University of Southern California Dissertations and Theses

Industrial productivity

(USC Thesis Other)

Industrial productivity

PDF

Download a page range

Download transcript

Copy asset link

Request this asset

Transcript (if available)

Content INDUSTRIAL PRODUCTIVITY by Y o u s s e f Rad A T h e s is P r e s e n t e d t o t h e FACULTY OF THE GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA I n P a r t i a l F u l f i l l m e n t o f t h e R e q u ire m e n ts f o r th e D egree MASTER OF ARTS (E c o n o m ic s) A u g u st 1956 UMI Number: EP44748 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. Dissertation Publishing UMI EP44748 Published by ProQuest LLC (2014). Copyright in the Dissertation held by the Author. Microform Edition © ProQuest LLC. All rights reserved. This work is protected against unauthorized copying under Title 17, United States Code ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106-1346 UNIVERSITY O F SO U T H E R N CA LIFO RN IA G R A D U A T E S C H O O L U N IV E R S IT Y PA R K L O S A N G E L E S 7 E c R. This thesis, written by ..........................Y o u s s e f ..Rad................................. under the guidance of / L A ®..Faculty Committee, and approved by all its members, has been pre sented to and accepted by the Faculty of the Graduate School, in partial fulfillment of the requirements for the degree of ..........................M a s te r..o f..A rt.s......................... ........................................................... COOKE............... A c tin g D ean D ^ . . A H E y s t . . l ? 5 6 ........................................ Facult^Gvmmittee Chairman A<A,AA££.. TABLE OF CONTENTS |CHAPTER J I . INTRODUCTION..................................................................... . . . ! P u rp o s e o f t h e s t u d y ......................................................... ' O r g a n iz a t i o n o f t h e t h e s i s . i I I . MEANING AND MEASUREMENT OF PRODUCTIVITY . . . Some p ro b le m s i n m e a s u r in g p r o d u c t i v i t y . . B a s ic m e a n i n g ........................................................................ i I n p u t - o u t p u t m ea su re m e n t ............................................... ! I I I . FACTORS AFFECTING EFFICIENCY AND PRODUCTIVITY I n n o v a t i o n s ............................................................................. M anagement f a c t o r s .............................................................. F i n a n c i a l f a c t o r s . . . . ......................................... L ab o r f a c t o r s ........................................................................ T he econom ic c l i m a t e ......................................................... The r a t e o f b u s i n e s s o p e r a t i o n s ..................... C hanges i n t h e c o m p o s itio n o f o u tp u t . . . O th e r econom ic f a c t o r s ............................................... G overnm ent p o l i c i e s ......................................................... N a t u r a l f a c t o r s ................................................................... O th e r f a c t o r s ........................................................................ N o ise ....................................................................................... L i g h t i n g .................................................................................. H ours o f w ork, r e s t p e r i o d s , and f a t i g u e . PAGE 1 2 1 j 3! I 5' 7 10 1 7 2k 21 31 I 32 36 36 38 39 40 k l k z 43 k k 46 i i i CHAPTER PAGE IV. ATTITUDE OF MANAGEMENT AND WORKERS.......................... 52 T he p s y c h o l o g i c a l c l i m a t e .................................... 514- E f f e c t s o f i n d u s t r i a l r e l a t i o n s i n h i g h e r p r o d u c t i v i t y ........................................................................ 62 V. ECONOMIC INCENTIVES AND HUM AN RELATIONS . . . 72 Econom ic s e c u r i t y .............................................................. 73 N a tu re and s o u r c e s o f m o t i v a t i o n . . . . . 77 Wages and p r o d u c t i v i t y ............................................. 79 M e asu res t o m a i n t a i n a h ig h l e v e l o f em p lo y m e n t ............................................................................. 83 M e asu res t o r e d u c e t h e d is p la c e m e n t o f l a b o r .................................................................................. 8I4 . M e a su re s t o p r o t e c t t h e s t a n d a r d o f l i v i n g o f un em p lo y ed w o r k e r s .......................................... 85 Human r e l a t i o n s . . .................................................... 92 L e a d e r s h i p ............................................................................. 9 1 4 - S u p e r v i s i o n ........................................................................ 97 U nion-m anagem ent r e l a t i o n s .............................. . 102 V I. PLANT AND E Q U IPM E N T .............................................................. I l l P l a n t l o c a t i o n ........................................................................ 112 Amount o f c a p i t a l p e r w o r k e r .............................. . 116 P l a n t l a y o u t ............................................................................. 118 M a t e r i a l h a n d l i n g .............................................................. 121 M a i n t e n a n c e ............................................................................. 1214- iv CHAPTER PAGE Age o f e q u i p m e n t .............................................................. 125 S iz e o f t h e p l a n t .............................................................. 127 V I I . ORGANIZATION AND CONTROL OP PRODUCTION . . . 130 M anagement and a d m i n i s t r a t i o n ............................... 133 P r o d u c t io n p l a n n i n g and c o n t r o l .......................... 137 C ost and b u d g e ta r y c o n t r o l .......................... ..... . lij.0 S i m p l i f i c a t i o n , s t a n d a r d i z a t i o n , an d s p e c i a l i z a t i o n ........................................................................ 14 4 D e s i g n .............................. 147 Work s t u d y ........................................................................ 11+.8 S t a n d a r d s ............................................................................. 150 M a r k e tin g , p r i c e p o l ic y , an d s a le s m a n s h ip 151 V I I I . PERSONNEL POLICY .............................................................. 154 L ab o r-m anagem ent c o o p e r a t i o n ............................... 156 Employment s e r v i c e s and p o l i c i e s ..................... 159 S e l e c t i o n a n d p la c e m e n t .......................................... 161 Employment p o l i c i e s ................................................... 162 T r a i n i n g .................................................................................. 164 U p g ra d in g o f e m p l o y e e s ............................................... 167 IX . SUMMARY AND CONCLUSIONS.................................................... 169 S u m m a ry ........................................................................................ 169 C o n c l u s i o n s ............................................................................. 171 BIBLIOGRAPHY....................................................................................................... 174 L IST OF TABLES TABLE PAGE I . H y p o t h e t i c a l Exam ple I l l u s t r a t i n g t h e E f f e c t s o f W ork-H ours on P r o d u c t i v i t y ............................... i|7 I I . V a r i a t i o n s i n t h e A v e rag e Age o f P r o d u c tio n M a c h in e ry i n 1914-9 a n d 1 9 5 0 ......................................... 126 LIST OP FIGURES i FIGURE PAGE 1 . P e r C ent o f L a b o r F o rc e i n U n i o n s ......................... . lOij. CHAPTER I INTRODUCTION T he e s s e n c e o f i n d u s t r i a l p r o d u c t i o n i s t h e t r a n s f o r m a t i o n o f raw m a t e r i a l s by f a c t o r y m e th o d s i n t o t h i n g s w a n te d b y s o c i e t y . M a t e r i a l s a r e b r o u g h t i n t o t h e p l a n t w here t h e y a r e p r o c e s s e d o r m a n u f a c tu r e d i n t o d i f f e r e n t fo rm s , q u a l i t i e s , a n d t h e n s h ip p e d o u t o f t h e p l a n t e i t h e r jfo r f u r t h e r p r o c e s s i n g i n o t h e r f a c t o r i e s , o r f o r im m e d ia te ■use b y u l t i m a t e c o n su m e rs. j I n d u s t r i e s a r e u s u a l l y d i v i d e d i n t o b r o a d c l a s s e s i I ja c c o r d in g t o t h e n a t u r e o f t h e i n d u s t r y , t h e u s e made o f :th e p r o d u c t , an d t h e am ount o f s e r v i c e o b t a i n e d fro m i t b e f o r e i t i s consum ed o r becom es u n f i t f o r f u r t h e r u s e . Thus i n d u s t r i e s t h a t m a n u f a c tu r e m a t e r i a l s , t o o l s , m a c h in e s , an d I { jequipm ent f o r u s e i n t h e o p e r a t i o n s o f o t h e r f a c t o r i e s a r e l e l a s s e d a s p r o d u c e r - g o o d s i n d u s t r i e s . T h o se w h ic h t u r n o u t ip ro d u c ts i n t e n d e d f o r d i r e c t u s e o f t h e p e o p le I n t h e home jor g e n e r a l l y i n d a i l y l i v i n g , a r e e o n su m e r-g o o d s i n d u s t r i e s iA ll p r o d u c t s m ig h t f a l l i n t o e i t h e r c l a s s d e p e n d in g upon Iwho u s e s them and f o r w hat p u r p o s e s ; b u t i n t h e m ain t h e i j d i s t i n e t i o n b e tw e e n t h e tw o c l a s s e s i s a fu n d a m e n ta l one o f I ith e u tm o s t im p o rta n c e t o t h e s i n g l e e n t e r p r i s e a n d t o t h e ! i ieconom ic s y s te m i n g e n e r a l . Of s i m i l a r Im p o rta n c e i s t h e c l a s s i f i c a t i o n o f i n d u s t r i e s on t h e b a s i s o f t h e am ount o f u s e o b t a i n e d from a i p r o d u c t b e f o r e i t i s c o m p le te ly u s e d up o r d e s t r o y e d . Thus I we h a v e d u r a b l e , n o n d u r a b le , a n d s e ra id u r a b le goods i n d u s - j t r i e s . T h ese c l a s s i f i c a t i o n s o f i n d u s t r i e s b a s e d upon t h e u s e made o f t h e p r o d u c t s h o ld im p o r ta n t m ea n in g f o r in d u s - j j t r i a l m an ag em en t. The ty p e o f goods p ro d u c e d s t r o n g l y i n - i i f l u e n c e s t h e o r g a n i z a t i o n , f i n a n c e s , b u s i n e s s p o l i c i e s , j f l a b o r s u p p ly , p r o d u c t i o n m e th o d s , m a r k e ti n g c h a n n e ls , and ! » ; [ g e n e r a l p r o s p e r i t y o f t h e s i n g l e e n t e r p r i s e . And t h e e c o - ; nom ic s y s te m i n g e n e r a l may b e b a ck w a rd o r p r o g r e s s i v e , may [p ro v id e a low o r h i g h s t a n d a r d o f l i v i n g , an d may f u n c t i o n j 3t e a d i l y o r w ith f l u c t u a t i o n s , d e p e n d in g up on c o n d i t i o n s b e a r i n g upon e a c h ty p e o f m a n u f a c tu r e a n d u p o n t h e r e l a t i o n s among t h e d i f f e r e n t t y p e s o f g o o d s .^ i i I . .PURPOSE OF THE STUDY j i : ! T he m a jo r p u rp o s e o f t h i s s tu d y i s d i r e c t e d to w a rd j an a tte m p t t o l i s t an d d i s c u s s a l a r g e num ber o f f a c t o r s j w h ic h seem t o h a v e m ore o r l e s s i n f l u e n c e on i n d u s t r i a l [ [ p r o d u c t i v i t y . I t h a s , h o w e v e r, l i t t l e t o s a y a b o u t t h e j r e l a t i v e im p o r ta n c e o f t h e s e d i f f e r e n t f a c t o r s , w h ic h i s j i jbound t o v a r y fro m i n d u s t r y t o i n d u s t r y . j ^L aw ren ce L. B e t h e l , I n d u s t r i a l O r g a n iz a t i o n a n d M anagem ent (New Y ork; M cG raw -H ill Book Company, In c . j 1 9 5 0 ), ;p p. 6-tS. | ! M easurem ent h a s a lw a y s b e e n a n i m p o r t a n t f a c t o r i n p r o v i d i n g i n f o r m a t i o n t o s e r v e a s t h e b a s i s f o r s o l v i n g b u s i n e s s p ro b lem s* And m anagem ent h a s becom e m ore a n d m ore i n t e r e s t e d i n u s i n g s c i e n t i f i c t o o l s i n m ak in g d e c i s i o n s * j jA s p i r i t o f c o m p e t i t i o n , e x t e n s i v e u s e o f m e c h a n ic a l a i d s , 'econom ic h a n d l i n g o f m a t e r i a l s , w e l l l a i d o u t f a c t o r i e s , m odern c o s t m e th o d s, p r o d u c t i o n p l a n n i n g a n d c o n t r o l , and p r o g r e s s i v e a t t i t u d e o f m anagem ent a r e n e e d e d f o r h i g h e r i p r o d u c t i v i t y . ; W hile t h i s p a p e r i s e s p e c i a l l y c o n c e rn e d w i t h p r o b - lem s o f r a i s i n g p r o d u c t i v i t y i n m a n u f a c tu r in g i n d u s t r i e s , 'much o f i t c a n be e q u a l l y a p p l i c a b l e t o o t h e r f i e l d s o f i ieconom ic a c t i v i t y . To s p e a k an d w r i t e a b o u t p r o d u c t i v i t y i s w o rth w h ile o n ly i f i t l e a d s t o a c t i o n . B ut a c t i o n on ! m a t t e r s a f f e c t i n g s o many d i f f e r e n t i n t e r e s t s commonly r e - : iq u ir e s a g r e a t d e a l o f c o o p e r a t i o n a n d a g re e m e n t. i ! I I . ORGANIZATION OP THE THESIS j ; i i W ith t h i s o b j e c t i n m in d , t h e p r e s e n t s t u d y h a s b e e n j [a rra n g e d and d i v i d e d i n t o n i n e c h a p t e r s . T he f i r s t i s t h e j i n t r o d u c t o r y c h a p t e r . The s e c o n d d i s c u s s e s t h e c o n c e p t o f ; p r o d u c t i v i t y . C h a p te r t h r e e c o n t a i n s a s t u d y o f t h e v a r i - j I ous f a e t o r s a f f e c t i n g p r o d u c t i v i t y . C h a p te r f o u r s p e a k s o f j I ' [ c e r t a i n p s y c h o l o g i c a l f a c t o r s i n f l u e n c i n g t h e g e n e r a l e n - j jvironm ent w i t h i n w h ic h i n d u s t r y w o rk s. T he f i f t h c h a p t e r d e a l s w ith w o rk e rs m o t i v a t i o n and t h e m anagem ent p ro b le m s o f human r e l a t i o n s , i ; W h ile i t i s im p o r ta n t t o do e v e r y t h i n g p o s s i b l e t o I b r i n g a b o u t and t o m a i n t a i n a p s y c h o l o g i c a l and econom ic c l i m a t e w h ic h f a v o r s t h e r a p i d g ro w th o f p r o d u c t i v i t y , i t i s i n i n d i v i d u a l e s t a b l i s h m e n t s t h a t t h i s g ro w th m ust a c t u - i a l l y t a k e p l a c e . C h a p te r s i x , p l a n t a n d e q u ip m e n t; c h a p t e r s e v e n , o r g a n i z a t i o n and c o n t r o l o f p r o d u c t i o n ; an d c h a p t e r e i g h t , p e r s o n n e l p o l i c y , t h e r e f o r e , d e a l w ith s t e p s w h ich c a n b e t a k e n t o r a i s e p r o d u c t i v i t y w i t h i n i n d i v i d a u a l u n d e r t a k i n g s . The f i n a l c h a p t e r c o n t a i n s th e c o n c l u s i o n s o f th e s t u d y . j CHAPTER I I j i THE HEARING AND MEASUREMENT OP PRODUCTIVITY One o f t h e p r im a r y t a s k s o f s c i e n t i f i c m anagem ent i s t o d e v e lo p m e th o d s f o r m e a s u r in g t h e p r o d u c t i v i t y o f em p l o y e e s . T h is h a s v a lu e n o t o n ly f o r s t u d i e s on t h e r e l a t i v e e f f i c i e n c y o f g e n e r a l p r o d u c t i o n b u t a l s o f o r t h e v e r y p r a c t i c a l p u rp o s e o f i n c r e a s i n g t h e p r o d u c t i v i t y o f p e o p le i f e n g a g e d i n s p e c i f i c t y p e s o f p r o d u c t i o n . ; ' i | M e a su re s o f p r o d u c t i v i t y a r e e s s e n t i a l f i r s t s t e p s i i n e s t a b l i s h i n g s t a n d a r d s o f p e r f o r m a n c e , w h ic h i n t u r n , ; make p o s s i b l e e f f e c t i v e s y s te m s o f em plo yee re w a rd s an d j s a n c t i o n s . P r o d u c t i v i t y m e a s u re s a r e a l s o n e c e s s a r y i n com* » 'p a r in g t h e e f f i c i e n c y o f a n o p e r a t i o n b e tw e e n d i f f e r e n t ! Igroups o f e m p lo y ee s an d b e tw e e n d i f f e r e n t p e r i o d s o f t im e . ! jT his p e r m i ts m anagem ent t o r e c o g n i z e i n e f f i c i e n t o p e r a t i o n s m ore r e a d i l y a n d t o n o t e t h e e f f e c t o f c h a n g e s i n t r o d u c e d • 1 i t o im prove o p e r a t i o n s . ! I n t e r e s t i n t h e p r o d u c t i v i t y o f l a b o r t e n d s t o i n - j jc re a s e a s l a b o r pow er becom es r e l a t i v e l y s c a r c e d u r i n g t h e ! ie o u rse o f i n d u s t r i a l i z a t i o n . Where l a b o r i s i n a b u n d a n t 1 1 i I ' I C h a r le s A. K oepke, P l a n t P r o d u c t io n C o n tr o l (New | York* Jo h n W ile y a n d S o n s, I n c . , 19i|-i) , p . 1$T ; M a r tin K r i e s b e r g . " P ro c e d u re f o r M e a s u rin g S a p lo y e e P r o d u c t i v i t y , " A dvanced M anagem ent, V o l. X V II, No. 8 (A u g u s t, 1 9 5 2 ), ; p . 6 . .s u p p ly , a s i n n a t i o n s i n t h e p r e i n d u s t r i a l s t a g e o f de v e lo p m e n t, t h e p r o d u c t i v i t y o f c a p i t a l i s l i k e l y t o b e o f m ore c o n c e rn * L a b o r p r o d u c t i v i t y a c q u i r e s g r e a t e r m ea n in g I a s a n econom ic i n d i c a t o r t o t h e d e g re e t h a t l a b o r m u st b e e c o n o m iz e d . L a b o r p r o d u c t i v i t y i s now r e g a r d e d a s an im p o r t a n t e le m e n t i n econom ic c a p a b i l i t i e s g e n e r a l l y , i n t h a t • i i t h e l p s i n t h e a s s e s s m e n t o f t h e a b i l i t y o f a n a t i o n , a s j w e l l a s i n d u s t r y , t o p ro d u c e w i t h a g iv e n q u a n t i t y o f m an- ' I pow er a c o m b in a tio n o f c i v i l i a n a n d m i l i t a r y goods s u f - j I f i c i e n t a t t h e same tim e t o s a t i s f y t h e m a t e r i a l a s p i r a - I j t i o n s o f v a r i o u s g ro u p s i n s o c i e t y and t o p r o v i d e t h e 2 ( m i l i t a r y m eans n e c e s s a r y f o r n a t i o n a l d e f e n s e . j i M anagem ents to d a y , r e a l i z i n g t h e im p o rta n c e o f p r o - j j : d u c t i v l t y , a r e i n t e r e s t e d i n p r o v i d i n g c o n d i t i o n s w h ic h a r e ; i i ! (co n d u c iv e t o maximum o u tp u t w ith o u t e x c e s s i v e e f f o r t o r { f a t i g u e . T hey w ish t o know how im p o r ta n t su c h f a c t o r s a s ( l i g h t , h e a t , v e n t i l a t i o n , h o u r s o f w ork, may be i n d e t e r - i m in i n g p e r f o r m a n c e . They l i k e t o know how t o c o n t r o l mo n o to n y a n d f a t i g u e , an d how t o d e s i g n m eth o d s o f work w hich [a re e a s i e r an d m ore r a p i d t h a n t h o s e w h ic h h a v e b e e n u s e d ! i ; I i n t h e p a s t . ' i i i What does " p r o d u c t i v i t y " mean? How i s " p r o d u c t i v i t y 7 i (" I" 1 " " ' “ 'ir " I I T r r ' ^ ! ^ W a lte r G a le n s o n , L a b o r P r o d u c t i v l t y i n S o v i e t an d i {Am erican I n d u s t r y (Mew Y o rk : C olum bia U n iv e rs T ty P r e s s , ! l9 5 F T ,'p .3 r i |m easu red ? How do es i t a f f e c t t h e o u tp u t a n d t h e s t a n d a r d | :o f l i v i n g ? T h e se a r e some o f t h e q u e s t i o n s t h i s c h a p t e r i |e n d e a v o rs t o a n s w e r. i I . SOME PROBLEMS IN MEASURING PRODUCTIVITY I n g a u g in g t h e p e rfo r m a n c e o f an a u to m o b ile i n te rm s o f m i l e s - p e r - g a l l o n , a l l t h a t i s n e e d e d i s t o k e e p a c c o u n t o f t h e num ber o f m i l e s c o v e re d a n d o f t h e num ber o f g a l l o n s consum ed. A m easu rem en t o f l a b o r p r o d u c t i v i t y i s o f t h e same c h a r a c t e r . I t i s a c o m p a ris o n o f t h e num ber o f u n i t s p ro d u c e d w i t h t h e num ber o f m a n -h o u rs em ployed i n t h e i r ( p r o d u c tio n . I n m e a s u r in g t h e p r o d u c t i v i t y o f , one s im p le | p r o c e s s w h ic h d o e s n o t ch an g e i n n a t u r e a s tim e p a s s e s , t h e p ro b le m i s a f a i r l y s im p le one i n c o n c e p ti o n , a lt h o u g h n o t i !a lw a y s so I n e x e c u t i o n . We s im p ly d i v i d e t h e num ber o f [ u n its p ro d u c e d I n a p e r i o d b y t h e num ber o f m a n -h o u rs e x p e n d e d i n t h e same p e r i o d . T he r a t i o s o co m p u ted may be i jcom pared w i t h t h e c o r r e s p o n d i n g r a t i o f o r o t h e r p e r i o d s . ! One d i f f i c u l t y a r i s e s fro m t h e f a c t t h a t m o st p r o c e s s e s do c h an g e i n n a t u r e a s tim e p a s s e s . I n f a c t , su c h 'c h a n g e s a r e i n e x t r i c a b l y c o n n e c te d w ith c h a n g e s i n p ro d u c t i v i t y . Few i n d u s t r i e s c o n ti n u e t o f a b r i c a t e e x a c t l y t h e jsame e n d p r o d u c t o u t o f e x a c t l y t h e same m a t e r i a l s o v e r a n y lo n g p e r i o d o f t i m e . M ost p r o d u c t i v i t y m e a su re m e n ts i g n o r e c h a n g e s i n t h e q u a l i t y o f t h e end p r o d u c t . What i s e v e n m ore s e r i o u s , Sthey i g n o r e c h a n g e s i n i n d u s t r i a l o r g a n i z a t i o n w h ich a l t e r i i t h e r e l a t i o n s h i p b e tw e e n t h e f i n a l o u tp u t a n d t h e o r i g i n a l j i i n p u t o f m a t e r i a l s . T he s e r i o u s n e s s o f t h i s p o i n t w i l l b e - i ecane p l a i n i f t h e r e a d e r w i l l r e f l e c t t h a t i t w ould be w rong t o d e s c r i b e w h at g o e s on i n a sh o e f a c t o r y i n t h e p r o d u c t i o n o f s h o e s . The p r o d u c t i o n o f s h o e s i s a com plex p r o c e s s i n v o l v i n g t h e r a i s i n g o f c a t t l e , t h e s l a u g h t e r i n g o f t h e c a t t l e , t h e p r o d u c t i o n o f t h e c h e m ic a ls u s e d i n t h e { jta n n i n g , t h e p r o d u c t i o n o f t h e t h r e a d u s e d t o sew t h e sh o e sj |a n d many, m any o t h e r o p e r a t i o n s . What g o es on i n t h e shoe i f a c t o r y i s m e r e ly one s t a g e o f t h e w hole p r o c e s s . When we m e a su re t h e p r o d u c t i v i t y o f t h e o p e r a t i o n o f a sh o e f a c t o r y i n te r m o f t h e num ber o f p a i r s p e r m a n -h o u r, we a r e n o t im e a su rin g t h e p r o d u c t i v i t y o f t h e s h o e - p r o d u c in g a c t i v i t i e s . o f t h e econom y. T h i s s t i l l w ould n o t b e t o o b a d i f t h e j j a c t i v i t y w i t h i n t h e sh o e f a c t o r y r e t a i n e d a f a i r l y c o n s t a n t ! I i [ r e l a t i o n s h i p w i t h t h e w hole p r o c e s s . B ut i f , f o r e x am p le , , t h e f a c t o r y b e g a n t o b u y i t s l e a t h e r c u t t o c o n v e n ie n t j s h a p e s an d s i z e s w h e re a s p r e v i o u s l y i t h a d b o u g h t t h e 1 l e a t h e r i n l a r g e s h e e t s , t h e r e s u l t i n g d e c l i n e i n m a n -h o u rs l 1 p e r p a i r e x p en d ed i n t h e f a c t o r y c o u ld n o t be r e g a r d e d a s a 1 ^ [g en u in e i n c r e a s e i n p r o d u c t i v i t y .-5 | { J | ^ N a t i o n a l A s s o c i a t i o n o f M a n u f a c t u r e r s , P r o d u c t i v i t y j ‘Gauge o f Econom ic P e rfo rm a n c e (E conom ic P o l i c y D i v i s i o n [ S e r i e s , No. 5 3 . N ew 'Y ork: P r e p a r e d by R e s e a rc h D e p a rtm e n t, ^ 2 ) 2_pp^J[^-171_ ______________ . ___________ ,__________ 1 W here a p r o d u c t i v i t y m ea su re m e n t i s i n t e n d e d t o c o v e r a num ber o f d i f f e r e n t p r o c e s s e s a n o t h e r c r i t i c a l d i f f i c u l t y a r i s e s . I t i s e a s y en o u g h i n p r i n c i p l e t o ad d j up a l l t h e m a n -h o u rs e x p e n d e d b y m a n u f a c tu r in g w o r k e r s . B ut how c a n anyone add up t o n s o f s t e e l , y a r d s o f c l o t h , b a r r e l s o f g a s o l i n e , an d so f o r t h t o g e t t h e t o t a l p h y s i c a l o u tp u t o f m a n u f a c tu r in g ? | I n p r a c t i c e , t h i s d i f f i c u l t y i s u s u a l l y s o l v e d b y ! a s s i g n i n g a s y s te m o f w e ig h ts b y w hich t h e o u t p u t f i g u r e s , j i n t h e i r d i v e r s e u n i t s o f m e a su re m e n t, may be co m b in ed . I n e f f e c t s u c h w e ig h ts amount t o a s e t o f econom ic e q u iv a - ! I ile n c e s s u c h a s one t o n o f s t e e l t o be r e g a r d e d a s e q u iv a - ! l e n t o f so m any y a r d s o f c l o t h , e t c . I n t h i s way t h e many d i f f e r e n t fo rm s o f m a n u f a c t u r in g o u tp u t a r e r e n d e r e d com- 'm e n s u ra b le a n d i t becom es p o s s i b l e t o m e a s u re t o t a l m anu- r i i f a c t u r i n g o u tp u t a n d h e n c e p r o d u c t i v i t y i n m a n u f a c t u r in g a s :a w h o le . I ! : The w e i g h ts , o r econom ic e q u i v a l e n c e s , a r e n o t com- j p l e t e l y a r b i t r a r y , s i n c e t h e y a r e u s u a l l y b a s e d on t h e j p r i c e s p r e v a i l i n g on some p a r t i c u l a r d a te o r c o m b in a tio n o f ' d a t e s . T hus one t o n o f s t e e l m ig h t be r e g a r d e d a s e q u iv a - J ; i , l e n t t o 1 0 0 0 y a r d s o f c o t t o n c l o t h i f i t t u r n e d o u t t h a t j i j jth e p r i c e o f one t o n o f s t e e l was t h e same a s t h e p r i c e o f j ,1000 y a r d s o f c l o t h . B ut t h e r e i s s t i l l an a r b i t r a r y e l e - j i Iment, s i n c e t h e s e p r i c e r e l a t i o n s h i p s v a r y fro m one d a te t o | I 10 i ; | a n o t h e r . I ! ! A s id e fro m t h e s e d i f f i c u l t i e s o f d e f i n i t i o n a n d i n - j t e r p r e t a t i o n , p r o d u c t i v i t y m e a su re m e n ts a r e a f f e c t e d by t h e j i n e c e s s i t y o f r e l y i n g on in c o m p le te and u n s a t i s f a c t o r y b a s i c s t a t i s t i c s . The a v a i l a b l e f i g u r e s on o u tp u t a n d em ploym ent a r e c o l l e c t e d c h i e f l y f o r o t h e r p u r p o s e s , an d t h e y c a n b e i j a d a p te d t o p r o d u c t i v i t y m ea su re m e n t o n ly b y somewhat d o u b t- | I f u l e x p e d i e n t s . B ro a d g a p s e x i s t i n t h e b a s i c i n f o r m a t i o n , w h ic h m ust b e f i l l e d b y c o n j e c t u r e o r a s s u m p tio n i f t h e eomt i p l e t e p i c t u r e i s t o b e p r e s e n t e d . The t r u t h i s t h a t a l l ! i i s t a t i s t i c s on p r o d u c t i v i t y a r e s u b j e c t t o a v e r y l a r g e m ar-! . ii i g i n o f e r r o r . I I . BASIC MEANING i I W hereas t h e c o n c e p t o f p r o d u c t i o n r e l a t e s s im p ly t o I |t h e o u tp u t o f w e a l t h , p r o d u c t i v i t y i s a r a t i o o f o u tp u t t o i j i n p u t ; a r a t i o b e tw e e n what i s p ro d u c e d a n d w hat i s u s e d up I i ! I o r w orn o u t i n t h e p r o c e s s o f p r o d u c t i o n . What i s u s e d u p i |when a n y th i n g i s p ro d u c e d i s a v a r i e t y o f d i f f e r e n t p r o - j id u e t i v e r e s o u r c e s . S t u d i e s o f p r o d u c t i v i t y , h o w e v e r, u s u - l l a l l y r e l a t e o u tp u t t o t h e i n p u t o f a s i n g l e f a c t o r o f p r o - : d u c t i o n . S in c e i t i s o f t h e e s s e n c e o f econ om ic p r o g r e s s j j t h a t m ore w e a l t h s h o u l d b e p ro d u c e d w ith l e s s l a b o r , s p e c i a l I ^ I b i d . , p p . 