some superior who can act in a judi- cial capacity. 4. A Staff whose functions would be the inves- tigation of any section of the business either not producing results or producing results of an average character; the investigation of any de- partment at the request of its head, and the study of all systems and methods which affect the re- lationship between departments, at the request of committees. Principles of Organization. — John Calder in an ex- cellent article on "Organization," outlines seven prin- ciples, with which I am in hearty accord. They are: 1. An executive with deciding powers is provided at all points where action must be taken; failure to do this opens up the way for vacillation, jealously, inefficient compromise and disorder. Eesponsibility divided invites evasion, 2. The responsibility of each position is fully and carefully outlined. A simple chart is often useful in conveying such relations to others and helps to avoid the conflict and lack of co-operation which tmeertainty creates. 224 ORGANIZATION AND ADMINISTRATION 3. The duties of the various organizations are made to con- form satisfactorily to the ability of those chosen to fill them. This is a most important and often, in reorganization work, a delicate matter with which no influence, or special interest, should be allowed to interfere. 4. No person should be made subordinate to two or more others, if it can be avoided, for this is a frequent source of trouble, ill-will and inefficiency. 5. The power to discipline men in any department is al- lowed to rest in the hands of the official who is held respon- sible for results. 6. The duties of the members of the organization are dis- tributed so that unequal loading is avoided. 7. Wherever possible, no positions on the staff are created which are culs de sac for the ambitious and permit of no pro- motion therefrom. Aims of Good Organization. — Harrington Emerson has expressed six fundamentals of good organization which will also prove of interest in this connection: Correct design. Specification of qualities. Selection of qualities. Economical purchase. Responsibility of each part. Combination into a workable unit. A comparison of these combined thirteen funda- mentals with the fifteen laws of organization in Chap- ters VII and VIII will demonstrate the logic and prac- tical nature of these laws. Aims of Co-ordination. — ^What I am aiming to do in calling attention to this important principle of CO-ORDINATION 225 organization — co-ordination — ^is to guard against and eliminate the kinds of conditions which caused the following conclusions to be reached after an investi- gation in one large organization: 1. We have conferred with some of your department heads, when young men evidently connected with the executive man- agement in a minor capacity, would appear and say that they had been sent by Mr. So-and-So to investigate this, that, or other detail, or to find what was being done about such and such a matter. Some of these young men were evidently greatly impressed with the importance of the authority briefly vested in them, while others attempted to perform an un- diplomatic matter in a very diplomatic, often apologetic, way, realizing that their errand was offensive. The feeling of the department managers was that the man- agement did not ask them for a report on the matter as they did not trust them to give an authentic report, or that these men were sent to spy out trouble in their departments. One of these managers said to the young man sent to investigate, "Tell Mr. So-and-So that if he wants to know anything con- cerning my department he can phone, write, or see me, but I will not have orders transmitted to me through office boys." After one of the young men had left one of the managers said to us, "Is 'n't that the d— dst thing." We replied, "Yes, but we do not believe that Mr. So-and-So realizes how offensive it is." "Oh, I don't know about that," he replied, "I think they are trying to goad me to the point where I will tender my resignation." We feel certain that no offense was meant, but certainly the most unfortunate method of obtaining information was adopted, so unfortunate that it riled some of the more sensi- tive managers to the fighting point. A constant repetition of these instances gradually impresses on a man the idea that he is not trusted and is not liked ; no man can co-operate and 226 ORGANIZATION AND ADMINISTRATION do the best, work for the company who has this impression. The idea also keeps the man constantly worried and appre- hensive. 2. There is a policy of restricting managers in their author- ity for expenditures to very small amounts, and of requiring them to submit all larger expenditures to committee discus- sion. In other words the manager is not held responsible for his total results and allowed to spend the money neces- sary to get them, the company does not trust him even in the spending of a little money without having him checked up by others frequently incompetent to pass on the matter, and the company pursues the policy of checking up each thing he does requiring money, presumably with the idea that he is either incompetent or dishonest. This matter is continually before the manager's mind, for his work is constantly inter- rupted and delayed, waiting for the approval of this or that expenditure. As we remarked before, some of the men do first and get permission afterward, but it is only a few who have the backbone to work contrary to the policy of the company. We imagine that if these men make a mistake and it is discovered that their lot is an unpleasant one. 3. It seems to be the policy of the managers to walk about the factory and discover details that are wrong, or to inves- tigate complaints of details brought to them by others, and then to call the managers of the department responsible to account. Many of these details are of minor importance, of such minor importance that the department managers not only should not be expected to be familiar with them but should be even reprimanded if they fritter away their time in following such details. However, after a manager has been called to account for details that were wrong, and has been reprimanded because, when called in, he was not familiar with the detail itself, after men have been sent into his department to investigate 00-OEDINATION 227 details and he finds them without his consent questioning his employees, and after kicks have been made on various expenditures, he becomes thoroughly convinced that it is nec- essary for him to know all the details in his department. He then proceeds to keep track of all details and also requires his subordinates to do the same and report to him on them, so that he may be ready at all times to have the facts when called to account. Now when a man has become absorbed in all the details of his department and is working himself to death keeping track of them and supervising each of them so no mistakes will be made for which he will be called to account, then he has reached a point where he has become valueless as a manager and where the company has, through its policy, finally made him valueless to them. One of the executives said when this was put before him, "Well, how can we judge what a department is doing except by judgiag from the details that come to our attention." We would suggest that if details are the only method of judg- ing, that considerable attention should be given to your cost system and to your system of reports to the management. Certainly if you judge by details, and hold to account for de- tails, you will continue to have an organization of good detail men but poor executives. In any organization there are certain things to be done, which determine the qualifications to look for in the people that are to do them. Having brought the people and work together, co-ordination merges them together into a harmonious working unit so that mass action may yield the greatest re- sults. Duties, functions, relationships, instructions, charts, selection, training all have a bearing on co- ordination and must all receive their share of con- sideration. 228 ORGANIZATION AND ADMINISTRATION Methods and Men.— In the past we have pinned our faith in methods. In the future we will devote our attention to men. In the past it was thought that machines, planning, timestudy were the things on which attention should he concentrated. We see now that as these things are used hy human beings, we must consider them first. The organizer of men will be the real leader of the future, and he will produce the greater results, for he will deal with values of far reaching importance to the success or failure of industry — ^the faculties of body and mind- without which there would be nothing to write about. Take away these two elements and there would be no progress, no development — ^nothing. CHAPTER XIV THIRD PRINCIPLE— RECORDS The Need of Records. — ^A correct plan of organiza- tion may be outlined, duties assigned, responsibilities placed, and individuals selected for the various posi- tions, but without proper records there can be no way of analyzing, co-ordinating, or measuring results. To get proper records the accumulation of data and statistics on which they are based, should be accom- plished with the least amount of effort, and the facts obtained must be exhibited in such a form as to enable the responsible officials, to assimilate them quickly and with confidence in their accuracy. Four Primary Divisions. — Recording may be divided primarily under four headings — General Ac- counting, Cost Accounting, Sales Accounting, and General Statistics. Any subsidiary statistics which may be collated lead back into any one of these four divisions. The first three of these divisions relate to the com- pilation of figures which must of necessity originate through the General Accounting Records, but which are segregated under different headings in the Cost Accounting and Sales Accounting Divisions. The General Statistics may relate to the accumulation of 229 230 ORGANIZATION AND ADMINISTRATION facts peculiar to the business which are not matters of accounting, or they may consist of data gathered from outside sources for the purpose of comparison. Statistics and Accounts. — All statistics relating to the Cost and Sales Accounting should be tied up with the General Accounting in such a manner that they may be susceptible to absolute proof of accuracy. Without this no dependence may be placed upon the results produced. The records of a business house may be likened to the chart of the mariner. No mat- ter how capable the navigator may be, if the chart is false the result is apt to be a shipwreck. The com- petent executive makes use of charts and reports in creating new policies or changing old ones. Inac- curacy in reports might lead to injudicious action, the result of which would mean disaster to the busi- ness. The changes in general accounting methods have been as great and as numerous as the changes in organization. Modern accounting as compared to the old Italian method is like comparing the auto- mobile to the old "one boss shay." This change has been due to what has been aptly termed /'Big Busi- ness." Under the old method every transaction passed through a day book — all entries being made in the rough. From there they were transcribed into a journal, and from the journal they were posted to the individual accounts in a ledger. The first deviation from this resulted in the use of a cash book in which all items relating to the cash were entered both as to receipt and payment, and the same were omitted from the day book. As busi- EECORDS 231 ness grew in detail, the extra work of recopying was gradually eliminated. People began to realize that the more figures were transcribed the greater chance of error existed. Typewriters were used in connection with the work of the accounting department, carbon paper was introduced, adding machines were installed which enabled the bookkeeper to accumulate totals from original entries and obviated the necessity of a greater portion of recopying. With it all, however, the ledger was considered the main book of account, and no rec- ord of the standing of a business could be obtained until all postings were made, balance proven, and ac- counts analyzed. In case the bookkeeper was out in his balance, there was no segregation of accounts which enabled him to confine his search for his difference to any particular section of his ledger. It dawned upon the accountant that this was a waste of time and energy. He realized that if the detail was great enough to divide the work among ten men each keeping a ledger, when one man made an error it would be necessary for the ten men to go over their work. As there was no way of knowing just where the error occurred, he soon appreciated the necessity of creating controlling accounts by seg- regating the original entries under proper headings. Controlling Accounts. — This led to the use of the column journal and cash book, wherein all entries re- lating to "accounts receivable" and "accounts pay- able" were made in columns provided therefor, and a proof of these accounts which were kept in ledgers sep- arate from the other items was readily obtained. This 232 OEGANIZATION AND ADMINISTRATION led to still a further introduction of controlling ac- counts, until now under modern accounting metjiods the standing of a business may be obtained when the last entry is made in the books of original entry or controlling record. The proof of the various ledgers or the classification records become secondary and in no way delay the general statement of conditions. General Controls. — ^By means of modern account- ing methods this record of controlling accounts may be carried to a degree which will meet the re- quirements of ally business, whether large or small. By all means the plan should embrace all records relating to costs and sales, and should show under general controls in such a manner as to give a con- tinuous inventory of raw materials and supplies, work in process, finished production, cost of goods sold and selling price of goods sold. Statistics re- lating to these general controls would come under the cost and sales accounting divisions and would be amenable to proof with these accounts. General Records. — Many accountants concede the value of the use of controlling accounts as they apply to what may be termed capital accounts, ac- counts receivable, accounts payable and sales and expense accounts, but fail to carry the scheme of ac- counting to its ultimate and proper conclusion by tying up the manufacturing accounts with the gen- eral records. With but little extra effort this may be done, and the results obtained will be invaluable to the executive. Faulty Cost Systems. — Great care must be observed in laying out the detail of the statistics required. RECORDS 233 The accumulation of data may be carried to the ex- treme, and the result is that a deluge of reports and charts obtains. The very multitude of figures over- whelms the executive. He is unable to select the wheat from the chaff, and the very purpose of the work is defeated. This means not only a loss of time and money, but is apt to create a loss of confi- dence in all statistics. They are all condemned and eliminated. The benefit which would accrue from the accumulation of essential records is eliminated and the business suffers accordingly. Inadequate Supervision. — Careful supervision of all records must prevail. Proper plans may be laid out and started; the methods introduced may be such as to make the work of accumulation automatic to such a degree as is possible; but when the human equation enters into the problem, a point dropped here and there may defeat the whole object. As an illustration: A number of years ago a large concern, the operation of which covered not only a large manufacturing division, but also an equal clerical force, decided to introduce a statistical division. This was placed under the supervision of the accounting division, and was established for the purpose of ac- cumulating cost data not only of the manufacturing departments but of the clerical departments as weU. The records of this division were tied up with the general accounting un^er proper controls and the method of accumulation, the details of records from which these accumulations were to be made, and the form of reports were outlined in a complete manner. It was assumed that the information obtained would 234 ORGANIZATION AND ADMINISTRATION be accurate and of great value. This would have been so, had the division received the proper super- vision. For lack of it, the work developed into an accumulation of figures upon which nobody could rely, and which was little used. The clerks doing the work were gradually changed, no attempt was made to instruct the new clerks as to the reason for their work, and no effort made to impress them with its value. The plans as originally laid out were gradually changed. Important details were dropped, and the results obtained were in no way like the results originally planned for. By reason of inability to secure information desired, the various heads of departments introduced record- ing groups in their departments and the statistical division became so only in name. This meant addi- tional expense and no correlation of the departmental records with the general accounting. Correlating the Records. — A change was made in the head of the accounting division. With the aid of outside counsel who had laid out the original plans, an investigation of the conditions resulted in suggestions covering changes which were put into operation. The statistical division was reorganized both as to personnel and methods. The departmental accounting was eliminated and the clerks were properly instructed as to their duties and as to the work they were doing. The new head accountant proved to be a supervisor of ability, and .the results obtained imme- diately after the change meant a saving of thousands of dollars to the cohcem. RECORDS 235 This condition has continued, many reforms have been introduced, combinations have been made and the department is now running at a less cost than the old department which gave no results whatever. Engineering and Accounting. — So much for the mat- ter of the theory of records and their practical nature as they relate to general accounting practice. Of late years an entirely new development has taken place. The "efficiency engineer," looked upon at first as encroaching in the realm of accountancy or as a quack, finally came into his own, and now we have the matter of engineering to consider in conjunction with accounting. Since we cannot properly divorce engineering from accounting, it is necessary to give some consideration to their relationship. Let me, therefore, cite a few cases which will show how detrimental it is to the success of a betterment undertaking for the accountant and the engineer to work independently or at cross purposes. In one ease the engineer was at work organizing a loosely run plant, and one of the devices started was service or operation time cards to control the activities of the workmen. Because the shop was a large one and because the department heads signally failed to co-operate as they should have, the re- turns were full of mistakes and misleading figures, as well as minus a lot of essential facts. At this stage along comes a record designed by the account- ant — an operation time and cost comparison — ^with the request that it be used. Now, imagine under this condition the value of such a comparison. Be- tween wide flnctuations, insufficient information, and 236 ORGANIZATION AND ADMINISTRATION incorrect entries, it would be next to impossible to use such a compilation in a constructive way. If today an operation cost was $10.60, and the next time the work was made the cost was $14.20, how would it be possible in the absence of the right kind of a control of productive activities for anyone to say what caused the increase of $3.60? It was simply a case of the accountant breaking in before the stage was set for his appearance. He, as an accountant, from both a cost and an auditing standpoint should have been more concerned with the accuracy and comprehensiveness of the time reports than a com- parison of results which could mean little and accom- plish nothing from a cost reducing standpoint. Distributing Costs. — In another plant the practice in handling repairs was to charge the cost of them to the particular order that happened to be on the machine at the time the break occurred or the need for repair developed. This was the auditor's scheme. The engineer protested, saying that while it was "O.K." from an auditing standpoint, in that all ex- penditures would be ;^roperly accounted for, it was very bad practice from a cost standpoint and still worse from an efficiency point of view when com- paring actua^ times with standards. In another plant using the machine-hour basis of costing, the foreman said he could not see why a ma- chine with a normal rate of 50 cents per hour should cost him $1.00 per hour when it was kept busy only half the time. His organization was on hand, power was available, and he was ready to work the machine ten hours at 50 cents per hour, and this, therefore. RECORDS 237 should be Ms cost regardless of other considerations, provided, of course, he kept the machine busy, if work was available. Fallacy of Averaging Overhead Rates.— Another surprising thing in this advanced accounting age is to find so many plants using average burden or over- head rates in the various departments, instead of de- termining the actual rates. I know of one case in particular where several departments have a fixed rate of 100 per cent, when a study would show that some would have a much higher rate and others a much lower one, which is exactly what an average cost means. Why spend money to gather cost facts when what is compiled is admittedly inaccurate and, many times from a selling standpoint, disastrous? If the engineer recommends actual department burdens he is told that it will cost too much money. The engineer replies that while it' is bad practice for the manufacturer to fool the other fellow, even if he can do so without being discovered, it is suicidal for him to fool himself through inaccurate and misleading burden costs, when for a little more money he can have real, constructive, and accurate figures. The accountant religiously studies the relation be- tween non-productive and productive labor, and con- siders these ratios a gauge of results — a low rate being looked upon as favorable and a high one detri- mental. The engineer says: "Pay no attention to these except for cost purposes, as efficiency is the real measure of success." It is indeed pitiful to have a foreman say he could dispense with several pro- ducers by adding some non-productive workmen, but 238 ORGANIZATION AND ADMINISTRATION that lie -would not dare to do so as the overhead would increase, and he would be criticized by the management, I have no patience with the accountant who so blindly considers success as the decrease in the ratio of non-productive to productive labor. If, by a wonderful increase in efficiency, the productive force in a plant could be reduced to one man with no decrease in burden, the ratio would be abnormally high indeed, but it would be a legitimate one and the efficiency would be at maximum, something not apparent from a study of non-productive to the pro- ductive labor but from a study of what productive labor was with what it is now. In this connection Gantt well says: A foreman had ten men on a job which, he said, could be done by eight if he could have a boy to supply them with work. He said, however, that if he made the change, the boy's wages would be called "non-productive" labor and his ratio would go up, with the result that he would be criticized, so he did not make it. In the U. S. Navy an energetic officer studied the loading of ammunition and very much reduced the direct labor em- ployed, but, being unable to reduce the indirect labor in the same proportion, the above ratio went up. He came in for very severe criticism, notwithstanding the fact that his total labor had been decidedly reduced. I might give numerous examples of this kind, including one where two men took the place of 16, and a daily direct wage of $8 took the place of $48, with but little increase of the corresponding indirect expense. The result of this and other changes was that the ratio for that shop became over double its former value, with a marked reduction in the total cost. Needless to say that the ratio theory in that plant is not re- RECORDS 239 garded with the same reverence that it once was. In plants where such results have been accomplished, those who have been accustomed to worshipping this ratio at once demand another idol in place of the one that has been so badly dis- credited. The accountant and the engineer seem to split over the theory of accounting and the practice of manu- facturing. The accountant believes in two funda- mentals : 1. Charge operating costs and expenses incurred in a busi- ness to the product produced. 2. Include in direct costs everything that can be applied to the order or unit or class of product. Let me test these from a practical, common-sense standpoint. Some years ago, I took hold of a large plant in Pennsylvania.- comprising a structural shop, machine shop, and foundry. ' The burden accounting at the time gave the machine shop more profits than it was entitled to, while the structural shop was showing profits less than those actually made. The foundry was selling castings to the machine shop and structural shop at actual cost, which did not include any proportion of the overhead expenses of the com- pany. In the changes that followed, each department was put on its own feet through the books of the company, with provision for a monthly profit and loss statement, the foundry being considered as a jobbing foundry selling its castings at market rates. The radical and, from the accounting standard, revolutionary thing about the development, was the adoption of standard burden rates for the various 240 OEGANIZATION AND ADMINISTRATION departments, the work in process being charged with actual and credited with standard burden rates, the difference being charged or credited monthly to a departmental burden profit and loss account. Standards of Operation. — The theory which I had in mind then, and which is now being accepted by industrial managers, was that the greatest volume of business could be secured only when the plant was operating at about normal; that high production meant low costs; low production high costs, under the usual method of accounting. This meant that the selling and cost divisions came into conflict both when costs were high, which operated against getting business, and when costs were extremely low, due to abnormal business, which resulted in tenders, lower than would be necessary to secure the business. In other words, if a man had ten automatic ma- chines in a department, all of them busy, each would absorb one-tenth of the overhead and prices would he based accordingly, and these prices would be the nor- mal or standard prices because the department would be working at practically full capacity. If Suddenly, however, work should fall off so that only half of the machines could be kept busy, the prices based on actual costs, with machines absorbing twice the regular over- head, would be so high as to operate against getting business with these machines. On the other hand, assuming that through a sudden rush of orders, over- time, night and Sunday work is resorted to, so that the ten machines would be turning out the work of twelve or fifteen, the costs, due to the smaller amount of overhead absorbed per machine, would be lower RECORDS 241 than a normal or standard price and the customer would get the benefit of this low price, when, as a matter of fact the extra profit should be considered as an offset to the loss when the department is oper- ating at less than capacity.* So much for the theory. How about the practice? A concern is in business to sell. It may make what it can sell and sell what it makes, but selling is the primary and fundamental basis of any business, a principle which many accountants and efficiency en- gineers alike seem to forget. Now, then, if as a sales manager I can't sell goods because, conditions being below normal, my prices are too high, due to excessive costs, or because, from an abnormally high production, my prices are lower than I know I can get for my goods, because of abnojmally low costs, I don't need to be an efficiency engineer nor an accountant to know that something is decidedly Nvrong with the whole thing, both in theory and in practice. In svch cases the usual sales policy is to ignore cost figures and take business as judgment may dictate. Standard Rates. — ^With standard rates, however, reflecting normal conditions, I am insured against loss in business on the one hand and loss in price and profits on the other. I know also that on this basis a line which is profitable in the shop will show the profits in the 'costing, whereas during periods of low production the increased overhead rate will not only wipe out all profit, but make the line show a loss. "Faulty practice," says the accduntant. "Poor * For further discussion on this subject, see "Industrial Cost Finding," by N. T. Ficker ; Vol. 5, Factory Management Course. 242 ORGANIZATION AND ADMINISTRATION business," says the manufacturer. "Common-sense," replies the engineer. At any rate here is what hap- pened to the concern in question. At the time the methods were introduced the business was making very little money. Its sales were not large. It was a heavy borrower, with a pattern account far in excess of real value. It had a bond issue hanging over its head. Today, this plant with two additions is doing a capacity business, making excellent profits and de- claring dividends. It is discounting its paper as well as rapidly retiring its bonds, and the pattern account is where it belongs. So much for the first funda- mental of applying all costs to what is produced. How about the second of including in direct cost all that can be charged to it? Analysis of Costs. — Assume that a machine is work- ing on Smith's contract and that for the operation in question 50 hours were estimated as being reason- able. Assume further that this machine has. recently finished the same operation on contract for Jones and that the next job is the same operation for Brown's contract. Also assume that while work is being done on Smith's job there are the following delays: No material 1 Hour Machine repaired 5 Hours Incorrect print f Hour Waiting for inspection % Hour Total 71/2 Hours and when the operation is completed the time turned in amounts to 65 hours. An analysis reveals: RECORDS 243 Actual time 65 Hours Estimated time 50 " Loss or waste 15 Hours Delays 71/2 " Extra time by operator 7l^ Hours Now, let me ask this question: Is the efficiency 50 hours (Estimated Tim e) _ . . 