Shop Management | Page 8

lowered in direct proportion to the profits which he has
made and the improvements introduced.

Under the contract system, however, the relations between employers
and men are much more agreeable and normal than under piece work,
and it is to be regretted that owing to the nature of the work done in
most shops this system is not more generally applicable.
The writer quotes as follows from his paper on "A Piece Rate System,"
read in 1895, before The American Society of Mechanical Engineers:
"Cooperation, or profit sharing, has entered the mind of every student
of the subject as one of the possible and most attractive solutions of the
problem; and there have been certain instances, both in England and
France, of at least a partial success of cooperative experiments.
"So far as I know, however, these trials have been made either in small
towns, remote from the manufacturing centers, or in industries which in
many respects are not subject to ordinary manufacturing conditions.
"Cooperative experiments have failed, and, I think, are generally
destined to fail, for several reasons, the first and most important of
which is, that no form of cooperation has yet been devised in which
each individual is allowed free scope for his personal ambition.
Personal ambition always has been and will remain a more powerful
incentive to exertion than a desire for the general welfare. The few
misplaced drones, who do the loafing and share equally in the profits
with the rest, under cooperation are sure to drag the better men down
toward their level.
"The second and almost equally strong reason for failure lies in the
remoteness of the reward. The average workman (I don't say all men)
cannot look forward to a profit which is six months or a year away. The
nice time which they are sure to have today, if they take things easily,
proves more attractive than hard work, with a possible reward to be
shared with others six months later.
"Other and formidable difficulties in the path of cooperation are, the
equitable division of the profits, and the fact that, while workmen are
always ready to share the profits, they are neither able nor willing to
share the losses. Further than this, in many cases, it is neither right nor
just that they should share either in the profits or the losses, since these
may be due in great part to causes entirely beyond their influence or
control, and to which they do not contribute."
Of all the ordinary systems of management in use (in which no accurate
scientific study of the time problem is undertaken, and no carefully

measured tasks are assigned to the men which must be accomplished in
a given time) the best is the plan fundamentally originated by Mr.
Henry R. Towne, and improved and made practical by Mr. F. A. Halsey.
This plan is described in papers read by Mr. Towne before The
American Society of Mechanical Engineers in 1886, and by Mr. Halsey
in 1891, and has since been criticized and ably defended in a series of
articles appearing in the "American Machinist."
The Towne-Halsey plan consists in recording the quickest time in
which a job has been done, and fixing this as a standard. If the
workman succeeds in doing the job in a shorter time, he is still paid his
same wages per hour for the time he works on the job, and in addition
is given a premium for having worked faster, consisting of from
one-quarter to one-half the difference between the wages earned and
the wages originally paid when the job was done in standard time. Mr.
Halsey recommends the payment of one third of the difference as the
best premium for most cases. The difference between this system and
ordinary piece work is that the workman on piece work gets the whole
of the difference between the actual time of a job and the standard time,
while under the Towne-Halsey plan he gets only a fraction of this
difference.
It is not unusual to hear the Towne-Halsey plan referred to as
practically the same as piece work. This is far from the truth, for while
the difference between the two does not appear to a casual observer to
be great, and the general principles of the two seem to be the same, still
we all know that success or failure in many cases hinges upon small
differences.
In the writer's judgment, the Towne-Halsey plan is a great invention,
and, like many other great inventions, its value lies in its simplicity.
This plan has already been successfully adopted by a large number of
establishments, and has resulted in giving higher wages to many
workmen, accompanied by a lower labor cost to the employer, and at
the same time materially improving their relations