1 7 - 1 8 . 11 I i n t e r e s t a t t a c h e s t o t h e c o n c e p t o f t h e p r o d u c t i v i t y o f l a b o r . P r o d u c t i v i t y i s t h u s a m e a su re o f g e n e r a l e f f i c i e n cy i n t h e u s e o f l a b o r ; i t i s n o t a m e a su re o f t h e e f f o r t i < | made b y w o r k e r s . j I n t h e m o st g e n e r a l s e n s e , p r o d u c t i v i t y d e n o te s " th e j q u a l i t y o r s t a t e o f b e i n g p r o d u c t i v e o r t h e p o s s e s s i o n o r z u s e o f pow er t o c r e a t e , t o b r i n g f o r t h , o r t o m a k e .” The i B u re a u o f L a b o r S t a t i s t i c s d e f i n e s p r o d u c t i v i t y a s ” t h e j j r a t i o b e tw e e n t h e p r o d u c t i o n o f a g iv e n com m odity m e a s u re d j jby volu m e, an d one o r m ore o f t h e c o r r e s p o n d i n g f a c t o r s , I 7 ' [ a ls o m e a s u re d b y v o lu m e ." ' " P r o d u c t i v i t y , " a c c o r d i n g t o J , i 't h e N a t io n a l A s s o c i a t i o n o f M a n u f a c t u r e r s , " i s t h e r a t e a t I jw hich t h e econom y c o n v e r t s human e x e r t i o n i n t o w a n t - s a t i s - I f y in g goods a n d s e r v i c e s . I t i s a m ea su re m e n t o f t h e o v e r - I I a l l e f f i c i e n c y o f t h e econom y, i n m uch t h e same way a s [ ? j [ m i l e s - p e r - g a l l o n i s a m easu rem en t o f t h e o v e r - a l l p e r f o r m - j O ! jance o f a p a s s e n g e r a u t o m o b i l e ." i ! 1 i * -— | - - _■ - ] 1 - - I — - ■ — m \ £ ; - ^ I n t e r n a t i o n a l L a b o r O r g a n i z a t i o n , F a c t o r s A f f e c t i n g j P r o d u c t i v i t y i n t h e M e ta l T r a d e s (G en ev a: I n t e r n a t i o n a l I [Labor - O f f i c e ,” T 9 5 2 ), PP. 4 - 5 . ! ^H irara S . D a v is , "The M eaning a n d M easurem ent o f Pro4 j d u c t i v i t y , ” I n d u s t r i a l P r o d u c t i v i t y (C ham paign, 1 1 1 .; I n - j d u s t r i a l H e s e a r c h A s s o c i a t i o n , 1 9 $ I)> p p . 1 - 2 . ! i J ^ O r g a n i z a t i o n f o r E u ro p e a n E conom ic C o - o p e r a t io n , [M easurem ent o f P r o d u c t i v i t y ( P a r i s ; O r g a n iz a t i o n f o r E u ro - jpean C o - o p e r a t io n , 1<)52), p . ljj>. ; ' fi ' i P r o d u c t i v i t y , Gauge o f Econom ic P e r fo r m a n c e , o p . i c i t . , p . 12 i W ith o u t d o u b t, t h e m ost c a r e f u l a n d m o st com pre h e n s i v e s t u d i e s o f p r o d u c t i v i t y i n t h e A m e ric an econom y a r e t h o s e p r e p a r e d b y t h e N a t i o n a l B u re au o f E conom ic R e s e a r c h . T h e i r m ain d raw b ack i s t h a t t h e y do n o t c o v e r t h e p e r i o d a f t e r 1 9 3 9 . H ow ever, t h e y a r e t h e b e s t a v a i l a b l e s o u r c e o f i n f o r m a t i o n on c h a n g e s i n p r o d u c t i v i t y i n t h e p e r i o d 1899 t o 1 9 3 9 . 9 D e f in i n g p r o d u c t i v i t y a s t h e r e s u l t s o b t a i n e d f o r j ! i ith e p r o d u c t i v e pow er e x p e n d e d may seem t o b e t h e same a s a | | i I d e f i n i t i o n o f e f f i c i e n c y . I t d e p en d s u p o n o n e 's c o n c e p t o f | l e f f i c i e n c y . T h e re a r e many i n s t a n c e s i n eco n o m ic l i t e r a - i i ; t u r e i n w h ich t h e r a t i o o f o u t p u t t o r e s o u r c e s e x p e n d e d i s \ r e f e r r e d t o a s e f f i c i e n c y , b u t t h e r e a r e p r o b a b l y f a r m ore { in s ta n c e s i n common u s a g e , e s p e c i a l l y i n t h e f i e l d o f i n - i I j I j d u s t r i a l r e l a t i o n s , i n w h ich e f f i c i e n c y r e f e r s t o t h e r e l a t i o n o f a c t u a l r e s u l t s t o t h o s e s e t a s a s t a n d a r d . Thus i t | i s h i g h l y d e s i r a b l e t o i n d i c a t e c l e a r l y i n u s i n g th e work { e f f i c i e n c y w h e th e r a p r o d u c t i v i t y o r a n i n d u s t r i a l e n g i n e e r i n g m ea n in g i s i n t e n d e d . ! I I I n t h e l i g h t o f t h i s c o n c e p tu a l r e v ie w , t h e m e a n in g ! jo f p r o d u c t i v i t y i n t h e econo m ic f i e l d may be s t a t e d a s " t h e {degree t o w h ich t h e pow er t o make o r p r o v id e g oo ds o r s e r v - ! i c e s h a v in g e x c h a n g e v a lu e i s u t i l i z e d a s m e a s u re d by t h e J i - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - j 1 9 I b i d . , p . 1 8 . j 1 10 io u tp u t o b t a i n e d f o r t h e r e s o u r c e s e x p e n d e d ." I n a b r o a d an d fu n d a m e n ta l s e n s e t h e p ro b le m o f i n - j e r e a s i n g p r o d u c t i v i t y may be s a i d t o b e t h e p ro b le m o f m ak- iin g m ore e f f i c i e n t u s e o f a l l t y p e s o f r e s o u r c e s i n em ploy- j m e n t an d o f u s i n g th em t o p ro d u c e a s many goods a n d s e r v i c e s a s p o s s i b l e a t t h e lo w e s t p o s s i b l e r e a l c o s t . T h is i m p l i e s | a b r o a d d e f i n i t i o n o f b o t h o u tp u t a n d i n p u t . The c o n c e p t o f o u tp u t w i l l i n c l u d e a l l goods a n d s e r v i c e s w h ic h s a t i s f y ' {w ants. I n p u t , when p r o d u c t i v i t y i s u s e d i n t h i s b r o a d and j {fu n d am en tal s e n s e , w i l l m ean t h e e f f o r t s a n d s a c r i f i c e s o f j , I l a l l t h o s e who c o n t r i b u t e t o p r o d u c t i o n . ! I ! | T h i s , h o w e v e r, i s a somewhat a b s t r a c t c o n c e p t; a n d j < i i j • i t i s s t a t i s t i c a l l y u n m e a s u ra b le , s i n c e t h e e f f o r t s and ; I { s a c r i f i c e s in v o lv e d i n p r o d u c t i o n a r e v a r i e d an d im p o s s ib le t o ad d t o g e t h e r . I t i s p o s s i b l e , b y r e l a t i n g o u tp u t t o t h e ' ! 1 ;i n p u t o f a p a r t i c u l a r f a c t o r o f p r o d u c t i o n ( l a b o r , l a n d , o r j c a p i t a l ) , t o a r r i v e a t a c o n c e p t w h ic h i s , i f one i s w i l l - j ;in g t o make some r a t h e r a r b i t r a r y a s s u m p tio n s , s t a t i s t i - ! c a l l y m e a s u r a b le an d w h ic h may be c a l l e d t h e p r o d u c t i v i t y J jof t h a t f a c t o r o f p r o d u c t i o n . W h ile t h e c o n c e p ts o f t h e ' ! ! { p r o d u c t i v i t y o f l a n d a n d o f c a p i t a l e q u ip m e n t a r e v e r y im - J i I p o r ta n t f o r c e r t a i n p u r p o s e s , t h e c o n c e p t o f t h e p r o d u e - 1 j t i v i t y o f l a b o r h a 3 r e c e i v e d a g r e a t d e a l o f a t t e n t i o n i n j i i I i ! ----------------------------------- I j 10H irara S . D a v is , oj>, c l t . , p p . 5 - 6 . I r e c e n t y e a r s . I t s h o u ld be m e n tio n e d t h a t when t h e word p r o d u c t i v i t y i s u s e d w i t h o u t f u r t h e r q u a l i f i c a t i o n , t h e p r o d u c t i v i t y o f l a b o r i s u n d e r s t o o d . The p r o d u c t i v i t y o f l a b o r i n an economy a s a w hole i s th e r a t i o o f t o t a l o u tp u t ito t o t a l l a b o r i n p u t ; t h e p r o d u c t i v i t y o f l a b o r i n a p a r t i c u l a r i n d u s t r y o r p l a n t i s t h e r a t i o o f t h e o u tp u t o f t h a t i I 11 • 'i n d u s t r y o r p l a n t t o l a b o r i n t h e i n d u s t r y o r p l a n t . j T h is c o n c e p t o f t h e p r o d u c t i v i t y o f l a b o r , th o u g h i n ! j some ways o f l e s s f u n d a m e n ta l s i g n i f i c a n c e t h a n t h e c o n c e p t i iof t h e r a t i o o f o u tp u t t o t h e i n p u t o f r e s o u r c e s i n g e n e r a l , ; | !is a r e l a t i v e l y s im p le c o n c e p t i n t h a t t h e d i f f i c u l t i e s o f ; l a d d in g t o g e t h e r u n l i k e t h i n g s a r e r e d u c e d i f we r e l a t e o u t - ; I p u t t o l a b o r i n p u t a l o n e . Even s o , t h e r e re m a in t h e p ro b lem s o f e x p r e s s i n g d i f f e r e n t k i n d s o f l a b o r i n hom ogeneous u n i t s . M o re o v e r, t h i s c o n c e p t i s o f s p e c i a l i n t e r e s t i f ; i } jone i s t h i n k i n g o f t h e economy a s a w hole and o f t h e c o n - j i t r i b u t l o n t h a t h i g h e r p r o d u c t i v i t y c a n make t o s o c i a l p r o g - j I ; r e s s . P r o v id e d t h o s e I n em ploym ent re m a in a c o n s t a n t f r a c - i t i o n o f t h e t o t a l p o p u l a t i o n , an i n c r e a s e i n t h e p r o d u c - ! | I j t i v i t y o f l a b o r i n an economy a s a w hole m eans a n i n c r e a s e ' jin t h e am ount o f w e a l t h p ro d u c e d p e r h e a d o f p o p u l a t i o n . j The c o n c e p t o f p r o d u c t i v i t y o f l a b o r i s a l s o o f c o n s i d e r - | \ ! i 1 ____________________________ I ; ! ! I n t e r n a t i o n a l L a b o r O f f i c e , H ig h e r P r o d u c t i v i t y i n ' M a n u f a c tu r in g I n d u s t r i e s (G en ev a; I n t e r n a t i o n a l L a b o r O ffic e , - v . - B . j i i j !a b le im p o rta n c e i n c o n n e c tio n w i t h wage p o l i c i e s . | Though t h e i n p u t o f l a b o r i s a s i m p le r c o n c e p t t h a n jth e i n p u t o f r e s o u r c e s i n g e n e r a l , e v e n t h e i n p u t o f l a b o r j jmay be th o u g h t o f i n d i f f e r e n t w ays. I f i t i s t a k e n t o j i I m ean t h e am ount o f e f f o r t p u t i n b y w o r k e r s , i t f o l l o w s t h a t an i n c r e a s e i n o u tp u t p ro d u c e d a t t h e c o s t o f c o r r e - j I s p o n d in g ly g r e a t e r e f f o r t w i l l n o t be r e g a r d e d as a n i n - j c r e a s e i n l a b o r p r o d u c t i v i t y . The am ount o f e f f o r t p u t i n , j i s , h o w e v e r, an e x c e e d i n g ly d i f f i c u l t c o n c e p t t o m e a s u r e . i IFor s t a t i s t i c a l p u r p o s e s I t i s u s u a l l y n e c e s s a r y t o f a l l fback, a s a m e a su re o f e f f o r t , on m a n -h o u rs , m an-w eeks o r j ! I m a n - y e a r s . F o r c e r t a i n o t h e r p u r p o s e s , t o o , i t may b e u s e f u l t o t h i n k o f l a b o r i n p u t a s t h e am ount o f tim e r a t h e r 't h a n t h e am ount o f e f f o r t d e v o te d t o w o rk in g . F o r e x a m p le 5 • I io u tp u t p e r m a n -h o u r o r p e r m an-w eek i n t h e economy a s a j iwhole h a s a c l o s e c o n n e c ti o n w i t h t h e q u e s t i o n o f how f a r I | I 'a v e ra g e h o u r l y o r w e e k ly w ages c a n b e r a i s e d w ith o u t g i v i n g ; i , r i s e t o c o s t i n f l a t i o n . j A lth o u g h , f o r e e r t a i n p u r p o s e s , i t i s so m etim es im - j p o r t a n t t o f o c u s a t t e n t i o n on t h e p r o d u c t i v i t y o f l a b o r , ■ t h e r e a r e d a n g e rs i n d o in g s o . T h e re i s n o t o n ly t h e d a n - j jg er o f b e in g m is u n d e r s to o d an d b e i n g th o u g h t t o p l a c e undue j ;e m p h a sis u p o n w h at can be done by w o rk e rs t o I n c r e a s e p r o - ! d u c t i o n . T h ere i s a l s o t h e d a n g e r o f g i v i n g i n s u f f i c i e n t ( I I a t t e n t i o n t o p ro b le m s o f w hat c a n b e done t o i n c r e a s e p r o - I i d u c tio n b y m ak in g a m ore e f f i c i e n t u s e o f o t h e r f a c t o r s o f ! j p r o d u c t io n . I n i n d u s t r i e s w here l a b o r c o s t s a r e low i n [c o m p a riso n w i t h m a t e r i a l c o s t s a n d c a p i t a l c o s t s , a t t e n t i o n jmay n e e d t o b e g iv e n p r i m a r i l y t o econom ize m a t e r i a l s o r j f u e l o r t o m ake b e t t e r u s e o f m a c h in e s . In u n d e r d e v e lo p e d c o u n t r i e s , e s p e c i a l l y , th e s h o r t a g e o f c a p i t a l an d l a n d and i t h e a b u n d a n c e o f l a b o r a r e o f t e n s u c h a s t o make i t m ore j i im p o r ta n t t o i n c r e a s e o u tp u t p e r m a c h in e o r p e r a c r e o f 1 12 1 l a n d t h a n t o i n c r e a s e o u t p u t p e r w o r k e r. j F o r t h e p u r p o s e s o f t h i s s tu d y , t h e n , t h e p ro b le m o f [ p r o d u c t i v i t y w i l l b e th o u g h t o f i n t h e b r o a d e r s e n s e a s t h e p ro b le m o f u t i l i z i n g a s e f f i c i e n t l y a s p o s s i b l e a l l t y p e s (of r e s o u r c e s i n u s e . | A u s e f u l d i s t i n c t i o n may be made b e tw e e n t e c h n i c a l i an d econ om ic p r o d u c t i v i t y . T e c h n ic a l p r o d u c t i v i t y m eans [the e f f i c i e n c y w ith w hich m a n -h o u rs o f l a b o r a r e u s e d i n t p a r t i c u l a r p r o c e s s e s . An i n c r e a s e i n t e c h n i c a l p r o d u c - I | t i v i t y m eans t h a t we h a v e l e a r n e d t o do some p a r t i c u l a r jo b w ith fe w e r m a n -h o u rs o f l a b o r . Econom ic p r o d u c t i v i t y , on jthe o t h e r h a n d , m eans t h e e f f i c i e n c y w i t h w h ic h t h e m an- ^ pow er o f t h e n a t i o n i s a l l o c a t e d t o t h e jo b s i n w h ic h i t i s I < i m ost e f f e c t i v e . F o r e x a m p le , a movement o f w o rk e rs fro m t h e I fa r m t o t h e f a c t o r i e s l e a d s t o an i n c r e a s e i n eco n o m ic p r o - ! I i : » : i 1 2 I b i d . , p p . 9 - 1 0 . d u c t i v i t y , s i n c e one h o u r ’ s w ork i n a f a c t o r y p r o d u c e s m ore m a rk e t v a lu e (on t h e a v e r a g e ) t h a n one h o u r ’ s w ork on a fa r m . J I I I . INPUT-OUTPUT MEASUREMENT I f l a b o r tim e i s t o b e t a k e n a s f u l l y r e p r e s e n t a t i v e o f t o t a l r e s o u r c e s e x p en d e d i n a p r o d u c t i v e u n d e r t a k i n g , one o f tw o c o n d i t i o n s m u st p r e v a i l : e i t h e r l a b o r tim e ex p e n d e d m ust b e so l a r g e i n r e l a t i o n t o t h e o t h e r r e s o u r c e s ! i : • t h a t t h e t o t a l i s c h a n g e d a p p r e c i a b l y o n ly b y c h a n g e s i n i j ith e l a b o r ite m , o r c h a n g e s i n t h e o t h e r r e s o u r c e s i n p u t s I [must move i n t h e same d i r e c t i o n a n d a t t h e same r a t e a s l a b o r . The l a b o r c o r r e s p o n d i n g t o a g iv e n p r o d u c t i o n may be [ d e fin e d i n s e v e r a l w ays, a n d v a r i o u s k in d s o f u n i t s may b e ! ! | lu sed t o m e a su re i t . The l a b o r i n p u t may i n c l u d e : ( a ) o n ly , I i th a t l a b o r w h ich i s u s e d f o r a d e f i n i t e g ro u p o f o p e r a t i o n s ; j j(b ) b o t h t h e p r e l i m i n a r y work a n d t h e i n p u t f o r t h e m anu- [ j f a c t u r e o r p r e p a r a t i o n o f t h e ra w m a t e r i a l s , an d p a r t o f t h e l a b o r in p u t c o r r e s p o n d i n g t o t h e m a n u f a c tu r e o f th e [m a c h in e ry , e q u ip m e n t, e t c . The f i r s t d e f i n i t i o n i s g e n e r - ' . a l l y u s e d a s b e i n g l e s s c o m p lic a te d and e a s i e r t o m e a s u re , j i •^Ibid. , p. 3. I t i s t h e one u s e d b y t h e B u re a u o f L a b o r S t a t i s t i c s . " ^ In s t u d y i n g t h e i n p u t o f l a b o r we m u st c o n s i d e r n o t o n ly t h e num ber o f w o rk e rs , b u t a l s o t h e i r h o u r s o f w ork. The q u a n t i t y o f l a b o r in p u t t h e n i s m e a s u re d i n te r m s o f t o t a l m a n -h o u r s . I d e a l l y , a t l e a s t , i n p u t o f l a b o r s h o u ld a l s o t a k e a c c o u n t o f t h e q u a l i t y o f t h e m a n - h o u rs . One c a n n o t e q u a te one h o u r o f a g r a d u a t e e n g i n e e r ’ s tim e w i t h one h o u r o f t h e s e r v i c e s o f a n u n t r a i n e d a p p r e n t i c e . A ch an g e i n a n y p r o c e s s w h ic h s u b s t i t u t e s one u n s k i l l e d m a n -h o u r f o r one p r o f e s s i o n a l m an -h o u r m u s t, b y a l l r e a l i s t i c s t a n d a r d s , b e c o n s i d e r e d a l a b o r - s a v i n g i n n o v a t i o n . The n a t u r e o f c a p i t a l a s a f a c t o r o f i n p u t i s some w hat m ore d i f f i c u l t t o a n a l y z e . The c a p i t a l u s e d by p r o d u c e r s i s em b o d ied i n th e fo rm o f b u i l d i n g s , m a c h in e r y , s t o c k s o f g o o d s, a c c o u n ts r e c e i v a b l e , a n d s i m i l a r a s s e t s . B ut we m u st n o t im a g in e t h a t t h e i n p u t o f c a p i t a l i s t o be m e a s u re d i n te r m s o f t h e c u r r e n t consumption o f su c h v a lu e s 1 1 i n t h e fo rm o f w ear and t e a r a n d o b s o l e s c e n c e . T h is i s th e .p ro b lem o f d e p r e c i a t i o n a n d i t i s an e n t i r e l y d i f f e r e n t I J m a tte r . The c o n su m p tio n o f c a p i t a l v a l u e s may be c o n s i d - je re d a n i n t e r m e d i a t e s t a g e i n t h e p r o d u c t i v e p r o c e s s , i n -th e same way a s t h e c o n su m p tio n o f m a t e r i a l s . Such c o n - : ^ M e a s u r e m e n t o f P r o d u c t i v i t y , M ethods U sed b y t h e B u re a u o f L a b o r S ta tiS T T ic s iri t h e U n ite d S t a t e s , op. c i t . , p . 1 7 . 's u m p tio n i s n o t one o f t h e u l t i m a t e f a c t o r s o f i n p u t . I L and m ust a l s o b e i n c l u d e d a s one o f t h e ite m s o f i n - | i p u t. T h is t e r n i s u s e d by e c o n o m is ts i n a b r o a d s e n s e t o i n c l u d e e v e r y t h i n g t h a t i s p r o v i d e d b y n a t u r e w i t h o u t m an’ s! i I a s s i s t a n c e . The s o i l on w h ic h we grow o u r c r o p s , t h e m e ta l^ i n t h e g ro u n d , t h e w a te r i n o u r s tr e a m s , a l l t h e s e t h i n g s e x c e p t i n s o f a r a s t h e y h a v e b e e n m o d if i e d by man may be co m p reh en d ed u n d e r t h e t i t l e o f l a n d . T h ese r e s o u r c e s a r e j l i m i t e d i n q u a n t i t y , a n d t h e i r u s e f o r one p u rp o s e may e n t a i l th e s a c r i f i c e o f o t h e r u s e s t o w h ic h th e y m ig h t b e p u t . ! i The e x t e n t t o w h ic h t h e y a r e u s e d i n t h e p r o d u c t i v e p r o c e s s ! 15 I m ust be c o n s i d e r e d a s a f a c t o r o f i n p u t . I t i s e a s y t o g e t t h e i m p r e s s io n t h a t t h e o n ly p r o b lem i n m e a s u r in g o u tp u t f o r p r o d u c t i v i t y p u r p o s e s i s t o j f i n d some way o f a d d in g t o g e t h e r d i v e r s e k i n d s o f p r o d u c t s !when a w h o le n a t i o n o r a n i n d u s t r y su c h a s e l e c t r i c a l igoods m a n u f a c t u r in g i s i n v o lv e d w ith p r o d u c t s r a n g i n g fro m i i | j g ia n t g e n e r a t o r s t o t i n y e l e c t r o n i c t u b e s . A f t e r a l l , ' I th e r e a r e many i n d u s t r i e s f o r w h ic h some s im p le p h y s i c a l j u n it I s commonly u s e d t o gauge volum e o f o u t p u t su c h a s j num ber o f a u to m o b i le s , y a r d s o f c o t t o n t e x t i l e , o r t o n s o f ! i i e o a l. T h ese s im p le p h y s i c a l m e a s u r e s , h o w e v e r, a r e n o t j ^ P e t e r S t e i n e r an d W illia m G o ld n e r, P r o d u c t i v i t y j !(B e r k e le y : I n s t i t u t e o f I n d u s t r i a l R e la tio n s T U n i v e r s i t'y i !of C a l i f o r n i a , 1 9 5 2 ), p p . 2 -3 - I I 20 i J n e c e s s a r i l y t h e a p p r o p r i a t e o n es t o u s e w ith i n p u t f o r gaug- jin g p r o d u c t i v i t y p e rf o r m a n c e , f o r t h e y do n o t n e c e s s a r i l y I j r e f l e c t t h e r e s u l t s a c h ie v e d w hen t h e i n p u t r e s o u r c e s w ere b e i n g e m p lo y e d . I T h e r e a r e s e v e r a l ways i n w h ic h an o r d i n a r y p h y s i c a l m e a su re o f o u tp u t may be i n a d e q u a te f o r p r o d u c t i v i t y p u r p o s e s e v e n i f o n ly one p r o d u c t i s i n v o lv e d . F i r s t , t h e o u tp u t o f a p l a n t , com pany, o r i n d u s t r y i s commonly th o u g h t • jof a s t h e volum e o f c o m p le te d p r o d u c t , b u t t h i s a p p ro a c h ; I ! • n e g le c ts w ork i n p r o c e s s w h ic h i s t h e c o n t i n u a l i n p u t a p p l i c a t i o n o f v a lu e t o t h e p r o d u c t . So t h e l o n g e r t h e p e - ir io d o f tim e c o v e r e d by a p r o c e s s and t h e s h o r t e r t h e tim e j ! p e r i o d f o r w hich p r o d u c t i v i t y c h a n g e i s b e i n g m e a s u re d , t h e ( ( g r e a t e r i s t h e n e e d f o r m e a s u r in g o u tp u t b y w ork accom p l i s h e d d u r i n g t h e p r o d u c t i v i t y p e r i o d r a t h e r t h a n b y p r o d - i juct c o m p le te d . A s e c o n d a n d r e l a t e d d e f e c t o f c u s to m a ry volum e i m e a s u r e s o f p r o d u c t i o n i s t h a t t h e y w i l l n o t r e f l e c t I :changes i n d e g re e o f p r o c e s s i n t e g r a t i o n a l t h o u g h s u c h i c h a n g e s w i l l be im m e d ia te ly r e f l e c t e d i n volum e o f i n p u t . j ' A t h i r d p ro b le m t h a t a r i s e s i n u s i n g c u s to m a ry o u t p u t d a t a i s t h a t t h e y f a i l t o show c h a n g e s i n th e p r o d u c t t Jwhich may h a v e r e q u i r e d m arked c h a n g e s i n i n p u t ; t h a t i s , j I ! ;what w ould a p p e a r t o b e a ch an g e i n p r o d u c t i v i t y m ig h t o n ly ; I b e a ch an g e i n a p r o d u c t 's s p e c i f i c a t i o n s . I f t h e l a b o r 21 I I n p u t o f a p a r t i c u l a r k i n d o f c o t t o n c l o t h , f o r e x a m p le , i s a d d e d due t o some c h a n g e s i n a p r o d u c t ’ s s p e c i f i c a t i o n s , i i th e y a rd a g e f o r t h a t t y p e o f c l o t h a s a w ho le w ould n o t r e - ! ! • ! f l e e t any ch an g e i n o u tp u t a lt h o u g h l a b o r a n d o t h e r i n p u t r e q u i r e m e n t s m ig h t h a v e t o b e c h a n g e d c o n s i d e r a b l y . T h is , j o f c o u r s e , i s n o t t r u e when t h e r e i s an I n c r e a s e i n o u tp u t due t o m ore demand b e c a u s e o f t h a t c h a n g e i n t h e p r o d u c t ’ s s p e c i f i c a t i o n s . I S t i l l a n o t h e r d i f f i c u l t y w ith o r d i n a r y d a t a on v o l - | I ume p r o d u c e d i s t h a t i t f a i l s t o r e f l e c t t h e o u tp u t o f a s - j s o c l a t e d s e r v i c e s w h ic h may h a v e no b e a r i n g on c u r r e n t p r o - j ! jd u e tio n . P o s s i b l y t h e m ost s t r i k i n g ex am p le i s t h a t o f t h e I ( e x p e rim e n ta l l a b o r a t o r i e s w h ic h a r e now m a i n t a i n e d b y many I ^com panies. The p r o d u c t o f s u c h w ork i s a n a d d i t i o n t o t I t e c h n i c a l k n o w led g e t h a t may r e q u i r e y e a r s o f f u r t h e r r e - : ; ! (S earch a n d t e s t i n g b e f o r e i t r e s u l t s i n c o m m e rc ia l o u t p u t , j I f an y r e c o g n i t i o n I s t o b e made o f t h i s p r o d u c t i n p r e s e n t j I p r o d u c t i v i t y a n a l y s i s , p r o b a b ly t h e m o st p r a c t i c a b l e way w o u ld be t o d e d u c t t h e m anpow er and o t h e r r e s o u r c e s fro m jthe i n p u t s i d e o r , i n o t h e r w o rd s, e m it b o th t h e i n p u t an d ‘ n u t p u t i n v o lv e d a n d n o t j u s t t h e o u t p u t . 1^ : I j In g e n e r a l , t h e p ro b le m s o f o u t p u t m e a su re m e n t t h a t i jean a r i s e f o r one s im p le p r o d u c t in p r o d u c t i v i t y a n a l y s i s j ; i i i ............................................... ..........—— ■ I ■^Hiram S. Davis, o£. cit., pp. 9-10. 22 I a r e b e s t s o l v e d b y t h e same m eth o d t h a t h a s t o be u s e d when q u i t e d i f f e r e n t p r o d u c t s a r e i n v o l v e d . T h is m eth o d i s t h a t o f c o m b in in g t h e d i f f e r e n t p r o d u c t s b y w e i g h ti n g o r a s s i g n i n g some m e a su re o f im p o rta n c e a c c o r d i n g t o a common s c a l e , e i t h e r t o t h e q u a n t i t i e s i n v o lv e d o r t o t h e q u a n t i t i e s c o n v e r t e d t o r e l a t i v e num bers and a g g r e g a t i n g . V a rio u s s c a l e s j o f im p o rta n c e m ig h t b e u s e d , b u t o n ly tw o a r e u s u a l l y m ore j j u s e f u l f o r p r o d u c t i v i t y p u r p o s e s . I n c o n s i d e r i n g t h e r e - j !s u i t s o b t a i n e d f o r t h e r e s o u r c e s e x p e n d e d , one i s i n t e r e s t - ! ' * led i n kn o w in g e i t h e r t h e i r im p o r ta n c e i n te r m s o f t h e i r e x -: ch an g e v a lu e o r t h e i r i n p u t r e q u i r e m e n t s . i i The m o st common s y s te m s o f w e i g h ti n g r e p r e s e n t i n g 1 ! [ th e s e tw o d i f f e r e n t v a lu e s i n c o m p ilin g o u tp u t a g g r e g a t e s i f o r p r o d u c t i v i t y a n a l y s i s h av e b e e n w e i g h ti n g by v a lu e a d d - ied an d b y l a b o r r e q u i r e m e n t s . V alue a d d e d i s e s s e n t i a l l y a ' j s a l e s - v a l u e w e ig h t, f o r i t i s s a l e s v a lu e l e s s c o s t o f p r o - j [ d u c tio n , o v e rh e a d , e t c . , l e s s d i r e c t l a b o r . L a b o r r e q u i r e - , i I [m ents, on t h e o t h e r h a n d , a r e a c o s t w e ig h t a l t h o u g h , i f | e x p r e s s e d i n l a b o r t i m e , t h e y a r e a fo rm o f r e a l c o s t . jW hether a s a l e s o r c o s t v a l u e w e i g h ti n g s y s te m i s u s e d w i l l !d e p en d on w hat one w a n ts t o m e a s u r e . I f t h e s h i f t i n g o f i . [ r e s o u r c e s fro m lo w e r t o h i g h e r v a l u e p r o d u c t i s t o b e i n - ! e lu d e d a s a n i n c r e a s e i n o u t p u t , t h e n a s a l e s - v a l u e s y s te m | *such a s v a l u e a d d e d s h o u ld b e u s e d . I f , h o w e v er, o n ly t h e t e f f e c t o f a ch an g e i n t h e r e s o u r c e s u s e d t o p ro d u e e a good j 23 o r s e r v i c e , f r e e o f t h e i n f l u e n c e o f p r o d u c t s h i f t s , i s t o be i n c l u d e d , a c o s t o r i n p u t - r e q u i r e i a e n t w e ig h t s h o u ld b e u se d * I n t h e l a t t e r c a s e , i f p r o d u c t i v i t y i s b e in g m eas* \ . I Jured b y t h e r a t i o o f o u tp u t t o l a b o r tim e e x p e n d e d , o u tp u t j i icom ponents o v e r tim e s h o u ld b e w e ig h te d by l a b o r tim e r e - i i q u i r e d i n t h e p e r i o d c h o s e n a s t h e b a s e ; and i f t h e r a t i o o f o u t p u t t o t o t a l i n p u t i s b e i n g m e a s u re d , o u tp u t s h o u ld 1 b e w e ig h te d o r r e v a l u e d b y b a s e - p e r i o d p r i c e s , a d j u s t e d t o 17 f u l l econom ic c o s t s . ; _______________________ | 1 7 I b i d . , p p . 