Works Organisation.
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By Percy Martin.
In dealing with the strict subject of this paper, as indicated by the title, "Works Organisation," I fully realise, and wish you to realise with me, that a good works organisation does not necessarily lead to success, unless supported by a wise company policy and an effective sales organisation. In other words, a works must produce that which can be sold at a profit, and the sales organisation must aim to sell that which a given works, with given facilities, can best produce, and also the company policy must be formed with due consideration for the limitations of both. It is fatal to ask impossibilities of either. . Later on I shall lay stress on the necessity of specialising your products, and duties of men, but as an exception to this rule of specialisation, let me cite the case of the department head, who must know enough of what other departments are doing to find his bearing with reference to the whole. He must understand the company policy in order to be able to manage his ,own department for the benefit of the whole. Therefore, let us clearly understand that the best of works organisation may be useless if one department of a company is pulling in opposition io the other departments, and that the best of men are useless unless they are wise enough to work with, instead of against, their colleagues. Team work is better than brilliant individual play. Some may contend that their results are not a commercial or financial success, in spite of being guided in their efforts by exactly the same principles which I am about to define, and I say that the reason is, although the principles of organisation of individual departments may be entirely correct, yet failure is not eliminated because of the loss of energy through lack of co-operation of the departments. I bring out this particular point, because, in my own mind, I feel certain that many failures are clue more to the loss of energy in the shape of internal friction in the organisation than to any other cause.
In laying down the general principles of works organisation, I am not giving a description of the Daimler Works and its methods, as there are too many departments there, organised in a manner which I would not describe as technically or theoretically correct, but rather as growths around the numerous local and special conditions imposed by force of circumstances and environments. Therefore, not having my subject qualified as to any specific production of a works organisation, it would be futile to deal with any special phases or problems which depend chiefly on local conditions and nature of products for their solution. Our subject is to be considered, then, as one dealing with the broad underlying principles of an organisation applied to an engineering works. We shall assume no particular form of product, no particular location, and no set conditions surrounding the works or works organisation, because all these aspects would to a very large extent alter the resultant form of that organisation. It is not my intention, therefore, to tell anybody how to build, equip, and organise an engineering works ; that is, the type of building, style of plant and machinery, detail arrangement of the sane, best form of lighting, heating, ventilation and transportation. These are important questions which can only be answered by the head of an organisation such as we contemplate, and I do not intend to bring these considerations within the scope of this paper. In this connection, therefore, my chief aim will be to give a few hints on how to spend money wisely on what are generally known as non-productive departments." The departments I have in mind are :— The Works Staff.—lncorporating chiefly departments for costkeeping and stock-keeping.
Engineering Staff .--Incorporating departments for on designing, production of working drawings, design of special tools and jigs, and a special department for production of the latter.
System of Inspection.—Incorporating detail inspection and testing of the completed article.
A glance at these various subjects will show that they cover the most vital parts of an organisation, and at the same time they involve a very large part of the expenditure, which only gives an indirect return, it is only the man who -thoroughly understands the bearing these departments have on the results who can trace the effect of the same on the productive part of a works (dealt with later). It is a mistake committed by a great many people in regarding establishments (which is another term used to describe this class of expenditure) as a dead charge -upon a business, the general rule governing such expenditure being to keep down the same to a minimum, on the assumption -that the less spent on such departments the greater will -he the remaining profits. I am very much afraid that in England,
where companies are administered by Boards of Directors, managers are considered good or bad according to their ability to keep down the so-called " establishment " expensies. This method of considering establishment charges makes it utterly impossible for au efficient organisation to be evolved, and no true progress can be made—or, at least, the best results cannot be achieved—until the manager or those responsible have thoroughly learned to consider the effects produced by such expenditure on the ultimate cost of production.
Taking first the works staff departments, it is usually the function of the cost-keeping section to record expenditure of wages and material on each piece of work put through the shops ; but who will deny that it is well worth the increased establishment expenditure to have a department which can not only produce sum-totals after the work has been finished, but which can produce before the work is started an accurate estimate of what the work should coat when completed.