65 hours (Actual Time) ' ^^ or is it 50 hours (Estimated Time) „ . „ 65—7.5 (Actual Time, less delay) ~ ^^^ Efficiency of Worker and Operati6n. — ^In consider- ing this aspect, the fact remains that the delays of 7.5 hours were beyond the worker's control and there- fore he is not responsible for the lost time. He was asked to produce the work in 50 hours and he used 57.5 hours, so that he is responsible for the loss of only the 7.5 hours which was clearly within his con- trol. It is evident, therefore, that the efficiency of the operation and of the worker is 50-f-57.5 or 86.9 per cent, his inefficiency being 13.1 per cent (100 — 86.9), while the inefficiency of the management is 10 per cent (86.9—76.9). Where shall we charge it? Surely not against the worker, unless we allow him an extra estimated time of 7.5 hours to cover the delays he was not responsible for, which of course, would not be good business. If not against the worker, what right have we, then, to change it to the Smith con- tract? If it does not belong to the worker or the 244 OEGANIZATION AND ADMINISTRATION operation, it should be clear that the job should not be taxed. Consequently it is a charge to the expense of running the business, and is ' either spread over all jobs in the department or charged into profit and loss. In this connection is it not true that the loss of 7.5 hours in delays is "accidental"? Both the Smith contract and the Brown job were fortunate, we will say, not to have delays except those which we can charge direct to the worker. Why, then, pin it on Smith? Charging the "Accidentals." — Delays and condi- tions which make for lost time not within the control of the worker are accidents whi'ch might or might not have been prevented by the management. Cer- tainly they were not included in the estimate of what should be done, and it is not good business to com- pare one set of conditions with a set that included items not taken into consideration. If you go in to : buy a piece of cut glass and, in taking it from the counter, the attendant drops and breaks it, what a row there would be if the store should ask you to pay for two pieces? The cost of the broken one is a logical charge to the expense of running the business and has to come out of the profits. So, in manufac- turing, the accidentals — and they are nothing else- should be credited to the job, not only that we may be fair to the worker, who in the case mentioned did in 57.5 hours (not in 65) what you asked him to do in 50; not only that we may have an intelligent com- parison of real actual time against the estimated time; not only that we may keep within proper limits the factors upon which estimate is based, and not the RECORDS 245 things which cannot be foreseen or controlled, but as a means of separating the inefficiency of the worker from that of the management, which in the case mentioned was 13.1 per cent for the worker, 10 per cent for the management. This, therefore, establishes the practicability of taking out of direct cost the accidentals and charg- ing them to the expense of conducting the depart- ment. The very purpose of an accounting arrange- ment is to show weaknesses and faulty places. How can they be discovered when they are buried, as would be the case if charged to direct cost? Compiling Costs. — Accounting and engineering are concerned with the same thing — reducing costs — for only through a reduction in costs can larger profits or increased margin of sales be expected. If there- fore, costs cannot be compiled on the kind of a basis that will not only reflect conditions as they exist, but for the enlargement of production and sales, the money spent in compiling them had better be turned to more productive channels. At any rate enough has been mentioned in this chapter to indicate the value of records — ^both ac- counting and engineering. CHAPTER XV FOURTH PEINCIPLE— CONTEOL Production Control. — How many manufacturers are there today who would attempt to manufacture and market a product before all the parts had passed through the engineering department and had been properly designed as to strength, clearances, and proper dimensions? How many manufacturers would hesitate -to purchase a high-priced machine tool if the maker of the tool could show them that the out- put of a particular part could be increased thereby fifty to a hundred per cent ? Yet many of these same manufacturers are failing to study scientifically the conditions under which these parts are made in the plant. When complaints are received they are investigated immediately, and if it is found that some part needs strengthening or the design is not suited to the requirements, the part is strengthened or redesigned. Most concerns are very particular to get their product as nearly psrfect as possible in design, in performance, and in workmanship, but how many of them pay the same attention to the parts going through the plant? How many manufacturers, while walking through the factory, ask the following questions : 246 CONTROL 247 Why is it that the assembly foreman is continually com- plaining because he is always out of a few parts which are necessary to make the completed unit? Why is it that our production the last ten days of the month is five times as heavy as that of the previous part of the month? Why is it that despite the fact that our assembly depart- ment and sales department are crying for more parts, we have so much idle equipment? Why are we out of material when our inventory is 100 per cent greater than it used to be and our production has only increased 25 per cent? The answer to all of the above questions is lack of production control. Lack of Control. — ^An analysis of a large number of investigations shows that this and faulty organization are the two conditions most usually met with in better- ment work. I have seen coijcerns which thought noth- ing of spending several thousand dollars for a machine tool, knowing that the new tool would soon pay for it- self due to increased production obtained. These same concerns, however, seldom consider devisiiig ways and means to see that there is a constant flow of work to and from the machine. The earning power of a new machine is rarely questioned after being installed, for the demonstrator while installing the machine shows by actual performance that it can do two or three times as much as the old machine. The earning capacity of a machine, however, does not depend upon how long it takes to turn out one piece or what it can do on a test run, but in how many pieces it can pro- duce over a period of time, a week or a month. If 248 ORGANIZATION AND ADMINISTRATION the macMne should turn out 5000 pieces per month and it only produces 3000 pieces, it is not necessarily the fault of the machine or the operator. The reason will probably be found to be "lack of control" in most cases. In the majority of cases the operator will turn out the work if the material comes at a proper flow. A great deal has been written in the past few years about "production control" and yet in plant after plant I have seen, the control exercised over pro- ductive activities was found to be of an ordinary character. In three of the largest concerns in the country it was found that idle time of machines averaged 30, 40, and 50 per cent respectively, prov- ing beyond all question an obvious lack of produc- tion control. Planning Production.— The first thing that is nec- essary before any control can be established in a plant, is to know what you wish to control. You must know what your aims are relative to produc- tion. This may not seem essential, but it is of vital importance. The chief difficulty with many manu- facturers, whose product consists of ten or more articles each consisting of several hundred, some- times thousands of parts, is to know how "to schedule the different articles his plant can make. He is not in a position to judge, because his production fluctuates materially, and any run on one article means a corresponding reduction in other articles. The first thing to do, however, is to determine on sehedules covering articles or models to be built, even if only tentative in character. If your product is such that you know what shipping schedule you CONTROL 249 desire to make, this can be used as the foundation from which you can start controlling your production. Laws of Control. — Before taking up any extended discussion of control, it might be well to consider a few laws which have a decided bearing on results. Law governs all things, and laws of control are just as true in their action as the laws of gravitation, or of supply and demand. These laws can be stated: The selection of starting points, whether purchasing, foun- dry work, jig making, machinery or assembly, should be with reference to those which are furthest from the finishing times. Work should be drawn through a shop, and not pushed through. No succeeding operation should be scheduled when its rela- tion to the preceding operation is less than one to one. To illustrate the practical operation of the first law, Chart 23, accompanying, is submitted, a study of which will indicate the value of such a plan of con- trol. The chart is self-explanatory. After a study of this chart with reference to the first law, it will be obvious that the second law is sound and easily understood. Instead of pushing all work from X to Y, it should be drawn at Y from X — in other words, work from the shipping or completion date and assembly dates. Kegarding the third law, assume that a piece has five operations as follows: 1st operation 10 Hours 2nd " 40 " 3rd " 20 " 4th " 80 " 5th " 40 " 250 ORGANIZATION AND ADMINISTRATION iHi|8flflfeiiS^^^r Jit f 1 s 1 ! 1 i 1 1 S SL J. - _ -- : - -in H J. -I- * »" - : -." . y 2' - _:--■-£ _ _ .. . 1 . 01 ~5 — "~:;;":"" ':"" z _- - _: ± « s - ^ _i Si? ^: " J !■ T 3fc - - -~ ~ _£Lt ...«S -^o ^^ "f .ob;' " ' p 1 -5J- BS - --- .-- -- - T^ : : _^i^ _ _ ; " LZ --iC;---- __- -,.. PZ ii ----u . tz ZZ Z i «::; :^ " -- 'X,^' ^- -- + - - h- g 01 - - ^ ^-^ ^« ^^, - — g // h S SI tr SI - . (M N ' . 1* \ ._ _ . a fr/ » E E/ - - . --- .H P Z/ -^f^J^^i^^'o^c ^!? n 01 Cl 6 : Liiij^ij:"^:'' ; - - - - - - ---i^ g s -- f [I L_ rt - i .- - ^_ K_i Li rl" " 'z --'3.' o 9 _- - Z- t u 5 -- 1 ^ E 5 X .,,. .1 ---,1 J2 ; ^ : :t: : :::r::::: ^ f f 1 \ h^s^.i).:-^ 2-:-^i5 . - t.- s 2 4 i \ / :: ; . . j S ' %- -l J - 3 it t r ' n — t — g "it- :^: t " :":::« -a.-- --t - [t -- tl- 21+ t i ■* ^^- t - -t ^- lT f 1. J- - -- -^ Tf I L 1 ^j. -J. f .^. . p S - - -li.. -SZ + t _.1 s 22 . . . _. . t ._ ... 1 .1 7 .. g ^ -tn --- .: I .- -- - - rw I'^l t It Ljiz .^: II. ■ :: » ' " '1 - S . t - 9/ p, (^ « 1 S-- :S'^:_-: ±: - ::_ f ' * S 4- - - ^ 1? t - ? I" jz. % I : i ._ _ i_. w I J "T- -: ;-. jH:- _g. - M - : :.:_<■*.; & s ^ ... _ _ <• r T"| "" " ;. _: ■ : ■ . CONTROL 251 It is obvious as one studies these times that an hour of work finished at Operation No. 1 releases four hours of work to Operation No. 2; that an hour of work at Operation No. 2 releases % hour to Opera- tion No. 3; that an hour released by Operation No. 3 gives 4 hours of work to Operation No. 4 and that an hour finished at Operation No. 4 gives % hour's work to Operation No. 5. In other words it is not safe to schedule work from Operation No. 2 to Opera- tion No. 3 or from Operation No. 4 to Operation No. 5, as an hour's work finished at Operation No. 2 or Operation No. 4 releases less than an hour of work to the next operation which would make it necessary for the workman to loaf until he received more pieces. From this law the danger points in scheduling succeeding operations can be determined. In some plants the custom is to hold all parts at a machine until they are finished, then releasing them to the next. This insures against troubles in sched- uling, but ties up considerable money in work in process. In others, parts are strung through the shops in an indiscriminate manner, no one knowing just what has been done, in which case there is absolutely no control. A recognition and use of this third law will make it unnecessary to hold all parts always at machines as in the first case, and also guard against an uncontrolled flow in the second case. Material Situation.— Before any attempt is made to control the location and progress of parts within the factory it is first necessary to control the mate- rial situation. To do this it is necessary to analyze each unit relative to the importance of assembly and 252 ORGANIZATION AND ADMINISTRATION sub-assembly work and the parts of which they are made. The best plan is to control the parts accord- ing to complete units. This can be carried out effec- tively through a graphic presentation of the units. We will take for example, a plant manufacturing ten different styles and sizes of a given product, each one having a hundred parts. The shipping schedule shows that the plant can make 5000 completed units per month. This total amount is split up accord- ing to the different models in lots of from 100 to 500 per month. The size of these lots would be equal to the number of completed models required times the number of parts per model. Material Control Sheet. — ^A separate "Material Control Sheet" should be kept for each model. This sheet consists of a "Parts List" on the left of the sheet, followed by the number of pieces used on each model. To the right of this the paper is laid off graphically, each square representing a completed unit. The material control sheet takes care of pieces ordered, pieces rough, pieces in process, and pieces finished. As a requisition is received by the control department from stores, showing that rough parts have been ordered, a yellow line is drawn opposite the piece showing the number of complete units pro- vided for on 'this particular part. As "Eeceiving Sheets" come through from the receiving department showing the receipt of rough parts, the yellow line is covered with red, the length of the line being determined by the number of pieces received. As orders are placed on the factory for certain parts, the red line is covered with a blue one, indicating the CONTROL 253 MATERIAL CONTROL SHEET | PARTS ^ V,.„TtD EACH tPUtt fiQUAO-S tWO (S|ECES IfO \- nil /M 1 1 i : : i : ; : i 1 ■ ■ ■ y\'-'\\V ti9 Ye//ow '00 :::p:::::;:::g S" |readin'g'^ Part Hum' \l)niT rL ZIQ Punhostd- 100 fta. nirtfmsrd-tOO fbs. ffeceivtd - 60 ' Received ■ 70 ' Ordered - SO - Ordered - « • nnished - W - Finished ■ » ' Assembled- 26 - Assemb ed-i6 • 26 t/nifs Assembled CHART 24. MATERIAL CONTROL SHEET mimber of pieces which are ahead of the factory to work on and supposed to be in process. As finished pieces are received by the assembly stores, the blue line is covered with black for the number of pieces finished. As units are assembled and shipped, a ver- tical line is drawn, thus cancelling out all parts to the left and still showing graphically to the right the number of parts still available. Chart 24 shows this in a graphic manner. By some such method it is possible to maintain an absolute control of the material both rough and finished, and it is the duty of the control department to keep continually after the short lines. Importance of Control. — I have seen conditions in factories where an operator would spend several hours setting up his machine, only to find when ready that there was no material or just enough to last for a small percentage of the necessary run. If you can 254 ORGANIZATION AND ADMINISTRATION establish a control on your materials so that you can see your danger points at a glance, you will have es- tablished the one big step necessary for internal con- trol. You will discover further that your stock is not balanced relative to the shipping schedule, and you will soon discover the reason why you have a heavy inventory and are continually out of some parts. Progress Control. — Once a control is established on the materials, you are in a position to watch the progress of the parts through the factory, and then to plan. To have an intelligent control on the mate- rials you must be in a position to tell the exact loca- tion of each part in the factory, knowing the exact number of parts finished at the different operations. In practice, I have found that this can be handled very simply by the following method: Eun all parts which enter into the finished unit under one order number, and control the individual parts on the order by the part number or some other symbol. Upon issuing a production order to the factory, a "Parts Progress Sheet" should be made out, giving the name of the parts, part number, order number, quantity of pieces required and any special features. Below, the opera- tion numbers should be filled out in theif proper sequence. After the part starts through the factory each operator should work on a service card or job ticket. These cards should be changed every day or whenever a new piece or operation is worked on, and should show the time spent on the job, the piece num- ber, order number, operation number and the number of pieces finished. They should be turned in daily CONTROL 255 to the planning department and the information should be entered on the proper Parts Progress Sheets which are kept in the planning office. It might be well to mention that this method will not work suc- cessfully if the men make out their own job tickets. The information should be entered on the cards by clerks. After these progress sheets, get working suc- cessfully, you will have a complete control on all parts in progress. Planning Department. — ^Eecently, I had an oppor- tunity to investigate the planning department of a large manufacturing concern, and upon the completion of the investigation reached the conclusion that the department was working under a false name. The records on the pieces in process were in good shape, but as far as planning was concerned there was none. "To plan," according to the proper interpretation of the word, means "to anticipate." It means "to form a picture either in the mind or on paper of that which you wish to do in the future." The progress records of the parts in any factory, though a big asset to any organization, and necessary in any plan- ning of the parts, must not be considered as plan- ning, because they merely show what has been ac- complished. To tie in with this, some method should be employed to show what should be and will be the condition of the parts in the future. The planning should be the essential feature of the operating end of the organization, and the progress records should be secondary to it. In planning, as has already been outlined, it is first necessary to determine what is going to be done. The next step to consider, is how 256 ORGANIZATION AND ADMINISTRATION PARTS SCHEDULE CARD CHART No. J ' PART No. B 961 NAME H0USIN6 ORDER No. W. 2021 CUSTOMER SMITH & Co QUANTITY 250 OPERATION NO MACHINE NO Dates - Each Space Eouals Ome Wopkims Day July August ■T* O :; (VJ ^ 2: !5 » 0* o = « > s lO r- =0 o f^ ~~ o» rotflo StooiO / 112 - 2 10 J 60Z 4 107 5 MS 6 SO - _ - - _ _ _ _ _ _ _ _ - - - _. CHAKT 25. PAKTS SCHEDULE CAED '»and when it is to be done, and the third step is to show by records what portion of the anticipated has actually been accomplished. Scheduling the Operation. — Having decided on the schedule, it is necessary to divide the finished units into assemblies and sub-assemblies, analyzing each part according to the number of pieces of that kind required, the sequence of the operations on these parts, the best places or machines to accomplish these operations, and finally the time which will be consumed in completing these operations. The Machine Board. — To carry out the planning, the "Parts Schedule Cards" shown in Chart 25, are used in conjunction with a large machine board. The machine board, a type of which is shown in Chart 26, is generally about six feet in length, the height of the board being determined by the number of machines CONTEOL 257 CHART 26. THE MACHINE BOARD 258 ORGANIZATION AND ADMINISTRATION to be used. Each machine is allotted about one and a half -inch vertically on the board, with a small space on the left for the machine number. The remainder of the board to the right is ruled vertically with lines either one-half inch or one inch apart according to the length of the operation, each one of these spaces representing one working day. Where there are a great many small runs I advise using the larger spacing. Each part has its own schedule card, as shown in Chart 25, which shows at the top the name of the part, the part number, quantity to be run, and the order number. At the left are two colunans, one for opera- tion numbers, and the other for machine numbers. The balance of the card is ruled graphically, with each square representing one working day. Determining the Date. — ^Before any part is run through the factory, the date upon which this part will be required for assembly must first be consid- ered. "We will take, for example', a part which is required by the assembly floor by August 6. Let us assume that the part requires six operations before completion and that the lengths of the operations are as follows: Operation No. Days 1 2 2 2 3 9 4 6 5 3 6 8 First, operation No. 6 should be investigated, since we CONTROL 259 know that this operation must be totally finished by August 6, or sufficiently advanced so that the Assem- bly Floor will not be held up. We find that opera- tion No. 6 can best be done on machine No. 50. Upon consulting the machine board we see that this ma- chine is available beginning July 30. A line, nine spaces long, is then drawn opposite operation No. 6 on the schedule card for the part in question; the line is nine units instead of eight because one of the days is a Saturday and an extra space is added for safety. The card is then dated backwards across the top, beginning at the right and continuing to the left up to the time that the schedule is being made. In this case the last space, taking in the end of the line, will be August 7. Next, consulting operation No. 5 we find that it will require three days on machine No. 145. Upon looking at the machine board we find that we cannot use this machine Antil July 27. A line is then drawn on the schedule card opposite Operation No. 5 and under dates 27, 28, 30, and 31. The next operation to consider is Number 4. Let us assume that this can be done on any of five machines. We con- sult the machine board and decide on machine No. 102, which is available when we require it. When a long operation precedes a short, we take the finishing date of the short one and work back to the left the necessary number of days. In order that the oper- ations do not run too close we will take the finishing date of operation No. 4 as July 30, and then work back six days. This same procedure is carried out until all of the operations have been entered on the schedule cards. 260 ORGANIZATION AND ADMINISTRATION After the schedule card has been finished, the entries are made on the board: that is, Operation No. 6 would be entered against Machine No. 50. The entry would be made as follows: A strip of paper one ineH. wide and nine inches long would be placed on the board opposite Machine No. 50 under the days July 30 — ^August 7. On this strip would be written the part number, quantity, order number and opera- tion number, showing that this machine is to be engaged on this part between these days and will not be available for other purposes. A red string is extended from the top of the board to the bottom and is always moved to the current date. This acts as a danger line for any machines which show only a short strip to the right of this string, indicating that the machine is dangerously close on work. Ordering the Jobs. — After the work is scheduled on the boards, orders are delivered to the foremen, show- ing them the rotation in which jobs are to follow on the machines. The machines in some plants are routed at least thirty days in advance, while in others a closer margin is necessary. Inasmuch as the parts progress sheets are entered up daily, a close relation- ship is established between actual progress and an- ticipated progress. This not only makes it possible to furnish Tquick and intelligent information relative to the present condition of parts in the factory, but it shows further when parts should be finished if noth- ing unforseen occurs. Checking the Progress. — It might be well to men- tion that the schedule cards and machine boards work with a cross index one on the other, much like a CONTROL 261 journal and ledger entry. The schedule card shows all of the machines on which any given part goes and the dates which these operations are to start and finish, while the machine board shows all of the different parts scheduled on a given machine and the dates upon which they are to start and finish. All of these methods are carried out graphically. The con- trol of the entire product is governed by the length of lines and there is a very close co-ordination be- tween the condition of materials from the time the rough materials are ordered until the parts enter the completed assembly. Incidentally it might be pointed out that as can be seen from the board (Chart 26) a close watch can be made of the idle time of machine, as shown by the gaps between scheduled jobs and congested machines indicated by the long strips of paper. A concern is a long way towards production control when it knows in advance the idle time and congestion of machines.* Value of Control. — Does it pay? In one case of a machine shop, graphic control methods were devised and installed with these results on capitalization: Loss, 1st year 6 per cent Profits, 2nd year 9 per cent Estimated Profit, 3rd year. 20 per cent In other words control methods plus a 15 per cent increase in plans and machinery, enabled the plant to turn out 80 per cent more product. * For other devices used in production control, see "Planning and Time Studies," by G. S. Armstrong ; Vol. 3, Factory Management Course. CHAPTER XVI FIFTH PEINCIPLE— STANDAEDIZATION Standardization Too Greatly Neglected. — Standard- ization in the modern factory organization is of tremendous importance. In this country we have been lax both in the predetermination and in the attainment of standards, and as a result one of the greatest fields still uncultivated by the industrial en- gineer is the standardization of policies, methods, products, devices, processes, and equipments. Go into the average machine shop, and you will find no rhyme or reason with reference to the loca- tion of machines; no predetermination as regards what a machine should do; no standard as to shapes and angles and grinding of cutting tools; no definite belt practice. In the foundry and the structural shops the same absence of standards is noticed by those whose business it is to study a large number of such plants ^ year. In a candy factory some years ago, I studied the machines which put the coating on chocolate creams. I noticed pieces of candy coming out of the machines with distances between them ranging from one to six inches. The machines were thoroughly studied to ascertain the reasons. Exhaustive tests were made 262 STANDAEDIZATION 263 and it was found that an important gear change had been overlooked which, when used, reduced the space between pieces to approximately half an inch. In other words, lack of standardization had been responsible for considerable loss in production. In the attempt of this country to get its aircraft manufacture on an efficient basis, it was found that lack of standardization was the great stumbling block, one important part made by different manu- facturers multiplying into several thousand combi- nations. And apropos of this subject, whatever our views may be regarding the Ford car or Henry Ford himself, we must all admit that both plant and car are monuments to this principle of standardization. Divisions of the Field. — ^It will be difficult to do justice to this important principle in a single chapter, for a book could easily be written about it; but a few general remarks will, I believe, indicate the scope of the field of standardization. Broadly speak- ing, that field can be divided into the following parts : Design of product Design of buildings Machines Tools and supplies Raw materials Operations of manufacturing Manufacturing policies and methods. Design of Product. — The design of the product is of fundamental importance in any manufacturing business. Unless this is carried out in a workmanlike and exhaustive manner, a detrimental influence will 264 OKGANIZATION AND ADMINISTRATION be noticed in all subsequent elements of standardiza- tion. The design of the product should be delegated to the best brains obtainable. The incorporation of the broad experience of men in contact with all divi- sions of the business should be the aim. This funda- mental can be divided into the following branches: Determination of standard sales arguments, as the basis of anticipating counter-arguments on the part of competitors. Consideration of similarities in the detailed design of differ- ent parts — for the reason that often parts somewhat similar in detail offer as many advantages, in processing through the operations of manufacture, as those which are exactly iden- tical. Standardization of stresses, yield points, and factors of safety for similar details in the design of product. Proper attention given to these points will ensure that parts of like function will be designed on the same basis, and this standard- ization will be repeated in the other sizes. Uniform and standardized methods of stress and strain calculation in the design of product. This is another matter which makes for convenience and security in the design of other sizes of the same article. Design, in fact, can be re- duced to a routine matter if care is taken to conform to the fundamentals of the first and original design. Standardization of the auxiliary detail parts, which are used in connection with the product, and which are pur- chased from other manufacturers. This will reduce the num- ber of different kinds of these parts, but will give correspond- ing increase in purchase quantities. Uniform and standardized methods of representation of the details of design, so that all persons who have anything to do with drawings, will need to know only one set of symbols. The incorporation of such elements as may affect the re- STANDARDIZATION 265 pair and maintenance expense for users of product. This will mean the consideration of the standards of the markets in the locality where the product is used. It gives the cus- tomer the many advantages that accompany promptness of service and low cost of maintenance, and at the same time furnishes a sales argument to the benefit of the manufiacturer. Design of Buildings. — The layout and design of the buildings in which the manufacture is carried on, is the next fundamental to consider. Unless the build- ings are so designed and are in such a condition that they are adapted to the manufacture of the product, economic disadvantages will be continually suffered. Each product requires its special types and arrange- ment of buildings. There will be many counter- influences and adjustments, of course, but buildings can generally be constructed and standardized in such a way that the subsequent detail of laying out machin- ery and process routing lines may be simplified and will furnish opportunities for great economies. Of course, the development and progress in building design and standardization for similar lines of pro- duct should be studied. This work, also, calls for a man of large experience. The following are the main elements of building standardization to be considered: A standardized type of construction, adapted to the hous- ing of the class of product manufactured, to be such that the detailed structure and fittings will always be economically procurable for maintenance purposes and for any subsequent expansions or rearrangenients. A standardized unit of construction, with reference to economical process routings. 