1 0 -1 1 . i i | CHAPTER I I I j | | FACTORS AFFECTING EFFICIENCY AND PRODUCTIVITY j i I n t h e p r e c e d i n g c h a p t e r m e a n in g an d m easu rem en t o f | p r o d u c t i v i t y was d i s c u s s e d . T h is c h a p t e r p r e s e n t s some o f i I ! ( | t h e a v a i l a b l e k n o w led g e c o n c e r n in g f a c t o r s w h ich a f f e c t t h e ; I r a t e o f w ork a n d e f f i c i e n c y o f p e r f o r m a n c e . The aim i s t o j d i s c u s s m e a s u re s w h ic h i n c r e a s e o r d e c r e a s e t h e c a p a c i t y o f ■ t h e i n d i v i d u a l t o p e rf o r m , o r t h e y a f f e c t p r i m a r i l y t h e e a s e o r d i f f i c u l t y o f t h e work i t s e l f r a t h e r t h a n c o n t r o l l i n g ! ! d i r e c t l y t h e e f f o r t w h ic h t h e i n d i v i d u a l p u t s f o r t h i n h i s [ a c t i v i t i e s . | I . INNOVATIONS I i j N e i t h e r l e a d e r s h i p i n s c i e n c e n o r i n t e c h n o lo g y ! I | (g u a ra n te e s l e a d e r s h i p i n p r o d u c t i v i t y o f goods and s e r v i c e s . i | E u r o p e ’s su p re m a c y I n s c i e n c e d i d n o t keep i t s te c h n o lo g y i | and p r o d u c t i v i t y a h e a d o f N o rth A m e ric a , n o r d i d I t s t e c h n o l o g i c a l l e a d e r s h i p i n many I n d u s t r i e s p r e s e r v e s u p e r i o r i t y i n p u t p u t p e r m a n -h o u r a n d o u tp u t p e r u n i t o f c a p i t a l . i The i n t i m a t e r e l a t i o n s h i p o f s c i e n c e and t e c h n o l o g y jis new t o t h e w o r ld . I n t h e c l a s s i c a l p e r i o d , t h e r e was no (c o n n e c tio n . T e c h n o lo g y was em bedded i n t h e s k i l l s o f t h e llow er c l a s s e s ; s c i e n c e was t h e p o s s e s s i o n o f t h e u p p e r I c l a s s e s . T he lo w e r c l a s s e s p e rf o rm e d t h e t a s k s o f p r o d u c - , t i o n ; t h e u p p e r c l a s s e s u s e d s c i e n c e p r i m a r i l y t o d e v e lo p m a rv e lo u s t o y s . The l a t e M id d le A ges an d t h e R e n a is s a n c e ! saw s c i e n c e a n d te c h n o lo g y becom e j o i n t p o s s e s s i o n s , b u t I * I t e c h n o lo g y c o n ti n u e d i t s a d v a n c e i n d e p e n d e n t l y o f s c i e n c e , j S c ie n c e was rem ad e b y t e c h n o lo g y i n t h e s e v e n t e e n t h an d J ( e i g h t e e n t h c e n t u r i e s , y e t , n o t u n t i l t h e n i n e t e e n t h c e n t u r y j I d id s c i e n t i f i c r e s e a r c h b e g i n t o a f f e c t t e c h n o l o g y . E ven j t h e n , l i t t l e m ore t h a n a c a s u a l a b s o r p t i o n o f s c i e n t i f i c ; • r e s u l t s i n g a s l i g h t i n g and b l e a c h i n g o c c u r r e d . O nly i n ' jthe l a s t q u a r t e r o f t h e n i n e t e e n t h c e n t u r y d i d r e a l l y s y s - ' 1 ■ jte m a tic a p p l i c a t i o n o f s c i e n c e t o i n d u s t r y b e g i n . : i D e s p ite t h e f a c t t h a t we l i v e i n a c h a n g in g w o rld , Jthe i n n a t e c h a r a c t e r i s t i c s and p o t e n t i a l i t i e s o f human b e - I |in g s re m a in e f f e c t i v e l y c o n s t a n t . We m u st n o t e x p e c t t h a t ! I p r o g r e s s c a n b e a c h i e v e d t h r o u g h g r e a t e r i n d i v i d u a l s t r e n g t h I Jor c l e v e r n e s s o r e f f o r t b e i n g a p p l i e d i n d o in g t h e same o ld Jth in g s by t h e same o l d m e th o d s . S i g n i f i c a n t g a in s i n p r o d u c t i v i t y d e p en d on f i n d i n g and u s i n g b e t t e r ways o f accom - j i .p l i s h i n g t h e e n d s we s e t f o r o u r s e l v e s . I n t h i s c o n t e x t a ! I I ( " b e t t e r ” way i s t o be u n d e r s t o o d a s a m eth o d w h ic h a t t a i n s ! I t h e same r e s u l t w i t h l e s s l a b o r . I n n o v a t i o n may b e t h e i n t r o d u c t i o n o f a new t o o l o r I i ! 1 i . , I Y a le B ro z e n , " R e s e a r c h , T e c h n o lo g y , a n d P r o d u c t i v - , I t y , " I n d u s t r i a l P r o d u c t i v i t y (C ham paign, 1 1 1 .: I n d u s t r i a l R e s e a r c h A s s o c i a t i o n , 1 9 5 l ) > P P . 2 5 -2 6 . ja new m a c h in e . H i s t o r i c a l l y l a b o r - s a v i n g i n n o v a t i o n s h a v e , j If o r t h e m ost p a r t , t a k e n t h e fo rm o f a t r a n s f e r t o pow er J j jequ ipm ent o f d u t i e s f o r m e r l y p e rf o rm e d b y human h a n d s . B e - ; i tw e en 1899 a n d 1939 t h e m ac h in e h o rs e p o w e r a v a i l a b l e t o eacli A m e ric a n f a c t o r y w o rk e r i n c r e a s e d b y a b o u t t h r e e - f o l d a n d t h e o u t p u t p e r m a n -h o u r i n f a c t o r i e s i n c r e a s e d i n a lm o s t j e x a c t l y t h e same p r o p o r t i o n . S in c e 193 9 , a n d p a r t i c u l a r l y 1 I i s i n c e t h e end o f W o rld War I I , t h e econom y h a s b e n e f i t e d Ifram t h e q u i c k l y a d v a n c in g a c c u m u la tio n o f s c i e n t i f i c i ! ^know ledge, a s w e ll a s h i g h l e v e l o f em ploym ent an d c a p i t a l ■ I P ! ( in v e s tm e n t. ; An i n n o v a t i o n d o es n o t n e e d t o b e i n t h e fo rm o f a new d e v i c e . I t may b e s im p ly a b e t t e r m eth o d o f h a n d l i n g t h e jo b w ith e x i s t i n g e q u ip m e n t. The d e v e lo p m e n t o f t h e •’l i n e ” m eth o d o f p r o d u c t i o n was a p o w e r f u l f o r c e i n i n - ! c r e a s i n g l a b o r ’ s p r o d u c t i v i t y . I t p e r m i t t e d t h e w o rk e r t o js ta n d s t i l l w i t h h i s t o o l s a n d m a c h in e r y , w h ile t h e work j c a m e t o him a t a c o n v e n ie n t h e i g h t f o r w o rk in g . I n n o v a t i o n may b e i n t h e fo rm o f new m a t e r i a l s o r s u p p l i e s w h ic h m ake t h e w o r k e r ’ s jo b e a s i e r a n d p e r m it him i i t o t u r n o u t m ore p r o d u c t i n an h o u r ’ s l a b o r . S u b s t i t u t i o n : i ,of m e t a l f o r p l a s t i c h a s s a v e d l a b o r i n many p r o c e s s e s . . i 1 i * — - .. ........... — ... i- . in-n i - B l i-i * i 2 ’ i P e t e r S t e i n e r an d W illia m G o ld n e r, o p . c i t . , p . 5 ; (C ongress o f I n d u s t r i a l O r g a n i z a t i o n , M a i n t a i n i n g P r o s p e r i t y ; (W a sh in g to n , D. C .: R e p o rt by C om m ittee on Econom ic IP o iic y , ! ^D epartm ent o f E d u c a ti o n an d R e s e a rc h , 1 9 5 4 ) , PP* 12-13* I j I n n o v a t i o n s h o u ld n o t b e th o u g h t o f e x c l u s i v e l y i n i I I te r m s o f t h e o c c a s i o n a l s p e c t a c u l a r r e v o l u t i o n i n i n d u s t r i a l . |m e th o d s . Such i n s t a n c e s o c c u r b u t , m ore comm only, im p ro v e d I e f f i c i e n c y r e s u l t s fro m t h e g r a d u a l a c c u m u la tio n o f many c h a n g e s , e a c h one o f w h ic h i s m in o r b y i t s e l f . The p r o c e s s o f i n n o v a t i o n i s so g r a d u a l a n d so c o n tin u o u s t h a t we e i t h e r f o r g e t t h a t i t g o e s on o r e l s e t a k e i t f o r g r a n t e d . We f o r g e t t h a t i n m any human s o c i e t i e s ways o f d o in g t h i n g s re in a in u n c h a n g e d f o r c e n t u r i e s a n d d e p a r t u r e s fro m e s t a b l i s h e d p r o c e d u r e s a r e e i t h e r f o r b i d d e n by la w o r im p eded by !a s u p e r s t i t i o u s a d h e r e n c e t o c u sto m . An a t t i t u d e w h ic h a c - ! e e p t s t h e d e s i r a b i l i t y a n d t h e p r a c t i c a l i t y o f t e c h n o l o g i c a l ch an g e i s an e s s e n t i a l p r e r e q u i s i t e t o p r o g r e s s . T h is |i s n o t an a t t i t u d e w h ic h c a n b e t a k e n f o r g r a n t e d . ^ I I . MANAGEMENT FACTORS j . The o r i g i n a l c o n c e p ti o n i s o n ly a f i r s t s t e p i n a n y j I t e c h n o l o g i c a l i n n o v a t i o n . A w h o le s e r i e s o f i n t e r e s t s m u st! f |c o o p e r a te t o b r i n g t h e i d e a t o f r u i t f u l c o n c l u s i o n . j j The' f i r s t o f t h e s e i n t e r e s t s i s i n d u s t r i a l m anage- ' I m e n t. M anagem ent h a s t h e r e s p o n s i b i l i t y f o r t h e e f f i c i e n t , I i u t i l i z a t i o n o f m en, m a c h in e s , m a t e r i a l s , a n d f o r m ak in g t h e ; 3 ^ N a t i o n a l A s s o c i a t i o n o f M a n u f a c t u r e r s , P r o d u c t i v i t y , I Gauge o f Econom ic P e rfo rm a n c e (E conom ic P o l i c y D i v i s i o n j !S e n e s , No. 5 3 . New Y ork; P r e p a r e d by R e s e a r c h D e p a rtm e n t, 1 1 9 5 2 } , p . 6 . ! n ' 2 8 d e c i s i o n as t o w h e th e r o r n o t t o a d o p t i n n v o a t i o n s . T h is i s n o t a lw a y s e a s y , s i n c e c a r e f u l c a l c u l a t i o n i s n e c e s s a r y t o d e te r m in e w h e th e r an i n n o v a t i o n i s r e a l l y an im p ro v e m e n t. A l l t h e r a m i f y i n g e f f e c t s o f t h e c h a n g e m u st be c o n s i d e r e d , e v e n i f t h e y a r e n o t p r e c i s e l y p r e d i c t a b l e . The ju d g m en t \ o f t h e b u s in e s s m e n i n r e j e c t i n g i n n o v a t i o n s w h ic h m u st b e j r e j e c t e d i s j u s t a s i m p o r t a n t t o p r o g r e s s a s t h e i r p r o g r e s - | j I s i v e n e s s i n a d o p t i n g t h o s e w h ic h s h o u ld b e a d o p te d . C o m p e titio n f u r n i s h e s one o f t h e m o st i m p e l l i n g i s t i m u l i to w a rd h i g h e r e f f i c i e n c y . C o m p e titio n f o r c e s t h e b u s in e s s m a n t o a d o p t t h e l a t e s t a n d m o st e f f i c i e n t m e th o d s , ^ i ; jand t o im p ro v e on th e m i f p o s s i b l e . C o m p e titio n p u n is h e s i h im i f he f a i l s t o k e e p u p w ith t h e p r o c e s s i o n , a n d e v e n tu a l l y e l i m i n a t e s him i f h e r e m a in s b e h in d f o r an y lo n g p e r i o d . C o m p e titio n p e r m i ts t h e s u r v i v a l o f o n ly t h e m ost i e f f i c i e n t . The s u p e r i o r p r o d u c t i v i t y o f A m e ric an i n d u s t r y ! iis due l a r g e l y t o t h e f a c t t h a t c o m p e t i t i o n h a s a lw a y s b e e n I i I j a c c e p t e d a s t h e way o f b u s i n e s s l i f e , w h e re a s some n a t i o n s . I h a v e p r e f e r r e d t o te m p e r t h e c o m p e t i t i v e w in d b y c a r t e l s I jand some o t h e r s b y a g e n e r a l a t t i t u d e o f l i v e and l e t l i v e . T he suprem e im p o rta n c e o f t h e c o m p e t i t i v e s p i r i t i n • | f o s t e r i n g i n d u s t r i a l p r o g r e s s i s b e s t a p p r e c i a t e d b y c o n - i j t r a s t i n g t h e A m e ric a n r e c o r d w ith t h e c o u r s e o f e v e n t s i n ; | I c o u n t r i e s w h ic h h a v e p r e f e r r e d c a r t e l s a n d i n d u s t r i a l r a - ; t i o n a l i z a t i o n t o c o m p e t i t i o n . The f o l l o w i n g re m a rk s a r e ; 29 |w r i t t e n b y a C a n a d ia n who h a s h a d e x t e n s i v e e x p e r i e n c e w i t h jb o th A m e ric a n a n d B r i t i s h i n d u s t r y : G re a t B r i t a i n was v e r y w e a lth y in 1880. She h a d so j m uch money t h a t sh e h a d g ra v e d i f f i c u l t i e s i n i n v e s t i n g ' i t a l l . H u n d red s o f m i l l i o n s o f p o u n d s h a d t o b e s e n t | a b r o a d e a c h y e a r t o f i n d p r o f i t a b l e e m p lo y m en t. T h e r e ! was no l a c k o f B r i t i s h money w ith w hich t o b u y b e t t e r I e q u ip m e n t. The l e a d e r s o f B r i t i s h i n d u s t r y w ere f u l l y a w are t h a t b e t t e r i n d u s t r i a l e q u ip m e n t h a d b e e n t h e f o u n d a t i o n o f t h e i r l e a d e r s h i p i n t h e p a s t , a n d o f t h e i r g r e a t e r w e a l t h . In s p i t e o f a l l t h i s , t h o s e i n c h a r g e o f B r i t i s h i n d u s t r y a llo w e d t h e e q u ip m e n t o f A m e ric a n i n d u s t r y t o draw a h e a d o f th em by l e a p s a n d j b o u n d s b e tw e e n 1880 a n d 1919» i n b o t h t h e q u a n t i t y o f t h i s e q u ip m e n t a n d i t s q u a l i t y . ! i S h a rp an d e f f e c t i v e c o m p e t i t i o n w as t h e o n ly m eans t h a t t h e A m e ric a n G overnm ent h a s e v e r u s e d t o e n s u r e | t h a t t h e e q u ip m e n t o f t h e i r i n d u s t r i e s was k e p t f u l l y 3 j u p t o d a t e , a n d t h e i n d u s t r i e s th e m s e lv e s f u l l y e f f i - | I c i e n t . The r e s u l t s a c h ie v e d a r e am ple t e s t i m o n y t o t h e s o u n d n e s s o f t h i s p o l i c y . The B r i t i s h G overnm ent h e l d t h e same v ie w u p t o l 8 8 0 i Prom t h a t tim e o n w a rd s, t h e y sw ung s lo w ly b u t i n c r e a s - | i n g l y t o t h e o p p o s i t e v ie w . I t was a b o u t 1880 t h a t t h e ! j h e a d s o f B r i t i s h b u s i n e s s e s b e g a n t o fo rm t r a d e a s s o c i - ' j a t i o n s , p r i c e r i n g s a n d c a r t e l s , w i t h t h e i d e a o f r e - j d u c in g t h e s h a r p n e s s o f c o m p e t i t i o n , o r e v e n o f e l i m i n a t i n g i t e n t i r e l y . A t f i r s t t h e B r i t i s h G overnm ent | lo o k e d t h e o t h e r w ay. C e r t a i n l y t h e y to o k no a c t i o n t o t p r e v e n t t h e f o r m a t i o n o f t h e s e o r g a n i z a t i o n s . I n l a t e r . y e a r s , h o w e v e r, t h e y e n c o u r a g e d t h e f o r m a t i o n a n d t h e e x t e n s i o n o f t h e a c t i v i t i e s o f t h e s e a s s o c i a t i o n s .4 I B u sin e ssm e n c a n a c c e l e r a t e t h e g ro w th i n p r o d u c t i v i t y t h r o u g h a c t i v e l y s u p p o r t i n g t h e s e a r c h f o r l a b o r - s a v i n g : ;i n n o v a t i o n s . M ost l a r g e c o n c e rn s m a i n t a i n r e s e a r c h an d i 1 (dev elo p m en t d e p a r tm e n ts w h ic h s p e c i a l i z e i n t h i s ty p e o f ^ C i t e d i n P r o d u c t i v i t y , Gauge o f E conom ic P e rfo rm - a n c e , o p . c i t p. ? a c t i v i t y . P r o g r e s s i s l i k e l y t o be m ore r a p i d when t h e s e a r c h i s c a r r i e d on s y s t e m a t i c a l l y t h a n when m anagem ent s im p ly w a i t s f o r an i d e a t o b e b r o u g h t t o i t s a t t e n t i o n . i j Of c o u r s e , p r o d u c t i v i t y i s a f f e c t e d n o t o n ly b y b u s in e s s m e n ’ s b e h a v i o r and a t t i t u d e to w a r d i n n o v a t i o n s b u t j a l s o b y t h e i r d a y - t o - d a y p e rfo r m a n c e o f n o rm a l d u t i e s . 'E f f i c i e n t p l a n t l a y o u t , e f f i c i e n t s c h e d u l i n g o f w ork, e f f i c i e n t a s s ig n m e n t o f s p e c i f i c t a s k s t o s p e c i f i c p e r s o n s , ; e f f i c i e n t p u r c h a s i n g , a l l h e l p t o d e te r m in e t h e o u tp u t I 'w h ich one m a n -h o u r w i l l y i e l d . The a g g r e s s i v e e x p a n s io n o f m a r k e ts o f t e n h e l p s t o I ; i n c r e a s e p r o d u c t i v i t y . I n many p r o c e s s e s , l a r g e s c a l e p r o d u c t i o n i s m ore e f f i c i e n t t h a n s m a ll s c a l e p r o d u c t i o n . B u t i f l a r g e p l a n t s a r e t o o p e r a t e c o n t i n u o u s l y a t t h e i r o p t i mum r a t e s m anagem ent m u st f i n d a d e p e n d a b le m a rk e t f o r t h e i r o u t p u t . F i n a l l y , p r o d u c t i v i t y i s i n f l u e n c e d b y m a n a g e m e n t’s a b i l i t y t o g e t a lo n g w i t h i t s e m p lo y e e s . Em ploym ent p r a c t i c e s an d p o l i c i e s w h ic h p ro m o te a s p i r i t o f c o o p e r a t i o n c a n n o t f a i l t o i n c r e a s e t h e y i e l d i n goods a n d s e r v i c e s < fro m e a c h m a n -h o u r o f w ork. ^ I b i d . , p . 8. I I I . FINANCIAL FACTORS When an i n v e n t o r h a s d e v i s e d a new i n d u s t r i a l m eth o d , j an d when m anagem ent h a s a c c e p t e d i t a s d e s i r a b l e , s t i l l a n - | o t h e r c o n d i t i o n m u st be m et b e f o r e i t c a n b e e f f e c t i v e i n I i n c r e a s i n g p r o d u c t i v i t y . C a p i t a l m u st be fo u n d f o r f i n a n c i n g t h e i n n o v a t i o n . When v e n t u r e c a p i t a l i s p l e n t i f u l a n d c a n b e o b t a i n - a e d on r e a s o n a b l e t e r m s , m anagem ent w i l l b e e n c o u r a g e d t o ■ i j i n s t a l l new t y p e s o f l a b o r - s a v i n g e q u ip m e n t w h ic h i t w ould ■ o t h e r w i s e r e j e c t . New e q u ip m e n t, o f c o u r s e , may b e i n s t a l l e d e v e n w ith o u t an y new c a p i t a l b e i n g c o n t r i b u t e d . i T h is w ould o c c u r as o l d e q u ip m e n t was r e t i r e d a n d t h e f u n d s jwould b e p r o v i d e d f o r r e p l a c e m e n t . B ut t h e p r o c e s s i s i a c c e l e r a t e d when new c a p i t a l i s p l e n t i f u l a n d t h e r e s u l t i n g im p ro v em en t i n p r o d u c t i v i t y i s much m ore r a p i d , j The c o n t r i b u t i o n o f new c a p i t a l t o t h e im p ro v em en t I , iin p r o d u c t i v i t y s h o u ld n o t b e o v e re m p h a s iz e d . I t s h o u ld ; n o t b e th o u g h t t h a t new b u s i n e s s in v e s tm e n t somehow a u t o - I m a t i c a l l y i n c r e a s e s p r o d u c t i v i t y . I n v e s tm e n t i s o n ly a j i f p a r t o f t h e p r o c e s s and m any o t h e r c o n d i t i o n s m u st b e m et jfo r t h e p r o d u c t i v i t y g a in s t o b e r e a l i z e d . I f t h e s t a t e o f I t h e i n d u s t r i a l a r t s i n a c o u n t r y i s s u c h t h a t f o u n d a t i o n s a r e d u g b y l a b o r e r s w i t h s h o v e l s , t h e i r p r o d u c t i v i t y w i l l i n o t be i n c r e a s e d i f t h e n e c e s s a r y f u n d s a r e i n v e s t e d t o j g iv e e a c h l a b o r e r tw o s h o v e l s . W here a w o rk e r a l r e a d y h a s | 32 a l l t h e e q u ip m e n t he c an u s e , m ere in v e s tm e n t c a n n o t im - i p ro v e h i s p e r f o r m a n c e . On t h e o t h e r h a n d , w h ere an i n d u s - ; i t r i a l im p ro v em en t h a s b e e n d e v is e d new f u n d s may be n e e d e d j t o make i t e f f e c t i v e . j I t m ust b e rem em bered t h a t i n a dynam ic econom y t h e a v e r a g e p e rfo r m a n c e o f i n d u s t r y i s u s u a l l y w e l l b e lo w t h e b e s t p e rf o rm a n c e p o s s i b l e w i t h t h e l a t e s t t o o l s a n d | m a c h in e s . T h is i s i n e v i t a b l e , s i n c e e v e ry o n e c a n n o t h a v e |th e l a t e s t m o d e l. An i n d u s t r y c a n n o t s c r a p i t s e x i s t i n g i i jeq u ip m en t e v e r y tim e an i n n o v a t i o n o c c u r s . B ut t h e w id th iof t h e gap b e tw e e n a c t u a l p e rfo rm a n c e an d p o t e n t i a l l y b e s t [ p e rfo r m a n c e i s i m p o r t a n t l y i n f l u e n c e d b y t h e a v a i l a b i l i t y 6 o f c a p i t a l . IV . LABOR FACTORS i O b v io u s ly t h e c h a r a c t e r i s t i c s o f t h e l a b o r f o r c e i Sw ill h a v e a c o n s i d e r a b l e i n f l u e n c e on p r o d u c t i v i t y . I t i s ih a r d ly n e c e s s a r y t o m e n tio n t h a t t h e e m p lo y ee s s k i l l , j t r a i n i n g ,- a n d e x p e r i e n c e a r e i m p o r t a n t i n d e t e r m i n i n g t h e j ! . i r a t e o f t h e i r o u t p u t . A s k i l l e d p a p e r - h a n g e r c a n d e c o r a t e j | I ! la l i v i n g room i n a f r a c t i o n o f t h e tim e t h e a v e r a g e hom e- i jowner c a n do i t h i m s e l f , n o t t o s p e a k o f t h e d i f f e r e n c e i n | jth e q u a l i t y o f t h e f i n i s h e d j o b . T h is r e l a t i o n s h i p w o u ld I ! ____ 6 I b i d . , p p . 8 - 9 . ; i 33 ! be t r u e e v en i f t h e a v e r a g e hom e-ow ner h a d a l l t h e t o o l s o f t h e t r a d e a t h i s d i s p o s a l . T h e re a r e v e r y few jo b s a t w h ic h know-how does n o t make some d e g re e o f d i f f e r e n c e i n e f f i c i e n c y . The h e a l t h a n d m o r a le o f t h e l a b o r f o r c e a r e a l s o j i m p o r t a n t i n d e t e r m i n i n g i t s p e r f o r m a n c e . E v e ry o n e knows I fro m h i s own e x p e r i e n c e t h a t when h e i s s i c k , o r w e a ry , o r j w o r r i e d , o r d i s c o n t e n t e d , o r o p p r e s s e d w i t h a f e e l i n g t h a t 1 h e i s b e in g t r e a t e d u n f a i r l y , h i s o u tp u t s u f f e r s . ! I The h e a l t h a n d m o r a le o f t h e p o p u l a t i o n a r e d e p e n d - ! i ie n t on a l a r g e num ber o f e co n o m ic , p o l i t i c a l , a n d s o c i o - ! j l o g i c a l f a c t o r s w h ich c a n n o t b e t r a c e d i n d e t a i l h e r e . i lone f a c t o r w h ich s h o u ld be m e n tio n e d s p e c i f i c a l l y i s t h e h o u r s o f w o rk . I f t h e w o rk er i s r e q u i r e d t o s p e n d e x c e s - i s i v e l y l o n g h o u r s a t h i s jo b e a c h day o r e a c h w eek, h i s i jo u tp u t p e r h o u r w i l l v e r y l i k e l y b e r e d u c e d . T h i s r e s u l t s f jnot o n ly fro m p h y s i c a l w e a r i n e s s , b u t a l s o fro m s t a l e n e s s , ! t Iboredom , o r l a c k o f f e e l i n g t h a t l i f e i s r e w a r d i n g . T h e re i s some e v id e n c e t h a t when d u r i n g t h e e a r l y p a r t o f t h i s ! ! i je e n tu r y t h e s t a n d a r d f a c t o r y w ork d a y was r e d u c e d fro m 12 J ;to 1 0 h o u r s t h e d a i l y o u t p u t p e r w o rk e r was n o t r e d u c e d a t S a il. T h is m ig h t h a v e b e e n due p r i m a r i l y t o t e c h n i c a l a d - ! v a n c e m e n t, a s m uch a s i t was due t o t h e im p ro v e d p e r f o r m - j :of l a b o r i t s e l f . ! I I n a dynam ic econom y p r o d u c t i v i t y d e p e n d s n o t o n ly j |on t h e e f f i c i e n c y o f t h e em ployee a t t h e p a r t i c u l a r jo b h e i j i s d o in g , b u t a l s o on h i s a b i l i t y t o c h a n g e a l o n g w ith t h e t i m e s . W ith c h a n g in g te c h n o lo g y a c q u i r e d s k i l l s c a n q u i c k - i j l y beccane o b s o l e t e . The em ployee m ust h a v e t h e a d a p t a b i l i t y \ 1 a n d i n i t i a t i v e t o l e a r n new m e th o d s o r h e w i l l b e a d r a g on p r o g r e s s . H is g e n e r a l e d u c a t i o n w i l l b e a f a c t o r i n d e t e r m in in g h i s a b i l i t y t o a d a p t . E ven m ore im portant*, a r e su c h i n t a n g i b l e s a s t h e g e n e r a l s p i r i t o f t h e p o p u l a t i o n a n d i t s : i a t t i t u d e to w a r d i n d u s t r i a l p r o g r e s s . The A m e ric an p e o p le :a r e u s e d t o c o n s t a n t c h a n g e s i n p r o d u c t i v e m e th o d s . They a c c e p t a n d e v e n w elcom e t h e s e c h a n g e s . I n some c o u n t r i e s • f t h i s i s n o t so a n d p e o p le lo o k -with s u s p i c i o n on a n y a l t e r - \ j a t i o n i n t r a d i t i o n a l ways o f d o in g t h i n g s . The t r a i t o f a d a p t a b i l i t y i s e s p e c i a l l y h e l p f u l i n I ! im p ro v in g w hat i s c a l l e d econom ic p r o d u c t i v i t y . I n c r e a s e s I n e co n o m ic p r o d u c t i v i t y a r e d e f i n e d a s s h i f t s o f t h e l a b o r f o r c e fro m t h e l e s s p r o d u c t i v e t o t h e m ore p r o d u c t i v e o c c u - ! I p a t i o n s , w i t h o u t n e c e s s a r i l y a n y i n c r e a s e i n t h e p r o d u c - j ! i t i v i t y o f an y p a r t i c u l a r o c c u p a t i o n . Such s h i f t s a r e e n - j c o u ra g e d when t h e l a b o r f o r c e i s f l e x i b l e an d a d a p t a b l e . j G e o g ra p h ic m o b i l i t y i s a l s o i m p o r t a n t s i n c e i t p e r m i t s t h e i em ployee t o move t o l o c a t i o n s w h e re h i s l a b o r c an be m ore i e f f e c t i v e . The A tom ic E n e rg y p l a n t a t Oak R idge c o u ld n o t j i ! 'have b e e n b u i l t o r o p e r a t e d i f l a r g e num bers o f s p e c i a l i s t s j i I a n d s k i l l e d w o rk e rs h a d n o t b e e n w i l l i n g t o a s s e m b le on a | s p o t a lm o s t u n i n h a b i t e d p r e v i o u s l y * The p o t e n t i a l p r o d u c t i v i t y o f an i n d u s t r y c a n b e s e r i o u s l y d e p r e s s e d i f o r g a n i z e d l a b o r im p o se s m ake-w ork r u l e s . F e a t h e r b e d d i n g , t h e p r a c t i c e o f r e q u i r i n g t h e em p lo y m e n t o f p e r s o n s w hose l a b o r i s n o t n e e d e d , d i l u t e s t h e p r o d u c t i v i t y o f t h e l a b o r f o r c e * V ery o f t e n su c h r u l e s r e - [ I s u i t fro m t h e f e e l i n g t h a t a w o rk e r h a s a v e s t e d i n t e r e s t j i n h i s jo b a n d t h a t when t e c h n o l o g i c a l a d v a n c e s e l i m i n a t e i jth e n e e d f o r h i s s e r v i c e s he o u g h t t o b e k e p t on i n a s t a n d - b y c a p a c i t y . S uch a n a t t i t u d e c a n b e a s e r i o u s d r a g ■ on p r o g r e s s s i n c e i t d e s t r o y s m a n a g e m e n ts i n c e n t i v e f o r J i n s t a l l i n g l a b o r - s a v i n g c h an g e s* A v e r y i m p o r t a n t f a c t o r i n d e te r m i n i n g l a b o r p ro d u c t i v i t y i s t h e m an n e r i n w h ic h e m p lo y e e s a r e c o m p e n s a te d . The fo rm o f c o m p e n s a tio n c a n so m e tim es a c t a s an i n c e n t i v e f o r t h e em p lo y ee t o i n c r e a s e h i s h o u r l y o u t p u t . I f h e i s I i ,p a id on a p ie c e - w o r k b a s i s he knows t h a t h e w i l l b e n e f i t i i |fro m an y a d d e d e x e r t i o n o r c l o s e r a t t e n t i o n t o t h e j o b . iBut p a y s y s te m s b a s e d on t h e i n d i v i d u a l w o r k e r ’ s o u t p u t I (must b e f l e x i b l e , a n d t h e r a t e p e r u n i t o f o u tp u t m u st be i i ! I i s u b j e c t t o ch an g e when a s u b s t a n t i a l c h an g e i n t h e p r o c e s s . ! I o c c u r s . R ig id p ie c e - w o r k r a t e s w ould d e s t r o y m a n a g e m e n t’ s ; i n c e n t i v e t o a d o p t i n n o v a t i o n s w h ic h i n c r e a s e o u tp u t p e r j m a n -h o u r, s i n c e t h e b e n e f i t w ould go t o t h e e m p lo y e e s i n ! g r e a t e r e a r n i n g s p e r h o u r r a t h e r t h a n t o o w n e rs h ip i n lo w er} 36 7 wage c o s t s o r t o c u s to m e r s i n lo w e r p r i c e s . i V. THE ECONOMIC CLIMATE The d i s c u s s i o n t h u s f a r h a s i n d i c a t e d v a r i o u s ways i n w h ic h t h e b e h a v i o r o f i n v e n t o r s , m anagem ent, e m p lo y e e s, an d f i n a n c i e r s may a f f e c t t h e g ro w th o f p r o d u c t i v i t y . I n I a d d i t i o n t o a c t i o n s o f t h i s ty p e w h ich c a n b e a s c r i b e d t o j !s p e c i f i c p e r s o n s , p r o d u c t i v i t y i s i n f l u e n c e d b y c e r t a i n ; i jb ro a d b a c k g ro u n d c o n d i t i o n s w h ic h a r e t h e r e s p o n s i b i l i t y o f e v e ry o n e I n g e n e r a l b u t no one i n p a r t i c u l a r . i iThe R a te o f B u s i n e s s O p e r a tio n s The f i r s t a s p e c t o f t h e econ om ic c l i m a t e w h ic h i s l i k e l y t o e x e r t a n im p o r ta n t e f f e c t on p r o d u c t i v i t y i s t h e g e n e r a l r a t e o f o p e r a t i o n s . I s t h e econom ic m ec h an ism j o p e r a t i n g w e l l b e lo w c a p a c i t y a s I n 1932? I s i t o p e r a t i n g a p p r o x i m a t e ly a t n o rm a l s p e e d a s i n , f o r e x a m p le , 1929 o r ! ! 