Know Your Costs in Advance.—To my mind the present system of costing adopted by the majority of works organisations today is totally insufficient for management purposes. I hold it as one of the fundamental principles of business that one should know the maximum, if not the exact cost of the article one is to produce before any serious production takes place at all. With an accumulation of sufficient data concerning the main expenses, such as can readily and easily be ascertained in con ection with the production of any given article, the calculation of cost, before the job is done, can be made simple, feasible and accurate. I have not said anything as to the necessity .if costing, because this is admitted on all hands ; but I would like to lay stress on the principles that your costs must be exact, or they may fail to be of use to you, especially when you are bringing out a new article to meet competition. Unless you know the exact margin you have to manipulate, you, or your salesmen, can never be quite sure whether quotations involve them in a slight profit or a slight loss, and it is easy to conceive of circumstances where, in order to gain a name or to meet competition, it is both necessary to get business and yet not to lose money. If business in these circumstances is lost for the sake of not knowing the exact cost, there is the risk that the financial losses through the lack of output, and consequent increased establishment percentages, will show up a loss on all the other business.
Old-fashioned Costing System.—It may be taken for granted that costs gait out in the old style are never available for any practical purpose other than accountancy use. Any discrepancy Mt methods shown up by this method of costing always comes along too late to be of service. Again, to get true costs in this way depends not upon your old style cost department, but upon the accuracy of the workmen in booking time and material. I do not, of course, pretend that it is unnecessary to have the checks which this cost department exercises ; I merely affirm that the cost department is of no use in this direction, so we mustlook elsewhere for prompter and surer methods of preventing waste, inaccuracies, and discrepancies, instead of discovering them weeks or months afterwards. The most effective manner in which to equalise costs, as regards material, is to hand over to the workman only the amount of material he actually requires, no more and no less. If a manager is certain that this is done he can rest assured that the material costs as given to him by his estimating department are correct, and will remain so for all time on that design. Should a mistake have been made in judging of the material necessary, the first man to produce an article will find out and demand more material, which ensures the matter being corrected through the medium of the storekeeper, who, by virtue of having received a copy of the well-distributed orders and specifications, will know exactly what material he is authorised to hand over to the workman on any particular order. One may ask what happens if a piece is inadvertently scrapped. This is one of the most important functions of the storekeeper, as the conscientious bringing-up of the scrapped pieces before the management is one of the most difficult orders to get properly obeyed. Yet the scrapped work is exceedingly instructive from a considerable number of standpoints. It enables one to judge of the efficiency of the workman, the quality of the material supplied by the purveyors, and the possibilities as regards improvements in design. When the workman is forced to apply to the store• keeper for fresh material to replace that which he has scrapped, it enables the latter to replenish the stock, both raw and finished, without waiting, as is often the case otherwise, until the end of the order, and incurring the consequent delay and unpleasantness through a batch of articles lying nearly complete, waiting for some trifle scrapped, not recorded and ordered
months before. The obtaining of accurate costs is facilitated to a considerable extent by the method of payment of wages used. Generally speaking there are three methods, namely, day work, or hourly rate system, the piece work system, and the premium bonus system. The first two most certainly do not enable one to arrive at accurate costs. The first because we have no control over the length of time, and the consequent establishment burden gives the ultimate cost of the job, and the piece-work system, although we have the exact amount of money paid to the man for performing the work, it is obvious that the length of time taken to do the same job on different occasions or by different methods would vary considerably, so that, as in day work, the establishments to be added would vary enough to upset the accuracy of any estimate based on piece-work prices. The premium bonus plan, which I will not describe minutely, as everyone puts his own interpretation on the way in which it should be worked, gives, in any case, a "limit cost," the bonus
paid away representing further profit to the company and the men over and above expectations, and if time allowances are properly fixed these bonuses can be taken into consideration and allowed for, flaying settled the costs beforehand, all that is necessary is the preparation of statistics with a view of assisting the management in the control of certain classes of expenditure.