266 ORGANIZATION AND ADMINISTRATION The standardized details of construction — such as the spac- ing of columns, width of bays, clearances, and so on — so that advantages may be secured in the standardization of line- shafting lengths, shafting hangers, uniform belt lengths, setting of cranes, motors, and machines, the economical lay- out of industrial railways or other kinds of transportation, and so on. A standardized general layout and future-expansion, or growth, chart — such that the detail units added from time to time will cause no disruption of or disadvantages to the inter-departmental communication and process lines. This also applies with respect to light, heat, and general conditions affecting the comfort of operators. Machines. — The standardization o£ the machinery of manufacture is the next point for the engineer to consider. In every case there is one device better suited to the particular purpose than any other, and this should be decided upon as the standard for future installations. I have often wondered how, in the equipments of certain plants, such an excessive variety of approxi- mately the same kind of machines could develop. In some instances little consideration seemed to be given to the maintenance and repair cost or to the develop- ment and ajrplication of machine charts. It is not unusual to find many machines which were made for practically the same purpose, but which have different operating characteristics. Owing to the fact that the speed changes do not follow the same ratios of decrease or increase, it is difficult to compare the accomplishments of operators on these machines. When they are operating machines of the STANDARDIZATION 267 MACHINE TYPE VERTICAL BORING MILL CAPACITY S4~DIA X 40' HIGH KINO MTCO MANUFACnm HFR5.semiHo. 296 LOT S4 OUR SCRIAL No. s- losoei DESCRIPTION OF DRIVE Mqtor-Imd. 440v.-2P-60c H0ffSCPO*feA DPlVCfPULLTf Full Load 10 B Hr DiA ScFacc e-x4i' X'gVKRilftH TOO PaV£Rfi/Uet PftlVER 8£LT hr & Width i-ZP-La CtP-S PULi£\ DiA ScFace CT/r-sPuLLEr Rev PEfi Mm. DIA. OF WORK AT THE CUTTING POINT ~ N 7 ^ ^ ? t^ ;^ th ?T ~„,>y s a ? Sssaaas ii SOFT Annealed 8c H£Ai fe Sfs i fe % H fe '/x >» lA PffACr/CAL CurrtNG 5p££DS FOR CaST /kOHS HMcricAL Ci/rriRG Sreeos for Steels SP££D OF cur IN FEET per MINUTE ^ "" Tool CoNrou/f and Angles Tool Cunm ANOClEdlWta AtiQLCS CastIk£Ms Steel ffoughing cufs or where large quantities oftnetal are fobe re- rrnveJ fZ> rt/fishin0 cuts when small Feeds are used, pn>¥/ding no Fharp angles in work CoMPouiibmn LEveff roWAPD FRONT 1 TOWARD REAR F£ED CHANGE LEVER NOrCN NUMBER HORIZONTAL &. VERTICAL FEEDS POSimCAHO FRICriOM clutch uveas ahd motor and Umi> CONC PULLEI BELT POSITIONS. 1 SMALL \ LARGE MimR itiLLEr\mroR pulley SMALL 1 LARGE MOTOR PULLEY 1 MOTO/t PULLEY SMALL URGE NOrOR FUILCY ! MOrPP PULLEY PC. & F.C. Levers Down PC.&.FC LEveRS Up P.O. Si. F'C. Levers Down p — TfT (— _p - — — —r -^ , — - |_|- -[— ^ \l \ tr 7r ^ ^^ J/J ^ ^ X 3^ -R V \V^ U 1 1 1 1 1 1 1 A *• ^ ■J, . J^ 4 k ii i=! ia KEVOLUTIONS OF WORK PER MINUTE CHART 27. FEEDS, CUTS, AND SPEEDS FOR TOOL AS SPECIFIED IN VERTICAL BORING MILL 268 ORGANIZATION AND ADMINISTRATION MULTIPLICATION FACTORS ran onra ARCS of CONTACTS = A 100' 110' 120° ISO' 140° ISO' 160' 170° 1^0' 190' 200° 210' 0.70' 07S' OJT ««" 087' 091° 0.94° 0.37' 100° 1.03° lOS' 107° CURVES aR6 DRAWN for 180" ARC or CONTACT 500 1000 1500 2000 2500 iOOO 3500 4000 H500 5000 5500 GOOO VELOCITY OF BELT IN 'FEET PER MINUTE /- Bett speeds sAou/d ^g kept beft^en 37S0 and 42S0 Fng of edge. Too f>i^f' speed causes trearina atfatj or Qorners. Proper s^iraf angles /S''fo 3S? REAMER CUTTING ANGLES INFORMATION Usffp/en/y of oil - Flood tvorlrif p^sible. Fccenlric relief besi for machine and f/e^f relief besf for /fand reamers • usually about 4. Negahvt ra He should be about SB? Helical flutes should be al^oul 12' iv/fh axis of reamer. Cutting edge:, should be spaced unevenly around reamer. Best Width oflahds ore^' fe>r^,,^~for/'ond I'^S' reamers. TAP CUTTING ANGLES SiYE-EP CUTTING ANGLES ^:^E3 INrORl^ATlON Use plenty of oil- Flood work if possible. S/toutd be no re/ief For i ofwidm of land. Remainder relieved onoo/tt top and angle of ttitead :- about £"» - ffactr taper to top. that is toward shanft should be 0.00/ per inch of/enyttt. //^FORMAT/ON Use plenty of oil' Flood work if possible. Clearance angle for cutting edge stioutd be SO Back taper should be O.0O3 per inch. Sack oat counterbore and clean out ctiips, after boring depfb eifua/ to fyo/fits diameter: Spceoso^CuTiNFeeT PCffMiNure - Carbon and High Speed Tools Feeos in/nches peh REroLunon Drill and Reamers Ma terial Machined Drills C.S. R.5. Reamers CS. H.S Taps CS. U.S. Sweeps CS. U.S. Cast /PON ~ Soet VHell Annealed Cast /pON -Med. Ave. Run of Castings Cast Ipon - Nafd Semi -Chilled 'h Malleable Iron Small Castings Steel - Soet MiLD-QlO-OJS Carbon Steel Medium FopGiNGS - Tool Steel aoz6 a04i Steel -Hard Tire Steel Cast Steel Annealed Cast Steel Unannealed QPS4 SnoNZE Brass 75 ISO CHART 30. CUTTING SPEEDS FOR DRILLING- MACHINE TOOLS AS SPECIFIED STANDARDIZATION 273 essentials, together with the charts in this chapter, should be carefully considered: Standardized specifications for classes, types, or kinds of tools and supplies required for the prosecution of the busi- ness, as well as the representation and control of the operat- ing characteristics of these small tools and incidental sup- plies. Standardization of amounts of small tools and supplies stocked in central tool store departments, as well as of those kept in the divisional tool crib or in the disbursing stations. The main reason why this should be done is that it improves conditions which may affect the operations of manufacture. Standardization of the equipment and furniture necessary for the storing and maintenance of tools and supplies while not in use. This also expedites the receiving and disbursing of tools and supplies, and effects economies in the expansion and rearrangement of stores facilities. Standardization of helping charts which show the charac- teristic purposes, uses, inter-relationship of small tools. This procedure in many ways helps the operator to acquire definite and correct knowledge of the use of tools, and enables him to check himself up constantly. Standardization of the shapes, cutting angles, and limits of cutting or gauging sizes of small tools as a basis of periodic inspections, and to make it possible to keep tools in proper condition. Use of standard auxiliary tool equipments in connection with the major machine tools, as a basis of definitely know- ing that the machine is properly equipped for doing its work. Standardization of equipments of small tools for the in- dividual needs of the different classes of workmen and oper- ators, in order to know whether each productive worker has the proper facilities and equipment to make him efficient. Standard credit, as well as classift^d Tool Crib allowances. 274 ORGANIZATION AND ADMINISTRATION 1^ ll 5 CAST l/tON STEEL TOOL CONTOUR lANo ANGLES Soft ancd: AHD HeAvy Men. OF Hard 5£Mi- Chillsd Castss. Soft QIO-WS Carbon Steel Heo. Ah'ld. CastM 4S CaHBOH HAf?o TlHEt Similar Hard Steels (\ — ___ 32 -I \ \ A/ Oirecfior, %^ 4. RM 63.1 36.B Zll.O 113.0 S4.0 1 he 93J 4e^ 27.0 I64.S S2.6 . 3T4 f^' or Feed ;|V ^ eej 33.0 19.1 ^ „.,, ^ li Hz Il3/f S6S 331 2072 /03.6 47/ '/k S4.0 ■il.S 24.4 /43J 71.4 32£ ^\\ ' c ^ * sas 29.7 /7.i 99.4 49.7 226 (Vj '^. ^Ali-, 1 3 /€ /» /26.7 63.2 368 249.9 I2S.3 JS8 \">-^\- ^ 1 '/,z se.7 49.3 28.7 172.9 868 193 -^6 72.B 36.2 21.1 119.7 S9.9 2-7.2 -1 "41 S3.6 29.S 17.4 966 48.2 2/9 li S/6 ZS.8 ISO S3.} 4I.S 78.6 ife 420 ?I.O 12.2 667 33.3 /S./ I- ^ '-'-' 1 1 ^ -%» II4.S S7.4 33S 219.8 /09.9 49.9 Tool • Curr/NG Angles Cast 7ron STEEL 1 1 ■'Ai 69.6 44.S 26.1 IS2S 76.3 J4.S Soft Med. Hard Soft fiea Hard Xs 65.9 32.3 I9.Z I0S.7 S27 23.9 BAC/fjLO/'fA //' //° 6' /?f //' <■*' Up Ancle B 71 7/ 77 69 7/ 76 'Az S4.I 27.0 /f.S S4.7 424 /9.2 SideSLopeC 7i- 7f° 4° sr 7i- 4^- i ■46.9 23.4 13.7 72.8 36.4 I6.S Sa 'POSCO/V APDf/eSS if 38.Z 19.4 /I.I h rot 3 a /» /OOS S0.4 294 ISS.S 931 42.2 Work f^Of^ wh/cn rNis Tool is Adaptcd /- /?QU^h/ng Cufs. 2 - F/'n/shtng cufs ivhen sma/l Feeds ore used 3 ' Feed fovfard fhe /eft tv/fh R H Tool. and foword fhe right mfh LH Tool ~ Speeds are hosed or> fool ax/s bemq m c//ned 60 "- 4-S^ fp fine qF Fe ed 4 - Nof adapted For F/h/sh/ng ivorff wh'ich requires sharp angles in confouK S-When ho/ is coo/ed hy a large srreafrioF tvafer increase speeds bu IS%. 6 • for special sfyarppcmfecTfooJ cor?tours use 90 % /-abuhfed soeeds. 7-Ang/3 (A'} isthe same os angle(A) ' or^ straight shanked foots. fe 1S4 39.3 22.9 128.1 64.3 29.2 fe sie 2S.9 16.8 389 44.S 20.2 fe 47.6 23.S 13 S 7/ft 3S.8 163 / 41.1 20.S I20 '/ei 324 46.1m 26.8 163.8 11.9 17.2 fe 72.1 3S.9 21.0 1134 S66 2S.7 ;!> ...DIRECTION e. orrecD f. SO}/ 114.0 71.1 42.2 272.0 136.0 61.7 ^ ^ W6l 1064 S3.I 30.9 188.0 94.4 ■42.8 Uli 7S.e 37.7 22.0 / -. i mi 129.6 64.9 37.9 216.8 IIS.4 S3S ft J. i i — J II OMl 96.0 47.8 27.9 164.0 81.6 37.2 •., -r ^ f. y-:— J mi 68.0 34.0 19.8 1136 S6J8 2S8 1 V A 1 f. ami 111.8 S6.4 32.8 197.6 99.2 44.9 '•^ \ 0P4I osa Sll 41.4 24.1 136.8 63H 31.1 wn V2S S9.0 29.S 17.2 94.4 47.4 2IS 1 1 1 wn 48.0 24.0 14.0 76.3 38.1 17.3 ^ OOSI m.4 Sl.l 79.8 174.4 87.2 39.S Tool Cutting Angles CAST IRON S71EEL II M4I SofiT M,o. Hard SOI-T Men. Haho mi 37.e 37.6 22.0 120.8 60.1 27.J Back Slope A 8' 8° 4' . 8' 8' S' Li f Angle B 6S' 68' 78' ei' 68' 74° OSli Sioe Slope C 14' 14' 7' 22' 14' 9° ons S3£ 26.8 IS.6 832 41.6 183 tSCOPE E^FOft EftlAL OJST 4U 122 127 Hardn 1 mi 89.6 44.3 26.2 146.4 73S 334 wo^fc Foe wmof m/s wot /s adapted /- /foaghmg Cufs 2 - Finishing Cu/s yvhen. small feeds are used. .m 3.-Feed i^owarti the left wifh ff.f/.Tool and foward right tvifh L.H.fool. 4 - Should- be used mainfa where a long and heavy cut is necessary. S- Not adapted for finishing work which requires sharp angles in contours. 6 - When tool is cooled bu a large stream of wafei; increase cuning speeds by IS% mi 0B61 66.1 33.1 19.2 101.6 SD.8 23.1 mi ms 47.1 23.S 13.7 t <; 0.031 824 41.4 24.0 129.6 64.7 29.4 0S4I mi 60.4 30.2 17.6 89.6 44.7 20.3 mi WIS 4i.O 2I.S I2.S CHABT 32. SPEEDS AND FEEDS OF MACHINE TOOLS AS SPECIFIED STANDARDIZATION 277 of raw material, as the basis of economies in its maintenance and handling, preparatory to its being moved to the operating machinery. Standard instructions as to the disposition of waste lengths, cuttings, or the manufacture of by-products from raw ma- terial not suited for use in the regular manufacture. Operations of Manufacturing. — The field of stand- ardization incidental to the actual physical operations in the production of the product, is very broad. It is here that the Organization Engineer has one of the greatest opportunities for instituting improvements. It seems that there are few executives who appreciate the advantages to be derived from concentration in this field, perhaps owing to the fact that on account of their multitudinous duties, most executives are unable to organize detailed investigaition along these lines. Certainly it is a difficult matter to secure men cap- able of doing this strenuous and exceedingly pains- taking work. The following summary shows the standards that may be developed in connection with the operations of manufacture: Standard machine setting charts for the convenience and direction of the operator, as well as economies of his time in setting his machine to the proper feed, speed and cut. These are suitably attached to each machine tool. Standard feed, speed, and cut charts for the various classes of materials and tools of manufacture. These are used as the basis of the instruction of the workman, in order that he may maintain the required rates of production. They are attached to the machine tool, in some place where they are readily ac- cessible. 278 ORGANIZATION AND ADMINISTRATION '46 Heavy Castg's. '/sz -& C/IST IRON Soft Am'l'o. AftO ISO Chilled 73.e ?6.l Soft QJO-OIS CAKBOH STeEL ISSO 2JS.I Med. AnL-d. HfIRD Srs£L Z4.3 24.1 60J 41.1 23.1 23.S 20.1 IS.2 S3.7 37.0 TOOL CONTOUK Ic ANGLES r'."D/rec/fon of Feed « > l» ;^^^ r 4 1 * ■~V/5° Tool CurrtNQ Angles Cast Jron 20.6 TeJ ?5.6 20.6 a? ScLeRoscops HAROtiess FOR MATEfriAL yYoRK FOf? WHICH THIS TOOL tS ADAPTED /- J?ough/ngi:cf^s 2 - Feed by hifntj 3 - Feeds in eifher direction. 4 - Should be mainly used for roi/glt- iny ouf me/al v/nere ^ork is divided befyveen cuffing on Stdes and iioffom oFcavifu ' sucnas a fire mold. 5- Nof adapfed for tvor/r requiring ■sfiarp angles //? confour 6- y/ften fool IS coofed by a large sfream oF i^afer, increase cuffing speeds /£% CHART 33. FEEDS AND SPEEDS FOR CUTTING TOOLS STANDARDIZATION 279 Standard symbolization, for the representation of the oper- ations performed upon product. This system of abbreviation is of great advantage to the clerk, as well as any other persons who may be called upon to use it. Standard sequence of operations with respect to the differ- ent classes of product. There is one best method of operation, and this should always be used. If everybody knows what comes next, many delays that would otherwise occur are elimi- nated. Standard tools, jigs, and fixtures used in connection with operations, to eliminate the trouble of figuring out just what ones shall be used every time the same operation repeats it- self. This is of decided advantage to both foremen and oper- ators, since they are enabled both to prepare for and start operations promptly. Standard instructions concerning the detailed manufac- ture of those parts with respect to the operations which are unduly complicated. This measure is of no little benefit to the operators ; most of them are'incapable of quickly securing such information themselves. As in the other instances men- tioned, the one best way should be figured out once, and then should be put down in writing as the basis of ready reference. Standard set-up times and rates of production for the oper- ations performed on product. This gives a definite mark at which the foreman and the operator may aim in carrying on their wprk. Standard piling and trucking methods and instructions, as the basis of economies in the routing of the product from ma- chine to machine, as well as in placing the product on the ma- chine itself and in taking it off. Policies and Methods. — The standardization of the policies and methods pertaining to the shop and office clerical work incidental to the processes of 280 ORGANIZATION AND ADMINISTRATION manufacture, is the next field of standardization which demands consideration. We hear much about shop standards, but how much are office standards discussed? We call the shop man a producer, and furnish him with detailed standardized instructions which are designed to help him in his work. Yet we too often forget that just such instructions would greatly benefit the office clerk also. The shop man is always kept on the "job-ahead" basis — at least it is the intention of most foremen that he should be. Why should not the office clerk also have a regular schedule of work? And it is important, in this connection, that there be team work between those in charge and those whose positions and duties are of relatively minor importance; otherwise there will be high efficiency in one place, and low in another. Accordingly the standardization of policies, methods, and procedure should be considered with reference to the following principal desiderata: General adoption of standard sales, accounting, and produc- tion policies with a view to directing the organization as a whole. Standardization of functions and duties of departmental divisions, as well as of the special duties of foremen, assist- ants, clerks and workers who are members of the departmental organizations. These duties should also be placed on a time and routine basis as far as possible. Standard methods of accumulating the original and funda- mental data concerning the sales requirements of the busi- ness. These data are used to predetermine production require- STANDARDIZATION 281 ment, and are of fundamental importance with respect to the formulation of the shop order. Standard methods for the planning, scheduling, and follow- up of the purchase of supplies and raw stock used in the manufacture of this product, as well as for the planning, scheduling, and follow-up of production in the operating de- partments of the business. Standard methods for operating departments, relative to their reports of detailed accomplishments, time consumed, and inspections of production from day to day. Standard methods for the intelligent charging of incidental and direct supplies to the accounts of those operating depart- ments responsible for these expenses. If the shop has an in- telligent and systematic symbol code for charges, requisitions for supplies can be made out so as to specify accurately what departments are to be charged, and the cost-finding work will be simplified accordingly. Standard methods for the routine work of ascertaining up- to-the-minute prime costs, as well as for looking after various phases of manufacturing costing. Cost-finding must tie in with the payroll and accounting work, and for this reason must be done on schedule. Standard methods for the handling and storing of raw and finished stock, and for carrying on the accounting work rela- tive to receipts and disbursements in connection with stock. Standard methods for the despatching of shipments, and for the prompt invoicing and billing of the customer. Standard methods whereby the accounting department may efficiently perform its many functions — such as making out statements, financial reports, claims, credits, and so on. Standard sales department methods relative to directing the customer how to state his wants intelligently, the interpre- tation of the customer's orders, and the formulation of the order in regard to the shipment of the goods. 282 OEG-ANIZATION AND ADMINISTRATION Accomplishments. — The business, let us say, has now been placed on an efficient operating basis. We have made certain record accomplishments, and we are proud of the record. Why not create standards of efficiency at ^y^hich we may aim continually in the daily work. Certainly it is always well to have an ideal. It is the general plan in well organized factories to create standards of departmental accomplishment. The field ordinarily covered varies a great deal ac- cording to the peculiarities of the different busi- nesses, but the following may be taken as the im- portant elements generally to be considered. Standard departmental capacities — given in terms of hours of work at standard rates, of production — as well as the per- centages of the standard capacities required, when the vari- able elements such as labor quota, machines down for repairs, power, or other factors for which the foreman cannot be held accountable, are taken into consideration. Standard amounts of material in process in each depart- ment, expressed in- terms of hours work at standard rates of production. These amounts must be properly proportioned to the capacities of the machines in the various departments, on the basis of so many hours work ahead of each machine. Standard machine-hour costs, for application in finding the cost of the product during a definite period. This must be properly apportioned to the different classes of machines used, as the basis of the departmental productive efforts. Either abnormally high or abnormally low machine-hour-cost charges to productive costs should be taken care of through the profit and loss accounts. Standard allowable idle-machine-time hours per period, ar- ranged according to machine classification. It is evident that STANDARDIZATION 283 machines should be variously classified with respect to idle time, since one machine perhaps cannot be kept busy more than 10 per cent of the time, another may be used only 50 per cent of the time, while still another may be in use all of the time. Yet all are necessary machines, and each must be kept constantly in condition for the particular work it has to do. Standard quotas of workers, as well as of the wages paid to the workers, sufficient to allow for carrying out at all times the departmental functions at standard capacity accomplish- ment rates. The wage costs per period of time should be such that the amounts allowable for the various departmental oper- ations will balance with the allowable unit costs for these oper- ations for the period. Standard classified departmental expenses, outside of those apportionable to machine-hour and labor-hour costs, such that these may be held uniform from period to period, but in ac- cordance with the weight of the departmental accomplishment. Thus the final element in cost-finding (as far as the individual operating department is concerned) is fixed on a constant basis. Costs should not vary apreciably from one period to another, as long as the amoimt of work done by the depart- ment is on a fairly constant basis. In closing, it may be said that the illustrations, Charts 27 to 33 in the preceding pages, will indicate how details may be standardized in practical form, and will also show how to present properly the facts that are of importance. CHAPTER XVII SIXTH PRINCIPLE— INCENTIVES The Desire and Willingness to Serve. — In the dis- cussion of the important question of industrial organ- ization, I have as yet said little concerning adequate incentives. In an address before the Academy of Political Science of New York, on "Compulsory Serv- ice and Industrial Preparedness," I stated that serv- ice ceases to be compulsory when there is a desire and a willingness to serve, and that our problem is to find out how to induce this willingness and desire. Likewise in industrial activities, this willingness and desire must be induced — it cannot be forced — and to that end incentives in some form must be devised and provided. Most workers laugh when they hear some one speak of the "joy of work." In business, however, a man will work for 16 hours a day if necessary. For the love of the game? Yes, to some extent, because to "play the game" is essential to success, but the real reason is to be found in the incentives that spur him on — incentives that warrant concentration and hard work for long hours. A worker goes home at night having earned a day's wages. Tomorrow is another day, and he will earn another day's wages — if he is not discharged or 284 INCENTIVES 285 laid off; if he does not quit; if lie does not die; or if he is not taken sick. His life is a "by-the-day" proposition. Of course, this condition is conducive to contentment, an optimistic attitude, freedom from worry, and the like. On the other hand, the business man or the executive goes home at night knowing that tomorrow, next week, next year, he has some- thing to work for — his business. He may be worried because of business conditions, things may not be "breaking right," but he feels that everything is part of the game, and that he is playing that game with what is actually his. No, I am not a socialist. I am not advocating an equal distribution of things, nor a giving away of anything when such generosity is not warranted by the conditions. I am simply trying to picture the difference between incentives and the lack of them. The Best Kind of Worker. — In industry the manu- factured product, in the last analysis, is labor, for the material that is bought by one concern and processed by labor, represents the labor spent on other material by another concern, and so on through to basic pro- cesses. Such being the case, it should stand to reason that the man who serves his employer best is the one: 1. Who works efficiently, rather than strenuously. 2. Who is not forced or driven. 3. Who has faith in the management. 4. Who is not treated in the manner that induces worry and doubt regarding the future. 6. Who does not have to shoulder responsibility that rightly belongs to the management. 286 ORGANIZATION AND ADMINISTRATION 6. Who knows that the question of exertion and fatigue receives due consideration from the management. 7. Who works under the right working conditions. 8. Who realizes that the management is interested in his welfare. 9. Who works in a pleasant, congenial atmosphere. 10. Who receives something in addition to wages for time spent at work, which represents, to him, his skill, co- operation, and extra efforts. Eeal incentives, are here, and until tlie time comes when these are all provided, there will not be the right relationship between capital and labor. The "Human Investment." — Business is conducted for profit. Material is purchased, and brains and muscle are utilized to convert this material, through the medium of plant and equipment, into a finished product at a cost that will be less than the price secured. The material, the plant, and the equipment represent an investment. Inasmuch as it is impos- sible to get results from the capital investment unless there is also the "human investment," the following conclusions seem logical: 1. Capital investment is entitled to a fair return on the amount invested, in the form of interest for the use of money. 2. Brains and muscles are entitled to a fair return for the efforts expended, and this will be in the form of salaries and wages. i 3. After the capital and the human investments have re- ceived their fair returns, the balance, after provision has been made for contingencies, depreciation, bad debts, and the like, should be divided between both INCENTIVES 287 capital and human investments, on some basis that represents the reward for the results, which both in- vestments were instrumental in securing. You say this means profit-sharing. Let us rather use the term, "savings-sharing," for profit-sharing on the right basis should induce the desire to effect savings, which would be divided between capital and human investments. You say, "Suppose there are no profits or savings to divide?" My answer is that proper methods and the desire to share in the savings will, in the majority of cases, produce savings to be shared. Let us not look at this subject, however, without considering the thorny side of things. In a survey made by the Welfare Department of the National Civic Federation, it was found that of the businesses whose plans were analyzed, not quite one-third were successful and the rest were failures. These statistics would seem to indicate that no further thought should be given to the matter. But let me paint you a few pictures, before you pass judgment, in an effort to determine a real basis for profit-sharing. Profit-Sharing in Proportion to Individual Attain- ment. — Two men are working side by side; both draw the same wages, we shall say, and both have been in the employ of the company for the same length of time. One of them is a careful, painstaking, and con- scientious man, who gives his employer the best he has; his contribution is maximum production with a minimum of rejections. The other is not so careful, painstaking, and conscientious. He does only enough work each day to "get by," and, although he has 288 ORGANIZATION AND ADMINISTRATION spoiled work from day to day, he has not given cause for his dismissal. The one displays interest in his work; the other does not. The one does his best; the other does no more than he has to. The division of profits or savings between these men gives them an equal amount, and the effect is detrimental to both. The conscientious man smarts under what he feels is an injustice, in that he gets no more than the other man. For even though he says nothing about it, he knows in his own heart that he has earned more for the company than his fellow-worker, and consequently feels that his share should be greater. The less conscientious man knows that, without exerting' himself to the same extent as the honest worker, he has secured as much in the sharing, and naturally feels that there is no need for him to do his best. The result is that both say "What's the use?" Such conditions point to an important law, as I see things, namely: Sharing in savings or in profits should be in proportion to individual attain- ment. Profit-Sharing at Frequent Intervals. — Now for an- other point. The worker is a "by-the-day" thinker, for he has worked, all his life, from day to day, get- ting his mpney from week to week, or else twice a month. He lives in the immediate present as far as his work life is concerned. But the purpose of saving or profit-sharing is to induce interest, to foster in the worker a desire to do the best he can, and to get him to take every advantage of his opportunities and of the facilities furnished him. People are prone to count their chickens before they are hatched, but if INCENTIVES 289 the hatching is likely to be too far in the future, they quit counting. So with workers. They will work for savings or profits if they are to get returns in the more or less immediate future, but if you attempt to keep them interested on the basis of promises that will not materialize for six months, you will find their interest on the .wane, and again the result is the question, "What's the use!" Thus we can establish another law: Profits or savings should be shared at intervals frequent enough so that interest may. be maintained. Profit-Sharing Irrespective of Company's Earn- ings. — There is another point that has a bearing on this important question. Men, let us say, are work- ing under a profit-sharing plan. They are expecting that there will be profits to divide, and then, owing to a bad year, the earnings q,re insufficient to warrant sharing them with the workers. Now imagine the feelings of a worker who has tried to do his best, who realizes that he has given his employer the best of service, so that, as he sees things, he is entitled to something more than his wages, and who is suddenly confronted with the situation which he describes as "nothing doing." Again the result is that the man is discouraged. This situation, to my mind, warrants establishing still another law: Something extra should be given to the worker, irrespective of what the company earns, in return for the interest and the effort that he expands in anticipation of sharing in profits. Worker's Share on Basis of Factor^ within His Control. — Still another point. "Workers may share in 290 ORGANIZATION AND ADMINISTRATION the profits or savings made, but they soon become dis- couraged if they see evidences of extravagance, of carelessness, of waste, on the part of the manage- ment; of factors they cannot control — like bad debts, faulty selling, buying at high prices on account of faulty purchasing, inefficient equipment, poor work- ing conditions, and faulty methods. Under such circumstances workers lose their ambition and initia- tive. So we can establish the fourth law: Savings- or profit-sharing should be on the basis of factors within the workers' control. Other Points to be Considered. — There are, of course, other points that can easily contribute to the failure of a plan of profit- or savings-sharing, as for instance — 1. The attitude of organized labor. 2. The fear of over-produetion and the introduction of machinery. 3. Suspicion, on the part of labor, as regards motives and intent. 4. Failure, on the part of labor, properly to understand the plan in use. 5. No representation of labor in determination of the plan. 6. No way of determining that the profits are as stated by the management. I believe, however, that if the four laws are recognized and lived up to, the plan that may be decided upon can be made successful in the majority of cases. Laws of Profit-Sharing. — Let us restate these four laws and see wljat can be done towards working out INCENTIVES 291 a plan based upon them. These are the laws briefly stated: 1. Sharing should be in proportion to individual attain- ment. 2. Division should be made at frequent intervals. 3. Division should be made, irrespective of what "show- ing" the company makes. 4. Division should be on the basis of factors within the worker's control. "But," you say, "how are we to determine indi- vidual attainments? How can we divide savings or profits when we know only once or twice a year what our real condition is? If we suffer a loss we have to stand it, why shouldn't the men? Why should we give men a division only on items within their control, when our real showing is on all the items that in- fluence profits and savings?" These are fair questions and demand consideration. But before I attempt to answer them, let me give you a fundamental principle: Unless the plan you establish is based on right and justice; unless there is something of the "give and take" to it; unless there is co-operation between the men and the management in working things out; unless the men can feel that they have some "say" in it all — by all means save your energy and your money, for the plan is doomed to be a failure, before it is even put into operation. Eemember that two- thirds of the plans have proved failures, and that the one you install must be established on a basis that will insure success at the outset. 