11948? Or i s i t o p e r a t i n g u n d e r s u c h p r e s s u r e a s t o p u t a j \ I 1 I 's e v e r e s t r a i n on t h e n a t i o n a l eco n o m ic s t r e n g t h a s i n t h e j 1 I 'p eak W orld War I I y e a r s ? J j j I I n a d e p r e s s e d p e r i o d when i n d u s t r y o p e r a t e s w e l l t I b e lo w c a p a c i t y t h e r e may b e a te n d e n c y f o r p r o d u c t i v i t y t o j i d e c l i n e , o r t o grow l e s s r a p i d l y t h a n u s u a l . D i v i s i o n o f t t l a b o r c a n n o t b e c a r r i e d as f a r a n d l a b o r f o r m a in te n a n c e j j 1 7 I i 'Ibid., pp. 9-10. a n d f o r g e n e r a l o v e r h e a d p u r p o s e s im p o se s a g r e a t e r b u r d e n p e r u n i t o f p r o d u c t . B u s in e s s i s r e l u c t a n t t o make new i n v e s tm e n ts f o r m o d e r n iz in g i t s p l a n t a n d e q u ip m e n t. i j I n s u c h a d e p r e s s e d p e r i o d , h o w e v e r, t h e r e a r e o t h e r f o r c e s m ak in g f o r an im p ro v ed l e v e l o f p r o d u c t i v i t y . A c e r t a i n p a r t o f t h e a v a i l a b l e p r o d u c t i o n f a c i l i t i e s i s p u t a s i d e , a n d t h i s i s l i k e l y t o i n c l u d e t h e l e a s t e f f i c i e n t p l a n t a n d e q u ip m e n t. A p a r t o f t h e l a b o r f o r c e i s unem p lo y e d a n d t h e e m p lo y e e s who a r e k e p t on a r e q u i t e l i k e l y j to be m ore e f f i c i e n t t h a n t h e a v e r a g e . I n a d d i t i o n , p r o f - j i t s s u f f e r s e v e r e l y a t s u c h a tim e a n d t h e p r e s s u r e o f com- j p e t i t i o n f o r c e s b u s in e s s m e n t o s e a r c h c a r e f u l l y f o r a l l p o s s i b l e m e th o d s o f im p ro v in g e f f i c i e n c y . T hus a d e p r e s s i o n c r e a t e s tw o o p p o s in g s e t s o f f a c - • * t o r s . One t e n d i n g t o i n c r e a s e p r o d u c t i v i t y an d t h e o t h e r t e n d i n g t o d e c r e a s e i t . As b u s i n e s s c o n d i t i o n s im p ro v e an d i Ith e n a t i o n m oves fro m d e p r e s s i o n t o p r o s p e r i t y t h e o p p o s i t e j s e t s o f o p p o s in g f o r c e s come i n t o p l a y . T he g r e a t e r s c a l e o f o p e r a t i o n s p e r m i t s m ore e c o n o m ic a l and m ore e f f i c i e n t I iuse o f l a b o r . I n v e s tm e n t f u n d s becom e m ore p l e n t i f u l a n d ib u s in e s s ra e n becom e m ore w i l l i n g t o m o d e rn iz e t h e i r f a c i l i t i e s . On t h e o t h e r s i d e , a s p r o s p e r i t y r e t u r n s t h e l e s s E f f i c i e n t p l a n t an d m a c h in e r y come b a c k i n t o s e r v i c e an d jth e l e s s e f f i c i e n t e m p lo y e e s a r e h i r e d b a ck an d b u s i n e s s ‘ # i ,c e a s e s t o f e e l so s t r o n g l y t h e n e c e s s i t y f o r c u t t i n g w a s te a n d im p ro v in g e f f i c i e n c y . When t h e econom y m oves fro m a s t a t e o f n o rm a l p r o s p e r i t y i n t o a p e r i o d o f i n f l a t i o n , s u c h a s d u r i n g W orld I War I I , f a c t o r s t e n d i n g t o r e d u c e e f f i c i e n c y come i n t o p l a y , i E q u ip m en t t h a t i s b a d l y o u t o f d a te i s b r o u g h t b a c k i n t o s e r v i c e . The l a b o r f o r c e i s a u g m e n te d by u n s k i l l e d s c h o o l b o y s a n d h o u s e w iv e s . H a s te and c o n f u s i o n p r e v a i l i n i n d u s - \ t r y . U n s a t i s f a c t o r y m a t e r i a l s a n d s u p p l i e s h a v e t o b e su b - ' 1 ; j s t i t u t e d f o r t h o s e u s u a l l y em p lo y ed . S h o r ta g e s o f m e t a l s ^ p rev e n t b u s i n e s s fro m m o d e r n iz in g i t s p l a n t a n d e q u ip m en t j ia t t h e u s u a l r a t e . S e l l e r s 1 m a r k e ts p r e v a i l an d i n e f f i - i c i e n t p r o d u c e r s i n some m e a su re a r e p r o t e c t e d from t h e c o n - j 8 s e q u e n c e s o f t h e i r i n e f f i c i e n c y . I iC hanges i n t h e C o m p o s itio n o f O u tp u t E v e ry econom y i s m ore e f f i c i e n t i n p r o d u c in g some ■types o f goods t h a n i t i s i n p r o d u c i n g o t h e r s . T h e r e f o r e , i ] Jany s h i f t i n o u t p u t fro m one ty p e t o a n o t h e r w i l l a f f e c t j ^the o v e r - a l l l e v e l o f p r o d u c t i v i t y . ' I An ex am p le w h ic h m akes t h i s c l e a r , a l t h o u g h i t i s I i n o t e c o n o m ic a lly t o o s i g n i f i c a n t , i s p r o v i d e d b y t h e t o b a c - > [co i n d u s t r y . T h is i n d u s t r y i s a b le t o c r e a t e one d o l l a r o f [ y a l u e w i t h m uch l e s s l a b o r i n m a n u f a c t u r i n g c i g a r e t t e s t h a n ; Jin m a n u f a c t u r in g c i g a r s . D u rin g t h e l a s t h a l f c e n t u r y J 8Ibid., p. 11. i 39 c i g a r e t t e s h a v e becom e a much l a r g e r f r a c t i o n o f t h e t o t a l o u t p u t o f t h e t o b a c c o i n d u s t r y . T h is d e v e lo p m e n t, b y i t s e l f and w i t h o u t r e g a r d f o r t h e c h a n g e s i n t h e p r o d u c t i v i t y o f t h e c i g a r e t t e an d c i g a r m a n u f a c t u r i n g p r o c e s s e s c o n - i s i d e r e d s e p a r a t e l y , h a s l e d t o an i n c r e a s e i n t h e p r o d u c t i v i t y o f t h e t o b a c c o i n d u s t r y a s a w h o le . A s i m i l a r , a n d f a r m ore i m p o r t a n t , econom ic d e v e l o p - j I jment h a s o c c u r r e d t h r o u g h t h e l o n g - t e r m s h i f t o f t h e e n t i r e A m e ric a n econom y fro m a g r i c u l t u r e t o i n d u s t r y . An h o u r 's ; I i ila b o r i n m a n u f a c t u r i n g o r i n t r a n s p o r t a t i o n p r o d u c e s f a r i ■more d o l l a r v a l u e t h a n an h o u r 's l a b o r i n a g r i c u l t u r e . The ^ d e c lin e i n t h e r e l a t i v e im p o r ta n c e o f a g r i c u l t u r e t h u s ! [ c r e a t e s a n a u to m a t i c i n c r e a s e i n t h e g e n e r a l p r o d u c t i v i t y | 9 o f t h e econom y. j O th e r E conom ic F a c t o r s t j So m any f a c t o r s i n t h e e co n o m ic c l i m a t e a f f e c t p r o - i j d u c t i v i t y . An e f f i c i e n t s y s te m o f t r a n s p o r t a t i o n i s im p o r t a n t s i n c e i t p e r m i t s g e o g ra p h ic s p e c i a l i z a t i o n w h ic h i n t u r n p ro m o te s p r o d u c t i v e e f f i c i e n c y . S t e e l p r o d u c t i o n j (could n o t be c o n c e n t r a t e d i n t h e l a r g e e f f i c i e n t m i l l s w i t h - o u t an e l a b o r a t e s y s te m f o r c a r r y i n g t h e ra w m a t e r i a l s t o ; th e m and f o r d e l i v e r i n g t h e i r p r o d u c t t o i t s c o n s u m e rs . ! ) The w i l l i n g n e s s o f t h e p u b l i c t o s a v e a n d t o i n v e s t ; 9Ibid., p. 12. i " i t s s a v i n g s i n i n d u s t r y a f f e c t s t h e r a t e a t w h ic h in n o v a - i I t io n s c a n be a d o p te d a n d t h i s i n t u r n i n f l u e n c e s t h e g ro w th i iin p r o d u c t i v i t y . The w i l l i n g n e s s o f t h e p u b l i c , a s c o n s u m e rs , t o a c c e p t new p r o d u c t s i s h e l p f u l s i n c e i t p e r m i t s i n d u s t r y t o m ake l a b o r - s a v i n g c h a n g e s i n t h e c h a r a c t e r o f * . 4 - I 0 i t s o u t p u t . V I. GOVERNMENT POLICIES I The g o v e rn m e n t c a n n o t b e o m it t e d fro m a d i s c u s s i o n o f t h e f a c t o r s w h ic h d e te r m in e t h e l e v e l o f p r o d u c t i v i t y . | ! 'H ow ever, i t s r o l e i s c h i e f l y a s e c o n d a r y o n e ; i t c a n e i t h e r idampen o r a c c e n t u a t e t h e e f f e c t s o f t h e o t h e r f a c t o r s w h ic h ! I 'have a l r e a d y b e e n m e n tio n e d . I The g o v e r n m e n t's a c t i o n i n t h e a n t i - t r u s t f i e l d i s o f c o n s i d e r a b l e im p o r ta n c e i n d e t e r m i n i n g t h e t r e n d o f p r o - i I d u c t i v i t y . C o m p e titio n i s one o f t h e m o st i m p o r t a n t s t i m u l i I jto i n c r e a s i n g e f f i c i e n c y . One o f t h e b a s i c r e a s o n s f o r t h e I [S u periority of American p r o d u c tiv ity over p r o d u c tiv ity in I jo th e r c o u n t r i e s i s t h a t t h e A m e ric an law s p r o t e c t a n d e n - i i ; jc o u ra g e c o m p e t i t i o n , an d f o r b i d u n r e a s o n a b l e m o n o p o lie s o r ; » ' l a c t i o n s i n r e s t r a i n t o f t r a d e . The c a r t e l s o r n a t i o n a l i z a t i o n i n some c o u n t r i e s a r e m e r e ly f o r p r o t e c t i n g t h e i n e f f i c i e n t a g a i n s t t h e c o n s e q u e n c e s o f i n e f f i c i e n c y . I H ow ever, a n t i - t r u s t p o l i c y may h a v e a d v e r s e e f f e c t s on p r o d u c t i v i t y i f i t d e g e n e r a t e s i n t o a p o l i c y o f h a r a s s m ent o f l a r g e c o n c e rn s m e r e ly b e c a u s e t h e y a r e l a r g e . L a rg e s c a l e p r o d u c t i o n i s o f t e n , a l t h o u g h n o t a lw a y s , e s s e n t i a l t o t h e a t t a i n m e n t o f maximum p o t e n t i a l e f f i c i e n c y . The p r o d u c t i v i t y o f t h e econom y w i l l u n d o u b t e d l y s u f f e r i f t h e A m erican i n d u s t r i a l g i a n t s a r e f o r c e d t o b r e a k u p i n t o s m a l l e r u n i t s . ; The g o v e rn m e n t may a l t e r t h e a l l o c a t i o n o f t h e p r o - • d u c t i v e r e s o u r c e s , t o t h e d e t r i m e n t o f econom ic p r o d u c - j | I j t i v i t y , b y m eans o f t a x a t i o n , t a r i f f , f i s c a l a n d s u b s id y ! i ! p o l i c i e s . H ig h c o r p o r a t e incom e t a x e s may d i s c o u r a g e i n - I v e s tm e n t i n u n d e r t a k i n g s i n v o l v i n g h i g h r i s k , s i n c e t h e \ g o v ern m en t c la im s a l i o n ’ s s h a r e o f a n y p r o f i t s b u t d o e s n o t s h a r e i n a n y l o s s e s w h ic h may d e v e l o p . The i n n o v a t i o n s j w h ich l e a d t o t h e m o st s p e c t a c u l a r i n c r e a s e s i n p r o d u c - j j t i v i t y a lm o s t i n e v i t a b l y i n v o lv e a h i g h d e g r e e o f risk.'*''*' ! ! I I j V I I . NATURAL FACTORS j I N a tu re i t s e l f p l a y s a r o l e i n d e t e r m i n i n g t h e p r o - j d u c t i v i t y o f l a b o r . The p r o d u c t i v i t y o f a g r i c u l t u r e d e - i i Spends h e a v i l y on t h e w e a t h e r . R e c e n t im p ro v e m e n ts i n y i e l d ! i : m ay b e due a s much t o good l u c k w i t h t h e w e a th e r a s t o i n - | i 1 1 I b i d . . p p . 12- 13. I I 'c r e a s e d hum an e f f i c i e n c y . The q u a l i t y , l o c a t i o n , a n d d e p th o f t h e A m e ric a n m i n e r a l d e p o s i t s d e te r m in e t o some e x t e n t t h e p r o d u c t i v i t y o f l a b o r i n t h e c o a l m in in g i n d u s t r y . C o m p a riso n s o f p r o d u c t i v i t y o f B r i t i s h c o a l m in e r s w i t h t h e p r o d u c t i v i t y o f A m e ric a n c o a l m in e r s a r e som ew hat u n f a i r , s i n c e t h e B r i t i s h m in e r m u st w ork a t a much g r e a t e r d e p t h . A lth o u g h t h e r e a l d i f f e r e n c e l i e s i n m e c h a n i z a t i o n o f U n ite d S t a t e s m in e s . Many o t h e r e x a m p le s o f n a t u r a l f a c t o r s a f f e c t i n g p r o d u c t i v i t y w i l l o c c u r t o t h e r e a d e r . Some o f t h e s e may j Ibe a l t e r e d b y human a c t i o n . The n a t u r a l f e r t i l i t y o f t h e I ' s o i l may be im p ro v e d b y f e r t i l i z a t i o n , low q u a l i t y o r e s j ! |may b e b e n e f i c i a t e d , p e r h a p s e v e n t h e w e a th e r may b e | a l t e r e d u n d e r human d i r e c t i o n s u c h a s c lo u d s e e d i n g . B ut j t h e r e i s a lw a y s a r e s id u u m o f u n a l t e r a b l e a n d u n c o n t r o l - i j l a b l e n a t u r a l f a c t o r s w h ic h m u st be t a k e n a s g i v e n . T h e s e j e x e r t a n i n f l u e n c e on p r o d u c t i v i t y w h ich i s o f v e r y g r e a t j im p o r t a n c e . ^ V I I I . OTHER FACTORS i I i i I n t h e p r e c e d i n g p a g e s some f u n d a m e n ta l f a c t o r s i J a f f e c t i n g e f f i c i e n c y a n d p r o d u c t i v i t y w ere d i s c u s s e d . The i ( f o l lo w in g p a g e s e x p l a i n t h e c o n d i t i o n s w h ic h a r e a l s o im 12_ L o c. c i t . p o r t a n t f a c t o r s i n p e rf o r m a n c e , t h a t i s , . t h e y i n c r e a s e o r d e c r e a s e t h e c a p a c i t y o f t h e i n d i v i d u a l t o p e r f o r m , o r t h e y a f f e c t p r i m a r i l y t h e e a s e o r d i f f i c u l t y o f t h e w ork i t s e l f j i r a t h e r t h a n c o n t r o l l i n g d i r e c t l y t h e e f f o r t w h ich t h e i n d i v i d u a l p u t s f o r t h i n h i s a c t i v i t i e s . An i n d i v i d u a l w ork e r e v e n i f he i s w e l l s u i t e d t o h i s o c c u p a ti o n a n d w o rk s c o n s c i e n t i o u s l y , s t i l l n e e d s t h e b e s t p o s s i b l e w o rk in g c o n d i t i o n s i f h e i s t o r e a c h maximum e f f i c i e n c y . ' ! ! | jN o ise j E f f e c t s o f n o i s e u p o n t h e n o rm a l w o rk in g r a t e o f j [w o rk e rs i n t h e i n d u s t r i a l s e t t i n g may i n d i c a t e e i t h e r v a r i - j a t i o n s i n m o t i v a t i o n , o r i n c a p a c i t y f o r p e r f o r m a n c e , o r jb o th . The l a b o r a t o r y s t u d i e s , h o w e v e r, a r e i m p o r t a n t i n i i n d i c a t i n g w h e th e r o r n o t n o i s e h a s a n e c e s s a r y e f f e c t u p o n ith e p e rfo r m a n c e o f w e l l - m o t i v a t e d w o r k e r s . The b r e v i t y o f t h e w o rk in g p e r i o d i n m o st o f t h e l a b o r a t o r y s t u d i e s g i v e s l i t t l e o p p o r t u n i t y f o r t h e w o rk e r ■ i ' *to becom e a c c u s to m e d t o t h e n o i s e . I n s p i t e o f t h i s , i t i s j I f fo u n d t h a t i n t e n s e a n d i r r e g u l a r so u n d s h a v e s u r p r i s i n g l y ! i i " 5 ! :h a r m f u l e f f e c t s . J \ D i r e c t s t u d y o f f a c t o r y p r o d u c t i v i t y , on t h e o t h e r i i 13 ■ i ^Thomas A. R yan, Work a n d E f f o r t (New Y ork : T he jR o n ald P r e s s Company, 194777™PP- 1^4*-T28; I n t e r n a t i o n a l :L a b o r O r g a n i z a t i o n , P r o d u c t i v i t y i n C oal M ines (G en ev a: ! i n t e r n a t i o n a l L a b o r O f f i c e , l 9 5 l ) , p . l £ l . ! h a n d , show s t h a t n o i s e u s u a l l y d i s t u r b s w o rk e rs a n d t h e v i b r a t i o n o f t e n i s h a r d on t h e m aichines a n d p r o d u c t s as w e ll* H ig h p i t c h e d so u n d s a r e m ore o b j e c t i o n a b l e a t lo w e r l e v e l s o f i n t e n s i t y t h a n a r e low p i t c h e d so u n d s* S i m i l a r l y , n o i s e s a t i r r e g u l a r i n t e r v a l s a r e m ore o b j e c t i o n a b l e t h a n t !c o n tin u o u s n o i s e s , t o w h ich i t i s e a s i e r t o grow a c c u s to m e d ; ; ! !I n f a c t , e a s y t a s k s t h a t a r e r o u t i n e o r d i n a r y c o n t i n u i n g j i i n o is e becom es a p a r t o f t h e e n v iro n m e n t an d becom es l e s s j 1 : h a r m f u l . f f l | I n m o st f a c t o r i e s n o i s e c a n n o t b e e l i m i n a t e d com p l e t e l y , b u t can o f t e n b e r e d u c e d o r a t l e a s t l i m i t e d t o c o n f i n e d a r e a s , t h u s r e d u c i n g h a r m f u l e f f e c t s * M ost com p a n i e s r e d u c e o v e r - a l l n o i s e i n t h e f a c t o r y by s e p a r a t i n g t h e n o i s i e s t o p e r a t i o n s fro m o t h e r w o rk , D ropham m ers, s a n d - b l a s t i n g e q u ip m e n t, g r i n d i n g m a c h in e s , p u n c h p r e s s e s , \ fo rm in g d i e s , e t c . , a r e o f t e n l o c a t e d i n s e p a r a t e b u ild in g s * When a s e p a r a t e b u i l d i n g i s n o t f e a s i b l e , t h e y a r e p u t i n a s e p a r a t e room away fro m o t h e r o p e r a t i o n s * ^ L i g h t i n g T h e re i s d i f f e r e n c e o f o p i n io n i n t h e e f f e c t o f b r i g h t n e s s i n t h e p e rfo r m a n c e o f w o rk . Some b e l i e v e t h a t a n i n c r e a s e i n i l l u m i n a t i o n may r e s u l t i n a n i n c r e a s e i n " ^ F r a n k l i n G. M oore, M a n u f a c tu r in g M anagem ent (Home wood, I l l i n o i s : R ic h a r d D. I r w i n , I n c . , 1 9 5 3 ), PP» lij-3-lh5* p e r f o r m a n c e . O th e r s m a i n t a i n t h a t e y e s t r a i n may b e d e - I c r e a s e d b y b r i g h t e r l i g h t i n g , e v en i f t h e r e i s no i n c r e a s e i n p e rfo r m a n c e t o i n d i c a t e t h e b e n e f i t . I t i s fo u n d t h a t a d d i t i o n a l l i g h t h a s m ore m a rk e d a d v g n ta g e s f o r t h e o l d e r p e r s o n -who h a s l o s t p a r t o f h i s pow er o f a c c o m m o d a tio n . L i g h t i n g f i x t u r e s s h o u l d n o t be v i s i b l e when t h e s u b j e c t i s w o r k in g . S h a d in g t h e b u l b s i s n o t e n o u g h , b e - ! c a u s e t h e s h a d e rim i t s e l f w i l l b e a b r i g h t s p o t c o n t r a s t i n g w i t h s u r r o u n d i n g d a r k e r o b j e c t s . T h e r e f o r e , t h e f i x t u r e s s h o u ld be rem o v ed fro m t h e f i e l d o f v i s i o n a l t o g e t h e r . I n d i r e c t s y s te m s o f l i g h t i n g a r e n o t a lw a y s s a t i s f a c t o r y f o r t h i s p u r p o s e , b e c a u s e t h e c e i l i n g o r w a l ls w h ic h r e f l e c t t h e l i g h t may th e m s e lv e s becam e b r i g h t s p o t s i f s u f f i c i e n t i n t e n s i t y i s s u p p l i e d a t t h e w o rk in g p l a c e . I t s h o u ld a l s o b e n o t e d t h a t b r i g h t s p o t s may b e p ro d u c e d b y h i g h l y p o l i s h e d o b j e c t s a s w e ll a s b y l i g h t i n g f i x t u r e s . W h ile t h e r e s h o u ld be n o b r i g h t a r e a s i n t h e f i e l d a ro u n d t h e w o rk , t h e r e s h o u ld a l s o b e n o v e r y d a r k a r e a s . I f a p a r t o f a room i s v e r y d a rk , l i g h t e r o b j e c t s w i l l c o n t r a s t w i t h t h e d a r k a r e a s a n d p ro d u c e t h e e f f e c t s o f s t i l l b r i g h t e r o b j e c t s . F o r t h e s e r e a s o n s i t i s u s u a l l y rec o m m ended t h a t t h e w ork p l a c e b e s u p p l i e d w i t h a m o d e ra te l e v e l o f e v e n i l l u m i n a t i o n , w ith e x t r a l i g h t f a l l i n g u p o n t h e w ork fro m f i x t u r e s w h ic h a r e ab o v e a n d b e h in d t h e w o rk e r. ■^Ryan, o £ . c i t . , p p . 1 3 8 -1 ' Hours of Work, Rest Period, and Fatigue The c h a r a c t e r i s t i c workw eek i n A m e ric a n f a c t o r i e s i s f i v e e i g h t - h o u r d a y s o r f o r t y h o u r s p e r w eek. D u rin g t h e 1 9 2 0 's , t h e c h a r a c t e r i s t i c week was f o r t y - e i g h t h o u r s . The h o u r s w ere s h o r t e n e d d u r i n g t h e d e p r e s s i o n o f t h e t h i r t i e s , i • I when t h e s h o r t e n e d w orkw eek was u s e d a s a w o r k - s p r e a d in g I d e v i c e . L a t e r t h e W age-H our Law, c a l l i n g f o r t i m e - a n d - a - i h a l f p a y f o r a l l h o u r s o v e r f o r t y w ork ed i n one w eek, f i x e d ' I I jth e f o r t y - h o u r week a s t h e p r a c t i c e i n A m e ric a n i n d u s t r y . The f o r t y - h o u r week i s m ore p r o d u c t i v e t h a n l o n g e r j jw orkw eeks. H o u rly e f f i c i e n c y i s h i g h a n d a b s e n t e e i s m i s j t I lo w w ith s h o r t w o rk w ee k s, b u t t h e g a i n i n h o u r l y o u t p u t i s j n o t en o u g h t o o f f s e t t h e e x t r a p r o d u c t i o n t h a t c o u ld h a v e ! b e e n o b t a i n e d w i t h l o n g e r h o u r s . A c c o r d in g t o a s t u d y made ! jby U n ite d S t a t e s D e p a rtm e n t o f L a b o r, t h e a d d i t i o n o f a j s i x t h d a y g e n e r a l l y d e c r e a s e s h o u r l y o u tp u t s l i g h t l y a n d i 3 * 6 ja l s o i n c r e a s e s a b s e n t e e i s m . The 20 p e r c e n t i n c r e a s e i n I j .h o u rs w i l l p r o b a b l y i n c r e a s e o u tp u t 18 p e r c e n t . F u r t h e r * i i n c r e a s e s i n h o u r s p e r d a y o r c h a n g in g t o a s e v e n - d a y week j d e c r e a s e s h o u r l y o u t p u t a n d i n c r e a s e s a b s e n t e e i s m a t p r o - ! ; g r e s s i v e l y m ore r a p i d r a t e s . E x t r a h o u r s abo ve f o r t y - e i g h t I ^in a week a r e o n ly tw o t h i r d s a s p r o d u c t i v e on l i g h t work ; jand h a l f a s p r o d u c t i v e on h e a v y w ork a s h o u r s u p t o f o r t y - ; ; i e i g h t . ' j :- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - i 16 |___________M oore , o p ; c i t . , p . 3h3»_______ i 47 A f o r t y - h o u r week i s m ore e c o n o m ic a l t h a n a l o n g e r w eek, a s f a r a s l a b o r c o s t s a r e c o n c e r n e d ,^ b e c a u s e h o u r l y j o u tp u t i s h i g h a n d l e s s o v e rtim e prem ium s a r e p a i d . T a b le I show s t h e e f f e c t s o f lo n g h o u r s on h o u r l y a n d t o t a l . p r o - I d u c t i o n , an d t h e way i n w hich u n i t c o s t s a r e a f f e c t e d i f tim e a n d a h a l f i s p a i d f o r o v e r tim e h o u r s . I t s h o u ld be n o t e d t h a t a f o r t y - e i g h t h o u r w orkw eek p r o d u c e s c o n s i d e r a b l y m ore t h a n a f o r t y - h o u r w eek, b u t n e v e r t h e l e s s l a b o r i j c o s ts p e r u n i t i n c r e a s e s 10 p e r c e n t . A f i f t y - s i x - h o u r (week r e s u l t s i n s t i l l m ore p r o d u c t s b e i n g m ade, b u t a t a 35 P©r c e n t g r e a t e r l a b o r c o s t p e r u n i t . i TABLE I HYPOTHETICAL EXAMPLE ILLUSTRATING THE EFFECTS OF W0RK-H0URS ON PRODUCTIVITY H ours p e r week _ ........... - w ---------- ""W ■■■• ......56 P r o d u c t i o n p e r h o u r ( p i e c e s ) . . . 98 85 P r o d u c t i o n p e r w eek............................. 4704 4 7 6 0 Wage c o s t a t $ 2 .0 0 p e r h o u r . . . . $96 $1 12 Prem ium p a y f o r o v e r t i m e ................ 8 16 T o t a l l a b o r c o s t .......................... 80 104 128 L a b o r c o s t p e r u n i t o f p r o d u c t . . . . $ 0 . 0 2 0 0 $ 0 .0 2 2 1 $ 0 . 0269 P e r c e n t a g e i n c r e a s e i n u n i t c o s t s o v e r c o s t s i n c u r r e d when o p e r a t i n g 40 h o u r s .............. 10 35 I t s h o u ld b e p o i n t e d o u t t h a t t h e r e l a t i o n b e tw e e n h o u r s a n d o u t p u t w i l l v a r y som ew hat, ow ing t o o t h e r f a c t o r s , i ! s u c h a s i n c e n t i v e p a y p l a n s , t h e d i f f i c u l t y o f t h e w ork, jth e e x t e n t o f t h e w o rk e r* s c o n t r o l o v e r t h e p a c e , t h e p h y s i c a l c o n d i t i o n s , t h e r e l a t i o n s w i t h m an ag em en t, t h e s h i f t , e t c . ' 1 '7 N ig h t s h i f t w o rk , r e g a r d l e s s o f t h e l e n g t h o f t h e w orkw eek, i s g e n e r a l l y l e s s p r o d u c t i v e t h a n d a y s h i f t work b e c a u s e i n many p l a n t s t h e w o rk e r s on t h e n i g h t s h i f t a r e n o t e q u i v a l e n t i n s k i l l t o t h o s e on t h e d a y s h i f t , s i n c e | s e n i o r i t y may g iv e a w o rk e r t h e r i g h t t o c h o o s e d a y tim e w o rk . I n some i n s t a n c e s t h e s u p e r v i s i o n i s a l s o l e s s a d e - 1 * | ^ jq u a te a t n i g h t . I n a d d i t i o n , i t c o s t s a b o u t 5 > pez* c e n t I jmore p e r h o u r ; c o n s e q u e n t l y , p r o d u c t s m ade a t n i g h t a r e l l i k e l y t o c o s t a b o u t 20 p e r c e n t m ore t h a n s i m i l a r p r o d u c t s 1 9 made on t h e day s h i f t . R e s t p e r i o d s . I n r e g a r d t o r e s t p e r i o d s , some com p a n i e s g iv e t h e w o rk e rs a r e s t p e r i o d d u r i n g t h e m id d le o f |th e m o r n in g an d a g a i n i n t h e . a f t e r n o o n . ' The e x p e c t a t i o n I s j th a t t h e l o s s o f tim e w i l l b e m ore t h a n made up b y t h e i n - i j c r e a s e d p r o d u c t i v i t y d u r i n g t h e r e m a in d e r o f t h e d a y . A jg r e a t many c o m p a n ie s d o u b t t h a t i t a c t u a l l y i s made u p . I n c o m p a n ie s w h ere t h e m a c h in e s p a c e t h e w o r k e r s , t h e r e i s no i | 1 7 I b i d . , p . 31*4. 1 18 j R yan, o p . c i t . , p . ll*.8. ! 19 j M oore, o £ . c i t . , p . 344* k9 o f f s e t i n e f f i c i e n c y t o make up f o r t h e c o s t o f t h e r e s t p e r i o d . I n o t h e r c o m p a n ie s , s u c h a s b l a s t f u r n a c e s , g l a s s f a c t o r i e s , and many o t h e r s , t h e n a t u r e o f t h e p r o c e s s d o e s n o t p e r m it b r e a k s i n t h e w ork. When tw o f i f t e e n - m i n u t e p e r i o d s a r e t a k e n , an* e i g h t - h o u r day b eco m es a s e v e n - a n d - a - h a l f - h o u r d a y . The a v e ra g e h o u r l y o u tp u t d u r i n g t h e s e v e n a n d a h a l f h o u r s m u st b e i n c r e a s e d 6 2 /3 p e r c e n t i n o r d e r t o o f f s e t t h e h a l f - h o u r I in o n p r o d u c tiv e t i m e . Two t e n - m i n u t e r e s t p e r i o d s c a n b e j : .made up b y a n i n c r e a s e d o u tp u t o f 4 1 / 2 p e r c e n t i n a v e r a g e , j h o u r l y o u t p u t . ^ 0 j I ! T h e re h a v e b e e n o c c a s i o n a l s t u d i e s o f m e c h a n ic a l j e f f i c i e n c y a s a f u n c t i o n o f r e s t p e r i o d s . I n one o f t h e s e , ! c o n c e r n e d w i t h m a c h in e o p e r a t o r s i n a f o u n d r y , p r o d u c t i v i t y an d e f f i c i e n c y w ere b o t h i n c r e a s e d b y r e s t p e r i o d s . I n j j o t h e r s t u d i e s , o u t p u t h a s b e e n r e d u c e d b y t h e i n t r o d u c t i o n j i I j o f r e s t p e r i o d s . The W e s te rn E l e c t r i c Company, a f t e r c o n - j i |s i d e r a b l e e x p e r i m e n t i n g w i t h r e s t p e r i o d s a t i t s H aw th orne t P l a n t i n C h ic a g o c o n c lu d e d t h a t t h e e f f e c t o f r e s t p e r i o d s i 2 1 I was d e b a t a b l e . j ! One s h o u l d n o t t a k e t h e H aw thorn e e x p e r im e n t a s t h e ! y a r d s t i c k o f to d a y * s o p e r a t i o n s . B e s t p e r i o d s a s a w h o le j PO I b i d . , p . 