Statistics worked out in the form of curves are probably the most useful, as figures do not convey such a clear idea of the position of the expenditure as a curve of comparisons. Avoid useless statistics, and choose only those which enable the management to direct the works in the best possible way, and to follow out a consistent policy, figuring always from the unit of manufacture, instead of comparing mere monetary expenditure. One of the other departments of importance, the management of which usually comes under the works staff, is stock-keeping. When one realises that this department is responsible for the check of, approximately, 50 per cent, of the expenditure of many engi
neering works, then 1 think you will admit that a most thorough and efficient department may be organised, even though it adds
considerably to the establishment charges before referred to. Properly kept stock records are, therefore, essential to an organisation, and the concentration of data on to a stock record, planned on the loose leaf system, is what is required. Each stock sheet represents one particular material. These sheets are classified and indexed, so as to be easily referred to. They should consist of a double-sided ledger, giving as debits to the stores the materials ordered, balanced by material delivered, and on the credit side the requirements of various shop orders, balanced by issues from stores. Thus a far more comprehensive view of the position as regards stock is obtainable than by laborious counting on the part of the storekeepers, and it enables the stock-keeper, before orders are despatched, to say whether there is any material in stores, whether there is any material still undelivered, or whether the material is bespoke by existing shop orders. All this is done without any reference to the stores, which has its own functions of delivery to workmen, questions of transport, etc., etc., to attend to. The advantages of this exact and comprehensive knowledge of the conditions in the shops and stores regarding material enables one to issue orders with the least possible margin of surplus stock. This means that not only are your capital resources carefully hus banded, but in so doing the necessary size of your stores is reduced to a minimum. The stock sheets may be made far. reaching enough to indicate, in addition to the above facts, also the weight of castings, the varying price of materials, etc. This information would enable invoices to be verified and the weight of various rough stampings, castings, etc., to be checked.
Other information worth knowing is recorded on the stock sheets, such as scrapped work, the whereabouts of patterns, models, templates, etc., what material is used for, and where obtained. Nothing need be said about the routine of purchasing, except that all departments interested in the placing of orders should be in possession of manifold copies of those orders. Then the ordering and stock departments themselves, as well as the receiving stores and the particular stores which are to take charge of the goods as well as the invoice inwards department, are enabled to foresee and to arrange their work as far as possible ahead.
The next section of the so-called " non-productive" departments is that of the engineering stag, comprising, first, the
department for original design and the production .of working
drawings ; secondly, the design of special tools and jigs, and an independent department for their production and upkeep ; and, thirdly, a system of inspection between operations. The first department, which may be designated constructional engineering, should follow the policy of the company as to the articles designed. In many manufacturing institutions, though, this is wrongly treated as a department independent of the works organisation, and I have known of numerous cases of the bad effects of antagonism caused through the control of the design
and the control of the works organisation being under different management or supervision. Though it is not my object. to
disparage the fullest exercise of brilliant ingenuity and genius, yet I think we shall do better to confine ourselves, as regards the engineering department, to the strict purpose of showing profit on a manufacturing business. One is consequently inclined to develop an organisation which can, in a more or less routine way, successfully standardise, improve, and, in fact, develop the design from day to day, or from year to year, of any article under consideration. In the production of designs, then, certain general principles are involved, which, in forming the basis of work in the constructional engineering office, aim to produce at the lowest pos sible cost articles for which there is a healthy demand. In the first place, there is the principle of standardisation applied to the design of the article—that is, the simplification of the design as far as is possible, and the utilisation of parts which are already known to you as having withstood the test of experience in your earlier designs. In other words, designs should rather be evolved from previous practice than completely revolutionised, because this reduces the possibilities of failure from an engineering standpoint, and the cost is also lowered to a tremendous extent right from the start. In the second place, the constructional draughtsmen should produce drawings on each of which is incorporated all the information necessary and useful for staff and shops, such as quantities, limits, style of finish, kind of material, etc. Further, this principle is also to be kept in view, viz., that in addition to cleverness, ingenuity and originality of design, the fact must not be lost sight of that the design has to be produced in your shops with its limited facilities and that as cheaply as possible. It may be stated that a little extra thought and intelligence bestowed by the constructors and their draughtsmen on their work saves tremendously in the shops where quantities are produced, and it is a great mistake to hurry the designers in their work. If there is no time to design properly, the work had better not be undertaken at all.
