It was to be expected that the growth of manu facturing methods would bring with it new plans of rewarding labor, if for no other reason than that it meant the disappearance of personal relations in large enterprises. The large operator of today is very unlikely to consider labor as a personal matter between the worker and himself, but is apt to look upon labor as something to be purchased like any other commodity. Men speak of buying labor instead of hiring men. This tendency is greatly to be de plored, for labor is essentially personal, and because of the personal relations involved it is difficult to measure it abstractly, as one would measure mate rial. It is no wonder, therefore, that under modern complex manufacturing conditions, with minute di vision of labor, and the complex social and labor or ganizations resulting therefrom, these older systems of rewarding labor have been found inadequate. They are still, it is true, in general use and will con tinue in use wherever conditions are such as to render them satisfactory; but beyond doubt other methods are rapidly coming into use, particularly in the more complex situations.
6. Halsey's premium plan.—The first of the new methods was that evolved by Mr. F. A. Halsey, and known as the Halsey premium Under this method, the worker is assured a definite day's pay if he reaches a certain production. If he ex ceeds this production he earns a premium in addition to his regular pay. To illustrate, suppose a certain piece of work requires ten hours, normally, for its com pletion and the workman's pay is $3.00 for ten hours. Suppose, further, that it is agreed that the workman shall receive one-third of his hourly wage, extra; for every hour by which lie can shorten this standard time. Suppose, again, that he does the work in nine hours.
1 X 30 Then the premium will be 3 = 10 cents, and his earnings for the nine hours will be (9 X 30) + 10 = $2.80, or at the rate of $3.11 per day. Should he fail to reduce the time, or, in fact, should he ex ceed the ten hours set as a standard, he would still receive $3.00 per day, provided, of course, that he was not so slow as to be an undesirable worker.
The Halsey plan, therefore, recognizes the prin ciple of increased pay for increased effort, which is the basic principle of piecework, but the proportion ate return for increased effort is not so great as under the method of straight piecework. On the other hand, this defect is compensated for by the protection of the workman against being penalized should he fail to attain the standard performance. It is clear also
that special provision must be made under this system for reporting the times of operations and the premi ums earned. It is equally clear that under this method of pay the labor cost of a given piece may vary between wide limits. The conciliatory nature of the Halsey plan has brought it into extended use, and it has exercised a great influence in the formation of other kinds of wage systems.
7. Taylor system.—The standards of performance for the Halsey plan were based originally on such rec ords of previous performances as were at hand, or, these being lacking, upon the personal judgment of some official. In all of the systems discussed so far, no effort is made to find out with accuracy what really constitutes a fair basis for a day's work, and all of them depend on enlisting the interest of the work man thru increased compensation. In 1895, in a remarkable paper before the American Society of Me chanical Engineers, Mr. F. W. Taylor pointed out that it was possible, by studying the details of any operation, to determine a minimum time in which each operation could be performed, and that on the basis of these detailed observations it was possible to fix the minimum time required for the job or similar jobs. He pointed out, also, that by sur rounding the workman with the best conditions and with expert advisers it is possible to reach the stand ards predicted by these experts. To encourage the worker to reach a given standard Mr. Taylor estab lished two piece rates, one a very high rate for those who reached or exceeded the standard, and the other a very low rate to penalize those who did not attain the standard. Because of the penalizing feature, it has been difficult to operate this pay system, but the theory of studying operations in advance, with the object of fixing a fair day's rate, has become an ac cepted principle in factory management.
There is no new principle involved in Mr. Taylor's piece-rate method, and it was not uncommon, long be fore he presented his paper, to make rough time-stud ies of operations. The idea of making minute and accurate time-studies was new, however, and it has opened up large possibilities in the matter of pre dicting times of operations, and determining costs in advance. Of course, the cost of clerical help in mak ing so-called time-studies is a charge against produc tion that must be compensated for by increased pro duction. Within limits, however, the extra expense can be.more than overcome and the profits can be in creased by this method.