3 k S . 21 Ryan, o p . , c i t . , p . lj?l, b e n e f i t e m p lo y e rs a s w e l l a s w o r k e r s . The l o s s o f tim e i n t a k i n g r e s t p e r i o d s i s u s u a l l y o f f s e t b y t h e w o r k e r s ’ i n - j c r e a s e i n t h e i r e f f o r t s i n p r o d u c t i o n u n l e s s t h e r e e x i s t s a! p o o r m anagem ent w here r e s t p e r i o d s a r e a p p l i e d . F a t i g u e . F a t i g u e i s a l s o a n o t h e r f a c t o r w h ich a f f e c t s p r o d u c t i v i t y . I t i s a vague a n d g e n e r a l te r m w h ic h i s a p p l i e d t o many d i f f e r e n t s i t u a t i o n s , p r o d u c e d by many f a c t o r s , a n d c h a r a c t e r i z e d b y m any sy m ptom s. We know t h a t p h y s i o l o g i c a l , p s y c h o l o g i c a l , a n d s o c i o l o g i c a l i n f l u e n c e s j ;are i n v o l v e d I n t h e p r o d u c t i o n o f f a t i g u e b u t , fro m a i s c i e n t i f i c p o i n t o f v ie w , t h e r e i s n o s i n g l e p r e c i s e d e f i - ! < I j n i t i o n o f f a t i g u e . P h y s i c a l f a t i g u e , m e n ta l f a t i g u e , a n d ! ! i | I 'n e rv o u s f a t i g u e a r e te r m s u s e d b y p h y s i c i a n s , p s y c h o l o g i s t s , 1 i i a n d p h y s i o l o g i s t s an d t h e common f a c t o r w h ic h c h a r a c t e r i z e s j a i l t h e s e s t a t e s i s a te n d e n c y to w a rd s i n a c t i v i t y . F a t i g u e ' jhas b e e n d e s c r i b e d a s a s o r t o f " n e g a t i v e a p p e t i t e f o r j a c t i v i t y . j i E a c h w o r k e r , f o r e x a m p le , h a s a " p h y s i o l o g i c a l I | c a p i t a l " w h ic h e n a b l e s him t o h a v e a c e r t a i n " p h y s i o l o g i c a l ; c r e d i t . " As he w o rk s, he c o n t r a c t s a " p h y s i o l o g i c a l d e b t" | 'w hich v a r i e s w ith t h e n a t u r e o f t h e j o b . A f t e r t h e w ork i s 'o v e r, t h e g r e a t e r t h e d e b t t h e l o n g e r i t w i l l t a k e t o p a y ! j j i t b a c k a n d t o r e c o v e r f u l l y t o t h e p h y s i o l o g i c a l r e s t i n g l I 1 i 2 2 j L u c ie n B ro u h a . " M e a s u rin g and R e d u c in g F a t i g u e , " j A d v an ced M anagem ent, V o l. XIX, No. 1 ( J a n u a r y , 1 9 5 4 ) , P* 9» i s l e v e l . T h e r e f o r e , a n y c h a n g e I n t h e jo b o r i n t h e e n v i r o n m ent t h a t w i l l r e d u c e t h e p h y s i o l o g i c a l s t r e s s w i l l a l s o r e d u c e t h e d e b t a n d t h e tim e n e c e s s a r y t o r e c o v e r . C o n se q u e n t l y , f o r t h e same am ount o f w ork f a t i g u e w i l l d e - 23 c r e a s e . I t s h o u l d b e p o i n t e d o u t t h a t f a t i g u e m u st b e t a k e n i n t o a c c o u n t when t h e m anagem ent i s s e t t i n g t h e s t a n d a r d h o u r s f o r p e rf o r m a n c e o f w o rk . F a t i g u e i s a l s o a c c u m u la - j t i v e a n d m ig h t b e c a r r i e d on f r o m one day o f work t o t h e !n e x t . ! _____________ ^ I b i d . , p . 1 2 . CHAPTER IV i ATTITUDES OF MANAGEMENT AND WORKERS i An a t t i t u d e commonly d e n o te s a l e a r n e d r e a d i n e s s t o j r e a c t i n a c e r t a i n m an n e r -which n o r m a l ly i n v o l v e s i n p a r t ! la s y m b o lic a c t . T h a t i s t o s a y , a c e r t a i n o b j e c t o r s i t u - I i l a t i o n w i l l p r o v i d e t h e i n d i v i d u a l w i t h a fra m e w o rk w i t h i n i ^w hieh h e can r e a c t * To d i s p e l a common e r r o r , i t i s w e l l t o p o i n t o u t t h a t a n a t t i t u d e i s n e i t h e r a m o tiv e n o r a I r e s p o n s e . A t t i t u d e r e f e r s t o p r o b a b l e d i r e c t i o n , n o t t h e b e h a v i o r i t s e l f . A t t i t u d e i s n o t a d r i v e o r f o r c e , a s a I m o tiv e i s , b u t s im p ly a s t a t e o f r e a d i n e s s t o r e s p o n d . An e m p lo y e e 's a t t i t u d e i s i n f l u e n c e d b y t h e p o s i t i o n an d r e p u t a t i o n o f t h e e n t e r p r i s e , I t s p o l i c i e s , t h e o p p o r - i I t u n i t i e s f o r a d v a n c e m e n t, t h e th o r o u g h n e s s o f t r a i n i n g , t h e c a l i b e r o f l e a d e r s h i p , t h e t y p e o f w ork d o n e , a n d th e am ount o f c o m p e n s a tio n . T he a t t i t u d e o f m anagem ent to w a rd human b e i n g s p r o v i d e s a f a i r l y r e l i a b l e i n d i c a t i o n o f a m a n a g e r 's t r u e "modus o p e r a n d i , " M ost m a n a g e rs can b e c h a r a c t e r i z e d b y one o f t h e f o l l o w i n g i d e n t i f i a b l e a t t i t u d e s : 1 , F e u d a l, i n w h ic h t h e em ployee i s lo o k e d upon a s a n e c e s s a r y p a r t o f t h e e n t e r p r i s e , 2 , P a r e n t a l , i n w h ich t h e m an a g e r v ie w s t h e em p l o y e e i n a p a t e r n a l o r f a t h e r a n d so n r e l a t i o n s h i p . 3* D i c t a t o r i a l , i n w h ic h t h e em p lo y ee i s v ie w e d as a r e c i p i e n t o n ly o f w hat t o do a n d how t o do i t . ij.. C o n t r i b u t o r y , i n w h ic h t h e p a r t i c i p a t i o n o f th e em p lo y ee s h o u l d b e u t i l i z e d w h e re v e r p o s s i b l e b e c a u s e era- I p l o y e e s h a v e s o m e th in g t o c o n t r i b u t e a n d c a n h e l p m ana g e r i a l e f f o r t s . 5 . D e v e lo p m e n ta l, i n w h ic h e m p lo y e e s a r e c o n s i d e r e d a s p o s s e s s i n g v a s t p o t e n t i a l i t i e s f o r im p ro v e m e n t, an d one , o f t h e c h i e f p u r p o s e s o f a m an a g e r i s t o h e l p i n t h e d e v e lo p m e n t o f e a c h e m p lo y e e . ^ ! I i I ! A b u s i n e s s c a n b e l i k e n e d t o a s h i p . T h o u sa n d s o f | | i jmen s e r v e a s t h e c re w a n d a l l a r e d e p e n d e n t on one a n o t h e r . I j i (Management h a s a g r e a t r e s p o n s i b i l i t y , n o t o n ly t o i t s ■ i f | s t o c k h o l d e r s b u t a l s o t o t h e w o rk e rs a s w e ll a s t o t h e J I I com m unity an d t o t h e n a t i o n . M anagem ent i s n o t m e r e ly t h e 1 I . a b i l i t y t o f o r e c a s t m a rk e t t r e n d s , t o s u p e r v i s e b u d g e t s , o r j to m a i n t a i n c o n t a c t s w i t h i n f l u e n t i a l b u y e r s . The k e y t o j ! i ; s u c c e s s f u l m anagem ent t o d a y l i e s c h i e f l y i n company p o l i - j ; i c i e s , a n d i n i t s d e a l i n g s w i t h t h e men a n d women who a r e i I e m p lo y e d . E v e ry s u c c e s s f u l m anagem ent s h o u ld u n d e r s t a n d J t h e f u n d a m e n ta l w o rk in g s o f t h e human m in d . I t m u st a c - i q u i r e a s p i r i t o f l o y a l t y , c o o p e r a t i o n , a n d z e a l fro m i t s > i ; le m p lo y e e s, a n d a t t h e same tim e b r i n g i n t o l i g h t t h e b e s t j ^ G eo rg e T e r r y , P r i n c i p l e s o f M anagem ent (Homewood, j I I l l i n o i s : R i c h a r d D. I r w i n , I n c . , 195>i|), p p . lflj.9-^56. i I t a l e n t s o f t h e men a n d women u n d e r i t s d i r e c t i o n . S u c h c o - I 2 'o p e r a t i o n m u st b e e a r n e d , i t c a n n o t be b o u g h t . I . THE PSYCHOLOGICAL CLIMATE The n o t i o n t h a t m oney i s t h e common d e n o m in a to r o f a l l hum an a s p i r a t i o n i s d e f i n i t e l y o u tm o d e d . Man h a s o t h e r n e e d s b e s i d e s a s e n s e o f e co n o m ic s e c u r i t y , a n d t h e s e m u st I ! jbe s a t i s f i e d i f h e i s t o f e e l s e l f - r e s p e c t i n g an d h a p p y . i I i M odern m a n a g e rs a r e com ing t o r e a l i z e m ore a n d m ore t h a t 1 I . ' e m p lo y e e s h a v e i m p o r t a n t p s y c h o l o g i c a l n e e d s w h ic h d e s e r v e i jc o n s ta n t c o n s i d e r a t i o n , n o t o n ly b e c a u s e r e s p e c t f o r t h e ! I j i n d i v i d u a l i s p a r t o f t h e d e m o c r a tic t r a d i t i o n b u t a l s o b e - j c a u s e e f f i c i e n c y i s d i r e c t l y a f f e c t e d b y t h e w o r k e r ’ s a t t i - j t u d e s a n d f e e l i n g s . D u rin g t im e s o f p r o s p e r i t y a n d man p o w e r s h o r t a g e , t h e m a n a g e r m u st c o n s i d e r t h e human f a c t o r a n d t h e o v e r - a l l a t t r a c t i v e n e s s o f t h e jo b s i f h e w is h e s t o e n s u r e a n a d e q u a te a n d s t a b l e l a b o r s u p p l y . D u rin g h a r d i i t i m e s , t h e m an a g er w a n ts t o i n c r e a s e e f f i c i e n c y i n o r d e r t o j l o w e r c o s t s , a n d a g a i n h e w i l l h a v e t o c o n s i d e r p s y c h o - ! 3 l o g i c a l n e e d s a s v i t a l f a c t o r s o f p r o d u c t i o n . 2 Jo h n C. A s p le y a n d E ugene W hitm ore ( e d s . ) , T he H andbook o f I n d u s t r i a l R e l a t i o n s ( C h ic a g o : The D a r t n e i l jC o r p o r a tio n , 'P u b l i s h e r s , l91j.b}* p . 8 0 . 3 j F lo y d L . R uch, P s y c h o lo g y an d L i f e (New Y o rk ; iS c o tt, F o re sm a n a n d Company, 1 9 p o ) , p . 6 1 7 ; A. L . G itlo w . , "Wages an d t h e A l l o c a t i o n o f E m ploym ent, n The S o u th e r n [Economic J o u r n a l , V o l. XXI, No. 1 ( J u l y , 195J+), p . 8 3 . 55 The e x t e n t t o w h ic h a n i n d u s t r y o r u n d e r t a k i n g s u c c e e d s i n i n c r e a s i n g p r o d u c t i v i t y w i l l d e p e n d l a r g e l y on t h e s t r e n g t h o f t h e w i l l an d d e t e r m i n a t i o n t o do so on t h e p a r t o f b o t h e m p lo y e rs a n d w o r k e r s . I t i s n o t en o u g h t o know l !what s h o u ld be done t o i n c r e a s e p r o d u c t i v i t y . The im p o r t a n c e o f p s y c h o l o g i c a l f a c t o r s a n d o f w h at m ig h t b e d e s c r i b e d a s a good p s y c h o l o g i c a l c l i m a t e c a n s c a r c e l y b e e x a g g e r a t e d . ^ - ! J O p in io n s d i f f e r r e g a r d i n g t h e im p o r ta n c e t o b e I I a t t a c h e d t o p s y c h o l o g i c a l f a c t o r s a f f e c t i n g p r o d u c t i v i t y . I iThe v ie w w h ic h r e g a r d s p r o d u c t i v i t y a s d e p e n d in g a lm o s t ^ e n t i r e l y u p o n t h e am ount o f c a p i t a l e m p lo y ed a n d t h e p r o - i . I d u c t i v e t e c h n i q u e s u s e d i s a p t t o t a k e f o r g r a n t e d a w i l l - j i I i 'i n g n e s s t o a c c e p t c h a n g e s a n d t o a d o p t new a n d im p ro v e d j t e c h n i q u e s w h ic h i s c e r t a i n l y n o t f o u n d i n a l l s o c i e t i e s . j The f a v o r a b l e a t t i t u d e s to w a r d s p r o d u c t i v i t y i n t h e I [ u n i t e d S t a t e s a r e no d o u b t due i n l a r g e m e a s u re t o t h e em- ! i p h a s i s t h a t i s p l a c e d u p o n c o m p e t i t i o n i n t h e A m e ric a n way ! I o f l i f e , a n d t o t h e s t r e n g t h o f U n i t e d S t a t e s t r a d e u n i o n s , I i ! jw h ich a r e , i n g e n e r a l , c o n f i d e n t o f t h e i r pow er t o s e c u r e ■ i j f o r w o r k e r s a r e a s o n a b l e s h a r e i n t h e b e n e f i t s o f h i g h e r I - :p r o d u c t i v i t y . Many o f t h e m o st i m p o r t a n t a d v a n ta g e s p o s - I i i | . i h ' ; ^ I n t e r n a t i o n a l L a b o r O r g a n i z a t i o n , F a c t o r s A f f e c t i n g P r o d u c t i v i t y i n M e ta l T ra d e s (M e ta l T r a d e s C o m m ittee, F o u rth .S e s s io n , R e p o rt No. 3 . G eneva: I n t e r n a t i o n a l L a b o r O rg an - i ^ z a t i o n , 1 9 5 2 ) , p . 1 0 2 . 56 s e s s e d b y t h e U n i t e d S t a t e s i n t h e f i e l d o f p r o d u c t i v i t y c a n n o t b e m a t c h e d i n o t h e r c o u n t r i e s , a t l e a s t f o r m a n y i y e a r s t o c o m e . T h e r e i s , h o w e v e r , n o p h y s i c a l r e a s o n w h y a i j c l i m a t e o f o p i n i o n a s f a v o r a b l e t o p r o d u c t i v i t y a s t h a t I ! w h i c h p r e v a i l s i n t h e U n i t e d S t a t e s s h o u l d n o t b e c r e a t e d I i n o t h e r c o u n t r i e s w h e r e h i g h e r p r o d u c t i v i t y i s i n f a c t I < j m u c h m o r e u r g e n t l y n e e d e d . j ! T h e f i r s t s t e p t o w a r d s c r e a t i n g a p s y c h o l o g i c a l c l i - j m a t e f a v o r a b l e t o p r o d u c t i v i t y i s a n u n d e r s t a n d i n g o f t h e ' i m p o r t a n c e o f i n c r e a s e d p r o d u c t i v i t y i n t h e c o m m o n i n t e r - I ♦ e s t s o f e m p l o y e r s , w o r k e r s , a n d c o n s u m e r s . T h i s i n t u r n ; r e q u i r e s t h e e s t a b l i s h m e n t o f c o n f i d e n c e t h a t t h e g a i n s f r o m h i g h e r p r o d u c t i v i t y w i l l b e f a i r l y d i v i d e d . I t s e e m s I t o b e g e n e r a l l y r e c o g n i z e d i n a l l s e c t i o n s o f s o c i e t y i n t h e U n i t e d S t a t e s t h a t i t i s o n l y b e c a u s e t h e i r p r o d u c t i v i t y i s h i g h t h a t A m e r i c a n s a r e a b l e t o e n j o y a h i g h s t a n d a r d o f l i v i n g . T h e u n i o n s h a v e r e c o g n i z e d t h e n e e d f o r i m p r o v e d m e t h o d s a n d i n c r e a s e d o u t p u t t o m a k e g o o d s a v a i l a b l e a t l o w e r c o s t s , a n d h a v e a g r e e d t o c o o p e r a t e w i t h t h e c o m p a n y i n s u g g e s t i n g a n d i n t r o d u c i n g m e t h o d s f o r i n c r e a s i n g p r o d u c t i o n , a n d i n e d u c a t i n g t h e i r m e m b e r s o n t h e n e e d o f s u c h m e t h o d s , c h a n g e s a n d i m p r o v e m e n t s . £ I n t e r n a t i o n a l L a b o r O f f i c e , H i g h e r P r o d u c t i v i t y i n M a n u f a c t u r i n g I n d u s t r i e s ( G e n e v a : I n t e r n a t i o n a l L a b o r O f f i c e , 1 9 5 > i | . ) , p . l 6 . M a n y u n i o n s h a v e r e c o g n i z e d t h e m a n a g e m e n t ' s r i g h t t o d e t e r m i n e j o b p r o c e d u r e a n d m e t h o d s a n d t o p u t i n t e c h n o l o g i c a l i m p r o v e m e n t s a n d t h e s e u n i o n s h a v e u s u a l l y a g r e e d t o c o o p e r a t e i n a n y w o r k t o i m p r o v e p l a n t o p e r a t i o n s * I t i s m u t u a l l y r e c o g n i z e d b y m o s t u n i o n s a n d c o m p a n i e s t h a t i n c r e a s e d w a g e s m u s t b e o f f s e t b y i n c r e a s e d p r o d u c t i v i t y i n o r d e r t h a t t h e c o m p a n y m a y b e k e p t i n s u c h a c o m p e t i t i v e [ p o s i t i o n t o e n a b l e i t t o p r o v i d e t h e e m p l o y e e s w i t h h i g h w a g e s a n d a n i m p r o v e d p l a n e o f l i v i n g . F i n a l l y , s o m e u n i o n s h a v e r e c o g n i z e d a n d p l e d g e d t h e m s e l v e s t o e n c o u r a g e e f f i c i e n t o p e r a t i o n t o m a i n t a i n p r o d u c t i o n a t i t s h i g h e s t j l e v e l , a n d t h a t t h e r e w i l l b e n o i n t e r f e r e n c e o r o p p o s i t i o n J t o i n t r o d u c t i o n o f m o d e r n m e t h o d s a n d m a c h i n e r y . | G r e a t e f f o r t s h a v e b e e n m a d e i n m a n y c o u n t r i e s i n i ! r e c e n t y e a r s t o p r o m o t e p r o d u c t i v i t y - c o n s c i o u s n e s s . I n j i i i j E a s t e r n E u r o p e a n c o u n t r i e s S o c i a l i s t w o r k c o m p e t i t i o n m o v e - j I j m e n t s h a v e b e e n o r g a n i z e d , w i t h t h e a i m o f p r o m o t i n g i j | j r i v a l r y a n d c o m p e t i t i o n b e t w e e n i n d i v i d u a l s , t e a m s a n d i ! i g r o u p s o f w o r k e r s , a n d s t i m u l a t i n g t h e s e n s e t h a t e a c h h a s 1 j a s i g n i f i c a n t p a r t t o p l a y i n t h e p r o g r e s s o f t h e i n d u s t r y \ ' i ' i n w h i c h h e w o r k s a n d I n b u i l d i n g u p t h e n a t i o n a l e c o n o m y . ! i T h e t r a d e u n i o n m o v e m e n t s i n t h e v a r i o u s c o u n t r i e s a r e i : ^ c l o s e l y i d e n t i f i e d w i t h t h e s e w o r k c o m p e t i t i o n s a n d h a v e j 1 6 1 I s p e c i a l r e s p o n s i b i l i t i e s w i t h r e g a r d t o t h e m . ^ I b i d . , p p . 1 7 -1 8 . ! 58 | j T he s e c o n d s t e p to w a r d s c r e a t i n g a p s y c h o l o g i c a l jc lim a te f a v o r a b l e t o p r o d u c t i v i t y i s t o r e a l i z e t h a t i f jh ig h p r o d u c t i v i t y i s i n d e e d d e s i r e d , c e r t a i n o t h e r t h i n g s , i !such a s g u a r a n t e e d em plo ym ent, w h ich a r e a l s o d e s i r e d m ay | h a v e t o b e s a c r i f i c e d t o i t . Once t h e im p o r ta n c e o f h i g h e r p r o d u c t i v i t y h a s b e e n r e a l i z e d , a n d t h e f a c t t h a t t h i s may c a l l f o r some s a c r i f i c e h a s b e e n f a c e d , t h e way i s open f o r I ja u n i t e d d r i v e on t h e p a r t o f e m p lo y e rs a n d w o rk e rs t o | jb r in g a b o u t h i g h e r p r o d u c t i v i t y . S u ch a d r i v e w i l l r e q u i r e ! 'th e f u l l e s t u n d e r s t a n d i n g b y e m p lo y e rs and w o rk e r s o f e a c h ■ i | ■ o th e rs ’ p o i n t o f v ie w a n d t h e c l o s e s t c o o p e r a t i o n b e tw e e n | ;them . ! | T he m anagem ent s h o u ld p r o v i d e i n f o r m a t i o n c o n c e r n i n g i jth e p o l i c i e s a n d p l a n s o f t h e com pany, o u tp u t f i g u r e s , a n d ! i [ s a le s t o t h e w o rk e r a n d t e l l h im s o m e th in g o f t h e o r g a n i z a - j i i j t i o n an d p r o c e s s e s o f m a n u f a c tu r e and d e p a r tm e n ts o t h e r J I ! ;th a n h i s own, s o t h a t h e h a s a c l e a r i d e a o f h i s p e r s o n a l I c o n t r i b u t i o n t o t h e f i n a l p r o d u c t . S i m i l a r l y , i t i s n e c e s - l s a r y t h a t m anagem ent s h o u l d l e a r n t h e w o r k e r s ’ v ie w s , i d e a s I a n d s u g g e s t i o n s , p a r t i c u l a r l y t h o s e b e a r i n g on b e t t e r i 7 1 m e th o d s . ! i I n v ie w o f t h e f a v o r a b l e c o n d i t i o n s w h ic h r i s i n g ! 7 j F a c t o r s A f f e c t i n g P r o d u c t i v i t y i n t h e M e ta l T r a d e s , jop. cit., pp. 10lj.-ld5. ( p r o d u c t i v i t y c r e a t e s f o r i m p r o v e m e n t s i n l i v i n g s t a n d a r d s , j j t r a d e u n i o n s w i l l u s u a l l y a g r e e t o o r e v e n f o s t e r t h e i n t r o d u c t i o n o f b e t t e r m e t h o d s , p r o v i d e d t h a t t h e w a g e a n d e m p l o y m e n t i n t e r e s t s o f t h e w o r k e r s a r e a d e q u a t e l y p r o t e c t e d . I f t h e y c a n b e a s s u r e d t h a t t h e w o r k e r s w i l l s h a r e i n b e n e f i t s o f h i g h e r p r o d u c t i v i t y , t r a d e u n i o n s w i l l b e p r e p a r e d ( t o c o o p e r a t e i n f i n d i n g s c o p e f o r i m p r o v e m e n t s a n d t o t a k e j ' p a r t i n j o i n t c o n s u l t a t i o n w i t h a v i e w t o t h e i m p r o v e m e n t s ■ < I i n t e c h n i q u e a n d o r g a n i z a t i o n . i ! I f w o r k e r s a r e a s k e d t o c o o p e r a t e w i t h m a n a g e m e n t i n J I t h e i n t r o d u c t i o n o f n e w a n d l a b o r - s a v i n g m e t h o d s o r p r o d u c t i o n a n d t o a b a n d o n p r a c t i c e s o r r u l e s w h i c h t h e y h a v e r e g a r d e d a s s a f e g u a r d s i n t h e p a s t , t h e y m a y i n t u r n r e a s o n - j a b l y d e m a n d c e r t a i n t h i n g s o n t h e p a r t o f m a n a g e m e n t . T h e y p a y d e m a n d t o b e t a k e n i n t o t h e c o n f i d e n c e o f m a n a g e m e n t ; ! i j r e g a r d i n g t h e r e a s o n s f o r p r o p o s e d c h a n g e s i n m e t h o d s o f ( p r o d u c t i o n a n d t h e n a t u r e o f t h e b e n e f i t s w h i c h a r e e x - i i i I i p e c t e d t o r e s u l t f r o m t h e m . | I C o n s u l t a t i o n w i t h w o r k e r s a n d t h e p a r t i c i p a t i o n o f 1 t I I 1 j w o r k e r s i n p r o g r a m s t o i n c r e a s e p r o d u c t i v i t y a r e i m p o r t a n t I j n o t o n l y f r o m t h e n e g a t i v e p o i n t o f v i e w o f d i s a r m i n g s u s - ! j p i c i o n a n d h o s t i l i t y b u t a l s o f o r t h e s a k e o f t h e v a l u a b l e I ! p o s i t i v e c o n t r i b u t i o n s w h i c h w o r k e r s , f r o m t h e i r o w n k n o w l - J 1 * i ( e d g e a n d e x p e r i e n c e , c a n o f t e n m a k e . : ^ i ; B i g s a v i n g s i n t i m e , m o n e y , a n d m a t e r i a l s , a s w e l l i a s h a rm o n io u s e m p lo y ee r e l a t i o n s , w i l l r e s u l t fro m a n e x t e n s i v e s u g g e s t i o n s y s te m t o b e em ployed b y m a n u f a c t u r i n g i n d u s t r i e s . T h i s , o f c o u r s e , i s n o t l i m i t e d t o m a n u f a c t u r i n g i n d u s t r i e s . L o c a l, s t a t e , a n d f e d e r a l g o v e rn m e n t a g e n c i e s a n d p r i v a t e o r g a n i z a t i o n s a r e a l s o b e n e f i t i n g fro m t h e u s e o f t h i s s y s te m . The P h o e n ix A iR e s e a r c h M a n u f a c tu r i n g d i v i s i o n o f t h e G a r r e t t C o r p o r a t i o n , f o r e x a m p le , p a i d I (out $ 1 9 ,8 0 0 p l u s w i t h h o l d i n g t a x e s f o r 5 5 0 s u g g e s t i o n s i n ! \ l 9 $ k . E s t i m a t e d d o l l a r s a v i n g s fro m t h e s e a c c e p t e d a n d ! (u se d s u g g e s t i o n s t o t a l e d $ 8 0 ,0 0 0 . The l a r g e s t s u g g e s t i o n |e v e r p a i d o f f b y A iR e s e a r c h was f o r $ 6 ,2 2 2 p l u s $ 1 ,5 5 5 i n 1 t a x e s t o a P h o e n ix m a c h i n i s t w hose s u g g e s t i o n f o r a new m e th o d o f m i l l i n g i m p e l l e r b l a d e s i n c r e a s e d p r o d u c t i o n on j 8 [ t h a t p a r t b y 5 0 0 p e r c e n t . | I t h a s b e e n m e n tio n e d e a r l i e r i n t h i s c h a p t e r t h a t (w o rk e rs a r e e n t i t l e d t o a r e a s o n a b l e s h a r e i n t h e b e n e f i t s ( r e s u l t i n g fro m i n c r e a s e d p r o d u c t i v i t y . B ut i n f i x i n g r a t e s 1 o f r e m u n e r a t i o n , due w e ig h t s h o u ld b e g i v e n t o t h e n e e d f o r ^ c o m p e n sa tin g w o r k e r s f o r a n y i n c r e a s e d e f f o r t s o r s a c r i - j f i c e s w h ic h h i g h e r p r o d u c t i v i t y may e n t a i l . The m an n er i n ,w h ic h wage i n c r e a s e s a r e r e l a t e d t o t h e r a t e o f g ro w th o f p r o d u c t i v i t y o f l a b o r a s a w h o le s h o u ld t a k e a c c o u n t o f t h e 1 jc o n s u m e rs ’ c la im s t o a s h a r e i n t h e b e n e f i t s o f h i g h e r p r o - i 1 8 ■ W e s te r n I n d u s t r y , m im e o g ra p h e d c o p y , O c to b e r , 1955* ; d u c t i v i t y , a n d o f t h e n e e d s o f t h e e c o n o m y a s a w h o l e . I f j t h e g a i n s f r o m h i g h e r p r o d u c t i v i t y a r e a b s o r b e d e n t i r e l y b y w o r k e r s a n d e m p l o y e r s i n t h e f o r m o f h i g h e r w a g e s a n d h i g h - I e r p r o f i t s , t h e s o - c a l l e d f i x e d i n c o m e g r o u p s a r e d e p r i v e d o f a n y s h a r e i n t h e s e g a i n s . A p a r t f r o m c o n s i d e r a t i o n s o f j e q u i t y , a c o u n t r y ' s c o m p e t i t i v e p o s i t i o n i n i n t e r n a t i o n a l m a r k e t s m a y b e s u c h a s t o m a k e i t v e r y i m p o r t a n t t h a t i n c r e a s e s i n p r o d u c t i v i t y s h o u l d b e r e f l e c t e d i n l o w e r c o s t s | a n d p r i c e s , e n a b l i n g i t t o s e l l m o r e g o o d s a b r o a d t o p a y i 1 f o r i m p o r t s a s w e l l a s e n a b l i n g m o r e w o r k e r s a t h o m e t o b u y ; I 9 I i m o r e g o o d s a n d s e r v i c e s . I | | I f w o r k e r s a r e a s k e d t o c o o p e r a t e w i t h t h e m a n a g e - j i i m e n t i n t h e i n t r o d u c t i o n o f n e w a n d l a b o r - s a v i n g m e t h o d s o f i p r o d u c t i o n t h e y m a y d e m a n d s a f e g u a r d s t o p r o t e c t t h e i r e c o - 1 I n o m i c s e c u r i t y . T h e d r i v e t o i n c r e a s e p r o d u c t i v i t y i s j l i k e l y t o i n v o l v e t h e t e m p o r a r y d i s p l a c e m e n t o f s o m e w o r k - ! j e r s , w h o w i l l b e c o n f r o n t e d w i t h a n e e d t o c h a n g e t h e i r j o b s a n d p e r h a p s t h e i r p l a c e s o f r e s i d e n c e o r , a t w o r s t , j l w i t h u n e m p l o y m e n t . S e c u r i t y , i n t h i s c a s e , r e q u i r e s t h r e e j j t h i n g s : f i r s t , e f f e c t i v e m e a s u r e s t o m a i n t a i n a h i g h g e n e r a l | l e v e l o f e m p l o y m e n t , s o t h a t w o r k e r s w i l l i n g i f n e c e s s a r y , ! t o u n d e r g o t r a i n i n g a n d t o c h a n g e t h e i r p l a c e s o f r e s i d e n c e : ! I j t o p r e v e n t u n e m p l o y m e n t f o r l o n g e r p e r i o d o f t i m e ; s e c o n d , ! 9 I b i d . , p . 1 0 8. m e a s u r e s t o a s s i s t t h e r e - e m p l o y m e n t o f d i s p l a c e d w o r k e r s , b y p r o v i d i n g t r a i n i n g a n d r e m o v a l f a c i l i t i e s , b y g i v i n g n o t i c e i n a d v a n c e o f e x p e c t e d d i s p l a c e m e n t s ; a n d t h i r d , m e a s u r e s t o m a i n t a i n s o m e i n c o m e f o r u n e m p l o y e d w o r k e r s b e t w e e n j o b s . 3 ^ I n s u m m a r y , t h e a t t i t u d e o f w o r k e r s t o w a r d s m e a s u r e s t o i n c r e a s e p r o d u c t i v i t y i s l i k e l y t o d e p e n d a g r e a t d e a l o n t h e d e g r e e w i t h w h i c h m a n a g e m e n t t a k e s t h e m i n t o i t s ! c o n f i d e n c e a n d p r o v i d e s o p p o r t u n i t i e s f o r p a r t i c i p a t i o n b y w o r k e r s i n t h e p l a n n i n g a n d a p p l i c a t i o n o f s u c h m e a s u r e s ; t i ! o n t h e s h a r e o f t h e b e n e f i t s w h i c h t h e y e x p e c t t o r e c e i v e ; a n d o n t h e i r c o n f i d e n c e i n s a f e g u a r d i n g t h e i r e c o n o m i c » s e c u r i t y . T h e a t t i t u d e o f w o r k e r s o n a l l t h e s e p o i n t s w i l l b e g r e a t l y i n f l u e n c e d b y t h e a t t i t u d e o f m a n a g e m e n t . I n t h i s t a s k , h o w e v e r , t h e g o v e r n m e n t h a s a l s o a m a j o r p a r t t o p l a y . T h e m a i n t e n a n c e o f a h i g h g e n e r a l l e v e l o f e m p l o y - j m e n t , a n d o f u n e m p l o y m e n t b e n e f i t s o r a l l o w a n c e s , a r e > I m a t t e r s p r i m a r i l y f o r g o v e r n m e n t w h i c h a l s o h a s r e s p o n s i - ; [ i b i l i t i e s I n t h e f i e l d o f v o c a t i o n a l t r a i n i n g a n d r e m o v a l f a c i l i t i e s . ! i I I . E F F E C T S O F I N D U S T R I A L R E L A T I O N S j i O N H I G H E R P R O D U C T I V I T Y I T h e v a s t n a t u r a l r e s o u r c e s o f t h e y o u n g A m e r i c a n R e - 1 1 QI b i d . . p . 