It is also necessary for drawings to be complete ones; nothing should be left to the judgment of the workman, however simple and obvious the job looks. It is safest not to assume that your workman has any qualifications beyond the requisite skill in his trade for which he is paid. The working drawings are then considered from the point of view of manufacture, which is to be effected both quickly and cheaply—that is to say, economically—and this brings us to the second portion of the engineer ing staff, viz., the designs of special tools and jigs. These tools
and jigs are made in accordance with the requirements of manufacture. That is, in the case of engineering works being
engaged on repetition work, a considerably greater expenditure on special tools and jigs is permissible than if the design is to be carried out only once or a limited number of times. Great attention should be paid to the department which designs special tools and jigs, and the work of sketching these special tools, jigs, and fixtures should, like the working drawing itself, be done with extreme care and accuracy, and with proper exercise of brains and judgment, as the subsequent manufactur ing costs depend to the greatest possible extent on this class of designing. T believe and my belief is supported by such observations as I have been able to make personally, that in many manufacturing concerns the quantity of tools used in compari son with the value of machinery shows a great deficiency in their tool equipments. An ample supply of good, up-to-date machinery is of small benefit unless a good quantity and variety of well-kept and well-designed tools is available. Besides the great influence that such tools have on the ultimate cost of
production, their use enables parts to be made which are absolutely interchangeable. Therefore, I say that money must be spent liberally, but, of course, judiciously, in this importantbranch of our so-called "non-productive" organisation.
The third consideration in regard to the engineering section is. that relating to inspection. The subject I have in mind is an all-important one, and covers a system of thorough inspection of a great variety of operations. Apart from the question of passing work, it is also worth a little extra expenditure to know that the detailed instructions contained on your drawings are carried out to the very letter. A system of inspection should be instituted, not necessarily between operations, but between operators. That is, work leaving an individual operator becomes inspected and passed on to the next man for his succeeding operation or operations. This has the double advantage. of locating any fault or scrap on to a single individual, thereby doing only justice to the other operators, and it, furthermore, enables a check to be put on the bonus to be paid to each individual operator. This is important because, under the system of payment which I prefer, and shall describe later on, there is an inducement for the performance of the greatest quantity of work in the shortest time, and, remembering that workmen are human, a strict control must be kept over their actions in this particular regard. This further involves the independent action and independent payment of your inspectors, and this is. myreason for including them in the engineering portion of the "non-productive" staff. When the working drawing is produced, and the jigs and special tools have been designed, the progress through the shops arranged for and the points of in.spec.tion settled, the question of material is brought to the fore_ Specifications of material are prepared from the information given on the drawings, and these specifications having been distributed thoroughly, enable orders to be placed in the economical manner previously described, and the material to be received into stores and put out to the particular workmen in need of it. Apart from this routine, however, there are the broader principles relating to the supply of suitable material.
Material Department.-1 have made this department one of the chief subjects of my paper, because experience has taught me the enormous importance that the supply of suitable materials bears to the successful issue of a manufacturing concern. The material department, such as I should like to have you keep in mind, is one which is organised so as to deal efficiently and economically with the providing or producing of
materials required. You will naturally understand that my views on this subject are prejudiced to a certain extent by my personal experience in attempting to provide suitable. materials for the manufacture of a modern touring car, an article of manufacture which incorporates a very large number of parts, a very large variety of material ; an article which has brought new problems in the line of materials for us to solve, and an article which is to a very great extent dependent for its behaviour upon the materials used in its construction. The first function of this department which we will consider is that of specification of materials. In order that specifications can be sent out which will give a clear and concise idea as to the character of material required, it is necessary, as in other departments, that proper facilities should be provided It is generally recognised that a problem clearly stated is half solved, and as far as the supply of material is concerned this is exceptionally true, because if one receives from the buyer a clear and not impossible specification, the problem of supplying that material is shorn of many of its difficulties. The material deparament, after having been provided with mechanical specifications by the engineering and other departments, should incorporate in its organisation men of the proper scientific training, and translate such mechanical specifications into the language of the supplier. On the other hand, that department should be conversant with the methods of production of materials, at least to such an extent that they can determine whether the material required by the engineering department can be obtained commercially or not. This department should be able to check the sometimes ill-considered requirements of designing engineers, who certainly do at times ask for material which is impossible to deliver; or only at impossible prices. You will gather from these remarks that the material department must incorporate a metallurgist and chemist, as well as a physicist, whose duties are to arrive at the necessary specifications of material to be used for fulfilling the mechanical requirements.