292 ORGANIZATION AND ADMINISTRATION Applying The First Law. — Now let us consider the laws in logical order. The first was, that profit-shar- ing should be in proportion to individual attainment. Much has been said, on this phase of the work, which was in opposition to this new, but I contend, and my experience has shown, that standards can be set which will determine the efficiency of each man. When such standards cannot be accurately or scientif- ically set, fair estimates can be made — not by looking at a piece of work and saying, "Oh, this will take about five hours," but setting down the known elments, and estimating the time for each element as indicated by the following: FOUNDRY WORK Laying board and pattern Placing drag Riddling sand Shoveling heap sand Ramming drag Laying bottom-board Clamping and rolling Placing cope side of pattern, Placing cope. Placing gaggers. Ramming cope. Lifting cope Finishing mould Piling, setting, and securing cores Closing Clamping and placing weights Total allowance Grand total INCENTIVES 293 MACHINE-SHOr WORK Waiting for piece Picking up and placing in machine Centering Eough turning Finish turning Getting cutting tool to replace wrong one supplied Facing one side Facing other side Grinding cutting tool Eough-turning taper Finish turning taper Forming radius Eepairing belt Forming edge "Waiting for foreman, for instructions Getting cutting tool Cutting first groove Grinding cutting tool Cutting second groove Cutting thread Getting chains Getting leathers, to place between chains and work Delay due to poor working of pneumatic hoist Taking piece out I wish every one could read, in this connection, "The Magic of Motion Study," by Eeginald T. Townsend, in World's Work. Mr. Townsend de- scribes the wonderful work which has been done by Frank B. Gilbreth, of Providence, R. I., in reducing to a positive science the work of motion-study. The Second Law Applied.— It is obvious that a concern which does not know its exact condition 294 ORGANIZATION AND ADMINISTRATION until the end of the year, cannot divide savings or profits at frequent intervals during the year. The fact remains, however, that the accounting and cost systems can, and should, be arranged on the basis that "would enable the management to secure monthly profit-and-loss statements; from these it can be deter- mined what has been saved in reduced costs, or what has been made in profits. Even if no monthly pay- ment is made to the men, they can be told what showing they have made, and can be given an idea as to what profit their work entitles them to. Then the payment can be made every three months, or at least twice each year. If the men know that they have earned something, and have some idea regarding the amount, it is likely that their interest will be sus- tained at the right point. Application of The Third Law. — ^It should be remembered that what the men have to look forward to is their wages, which they of course receive, irrespective of any loss the company may have to bear. At the same time, the owners of the company have the future to look forward to. They own the business, the investment is theirs, and losses sustained at one time may be made up at another time. They can borrow money; the men cannot. They may have a surplus; the men have none. They may have a reserve capital; the men do not possess any. After all, the big thing is to secure the co-operation of the workers, to get them to strive. But a failure to give them the rewards will do more than any other one thing to make them lose heart and say — "What's the use?" INCENTIVES 295 The Fourth Law in Operation. — ^You can well imagine the mental effect on the average worker of doing what is within his control sufficiently well to entitle him to rewards, only to lose them because of what happens in connection with factors not within his control. Of course, the men cannot and should not run a business. They are engaged to do certain definite things, and the idea of giving them a share in savings or profits is to get them to do their best with reference to these certain, definite things. Now the men, let us say, do their part of the work, but because of poor purchasing, or inaccurate costing, or other causes, losses wipe out the gains the men ought to make. It seems, nevertheless, because the men are not to blame for the losses, and because they have done what would otherwise entitle them to rewards on the items they could and did control, that they should be rewarded. In a shop in which the men are paid on the bonus plan, some men are delayed in their work by causes beyond their control. The time set, we shall say, is 10 hours, and the men do their part of it in 10 hours, but, because of the delay of two hours, the total time is 12 hours. In other words, the efficiency is 83.3 per cent. Should the men be made to suffer for this delay, or should they receive their reward and the inefficiency be charged to the management? Use of a "Sliding Scale." — ^Under any plan of profit- or savings-sharing, the regular wages paid to the men in the district should be paid to the men working under the plan. In order that the rewards may be based on in- 296 ORGANIZATION AND ADMINIStRATION dividual attainment, fair standards should be deter- mined by motion-study or by estimates based on detailed analysis, and the men should be paid an amount, over and above their wages, based on their attainment. This amount should be determined by means of a "sliding scale," as follows: For 100 per cent efiBeiency, 20 to 25 per cent on wages. << gQ << " <' 20 " " " " 1 1 on II It 11 K a it ct tt '' 70 *'•'< tt o (* tt tt ti 1 1 on tt It tt n tt tt It tt As this premium would be paid on what the men actually do, the plan of payment outlined above would serve the two desirable objects: (1) to reward the workers on the basis of factors within their control, and (2) to reward them, irrespective of what "showing" the company makes. After the men have been rewarded according to this plan, after deprecia- tion, bad debts, and reserves have been taken care of, and after capital investment has received a fair return on the money invested, the balance should be divided between the capital and the labor investment. The amount given the men should consist of wages plus premium. If you pay men wages, plus premium or bonus based on individual attainment, and in addition to this give them an extra amount representing their share of savings or profits, you provide real incen- tives. For men will under such circumstances be anxious to do their best, because high efficiency will mean larger premiums, and a large Avage and pre- IXCEXTIVES 297 mium total will mean a greater share in the savings or profits. Two Practicable Plans. — ^In arranging to distribute savings, tlie following plan could be used to ad- vantage: Divide the business into departments, and charge them with the direct labor costs, the indirect costs, and the proper share of overhead expenses, charge- able to the producing end of the business. Credit these departments either with what the costs were at the time the plan was started, or with an amount representing a fair estimate which is made from the standards determined upon, and which covers the work done. According to such a system, the depart- ments will be charged with actual time or costs, and credited with estimated, or standard, times or cbsts. The difiference between this plan and others is in the savings or the waste. Incidentally, the men should have something to say with respect to the settling of these estimates or standards, if their full and hearty co-operation is to be secured. In case piece- work system of payment was in operation at the time the plan was introduced, it would naturally have to give way to an hourly basis of wage-payment. Then the piece-workers could be paid, out of the savings, the difference between the day rate and what their hourly rate on piece-work was for a period of four to six months previous to the installation of the new method of reward. As can be seen, this, as regards the business as a whole, is the same kind of plan as that which is applied, in the ease of the men, when they are given 298 OEGANIZATION AND ADMINISTRATION a premium or bonus based on individual attainment. The total actual and standard, or estimated, times and costs, which include the work of all the molders, would be the charge and credit for the moulding de- partment, and the difference would be the waste or the saving. The total actual and standard, or estimated, times of all departments would give the charges and credits for the business as a whole, and the difference, again, would be the waste or the saving. One third to one half of the net savings should be credited to the men, and should be paid to them on the basis of total wage and premium earn- ings, as before mentioned. Common labor and the work of the foremen should be included in the division. Another possible plan is this: After capital has received its legitimate earnings, contingencies have been taken care of and labor has received its regular wages, any surplus should be divided between capital and labor, in proportion to the earnings made by each. If, in a business capitalized at $500,000, the earnings amounted to $100,000 in a year, and the earnings of labor were $100,000, any surplus should be divided "fifty-fifty," as the saying goes. In other words, after deducting 6 per cent, $30,000, as dividends and $25,000 for contingencies, reseryes, and so on — or $55,000 — the surplus would be $45,000, of which $22,500 would go to labor and $22,500 to capital. CHAPTER XVIII SUCCESSFUL USE OF OEGANIZATION PRINCIPLES Efficient Organization. — ^It is sometimes a good plan to compare more or less, abstract discussion with con- crete practice. Oftentimes you can prove a thing by talking about something different. Hence it was de- cided to submit an example of efficient organization which would bear out the contentions here presented. One of the most interesting cases of efficiency in organization development that has come under the author's notice was the New York Evangelical Cam- paign of "Billy" Sunday in 1917, and it is believed that a description of this efficient campaign will prove interesting, as it conforms to the principles and laws of organization developed in previous chapters. Direct and Simple Organization. — Chart 34, page 306, shows the Sunday organization in graphic form, and the thing to marvel at is its simplicity, elimination of overlapping, comprehensiveness and the clean cut nature of the divisions. The "New York American" well said: His organization is one that many great business houses might well take as a model. In the way its various activities are co-ordinated is shown executive ability of the highest order. "Billy" Sunday himself is the active head of this wonder- 299 300 ORGANIZATION AND ADMINISTRATION ful soul-saving machine. He has every detail of its opera- tion at his fingers* end. Yet so smoothly does it run and so nicely do the cogs fit into one another that once set in motion he can leave everything except the most important details of its operation to others. Let us take this chart and analyze it so as to check it against the principles and laws of organization developed in this book. Investigation. — Months before the actual start of the revival an army of 20,000 enthusiastic and well- trained workers were preparing the way for what was to come. Every feature of importance was looked into — the matter of prayer meetings, shop visitations, people to be reached, support of the churches, finances, workers, and'scores of other factors. Head- quarters were opened in the Metropolitan Tower where recruits were enlisted and details of the cam- paign worked out so that ithe entire field could be comprehended and co-ordinated. "The Outlook," a few weeks before the campaign, made a statement which has a bearing on this im- portant principle of investigation: When Billy Sunday (the name under which everyone knows him) begins to consider making war in a certain city against "the intrenched forces of sin" (he likes martial phrases) he first sends to that city his scouts. It is the duty of these followers to "feel out" the strength of the enemy to learn what support and what natural allies can be found among the natives of the chosen theatre of war. The report is then laid before Commander-in-chief Billy Sunday and his General Staff. When the reports of the Scouts have been deemed to war- ORGANIZATION PRINCIPLES 301 rant an attack on a city, the scouts are sent back to that town, accompanied by more experienced and more heavily armed organizers. As an example of how the Sunday army works, consider what is doing now. Billy Sunday is on tlie firing line in Buffalo and is not scheduled to open his personal assault in New York City until April 1st, but, for several weeks already, his scouts', sappers, engineers, artillery-men and sharpshooters have been hard at work in the metropolis. Co-ordination. — A brief description of this efficient organization will prove of interest. As can be seen from the chart, it divides into four main sections: 1. The Musical Department under the direction of Homer Rodeheaver, 2. Personal employees of Mr. and Mrs. Sunday — clerks, secretaries, etc. 3. Business management under the direction of George Sunday. 4. Comm-ittees, workers, meetings and the actual work in connection with the revival, under the direction of the Executive Committee. In the musical organization there were 4000 mem- bers, divided into two great choirs of 2000 each be- sides a large corps of musicians. Anyone who has attended any of the Sunday meetings can testify to the efficiency of this branch of the work and how much of a factor it is in the work of helping Mr. Sunday in his soul-saving work. The business management would excite the admira- tion of anyone interested in business pursuits. Under this section came the handling of all the financial 302 OEGANIZATION AND ADMINISTRATION matters, auditing, payment of bills, handling and counting the offerings, supervising the selection of the Tabernacle site, erection of buildings and care of same during meetings, ushers, decorations and other phases of the business conduct of the campaign. The fourth of these groups is really the most im- portant and is eloquently described by the "New York American" as follows: This group consists of several hundred committees, includ- ing in their membership more than 15,000 men and women. They look after all matters not attended to by other branches of the organization, but their chief duty is to stir up interest in the Sunday meetings and to extend personal invitations to attend them. "Within the next three months it is planned to extend these invitations not merely once, but several times to every man, woman and child in the boroughs of Manhat- tan, Bronx and Richmond. The city has been divided into twenty-three districts, Man- hattan havinrj fifteen, the Bronx five and Richmond three. Each district is in charge of a local clergyman, who acts as district leader. These districts are sub-divided into sections, determined largely by the number of churches in it, and there is a chairman, usually a pastor, for every section. Then follows another sub-division: the sections are again split up into blocks in which jire encompassed sixty or more Protestant families. Over each of these blocks a committee presides. The sections are lettered and the blocks are num- bered. Each enlisted clergyman explains to his congregation the work of the Sunday campaign and opens a neighborhood prayer-meeting home. He also appoints the block commit- tees and enlists the services of all personal workers in his congregation. These prayer-meetings will commence in all districts on February 13. ORGANIZATION PRINCIPLES 303 In addition to the prayer meetings Bible classes are organ- ized and "trail hitters" are brought from distant cities to testify to the efficacy of the salvation to which Mr. Sunday points the way. . Twenty thousand persons will be actively engaged in the New York campaign when the full force of the movement gets under way. Of this vast army every man, woman and child holds some specific office or has some definite work to do for the cause. Each of the innumerable Committees is under the direction of experienced workers, many of them salaried members of Mr. Sunday's personal staff. Schools, shops, factories, offices and even jails and prisons are covered by the vast network of committeedom. The hun- dreds of block committees reach every home and family, so that not a person in New York will be immune from the great propaganda. Records. — ^A large staff was maintained at the Sun- day offices in tlae Metropolitan Tower and had all the appearances of a large business corporation. Here were prepared and issued thousands and thousands of letters, circulars and pamphlets used in the work of assisting the movement. Here the clerical records were kept and compiled in business-like fashion. Here were elaborate card index systems telling daily the real facts as to progress, results and the work to be done. Planning.— Without any question the work of plan- ning was efficiently done both before and during the campaign. Consider the following evidence of plan- ning: Tabernacle seating 25,000 people — a building 330 feet long and 245 feet wide. 304 ORGANIZATION AND ADMINISTRATION Acoustic properties such that all could hear, due to a sounding board of special design, over the pulpit. Ample exits. Ushers organized on a military basis — 25 captains and lieutenants, 106 non-commissioned officers and 750 ushers with 100 in reserve, in readiness for any emergency. Transportation facilities planned to handle the large crowds, in and from the Tabernacle, in the shortest time possible. A well equipped emergency hospital. Nursery for the children. Postofflce, telephone booths, telegraph and express offices. Prayer and shop meetings. Handling of the crowds. Machine to count and sort the coins taken in collections. Planning personal work and placing people in charge of same. Publicity, reporters and clerical work in connection. Women workers reaching employed women and girls. Outlying districts. Taking care of boys and girls. Sunday Schools. Students' Meetings. All of these things and many others, too numerous to mention, were all worked into the general scheme of things. Each had its place and had a bearing on the others. Considered in its entirety the Sunday campaign, in the way things were handled, was a monument to the efficiency of good planning. Standardization. — A chapter could be written about this section of the work of the Sunday campaign, but lack of space forbids. Two cases will be given how- ever. ORGANIZATION PRINCIPLES 305 Under "Duties of Block Committees," in connec- tion with, prayer meetings, the following standard practice was worked up: Arrange for the %iolding of "block" prayer meetings on Tuesday and Thursday evenings, commencing Tuesday, Feb- ruary 13, 1917. The "Instruvtions for Secretaries" contains some excellent standi ardization as follows: Secure homes in which to hold the "block" prayer meet- ings and appoint the leaders of such meetings. Do not hold a service twice in the same house if it can be avoided. The experience of the Sunday party is that it is better to have a number of small prayer meetings than fewer and larger ones. Incentives. — This principle can be dismissed with a few remarks. I do not know what the actual results of the New York Campaign were — probably no one knows or will ever know — but there were rewards, substantial ones, in souls saved and in a large col- 'lection which went to the Eed Cross and the Y. M. C. A. In twenty-three cities previous to the New York campaign, 322,469 persons were converted and $481,466 taken in as offerings — rewards which cer- tainly testify to the efficient use of the first five prin- ciples of organization. Laws of Organization — Objective. — ^Billy Sunday feels that he is fighting against "the intrenched forces of sin." His object is to save souls, fight drink and elevate humanity. While he does the heavy work himself oji the firing line, he is wise enough to see that efficient helpers assist mightily. 306 OEGANIZATION AND ADMINISTRATION I— 1 ra r' 1 1 - s - ..— 1 s- T ■ 1 r-3 m ■— '• 1 =^ 1 tB c i ■=:! "^ — ^S-, - E . - % _ S i[- r i 1 i i favor of control boards. Mr. Jones objected to them on the grounds that they touIcI mean an expensive Installation and result in what he terraed a lot of "red tftpe." Williaih?. and Brown were partial t6 the" board* but &ii not'wantto auction their introduotlon untH they knew more about them and the cost. THIRD PAGE OF BETTERMENT RECORD COMMITTEE PLAN 365 Action by PlannlTlR Committee DeciiwD if »' Sttff Work b NoMMwry Refeired to Suff (or InvutigBtion and Report 1 Return Wanted hy 4/l/l7 Final Action by Mill Council Date 4/5/17 Agreed to aa per Action of Conunittee Agreed to With Following Changes: It Is recoriunended that the conclusions of the staff as to cost and possibilities- in the hoards tie foUonsd. Rejected Iteferred Back to Committee for Further DiKuiiion Referred to Staff For < Invettigation and Report Approval or Rejection by Management Approved Rejected Rcnurka ..j.1j J-B-S- n— 4/7/17. FOURTH PAGE OF BETTERMENT RECORD 366 ORGANIZATION AND ADMINISTRATION the committees, lie will check at the bottom of page 2, opposite to "Eefer to Committee for Eecommenda- tion." The subsequent findings of the committee will then be submitted on page 4, and the final deci- sion of the management will be indicated immediately below. If the executive will faithfully make use of the "Betterment Record," and if he will practice the principles upon which it is based, he will be amply repaid in terms of results. CHAPTER XXII STAFF ORGANIZATION Line and Staff Compared. — Industrial organiza- tions have been classified under the following heads : Line, Staff, and Committee. In this book I have devoted one chapter to Committee Organization, and throughout I have given considerable attention to the question of Line Organization. In this chapter I shall outline the essentials of staff organization in industrial plants. The line organization in industry is responsible for maintaining a plant in a state of continuous, uniform, and successful operation. The function of the staff organization, on the other hand, is to im- prove the plant and the organization. Or, in other words, the function of the line organization is that of performance, while the function of the staff organ- ization is that of progress. Analogy to the Human Organization. — ^If we com- pare the organization of a plant to that most perfect organization, the human body, line executives might be compared to the secondary brain located in the spinal column; when the brain has decided on a course of action, it delegates to the secondary brain, as it were, the responsibility of putting that action into effect. For example, if the brain decides that 367 368 OEGANIZATION AND ADMINISTRATION the speed of respiration should be lessened, the order is transmitted to the secondary brain — under whose direct control the lungs operate — and the respira- tion is slowed down. The brain is the Chief Execu- tive; the secondary brain corresponds to those imme- diately in touch with him. The staff might be compared to the five senses, which study conditions and convey their impressions to the brain; then the brain decides upon the course of action to be taken. For instance, if the road on which you are walking becomes rough, the sense of feeling immediately notifies the brain of this fact. The brain then directs sight to discover a smoother path, and when it is found the brain tells the feet to take that path; the brain proper does nothing more with reference to the operation of the feet, for the secondary brain keeps them moving until the brain tells them to stop. If you come to a flight of stairs the eyes see them and notify the brain, which changes the motion of the feet to one of climbing and then turns over to the secondary brain the job of keeping them in motion. The senses convey to the brain the innumerable impressions received from the outside world, and the brain decides what action is to be taken with respect to them. • Without the secondary brain, the brain itself would be occupied entirely with the work of keeping the heart, lungs, and other organs in action, and would have no time to perform its many other functions. If there were no senses the mind would be a blank, and naturally would be of little value as a directing organism. STAFF ORGANIZATION 369 The lesson for industry to dr~avSr from this physio- logical analogy is that the relationship of functions in the human body furnishes an excellent basis for industrial organization. As the brain through sight selects the path and then turns over to the secondary brain the job of keeping the feet in motion, so the executive of a plant, through staff, investigates and decides upon the best method of procedure and then directs the line organization to follow this method. The staff in an industry is a body of men organized " for the purpose of making detailed investigations of conditions and results, and submitting to the man- agement sufficient data to enable it to make an accu- rate and intelligent decision as to the course of action which should be taken. Functions of the Staff. — The functions of the staff may be outlined as follows: To conduct investigations of all parts of the products, to dis^ cover any faults and inefficiencies. To conduct experimental tests, both physical and chemical, in an effort to better both the product and the process of manu- facture. To determine proper standards from a study of the above. To prescribe the methods for carrying on the work as outlined. To prepare instructions covering the procedure determined upon. To ascertain accomplishments so as to measure same jvith standards. To investigate reasons for failure to attain the standards set. To analyze errors, delays, complaints, and rejections. . To maintain staff files, and to handle all details in connection with staff work in an orderly and systematic manner. 370 OEGANIZATION AND ADMINISTRATION Inter-Depaxtmental Relations. — One of the greates values of staff is its ability to study and correct mat ters involving inter-departmental relations. A con cern that has many departments may employ goo( managers, each department may be well run indi vidually and yet the co-operation and the relation! between the departments may be so poor as to inter fere seriously with the success of the plant in ques tion. The supply system (whereby materials art supplied by certain departments to others), the ordei system, the timekeeping system, the stores system and the planning system, all affect several depart- ments and the relations between these departments, In the average plant there is no provision for the improvement or adjustment of inter-departmental re- lations. Most of the systems that affect these relations to the greatest extent, as, for example, the stores, order, and timekeeping systems — are devised by the accounting department entirely from an accounting standpoint, with little, thought as to their effect on the production of departments or the relations be- tween departments. In one case, the accounting de- partment of a company employing several thousand hands, devised a system for ordering repairs made to equipment, which was excellent from an account- ing standpoint, but so much red tape was involved that it took a repair order an average of from four to five days to reach the repair gang and the loss in production of the machine during this time was frequently many times more than the cost of making the repair. In another case, the methods of handling orders STAFF ORGANIZATION 371 were so inefficient that before an order received could reach the factory it would be held up three days, and also the passing of orders from one department to the next was much delayed. In each of these instances the departments affected knew that the system in use was wrong, and yet they were at a loss as to how to correct it. When they suggested changes they were told that these would affect this or that matter in another department or that they would have a bad effect upon the accounting, and therefore matters would have to stand as they were. Frequently situations of this sort lead to the crit- icism of one department by another and the conse- quent creation of hard feeling. Departments do not like to carry their troubles to the general manager, since if they do they are liable to be considered tale bearers. General Manager and Staff. — ^Even when the gen- eral manager is appealed to, he is frequently at a loss to correct the trouble. Sometimes he orders changes which assist one department, but which work to the decided disadvantage of other departments. Sometimes the matter is referred to the accounting department — perhaps the only one that is satisfied — and the report comes back that the system is very satisfactory and cannot be bettered. It is evidently out of the question for the general manager to as- sign to one of the departments affected the duty of investigating the system through all the departments it affects, since such a course would assuredly create friction. The only method at all possible — so far as the manager is concerned— is to make a personal 372 OEGANIZATION AND ADMINISTRATION investigation of the system, and that is really im- practicable as the general manager has too many other duties to allow him to devote the time neces- sary to make a detailed investigation of any system. It is in cases of this sort that the staff becomes most valuable, for, since it is connected with the general manager and is not affiliated with any line department, it is in an excellent position to investi- gate any system through all the departments which it affects, without creating friction, and to submit to the general manager an unbiased report on its defects, and suggestions with respect to improve- ments. Organizing the Staff. — Great care should be taken in the organization of a staff. A well-organized staff is of inestimable value to a company; an improperly organized staff is a constant source of friction, and more of a detriment than an advantage. The average manager, feeling the need of an assist- ant to help him in the investigation of the many complaints that are inevitable, frequently organizes a crude form of staff consisting merely of several young men with no special training, who act as assistants. He calls upon these men to investigate th departrnent responsible for a delayed order or a defect in product, or to investigate the complaint of one department concerning another. Frequently the men thus employed are of but little better grade of intelligence than good clerks. Their duty is usually to find out which department appears to be at fault, so as to enable the manager to administer a "call- down" intelligently, but their powers are seldom of STAFF ORGANIZATION 373 sucn an order as to enable them to analyze the situa- tion and find the basic trouble with the methods or system used, or to offer constructive criticism by suggesting changes that would eliminate the causes of the trouble. This method of procedure is probably the most unfortunate that could possibly be selected. The men thus employed are looked upon as spies of the general manager, and are cordially hated by the whole organization; moreover, the general manager himself is also liable to be strongly disliked. The feeling that is created among the department heads is well illustrated by the attitude of a manager of a large department with whom I once came in contact. This man felt that the management would not trust his word