109. I j p u b li c , p l u s t h e e n e r g i e s a n d i n v e n t i v e n e s s o f i t s p e o p le , i {brought an i n d u s t r i a l d e v e lo p m e n t u n p a r a l l e l e d i n h i s t o r y . I n t h e b e g i n n i n g i t to o k t h e fo rm o f a m u l t i t u d e o f home c r a f t a n d s m a l l - s h o p e n t e r p r i s e s . , T h e o w n e r w o r k e d w i t h h i s m e n a n d h a d a f i r s t h a n d u n d e r s t a n d i n g o f t h e i r p r o b l e m s , t h e i r h o p e s , a n d t h e i r f e a r s . T h e c r a f t s m a n a n d h i s f a m i l y u s u a l l y l i v e d i n a s m a l l c o m m u n i t y a n d h a d a h o m e a n d a g a r d e n . M a n y t h i n g s t h a t t h e f a m i l y r e q u i r e d w e r e . m a d e a t h o m e . ! | I A s t h e f a c t o r y s y s t e m s p r e a d o v e r t h e U n i t e d S t a t e s j ! » a n d c o r p o r a t e m a n a g e m e n t r e p l a c e d t h e o w n e r - m a n a g e r , p e r - i j s o n a l c o n t a c t b e t w e e n e m p l o y e e a n d e m p l o y e r b e c a m e t h e e x - j c e p t i o n r a t h e r t h a n t h e r u l e . I n t h e m o d ern m ass p r o d u c - t • t i o n i n d u s t r i a l o r g a n i z a t i o n t h e w o r k e r m a y n o t e v e n k n o w I ' j t h e c h i e f e x e c u t i v e o f h i s c o m p a n y . H i s c o n t a c t w i t h m a n - i I a g e m e n t i s l i m i t e d t o h i s f o r e m a n o r t h e f a c t o r y s u p e r i n - f j t e n d e n t . T h e p r i d e o f c r a f t s m a n s h i p w h i c h o n c e m o t i v a t e d i { ( jmen t o g r e a t e r e f f o r t h a s g i v e n way t o r e p e t i t i v e o p e r a - ; t i o n s , w h i c h a r e o f t e n m o n o t o n o u s a n d b o r i n g . T h i s h i g h l y t ! s p e c i a l i z e d d i v i s i o n o f l a b o r I n t h e i n d u s t r i a l s y s t e m , j m a d e a d v a n c e m e n t m o r e d i f f i c u l t a n d a m a n ’ s p a y l e s s s e - f 1 " i c u r e . S o , w h i l e t h e s y s t e m o p e n e d n e w d o o r s o f o p p o r t u n i t y ' I b y t h e c r e a t i o n o f m i l l i o n s o f j o b s a t g o o d w a g e s , i t a l s o i 1 1 1 m a d e g r e a t i n d u s t r i a l d e p r e s s i o n s . " ^ A sp le y an d M iitm o re , o p . c i t p . 9. ! I j W i t h t h e i m p o s i t i o n o f c o l l e c t i v e b a r g a i n i n g , f i r s t i j t h r o u g h t h e N a t i o n a l I n d u s t r i a l R e c o v e r y A c t a n d l a t e r b y j j t h e p a s s a g e o f t h e N a t i o n a l L a b o r R e l a t i o n s A c t , a n e w c o n - j i ; c e p t i o n o f e m p l o y e e - e m p l o y e r r e l a t i o n s b e c a m e e v i d e n t . T h e m o r e f a r s i g h t e d a m o n g t h e b u s i n e s s c o m m u n i t y a c c e p t e d t h e I p r i n c i p l e o f c o l l e c t i v e b a r g a i n i n g , h o p i n g i t w o u l d b r i n g a j j m e a s u r e o f i n d u s t r i a l s t a b i l i t y . T h e y s e t t h e m s e l v e s t h e j t a s k o f m a k i n g i t w o r k . E m p l o y e r s w h o i n t h e p a s t h a d c o n - ! c e r n e d t h e m s e l v e s m a i n l y w i t h p r o d u c i n g f o r a p r o f i t w i t h \ | ! t o o l i t t l e t h o u g h t o f h u m a n e l e m e n t s i n v o l v e d i n p r o d u c - I I i t i o n , s e t u p i n d u s t r i a l r e l a t i o n s d e p a r t m e n t s t o d e a l j i ! e f f e c t i v e l y w i t h t h e p r o b l e m s w h i c h c a m e i n t h e w a k e o f t h e I I N a t i o n a l L a b o r R e l a t i o n s A c t . B r o a d p o l i c i e s a f f e c t i n g e m p l o y e e - e m p l o y e r r e l a t i o n s w e r e f o r m u l a t e d b y t o p m a n a g e - j m e n t , a n d a d m i n i s t e r e d b y t h e s e d e p a r t m e n t s w h i c h w e r e j i s u p e r v i s e d b y a n e w t y p e o f e x e c u t i v e k n o w n a s t h e D i r e c t o r | | o f I n d u s t r i a l R e l a t i o n s . J I j N o t o n l y t h e i n d u s t r i a l r e l a t i o n s d i r e c t o r s w e r e r e - j i ! c e i v i n g i n c r e a s e d c o m p e n s a t i o n i n r e c o g n i t i o n o f t h e i m - S p o r t a n c e o f t h e i r w o r k , b u t m o r e a n d m o r e c o m p a n i e s w e r e ; ! ; 12 e l e v a t i n g t h e m t o m e m b e r s h i p o n t h e b o a r d o f d i r e c t o r s . ; ! ' T h i s i s a n i n t e r e s t i n g t r e n d , f o r i t r e f l e c t s t h e i m p o r - i I t a n c e w h i c h c o r p o r a t i o n s a t t a c h t o i n d u s t r i a l r e l a t i o n s , | < I I I " K i l l 1 1 n m m I i M M I M . . . . . . . . . . . . . . . . . . I 12Ibid., p p . 7 0 -7 1 . I 65 . i | n o t o n l y a s t h e y a f f e c t p r o f i t s b u t a l s o a s t h e y a f f e c t p u b l i c r e l a t i o n s . P e r h a p s o n e o f t h e m o s t s i g n i f i c a n t t r e n d s i n i n d u s - ; t r i a l r e l a t i o n s t o d a y i s t h e i n c r e a s i n g r e l i a n c e w h i c h e m - ! p l o y e r s a r e p l a c e d u p o n s c i e n t i f i c r e s e a r c h i n t h e f o r m u l a t i o n o f p o l i c y . D u r i n g t h e w a r , u n d e r p r e s s u r e t o p r o d u c e a t a n y c o s t , f e w e m p l o y e r s h a d t i m e f o r r e s e a r c h w o r k . i M o s t o f t h e m w e r e c o n t e n t t o m e e t t h e e m e r g e n c y o f t h e m o - : m e n t . B u t t o d a y , m a n a g e m e n t a n d u n i o n s a l i k e r e a l i z e t h e j i m p o r t a n c e o f g e t t i n g t h e f a c t s b e f o r e p r o c e e d i n g , a n d i n i i . a d d i t i o n t o i n a u g u r a t i n g r e s e a r c h p r o j e c t s o f t h e i r o w n , i I i ■ j h a v e j o i n e d w i t h t h e g r e a t u n i v e r s i t i e s a n d i n d e p e n d e n t r e - | s e a r c h o r g a n i z a t i o n s t o a n a l y z e c o n d i t i o n s w h i c h a f f e c t | 1 3 : e m p l o y e e - e m p l o y e r r e l a t i o n s h i p . I t i s n o w a n a c c e p t e d e c o n o m i c a n d p o l i t i c a l d o c - i t r i n e i n t h e U n i t e d S t a t e s t h a t e v e r y m a n h a s a r i g h t t o a ' d e c e n t l i v i n g a n d t h e l a r g e s t m e a s u r e o f s e c u r i t y w h i c h t h e i ; ! c o m m o n w e a l t h c a n p r o v i d e . T h e A m e r i c a n p e o p l e a r e c o n v i n c e d i 1 ; t h a t t h i s s e c u r i t y a n d o p p o r t u n i t y c a n b e p r o v i d e d b y t h e j i t r a d i t i o n a l s y s t e m o f i n d i v i d u a l I n i t i a t i v e a n d p r i v a t e : e n t e r p r i s e . B u t t h e r e i s a d i f f e r e n c e o f o p i n i o n a s t o h o w f i t h e s e o b j e c t i v e s c a n b e s t b e a t t a i n e d a n d h o w t h e e c o n o m i c ' s y s t e m c a n b e o p e r a t e d I n o r d e r t o a c c o m p l i s h t h e m o s t g o o d ! | i J 1 3 I b i d . , p . 7 2 . j I | ! f o r m o s t p e o p l e . T h e r e i s o n e g r o u p w h i c h c o n t e n d s t h a t n a t i o n a l i t p r o s p e r i t y d e p e n d s u p o n t h e p u r c h a s i n g p o w e r o f t h e m a s s e s . ! T o c r e a t e s u c h p u r c h a s i n g p o w e r t h e n a t i o n a l i n c o m e s h o u l d j b e m o r e w i d e l y d i s t r i b u t e d . T h i s g r o u p f a v o r s t a x i n g t h e r i c h , a n e x p a n d i n g p r o g r a m o f s o c i a l s e c u r i t y , g o v e r n m e n t p l a n n i n g i n t h e i n t e r e s t o f t h e u n d e r p r i v i l e g e d , a n d J g o v e r n m e n t s u p p o r t o f u n i o n s t o i n s u r e t h e w o r k e r r e c e i v i n g j a n i n c r e a s i n g l y g r e a t e r s h a r e o f t h e p r o f i t s o f i n d u s t r y l a n d a g r i c u l t u r e . ! O t h e r s t a k e t h e o p p o s i t e v i e w . T h e y b e l i e v e t h a t i n j o r d e r t o p r o v i d e a d y n a m i c e c o n o m y t a x a t i o n s h o u l d n o t d i s - | c o u r a g e i n v e s t m e n t c a p i t a l . T h e y w o u l d e n c o u r a g e p o o l s o f f j c a p i t a l o u t o f w h i c h w o r k e r s c a n b e p r o v i d e d w i t h m o r e i e f f i c i e n t t o o l s f o r c r e a t i n g w e a l t h . T h e y c o n t e n d t h a t t h e I ( b u s i n e s s c a n f u n c t i o n b e t t e r w i t h l e s s g o v e r n m e n t i n t e r f e r - I ' e n c e . A n d w h i l e t h e y r e c o g n i z e t h e i m p o r t a n c e o f h i g h - | t l e v e l c o n s u m e r b u y i n g p o w e r , t h e y m a i n t a i n t h a t t h i s c a n i i ^ b e s t b e a c c o m p l i s h e d b y p a s s i n g a l o n g t o c o n s u m e r s ( w h o a r e j t h e w o r k e r s ) t h e s a v i n g s m a d e ' p o s s i b l e b y m o d e r n m a s s p r o d u c t i o n a n d m a s s s e l l i n g . I n t h i s w a y r e a l w a g e s , a s d i s t i n c t f r o m t h e d o l l a r w a g e s , c a n b e c o n t i n u a l l y i n c r e a s e d w i t h t h e l e a s t d i s t u r b a n c e t o t h e e c o n o m i c s y s t e m . ^ ^ A s p l e y and W hitm ore, 0£ . c i t . , p p . 2 7 -2 8 . W h i l e m u c h m a y b e s a i d f o r b o t h o p i n i o n s , c o n f l i c t a r i s e s i n t h e i r p r a c t i c a l a p p l i c a t i o n . I n o n e c a s e t h e r e i s a n u n w i l l i n g n e s s o f c a p i t a l t o e n g a g e i n b u s i n e s s u n d e r - f t a k i n g s i f g o v e r n m e n t i s t o c o n t r o l a n d r e g u l a t e t h e d i s t r i b u t i o n o f i n c o m e . I n t h e o t h e r t h e r e i s a n u n w i l l i n g n e s s o n t h e p a r t o f t h e w o r k e r t o a c c e p t w h a t m a n a g e m e n t c o n s i d e r s a " f a i r ' ’ s h a r e o f t h e s a l e s d o l l a r a s c o m p e n s a t i o n f o r h i s l a b o r . O u t o f t h i s s i t u a t i o n h a s a r i s e n w h a t e c o n o m i s t s c a l l " t h e i n d u s t r i a l c o n f l i c t , 1 1 a n d w i t h i t h a s j . a r i s e n t h e n e e d f o r r e v a l u i n g e m p l o y e e - e m p l o y e r r e l a t i o n - ; I j t j s h i p s t o f i n d a c o m m o n g r o u n d o f c o o p e r a t i o n , i n s t e a d o f j i ' c o n f l i c t i n i n d u s t r i a l r e l a t i o n s . j i " T o o m a n y p e o p l e a r e l i k e l y t o t h i n k o f m a n a g e m e n t j l a n d l a b o r a s h a v i n g d i f f e r e n t o b j e c t i v e s , " s a i d E r i c J o h n - ' } * j s o n , o f t h e C o m m i t t e e f o r E c o n o m i c D e v e l o p m e n t s t u d y i n g ; i ( l a b o r - m a n a g e m e n t r e l a t i o n s , " w h i l e t h e i r o b j e c t i v e s a r e i i q u i t e a l i k e . S o a r e t h e i r b a s i c p r i n c i p l e s a n d b e l i e f s . i j E v e r y p o l l i n t h e c o u n t r y s h o w s t h a t A m e r i c a n s b y a v a s t j , ! m a j o r i t y p r e f e r c a p i t a l i s m t o a n y o t h e r e c o n o m i c s y s t e m . ' j T h i s c o m m u n i t y o f i n t e r e s t a n d c o m m o n o b j e c t i v e s c a n b e ' i s e r v e d o n l y t h r o u g h g r e a t e r p r o d u c t i o n o f a l l t h o s e t h i n g s w h i c h m a k e f o r b e t t e r l i v i n g . T h e c o n s u m e r , t h e w o r k e r , ' ■ t h e i n v e s t o r m u s t a l l s h a r e e q u i t a b l y i n t h e f r u i t s o f i n - i j c r e a s e d p r o d u c t i o n . T h e i r r e s p e c t i v e s h a r e m u s t b e l o w e r ! 1 p r i c e s , h i g h e r w a g e s , s o u n d e r p r o f i t s . S t e a d y , u n i n t e r - I j r u p t e d p r o d u c t i o n w i l l g iv e t h e s e t h i n g s . S t r i k e s w i l l ‘n o t I n v e s t o r s , m an ag em en t, a n d l a b o r a r e t h u s p a r t n e r s i n A m e ric a n i n d u s t r y . T h e s e p a r t n e r s t o g e t h e r p r o d u c e t h e g o ods w h ic h c o n su m e rs b u y a n d w h ic h a r e e s s e n t i a l t o th e m . On t h e o t h e r h a n d , c o n su m e rs a r e e s s e n t i a l t o i n d u s t r y f o r w i t h o u t t h e i r p u r c h a s e s , i n d u s t r y w o u ld c o l l a p s e . I n v e s t o r s , e x e c u t i v e s , e m p lo y e e s , a n d c o n su m e rs o p e r a t e a n d l i v e |w i t h i n t h e fra m e w o rk p r o v i d e d b y g o v e rn m e n t. The g o v e r n - im ent, o f c o u r s e , h a s a p r o f o u n d e f f e c t on i n d u s t r y . I t c a n I c r e a t e c o n d i t i o n s f a v o r a b l e t o i n d u s t r y a n d l a b o r , i t c a n , |b y o v e r - r e g u l a t i o n a n d e x c e s s i v e , t a x a t i o n o r by o t h e r jp o w e rs , g r e a t l y h a n d ic a p i t . So t h e e x t e n t o f t h e p o w ers lan d t h e n a t u r e o f t h e a c t i v i t i e s o f g o v e rn m e n t h a v e a g r e a t ( i n f l u e n c e on i n d u s t r i a l econom y. I Some u n io n s c o n te n d t h a t t h r o u g h t h e u s e o f e co n o m ic ( f o r c e t h e y h a v e b e e n a b l e t o r e c e i v e fro m t h e m anagem ent a ( l a r g e r s h a r e o f t h e s a l e s d o l l a r . A n a l y s i s , h o w e v e r, d o es •not s u p p o r t t h i s c o n t e n t i o n . Do t h e h i g h e r d o l l a r w ages jw h ich o r g a n i z e d l a b o r h a s won r e p r e s e n t a b i g g e r s l i c e o f t h e p i e ? The f a c t i s t h a t an y b u s i n e s s m u st e a r n a c e r t a i n i ' p r o f i t t o s t a y i n b u s i n e s s . I f i t s e a r n i n g s f a l l b e lo w t h e i j r e q u i r e d minimum i t c a n n o t c o n t i n u e t o o p e r a t e . H ig h e r i , - i n .................. ........................................................ ......... ^ A s p le y a n d W h itm o re, o p ,, c i t . , p . 28. j w a g e s p a i d t o l a b o r d o n o t c o m e o u t o f c a p i t a l ' s s h a r e o f ; t h e s a l e s d o l l a r . They m u s t c o m e o u t o f o p e r a t i n g e f f i - j | i c i e n e y , o r t h e y a r e e v e n t u a l l y a d d e d t o t h e s e l l l n g p r i c e ! i a n d p a i d b y t h e c o n s u m e r . T h e c o n s u m e r i s a l s o a w o r k e r , ! i w h e t h e r h e i s e m p l o y e d o n a f a r m , i n a f a c t o r y , o r i n a n j o f f i c e . ^ j J T h e g r e a t o p p o r t u n i t y f o r c o l l e c t i v e b a r g a i n i n g t o i a f f e c t t h e s t a n d a r d o f l i v i n g o f t h e c o m m u n i t y i s b y i n - I I f l u e n c i n g t h e r a t e o f i n c r e a s e i n o u t p u t p e r m a n - h o u r . I s ' j c o l l e c t i v e b a r g a i n i n g l i k e l y t o a c c e l e r a t e o r t o r e t a r d t h e , i | ! g r o w t h i n o u t p u t p e r m a n - h o u r ? T h e a n s w e r d e p e n d s u p o n h o w j i c o l l e c t i v e b a r g a i n i n g a f f e c t s t h e e f f i c i e n c y o f e m p l o y e e s ! a n d m a n a g e m e n t , h o w i t a f f e c t s t h e r a t e a t w h i c h c a p i t a l i s I a c c u m u l a t e d , a n d h o w i t a f f e c t s t h e r a t e a t w h i c h c a p i t a l | j i s i m p r o v e d . ' | C o l l e c t i v e b a r g a i n i n g m a y b e u s e d e i t h e r t o e n f o r c e ! J m a k e - w o r k r u l e s a n d p o l i c i e s o r t o i n t r o d u c e p r o p o s a l s o f i i I ! i l u n i o n - m a n a g e m e n t c o o p e r a t i o n t o i n c r e a s e o u t p u t . T h e r e a r e j o n l y a f e w u n i o n s t h a t h a v e l i m i t e d o u t p u t o r t h a t a r e : s e e k i n g t o d o s o . C o l l e c t i v e b a r g a i n i n g h a s m a n y i n d i r e c t J , f a v o r a b l e e f f e c t s u p o n m a n a g e m e n t a n d u p o n o u t p u t p e r m a n - i i h o u r . F o r e x a m p l e , i t c o m p e l s m a n a g e m e n t t o b e b e t t e r p r e - ' p a r e d t o j u s t i f y i t s d e c i s i o n s . C o n s e q u e n t l y , i t d i s c o u r - \ I ' a g e s s n a p j u d g m e n t s a n d e n c o u r a g e s m a n a g e m e n t t o p r o v i d e l 6 I b i d . , p p . 2 9 -3 0 . 70 i i |them selves w ith more adequate in form ation and to base de c i s i o n s upon c a r e f u lly considered p o l i c i e s . I t a ls o en courages la r g e r exp en d itu res on te c h n o lo g ic a l r e sea r ch . i The more r a p id ly money wages are exp ected to advance, th e j la r g e r the amounts which i t i s advantageous t o spend by management in order to prevent r i s i n g wages from producing 17 h ig h er lab or c o s t s . Union-management co o p era tiv e p lan s rep resen t an ex- | I | ! [ten sio n and development of em ployer-union r e la t io n s h ip s b e-: t i I yond th o se norm ally e s ta b lis h e d by c o l l e c t i v e b a rg a in in g . j ;Union-management co o p era tio n c r e a te s a d d itio n a l in d u s t r ia l ! [r e la tio n s or employment r e la t io n s h ip s . I t assumes a c tiv e ! i ! c o l l e c t i v e b a rg a in in g . In a d d itio n , however, i t e s ta b - j ' i l i s h e s r e la t io n s h ip s th a t go much fa r th e r than m erely n e g o - ; j tia t in g and a d m in ister in g terms of a j o in t agreem ent. In l lunion-management co o p era tio n , th e union and the employer ; i 'create and m ain tain a p o s i t i v e , planned co o p er a tiv e pro- I ;gram, a program d esign ed t o in c r e a se e f f i c i e n c y , produc- i t i v i t y , and teamwork, and lik e w is e t o g iv e g re a te r s e c u r ity t jto th e union and added advantages to i t s members. Union- ■management co o p era tio n c o n s is t s e s s e n t i a l l y o f a system of j j j o in t c o n s u lta tio n . Such co o p era tio n b egin s w ith f u l l j i I j ■ j | i > i *1 I I Summer H. S lic h t e r , "Economic E f f e c t s of C o lle c - J t i v e B argain in g," Labor Problems by George P. S ch u ltz and !R. Coleman (New York: McGraw-Hill Book Company, I n c ., 1 9 5 3 ) , p p . 3 3 5 - 3 3 6 . a c c e p t a n c e o f t h e u n i o n a n d o f t h e c o l l e c t i v e b a r g a i n i n g : p r o c e s s . W ith t h a t b a c k g ro u n d , i t p r o v i d e s f o r a c t i v e a i d jby t h e u n i o n i n m e e ti n g m a n a g e m e n ts d a y - t o - d a y p r o b le m s , i p a r t i c u l a r l y t h o s e o f m a i n t a i n i n g a n d im p ro v in g p r o d u c - t i v i t y . " ^ T A D a le Y o d e r, P e r s o n n e l P r i n c i p l e s a n d P o l i c i e s (New Y o rk : P r e n t i c e - H a l l , I n c . , 1 9 3 2 ) , p p . 3 3 1 “ 3 5 2 . j C H A P T E R V I 1 ! E C O N O M I C I N C E N T I V E S A N D H U M A N R E L A T I O N S I M o n e y h a s u n i v e r s a l l y b e e n e m p l o y e d t o g e t m e n t o w o r k . I n u s i n g t h i s i n c e n t i v e , b u s i n e s s h a s t r a d i t i o n a l l y j o p e r a t e d o n t h e p r i n c i p l e s t h a t t h e m o r e i m p o r t a n t t h e j o b , t h e m o r e v a l u a b l e t h e m a n , a n d t h e h i g h e r h i s p r o d u c t i o n , \ I i ) - I I t h e h i g h e r h i s p a y . T o i n c r e a s e t h e a m o u n t o f e n e r g y ; i e f f e c t i v e l y a p p l i e d t o p r o d u c t i o n , b u s i n e s s h a s a t t e m p t e d i I ■ t o r e d u c e f a t i g u e . I n d o i n g t h i s , e f f o r t s h a v e b e e n m a d e > I t o i n c r e a s e t h e w o r k e r ’ s e n e r g y s u p p l y , u s e h i s a v a i l a b l e j j e n e r g y m o r e e f f e c t i v e l y , a n d i n c r e a s e h i s m o t i v a t i o n . | T h e s e m e t h o d s h a v e i n v o l v e d t h e b e t t e r s e l e c t i o n o f w o r k e r s ; i • ! i i m p r o v e d m e d i c a l s e r v i c e s , m o r e a d e q u a t e f o o d s e r v i c e s , i m - , p r o v e d m a c h i n e r y a n d p r o c e d u r e s , b e t t e r r e s t p e r i o d s , ; i i ! s h o r t e r w o r k i n g h o u r s , b e t t e r p h y s i c a l c o n d i t i o n s o f w o r k , j ’ 1 ^ | a n d a v a r i e t y o f i n c e n t i v e s y s t e m . ^ ! W h i l e a n i n c e n t i v e a f f e c t s t h e a m o u n t o f w o r k w h i c h ! I a n i n d i v i d u a l d o e s , i t d o e s n o t n e c e s s a r i l y r a i s e e f f i - [ c i e n c y a t t h e s a m e t i m e t h a t i t r a i s e s p r o d u c t i v i t y . I n j i m o s t p h y s i c a l o r m u s c u l a r t a s k s , i t i s f o u n d t h a t t h e e n e r g y c o n s u m p t i o n p e r u n i t o f w o r k i s l e a s t f o r a m o d e r a t e ; I | p a c e . I f t h e e f f o r t o f a n i n c e n t i v e i s t o i n c r e a s e t h e j ■■i- I M I L _ 1 — - J * u — I -u - 1 .1 j 1 ! H en ry C. S m ith , P s y c h o lo g y o f I n d u s t r i a l B e h a v io r j ( N e w Y o r k : M c G r a w - H i l l B o o k C o m p a n y , I n c . , 1955)> p p . Ij3 - j M , _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ j p a c e o f t h e w o r k b e y o n d t h i s o p t i m a l l e v e l , t h e r e f o r e , i t I | m a y d e c r e a s e t h e o v e r - a l l e f f i c i e n c y o f p e r f o r m a n c e . I n I i I t h e l o n g r u n , t h e n , i t m a y h a v e a d v e r s e e f f e c t s . L e t u s assum e t h a t any t a s k h a s i t s o p tim a l l e v e l o f e f f o r t . F o r t h i s r e a s o n t h e p r o b l e m o f m o t i v a t i o n i n w o r k i s n o t s i m p l y t o f i n d t h o s e i n c e n t i v e s w h i c h w i l l r a i s e j o u t p u t . T h i s i s o n l y a p a r t o f t h e p r o g r a m . I n a d d i t i o n , ! w e s h o u l d f i n d t h o s e i n c e n t i v e s w h i c h w i l l r a i s e p r o d u c t i o n ; 2 | w i t h o u t u n d u l y d e c r e a s i n g e f f i c i e n c y . I . E C O N O M I C S E C U R I T Y j ; i j T h e q u e s t f o r e c o n o m i c s e c u r i t y h a s b e e n o n e o f t h e j , s t r i k i n g c h a r a c t e r i s t i c s o f m i d - c e n t u r y i n d u s t r i a l r e l a - j t i o n s i n t h e U n i t e d S t a t e s . T o s o m e e x t e n t , c r e d i t m u s t b e j I g i v e n t o t h e g r e a t d e p r e s s i o n o f t h e 1 9 3 0 ’ s f o r t h i s g r e a t ; * » s e a r c h f o r s t a b i l i t y a n d p r o t e c t i o n a g a i n s t p e r s o n a l e c o - j j n o m i c c a t a s t r o p h e . T h e d e p r e s s i o n c r e a t e d a p e r s i s t e n t ; i f e a r I n t h e m i n d s o f p e o p l e . M a t u r e m e m b e r s o f t h e l a b o r j i ' I 1 ( f o r c e , f i n d i n g I t n e c e s s a r y t o j o i n i n m ad e-w o rk p r o j e c t s \ i j a n d t o a c c e p t p u b l i c r e l i e f , d e t e r m i n e d n o t t o b e ' c a u g h t ! ! j 'a g a i n i n jo b s t h a t v a n i s h e d o v e r n i g h t . Many u n io n s whose 'm em b e rsh ip s d e c r e a s e d a n d w hose f i n a n c i a l r e s o u r c e s w e re ' i q u l c k l y d i s s i p a t e d s o u g h t p r o t e c t i o n a g a i n s t r e p e t i t i o n o f j I : > \ 1 ■ ■ ■ - - ■ — ■ ---------------------------------------- - - . 2 1 : T h o m a s A . R y a n , W o r k a n d E f f o r t ( N e w Y o r k : T h e ! R o n a l d P r e s s C o m p a n y , 1 9 5 7 7 7 P P « 1 6 9 - 1 7 0 . | ! i s u c h a c a l a m i t y . The S o c i a l S e c u r i t y A c t, w i t h i t s unem p lo y m e n t c o m p e n s a tio n , o ld a g e a s s i s t a n c e , a n d p e n s i o n p r o gram s a n d o t h e r p u b l i c a i d , i s a t a n g i b l e r e s u l t o f t h i s 3 j f r i g h t e n i n g e x p e r i e n c e . I & | Unem ploym ent i s a co m p lex phenom enon h a v in g v a r i o u s c a u s e s . I t c a n b e c l a s s i f i e d i n v a r i o u s w a y s. D i s t i n c t i o n s a r e o f t e n d ra w n , f o r e x a m p le , b e tw e e n c y c l i c a l , s e a s o n a l , c a s u a l , and t e c h n o l o g i c a l o r s t r u c t u r a l unem ploym ent i ' j ( |T h e re i s n o r e a s o n t o s u p p o s e t h a t m e a s u re s t o p ro m o te j I h i g h e r p r o d u c t i v i t y t e n d i n t h e m s e lv e s t o i n c r e a s e c y c l i c a l ! I o r g e n e r a l unem ploym ent a t t r i b u t a b l e t o a p e r i o d i c a l o r !c h r o n i c d e f i c i e n c y o f a g g r e g a t e dem and. S in c e t h e w ar i • j I t h e r e h a s b e e n r e l a t i v e l y l i t t l e u n em p lo y m en t o f t h i s k i n d , j ; | a n d m o st p e o p le w ou ld p r o b a b l y a g r e e t h a t t h i s t y p e o f u n - j em ploym ent w ould n o t be a - r e s u l t o f m e a s u re s t a k e n t o r a i s e 1 ;p r o d u c t i v i t y b u t o f o t h e r f a c t o r s m a k in g f o r d e p r e s s i o n , I ! I !w h ic h w o u ld be a s h a r d o r h a r d e r t o com bat i n an econom y i i i i i w i t h low p r o d u c t i v i t y t h a n i n an econom y w i t h h i g h p r o d u c - J i j t i v i t y . Nor i s t h e r e a n y r e a s o n f o r s u p p o s in g t h a t h i g h e r j i i j p r o d u c t i v i t y t e n d s i n g e n e r a l t o i n c r e a s e s e a s o n a l o r ; c a s u a l u n e m p lo y m e n t. ! | B u t, i f i t i s a f a l l a c y t o s u p p o s e t h a t h i g h e r p r o - i d u c t i v i t y a lw a y s t e n d s t o m ake f o r u n e m p lo y m en t, i t c a n n o t j 3 ^ D a le Y o d e r, P e r s o n n e l P r i n c i p l e s a n d P o l i c i e s (New [ Y ork: P r e n t i c e - H a l l , i n c . , 1 9 5 2 ) , P . 5 l 3 . 