The suitability of material for the various requirements put upon it cannot be determined from the mere consideration of tensile strength, elastic limits, and elongations ; neither will the mere chemical analysis ensure that material will suit a definite purpose. The physical condition of the material, although it possesses the elements specified, varies to a very great extent, as we all know, and therefore, their specifications must either include an exact description of the treatment which the material is to undergo before delivery, or, what is perhaps more reliable, they should be in a. position to treat the materials when delivered. If the latter method is followed, then this department should be equipped, as well as with chemical and physical laboratories, also with a complete outfit of furnaces and other appliances for treating the materials after they arrive from the rolling mills, stampers, or forges. I think it is not too much to say in the light of to-day's knowledge of these subjects that no stamping or forging should be used in machine construction in the condition in which it conies from the stamp or forge. When we have found by experience that two pieces of steel may he cut from the same bar, and forged or stamped by the same smith, and, although not burnt in the process as generally understood, one piece of steel may prove to be double the strength of the ether, it behoves us to surround ourselves with the necessary equipment and intelligence to correct such irregularities if we value the factor of reliability in our products.
I have read on several occasions criticisms on the ability of manufacturers in England to supply steel and other materials suitable for the construction of the modern motorcar. My own experience leads me to the conclusion that the motorcar manufacturers themselves are to a considerable extent at fault. If they know what they want, and are able to express it in terms comprehensible to the producer of the material in question, there is no place in the world where material can be obtained as well, or as cheaply, as in this country. Sheffield remains to-day the hub of the steel world, especially when steel of a special character is required. As referred to before, it is not sufficient to express your requirements as regards material in mere mechanical terms, as at present used. Almost every part in a machine has different conditions or stresses to withstand,. and it is only possible through continued experiments and experience under actual conditions to arrive at a choice of the best material for the purpose. A most careful record of failures in practice
should be kept, through which one is enabled to reject the bad and develop the good. If one, therefore, realises the comparative importance of being able to specify correctly for material required, then it is certain that the only way to do this is to have a properly administered and equipped department for dealing with the various questions appertaining to material on the lines referred to. I need not emphasise the importance of good material as a feature of every mechanical construction, because this is a subject which is being prominently brought to our notice from day to day by everyone interested. Therefore, in order that such important functions should he properly dealt with, the material department should above all be thorough and efficient. They should be able, first of all, to give intelligent specifications ; secondly, they should have proper means of ensuring that material is up to specification when delivered, viz, by a proper testing laboratory; thirdly, they should be able to apply whatever treatment is necessary to the material receivea, thus ensuring that it is handed over to the manufacturing department in the most suitable and unvarying form. In. carrying out this last condition it might also be mentioned that it is . lmost as necessary tu leave the material in such condition that it can be economically machined as it is to see that the material will perform its duty when finished.
Before leaving this particular subject, which particularly incorporates provision of chemical and physical laboratories, the payment of proper officials and the support of continued experi• ments, you will see again that it is a case of advance expenditure and would come on broad lines under the so-called establishment charges. But again, I say, how can anyone deny the enormous benefits such an organisation would have upon the general results of a company producing anything in the way of machinery where reliability is a great factor? Of course, if desirable I might point out several phases of this department, which are more or less of a routine nature, and in a large works such routine is daily the cause of savings, which, if recognised on the part of the management, would easily justify all the expenditure incurred in administrating and equipping such a sub-department. I mean here that the daily checking of material received so often saves entire machining costs with its attendant delays in production, by detecting at the first moment that the material is not as specified or is unsuitable for the work. It might be carried further, and I might say that, without such a department, the place where one discovers the material is wrong is when, the products of a company have failed ia actual service, and, as we all know, the costs of such failures are often beyond calculation.