without sending men to investigate any reports that he made; that the management disliked him and his methods; that they were trying to "get something on" him so they could oust him; and that they were also trying to irritate him so much that he would resign. This same feeling toward the man- agement extended in a smaller degree throughout the whole concern, and engendered an attitude of suspicion and distrust on the part of all department managers;, it was all due to this unfortunate policy of investi- gation on the part of the general manager. When a staff is forced on the department man- agers and the staff members come into a depart- ment under orders from the general manager to show up the department workers and to find fault, more harm than good is done; but when a staff consists of a body of experts who can be called on by the 374 ORGANIZATION AND ADMINISTRATION department managers to come into their department and work with them to help solve their more diffi- cult problems, the entire attitude toward the staff is different and the staff itself becomes one of the greatest assets of the concern. Personnel of the Staff. — The personnel of the staff should be made a matter of the most careful consid- eration. The chief of staff must primarily be a man of strong personality and great tact, for unless he can obtain co-operation, and work without giving offense, he cannot succeed. He must have a highly developed power of analysis, excellent common sense, and a broad manufacturing experience, and he must be able to form sound judgments and make quick decisions. He must be second to the general man- ager only, and naturally, since this is so, he must be paid accordingly. When the size of the concern warrants the arrangement, the chief of staff should have assistants whose duty it should be to make detailed studies of methods, and in the case of a very large concern it frequently pays to have, an assistant to the chief of staff working continually in each de- partment. Fostering Co-operation. — The nice point in organ- izing a staff is to organize it in such a way that it will be a factor which will help to increase the co- operation and good f«eling in the organization, in- stead of being a cause of friction and bad feeling. If the departments properly understand the functions of the staff, and if the staff men are diplomatic, it will not be long before the departments will appre- ciate the advantage of having the assistance of men STAFF ORGANIZATION 375 who are not interrupted by routine duties, and who can spend their entire time, if necessary, in study- ing and solving difficult departmental problems. Staff Problems: Individual Department. — The prob- lems that the staff is called upon to solve may be divided into two classes. First, the problems which concern the methods of an individual department only; and second, the problems (such as those in connection with order systems, planning and routing systems, and so on) which affect several departments and the relations between departments. ' When a problem concerns an individual depart- ment only, the request for staff help should come from the manager of the department in question. If the department manager is not inclined to call on staff of his own free will, the general manager should diplomatically suggest that he ask for the assistance of the staff, and this suggestion should be made at a time when the two men are discussing the depart- mental problem in question, or at a time when the department manager is called in to discuss records which show that his accomplishment is not all that could be desired. When the staff man has been called in by a de- partment manager for the first time, it is necessary for him to exercise great diplomacy in order to put himself on a friendly footing with the department manager. If he assists the department manager to the full extent of his ability, and gives him the im- pression that they are working together to accom- plish the required result, he will receive his co-opera- tion: furthermore the manager will feel that the 376 ORGANIZATION AND ADMINISTRATION responsibility for the work is largely his own, and will be as much disappointed if they fail to obtain results as the staff man himself. If, on the other hand, the staff member upon entering the depart- ment conveys the impression that he is going to "show up" the department manager, then the man- ager will naturally feel inclined to try to make the work of investigation a failure and will be more than satisfied if he can prove that the staff man was not smart enough to show him up. When the staff has conducted a study ih any de- partment, the results should be submitted to the manager of that department in order that he may approve them and put into effect the changes sug- gested. If necessary, the department manager (either alone or accompanied by the staff man) may then take the report to the general manager for his ap- proval. Under no circumstances should the recom- mendations be submitted, first of all, directly to the general manager for his approval and then forced on the department manager; such a method in- variably causes friction between the department and the staff. When the department manager and the staff man disagree, they should go together to the general manager, lay their contentions before him, and allow him to render a decision according to the merits of the case. It happens that in many plants, because of the natute of my work, I have temporarily been placed in a position equivalent to that of chief of staff, and I have found that the exercise of a little tact, thoughtfulness, and common sense, secures the hearty co-operation of department managers. STAFF ORGANIZATION- 377 Staff Problems: Relations Between Departments. — When the problem to be studied affects several de- partments and the relations between them, the method of handling the matter is necessarily differ- ent. If there has been a policy of forming com- mittees for the handling of specific problems, the re- quest for staff investigation should come through the committee directly concerned. For instance, if there is a planning committee and it appears to them that the planning methods could be improved, or if the planning system is proving unsatisfactory to some of the members of that committee, then the committee should be empowered to call on the staff to investigate the planning system and to report its findings to the committee. In a case of this kind, as when a member of the staff is dealing with a ^ department manager, the findings of the staff should not be taken to the gen- eral manager until they have first been submitted to the party most directly concerned — in this in- stance, the committee. When there is disagreement between the staff and the committee, the general man- ager should be called on to render a decision. It is an excellent idea to make the chief of staff a member of every committee, with the privilege of attending or not attending meetings as he chooses. If the system which I have described is faithfully followed, the staff will prove of invaluable assist- ance — in short, it will become to the executive what the senses are to the brain. CHAPTER XXIII THE PEOPER SELECTION OF PERSONNEL Qualifications versus Requirements. — ^In the future, in this big and worth-while task of developing men, a great deal more attention is going to be paid to the matter of selection and training. Qualifications are going to be matched against requirements. Too often so many changes are made in the per- sonnel that in time the make-up of an organization resembles that of a patch quilt. Of course the proper method is to determine, first of all, the requirements with respect to personnel, and then to find the men who can fill those requirements. We all know of concerns in which disorganization, confusion, and general conflict of authority — or utter lack of any — result simply because there is no definite policy in regard to personnel. Men come and go without ever really finding their place, because the organization is built around the workers instead of the workers being chosen for, and fitted into, the organization. The Executive. — If, upon analyzing the personnel of a plant, you find that the executive by temper- ament, training, habits, and mentality, is totally un- fitted to manage, you might as well make up your mind at once that no amount of reorganization will produce the desired results with this man at the head 378 SELECTION OP PERSONNEL 379 of the company. You can place the best kind of men around him, furnish him the most efficient methods that human ingenuity can devise, provide him with every aid possible, and yet you will fail to secure efficiency because the wrong man is in the executive position. It would be highly illogical, for instance, to attempt to reorganize a business around a man to whom the following description would be applicable: For a man of his supposed station he is exceedingly nar- row-minded and unprogressive, and as a consequence is apt to oppose, either passively or actively, any departure from the old way. He is unduly suspicious of those with whom he is thrown in contact, and is inclined to be jealous of his own subordinates. This probably accounts for the prudent man- ner in which he has evaded the development of an understudy for himself. He is vain and boastful, and is therefore easily influenced by flattery. He is not a handler or developer of men, neither is he conversant with the important details of the business as he should be. Altogether, he is of the destruc- tive type, and after careful consideration we recommend that he be superseded by a man of a much higher type. Latent Ability in Existing Personnel. — ^It is utterly wrong to reorganize a business wholly with reference to those who are employed at the time of reorgan- ization, for then the work will be based on the per- sonal peculiarities and characteristics of individuals who may or may not meet the requirements, and in the end all the principles and laws of organization may be grossly violated. The only safe plan is to ignore the individuals for the time being, map out the organization as it should be, draft specifications 380 ORGANIZATION AND ADMINISTRATION covering the requirements, and then find if possible persons who are really qualified to fill those require- ments. If such persons are among the existing per- sonnel, well and good; if not, the organization must be built up of persons secured outside, but only after the existing personnel has been carefully studied and every one has been given an opportunity to fit into the new arrangement. In other words, latent ability in the present force should not be overlooked. I never did believe in the pernicious policy of "fire and hire" too often practised in industry; it is so easy to adopt that extreme caution must be exercised. If you will refer to Chapter III once more, you will recall that by changing the type of organization you can sometimes convert certain weak individuals into strong ones. If a man who has been with the firm five or ten years appears to be weak, but seems at the same time to possess some of the qualities that are to be desired, then the employer should by all means retain him and find out what he can do under right conditions. The firm owes this much to such a man, who, if turned adrift, may find it hard to begin again, owing to the difficulty of "unlearning" the wrong way and learning the right way of perform- ing his duties. I have always contended in my prac- tice that a man with the qualifications is entitled to his opportunity under the changed conditions, even though he may have been considered a failure under the old. I well remember, in one case of the reorganization of a department, that the feeling seemed to be that the manager should be dismissed. He was, to be SELECTION OF PERSONNEL 381 sure, a strange combination of strength and weak- ness, and on certain counts was failing miserably, but nevertheless I believed that he should not be summarily discharged. Consequently, I reported: "This man has never had a real opportunity to dem- onstrate his abilities. He has been a 'detail-chaser,' for which he is not so much to blame as the type of organization he has been working under. He has never had a real conception of what his job is. His func- tions, duties, and relationships have not been defined, so that he has not been properly informed as to what has been expected of him. Organize this department, give the man authority to get results, get him away temporarily from his job so he can obtain a true perspective of it, and then if he cannot make good, fire him." To follow this kind of advice means the develop- ment of men. Not to do it, means to be instrumental in making men failures. In another case, a foreman who had been with the firm for years had opposed the management's new policy consistently, and sometimes openly, for six months. Three different times the management felt it advisable to discharge this man. This is the ad- vice that I gave: "This man has been with you seventeen years and if you turn him adrift now' he will be lost, for he is no doubt an inefficient person. But he knows your business from top to bottom, and he has the making of a good man if he can be waked up and started right. If you get a new man he will not know your business, and what guarantee can you give that he will like the new policy any better than 382 OEGANIZATION AND ADMINISTRATION the present foreman?" I won the point, and within six months the man was one of the most loyal work- ers; he became an efficient foreman and subsequently earned a considerable bonus each month. This case is another testimony to the worth of the man-building method. The Man and the Job. — The executive of the future is going to have a staff to help him decide upon the selection and training of those who serve him. As Harrington Emerson so well puts it, "Man- agement is the personnel putting the organization into action." The work of this staff will be the improve- ment of personnel. Gerald Stanley Lee makes the fol- lowing comment which is very apt in this connection: What this shop is doing I have come to believe that all shops before long are going to arrange to do. Jobs are going to be put on an endless belt, swing through the world like the part of a Ford Car in the Ford factory, and each man, as the belt goes by, is going to take one off, or some man who has studied him will take a job off the belt for him. References and Previous Records. — In the selection of the working force too much dependence has been placed upon references and previous records. In re- gard to this point, Dr. Katherine M. H. Blackford ex- presses the "following opinion : I want to speak particularly about those two last items in experience, previous records and references. I regret to say that most employers have little idea about looking for any- thing in an applicant except what his previous record has been and what reference he carries. I consider these the least valuable of all in selecting employees. I almost never, cer- SELECTION OF PERSONNEL 383 tainly never of my own accord or wishes, look up a man's references. If when the man stands or sits before me, I can- not evaluate that man, certainly I cannot depend on the refer- ences he carries. I have had a great many similar experiences, but one will suffice. One of the finest sets of reference letters that I have ever examined belonged to a man that has all but wrecked two concerns which had employed him. I would not pay him, I would not consider him, in a concern of mine. It is also of very little value to look up a man's previous record to determine his efficiency. A previous record is important in determining how much experience a man has had, but certainly not in determining what his efficiency in your organization will be. I have known men, good men, men who, in the right environment and under the right management and with the right training, would have made exceptionally fine employees, but who were discouraged, disheartened, and finally put down and out (if I may use that very expressive slang term) by having employer after em- ployer dig up records that were to their detriment. A man's past record may be poor, he may have made mistakes, he may have made terrible mistakes, but place him in the right en- vironment, give him the right appreciation and encourage- ment, and I tell you he may make good in a wonderful way. Many employers give letters of reference exceedingly lightly. I can write you a letter of reference for any man you may bring to me, even if he has a criminal record, and make it appear that he is worth employing, without lying about him ; any one can. Selecting Personnel: Three Methods. — According to Harrington Emerson there are three ways to select personnel: To rely on impressions. To trust to demonstration. To predetermine by analysis. 384 ORGANIZATION AND ADMINISTRATION I am in favor of the third method. The first may be excellent if the impressions are always right, hut all of us are prone to jump at conclusions. The sec- ond may be good if the person demonstrates his ability; but "if not, the experiment may prove costly. The third method — that of analyzing the characters of the applicants, and thus determining their fitness — is the one which is recommended by such authorities as Dr. K. M. H. Blackford, Scott, Miinsterburg, and Kemble. The executive who reads with an open and unbiased mind the works of these specialists will find much that will assist him to lay an excellent foundation for the personnel of his organization. A proper basis for the selection and training of employees is so fundamentally necessary that the wonder is that more managers have not given it more attention. If one will study the usual methods of hiring and firing in so many of our industrial plants, he will speedily be convinced that such a basis is a prime requisite. The Executives 's Assistants, — One of the pitiable things in industry is to find managers who seem afraid, or for some reason are unwilling, to surround themselves with men stronger in certain lines than they themselves are. In these days a man cannot be expected to be a specialist in many fields, or even to know all there is to know in his own field; natur- ally it can be said of any man that some one does exist somewhere who knows more than he does about any subject he may name. Not being a psychologist, I don't know the reason for this narrowness on the part of many executives but I can testify to the SELECTION OF PERSONNEL 385 detrimental results that they bring about in industry. Is the brain sufficient unto itself? No, it depends largely upon the marvelously efficient senses in form- ing its judgments, and delegates to the "line organ- ization" of the body the carrying out of the orders that it issues. Does the wise general depend in war upon men inferior to him in the different branches of warfare? No, he has about him the best of special- ists. Does the Carnegie or Morgan or Kockefeller type of executive depend upon men who know less than he himself does about certain phases of the work? No, they believe that the best assistants ob- tainable are none too good for them. A certain man of comparatively limited education, who nevertheless had acquired an enviable reputa- tion as a writer, was once asked how he wrote so well in spite of his restricted knowledge of language and grammar. This was his reply: "I have an assist- ant who is a genius on that stuff; I supply the ideas, and he puts them in shape for me. Saves a lot of time, and costs me $1500 a year — cheap, isn't it?" The man who feels he has nothing to learn, or who will not gain from contact with bigger men than he, is making a mighty serious blunder — so serious in fact that he is on the downward path. The executive of the future who will not avail himself of the serv- ices of specialists will be in for some sorry times, for the knowledge pertaining to the various branches of industry is so voluminous as to make it impossible for any one man to master it. Complementary Function of Assistants, — Then, also, an executive should surround himself with men 386 ORGANIZATION AND ADMINISTRATION who possess qualities that will offset his weaknesses. Every man knows his own failings, even though he may not confess them to others, and he should select as assistants men who will be able to make up what he lacks. A man who is of the driving type, who is inclined to force and crowd people to the limit, who is likely to call people down too severely, should have between himself and his organization a man who will exert a restraining influence upon him. A man who is decidedly impatient and irritable — as some executives who are constantly harassed by those higher up, are likely to be — should have men with him who are patient and even-tempered. Co-operation. — ^In securing a big man to work with him, the executive should be sure not to get one with whom he will constantly clash. The lack of co-operation to which I refer is best described by Elbert Hubbard in the following extract from "The Phillistine": Then there is G^len Buck; big, artistic, prophetic, poetic and practical. Glen Buck did business for himself. And he had at the most half a dozen clients. One of these was the Ford Motor Company. Glen Buck's advertising was so satis- factory to Ford that Ford insisted Buck should give up the advertising business and move down to Detroit so as to be close to the throne. Glen Buck does not belong close to the throne, and he went to Wayne County under- protest. Glen could never fit into an organization ; he is no spoke in a wheel, no cog in a gearing. He has to be by himself, and so long as Henry Ford was in Detroit, and Glen Buck in Chicago, they loved each other like David and Jonathan, but when they got together there was an immediate argument as to who was SELECTION OP PERSONNEL 387 David and who was Jonathan. No one was to blame ; it was a matter of temperament. Glen Buck has to think for him- self, and think out the problem at a distance from the dicta- tion of the boss. Aptitude of Employees. — The efficient executive of the future is going to give considerable attention to determining what kind of work his employees are fitted for, and also what kind of work will give a man the most satisfaction and contentment. Some men dislike responsibility, others thrive on it. Many a baseball player who was a star as a member of the nine, has proved a failure as manager of the team. A man I knew as a most capable bookkeeper, failed miserably when he was made chief accountant. Herman Schneider, Dean of the Engineering School of the University of Cincinnati, relates the following incident, which is of particular interest in this con- nection: Several years ago two men appeared at my office to apply for admission to the co-operative course. Although they came together they were not mutually acquainted, one being from Kansas and the other from Ohio. They were of the same physical build, they had the same facial characteristics, their scholarship records were equally good, and both said they felt an impulse toward mechanical engineering. Both looked like good material. The conversation disclosed no radical or even slight differences in their personalities. They gave promise of being a good "pair," and consequently were sent to the same machine shop. In due process of events, a co-ordinator from the engineer- ing college called at the machine shop. The foreman said Kansas was satisfactory, but Ohio didn't get into the work. 388 OEGANIZATION AND ADMINISTRATION Each time the co-ordinator called, the foreman reported Kansas as most satisfactory and Ohio as more and more un- satisfactory. In a month Kansas was turning out his work with the ease, sureness, and dexterity of an old hand, while Ohio was getting a ease of nerves, spoiling work, and develop- ing fatigue. The superintendent asked us to try Ohio else- where, but we decided for a number of reasons to continue him in the shop a little longer. Iji the university, however, Kansas was soon reported to my office as utterly hopeless. His scholastic grades were almost zero in all his subjects. He gave no reactions at all in class and laboratory work. His teachers said he was stupid. But Ohio came to his school work with avidity. He was mentally keen and seemed to delight in his work. Kansas grew nervous over his school work. Ohio thrived on his. Kansas at school was tired out at 10 :30 each morning; Ohio got better as the hours went by. Kansas longed for the rest which shop work gave him ; Ohio longed for the rest which school work gave him. Careful tests and conferences showed conclusively that Kansas broke under mental work, mental responsibility, and self -directed and diversified manual work; but that he expanded in spirit, health, and sa,tisfaction under repetitive shop processes, which were planned for him. Similar tests and conferences showed that Ohio broke under the strain of directed repetitive processes and, to a lesser degree, under self-directed and diversified manual work; but that he thrived when given mental problems and responsiblity. Sizing up Applicants. — Dean Selineider submits the following list wHch shows the major char- acteristics of every man, the positive at the left and the negative at the right. This list should be given attention by every executive who employs workers; SELECTION OF PERSONNEL 389 Physical strength Physical weakness Mental Manual Settled Roving Indoor Outdoor Directive Dependent Original Imitative Small scope Large scope Adaptable Self-centered Deliberate Impulsive Manual accuracy Manual inaccuracy Mental accuracy Mental inaccuracy Concentration Diffusion Rapid mental co-ordination Slow mental co-ordination Dynamic Static Dr. Blackford gives a list of points which should prove of valuable assistance to the executive in the selection of his personnel: Health. — Size, endurance, strength, condition of body, pre- dispositions, morality, sobriety, sanity. Character. — Honesty, truthfulness, loyalty, discretion, pru- dence, enthusiasm, courage, steadfastness, depend- ability. Intelligence. — Ability to learn, ability to understand, ability to follow instructions, judgment, memory, observation, expression-writing and speaking, imagination, reason. Disposition to Industry. — Energy, love of work, willingness, perseverance, decision. Experience. — Education, training, previous record, refer- ences. Natural Aptitudes. — Commercial, mechanical, artistic, judicial, executive, selling, advertising, agricultural, medical, educational, legal, engineering, floricultural, horticultural, stock-breeding, speed, accuracy, patience, attention to detail. 390 ORGANIZATION AND ADMINISTRATION Presenting the Opportunity. — ^In selecting men for an organization every effort should be made to give each man an opportunity to measure up to the best that is in him. There has been too much laxity in this respect. In the era of development to come, when conditions undergo the reaction that always follows war, this question of intelligent selection will have a new significance. The wise manager of the future will give the subject very particular atten- tion. CHAPTER XXIV INDUSTRIAL ADMINISTRATION Men, the Primary Factor. — Carnegie has said that if he were obliged to choose between having per- sonnel and having building equipment, to start with, he would choose the men because the equipment would be comparatively easy to obtain later. How well he knew from a ripe experience the inestimable value of men, of good men who can "carry the message to Garcia," of men who can finish well what they start out to do. The strangest experience in all my industrial work has been to find in a greaj; many plants a failure or unwillingness properly to study this important sub- ject of men as it relates .to efficient administration. In such plants, methods, machinery, and money are looked upon as of primary importance in relation to the success of the enterprise; industry seems to be considered a triangle, so to speak, in which spe- cialists — the systematizer and accountant, the engi- neer and inventor, the financier and banker — ^make up the three sides. As a matter of fact, still to em- ploy the mathematical phraseology — ^industry is a square, three sides of which are those just mentioned, and the fourth side of which — the foundation — ^is the men. Herbert N. Casson represents industry in the following way: 391 392 ORGANIZATION AND ADMINISTRATION Hearts — The People Clubs — The Government Diamonds — Capital Spades — Labor Let the systematizer and accountant provide the best methods the world can produce — without men those methods are valueless. Let the engineer and inventor design, build, and erect the most efficient equipment — without men to operate it, where are your results? Let the financier and banker provide all the funds necessary to run an enterprise — with- out men, how will the money be handled? We are through with the days when the accountant would consider a cost system a cure-all without con- sidering men and their relationships. No longer will the efficiency expert be able get results by introduc- ing planning or time-study methods before he has analyzed personnel and prescribed for organization ills. The time is past for the engineer to design mechanical improvement before devoting proper at- tention to the subject of man-power. In the admin- istration of industry, the executive of the future, whether he be accountant, engineer, or efficiency ex- pert, will consider men from two angles: Man as an individual Men in their relations to one another. Napoleon said that in war men are nothing — ^it is the man who is everything. True as this is. it is also true that when men are trained for war the rela- tions of each one to all the others must be carefully planned in advance, in order that the army may con- INDUSTRIAL ADMINISTRATION 393 stitute an efficient unit. The very same principle holds good in industry. In this whole treatise ,the idea constantly empha- sized is that there should be an ideal with respect to organization development, and then that every effort should be made to attain that ideal, which is man-building. Both Chapter V, ' ' The Type of Organ- ization," and Chapter VII, "The Laws of Organiza- tion," recognized the human factor. Chapter VI, "The Principles of Organization" considered factors that derive their importance from their relation to the most essential factor of all, man. Other chapters — like "Staff Organization" and "The Committee Plan" — dealt with the relationships of men. It is therefore fitting that there should be a chapter con- cerning the administration of industry, the task of administration — the actual work of guiding, direct- ing, training, and co-ordinating the activities of men. No treatment of this subject would be complete which included nothing more than an exposition of the principles and laws of organization. In attempting to formulate rules of efficient admin- istration, I have not underestimated the difficulties that follow from the fact that there is little in the way of prescribed practice upon which to base such rules. Nevertheless I shall endeavor to reach logically certain rules with respect to "man relationships." Spirit. — Unless the spirit of an organization is right, it cannot make the most of its men. What is meant by spirit? A few years ago one of the baseball teams of the National League, under the guidance of a new man- 394 ORGANIZATION AND ADMINISTRATION ager, was making a great showing in the race for the pennant. The sporting world was particularly excited because this team had always finished at or near the bottom of the list. One day in the midst of this great drive, a sporting writer approached the new manager of the club and questioned him as to how he accounted for this sudden change in the form showed by his team. The manager's answer consisted of one word^spirit. He had succeeded in arousing the latent ability and talent that was in his men; he