Having obtained the best man he can find for the most important positions, those requiring what is usu ally called executive ability, the task of filling the lower ranks must then be undertaken. Here mistakes are less costly, for the workers bear less responsibility, yet it is most important that even the humblest task be performed properly and on time. The negligence of a shipping clerk may cost the business a valuable cus tomer, and a bookkeeper's mistake may lead to mis understandings and recriminations or to an overdraft at the bank.
The building of an organization for a business is so important that it ought never to be undertaken by a man who himself has not been trained in the business. A man without experience, no matter how much capi tal he possesses, should beware of making the experi ment. To such a man business may seem a very simple and easy matter. Doubtless baseball looks like a very easy game to many of the spectators, and the better the players the easier the game looks. Busi ness is a much more difficult game than any that is played for sport, and the job of getting together a really efficient business organization requires much more knowledge and judgment than does the build ing of a champion baseball team.
7. Labor great cost factors of busi ness are the salaries and wages paid to employes and the interest on the capital invested. The experienced business man, with the advice and cooperation of his banker, is able to keep the interest factor fairly well under control. In abnormal times, such as prevailed after the European War broke out in 1914, the rate of interest on capital is subject to unusual fluctuations, but in ordinary times its stability can safely be counted upon.
But the cost of labor is never a stable factor and it is one of the problems which give most worry to our manufacturers. In figuring output and prices for the coming season, a manufacturer must estimate the wage cost per unit. A month or ti,vo later, after he has closed many contracts for delivery, his Men may strike for higher wages, and his plant may be idle during many weeks of futile negotiations with his men. The so-called industrial discontent, which has been the sub ject of many books and magazine articles, is an im portant social question, but from our point of view it is a grave business problem, for it makes business more difficult and increases the uncertainty of profit.
We will not consider here the reasons why the labor question is of more importance than formerly, nor will we describe the various means that have been adopted to prevent strikes and lockouts. Here it is
enough to call attention to the fact that the hiring of labor for business purposes involves a positive and always imminent risk.1 Doubtless the very size of modern business is largely responsible for it, for em ployes too seldom come into personal contact with their employer. The corporation they are working for seems to them a bard, impersonal, unsympathetic taskmaster.
Whatever measures or plans an employer may adopt to bold his men and to keep them satisfied, no effort should be spared to make the men feel that he personally is really interested in their condition and very glad when one of them has earned a promotion. In the case of a corporation this is the duty of the president or general manager, and it would be well if the men could feel that the executive had the cor dial backing of the entire board of directors. If un happily some of the directors think only of dividends, they must be kept in the background. Such directors may work infinite mischief to a business.
8. Unforeseen price men realize that the prices of commodities are subject to hidden and incalculable forces. In the long run the prices of most articles tend to keep close to their costs of production, but at times market prices depart widely from costs. The price of any article on any day is explained by the demand in its relation to the supply. If the demand for an article is not a constant quantity, the price is subject to fluctuations. These cannot be foreseen and the business man nmst therefore be pre pared for the unexpected. He may be obliged to pay a higher price for his raw materials than Ile expected, and when he is ready to market his finished product, it may happen that be and his competitors liave over estimated the demand and .will be obliged to sell at prices barely covering the cost of production.
The risk of loss thru price changes is least in the case of certain so-called staples, the consuMption of which is pretty well known. The grocer, for example, incurs little risk of loss thru changes in the prices of' such commodities as flour, salt, sugar, etc. In gen eral, a business dealing in staples is safer than a busi ness dealing in so-called "fancies," for the demand for the "fancies" may vanish at any time.