For example, suppose twenty units or pieces to be the largest amount of work of a kind that can be done in a day. If a workman finishes 20 pieces and all are perfect, and he receives 15 cents per piece, his pay will be 15 X 20, or $3. If, however, he turns out only 19 pieces, then he is allowed a proportionately lower price, say 12 cents per piece, and his pay for the day will be 12 X 19 or $2.28. If he succeeds in com pleting 20 pieces, some of which are imperfect, then he is given a still lower rate of pay, say 10 cents, or even 5 cents per piece, according to the circumstances. Thus, while incompetence is heavily penalized, care lessness is still more severely dealt with. This is only another of the special plans made to suit particular conditions. It could be introduced into only high grade shops, where the work is standardized and the men are trained by functional foremen. It might be applied where the intensity or the rate of production must be high in order to get the utmost out of the/ very costly machinery, tools and so on.
5. Efficiency system.—The efficiency system is still another of these methods of wage payment. Here the time limit is set, as in the Taylor system, and if the workman fulfils the requirements he receives a large bonus ; that is, the employe is paid by day wages, but is stimulated by an additional bonus proportioned to his efficiency—efficiency in this sense being the ratio between the time he takes for the job and the standard or schedule time set for him. The amount of the bonus is determined by a standard table which fixes the percentages of wages, for time actually worked, that is paid in addition as bonus at any determined rate of efficiency. As applied in the Santa Fe shops, this system grants no bonus for work below 66% per cent efficiency—that is, below the rate of working at which the man takes 1% the standard time for com pleting his job; from that point upward, it allows bonus on a rising scale, which reaches 20 per cent in addition to actual wages at 100 per cent efficiency (or the completion of the job in the standard time). Thereafter it adds 1 per cent of wages for each addi tional 1 per cent of efficiency.
6. Comparison of Emerson and Taylor wage plans.—Thus it is seen that this system does not pun ish a man for not reaching a standard and obviates the failing of the Taylor system by enabling the men to earn a fair wage even if unforeseen difficulties occur. For instance, if a man reaches 100 per cent efficiency, he receives a 20 per cent bonus; if he falls below or goes above this standard, he receives less or more, according to the following table: 7. Comparison of three fundamental rates.—That the three rates of payment may be compared the more easily, the following table has been prepared in which each system has been reduced to a time payment basis; In order to make a further comparison of the va rious systems, we will assume that the following con ditions might occur: (1) The workman reports at the shop, stays there all day, but is given no work; (2) the workman does the standard work in the standard time; (3) the workman does all the work in a very short time, re mains in the shop, but is given no further work.
Then, under the various systems we have mentioned, their pay would be respectively as follows : 8. The purpose of time and motion-studies and bonus systems.—There is no necessary relationship be tween time-study and premiums. Either might exist without the other in any system. Each has a dis tinct purpose. A straight piece-rate system may be based on accurate time and motion-studies, and may prove very satisfactory to both management and men; while a piece-rate plan involving a large bonus may be equally disappointing to all concerned. Time and motion-studies should determine the amount of work that can be done in a day. In short, they should es tablish the basis of a fair day's work, and hence a fair day's pay. The premium element in the system may serve simply as a means of distributing the wage, but its real purpose is to stimulate the worker to greater and better production. Its most important result is the stimulus that it gives to human endeavor ; while affording the basis of a just reward it furnishes a prize to be won.
9. Simple bonus plan without time-study.—Where past records have been taken as a basis of. a wage rate in combination with a simple bonus, the minimum of workingmen's resistance has resulted. The bonus plan of payment as combined with methods that deter mine accurately the shortest time in which a job can be finished, has much to recommend it. In the first place, it is readily understood and can therefore be easily introduced among a body of laborers. It is easily adapted in some form to almost any other sys tem of pay that may already be in existence in the shop. Some managers have found it advisable to ex tend the bonus plan so as to include the job bosses and the foremen. The plan in this case is to give bonuses to the foremen if all the men under them earn bonuses. This has the advantage of stimulating the foremen to give immediate and close attention to the inefficient workman. They will either attempt by proper and speedy training to raise such a man's efficiency, or drop him from the payroll.
Thus from the point of view of labor the great pur pose of standardizing, as to both operations and time, is to introduce some system of wages whereby effi ciency is increased and stimulated by means of bonus awards.
Perhaps the greatest discovery which the modern manager has made in his studies and attempts to solve his labor problems thru better wage systems, is the fact that the efficiency of the whole organization is the efficiency of the individual workman, and that the effi ciency of the latter is secured and increased by giving him a wage proportioned to his production.