had developed a spirit which enabled his men to run out on the field imbued with the spirit that could not be beaten — and they won the pennant and the World's Championship. I cite this little incident to emphasize the fact that the winning qualities of that team are the very same which must "win the pennant" in industry, but which nevertheless in most industrial organizations are woefully lacking. In "The Blazed Trail," by Steward Edward White, is the following passage, which may well serve as a definition of the word Spirit: Of these men Thorpe demanded one thing — Success. He tried never to ask of them anything he did not believe to be thoroughly possible; but he expected that in some manner, by hook or crook, they would carry the affair through. Accidents would happen there as elsewhere; but a way to arrive in spite of them always exists, if only a man is willing to use his wits, unflagging energy, and will. Bad luck is a reality; but much of what is called bad luck is nothing but a want of foresight. And Thorpe never spared himself. Impossibilities were INDUSTRIAL ADMINISTRATION 395 pushed aside like thistles. The men went at them headlong, and the impossibilities gave way before the rush. Thorpe always led. Not for a single instant of the day, nor for many a night, was he at rest. He was like a man who has taken a deep breath to reach a definite goal, and who cannot exhale until the burst of speed is over. All this captured the men inevitably. They adored him because he represented to them their own ideals, what they would be if freed from the heavy gyves of vice and executive incapacity that weighed them down. In "The Independent," there appeared the following extract from an editorial entitled "Goethals, Master of Efficiency": If there was anything more wonderful on the Isthmus than the efficiency of the force that was building the canal, it was its esprit de corps. Everybody from "the Colonel" all the way down and back again believed in the Canal, loved the Canal, and fought the good fight that the Canal might be made a great reality. They were ready to give every ounce they had for the Canal, because "the Colonel" believed in them and they believed in him. It was their job, their responsibility, their trust. The marvelous spirit of the Canal builders was a reflection in a myriad-faced mirror of the spirit of their Chief. His heart matched his head, and worked in perfect har- mony with it. He said, "Be considerate, just, and fair with them in all dealings, treating them as fellow-members of the great brotherhood of humanity." In this spirit he approached the human problems that con- stantly confronted him, and with this spirit he conquered. His broad humanity met the instant generous response of the thoroughly human units of the great machine he guided. "Tell the Colonel" was the characteristic refrain of a popular song on the Isthmus; and every one with a grievance or a 396 OEGANIZATION AND ADMINISTRATION problem or a suggestion told "the Colonel" and received ungrudging justice, generous helpfulness, and cordial recog- nition. Out of it came efficiency in richest measure ; and the build- of the Canal will always stand as a monument to the man who "went and did it." Good Leadership. — ^If the right spirit is to be cul- tivated, the leadership must be right; it must inspire others to give the best that is in them. I know a man who has employed men without making any arrangements with them in advance regarding salary. They knew he was square; they liked him personally and realized that he would not take advantage of them. He was "human," and he dealt with his men as human beings. All the dealings were man-to-man affairs, not merely cold-blooded business propositions. This man had the spirit which made for success in his organization, and which produced results. The "Saturday Evening Post," in an article on Admiral Sims, quoted the following maxims of his. If they should be adopted by industrial organizations, a spirit which could not know defeat would soon develop. Always let your general mission be understood. The American is" willing to co-operate when his intelligence is enlisted. Invite suggestions, and consider them carefully. Hold con- ferences for this purpose. I have known valuable improve- ments in seamanship, gunnery, radio, and so on, to result from such suggestions from junior officers and enlisted men. Make use of competition when practicable. It promotes interest even in the most strenuous drills. INDUSTRIAL ADMINISTRATION 397 Encourage your men to come to you for information on any subject, and take pains to look it up and supply it. Help them in anything they want to study. Train your men in initiative by "putting it up to them" on all proper occasions, and explain "why you do it." Maintain discipline with the minimum reference to higher authority. Always be considerate of inexperience. When admonition will correct a small fault, it is almost always a mistake to inflict punishment. Be absolutely just in your dealings with your men. Hardly anything tends more strongly toward loyalty. All kinds of men respond to the square deal. Never destroy or decrase a man's self-respect by humiliat- ing him before others. If his self-respect is destroyed, his usefulness will be seriously diminished. A man who is ' ' called down" in the presence of others can hardly help resenting it. Do not let the state of your liver influence your attitude toward your men. Avoid asu you would the plague, hostile criticism of author- ity, or even facetious or thoughtless criticism that has no hostile intent. Deputing Authority. — No man who attempts to do everything himself can be a master business-builder; he must deputize authority among competent assist- ants. In his excellent book "The Executive, and His Control of Men," E. B. Gowin makes the following comments which are pertinent to this subject: A mass of material pours in upon every executive. Letters by the hundred are dumped into the office, the mere opening of which would often consume his working hours. Streams of callers besiege him; receiving each would leave the recep- 398 ORGANIZATION AND ADMINISTRATION tion room still crowded at nightfall. Telephone messages, telegrams, messengers, memoranda from subordinates, press new problems upon him; "unfinished business" haunts the office and, like Banquo's ghost, will not down. Under such a burden many a manager is being crushed. His life is one long, losing fight. In spite of strenuous activity there has remained no time for those larger problems upon which, after all, successful guidance depends. It has always seemed strange to me that an over- worked manager, realizing that he is not mastering his tasks, . should be unwilling to delegate and depu- tize to others the details that are keeping him from attending to more important things. There is serious danger in such an attitude and in the practice that it engenders. On this point Gowin speaks as follows: Napoleon, in his failure to relieve himself of details by building up an adequate staff, is an illustrious instance of this truth. During his early years, he made up for this by his remarkable activity, but by the time of the last German campaign the intellect, once sweeping and vigorous enough to compass all details, had begun to falter. Napoleon's de- feat at Leipsie was mainly due to his neglect of details, which he here seems to have left largely to subordinates. Hitherto he had saved them all the thinking, and now in the emergency they possessed no directive capacity, but looked to him to arrange everfthing. Such business Napoleons are legion, and Leipsics in consequence are being lost every day. And on this same important point Herbert N. Casson, in his excellent book "Factory Efficiency," speaks in no uncertain terms: There is a little old man, about seventy-five years of age, INDUSTRIAL ADMINISTRATION 399 who runs a little old repair shop in a little old street where I frequently walk. The other evening at 9 :30 I found that little old man busy washing his windows. "Why 'are you working so late?" I asked him. "That's toy way," he answered cheerfully; "I work fif- teen hours a day. I always have. I like to do everything myself. I never hire window-cleaners — ^they are too expen- sive ; some of them charge as high as two shillings. My way is to do my own work." Poor little old man! All his life he has been doing the wrong thing. He has never found it out. He never will. If he could have his own way, no doubt he would make his own cofiin, dig his own grave, and then get in and pull the earth over himself. Poor little old man! He has worked fifteen hours a day for sixty years; he has worked 270,000 hours. And what has he got? A little old repair shop in a narrow street. What is the matter with him? Just this — ^he has never appreciated the value of efficiency or of organization. He has tried to do everything himself, and the result has been that he has remained at the foot of the business ladder. No man can climb high — ^bear this in mind — ^who tries to save money by doing everything himself. An executive should examine himself carefully, and frankly decide what Ms business capacity really is. Then he should analyze his work, classify it, and in three columns (A, B, C) list the various duties, in the oi^der of their importance. The "A" duties he should attend to himself, the "B" duties he should delegate to his immediate subordinates, and the "C" duties he should give over to those in less respon- sible positions. The results accomplished, as com- pared with the old plan, would be tremendous. 400 ORGANIZATION AND ADMINISTRATION Details. — To fuss over details is to waste time that coiild better be devoted to more important matters. If you engage a man to do a certain thing, it is to be presumed that you have taken care to select the right man for the position you desire to fill. The man is expected to do a specific work, is responsible for the accomplishment of certain definite results, and therefore has, or should have, certain well-defined duties to perform. Nothing will so hamper a man as too constant supervision, designed to check him up minutely with respect to the details of his work, and if he is a real, live, competent individual he will resent such a policy in time and seek employment where he can exercise his powers to the fullest. Accomplishments are what count, not the road traveled to reach the goal. You hire an advertising manager, allow him a certain expenditure, and de- sire results within a certain time. While a reason- able amount of supervision must be exercised in order that it may be known how the work is progressing, the details of the work should be left to the manager himself. If he does not obtain for you the expected results, dispense with his services and secure the man who can — ^you know he is to be found somewhere. But you cannot expect a man to do his best if he never knows from one minute to the next what inter- ference he will have to put up with from those above him. He cannot measure up to requirements un- less he is given clearly to understand that things are strictly up to him. If you take upon yourself the responsibility for details, he will hold you to account INDUSTRIAL ADMINISTRATION 401 for any failure on his part to secure results, and lie has the best excuse in the world if things go wrong. He will say, "If you had allowed me to do this, that, and the other thing, results would have been better." Further, men prove themselves worthy of respon- sibility only if they are given full authority in their particular spheres. To say that there is responsi- bility where there is not full authority, is to express a paradox. If you are one of those who spend too much time on details that could be delegated to others, call your force in some day, outline for each man his function, duties, and relationships, and then tell them all to "go to it." You will be happier, the men will be more contented, and the results will be better. Contact. — The executive who disregards his im- mediate subordinates and jdeals directly with those immediately under these subordinates or with the workmen themselves, is unjust to the men whom he has placed in positions of authority. I know a manufacturer who makes just this serious mistake. He is in the habit of walking through his shop and giving orders directly to the workmen them- selves, or — ^worse still— countermanding orders they have already received from his own assistants. Here is a conversation typical of many that take place under those circumstances: "How many pieces are you making today, Jim?" "Going to give you ten." "Not enough, Jim. The way that job is tooled up, we should have fifteen." 402 ORGANIZATION AND ADMINISTRATION "But the foreman gave me ten as the daily sched- ule." "Can't help it, he is wrong; I want fifteen pieces." What is the result of such a course! The man doesn't know where he stands. He loses respect for his employer because he "butts in" and does not let the foreman run things; and he loses respect for the foreman, who, in his opinion, doesn't know what con- stitutes a day's work, and who i« not the real boss in his department. The foreman, on his part, finds it difficult to work with the men, for naturally his authority has not the weight with them that it should have. Moreover, he also resents the way his em- ployer runs affairs; he feels — and justly — that if any orders are to be changed, he himself should be the one to take the matter up with the workmen. The net result is a dissatisfied set of foremen and work- men, and it need hardly be said that under such cir- cumstances there must be friction, disorganization, and eventually disaster. Simplicity. — ^In arranging the relations of those who constitute the organization, make the plan as simple as possible. Eliminate complications %i your organization. I realize that some businesses without question are more involved than others, but they can all be made simple. What I mean by simplicity is best illustrated by the accompanying chart of the Prussian State Railroad, Chart 35, which should impress all who see it with the feeling that if the railway system of an entire nation can be reduced to such a simple basis, the INDUSTRIAL ADMINISTRATION 403 404 ORGANIZATION AND ADMINISTRATION organization of a single business can be made simple. Change. — When new people are brought into an organization, make due allowance for the change in relationships that is necessitated. You employ, let us say, two hundred persons in the administrative branches of your business. Each per- son has a relationship with 199 otherg. Drop a few and add new ones — a disruption occurs (even though it may be slight), and continues until mutual under- standing is again established between the old em- ployees and the "new arrivals." During this pro- cess of the establishment of organization equilibrium, the management should take such steps as will tend to make the way easy for all, exercising patience with the new people, helping them to get acquainted, and ascertaining how the others are working with them. Counsel. — We grow as we accept the teaching of those who, knowing more than we do about a given subject, can counsel wisely. Every man has a general knowledge concerning his own body, but when he is sick he calls in a physician, who possesses a thorough knowledge both of the body and of the cures for its various ailments. So in the case of the organization, management, and administration of the future, the executive, while he knows his own men and his own methods, in the event of abnormal trouble of any kind will rely on the counsel of the specialist who thoroughly under- stands both the cause and the "cure" of industrial inefficiency. Even nosv the value of the specialist in industry is an accepted fact, and as more of the younger generation take up executive work, the more INDUSTKIAL ADMINISTRATION 405 widely will the importance of competent counsel be recognized. Approach. — There is always a right way to begin organization work, although there was a time when organization was a sort of "go as you please" prop- osition. The president of a company, when he wanted to institute improvements, had to overcome the in- ertia of a lukewarm board of directors, or the gen- eral manager had to see the president before the work could be started. Then, too, the outside expert would get into a plant on any pretext, feeling secure in his ability to "get his toes in'^' and settle down for an indefinite stay. All these conditions are part of the pioneering stage — the conflict period — which is past. Today matters are different. ' ' Those at the top" are coming more and more to realize that they themselves are the ones who should recognize the need for betterment work — that they should be will- ing to assist in such work with all the power of their influence and of their money. A large responsibility rests upon the board of directors. If the leaders in industry do not favor making beneficial changes, how can the workers be expected to be progressive! Next in importance is the co-operation of the heads of the various departments, for it is these people who will have to do the greater part of the work under the changed conditions. With the heads of depart- ments in line, it will not be long before the foremen will be "getting on the band wagon." After all, the real fault in industry is not so much with the workers as with those higher up — hence the logic 406 ORGANIZATION AND ADMINISTRATION of starting at the top in any campaign of better- ment. Initiative. — Tlie executive should study men in order that he may be able to arouse in them the greatest possible amount of initiative. When an executive buys a ton of coal for the power house, he really buys so many heat units; in other words, he purchases latent energy, which is released as fire is applied to the coal. When an executive hires a man, he secures so much mentality, which, like the coal, possesses latent energy, and which is released when initiative is applied. In Mencken's "Philosophy of Friedrich Nietzsche," the following passage furnishes an excellent definition of initiative: A man's mental powers are to be judged not by his ability to accomplish things that are possible to every man foolish enough to attempt them, but by his capacity for doing things beyond the power of other men. In Chapter IV, I outlined the several kinds of initia- tive, ' and gave highest place to that kind which enables a man to recognize, without suggestions or assistance, ' the need for improvements, and then to delegate to others the task of doing the work. The task of the executive in administration is tjo induce in his subordinates this highest type of initiative. Every man possesses powers of which he is not fully conscious until he is called npon to exert them. Time and again I have seen men far surpass their own expectations when they were asked to do extraordi- nary things. I know of one case in which a secretary INDUSTRIAL ADMINISTEATION 407 to the chief engineer of a large plant was suddenly placed in the position of supervisor of maintenance, the duties of which demanded executive power, driv- ing energy, decisiveness, tact, and the ability to keep in touch with countless details. The man did not know whether he could handle the work or not, but when he was given both responsibility and authority he simply "sailed iii and did it." He was able to do more things than he thought himself capable of doing, which proves the practical nature of the theory that no man knows what he can do until he has had a chance to demonstrate. Executives who refuse to delegate big tasks to subordinates are therefore guilty of making men "leaners," stifling initiative, and keeping energy bottled up. Carnegie adopted the right basis upon which to develop men. He did not care anything at all about a man who did not already look upon himself as a future partner in the business. Cultivate this ideal in your men, give them tasks that will demand all their reserve powers, and then watch them develop initiative. Action and Reaetion. — Every action has its corre- sponding reaction; therefore, executive action should be of the kind that will produce the right reaction in subo -dinates. In Kipling's "The Ship that Found Herself" is the thought that I have in mind, expressed in a novel and striking manner. The author represents the fol- lowing conversation as taking place, during a heavy storm which racked every bolt in the ship, between certain parts of the vessel: 408 OEGANIZATION AND ADMINISTRATION ' ' Come back ! ' ' said the deck beams savagely, as the upward heave of the sea made the frames try to open. "Come back to your bearings, you slack-jawed irons." "Rigidity! Rigidity! Rigidity!" thumped the engines. "Absolute unvarying rigidity, rigidity!" "You see!" whined the rivets in chorus. "No two of you will ever pull alike, and you blame it all on us. We only know how to go through a plate and bite down on both sides so that it can't and mustn't and shan't move." "I've got one fraction of an inch play, at any rate," said the garboard strake triumphantly. So he had, and all the bottom of the ship felt the easier for it. "Then we're no good," sobbed the bottom rivets. "We were ordered never to give — and we've given." "Don't say I told you," whispered the steam consolingly, "but you had to give a fraction, and you've given without knowing it; now hold on as before." To use another illustration — the engine of an auto- mobile will not run with perfect smoothness until the various parts have been thoroughly adjusted. In short, the point is that if any mechanism is to work at highest efficiency, all the parts must be properly adjusted to one another. So, in the case of industry, there must be a harmonious "adjustment" of those who constitute the industrial mechanism, in order that each :giay work efficiently with all the others. And just as a lubricant is of great value in keeping an engine working smoothly, so, in industry, kind- ness and a broad-minded justice will be of great assistance in the administration of affairs. Progress of the Individual. — The executive should give his workers every opportunity to make good and win their way to positions of responsibility. INDUSTKIAL ADMINISTRATION 409 How many times have you heard an executive exclaim, "If I only had a man to take Smith's place!" The business slogan of today seems to be, "There is plenty of room at the top — we want $10,000 men." Very often a manager will advertise exten- sively for men to fill responsible positions, and will accept applicants from other cbncerns, overlooking the fact that right in his own organization may be the very material he is looking for. Many managers seem to be satisfied with nothing less than the pol- ished cut diamond, and have a hard time finding it, whereas if they would look for the uncut diamond "in the rough" they could find plenty of them. A certain rough-and-ready, hard-fisted manager who had the right idea, expressed it in these words: "My business is not to find men; it's to make 'em. I once took a man who had been on a six-months' jag, read the riot act to him, and gave him a job at $10 a week. Today he is a respected citizen, earning $3,000 a year." Contrary to appearances, he "had it in him" to make good when he was really given the opportunity. This case is an excellent illustra- tion of the progress of the individual. If the executive will apply the laws of organiza- tion, which have been given — and especially those that concern mental capacity, responsibility, concen- tration, and greatest complication, he should be able to fill the higher positions satisfactorily with men from his own organization, instead of wasting time looking outside for ideal men. Executive Direction. — The object of administration should be to develop men. 410 ORGANIZATION AND ADMINISTRATION Tlie manager of tlie future will not be a manager at all, at least not according to the present interpre- tation of the term; he will be a co-ordinator and a guide. Primarily, instead of doing, he will decide; rather than counsel, he will seek advice; instead of achieving, he will endeavor to inspire others to achieve. He will not spend his time- on details, he will delegate them to others. He will not be a driver, he will lead. Instead of looking at things from the standpoint of dollars, he will consider them from the standpoint of sense. In other words, instead of al- ways asking, "How many dollars can I make," he will ask the more important question first of all, "How many men can I make!" Many of the managers of industry have come up through the ranks. They are what we call "seK- made" men. They know the mechanical rather than the economical side of business. Those who went to college learned little there about men and methods, much about machines, materials and finance. Those who did not receive the college training have picked up a bit here, something there, and other things somewhere else, until, with this knowledge and through sheer force of personality, or driving energy, or unusual^ capacity, they have become captains of industry. Some of them know men, as a result of years of contact with workers. Others do not know men, because they have failed to make use of their opportunities. A college-trained youth was once telling a section boss about his training and his qualifications. The boss grunted and said, "Yes, but could you boss this INDUSTRIAL ADMINISTRATION 411 gang?" And the question was very mucli to the point. The executive of today knows through having done, but he has attained his position only after a gradual development, the basis of which is a thor- ough theoretical knowledge of his field, and constant contact with the workers. How about the managers of the future, the men who, because they will step directly from the col- leges into positions of responsibility, will not have the opportunity to work up through the ranks. These men will have to make it their business to know men and methods. The manager of the future may not be able to sell his own goods or know the technical side of his business, but he will know how to secure men who can "fill the bill." He may not know how much work a machine is ^ood for, but he will know how to train a staff of men who can find this out for him. He may not be able to determine the fatigue factor in the human body, but he will be able to map out a plan whereby others can ascertain what it is. The functions of the manager are tersely and graph- ically described by H. N. Casson: The business of a manager is to manage. He is to co- ordinate the various departments of his company. He must secure team play and enthusiasm. He must handle the in- variable human-nature problem. He must administer justice. He is a leader, a judge, a general, a builder. That is what a manager is. Many a man thinks he is a manager when he is nothing but a Laborer-in-Chief. He is nothing but a sort of Head Worker who possesses authority over the other workers. 412 ORGANIZATION AND APMINISTRATION A real manager, on the contrary, is a man who directs, instructs, plans, creates, organizes. So far as possible, ho does nothing himself which ho can get some one else to do. His business is not to do work, but to ^ct work done. A real manaijcr gets his staff trained. He fits people to their jobs, he studies his people, and he studies tlicir work. Often he goes away to a quiet place for an entire day and just thinks — thinks about the whole problem, and plans for the future. A real manager knows the meaning of organization. Ho knows that he is a head, and not a pair of Imnds or legs. He is not fussy, lie does not mess with dolails, but from morning until night he concentrates upon just one thing — RESULTS. Wilfred Hill, of Birmingham, England, defines good management in these words: I find the secret of good management is to make your busi- ness as neai'ly automatic as possible. Do very little youraelf. Just hold the reins; don't try to pull the wagon. Too many drivers spend their time pushing at the wheels; whereas if they would learn the art of management, they could sit in the seat comfortably. The opportunities before the young men of the country were ncvor hotter than thoy are today. Posi- tions of authority will have to be flllod, and by men who will not have had the kind of training their fathers had. Formerly a man worked his way up to the presidency of an organization through the posi- tions of machinist, foroman, snperintcMulont, and gen- eral manager. Now his son goes to college and re- ceives an excellent theoretical training, which fits him to begin work in a much better position than the INDUSTRIAL ADMINISTRATION 413 one in whicli his father started. How will he cash in on this training? By acquiring, through observa- tion and experience, a thorough practical knowledge of men and methods. In this connection the following dialogue between father and son, which appeared in an article "Eungs" by Walter Gardner, in "The Popular Magazine" will prove wonderfully illuminating: "General Manager! End the strike! You're a lunatic! I've managed this plant for twenty-six years " Jimmy jumped to his feet. His voice rang clear and true : "You're not a general manager! You a.re a general fore- man! You don't delegate authority; you assume it! When things go wrong — this situation of delayed deliveries, for ex- ample — you have no one to correct, no one to blame but your- self. And naturally the fault goes uncorrected. You re- serve the privilege of stepping anywhere into the delicate mechanism of office managemelit. You give orders. No one knows where his responsibility ends or begins. Departments overlap. Work is left undone — or perhaps done twice. You forbid your own department heads to act without consulting you. 