'be d e n i e d t h a t t e c h n o l o g i c a l p r o g r e s s d o e s c h a n g e t h e n a t u r e i !o f em ploym ent o p p o r t u n i t i e s and d o e s fro m tim e t o tim e make ( p a r t i c u l a r g r o u p s o f w o r k e r s r e d u n d a n t i n p a r t i c u l a r o c c u - j I j I p a t i o n s a n d p l a c e s . E f f o r t s t o s p e e d u p t h e r a t e o f t e c h - j | i j i j n o l o g i c a l p r o g r e s s may t e n d t o i n c r e a s e t h e i n c i d e n c e o f | t e c h n o l o g i c a l unem ploym ent o f t h i s k i n d . j T e c h n o l o g i c a l c h a n g e s i n an i n d u s t r y may h a v e t h r e e p o s s i b l e a d v e r s e e f f e c t s on em ploym ent i n t h a t i n d u s t r y : ! ( a ) t h e r e may be a d e c r e a s e i n t h e am ount o f em ploym ent ! a v a i l a b l e i n t h e i n d u s t r y a s a w h o le ; ( b ) t h e r e may be a i d e c r e a s e i n t h e am ount o f em ploym ent a v a i l a b l e i n p a r t i c u - ' , i ! l a r p l a c e s ; a n d ( c ) t h e r e m ay b e a d e c r e a s e i n t h e em p lo y - | m ent o p p o r t u n i t i e s o p en t o p a r t i c u l a r c a t e g o r i e s o f w o rk e rs ; in t h e i n d u s t r y . I i i To d i s t i n g u i s h t h e s e t h r e e s o u r c e s o f p o s s i b l e h a r d - | I | I is h ip t o w o rk e rs i s n o t , o f c o u r s e , t o s a y t h a t i t s h o u ld b e j i I 't h e p o l i c y o f a n i n d u s t r y i n a l l c i r c u m s t a n c e s t o p r e v e n t j j an y d e c r e a s e i n em ploym ent e i t h e r i n t h e i n d u s t r y a s a | j I :w hole o r I n p a r t i c u l a r p l a c e s o r f o r p a r t i c u l a r c a t e g o r i e s j j i |o f w o r k e r s . S u ch c h a n g e s may b e n e c e s s a r y i n t h e p r o g r e s s ! i ; io f an i n d u s t r y and t h e d e v e lo p m e n t o f t h e c o u n t r y ’ s econom y. To t r y t o p r e v e n t s u c h c h a n g e s fro m e v e r o c c u r r i n g j i 'w o u ld b e t o t r y t o s t o p t h e e co n o m ic d e v e lo p m e n t o f t h e ic o u n tr y a t w h a te v e r s t a g e i t h a p p e n e d t o h a v e r e a c h e d , w h ic h w o u ld be f a t a l a l i k e t o eco n o m ic p r o g r e s s a n d t o 76 i | s o c i a l w e l f a r e . What I s i m p o r t a n t I s t o e n s u r e t h a t , when t e c h n o l o g i c a l c h a n g e s do l e a d t o a n a r r o w in g o f em ploym ent • o p p o r t u n i t i e s u n d e r any o f t h e s e t h r e e h e a d s , s t e p s s h o u l d b e t a k e n t o k e e p t o a minimum a n y h a r d s h i p t h a t may be e n - j t a i l e d . ^ - Any l a b o r - s a v i n g t e c h n o l o g i c a l ch an g e i s l i a b l e t o i n v o l v e a d e c r e a s e i n t h e am ount o f em ploym ent o f f e r e d i n (th e i n d u s t r y i n w h ic h i t o c c u r s , u n l e s s t h e dem and f o r t h e ; i j ip ro d u c t i n c r e a s e s s u f f i c i e n t l y t o p r o v i d e a l t e r n a t i v e em- I t p lo y m e n t f o r w o rk e rs whose s e r v i c e s w o u ld o t h e r w i s e be d i s - ' ! p e n s e d w i t h . j ; » ! The p ro b le m o f t h e e f f e c t s o f h i g h e r p r o d u c t i v i t y oni i j jo b s e c u r i t y i s e s p e c i a l l y d i f f i c u l t i n c o u n t r i e s w i t h a ! j I :l a r g e am ount o f un em ploym ent a n d u n d e re m p lo y m e n t. T h is i n - j i 1 i jc lu d e s m any o f t h e u n d e r d e v e l o p e d c o u n t r i e s . W here t h e r e j 1 j |i s a s u r p l u s o f l a b o r , d i s p l a c e d w o rk e rs a r e m ore d i f f i c u l t . i I t o a b s o r b , a n d i t m ig h t seem t h a t p o l i c y i n s u c h c o u n t r i e s I [s h o u ld aim r a t h e r a t i n c r e a s i n g p r o d u c t i o n a n d em ploym ent j [th a n a t h i g h e r p r o d u c t i v i t y . I t w o u ld be i n a p p r o p r i a t e t o [ a tte m p t t o a d o p t, i n c o u n t r i e s w h ere l a b o r i s a b u n d a n t a n d j i 1 jcheap a n d c a p i t a l s c a r c e a n d d e a r , t h e c a p i t a l - i n t e n s i v e ; i a n d l a b o r - s a v i n g m e th o d s o f p r o d u c t i o n w h ic h a r e a p p r o p r i - ; ! 1 t j 1 1 I n t e r n a t i o n a l L a b o r O f f i c e , H ig h e r P r o d u c t i v i t y i n I M a n u f a c t u r i n g I n d u s t r i e s (G e n e v a ; I n t e r n a t i o n a l L a b o r O f- : f i c e , 1 9 £ 4 ) $ p p . 3 1 - 3 2 . I 77 i 5 a t e i n s u c h c o u n t r i e s a s t h e U n i t e d S t a t e s . 'N a tu r e a n d S o u rc e s o f M o t i v a t i o n | T h e re seem s v e r y l i t t l e d o u b t t h a t a s e a r c h f o r i m a t e r i a l s e c u r i t y i n some fo rm a c t s a s a m o tiv e i n a m a j o r i t y o f w o rk e rs t o d a y . At t h e same t i m e , i t seem s g e n e r a l l y a c c e p t e d t h a t g r o s s m a t e r i a l i n s e c u r i t y i s a d e t e r r e n t . No one c a n b e e x p e c t e d t o c o n c e n t r a t e on h i s w ork i f h e i s p re ~ i (o c c u p ie d a t t h e same tim e w i t h g r a v e f i n a n c i a l w o r r i e s ! 6 ja b o u t h i s f a m i l y 's w e l f a r e . j M o t i v a t i o n t o p e r f o r m e f f e c t i v e l y i n g i v e n t a s k s I jo v er tim e c a n b e r e g a r d e d a s e s s e n t i a l l y o f tw o s o r t s . I ( F i r s t , t h e g iv e n t a s k c a n b e a p a t h t o some g o a l n o t d i - j r e c t l y r e l a t e d t o t h e t a s k . T he w o rk e r m ust s u p p o r t h im - < s e lf a n d h i s f a m i l y a n d h e a p p e a r s r e g u l a r l y t o p e r f o r m h i s i i ( d u t i e s . I f t h e w o rk e r who p r o d u c e s m ore an d p r o d u c e s b e t t e r I q u a l i t y i s p a i d a c c o r d i n g l y , he c a n b e h i g h l y m o t i v a t e d | j « [even th o u g h t h e w ork i t s e l f d o e s n o t m o t i v a t e h im . W here ! t h e r e i s no d i r e c t in c r e m e n t o f r e w a r d to w a rd r e a c h i n g h i s j g o a l o f s u p p o r t o r s e c u r i t y f o r h i m s e l f a n d h i s f a m i l y by I j i n c r e a s e d e f f o r t , h e i s o n ly m o t i v a t e d t o do t h e m inimum ; i r e q u i r e d t o k e e p h i s j o b . I i I b i d . , p p . 3 5 - 3 6 . 1 6 R. P . T r e d g o ld , Human R e l a t i o n s i n M odern I n d u s t r y :(New Y o rk : I n t e r n a t i o n a l U n i v e r s i t i e s P r e s s , I n c . , 1 9 5 o ), p* b k - 78 S e c o n d , t h e g i v e n t a s k c a n i n i t s e l f b e r e w a r d i n g . The i n d i v i d u a l a t t a i n s r e a l a n d i m p o r t a n t s a t i s f a c t i o n s o u t o f h i s j o b . He w i l l r e f u s e o t h e r jo b s w h ic h p a y m ore b u t g iv e l e s s i n t r i n s i c s a t i s f a c t i o n . T h e se i n t r i n s i c r e w a r d s h a v e b e e n r e c o g n i z e d b y a v a r i e t y o f t e r m s , s u c h a s c r a f t s m a n s h ip , f e e l i n g o f c l o s u r e o r c o m p l e t i o n , f e e l i n g o f im- p o r t a n c e a n d o f p e r s o n a l w o r th , a n d d e s i r e f o r new e x p e r i e n c e . T h e re i s an e q u a l l y l o n g l i s t o f te r m s e x p r e s s i v e o f t h e b l o c k i n g o r l a c k o f s a t i s f a c t i o n fro m t h e s e i n t r i n s i c r e w a r d s , s u c h a s f r u s t r a t i o n , p e r s o n a l i n s e c u r i t y , i n f e r i - 7 o r i t y f e e l i n g s , f i x a t e d r e s p o n s e s , a n d h o s t i l i t y . P r im a r y d e t e r m i n a n t s o f i n t e r e s t o r l a c k o f i n t e r e s t a p p e a r t o b e m a t t e r s o f i n d i v i d u a l d i f f e r e n c e s . The d i s s a t i s f a c t i o n due t o t h e n a t u r e o f t h e w ork i s d i f f i c u l t t o s e p a r a t e fro m t h a t due t o a v a r i e t y o f o t h e r a s p e c t s o f t h e w o rk in g s i t u a t i o n , s u c h a s t h e s u p e r v i s i o n , com pany l a b o r p o l i c i e s , a n d t h e l i k e . N ot o n ly t h e w o rk e r may d i s l i k e t h e s u p e r v i s o r , b u t h e may a l s o d i s l i k e t h e w ork he i s do in g b e c a u s e o f h i s r e l a t i o n s t o t h e s u p e r v i s o r r a t h e r t h a n b e c a u s e o f t h e n a t u r e o f t h e t a s k i t s e l f . The im p ro v e d r e - i l a t i o n s t o s u p e r v i s i o n fo u n d i n t h e W e s te rn E l e c t r i c Com p a n y t e s t room s t u d i e s c a n b e r e g a r d e d a s an i n s t a n c e o f 7 D a n ie l K a tz a n d R o b e rt L . K ahn, ’’Human O r g a n i z a t i o n a n d W orker M o t i v a t i o n , ” I n d u s t r i a l P r o d u c t i v i t y (C ham paig n, I l l i n o i s : I n d u s t r i a l R e s e a r c h A s s o c i a t i o n , 1 9 5 1 ) > PP. llj-9- 1 5 0 . t h e o p p o s i t e e f f e c t . I t may he t h a t g r e a t e r im provem ents ; i n e f f i c i e n c y c a n b e o b t a i n e d t h r o u g h i n c r e a s e i n i n t e r e s t . j I n some i n d u s t r i e s , s p e c i a l b o n u s m e th o d s o f p ay m en t; i a r e m ore w id e ly a p p l i e d t o t h o s e t a s k s w h ic h a r e r e g a r d e d ■ j ! a s i n t r i n s i c a l l y b o r i n g a n d d i s t a s t e f u l . T h e se b o n u s e s , j w h ic h a r e s u p p o s e d t o s u b s t i t u t e f o r i n t e r e s t i n t h e t a s k i t s e l f , m ay r e d u c e e f f i c i e n c y e v e n i f t h e y a r e s u c c e s s f u l 8 i n r a i s i n g o u t p u t . ; i Wages a n d P r o d u c t i v i t y ; H en ry F o r d was one o f t h e f i r s t a d v o c a te s o f h i g h 'w ages t o g iv e i n d u s t r i a l w o r k e r s g r e a t e r p r o d u c t i v i t y . H i s ; i a c t i o n i n v o l u n t a r i l y i n c r e a s i n g w ages a t h i s g r e a t p l a n t i n D e t r o i t u s h e r e d i n a new c o n c e p t i o n o f wage s e t t i n g . (F o rd d e m o n s tr a te d t h a t h e c o u ld p a y prem ium w ages w i t h o u t ! I i n c r e a s i n g u n i t c o s t . I t s h o u ld be n o t e d t h a t F o r d 's c o s t ; i j came down n o t b e c a u s e o f t h e i n c r e a s e d p u r c h a s e s o f F o r d 's I ! c a r s b y h i s w e l l p a i d e m p lo y e e s , b u t b e c a u s e b y p a y in g p r e - j i i miura w ages h e was a b l e t o a t t r a c t w o rk e rs w i t h g r e a t e r s k i l l a n d g r e a t e r a b i l i t y t o p r o d u c e . T h e s e a d v a n ta g e s w ere l o s t ' I i las so o n a s F o r d 's c o m p e t i t o r s came up t o h i s wage r a t e s , I ,and b y 19*4-2 when F o rd was o r g a n i z e d by t h e U n i t e d A utom o- > b i l e W o rk e rs i t was c la im e d t h a t F o r d 's w ages w ere b e lo w 1 t h o s e t h e n p a i d i n u n i o n i z e d a u to m o b ile p l a n t s i n t h e 1 ; 1 ' - \ ; 8 1 Ryan, o £ . c i t . , p . 1 8 5 . ! D e t r o i t a r e a . The a t t i t u d e o f w o rk e rs to w a rd s h i g h e r p r o d u c t i v i t y , j l i k e t h a t o f e v e r y b o d y e l s e , d e p e n d s g r e a t l y u p o n w hat t h e y i e x p e c t t o g e t o u t o f i t . E v e ry b o d y a g r e e s t h a t w o rk e rs as a w hole s h o u l d s h a r e i n t h e b e n e f i t s o f h i g h e r p r o d u c t i v i t y an d i t i s e v i d e n t t h a t t h e y h a v e done s o . How l a r g e t h i s s h a r e s h o u l d b e a n d w hat fo rm i t s h o u ld t a k e a r e , h o w e v e r, c o n t r o v e r s i a l q u e s t i o n s . W hat c o n s t i t u t e s an e q u i t a b l e s h a r e f o r w o rk e rs i n ;th e b e n e f i t s o f h i g h e r p r o d u c t i v i t y d e p e n d s u p o n p a r t i c u l a r c i r c u m s t a n c e s . M ost p e o p le w ould p r o b a b l y a g r e e t h a t w ork e r s s h o u ld b e c o m p e n s a te d f o r an y a d d i t i o n a l e f f o r t s o r s a c r i f i c e s w h ic h t h e y may make t o a c h i e v e h i g h e r p r o d u c t i v i t y . As n a t i o n a l incom e i n c r e a s e s t h r o u g h h i g h e r p r o d u c t i v i t y , t h e r e i s a s t r o n g c a s e i n e q u i t y f o r a n i n c r e a s e i n t h e p r o p o r t i o n o f t o t a l incom e a s w e l l a s i n t h e a b s o - j l u t e am ount o f in co m e w h ic h goes t o t h e l e s s p r o s p e r o u s i s e c t i o n s o f t h e com m unity, w h e th e r t h e y b e w o r k e r s , s m a ll jin d e p e n d e n t p r o d u c e r s , o r s a l a r y e a r n e r s . j A p a r t fro m c o n s i d e r a t i o n s o f e q u i t y , t h e r e a r e c o n s i d e r a t i o n s r e g a r d i n g t h e e f f i c i e n c y a n d s t a b i l i t y o f t h e i e co n o m ic s y s te m t h a t m u st a l s o be t a k e n i n t o a c c o u n t . I n I 9 Jo h n C. A s p le y a n d E ugene W hitm ore ( e d s . ) , The H andbook o f I n d u s t r i a l R e l a t i o n s (C h ic a g o : The D a r t n e l l C o r p o r a t i o n , P u b l i s h e r s ^ 19lj-65, p p . 5 6 1 -5 6 2 . t h e i n t e r e s t s o f e f f i c i e n t p r o d u c t i o n i t i s i m p o r t a n t , f o r workers no l e s s than fo r other s e c tio n s of th e community, th a t th e retu rn s on c a p it a l in v e s te d should be s u f f i c i e n t t o induce an adequate r a te o f c a p it a l form ation . No l e s s c o n tr o v e r s ia l than th e q u e stio n of th e s i z e of th e w orkers1 share in th e b e n e f it s o f h igh er p r o d u c tiv i t y i s th e q u e stio n o f th e form which t h i s share should take] ! This i s not on ly a q u e stio n o f th e ch o ice between h ig h er j I t money wages on th e one hand and lower p r ic e s fo r consum ers’ jgoods on the o th er. A part o f th e in crea sed w ealth y ie ld e d ! i by h ig h er p r o d u c tiv ity may, in many c a s e s, reason ab ly take ! the form o f s o c ia l s e r v ic e s and b e t t e r working c o n d itio n s; j |or, where a p p ro p ria te, of a r e d u c tio n in normal hours of I jwork. I t i s w e ll known th a t working hours have tended to become sh o r te r as p r o d u c tiv ity has in c r e a se d . S p e c ia l I f ;in t e r e s t a tta c h e s to the q u e stio n of how fa r th e share o f I I jworkers in th e b e n e f it s of h ig h er p r o d u c tiv ity should take I i j ,the form o f h ig h er money wages and how fa r of low er p r ic e s fo r consumers' goods. ^ I t i s argued th a t i f h ig h er p r o d u c tiv ity i s tr a n s - ■ la t e d in t o low er c o s ts and lower p r ic e s th e co m p etitiv e : I jp o sitio n o f th e undertaking, in d u str y , or the country con- ; "^Higher P r o d u c tiv ity in M anufacturing I n d u s tr ie s , op. c l t . , pp. S |-2 6 . i ic o n c e r n e d w i l l b e s t r e n g t h e n e d . W h ile t h e f o r c e o f t h e s e i !a rg u m e n ts i n c e r t a i n c ir c u m s ta n c e s c a n n o t be d e n i e d , o t h e r ; I a rg u m e n ts c a n b e u s e d t o s u p p o r t t h e v ie w t h a t i n a f r e e ! i e n t e r p r i s e econom y, i n n o rm a l c i r c u m s t a n c e s , s t a b l e p r i c e s j a n d r i s i n g m oney w ages a r e p r e f e r a b l e t o f a l l i n g p r i c e s an d j I s t a b l e m oney w a g e s . Among t h e a rg u m e n ts i n s u p p o r t o f t h i s p o i n t o f v ie w a r e t h e f o l l o w i n g : 1 . P a l l i n g p r i c e s i n c r e a s e t h e b u r d e n o f d e b t . ■ i T h is i s an i m p o r t a n t c o n s i d e r a t i o n b o t h f o r g o v e rn m e n t a n d j f o r b u s i n e s s . I i 2 . I f h i g h e r p r o d u c t i v i t y i s r e f l e c t e d c h i e f l y i n i . j f a l l i n g p r i c e s a n d i f p r o d u c t i v i t y i n c r e a s e s f a s t e r i n so m e ; c o u n t r i e s t h a n i n o t h e r s , p r i c e l e v e l s i n t h e d i f f e r e n t c o u n t r i e s w i l l t e n d t o g e t o u t o f a l i g n m e n t , an d t h e c o u n - ! t r i e s i n w h ic h p r o d u c t i v i t y i n c r e a s e s l e a s t w i l l t e n d t o I i 'f i n d t h e i r c u r r e n c i e s o v e r v a l u e d . I 1 i ( | 3 . A t any one tim e some i n d u s t r i e s a r e e x p a n d in g I i a n d n e e d m ore l a b o r , w h ile o t h e r s a r e c o n t r a c t i n g an d n e e d l e s s l a b o r . Wage d i s p a r i t i e s b e tw e e n i n d u s t r i e s may p l a y a n i m p o r t a n t p a r t i n a t t r a c t i n g l a b o r t o t h e i n d u s t r i e s | w here i t c a n b e u s e d t o t h e g r e a t e s t a d v a n t a g e , s i n c e e x - i _ I ,p e n d in g i n d u s t r i e s commonly o f f e r h i g h e r w ages t h a n c o n - j J t r a c t i n g i n d u s t r i e s . A v e ra g e money w ages i n t h e econom y a s j |a w h o le c a n b e k e p t s t a b l e o n ly i f wage i n c r e a s e s i n some j I i n d u s t r i e s a r e b a l a n c e d b y wage r e d u c t i o n s i n o t h e r s . j 1^. U n le s s w o r k e r s r e c e i v e some i n c r e a s e s i n m oney w ages fro m tim e t o t im e i t w i l l be d i f f i c u l t - t o c o n v in c e th em t h a t t h e y a r e i n f a c t s h a r i n g i n t h e b e n e f i t s o f h i g h j e r p r o d u c t i v i t y . C o st o f l i v i n g in d e x n u m b ers do n o t a l ways i n s p i r e c o n f i d e n c e , a n d an i n c r e a s e i n r e a l incom e i s m uch m ore t a n g i b l e i f i t t a k e s t h e fo rm o f an i n c r e a s e i n ' m oney e a r n i n g . U s u a l l y w o rk e rs show m ore i n t e r e s t i n t h e p l o y e r h a s t o o f f e r . W o rk e rs f r e q u e n t l y m ake t h e s t a t e m e n t ! M o re o v e r, t r a d e u n io n l e a d e r s , i f t h e y a r e t o r e t a i n ; l i v e r . T h e y g e t t h e c r e d i t f o r i n c r e a s e s i n money w ages w h ic h i t g i v e s r i s e . I t w ould be s u f f i c i e n t h e r e t o em p h a s i z e , f i r s t , t h a t a p o l i c y a im e d a t m a i n t a i n i n g a h i g h i [ g e n e r a l l e v e l o f em ploym ent i s n o t s u f f i c i e n t t o e n s u r e i ' t h a t t h e r e w i l l b e n o unem ploym ent i n p a r t i c u l a r i n d u s t r i e s , a r i s i n g o u t o f i n c r e a s e d p r o d u c t i v i t y o r s h i f t s i n am ount t h e y c a n e a r n on t h e jo b t h a n a n y t h i n g e l s e t h e em- ; I t h a t t h e y "w a n t i t i n t h e p a y e n v e l o p e . ith e c o n f i d e n c e o f t h e i r m em bers m u st h a v e s o m e th in g t o d e - ; b u t n o t f o r r e d u c t i o n i n t h e c o s t o f l i v j M e a s u re s t o M a i n t a i n a H ig h L e v e l o f Em ploym ent I t i s n o t t h e p u r p o s e o f t h i s p a p e r t o d i s c u s s t h e c o n t e n t o f a f u l l em ploym ent p o l i c y o r t h e d i f f i c u l t i e s t o n * » ' F r a n k l i n E . F o l t s , I n t r o d u c t i o n t o I n d u s t r i a l Man- j lagem gnt (Hew Y o rk : M c G ra w -H ill Book Company, I n c . , 195li.)» I i p * V 7 2 . ! I the d ir e c t io n o f demand, which can occur even w ith a h ig h | [general l e v e l o f a c t i v i t y . Second, however, e f f e c t i v e measures t o prevent gen era l unemployment w i l l enormously I ! jease th e problem of reab sorb in g in to p rod u ctive employment j i 1 th e workers who may lo s e t h e ir jobs in p a r tic u la r in d u s- j t r i e s . As lo n g as th ere are enough jo b s, and provided th a t s u it a b le t r a in in g , r e tr a in in g and tr a n s fe r f a c i l i t i e s are a v a ila b le , th ere i s no reason why an unemployed worker who i s w i l l i n g to undergo t r a in in g , and i f n e c e ssa r y to change 'his p la c e of r e s id e n c e , should remain unemployed fo r I | L 12 jlong* * j i Measures t o Reduce the Displacem ent o f Labor The number of workers fo r whom new jobs must be a v a ila b le i f unemployment i s to be avoided w i l l depend t [partly upon the circu m stan ces co n fro n tin g the p a r tic u la r j i j ■industries in which te c h n o lo g ic a l improvements occur. In iso fa r as government in flu e n c e s the r e l a t i v e r a te o f growth ; ! i t i o f p r o d u c tiv ity in d if f e r e n t in d u s t r ie s , i t seems d e sir a b le 1 i , t h a t, w ithout n e g le c tin g th e need f o r s t r u c t u r a l •changes I i ;which may sometimes be u n avoid ab le, i t should u se t h i s in - I iflu en ce to ensure th at p r io r it y i s g iv en to the ta sk o f i I [r a isin g p r o d u c tiv ity in in d u s tr ie s where h ig h er produc- j 12 Higher P r o d u c tiv ity in M anufacturing I n d u s tr ie s , * , 1 JP g g K " — uni n — — imSi i ■ ■ — — —— — op * c i t ♦f p* 37• r " _ _ ’ 85 t t i v i t y i s not expected t o le a d to a displacem ent o f la b o r . In s e l e c t i n g such in d u s tr ie s a t te n t io n should be g iv en both to m arkets and t o raw m a te r ia l s u p p lie s . At tim es when th e r e i s a sh ortage o f m a te r ia ls , in cr ea se d p r o d u c tiv ity in th e in d u s t r ie s u sin g th e sca rce m a te r ia ls i s l i k e l y t o r e s t r i c t employment o p p o r tu n itie s . High p r o d u c tiv ity in the autom obile in d u str y , f o r example, at a tim e when a d d itio n a l i su p p lie s of s t e e l are u n ob tain ab le, i s l i k e l y t o le a d to ! |unemployment in th e autom obile in d u str y . Higher produc t i v i t y in th e s t e e l might le a d to unemployment in th a t in d u s t r y but i f t h i s h ig h er p r o d u c tiv ity b rin g s a r e d u c tio n \ I I [ i in the p r ic e o f s t e e l , i t might stim u la te employment in the! i I I is t e e l- u s i n g in d u s t r ie s . I I In d u str ie s where an in c r e a se in p r o d u c tiv ity prom ises th e g r e a te s t b e n e f it s from th e p o in t o f view o f economic development as a whole w i l l be in d u s t r ie s where an in c r e a se in output or r e d u c tio n in c o s ts or b oth w i l l provide the ■ jresources fo r expansion o f output and employment in other ] TO in d u s t r ie s . ^ i M easures to P ro tec t th e Standard o f h iv in g o f Unemployed I ' Workers i it . ' " I - m u j ! The g r e a te r th e su c c e ss o f measures t o m ain tain h igh I [general l e v e l o f employment, and t o reduce th e numbers and ; I j i ~ ^ I b i d . , p p . 38- 3 9 . ■ i t o p ro m o te t h e re e m p lo y m e n t o r d i s p l a c e d w o r k e r s , t h e l e s s | i t w i l l be n e c e s s a r y t o f a l l b a c k u p o n m e a s u r e s t o p r o t e c t I t h e s t a n d a r d o f l i v i n g o f u n e m p lo y e d w o r k e r s , | j A c o m p re h e n s iv e schem e o f u nem ploym ent i n s u r a n c e o r !unem p lo y m en t a s s i s t a n c e c a n p l a y a n I m p o r ta n t p a r t i n r e d u c in g h a r d s h i p * The c a s h b e n e f i t s a v a i l a b l e a s a r i g h t u n d e r a n unem ploym ent i n s u r a n c e schem e p r o v i d e u n e m p lo y e d w o rk e rs w i t h a p a r t i a l incom e a n d t h u s h e l p t o sm o o th t h e I _ |n e c e s s a r y a d j u s t m e n t o f t h e l a b o r f o r c e t o t h e c h a n g in g d e - t imand f o r l a b o r . U nem ploym ent c o m p e n s a tio n . U nem ploym ent co m p en sa t i o n i s a m e a s u re a d o p te d i n t h e U n i t e d S t a t e s t o p r o t e c t w o r k e rs a g a i n s t unem ploym ent a n d i s d e s i g n e d t o d i s t r i b u t e p a r t o f t h e m oney l o s s e s t h a t a r e s u f f e r e d b y w o r k e r s b e c a u s e o f u n e m p lo y m e n t. T h is i s an o u tg r o w th o f t h e S o c i a l S e c u r i t y A c t w h ic h d e a l s w i t h t h i s m a t t e r . A c c o r d in g t o i t h i s A c t, e m p lo y e rs who em p lo y e i g h t o r m ore e m p lo y e e s a r e s u b j e c t t o a t a x o f t h r e e p e r c e n t o f t h e i r p a y r o l l up t o t h r e e th o u s a n d d o l l a r s f o r e a c h w o r k e r . I n t h e o r i g i n a l A c t t h e t a x was on t o t a l w a g e s, b u t i n 1939 t h e l i m i t o f t h r e e t h o u s a n d d o l l a r s was a d o p t e d . I n 1 9 Congress p r o v i d e d t h a t fro m J a n u a r y 1 , 1 9 5 6 , t h e t a x s h o u ld b e a p p l i e d i ‘t o e m p lo y e rs who em p lo y f o u r o r m ore i n s t e a d o f t h e minimum 'o f e i g h t . The p u r p o s e o f t h i s t a x , o f c o u r s e , i s t o p r o v i d e c o m p e n s a tio n f o r e l i g i b l e w o r k e rs when t h e y a r e unem - i p l o y e d . 4’ The m oney c o l l e c t e d b y e a c h s t a t e i s s e n t t o t h e S e c r e t a r y o f t h e T r e a s u r y , who p u t s i t i n a fu n d c a l l e d U nem ploym ent T r u s t F u n d . F o r e a c h s t a t e a s e p a r a t e book a c c o u n t i s m ade a n d t h e am ou nts s e n t b y e a c h s t a t e p l u s i n t e r e s t r e c e i v e d on t h o s e am o u n ts a r e c r e d i t e d t o t h e i r a c c o u n t s . The S e c r e t a r y o f t h e T r e a s u r y k e e p s e n o u g h c a s h t o m e e t t h e c u r r e n t n e e d b y s t a t e s a n d i n v e s t s t h e r e m a in d e r i n U n i t e d S t a t e s b o n d s o r i n p l a c e s w h ic h t h e s a f e t y I o f t h e p r i n c i p a l a n d a l s o t h e i n t e r e s t a r e g u a r a n t e e d b y ! 15 't h e U n i t e d S t a t e s G o v e rn m e n t. v a r y g r e a t l y t h e y f o l l o w a g e n e r a l p a t t e r n . To b e e l i g i b l e f o r b e n e f i t s , a w o rk e r m u st b e i n v o l u n t a r i l y u n e m p lo y e d , h a v e h a d a c e r t a i n l e n g t h o f tim e o r b e e n p a i d a c e r t a i n l a n d p r o v i d e f o r a w a i t i n g p e r i o d b e tw e e n t h e f i l i n g o f a ; A lth o u g h t h e b e n e f i t p r o v i s i o n s o f t h e s t a t e la w s ja b le t o a n d a v a i l a b l e f o r w ork, a n d r e g i s t e r e d a t a l o c a l j j | j p u b l i c em ploym ent o f f i c e . He m u st n o t a l s o r e f u s e s u i t a b l e ; ;w ork. I n a d d i t i o n t o t h e s e q u a l i f i c a t i o n s , a w o rk e r m u st j jam ount o f w ages i n c o v e r e d w ork w h ic h u s u a l l y i s c a l l e d j Jth e b a s e p e r i o d . A l l t h e s t a t e la w s e x p e p t N evada a n d M ary- | ^ " F l o r e n c e P e t e r s o n , o f L a b o r E co n o m ics (New j jY ork; H a r p e r a n d B r o t h e r s , 1 p . 7 ST. j 15 ^D om enico G a g l ia r d o , A m e ric an S o c i a l I n s u r a n c e (New Y ork: H a r p e r a n d B r o t h e r s , 1 9 5 5 ) > P* 251(-. ~ 88 c l a i m f o r b e n e f i t s a n d t h e tim e a t w h ic h t h e y b e g i n t o be p a y a b l e . S o m etim es a s u p p l e m e n ta r y un em ploym ent b e n e f i t j i s p a i d t o t h e u n e m p lo y e d w o r k e r s . T h is b e n e f i t comes from? a f u n d s e t a s i d e b y t h e e m p lo y e r o r t h e u n i o n . Workmen* s c o r a p e n s a tio n . W ith t h e i n d u s t r i a l r e v o l u - j t i o n a n d i n c r e a s e d u s e o f m a c h in e r y a n d m e c h a n ic a l t o o l s , p h y s i c a l im p a irm e n ts r e s u l t i n g fro m i n d u s t r i a l a c c i d e n t s a n d i n d u s t r i a l d i s e a s e s h a v e i n c r e a s e d . W orkmen*s compensa-r I t i o n la w s p r o t e c t an d assum e p ro m p t p ay m en t o f b e n e f i t s . t o ; i j i n j u r e d e m p lo y e e s . T h i s i n s u r a n c e i s b a s e d n o t on t h e > p r i n c i p l e o f n e g l i g e n c e , b u t on t h e p r i n c i p l e o f i n j u r y ; J I an d n o t on t h e c o n c e p t o f d am ag es, b u t on t h a t o f c o m p e n sa -j t i o n . ! i The f i r s t l e g i s l a t i o n p r o v i d i n g b e n e f i t s f o r w ork in-j- f j u r i e s i n t h e U n i t e d S t a t e s was e n a c t e d i n M a ry la n d i n 1 902, t b u t t h i s la w w as d e c l a r e d u n c o n s t i t u t i o n a l a f t e r l e s s t h a n tw o y e a r s ' o p e r a t i o n on t h e g ro u n d t h a t i t d e p r i v e d b o t h I t h e e m p lo y e r a n d t h e .em p lo y ee o f t r i a l b y j u r y an d c o n - I f e r r e d j u d i c i a l f u n c t i o n s u p o n a n e x e c u t i v e o f f i c e r . I n j J1908 t h e F e d e r a l G overnm ent p a s s e d a c o m p e n s a tio n la w j jc o v e r in g o n ly c e r t a i n c a t e g o r i e s o f i t s e m p lo y e e s . I n 1 9 1 0 j !lJew Y ork p a s s e d a c o m p re h e n s iv e la w w i t h o u t t h e com m on-law 1 | l • l i a b i l i t y f e a t u r e , b u t i t a l s o was d e c l a r e d i n v a l i d b y t h e j i h i g h e s t c o u r t i n t h e s t a t e . j I ! . - | j _______ ^Peterson, op. cit., pp. 78I 1-7 8 5. j A f t e r t h e F e d e r a l a c t o f 1908 and t h e New Y ork a c t i I o f 1 9 1 0 , t h e m ovem ent r a p i d l y s p r e a d a l l o v e r t h e U n i t e d S t a t e s . T en s t a t e s e n a c t e d c o m p e n s a tio n la w s i n 1 9 1 1 , a n d I tw enty more, in a d d itio n t o A lask a, Puerto R ico, and j Hawaii, d id so during the fo llo w in g f iv e y e a r s, and in 1 9 1 7 j a l l doubts as t o th e c o n s t i t u t i o n a l i t y of workmen*s compen s a tio n laws were removed when th e Supreme Court upheld the jp r e v a ilin g la w s. During 1 9 3 0 *s a l l th e rem aining s t a t e s jwith the e x c e p tio n o f M is s is s ip p i p assed com pensation l e g is * i 17 j l a t i o n . M i s s i s s i p p i e n a c t e d a c o m p e n s a tio n la w i n 191+8. j | | In s p it e o f the f a c t th a t a l l s t a t e s as w e ll as th e ! ! ■ ! F ed eral Government have com pensation law s, not a l l , or even' | n e a r ly a l l , workers are now p r o te c te d by th e se la w s. j j No com pensation law covers a l l em ployees. The l a r g - ! 