Another portion of the routine work to he kept in mind in connection with this department is one which we need not deal with at length, but, at the same time, it has a very important bearing on the success or failure of any undertaking. I refer to the price paid for material. As soon as the factor of price has to be dealt with we naturally assume that this department must be administered by someone who realises to the fullest extent the effect of price of material on the success of the company from a financial standpoint. But, on the other hand, the most unwise administration of such a department which. it is possible to conceive would be one which procures material chiefly from the standpoint of price, without giving due consideration to the conditions before referred to. The head of such a department should keep in touch not only with his own country, but with all those countries which are noted for progress in the art of producing raw material. Ile should ever be ready to try new materials and bring to the notice of the designing department the possibilities of new materials which are continually being put on the market. The one great factor which influences price of material is admittedly quantity and regularity of requirements. Therefore, this department must be well informed as to the general policy of the company, and should know at the very earliest moment what the probable future programme of the company is to be. If one knows to a fairly accurate degree what the requirements of the shop will be for a year or two ahead, it gives one an enormous advantage in buying, because his suppliers are very anxious to obtain large and regular orders. If you refer back to my remarks in connection with stock-keeping department you will see that one of the chief benefits of having a well-organised stock-keeping department to the material department is that it gives accurate and ample information so as to enable them to take advantage of the fluctuations of market prices. Another great question which this department has to deal with is delivery of material, the importance of which I do not need to emphasise, because I am sure every man connected with a manufacturing institution has had reason to realise the importance of this factor in keeping up his output. Again, this serious feature is certainly best dealt with if the company's organisation is such that orders can be Placed as far ahead as possible, and if specifications are clear and the requirements are within the possibilities of the producing firms. As a rule it is very advantageous for the administrator of this department to keert in very close touch with the people for whom be is buying in order to satisfy himself that their facilities for producing are ample, so that he has not to tel upon promises that are made sometimes
with the best of intentions. If these promises are checked by one who understands more or less of the methods of production, then it can easily be. judged whether the promise is beyond the possibilities of the producing firm or not. The ideal condition would be to have your material delivered at regular intervals and in quantities as requited, thus enabling you to keep down your stock and make a consequent saving in capital outlay. In this matter, however, it is necessary to compromise with the people who have to deliver the material, because this question cuts both ways.
In summing up, I might say that as far as my personal observations have gone, this all-important question or phase of manufacture is too often put in the hands of incapable officials, expenditure of money for the necessary facilities are too often forbidden, and very often the three chief functions of such a department, as pointed out, namely, specification, price, and delivery, are handled by people more or less independent of each other, thus failing to obtain the co-operation which is so necessary to the success of any organisation. Generally speaking, I may perhaps be allowed to repeat in brief the functions of the Material Department such as I would advocate. Such department should be able through its officials, equipment, and organisation, first, to decide what material should be used to carry out the engineers' intentions ; secondly, it should be able to purchase such material to the best advantage; thirdly, it should make arrangements for delivery best to suit the desired programme of production ; fourthly, it should carry out a systematic check of all materials delivered with reference to specifications sent out ; fifthly, to issue all instructions for the treatment and handling of materials in case the material has not been treated in the manner before referred to previous to delivery; arid, lastly, this department should carry on systematic
experiments and research work, with a view to introducing new and better material from time to time which is consistent with -the progress which we are all aiming at.
Labour.
The last general subject which I would treat with is that of labour, and naturally I have not taken into consideration any of the numerous questions which are only to be decided in view of local conditions, but have simply tried to bring out a few principles which have struck me in dealing with this important factor. I believe it to be true that the highest possible or maximum rate should be paid for skilled labour, instead of, as many managers seek to do, paying the minimum rate. The reasons I have for coming to this conclusion and adopting it as a principle are manifold. In the first place, the payment of maximum rates gives a larger choice of labour, and maximum rates being paid the best men can be chosen and letained. Being certain of retaining your labour and having confidence in the thoroughness and reliability of your operators, it is then a matter of obtaining the maximum results from your men, not by driving them, but by a system of induction which enables the operator to participate in the results achieved by any extra efforts he may have to put forth. To condense the foregoing remarks into one principle, this means that one should pay the highest possible rate that a man can earn—but see that he earns it ! The mistake is too often made of judging of the wages bill according to the individual earnings per man. The only standard from which it is possible to judge your wages spent is the relation it bears to the output of the factory worked out in units. It is not so much what each man earns individually, as what is produced in your works by the payment of so much in wages ; and methods must be sought, not to reduce the rate of pay of your men, but actually to increase same, taking care such increase is more than recompensed by the extra output achieved. This leads on to the consideration of the bonus system of paying wages as a means of increasing earnings of men, and ensuring at the same time more than a corresponding increase in the output. The principles of the bonus system are chiefly as follows :—Divide up work in the factory into jobs, considering these jobs as units of work. Each of these jobs is provided with a time allowance by the rate-setting department. These allowances should not be fixed by the old method of observation, but from charts and curve tables, of data established by your actual previous results in different metals, operations, etc., or from other accepted sources of information.