'My hands must be on the purse strings,' you say. That's only an excuse, and you know it. You know that the company has outgrown the old days, but you won't admit it. With one or two exceptions you have chosen week-kneed as- sistants that you can ride over. In short, dad, you are treat- ing this factory as a toy; you are running it for your own pleasure — to gratify your vanity. "I don't yet know all the details. But — take that letter- head on your desk. You have decided to design one. The advertising manager knows more about it than you do. The sales manager knows what he wants to send out. But you want to be pleaj^pd — yon insist on designing it yourself. You 414 ORGANIZATION AND AD3IINISTRATI0N make the discovery that the run of extra colors costs but little. Look at it — a ehromatie fantasy ija five outburets— a ponsse-cafe in five colors — a rainbow struck by lightning. Beamingly yon wfll present it for criticism. No one wants to hnrt yonr feelings. They murmnr something that you all too wiBin^y take for approbation. It pleases yon, and no one dse. Leave that work to the man yon hired to do it. If his design meets with popnlar approv^ praise him; if not, fire him. "Let Bob Ware hire his own men. Keep yonr fingers out of things. Give men fnU credit for work well done, and come down hard when it is poorly done. Dad, yon 're too close to the job. YonTl never change. Yon need new blood — some one to get the varions departments working in har- mony and keep them there. "The duties of president should take up your full time. Finances, expansion, general policy — ^your time is too valu- able to spend in 'helping' your subordinates with details. Admit to yourself that the company has grown beyond a one- man institution." The manager of the future will be every inch a man. He will love men, and will work with them to make them better men. He will study men, for in the last mialysis men are, and always will be, the foundar- tion of industry and r-i\-ilization- Even if all mo»ey and aU pr(^)erty were destroyed, and only man and God-given resources (trees, water, the mine deposits, and animal life) were left, still man would erect a civilization even greater than that in which we now live. Man is the foundation — ^therefore, know man; for a thorough knowledge of man, and of men, will be the keystone in the industrial structure of tbe coming age or cycle of development and refinement. INDUSTRIAL ADMINISTRATION 415 Recapitulation. — In concluding this discussion, I wish to place final emphasis upon the fact that its whole purpose is to show the importance of man- building. The future of industry is in our own hands. The Great War, we trust, will have democratized the en- tire world, but to make democracy, and particularly industrial democracy, a living, breathing reality for ourselves, for our children, and for their children, we must train and develop men for the big things ahead. Never before was there such a wonderful opportunity in this respect as there is in this era of man-building, and never in our times at least will there be another such opportunity. If we consider man as a machine or as so much beef and brawn, we shall progress slowly. If we look upon him as the handiwork of the Creator, placed on earth that he may develop as fully as possible, we shall do our best to help our fellow-men fulfill the divine function of development. Tie up a man's arm and it will soon wither; let him use and exercise it, and it will become strong and muscular. So with the talents and abil- ities of man; repress and hinder them, and they will become atrophied, they will wither and die. But give those talents and abilities full play, and they will work for the upbuilding of man, both as an indi- vidual and as a race. CHAPTER XXV INDUSTKIAL EELATIONS The Worker and His Endowments. — No treatise on organization and administration would be complete without consideration of the question of the worker — the man at the machine, at the bench, or on the floor. I regret exceedingly that I cannot devote more than one chapter to this important subject of industrial relations, for several books could easily be written about it, but I shall have to confine myself, so far as possible, to principle and laws, which after all are more important than devices and methods. In the first place, what is a man? Is he just bone and muscle- — so much beef to be used for the strength that is in him, or is there something in his make-up of vastly greater value than mere brute strength? The Almighty endowed us all most abundantly for the battle of life. If we do not use our endowments to the fullest, we have no one to blame but ourselves for our lack of success. If, however, we make no attempt to develop endowments in others, we are neglecting both a privilege and a duty. These endow- ments are concentration, reason, interest, judgment, energy, imagination, attention, memory, and others, and every normal man possesses them all to some 416 INDUSTRIAL RELATIONS 417 extent. On their proper use depends more than you realize, and right here is where industrialism has failed to consider latent possibilities. Employer and Employe. — No matter how you study men, you cannot get away from the conclusion that the underlying motive which influences most of us is an instinctive desire for gain. We are all creatures of aspiration, and it makes absolutely no difference whether the person is the man who owns the large industrial enterprise, or the man who works by the day. Both want to make as much as they possibly can. To mutualize the interests so that each can realize his desire, is no easy task. It is not an impossible task, however, and in its success- ful performance both capital and labor will receive material benefit. Both lose out when either ignores the interests of the other. Ambitions of the Wajge-Earner. — ^We should not lose sight of the fact that as a nation, the bulk of our people are wage-earners, and that as time goes on there will be more and more of them. Therefore, upon the wage-earner falls the task of raising chil- dren that will be equipped mentally, morally, and physically to carry on the work that will make this nation a far greater power even than it is today. The tendency must ever be upward. If we eliminate fair dealing; if cost of living increases without some means being provided to enable workers to keep pace with it, we rob them of the very thing so necessary to the proper development of future generations — their ambition to be something and to do their share in contributing to the progress of the world. 418 OEGANIZATION AND ADMINISTEATION I have been a worker, I have mingled much with workers, and I admire them as a body of men for a number of qualities that entitle them to our respect. No one can deny that they like the good things of life; that they look forward to the time when their ability will win for them sufficient to enable them to indulge their laudable desires. Get close enough to the average workman and you will find a personality to marvel at. Among his desires are a comfortable home; healthy and happy children; musical instru- ments; plenty of nourishing food; books and maga- zines; and a savings account in the bank. In brief, he wants the necessities of life, some of the com- forts, and in addition something laid by with which to take care of the rainy day to come. I have seen as much pride on the part of a workman, over his ability to save and buy a home, as you see in the man who bucks Wall street and wins. The average workman is sound to the core, but find the core! Employer's Responsibility to the Worker. — There is no limit to human desire. In a century our wealth has increased by leaps and bounds. Is there one among us so satisfied that he desires nothing more? We are all still striving for greater things in spite of the comforts with which we are surrounded. If the Creator endowed us with the desire for wealth and power, and they have been and will continue to be the basis of all progress, we are neglecting a wonder- ful opportunity if, being able to provide the workman with the means for gratifying his honest desires, we fail to do so. In his book on "Industrial Depres* sions," George H, Hull makes this statement: INDUSTRIAL RELATIONS 419 On the other hand, to the industries there is no known limit; for as has been shown elsewhere in this volume, it is impossible to produce the objects of permanent wealth more than man desires to possess or more than he is able to buy, and the products of the industries may be multiplied indefinitely within the borders of such nations as possess adequate deposits of coal and iron and have the energy and intelligence to use them with wisdom. Resources, Methods, and Men. — ^Let us consider two pictures for a moment. Work as we see it today is the result of a wonderful evolution. Time was, when the shoemaker made the entire shoe and the clock-maker was a maker of all the parts which he assembled. Today, as a result of the closest applica- tion of the laws of metallurgy, chemistry, mechan- ics, physics, and electricity, we see a transformation that is startling in its magnitude. We live in the age of specialization, not only as regards a part manufactured by a single concern but also with re- spect to many of the detailed operations entering into the making of this part. When we compare the old plant with the new, there is no question as to the progress made, but has this progress carried with it progress in all respects? Consider the average workman's training. He learns his trade largely through observation. He starts in as an apprentice, watches his fellows, gets a few pointers from them and an occasional word from his foreman. He de- velops as well as he can under such conditions, drifts from shop to shop, picks up points as to the various lines of work, and in time becomes a full-fledged mechanic, his success being largely a matter of men- 420 ORGANIZATION AND ADMINISTRATION tality, initiative, and the incentive furnished him to make the best use of his forces. In most plants he starts in as a man whom some one else has trained, and if he is able to make work of fairly good quality with not too much loss and in a reasonable length of time, he stays. On the other hand, if he does not "suit," he is sent on his way for some one else to try out, which is both costly to the concern and most discouraging to the mechanic. This is our first picture. As for the second picture, consider the following: In the machine-tool, electrical-machinery, power- transmission and conveying-machinery, tool-steel, and other specialized industries, the best brains that could be found have been working for years to im- prove the manufacture. In regard to the shop, the layout of buildings, the arrangement of machinery, the handling of stores, the routing of work, the har- nessing of power, have all been carefully worked out. Now let me ask this question: Has the man been studied to the same extent in the attempt t» match him against all the forces of the universe? A moment's reflection will show you that he has not, and, as a natural result, he has rebelled against the attempt to force him to match his human variables against the constants due to physical laws. The two principal elements in the factor, industrial relations, are: Wages received by men, and, treatment of men. The Mental Phase. — Now the matters the consider- ation of which will bring about the right industrial relationship, are those which I shall now take up. They are worthy of the most careful attention. INDUSTRIAL RELATIONS 421 The mental side of our workers should receive more attention than it does. The mental worker is told that he must take physical exercise in order to maintain an even balance. Do we tell the worker who uses his hands and muscles all day that he should exercise his mind to maintain an even balance? All theory? Not much. What are ambition and interest for if not to rouse men to a white heat of enthusiasm? What are attention and concentration for if not to focus the full power of the mind on the varying details of a proposition? Of what use is imagination: if not to transform a dream into a liv- ing, practical reality? Could there be any good accomplished without energy to put a task through to a successful issue? What would energy amount to without the proper use of the other qualities? Eliminating Strenuousness. — The elimination of strenuousness in work is important. The strenuous man jumps, runs, leaps, attempts to do more than he can, brushes aside details as if they were of no moment, the underlying thought seeming to be not how much can be accomplished but how much can be undertaken, and in this way he wastes time and energy. The efficient man is never flustered, worried, or spectacular. He undertakes what he judges he can accomplish, and then goes ahead and does it. He is never hurried, but every step counts, and what he does is the result of the least possible expenditure of time and eenrgy. You see the difference between the two in all walks of life. The man of affairs tries strenuously to build up a large business and m the end the business goes to smash, as he does. In 422 ORGANIZATION AND ADMINISTRATION foundries I have observed that the thought often was how many moulds could be made — not how many good, clean, castings. In the machine shop it was how many pieces could a man rush through — ^not how many pieces could be made exactly to specifica- tions. In the structural shop it was how many rivets could be driven, rather than how many would pass the inspector's hammer. Strenuousness should be discarded for efficiency. Leadership. — Force and drive must give way to the leadership which inspires men to accomplish things. You cannot force a man to do anything. It may look as if he could be driven, but sooner or later, in some way or other, he shows that he resents the attempt, perhaps without regard to the method employed. You cannot force animals, plants, or chil- dren, and the same thing is true of men. It is said that we work because we have to. Granting that there is a mite of truth in this statement, is it not rather a case of working because we want to, because it gratifies ambition, because it satisfies our desires to live properly, because there is personal develop- ment in work, no matter how humble? It is the ideal we strive for, whether high or low, which is the power behind the act. Driving, as a policy, has only one leg to stand on — might regardless of right. Good Faith. — ^Faith of man in man must be a greater part of our industrial life than it is today. Men will do most for the man or the firm that they trust the most, and the policy of any firm should never be one of attempting what may sooner or later shatter the faith of the employees. INDUSTRIAL RELATIONS 423 Inefficieny. — There must be a separation of the in- efficiency of men and management. When this is not done, both sides will suffer. Each invariably blames the other in the absence of facts on which to work. This separation is not an impossible or difficult task, but one, nevertheless, that is rarely attempted. Increasing Exertion. — More consideration must be given to increasing exertion. If an ultimate attain- ment is ten units per day, it takes greater exertion per unit to go from 9 to 10 than from 7 to 8. Walk- ing two miles an hour is not difficult. To increase to 3 miles requires the expenditure of some exertion, while to attain 4 miles per hour demands much more exertion than was called for in going from 2 to 3. Counting normal effort one, exertion for greater ac- complishment is not 1, 2, 3, 4, 5, but rather 1, 2, 4, 8, 16. Yet men are often criticised by their foremen for not attaining the 20 per cent from 80 per cent to 100 per cent as readily and as rapidly as they make the 20 per cent from Sb per cent to 80 per cent. Some do not even get the opportunity. Worry a Drawback. — ^Worry on the part of our workers must be eliminated. Men cannot work or think most efficiently and worry at the same time. Science points out the evil effects of worry on the system, and any condition which in the slightest degree induces worry, is unsound and should be dis- carded, for the very good reason that worry is a negative element and it is manifestly impossible to get positive action from negative forces. A hopeful, bright, confident outlook is productive of far greater results to both the man and the management. 424 ORGANIZATION AND ADMINISTRATION Distributing Responsibility. — There must be a more equitable distribution of responsibility. No work- man should be expected to shoulder responsibility that is not rightly his. Yet cases are many in which more than his share is forced upon him. Failure to provide materials promptly, incorrect drawings, in- efficient machines in poor condition, poor tool equip- ment, loose belts, are certainly elements beyond the man's control, and any method which makes him suffer for such conditions is decidely unfair. The responsibility that rightly belongs to the manage- ment can generally be defined. Habit. — The question of habit must receive proper consideration. Habits are very easy to acquire. To correct or eliminate a habit is sometimes an exceed- ingly diJ95cult task, and it should be not at all sur- prising that the man of pronounced habits finds it harder to make a change than the one who does not perform his work unconsciously. The ramming done by the moulder, the riveting of the boiler-maker, the blows of the smith are usually the results of sub- conscious action. Those men instinctively do what is necessary. Time must be allowed for changing habits, and the man must receive all possible co- operation. Impatience and ridicule are certainly not the means to employ. Strikes. — There must be less in the way of strikes and industrial warfare. It is estimated that three hundred and fourteen thousand (314,000) people a year are engaged in strikes and lockouts, that each person suffers an average loss of $89 thereby. Further, the cost per capita of strikes is estimated INDUSTRIAL RELATIONS 425 at 37 cents. Statistics show that the civilized world loses annually, through strikes and lockouts, about $80,000,000 in wages and $40,000,000 in the salaries of employers of labor. The loss to the world in one form or another amounts to $5,000,000,000 a year in either direct loss or diversion of the money in circu- lation. When you consider these figures along with the fact that for over a period of nearly fifteen years 44 per cent of the strikes have been successful and 44 per cent failures, you realize that there is room for great improvement in the relation between cap- ital and labor, and that when "adversaries" are so evenly matched, arbitration, compromise, justice, and fair dealing would do much toward saving this waste. Selecting Employees. — There must be a more in- telligent selection of employees. We too often select employees as we buy cigars — ask for a good one and take what is given us. Instead of carefully analyzing the man — his characteristics, tendencies, ability — we are influenced by the glib description of experience and the elaborately worded letter of reference. Labor and Capital. — ^Labor and capital must view things more from each other's standpoint. Consider- able can be done by the man who, acting for both, can analyze and outline betterment, and such analysis will mean considerable in the way of better condi- tions, increased wages, and lower costs. To illus- trate: A man had been making 16 pieces per hour. It was found that he could turn out 23 pieces if he were allowed 16 per cent rest. The management agreed to this arrangement, and the worker attained between 95 and 100 per cent efficiency. 426 ORGANIZATION AND ADMINISTRATION Cutting Rates. — The practice of cutting rates when men, through individual skill and ingenuity, increase their earnings, must be eliminated. A labor leader once said to me, "Yes, we have faith enough in you, but what guarantee have we that rates will remain in effect after you leave?" I told him that one of my aims is to inspire managements with high ideals so as to enable them to see the fallacy and injustice of this practice of cutting rates. Fatigue. — Rest and fatigue must receive greater consideration. In one instance, girls making 275 tobacco pouches per day, after the work had been standardized and 20 per cent had been allowed for rest, were enabled to turn out 660 per day. Welfare. — The welfare of the wage-earner must be more seriously considered. Entirely aside from the humane phase of this question, it will pay every industrial manager or executive to practice the Golden Rule in all his relations with those whom he employs. There is no stronger incentive to honest and untiring effort on the part of the worker, than the realization that "those higher up" have at heart his own interests and welfare, and are always will- ing to meet him half way. StimulatiQn. — ^Work which stimulates must take the place of enervating work. Recently the writer studied a plant employing a large number of girls. In one class of work each girl was found, after careful study, to average 83,000 motions per day of 9 hours, or 9,222 motions per hour. Yet the work was energiz- ing because the girls had to think as well as to obey the dictations of habit. The factor contributing most INDUSTRIAL RELATIONS 427 of the stimulating effect, however, was their singing as they worked. As a safety valve nothing could have been better, and considering that these girls worked on neither a piece-work nor a bonus basis, but on a straight day-work plan, and were a happy and contented lot, the results are not only marvelous but a tribute to the far-sighted policy of the manage- ment. As I studied this case I felt that here was a lesson in relationship that should be taught to many, with profit to themselves and comfort to the worker. Wage Payment.— If we obey the laws of health we keep well and strong. If we conform to the laws of electricity, we can use this force to advantage. If we recognize and apply the laws of compensation, we can secure results of value both to the worker and to the 'employer. A law may be defined as a principle deduced from practice and observation. What then is the law of wage payment and proper treatment? Let me state it as follows: Men at work will do their best and accomplish the most when engaged in work which stimulates; when rest balances exertion; when they can work efficiently rather than stren- uously ; when force and driving tactics give way to the leader- ship which attracts; when causes contributing to worry have been eliminated; when the attitude of "mental impossibility" no longer keeps them from attempting greater things; when responsibility is properly divided and the inefficiencies are separated as between the management and the men ; when pro- vision is made to cover the natural inertia due to habit ; when the workers have faith in the intention of the management to deal fairly and honestly; when they are guaranteed against cuts in rates; when they do not deem it necessary to hold 428 ORGANIZATION AND ADMINISTRATION back and become deceitful in their attempt to influence rates ; when they are paid an amount to compensate for the time employed, plus an additional amount which represents to the man his skill and the co-operation he displays. Right Relationship. — What I mean by the right relationship between employer and employee is ex- cellently expressed in the following: Cleveland, November 26. "Government by the employees, and of the employees." This rule, displacing the former rule of the "boss," which still holds in nearly all factories,' controls the relation of the employee to the employer in the factory of the Printz- Biederman Company. The federal system of government has been applied in the Printz-Biederman factory for the benefit of the employees for the last eight months, and is declared to be operating satis- factorily. Under the plan the employees have a senate and a lower house upon which devolve the duty of passing upon all ques- tions in which the welfare of the employees is concerned. A short time ago it became necessary to cut down either the force or the hours, temporarily. Instead of arbitrarily issuing a layoff order, Alexander Printz, president, turned the facts and figures over to the senate and the house. After some debate these two bodies decided upon a plan of curtailing ex- penses, which was put into effect. About a year ago Mr. Printz decided to depart from the old system of shop management. He called in A. J. Leitch, efficiency engineer. Mr. Leitch decided on the federal plan of government. According to the federal plan the foreman or the fore- woman of each of the sixty departments constitutes the sen- ate. The employees of each department elect a member of INDUSTRIAL RELATIONS 429 the house from among their number, and five at large, so that they have sixty-five members in the lower house. Responsibility of Executives. — In conclusion let me ask you this question, What is our responsibility? — The cost of living is an important issue. Demand increases with the increase in population, and it is an established fact that supply has not been increas- ing with this increase in population. To get supply enough to meet the demands and to balance with cost of living, will not be such an absorbing prob- lem. There are two possible solutions: 1. There must be more producers; 2. There must be a greater amount supplied by those now producing. The first solution is practicable only if labor is allowed shorter hours, better working conditions, and a remuneration which will attract the worker. The second can be employed by^ eliminating wastes, stand- ardizing conditions, bringing about proper co-ordina- tion, setting fair tasks, and allowing men to earn an amount which will compensate them for their skill and their co-operation. Let us not be satisfied with conditions as they are, but strive for conditions as they should be. In attain- ing this ideal all may assist, with the certainty of accomplishing something worth while. We cannot change yesterday — the past, with its mistakes and its misunderstandings, is behind us. But, profiting by experience, with the picture of the right ideal before us, and guided by a keen sense of justice and fair dealing, we can dare to attempt a settlement of the serious problems of industrial life, and contribute mightily to the progress of the world. INDEX. Ability, Latent, in Existing Feraonnel, 379 Accounting Books, Investigation of, 126 — Engineering versus, 235 — Investigation of, 124 Accounting Metbods, Investigation of, 126 — Modern, 230 — Office and, as a Factor in Inves- tigation, 123 Accounting Operation, Standards of, 240 Accounts, Controlling, 231 — Statistics and, 230 Action and Reaction, 407 Administration, Primary Factor in, 391 — Improper, 225 Advantages of Conferences, 356 Advertising Mettiods, Investigation of, 141 Advisers, Executive and, 42 Ago of Prevention, 7 Agent's Survey Blank, Chart of, 68 Allowances for Force, Drive and Run- ning Fits, Chart Showing, 270 Alternate Organization, Chart of. Modeled from Human Body, 43 Ambitions of the Wage-Earner, 417 American Magazine, on Organization, 18, 49 Analogy of Staff to Human Organiza- tion, 367 Analysis of Automobile Assembly, 172 —of Costs, 242 Analyzing the Survey, 144 Ante-Bellum Conditions, 11 Antlcipatlve Inspection, Report on, 347 Antiquity, Lessons from, 1 Approach, 405 Application of Committee Plan, Chart Showing, 215 431 — Laws of Organization, 107 Aptitude of Employees, 387 — Herman Schneider on, 387 Army, British Organization of, Isaac P. MarcasBon on, 46 Arrangement of Report, Order and, 152 Aryans, Lessons from the, 3 Assistants, Executive, 384 Attainment, Individual Profit-Sharing in Proportion to, 287 Authority, Centralized, 48 — Deputing, Herbert N. Casson on, 398 — E. B. Gowin on Deputing, 397 Automobile Hood Handles, 196 — Tank Drain Outlet, Press Opera- tions on, 196 Automobile Assembly, Absence of Jigs, Fixtures, ^ or Tools, Delays Caused by, 181 — Betterments in, 184 — Changes in Design, 182 — Changes in Schedules of, 183 — Delays in, 176 — Department Analysis of, 172 — Faulty Design, Delays Caused by, 182 — Fixtures, Shortage in, 181 — Jigs, Delays Caused by Absence of, 181 — Making Special Parts for, 182 — Manufactured Material, Shortage, of, 181 — Material, Purchased, Delays Caused by, 176 — Material, Shortage of, 182 — Orders for, Delayed, 182 — Parts, Manufactured, Delays Caused by Waiting for, 180 — Parts, Shortage of, 182 — Parts for Special, Making, 182 — Parts which Cannot be Used, De- lays Caused by Receiving, 177 432 INDEX — Purchased Farts, Shortage of Manufactured Material, or, 181 — Schedules of. Changes in, 183 — Shortage in Jigs, Fixtures and Tools, 181 — Shortage of Manufactured Mate- rial, 181 — Shortage of Parts, 182 • — ^Special Cars, Delays Caused by Making, 179 — Special Parts for, Making, 182 — Sundries, Making Special Parts and, 182 — Tools, Delays Caused by Absence of, 181 Averaging Overhead Eates, Fallacy of, 237 Babson, Boger W., on Financial Cycles, 6 Babylonians, Lessons from the, 3 Belt Practice, Standard, for Machine Tools, Chart Showing, 268 Belting, Investigation of, 138 Betterment Records, 361, 362, 363, 364, 365 Bills, Making-Up, of Materials, Keport on, 351 Blackford, Dr. K. M. H., on Char- acteristics of Workers, 389 — on References, 382 Blank, Survey, Chart of Agent's, 68 Board, Machine, 256, 257 Body, Human, Chart of, 39 — Chart of Alternate Organization Modeled from, 43 — Harrington Emerson on Organiza- tion of, 40 — Organization of, 39 — Organization of, Herbert N. Cas- son On, 44 Boiler Shop, Recommendations on, 326 — Tool Room, Report on, 326 Bonus Plan of Wage Payment, 199 — versus Piece Rate, 200 Books, Accounting, Investigation of, 126 Borine, Mill, Vertical, Chart Showing Feeds, Cuts, and Speeds for Tools, 267 Bosses, Multiplication of, 204 Brass Castings, Cause of Rejections of, 166 Brass Foundry, Melting Tests in a, 192 — Report on, 165 — Standardization in a, 192 Britisli Army, Organization of, Isaac F. Marcasson on, 46 — Conduct of War, Isaac P. Mar- casson on, 48 — Trade- Unions, Wi Hi am Hard quoted on, 15 Building, Investigation of, 120 Buildings, Standardization of, 263 Business, Divisions of, 207 Business Organization, 41 — Chart of. Modeled from Human Organisms, 42 Calder, John, on Principles of Organ- ization, 223 Candy Factory, Standardization in a, 262 Capacity, Mental, Fifth Law of Organ- ization, 88 Capital, Labor and, 425 Card, Parts Schedule, 256 Careless Reorganization Methods, 109 — Workmanship, Report on, 328 "Caretaker or Promoter," 18, 49 Oasson, Herbert N., on Deputing Authority, 398 — ^Executive Direction, 411 — on Industry, 391 — on Organization of Human Body, 44 Castings, Brass, Cause of Rejections of, 166 — Report on, 164 Cause of Rejections of Brass Castings, 166 Causes and Remedies of Shop Errors, 330 Centralized Authority, 48 Changes in Organization, 404 Characteristics of Workers, Dr. K. M. H. Blackford on, 389 • — Herman Schneider quoted on, 388 Charging Accidentals, 244 Chart of Agent's Survey Blank, 68 — Alternate Organization Modeled from Human Body, 43 — ^Business Organization Modeled from Human Organisms, 42 — ^Detailed Organization of Engi- neering Department, 77 —'Functions of Line and Staff, 52 — ^Human Body, 40 — ^Ideal Organization Plan, 47 — ^Improper Organization, 22 — One-Man Organization, 208-209 — Organization of Consulting Engi- neering Firm, 79 ^Organization of Engineering De- partment, 75 — ^Proper Organization, 23 INDEX 433 Chart Organization, Showing Co-ordi- nation of Plant, 215 — Showing Lack of Co-ordination, 212-214 Chart Shoving AIlowanceB for Force, Drive, and Running Fits, 270 — Application of Committee Flan, 215 — Cutting Speeds for Drilling-Ma- chine Tools, 272 — Detailed Organization of a Pur- chasing Department, 221 — Feeds and Speeds for Cutting Tools, 272 — Feeds, Cuts and Speeds for Ver- tical Boring Mill Tool, 267 — Feeds and Speeds of Machine Tools, 276-278 — Lack of Co-ordination, 212-214 — Line and Staff Committee Plan of Organisation, 219 — Manufacturing Control Covering Purchasing, Jigs, Machinery, Sub-assembly and Assembly work, 250 — Material Control Sheet, 253 — One-Man Organization versus Functional Organization, 210 — Operation of Machine Board, 257 — Organization of a Drafting De- partment, 220 — Parts Schedule Card, 256 — Plan after Co-ordination, 215 — Proper Type of Organization^ 216-218 — Standard Belt Practice for Ma- chine Tools, 268 Checking Work in Progress, 260 Chief Engineer, Duties and Functions of, 336 Committee, Chart Showing Line and Staff Plan of Organization, 219 — Conferences, Value of, 104 — Ideals, 357 — Plan, Chart Showing Application of, 215 — Plan in Organization, 355 ■ — Procedure, Rules of, 358 Committees, Conferences and, 53 — Defects of, 355 Company's Earnings, Profit Sharing, Irrespective of, 289 Competitors, Investigation of, 142 Compiling Costs, 245 Complementary Function of Assistants, 385 Complication, Greatest, Second Law of OrganizatiM, 75 Conception as an Element of Reorgan- ization, 111 Concentration, the Third Law of Or- ganization, 83 Conditions, Ante-Bellum, II — Social, Affecting Reorganization, 114 — Sales, Report on, 323 Conduct of War, British, Isaac F. Marcasson on, 48 Conferences and Committees, 53 — Advantages of, 356 — Faults of, 355 — Fourteenth Law of Organization, 104 — Questionaire on. Factory Maga- zine, 356 — Value of Committee, 104 Conflict, World, Inevitability of, 13 Consulting Engineering Firm, Chart of Organization of, 79 Contact with Subordinates, 401 Control, Fourth Principle of Organ- ization, 246 — Laws of Production, 249 Controlling Accounts, 231 Control of Materials, 251 — Shipments, 327 — Shipments, Recommendations Cot- ering, 327 — Work in Progress, 254 Control Production, 148, 246 — Report, on, 172 Control Sheet, Material, 252 — Material, Chart Showing, 253 Co-operation between Staff and De- partments, 374 — Elbert Hubbard on, 386 — Future Era of, 29 . — the Twelfth Law of Organization, 100 Co-operative Management, 28 Co-ordinating the Survey, 148 Co-ordination, Chart Showing Lack of, 212-214 — Chart Showing Plan Aft^r, 215 — Factors of, 205 —Functional, Ninth Law of Organ- ization, 96 — Importance of, 203 — of Plant, Organization Chart Showing, 215 — Organization Chart Showing Lack of, 212-214 — ^Report on, 153 — Second Principle of Organization, 203 Correct Type of Organization, 38 Conelatlott of Records, 234 434 INDEX CoTTespondence, Investigation of, 127 Cost Distribution, 236 Costs, Analysis of, 2'42 — Compiling of, 245 — Excessive, Report on, 313 Cost System, Investigation of, 128 Counsel, 404 Customers' Orders, Investigation of, 127 — Specifications, Inspection of, 332 Cutting Speeds for Drilling-Macliine Tools, Chart of, 272 — Tools, Chart Showing Feeds and Speeds for, 272 Cuts, reeds and Speeds, Chart Shovi- ing, 267 Cycles, Financial, Roger W. Babson Quoted on, 6 Dates of Machine Operation, 258 — Schedule of Purchasing, 190 Day, Surveying My, 57 Defective Estimates, Recommendations for Overcoming, 314 Defects of Committees, 355 Definition of Organization, 205 — Personnel of Organization, 205 — Plan and Policies of Organiza- tion, 205 Delays in Automobile Assembly, 176 Deliveries in Production, Investigation of, 135 Department, Chart Showing Organiza- tion of a Drafting, 220 — ^Detailed Organization of a Pur- chasing, 221 — ^Engineering, Chart of Detailed Organization of, 77 — ^Engineering, Chart of Organiza- tion of, 75 — Estimating, 314 — in Detail, Organization of a, 217 — Planning, 255 — Receiving, Investigation of, 133 — Sales, Organization of, 81 Departmental Accomplishments, Stand- ization of, 282 Departments, Co-operation between Staff and, 374 — Relations between. Staff Prob- lems, 377 Deputing Authority, E. B. Gowin on, 397 — ^Herbert N. Casson on, 398 Design, Supervisor of, Duties and Functions of, 340 Detail, Organization of a Department in, 217 Detailed Organization of Engineering Department, Chart of, 77 — Purchasing Department, 221 Details, 400 Diagnosis, Second Element of Inves- tigation, 144 Diemer, Hugo, on Essentials in Shop Management, 213 Direct Executive Subordinates, Func- tions and Duties of, 337 — Subordinate Executive, Duties and Functions of, 337 Direction, Executive, 409 — Herbert N. Casson on, 411 — ^Walter Gardner on, 413 — Wilfred Hill on, 412 Discipline, Shop, 316 Distribution as a Factor in Investiga- tion, 138 Distribution, Cost, 236 Divisions of Business, 207 — Organization, 54 - — ^Records, Four Primary, 229 — Standardization, 263 Drafting Department, Chart Showing Organization of a, 220 praln Outlet, Automobile Tank, Press Operations on, 196 Drilling Slachine Tools, Chart Show- ing Cutting Speeds for, 272 Drive Fits, Chart Showing Allowance for, 270 Drop Forge Department, Report on a, 197 Duties and Functions of Chief En- gineer, 336 — ^Direct Subordinate Executive, 337 — Indirect Subordinate Executive, 342 — Pattern-Shop Foreman, 343 — Personnel, 312 — ^Personnel, Investigation of, 312 — Plant OfScials, 312 — Supervisor of Design, 340 ■ — Supervisor of Maintenance, 337 Duties of Direct Executive Subordi- nates, 337 — Executive Subordinates, Func- tions and, 337 — ^Executives, Functions and, 336 Education as a Factor in Man-Build- ing, 32 — ^Richmond P. Hobson on, 32 Efftciency of Worker and Operation, 243 — Sales, Recommendations for, 324 — Twelve Principles of, Harrington Emerson on, 38 INDEX 435 Egyptians, Lessons from the, 3 Elghtli law of Organization, Perma- nency, 92 Element of Investigation, Diagnosis, the Second, 144 — Reports, the Third, 152 Element of Beorganlzatlon, Conception as, 111 — Ideals as, 110 Eleventh Lav of Organization, Per- sonnel, the, 99 Eliminating Strenuousness, 421 Emerson, Harrington, on Good Organ- ization, 224 — Organization of Human Body, 40 — Selection of Personnel, 383 — Standardization, 70 — Twelve Principles of Efficiency, 38 Employee, Employer and, 417 Employees, Aptitude of, 387 — Investigation of, 121, 135 Employer and Employee, 417 Employer's Besponsibllity, George H. Hull on, 418 — to the Worker, 418 Employment Methods, Investigation of, 136 — Report on, 168 Endowments, Worker and His, 416 Engineer, Chief, Duties and Functions of, 336 Engineering Firm, Consulting, Chart of Organization of, 79 ' — versus Accounting, 235 Engineering Department, Chart of De- tailed Organization of, 7 — Chart of Organization oif, 75 England, Investigations of Fatigue in, 31 Equipment, Investigation of, 137 Era, Future, of Co-operation, 29 — of Progress, Present, 9 Errors, Shop, Causes and Remedies of, 330 Essentials in Man-Building, 26, 33 — Organization, 213 — Reorganization, First, 108 — Shop Management, Hugo Diemer on, 213 Estimates, Defective, Recommenda- tions for Overcoming, 314 Estimating Department, 314 Excessive Costs, Recommendations for Overcoming, 313 — Report on, 313 Ezecntlve and Advisers, 42 — Assistants of, 384 — ^Direct Subordinate, Duties and Functions of, 337 — Direction, 409 — Functions of, 36 — Indirect Subordinate, Duties and Functions of, 342 — Man-Building Dependent on, 27 — Organism, 46 — Organization, Lack of, 225 — Personality of, 378 — Responsibility, 226 Executive Direction, Herbert N. Caa- son on, 411 — Walter Gardner on, 413 — Wilfred Hill on, 412 Executives, Functions and Duties of, 336 — Responsibility of, 429 Executive Subordinates, Direct, Func- tions and Duties of, 337 — Functions and Duties of, 337 Exertion, 423 Existing Personnel, Latent Alibity in, 379 Factor, Human, in Organization, 17 Factor in Administratien, Primary, 391 — Man-Building, Education as a, 32 — ^Man-Building, Organization as a, 18 Factor of Investigation, Distribution as a, 138 — Management, a, 120 — Office and Accounting Methods as a, 123 — Production as a, 131 Factors of Co-ordination, 205 — Within Worker's Control, Sav- ings-Sharing on Basis of, 289 Factory, Candy, Standardization in, 262 — Magazine Questionaire on Confer- ences, 356 Facts, Proper Presentation of, 116 Fallacy of Averaging Overhead Rates, 237 Fatigue, 426 — and Physical Welfare, 30 — H. M. Vernon on, 32 — Investigations of, in England, 81 — Stanley Kent on, 32 Faults of Conferences, 355 Faulty Planning, 318 — Systems, 232 Feeds and Speeds for Cutting Tools, Chart Showing, 272 — Cuts, and Speeds for Vertical Boring-Mill Tool, 267 — of Machine Tools, 276-278 Female Help, Investigation of, 168 436 INDEX Fenelon, Francois, on statesmen, 27 Fifteenth Law of Organization, Staff, 105 Fifth Law of Organization, Mental Capacity, 88 — Principle of Organization, Stand- ardization, 70, 262 — Period of Progress, 6 Financial Cycles, Roger W. Babson on, 6 Firm, Consulting Engineering, see Chart, 79 First Essentials in Reorganization, 108 — ^Law of Organization, the Ohjeo- tive, 73 — Principle of Organization, Inves- tigation the, 118, 144 Force Pits, Chart Showing Allow- ance for, 270 Foreman, Pattern-Shop, Duties and Functions of, 343 Forge Department, Drop, Keport on, 197 Form of the Eeport, 152 Foundry, Brass, Melting Tests in a, 192 -^Report on, 165 — Standardization in a, 192 Four Periods of Progress, 4 — ^Primary Divisions of Records, 229 Fourteenth Law of Organization, Con- ferences, the, 104 Fourth Law of Organization, Individ- ualism, 86 — Principle of Organization, Plan- ning Control, 69, 246 Function, Complementary, of Assist- ants, 385 — of Staff, 51, 369 Functional Co-ordination, Ninth Law of Organization, 96 — Organization, Chart Showing One- Man Organization versus, 210 Functions and Duties of Executives, 336 — ^Executive Subordinates, 337 Functions of Chief Engineer, Duties and, 336 — Direct Executive Subordinates, 337 — Executive, 36 — Foreman, 343 — Indirect Subordinate Executive, Duties and, 342 — ^Line and Staff, Chart of, 52 — Pattern-Shop Foreman, Duties and, 343 —Personnel, Duties and, 312 — ^Personnel, Investigating Duties and, 312 — Plant Oticials, and Duties, 312 — Supervisor of Design, Duties and, 340 — Supervisor of Maintenance, Duties and, 337 Fundamental Principles of Organiza- tion, 56 Future Era of Co-operation, 29 — Period of Progress, 9 Gantfe, H. L., on Management, 26 — Non-Productive Labor, 238 Gardner, Walter, on Executive Direc- tion, 413 General Manager and Staff, 371 Glovatski on Organization, 36 Goethals, G. W., Citation from "The Independent," 395 Good Faith, 422 — Leadership, 396 — Organization, Harrington Emerson on, 224 Gowin, E. E., on Deputing Authority, 397 Great World War, Influence of, on Progress, 10 Greatest Complication, Second Law of Organization, 75 Habit, 424 Handles, Hood, Automobile, 196 — Press Operations on, 196 Handling, Storage, Piling of Material and, 197 Hard, William, on British Trade Unions, 15 Help, Female, Investigation of, 168 Hill, Wilfred, on Executive Direction, 412 Hobson, Richmond P., on Education, 32 Hood Handles, Automobile, 196 — Press Operations on, 196 Hopf, Harry A., on Six Principles of Organization, 57 Hubbard, Elbert, on Co-operation, 386 Hull, George H., on Employer's Re- sponsibility, 418 Human Factor in Organization, 17 — Investment, 286 — Organisms, Business Organization Chart Modeled from, 42 — Organization, Analogy of Staff to, 367 Human Body, Chart of, 39 — Chart of Alternate Organization, Modeled from, 43 INDEX 437 Human Body, Oiganizatlon of, 39 — ^Harrington Emerson on, 40 — Herbert N. Casson on, 44 Ideal Organization Plan, Chart of, 47 Ideals as an Element of Reorganlza* tion, 110 — Committee, 357 — of Organization, 39 Identifications, Report on Material, 352 Idle Time of Machines, Report on, 171 Importance of Co-ordination, 203 — ^Following Instructions, 316 — Organization, 15 — Written Instructions, 334 Improper Administration, 225 Improper Organization, 21 — Chart of, 22 Inadequate Supervision of Records, 233 Incentives, 151 ' — For Labor, 199 — Report on, 199 — Sixth Principle ef Organization, 71, 284 Indirect Subordinate Executive, Duties and Functions of, 342 Individual Attainment, Profit-Sharing in Proportion to, 287 — Departments, Staff Problems, 375 — Progress, 5 — Progress of the, 408 Individualism, Fourth- Law of Organ- ization, 86 Individuals, Proper Placement of, 17 Industrial Organization, Principles and Laws of, 56 — Organizer, Status 9f, 111 — Period of Progress, 6 — ^Relations, 416 — ^Reorganization, Permanence of, 112 — Safety, Frederick W. Loghran on, 30 Industry, H. N. Casson quoted on, 391 Inevitability of World Conflict, 13 Influence of the Great World War on Progress, 10 Initiative, 406 — H. L. Mencken on, 406 Inspection, Anticipative, Report on, 501 — Production, Investigation of, 134 — ^Proper, Recommendations for, 322 — Reports, 319 — Shop Supervision and, 329 Inspection of Castomer'B Specifica- tions, 632 — Shop Specifications, 331 Instruction, Sample, for Methods, 347 — Importance of Following, 316 — Manual of Organization, 334 — ^Recommendations for Following, 316 — Sample, for Personnel, 335 — Thirteenth Law of Organization, 103 — ^Written, Importance of, 334 Inter-Departmental Relations, 370 Inventory, Investigation of, 130 Investigation, Distribution as a Factor of, 138 — Female Help, 168 — First Principle of Organization, 58, 118, 144, 152, — Management as a Factor of, 120 — Production as a Factor of, 131 — Office and Accounting Methods as a Factor of, 123 Investigation of Accounting, 124 — Accounting Books, 126 — ^Accounting Methods, 128 — Advertising Methods, 141 — Belting, 138 — Building, 120 — Competitors, 142 — Correspondence, 127 — Cost System, 128 — Customers' Orders, 127 — ^Duties and. Functions of Person- nel, 312 — ^Employees, 121, 185 — ^Employment Methods, 136 — Equipment, 137 — ^Inventory, 130 — Invoices, 128 — Market, 140 — Material, 132 —Office, 123 — Organization, 120 — Payrolls, 128 — Planning Methods, 132 — Prices, 140 — Product, 131 — Production Deliveries, 135 — Production Inspection, 134 — ^Production Operations, 134 — ^Production System, 207 — ^Purchasing, 133 — Receiving Department, 133 — Salesmen, 138 — Sales Methods, 139 — Sales Product, 139 — Sales Records, 142 — Salps Territory, 138 438 INDEX Investigations of Fatigue in England, 31 Investigators, Trained, 118 Investment, Human, 286 Invoices, Investigation of, 128 Job, Man and the, 382 Kent, Stanley, on Fatigue, 32 EipUng, Budyaid, on Reaction, 407 Labor and Capital, 425 ■ — Incentives for, 199 — Non-Productive, H. W. Gantt on, 238 Lack of Co-ordination, Chart Shovring, 212, 214 • — Coordination, Organization Chart Showing, 212-214 — Executive Organization, 225 — Production Control, 247 Latent Ability in Existing Personnel, 379 Law of Organization, Conferences the Fourteenth Law of, 104 — Eighth, 92 — Eleventh, 99 — Fifteenth, see Staff, 105 — Fifth, see Mental Capacity, 88 —First, 73 — Fourteenth, see Conferences, 104 — Fourth, see Individualism, 86 —Ninth, 96 — Second, 75 — Seventh, Responsibility, 92 — Sixth, 90 — Staff, the Fifteenth Law of, 105 ■ — Tenth, see Relationship, 98 —Third, 83 — Thirtenth, 103 — Twelfth, 100 Laws, Principles and, of Industrial Organization, 56 Laws of Organization, Application of, 107 ^Organization, Working, 73 — Production Control, 249 — Progress, 1 — the Plant, 335 Leadership, 422 — Good, 396 Lee, Gerald Stanley, on Personal, 382 Lessons from Antiquity, 1 — the Aryans, 3 — the Egyptians and Babylonians, 3 Limitations of Staff, S3 Line and Staff, 41 — Committee Plan of Organization, Chart Showing, 219 — Compared, 367 — Frederick Palmer on, 52 — Functions of, Chart of, 52 Local Conditions Affecting Reorgan- ization, 114 Loghran, Frederick W., on Industrial Safety, 30 Machine Board, 256, 257 — Chart Showing Operation of, 257 Machine Operation, Sates of, 258 Machines, Report on lile Time of, 171 — Standardization of, 266 Machine Shop, Organization of, 80 — Standardization in a, 195 Machine Tools, Chart Showing Stand- ard Belt Practice for, 268 — Speeds and Feeds of, 276-278 Maintenance, Supervisor of, Dalies and Functions of, 337 Making the Survey First Principle of Investigation, 118 — np Bills of Materia], Report on, 351 Man and the Job, 382 — Organization, 24 Management and Workers, 26 — as a Factor in Investigation, 120 — Co-operative, 28 — H. L Gantt quoted on, 26 — Shop, Hugo Diemer on Essentials in, 213 Manager, General, and Staff, 371 Managerial Views on Reorganization, 113 Man-Building Dependent on Eiecntive, 27 — Education as a Factor in, 32 — Essentials in, 26, 33 — Organization as a Factor in, 18 Manual of Organization Instructions, 334 Manufacturing Control, Chart Show ing, 250 — Operations, Standardization of, 277 — Policies and Methods, Standard ization of, 279 Marcasson, Isaac F., on British Con duct of War, 48 — Organization of British Army, 46 Market, Investigation of, 140 Material Identifications, Eeport on, 352 — Investigation of, 132 — Report on Making up Bills of, 351 — Storage, Handling, and Piling of, 197 INDEX 439 Material-Control Sbeet, 252, 253 — Chart Showing, 253 Materials, Control of, 251 — Raw, Standardization of, 275 Melting Tests in a Brass Foundry, 192 Men, Methods and, 228 — Eequirements in. Qualifications versus, 378 — Resources, Methods and, 419 Mencken, H. Ii., on Initiative, 406 Mental Capacity, Fifth Law of Organ- ization, 88 Methods, Advertising, Investigation of, 141 — Careless Reorganization, 109 — Employment, Investigation of, 136 — Investigation of Accounting, 126 — Modern Accounting, 2S0 — Oflce and Accounting, as a Factor in Investigation, 123 — Planning, Investigation of, 132 — Sales, Investigation of, 139 — Sample Instruction for, 347 — Standardization of Manufacturing Policies and, 279 — Three, of Selecting Personnel, 383 Methods and Men, 228 — and Resources, 419 Modem Accounting Methods, 230 MiUiplicity of Bosses, 204 Necessity for Records, 229 Ninth Law of Organization, Co-ordina- tion, the, 96 Non-ProductlTe Labor, H. L. Gantt on, 238 Objective, First Law of Organization, 73 Ofi&ce and Accounting Methods as a Factor of Investigation, 123 — Investigation of, 123 OfBclals, Plant, Duties and Functions of, 312 One-Man Organization, Chart of, 208- 209 — ^versus Functional Organization, Chart Showing, 210 Operation, Efficiency of Worker and, 243 — of Machine Board, Chart Show- ing, 257 — Scheduling the, 256 Operations, Manufacturing, Standard- ization of, 277 Press, on Automobile Tank Drain Outlet, 196 Press, on Hood Handles, 196 — frodnction. InvesUgation of, 134 Older and Arrangement of Report, 152 Orders, Investigation of Customers', 127 Organism, Executive, 46 — Human, Business Organization Chart Modeled from, 42 Organization, Alternate, Chart of. Modeled from Human Body, 43 — American Magazine on, 49 — and the Man, 24 — Application of Laws of, 107 — as a Factor in Man-Building, 18 — Basiness, 41 — Business, Chart of, Modeled from Human Organisms, 42 — Changes in, 404 — Committee Plan in, 355 — Conferences, the Fourteenth Law of, 104 — Co-operation, the Twelfth Law of, 100 — Correct Type of, 38 — Definition of, 205 — Definition of Personnel of, 205 — Definition of Plan and Policies of, 205 — ^Divisions of, 54 — Essentials of, 213 — Fifth Law of, 88 — Fourth Law of, see Individualism, 86 — Fourth Principle of, 69, 246 — Fundamental Principles of, 56 — Glovatski on, 36 — Good, Harrington Emerson on, 224 — Herman Schneider on, 24 — Human, Analogy of Staff to, 367 — Human Factor in, 17 —Ideals of, 39 — Importance of, 15 — Improper, Chart of, 22 — Industrial, Principles and Laws of, 56 — Instructions, Manual of, 334 — Instructions, the Thirteenth Law of, 103 — Investigation, First Principle of, 118, 144, 152 — Investigation of, 120 — John Calder on Principles of, 223 — Lack of Executive, 225 — Ninth Law of, 96 — One-Man, Chart of, 208-209 — One-Man, versus Functional Or- ganization, Chart Showing, 210 — Permanency, Eighth Law of, 92 — Personnel, the Eleventh Law of, 99 —Plan, Ideal, Chart of, 47 440 INDEX — Proper, 21 , — Proper, Chart of, 23 — Records, the Third Principle of, 229 — ^Relationship, the Tenth Law of, 98 — Responsibility in, 222 — Responsibility, Seventh Law of, 92 — Second Law of, see Greatest Com- plication, 75 — Second Principle of, 59, 199 — Simpliciby in, 402 — Six Principles of, 56 — Sixth Law of, see Specialization, 90 — Sixth Principle of, see Incen- tives, 71, 284 —Spirit of, 393 — Staff, the Fifteenth Law of, 104 — Standardization the Fifth Prin- ciple of, 262 — Third Law of, see Concentration, 83 — Twelfth Law of, 100 — ^Working Laws of, 73 Organization, Chart Showing Co-ordi- nation of Plant, 215 — ^Lack of Co-ordination, 212-214 — Line and Staff Commitee Plan of, 219 — Proper Type of, 216-218 Organization of British Army, Isaac F. Marcasson on, 46 — Consulting Engineering Finn, Chart of, 79 — Department in Detail, 217 — ^Drafting Department, Chart Show- ing, 220 — ^Engineering Department, Chart of, 75 — Engineering Department, Detailed, Chart of, 77 — Machine Shop, 80 — Sales Department, 81 — Staff, 372 Organization of Human Body, 39 — ^Harrington Emerson on, 40 — Herbert N. Casson on, 44 Organizations, Staff, 367 Outlet, Automobile Tank Drain, Press Operations on, 196 Oveihead Rates Falacy of, Averag- ing, 237 Parts Schedule Card, 256 Past Period of Progress, 10 Fattern-Shop Foreman, Duties and Functions of, 343 Fayment, Wage, 427 — Bonus Plan of, 199 Payrolls, Investigation of, 128 Period of Progress, Financial, G — Future, 9 — Industrial, 6 — Past, 10 — Race, 5 Periods of Progress, Four, 4 Permanency, Eighth Law of Organ- ization, 95 — of Industrial Reorganization, 112 Personality of Executive, 378 Personnel, Duties and Functions of, 312 — Existing, Latent Ability in, 379 — Gerald Stanley Lee on, 382 — ^Investigating Duties and Func- tions of, 312 — Proper ■ Selection of, 378 —Sample Instructions for, 335 — Selection of, Harrington Emerson on. 383 — the Eleventh Law of Organiza- tion, 99 — Three Methods of Selecting, 383 Personnel of an Existing Corporation, 156 — Organization, Definition of, 205 — Staff, 374 Physical Welfare, Fatigue and, 30 Piece Bate versus Bonus Plan, 200 Piling of Material, Storage Handling and, 197 Placement of Individuals, Proper, 17 Plan after Co-ordination, Chart Show- ing, 215 — and Policies of Organization, Defi- nition of, 205 — Committee, Chart Showing Appli- cation of, 215 — Committee, in Organization, 355 — Ideal Organization, Chart of, 47 — of Wage Payment, Bonus, 199 Planning Department, 255 — Faulty, 318 — Fourth Principle of Organization, 69 — in a Structural Shop, 187 — Methods, Investigation of, 132 — Production, 248 — Proper, Recommendations for, 318 — Report on, 186 Plant, Laws of the, 335 ■ — Officials, Duties and Functions of, 312 — Organization Chart Showing Co- ordination of, 215 INDEX 441 Policies and Methods, Standardization of Manufacturing, 279 — of Organization, Definition of Plan and, 205 Power, Unneoessary Use of, Report on, 349 Preliminaries of Ee-organization, Ten, HO Preparatory Steps in Reorganization, 108 Present Era of Progress, 9 Presentation of Facts, Proper, 116 Press Operations on Automobile Tanic Drain Outlet, 196 — Hood Handles, 196 . Prevention, Age of, 7 Previous Records, References and, 382 Prices, rnvestigation of, 140 Primary Divisions of Records, Pour, 229 — ^Factor in Administration, 391 Principle of Investigation, First, 58 Principle of Organization, Fifth, see Standardization, 70 — First, 58 — First, Investigation the, 144 — Fourth, Control, 246 — Investigation, the First, 118 — Planning, Fourth, 69 — Second, 59, 203 — Standardization the Fifth, 262 — Third, Records, 64, 229 Principles and Laws of Industrial Or- ganization, 56 — Fundamental, of Organization, 56 Principles of Efficiency, Twelve, Emerson Harrington on, 38 Principles of Organization, John Calder on, 223 — Sis, 56 Problems, Unsolved, 12 Problems, Staff, Individual Depart- partments, 375 — ^Relations between Departments, 377 Procedure, Committee, Rules of, 358 Product, Investigation of, 131 — Sales, Investigation of, 139 Production as a Factor of Investiga- tion, 131 — Deliveries, Investigation of, 135 — Inspection, Investigation of, 134 — Operations, Investigation of, 134 — Planning, 248 — Standardization of, 263 — System, Investigating a, 207 Production Control, 148, 246 — Lack of, 247 — Laws of, 249 — ^Report on, 172 Profit-Sharing at Frequent Intervals, 288 — in Proportion to Individual At- tainment, 287 — Irrespective of Company's Earn- ings, 289 — versus Savings-Sharing, 287 Programme of Reorganization, 115 Progress, Financial Period of, 6 — Four Periods of, 4 — Future Period of, 9 — Individual, 5 — Industrial Period of, 6 — Influence of the Great World War on, 10 ——Laws of, 1 — of the Individual, 408 -—Past Period of, 10 — Present Era of, 9 — Race Period of, 5 — Sheet, Parts, 254 Promoter, Caretaker or, 18, 49 Proper Inspection, Recommendations for, 322 — Organization, 21 — Organization, Chart of, 23 — Placement of Individuals, 17 — Planning, Recommendations for, 318 — Presentation of Facts, 116 — Selection of Personnel, 378 — Type of Organization, Chart Showing, 216-218 Prussian State Railroad, Chart of, 403 Purchasing Dates, Schedules of, 190 — ^Department, Detailed Organiza- tion of a, 221 — Investigation of, 133 Qualifications versus Requirements in Men, 378 Qnestionaire on Conferences, Factory Magazine, 356 Race Period of Progress, 5 Railroad, Prussian State, Chart of, 403 Rate-Cutting, 426 Rates, Standard, 241 Raw Materials, Standardization of, 275 Reaction, Action and, 407 — Rudyard Kipling on, 407 Receiving Department, Investigation of, 133 — Sheets, 252 Recommendations for Boiler Shop, 326 — Control of Shipments, 327 — Following Instructions, 316 442 INDEX ^Overcoming Defective Estimates, 314 — Overcoming Excessive Costs, 313 — Overcoming Rejections, 317 — Proper Inspection, 322 — ^Proper Planning, 318 — Sales Efficiency, 324 Eecords, Bbtterment, 361, 362, 363, 364, 365 — Correlation of, 234 — Four Primary Divisions of, 229 — Inadequate Supervision of, 233 — Necessity for, 229 — Previous, References and, 382 — Sales, Investigation of, 142 — Third Principle of Organization, 64 —Value of, 148 Seferences and Previous Records, 382 — Dr. K. M. H. Blackford on, 882 Bejections of Brass Castings, Cause of, 166 — Recommendations for Overcoming, 317 — ^Report on, 164 Belatlons between Departments, Staff Problems, 377 — Industrial, 416 — ^I&ter-Departmentai, 370 Belatlansbip, Right, 428 — Tenth Law of Organization, 98 Remedies of Shop Errors, Causes and, 330 Beorganization, Careless Methods of, 109 — Conception as an Element of. 111 — First Essentials in, 108 — Ideals as an Element in, 110 — Local Conditions Affecting, 114 — Managerial Views on, 113 — Permanent Industrial, 112 — Preparatory Steps in, 108 —^Programme of, 115 — Ten Preliminaries of, 110 Beorganizer, Status of Industrial, 111 Repairs and Stores, Tool, Report on, 354 * Beport, Form of, 152 — Order and Arrangement of, 152 Beport on Anticipative Inspection, 347 — Boiler-Shop Tool Room, 326 — Brass Foundry, 165 — Careless Workmanship, 328 — Castings, 164 — Co-ordination, 153 — Drop Forge Department, 197 — Employment, 168 — Excessive Costs, 313 — Idle Time of Machines, 171 — Incentives, 199 — Making Bills of Material, 351 — Material Identification, 352 — Planning, 186 — Production Control, 172 — ^Rejections, 164 — Sales Conditions, 323 — Shipments, 327 — Standardization, 192 ■ — Tool Repairs and Stores, 354 — Unnecessary Use of Power, 349 Reports, Inspection, 319 — Third Element of Investigation, 152 — Typical, 153 Requirements in Men, Qualifications versus, 378 Resources, Methods, and Men, 419 Responsibility, 424 — Employer's, George H. Hull on, 418 — Employer's to the Worker, 418 — in Organization, 222 . — of Executives, 226, 429 — Seventh Law of Organization, 92 Right Relationship, 428 Rules of Committee Procedure, 358 Running Fits, Chart Showing Allow- ance for, 270 Safety, Industrial, Frederick W. Logh- ran on, 30 Sales Conditions, Report on, 323 — Department, Organization of, 81 — Efficiency, Recommendations for, 324 — Methods, Investigation of, 139 — Product, Investigation of, 139 — Records, Investigation of, 142 — Territory, Investigation of, 138 Salesmen, Investigation of, 138 Sample Instructions for Methods, 347 — Personnel, 335 Savings^haring at Fregiuent Intervals, 288 — in Proportion to Individual At- tainment, 287 — Irrespective of Company's Earn- ings, 289 ■ — on Basis of Factors within Work- er's Control, 289 — Profit-Sharing versus, 287 Schedule Card, Parts, 256 Schedules of Purchasing Dates, 190 Scheduling the Operation, 256 — Work in Progress, 260 Schneider, Herman, on Aptitude of Employees, 387 — Characteristics of Workers, 388 INDEX 443 — Organization, 24 Second Law of Organization, Greatest CompUcation, 75 — Principle of Organization, Co-ordi- nation, 59, 203 Selection of Fersonnel, Harrington Emerson on, 383 — Proper, 378 — Three Methods of, 383 Seventh Law of Organization, Be> sponsibility, 92 Sheet, Material Control, 252, 253 — ^Parts List, 252 — Parts Progress, 254 Sheets, Keceiving, 252 Shipments, Control of, 327 — Recommendations Covering Con- trol of, 327 — Reports on, 327 Shop, Boiler, Recommendations on, 326 — ^Discipline, 316 — ^Errors, Causes and Remedies of, 330 — Machine, Organization of, 80 — Machine, Standardization in a, 195 — ^Management, Hugo Diemer on Es- sentials in, 213 — Planning in Structural, 187 — Specifications, Inspection of, 331 — Supervision and Inspection, 329 Simplicity in Organization, 402 Six Filnciples of Organization, 56 — -Harry A. Hopf on, 57 Sixth Law of Organization, see Spe- cialization, 90 — Principle of Organization, Incen- tives, 71, 284 Specialization, Sixth Law of Organ- ization, 90 Specifications, Customer's, Inspection of, 332 — Inspection of Shop, 331 Speeds and Peeds of Machine Tools, Chart Showing, 276-278 — Chart Showing Feeds, Cuts and, 267 — Cutting, for Drilling, Machine Tools, 272 — for Cutting Tools, Chart Showing Feeds and, 272 — of Machine Tools, 276-278 Spirit of Organization, 393 — Stewart Edward White on, 394 Staff and Departments, Co-operation between, 374 — Committee Plan of Organization, Chart Showing Line and, 219 — Fifteenth Law of Organization, 105 Function of, 51 — Functions of Line and. Chart of, 52 — Functions of the, 369 — General Manager and, 371 — ^Limitation of, 53 — Organizations, 367 — Organizing the, 372 — Personnel of, 374 Staff, Line and, 41 — Compared, 867 — Frederick Palmer on, 52 Staff Problems: Individual Depart- ments, 375 — Relations between Departments, 377 Standard Belt Practice for Machine Tools, Chart Showing, 268 — Rates, 241 Standardization, ISO — Divisions of, 263 — Fifth Principle of Organization, 70, 262 — Harrington Emerson on, 7 — Report on, 192 Standardization in Brass Foundry, 192 — Candy Factory, 262 — Machine Shop, 195 Standardization of Buildings, 263 — Departmental Accomplishments, 282 — Machines, 266 — Manufacturing Operations, 277 — Manufacturing Policies and Meth- ods, 279 — Production, 263 — ^Raw Materials, 275 — Tools and Supplies, 271 Standards of Accounting Operation, 240 State Railroad, Prussian, Chart of, 403 Statesmen, Francois Fenelon quoted on, 27 Statistics and Accounts, 230 Status of Industrial Reorganizer, 111 Steps, Preparatory, in Rorganizatlon, 108 Stimulation, 426 Storage, Handling and Filing of Ma- terial, 197 Stares, Report on Tool Repairs and, 354 Strennousness, Eliminating, 421 Strikes, 424 Structural Shop, Planning in a, 187 444 INDEX Suboidinats Executive, Direct, Duties and Functions of, 337 — Indirect, Duties and Functions of, 342 Suboidlnates, Contact with, 401 — Direct Executive, Functions and Duties of, 337 — Executive, Functions and Duties of, 337 Success of Profit- Sliaring Plan, Ele- ments Affecting, 290 Sunday ("Billy") Campaign, Applica- tion of the Principle of Con- ferences, 310 — ^Application of the Principle of In- structions, 310 — Co-operation in, 310 — Permanency a Factor in, 308 — ^Personnel in, 309 — Relationship a Factor in, 309 Supervision and Inspection, Shop, 329 — of Records, InadecLuate, 233 Supervisor of Design, Duties and Functions of, 340 — Maintenance, Duties and Func- tions of, 337 Supplies, Standardization of, 271 Survey, Analyzing the, 144 — ^Blank, Agent's, Chart of, 68 — Co-ordinating the, 148 Surveying My Day, 57 System, Cost, Investigation of, 128 — Production, Investigating a, 207 — ^Voucher, Investigation of, 128 Systems, Faulty, 232 Tank Drain Outlet, Automobile, Press Operations, 196 Ten Preliminaries of Reorganization, 110 Tenth Law of Organization, Relation- ship the, 98 Territory, Sales, Investigation of, 138 Tests, Melting, in a Brass Foundry, 192 Third Element of Investigation, Re- ports the, 152 — ^Law of Organization, Concentra- tion, 83 — Principle of Organization, Rec- ords, 64, 229 Thirteenth Law of Organization, In- structions, 103 Three Methods of Selecting Person- nel, 383 Time, Idle, of Machines, Report on, 171 Tool Repairs and Stores, Report on, 354 — ^Room, Boiler-Shop, Report on, 326 — Vertical Boring Mill, Chart Show- ing Feeds Cuts, and Speeds for, 267 Tools, Cutting, Feeds and Speeds of, 272 — Drilling-Machine, 272 — Machine, Chart Showing Stand- ard Belt Practice for, 268 . — Standardization of, 271 Trade-Unions, British, William Hard quoted on, 15 Trained Investigators, 118 Twelve Principles of Eficiency, Emer- son Harrington on, 38 Twelfth Law of Organization, Co-oper- ation, the, 100 Type, Correct, of Organization, 38 — Chart Showing, 216-218 Typical Reports, 153 Unions, British Trade, William Hard quoted on, 15 Unnecessary Use of Power, Report on, 349 Unsolved Problems, 12 Use, Unnecessary, of Power, Report on, 349 Value of Committee Conferences, 104 — Records, 148 Vernon, H. M., on Fatigue, 32 Vertical Boring Mill Tool, Chart Showing Feeds, Cuts, and Speeds for, 267 Voucher System, Investigation of, 127 Wage-Earner, Ambitions of the, 417 Wage Payment, 427 — Bonus Plan of, 199 War, British Conduct of, Isaac F. Marcossan on, 48 — Great World, Influence of on Progress, 10 Welfare, 426 — Physical, Fatigue and, 30 White, Stewart Edward, on Spirit, 394 INDEX 445 Worker and his Endowments, 416 — Contract of, 254 — and Operation, Efficiency of, 24S — Scheduling, 260 — Employer's Kesponsibllity to the, Workmanship, Careless, Report OB, 418 328 Workers, Characteristics of. Dr. K. M. World War, Inevitability of, 13 H. Blackford on, 389 — Influence of, on Progress, 10 — Herman Schneider on, 388 Worry, 423 Working Iiaws of Organization, 73 Written Instructions, Importance e^ Work In Progress, Checking, 26C 334 lltei'IS!l'™.™!'''^''"''"'stration 3 1924 002 381 204