It has long been an established fact that time taken on work which can be performed by hand is capable of being estimated with tolerable accuracy, whilst work performed on machinery can be forecasted with something approaching exactitude, so that, given the operations and data necessary for the performance of work, times that an average man should occupy can be readily fixed. These times being set on all jobs, the actual time taken on the job is deducted, and the balance, which is time saved, is divided up between the workman concerned and the company, in proportions determined by the latter. In my opinion an equal division is best. It should be noted that the bonus is not intended for the exercise of mere extra physical effort, as it must not be supposed for a moment that this is our sole object. Extra physical effort cannot be maintained for long, but the utility of the bonus system undoubtedly prevails through the incentive to increase the output by continued and uninterrupted work, and in the encouragement of these small economies of time which can only emanate from the intelligence and ingenuities of the workman himself. One of the rules which a manager should lay down strictly to his staff is that time allowance, once fixed, must not be reduced. With the bonus system, and its stated object of profit-sharing, one should never lose the confidence of the men by breaches of contract such as this, and I unhesitatingly condemn the action of firms who do this as unjust, besides being an extremely short-sighted policy, and detrimental to their own interests.
Another feature of the bonus system in its application to the labour section of this paper is, as already mentioned, the increase of output due to the effects of the system. This increase in output per unit of time is very far-reaching in its effects. We know that whether a factory is fully occupied or only partially occupied certain establishment charges are being incurred, and we know that this cost is to be distributed in certain proportions over the articles or units made. If the output is increased, the amount of establishments to be added per article or unit is less, thus reducing still further the actual cost. Thus, the factory equipment is made more valuable on account of this effect of the bonus system in producing a greater output than before. Again, the desire on the part of men to earn bonus naturally reverses the usual tendency of the offices, pressing the works for delivery. The pressure, on the contrary, is exerted right from the other end—that is, it is the man, or the men individually, who are always pushing and scheming to secure a continuity of work with the object of increasing their earnings, and the stores, therefore, are forced automatically to push for, and get in, the material to avoid any friction in which they would probably come off second best. In other words, instead of the staff driving the works for output, the works drive the staff to supply them with the necessary material, and jobs are finished off by virtue of fresh ones pushing them out.
Oneatime.—Much difference of opinion exists as to the manner in which the additional expense incurred by payment of time and a quarter, time and a half, etc., for work done in overtime hours should be considered, but I firmly believe that this surplus time should be made chargeable to general establishments, instead of considering this as a part of the cost of the particular job. Firstly, in order to prove this statement, one must consider the reasons for overtime. Overtime is usually resorted to either to increase the output through a sudden unexpected demand, which may not be sustained, or to equalise the product of one department in proportion to others, thus avoiding further capital outlay where not considered permanently necessary. Again, the work done by overtime is as often as not the work which has been postponed during the day to accommodate a rush job, and if any job should be burdened at all, it is this latter. Although it is, generally speaking, unsatisfactory to work overtime, owing to the difference in productive efficiency between normal and abnormal working, it is far better to resort to it than lose business or to embark on fresh capital expenditure unless the market or demand warrants it
In conclusion, I would say that having stated as briefly as possible a few of the principles of works organisation, and having called attention to a few of those functions or departments which I consider are of maximum importance, I would like to impress upon you some of the things that a works manager should avoid in running his works. If a manufacturing institution is organised with due consideration to order and cleanliness, and the responsible officials are inspired with a desire to get the best possible results, T think it is fair to say that the natural tendency is for things to organise themselves. The details of each department seem to be worked out automatically, without the chief officials concerning themselves to any great extent.
Therefore, feeling that this is true, I have seen fit to add a few " Don'ts" as concluding remarks :— Don't allow a programme of output, once settled, to he changed.
Don't be tempted to accept special orders at a high price, because it can never pay to introduce a multitude of types or to upset routine work.
Don't encourage secrecy between your officials, but, on the contrary, let every department head and trusted official in your organisation understand to the fullest extent your own views, intentions and aims.
Don't neglect to maintain your reputation at any cost. Institute a thorough system of inspection after each operation and make exhaustive tests before delivery ; in other words, spend money freely to ensure that that which you deliver is certain to uphold and create a good reputation.