1 e s t group o f wage earners d eprived o f workmen's compensa- i t io n p r o te c tio n i s a g r ic u ltu r e . There are approxim ately t jthree m illi o n wage earners engaged in t h i s employment and \ l i o c c u p a t i o n a l i n j u r i e s o c c u r f r e q u e n t l y a n d m any o f th e m a r e , s e v e r e . A fe w a c t s , h o w e v e r, do i n c l u d e a g r i c u l t u r e . 1 i More t h a n tw o m i l l i o n r a i l r o a d w o rk e rs a r e n o t i n - \ ie lu d e d i n s t a t e a c t s b e c a u s e o f t h e c o n f l i c t b e tw e e n s t a t e a n d f e d e r a l j u r i s d i c t i o n . O th e r g ro u p s n o t c o v e r e d i n some ! s t a t e s are seamen, d om estic, and casu al w orkers. I ) ' " 1 " 1 1 r ~ j ■ ^ G a g lia rd o , op. c i t . , pp. 386-389. 90 The am ount o f m oney t h a t i n j u r e d w o r k e r s r e c e i v e u n d e r t h e d i f f e r e n t a c t s i s d e te r m i n e d by t h e r a t e , u s u a l l y a p e r c e n t a g e o f t h e w a g e; t h e t e r m o r p e r i o d o f p a y m e n t; t h e w e e k ly maximum; a n d t h e a g g r e g a t e maximum. T he am ount j a n d t h e m e th o d o f p a y m e n t a l s o d i f f e r a c c o r d i n g t o t h e t y p e _ . . 18 o f i n j u r y . f O ld- Age a n d S u r v i v o r s I n s u r a n c e . As l a t e a s 1929 o n l y t e n . s t a t e s h a d e n a c t e d o l d a g e p e n s i o n la w s , a n d o f | t h e s e o n ly tw o w ere a c t u a l l y p a y in g p e n s i o n s e v e n i n a fe w j E c o u n t i e s . E ls e w h e r e i n t h e c o u n t r y o l d p e r s o n s w i t h o u t i n come o r s u p p o r t fro m t h e i r f a m i l i e s o r fro m p r i v a t e c h a r i t y i i w ere s e n t t o t h e c o u n ty p o o r h o u s e s . D u rin g t h e y e a r s 1 9 3 0 - 1 9 3 ^ a t l e a s t t h i r t y a d d i t i o n a l s t a t e s e n a c t e d p e n s i o n l a w s . W ith t h e S o c i a l S e c u r i t y A c t o f 1935* o l d a g e a s s i s t a n c e p ro g ra m s w ere e x p a n d e d t h r o u g h o u t t h e c o u n t r y . T h is A ct e s t a b l i s h e d a n i n s u r a n c e p ro g ra m f o r a g e d p e o p le w h ic h d e c r e a s e d t h e n e c e s s i t y f o r p u b l i c a s s i s t a n c e a n d p e n s i o n s . The F e d e r a l O ld-A ge a n d S u r v i v o r s I n s u r a n c e i s n a t i o n - w i d e i n s c o p e , c o v e r i n g a l l s t a t e s , t h e D i s t r i c t o f C o lu m b ia , A l a s k a , H a w a ii, P u e r t o R ic o , a n d t h e V i r g i n I I s l a n d s . B e n e f i t s a r e d e te r m i n e d on t h e b a s i s o f t h e r e - ! l a t i o n s h i p o f p a s t e a r n i n g s . P e r s o n s w i t h d e p e n d e n ts a l s o t 1 5 • I l 8I b i d . , p p . 391- 3 9 7. | 19 r e c e i v e a d d i t i o n a l b e n e f i t s . D i s a b i l i t y I n s u r a n c e . T h is t y p e o f i n s u r a n c e b e - i I c a u s e o f te m p o r a r y i l l n e s s n o t a r i s i n g o u t o f w o r k e r 's em p lo y m e n t i s a r e l a t i v e l y new d e v e lo p m e n t i n t h e U n i t e d S t a t e s . The s i g n i f i c a n c e o f t h i s i n s u r a n c e l i e s i n t h e f a c t t h a t i t m akes m ore u n i f o r m a n d c e r t a i n t h e i n c i d e n c e o f a f i n a n c i a l b u r d e n w h ic h may b e h e a v y a n d w h ic h c a n n o t b e p r e d i c t e d f o r a n y one i n d i v i d u a l . I t s h o u l d b e p o i n t e d !o u t t h a t t h i s I n s u r a n c e i s n o t s o c i a l i z e d m e d i c i n e . I t i s a m e th o d o f p a y m e n t. W ith t h e a s s u r a n c e t h a t t h e b i l l s i w i l l be p a i d fro m t h e common f u n d , p a t i e n t s w i l l b e f r e e r j J to s e e k t h e c a r e t h e y n e e d . The d i s a b i l i t y i n s u r a n c e la w s 'g e n e r a l l y f o l l o w t h e unem ploym ent i n s u r a n c e s y s te m i n r e - | 20 g a r d t o e l i g i b i l i t y r e q u i r e m e n t s a n d w a i t i n g p e r i o d s . | H e a l t h I n s u r a n c e . The m ovem ent f o r c o m p u ls o ry i I h e a l t h i n s u r a n c e i n t h e U n i t e d S t a t e s b e g a n b e f o r e t h e j F i r s t W orld W ar. A f t e r t h a t w ar a n d d u r i n g t h e p r o s p e r i t y I o f 1 9 2 0 * s p u b l i c c o n c e r n f o r h e a l t h i n s u r a n c e d i m i n i s h e d . iThe h a r d s h i p s r e s u l t i n g fro m t h e d e p r e s s i o n o f e a r l y 1 9 3 0 's i ' |a r o u s e d t h e p u b l i c i n t e r e s t a g a i n . I n 1935* P r e s i d e n t i . R o o s e v e l t 's C om m ittee on E conom ic S e c u r i t y i n c l u d e d i n i t s ■ re p o rt v a r i o u s p r o p o s a l s f o r h e a l t h i n s u r a n c e , b u t no f u r - I i ___________________ 19 P e t e r s o n , o £ . c i t . , p . 7 6 2 . 20 G a g l ia r d o , o p. c i t . , p . l]l|-7 . t h e r a c t i o n h a s t a k e n p l a c e . I n 1943 S e n a t o r s W agner a n d M u rra y a n d R e p r e s e n t a t i v e D i n g e l l i n t r o d u c e d i n t o C o n g re s s a b i l l w h ic h p r o v i d e d f o r a n a t i o n a l h e a l t h i n s u r a n c e p r o gram t o b e a d m i n i s t e r e d b y t h e F e d e r a l G o v e rn m e n t. T h i s j was t h e f i r s t tim e t h a t i m p o r t a n t h e a l t h i n s u r a n c e l e g i s l a t i o n w as i n t r o d u c e d . i The W a g n e r- M u r ra y - D in g e ll b i l l was n o t e n a c t e d i n t o j i I jlaw * I t was r e i n t r o d u c e d on May 2 0 , 1947* u n d e r d i f f e r e n t i s p o n s o r s h i p a n d w i t h m any m o d i f i c a t i o n s . C o v e ra g e was e x - | f t e n d e d t o i n c l u d e t h e s e l f - e m p l o y e d , b u s i n e s s a n d p r o f e s s i o n a l m en, a n d f a r m e r s , a g r i c u l t u r a l a n d d o m e s tic i I p i | (w o r k e rs , a n d f e d e r a l c i v i l s e r v i c e e m p lo y e e s . j ! I t s h o u ld b e p o i n t e d o u t t h a t w orkm en*s c o m p e n s a tio n a n d d i s a b i l i t y i n s u r a n c e , e x c e p t i n s o f a r a s t h e f o r m e r p a y s m e d i c a l c o s t s , a r e i n s u r a n c e s d i r e c t e d p r i m a r i l y a g a i n s t l o s s o f in c o m e . H e a l t h i n s u r a n c e a t t e m p t s t o p r o - |V ide m e d i c a l c a r e t o t h e e l i g i b l e w o r k e r s r e g a r d l e s s o f t h e j f ' 'e f f e c t o f i l l n e s s u p o n t h e i r in c o m e . I t I I . HUMAN RELATIONS j i Many o f t h e k e y p ro b le m s I n m anagem ent d u r i n g t h e p a s t s e v e r a l d e c a d e s h a v e b e e n i n human r e l a t i o n s . The ' a b i l i t y t o g e t a l o n g w i t h e m p lo y e e s , c u s t o m e r s , t h o s e b e i n g 21I b i d . , p p . 453 f f . s e r v e d , a n d t h e com m unity i n w h ic h t h e e n t e r p r i s e o p e r a t e s i s b e c o m in g i n c r e a s i n g l y m ore s i g n i f i c a n t . The m a n a g e r o f t o d a y m u st p o s s e s s t h e c a p a b i l i t y o f g e t t i n g a lo n g w i t h p e o p l e . E v e ry e n t e r p r i s e d e p e n d s u p o n hum an b e i n g s a n d i t i s v e r y d i f f i c u l t t o name one w h ic h i s n o t a f f e c t e d b y 22 p e o p l e . A b u s i n e s s o r i n d u s t r y c a n b e v ie w e d a s a n i n t e g r a t e d w h o le , o r a s a s o c i a l o r g a n is m i n w h ic h t h e r e i s a ■ c o n t i n u i ty o f a c t i v i t y a n d a c o n s t a n t p r o c e s s o f a d a p t a t i o n |t o c h a n g e . T h is p r o c e s s o f a d a p t a t i o n i s b o t h e x t e r n a l a n d I !i n t e r n a l . Any b u s i n e s s e x i s t s w i t h i n t h e l a r g e r fram e w o rk o f t h e t o t a l s o c i a l a n d eco n o m ic e n v iro n m e n t o f w h ic h i t i s a p a r t . I t f u n c t i o n s w i t h i n t h e g iv e n e co n o m ic s y s te m a n d m u st s u r v i v e a s a f u n c t i o n i n g e co n o m ic u n i t . I t m u st c o n s t a n t l y a d j u s t i t s e l f t o t h e im p a c t o f eco n o m ic c h a n g e s , o f t e c h n o l o g i c a l d e v e lo p m e n t, o f g o v e rn m e n ta l a n d l e g a l c o n t r o l s , o f t h e f o r c e s o f p u b l i c a t t i t u d e s a n d o p i n i o n s , a n d o f a l l t h e f o r c e s o p e r a t i n g w i t h i n t h e s o c i e t y , j H ow ever, t o m e e t t h e s e dem ands o f t h e e x t e r n a l s o - I c i a l an d eco n o m ic w o r ld , a b u s i n e s s o r i n d u s t r y m u st m a in t a i n a w e l l - i n t e g r a t e d i n t e r n a l o r g a n i z a t i o n . No eco n o m ic I e n t e r p r i s e c a n s u r v i v e f o r lo n g i f i t s i n t e r n a l s t r u c t u r e i i i i 2 2 1 G eo rge T e r r y , P r i n c i p l e s o f M anagem ent (Homewood, I l l i n o i s : R ic h a r d D. I r w i n , I n c .," 1954)» p . 3 9 3 . i s s h a k y a n d i n e f f i c i e n t . ^ Leadership I t i s apparent from th e se o b ser v a tio n s th a t one of th e most im portant problems which management f a c e s i s th a t o f b u ild in g s u f f i c i e n t co o p era tio n and teamwork throughout th e o r g a n iz a tio n so th a t th e e n e r g ie s and p erso n a l r e - I s o u r c e s o f e x e c u t i v e , s u p e r v i s o r s , a n d r a n k - a n d - f i l e era- i I p lo y e e s a r e n o t w a s t e d i n c o n f l i c t a n d a r e u s e d f o r t h e j I i l ;c o n s t r u c t i v e t a s k o f g e t t i n g t h e jo b d o n e . The t r u t h o f J t h i s s t a t e m e n t i s e v id e n c e d b y t h e s t r o n g c o n v i c t i o n among j a num ber o f t o p e x e c u t i v e s t h a t t h e s t r e n g t h o f an o r g a n i - ; ' I R a tio n l i e s m o stly in i t s p eo p le, not in i t s system s, i 2 i i (te c h n o lo g ie s , p roced u res, or c a p it a l r e s o u r c e s . I Importance o f le a d e r s h ip . L eadership i s th e a c t iv - i j it y o f in flu e n c in g p eop le t o coop erate toward a goal which the le a d e r d e s ir e s and i s one of th e most im portant a t t r i b u t e s th a t a f f e c t s human e f f o r t s . It in clu d es th e dominant i i ip e r s o n a lity t r a i t s of one person who i s th e le a d e r and th e p e r s o n a li t ie s o f the f o llo w e r s . As a r e s u lt o f th e i n f l u ence o f th e le a d e r upon th e a t t it u d e s and i n t e r e s t s o f th e f o llo w e r s , th e cou rse o f a c tio n of th e many i s changed, i -^ B u rle ig h B. G a rd n e r a n d D a v id G. M oore, Human Re l a t i o n s i n I n d u s t r y (Homewood, I l l i n o i s : R ic h a r d D. I r w i n , I n c . , 195>!?), p . 3&7. 2 k I b i d . , p . 368. ! u n if ie d , and d ir e c te d toward th e common o b je c t iv e . E f f e c t iv e le a d e r sh ip in management i s r a p id ly becom in g of s i g n if ic a n t im portance. More r e c o g n itio n i s b ein g i | g iv en t o th e f a c t th a t many m anagerial accom plishm ents are | gain ed through th e work of o th e r s. A lso , th ere i s g re a te r m anagerial awareness o f th e n e c e s s it y o f o b ta in in g d e sir e d r e s u lt s through organ ized or group e f f o r t s . In a d d itio n , the in c r e a se d emphasis on th e human elem ent in management | jhas s t r e s s e d th e importance of le a d e r sh ip as a n ecessa ry ! i 2 ^ ! !in g re d ie n t o f s u c c e s s f u l o p e r a tio n s. j j Need f o r le a d e r s h ip . Competent le a d e r sh ip i s needed' I ; ;at a l l l e v e l s o f management. Contrary to popular op in ion, i le a d e r sh ip i s not co n fin ed t o to p management p o s it io n s but j is e q u a lly n e c e ssa r y at th e lower l e v e l s , e s p e c ia ll y th e J |su p erv iso ry l e v e l . In th e s e lower l e v e l s th e number of ! [people le d and th e scope o f o p era tio n s are r e l a t i v e l y sm all] I ! ; jbut e f f e c t i v e le a d e r sh ip i s req u ired in g e t t in g the ta sk s j done. I B u sin e s s, as w e ll as government, p o l i t i c a l p a r t ie s , I and s c h o o ls , needs le a d e r s . In f a c t ev ery group, regard l e s s of i t s s i z e , needs le a d e r . The attainm ent o f h ig h 1 j id e a ls , p r o g r e ss, and improved c i v i l i z a t i o n depend in g rea t I I l | [measure upon competent le a d e r s h ip . Every o r g a n iz a tio n i f | I ^ G e o r g e R. T e r r y , o£. c i t . , p p . 227.-228. j ; 96* i I i t d e s ir e s t o accom plish i t s purposes must have th e s e r v ic e s ( |o f p ersons who can p rovid e le a d e r sh ip and management. . Types o f le a d e r s h ip . The in flu e n c e o f the le a d e r 'may be d ir e c t or in d ir e c t . D ir e c t le a d e r sh ip i s p r a c tic e d i ! I I through p erso n a l co n ta ct and i t may be e x e r c is e d by an ex - 1 : i le c u tiv e a t any l e v e l in th e o r g a n iz a tio n . In d ir e c t le a d e r - I I sh ip i s e x e r c is e d through oth er p erso n s. This i s a very ! common t y p e o f l e a d e r s h i p b u t i t i s so m e tim e s d i f f i c u l t t o j U t i l i z e s a t i s f a c t o r i l y b e c a u s e t h e i n t i m a t e i n f l u e n c e o f t h e l e a d e r u p o n t h e f o l l o w e r s i s l a c k i n g a n d t h e dynam ie i n t e r - : i :a c tio n between th e le a d e r and th o se le d i s slowed up b e- , 26 cause o f th e in te r v e n in g media. L eadership i s a ls o c l a s s i f i e d as a u to c r a t ic , p a te r n a l i s t i c , or dem ocratic. A u to c r a tic le a d e r sh ip m a n ife sts ' • i t s e l f in the assignm ent o f ta sk s w ithout c o n s u lta tio n w ith' th e persons who are t o ex ecu te th e p la n s . This type o f le a d e r sh ip f a i l s to u t i l i z e th e c a p a c it ie s and t r a in in g of th e members of th e o r g a n iz a tio n . The p a t e r n a l i s t i c le a d e r i s the one who t r e a t s h is fo llo w e r s as a fa th e r t r e a t s h is c h ild r e n . He attem pts t o p r o te c t them by making d e c is io n s fo r t h e i r com fort. This type of le a d e r sh ip does not develop th e s e l f - r e l i a n c e and independence of th e group members and th e su c c e ss of Richard N. Owens, Management o f I n d u s tr ia l E nter p r is e s (Homewood, 1 1 1 .: Richard D. Irw in, I n c ., 1 9 5 3 ) P- 73* th e e n te r p r is e i s made t o depend upon th e c o n tin u a tio n of the s e r v ic e s o f th e le a d e r . The dem ocratic le a d e r em phasizes the soundness of i | ; th e op in ion o f th e group. He su g g e sts p o l i c i e s w ithout i i d ic t a t in g them and attem pts to have group approval f o r h is I p o l i c i e s b efo re th ey are c a r r ie d o u t. T h is approach has a tendency to be slow , u n le ss a vigorou s le a d e r su cceed s in j (winning agreement on a program w ithout unreasonable d e la y . | i D iffe r e n t ty p es of problem s, o f co u rse, re q u ir e d i f - 1 ’ i Ifer en t ty p e s of conduct on th e part of th e le a d e r . The ; i i i I |le a d e r who fa c e s th e p r a c t ic a l problems a r is in g in th e ex e -| c u tio n of h is p lans should dem onstrate a d iff e r e n t k ind of j | le a d e r sh ip a b i l i t y . He must m aintain th e l o y a l t y of h i s fo llo w e r s and at th e same tim e fa c e th e r e a l i t i e s o f th e s it u a t io n and o b j e c t iv e s . Many f a i l s t o make th e t r a n s i - ' t io n req u ired by the changed s it u a tio n .* ^ i (S u p er v isio n ; i • "A v i t a l su p p ortin g column in th e o r g a n iz a tio n struc-j- i tu re o f any e n te r p r is e i s s u p e r v is io n . Just as th e f i t n e s s j o f th e fo u n d a tio n determ ines th e soundness of a b u ild in g , i i ' Iso th e c a lib e r of su p e r v isio n determ ines th e com p leteness ! ! ’ I pQ 1 o f p u ttin g m anagerial a c t i v i t i e s in to e f f e c t . " I b i d . , p p . 7^ . 7 5 . T e r r y , op. c i t . , p . 232. S u p e r v i s i o n i s t h e p o i n t o f a p p l i c a t i o n f o r m o st o f t h e p r i n c i p l e s o f m anpow er m anagem ent a n d i s a l s o i t s m o st (o b v io u s n o n p r o f e s s i o n a l p r a c t i c e . I n s u p e r v i s i o n m uch o f i I t h e t o t a l p ro g ra m o f m anpow er m anagem ent comes t o f o c u s . ;In s u p e r v i s i o n t h e o p e r a t i n g l i n e p u t s i n t o p r a c t i c e a l a r g e p a r t o f t h e o r g a n i z a t i o n 's m anpow er p o l i c y , an d t h e s u p e r v i s o r s ' m a jo r jo b i s t o g e t t h o s e who h a v e b e e n p l a c e d u n d e r t h e i r s u p e r v i s i o n t o w ork w i t h th em a3 m em bers o f t h e ; |w ork te a m . i ' 1 | S u p e r v i s i o n c a n b e d e f i n e d a s t h e ’’a c t i v i t y o f i I c a r r y i n g o u t p o l i c i e s an d o r d e r s fro m t h e u p p e r m a n a g e r i a l i | l e v e l s t o e m p lo y e e s o f t h e lo v rer l e v e l s a n d a t t h e b a s e o f t h e o r g a n i z a t i o n s t r u c t u r e by m eans o f d i r e c t a n d c l o s e { c o n t r o l w i t h t h e s e e m p lo y e e s an d t h e e x e r c i s e o f d e c i s i o n j 29 i m a k in g w i t h i n p r e s c r i b e d a r e a s o f o p e r a t i o n . ” 7 ! j As t h e t e r m s u p e r v i s i o n i s m ore g e n e r a l l y u s e d , | a t t e n t i o n i s f o c u s e d on lo w e r l e v e l s o f t h e m anagem ent j * s t r u c t u r e c l o s e s t t o t h e a c t u a l p e rf o r m a n c e o f p r o d u c t i o n p r o c e s s e s . S u p e r v i s o r s i n t h i s s e n s e a r e t h o s e who d i r e c t I t h e e f f o r t s o f r a n k - a n d - f i l e e m p lo y e e s a n d t h e i r jo b i s t o J i |s e e t h a t w ork i s d o n e . I f e m p lo y e e s a r e h o u r l y r a t e d , J 1 30 ■ s u p e r v i s o r s a r e l i k e l y t o be d e s c r i b e d a s fo re m e n .-7 ; i ' 29 I b i d . , p . 2 k k - ' I -^ Y o d e r, o p . c i t . , p . 252j E lm e r P e t e r s e n an d E . G ro s v e n o r Plowm an, B u s i n e s s O r g a n i z a t i o n an d M anagem ent 1 !_(Homewood, I l l i n o i s : R ic h a r d D. I r w i n . I n c . , Y. u . '2 2 8 . , 99 i There has been co n sid er a b le d is c u s s io n o f th e ques t io n o f whether su p e r v iso r s are management members. A l though th e Supreme Court has r u le d th a t th e y are part of I . I 'management, th e su p e r v iso r s or foremen in many in s ta n c e s do not perform m anagerial a c t i v i t i e s . R esearch s tu d ie s and su rveys show th a t many su p e r v iso r s do not b e lie v e th ey are members of management and th a t th e y do not id e n t i f y them s e lv e s w ith management group. A su p erv iso r i s u s u a lly b e- \ J jlie v e d t o r e c e iv e a rea so n a b ly g r e a te r com pensation than ' a n y em p lo y ee u n d e r h im . H ow ever, t h e d i f f e r e n t i a l i n com- , i i I p e n s a t i o n b e tw e e n t h e s u p e r v i s o r a n d t h e i n d i v i d u a l b e i n g | ! t ■supervised i s fr e q u e n tly sm all and, as such, does not d is - j f j ;tin g u ish him as a management member. In some in s ta n c e s , j e s p e c i a l l y where th e em ployees are working overtim e, the I I su p e r v iso r may a c t u a lly r e c e iv e l e s s pay than a person under h im .31 | i S u c c e s s fu l s u p e r v is o r . There i s some e v id e n c e, I (based on s tu d ie s made in a number of d if f e r e n t in d u s t r ie s , j th a t th e su p e r v iso r s who g e t th e b e s t r e s u l t s , in term s both of p r o d u c tiv ity and of th e s a t i s f a c t i o n f e l t by mem b ers of t h e ir groups, ten d t o be th ose who: i 1 . are r e c o g n iz e d as b ein g able t o provid e le a d e r s h i p and as p o s s e s s in g su p e r io r p lann in g a b i l i t y ; j 31T e r r y , o p . c i t . , p . 21^.6. 2. do not attem pt to su p e rv ise to o c l o s e l y , but le a v e la t it u d e fo r in d u s t r ia l i n i t i a t i v e ! 3 . are em p lo y ee-o rien ted , at l e a s t in th e sen se of I having a r e a l in t e r e s t in th e workers and t h e i r m o tiv a tio n s! i ij.. are ab le t o c r e a te a fa v o r a b le s p i r i t in th e I I s e c t io n or work group! i i 5 . are f a m ilia r w ith th e jobs th ey su p erv ise and j are aware of th e d u tie s o f th e su p e r v iso r s! 6 . develop people by in c r e a s in g th e c a p a c ity and ^understanding o f human b ein g s! i I 1 7« d is c i p li n e e f f e c t i v e l y and make reason ab le , i , I [allow ances fo r m ista k e s, f a ilu r e to carry out ord ers, and t j iwork below standard. They hear employee's side of the ! Jstory, reprimand in private, and turn these occasions into , i ! o p p o r tu n itie s fo r in s p ir in g fu tu r e perform ance! and ! 8. g iv e c r e d it where c r e d it i s due. S u c c e s s fu l j su p e r v iso r s ex p ress t h e i r a p p r e c ia tio n fo r work w e ll done or beyond th e c a l l o f d u ty. On th e other hand, f a u lt y work: i s th orou gh ly in v e s t ig a t e d and the r e s p o n s i b i l i t y fo r i t i s ' 32 I lo c a te d and rem edial a c tio n taken. j I t should be m entioned th a t a su p e r v iso r or a f o r e - i 1 man who i s g iv e n so l i t t l e freedom or a u th o r ity by h is top | I i 'management th a t he i s unable t o ex ert a m eaningful i n f l u - ! ^ I b i d . , pp. 2i|.6-2i;7! Samuel Towsen. ” An Alphabet o f Morale B u ild in g ,” S u p erv isio n , (May, 1 9 5 6 ) , pp. 2 0 - 2 1 . j r 101 ;ence on t h e e n v iro n m e n t i n w h ich h e and h i s em plo yees f u n c - I t i o n w i l l be i n e f f e c t i v e i n d e a l i n g w i t h e m p lo y e e s, r e g a r d - ' l e s s o f h i s human r e l a t i o n s s k i l l s . 1 S e l e c t i o n o f s u p e r v i s o r s . ^ S u p e r v i s o r s r e q u i r e c e r t a i n a b i l i t i e s , many o f w hich a r e n o t p o s s e s s e d , i n t h e n o rm a l c o u r s e o f t h i n g s , b y a m a j o r i t y of p e o p l e . S u p e r v i s i o n i s a d e f i n i t e f i e l d o f a c t i v i t y a n d , f o r m o st s a t i s - i f a c t o r y r e s u l t s , r e q u i r e s s p e c i a l know ledge as w e ll a s s k i l l I i n a p p l i c a t i o n . Job know ledge i s f r e q u e n t l y c o n s i d e r e d th e ! jprlrae r e q u i s i t e i n s e l e c t i n g a s u p e r v i s o r y c a n d i d a t e . W ithy i i 'o u t q u e s t i o n , c o m p le te know ledge and u n d e r s t a n d i n g of t h e 'work t o be s u p e r v i s e d i s v i t a l . But e x p e r i e n c e and r e - , j s e a r c h show t h a t so m e th in g i n a d d iti-o n t o jo b know ledge i s : | I ,n e c e s s a r y f o r e f f e c t i v e s e l e c t i o n o f s u p e r v i s o r s . " ^ Some- ! jtim e s s u p e r v i s o r s a r e s e l e c t e d on t h e b a s i s o f f a v o r i t i s m . I j | The p r o c e s s o f p r e l i m i n a r y s e l e c t i o n may u s e a b a t - j ! \ J t e r y o f t e s t s t o a i d i n i d e n t i f y i n g t h o s e who have p o t e n t i a l ■ q u a l i f i c a t i o n s f o r s u p e r v i s o r y p o s i t i o n s . The v a l i d i t y o f ! |s u c h t e s t s i n an y p a r t i c u l a r o r g a n i z a t i o n s h o u ld b e c h e c k e d j i by c a r e f u l s t u d i e s . I t may r e a s o n a b l y be assum ed, h o w ever, | 't h a t i n t e l l i g e n c e i s one q u a l i t y t h a t i s r e f l e c t e d i n s a t - j r i s f a c t o r y p e rf o r m a n c e o f t h e s u p e r v i s o r ' s jo b , so t h a t t h i s I ^ q u a lity m ig h t w e l l be t e s t e d . j i j i , 33Te r r y , op. c i t . , p . 2ij.8. , j u _ ! U niversity or Sautnern California UBraky I 102 l i | S t u d i e s o f t h e i n t e r e s t s o f s u p e r v i s o r s in any o r g a n i z a t i o n may j u s t i f y r e c o g n i t i o n o f a p r e f e r r e d p a t t e r n o f i n t e r e s t s t h a t c a n a l s o b e u s e d i n s e l e c t i o n a t t h i s i l e v e l . S i m i l a r l y , t h e n e e d f o r b a la n c e an d o t h e r te m p e r a m e n t a l q u a l i f i c a t i o n s may j u s t i f y t e s t s o f e m o t i o n a l a d j u s t m e n t . ^ The s u p e r v i s o r * s c o n t r i b u t i o n t o t h e s u c c e s s o f an e n t e r p r i s e i s o f v i t a l im p o r ta n c e . I f s u p e r v i s o r s a r e t o |p l a y t h e i r f u l l p a r t e f f e c t i v e l y i n p r o m o tin g p r o d u c t i v i t y , ith e n t h e y s h o u ld be c a r e f u l l y s e l e c t e d and t r a i n e d , s h o u ld {be c o n s u l t e d and k e p t w e l l in f o r m e d a b o u t company p o l i c y and p r o c e d u r e s , and s h o u ld be g iv e n a d e q u a te s t a t u s a n d good p ro m o tio n p o s s i b i l i t i e s . U nion- Management R e l a t i o n s | The g e n e r a l l e v e l o f jo b s a t i s f a c t i o n p l a y s an e n o r - Jmous p a r t i n t h e r e l a t i o n s b e tw ee n u n io n and m anagem ent. |A11 m a t t e r o f w ages, c o n d i t i o n s , a m e n i t i e s , p r o p e r s e l e c t i o n o f men, s u p e r v i s i o n , a f f e c t t h e g e n e r a l l e v e l o f jo b t s a t i s f a c t i o n . Where t h i s l e v e l i s low an d men e n t e r t h e i n d u s t r y u n w i l l i n g l y u n d e r t h e f o r c e o f n e c e s s i t y , t h e i n - I j c r e a s e d d i s s a t i s f a c t i o n e x p r e s s e s i t s e l f a l l r o u n d , l e a d i n g 't o d i s p l a c e d , s u b s t i t u t e , o r p r o j e c t e d g r i e v a n c e s and •^ Y o d e r, o p . c i t . , p . 260. I~ ' 103j I !c l a i m s . E v e ry i n d u s t r y d e v e lo p s n o t o n ly i t s own p a r t i c u l a r i n s t i t u t i o n s , b u t a s y s te m o f i d e a s , b e l i e f and v a l u e ju d g m e n ts, o r g e n e r a l l y s p e a k in g "a c l i m a t e o f o p i n i o n , ” w h ic h i s t h e b a s i c a tm o s p h e re i n w h ic h t h e u n io n s o p e r a t e . E ach i n d u s t r y h a s i t s own m echanism o f s e l e c t i o n o f l a b o r f o r c e , a t t r a c t i n g some t y p e s o f men and r e p e l l i n g o t h e r s ; j t land e v e r y i n d u s t r y th r o u g h i t s m echanism o f c u s to m s , h a b i t s , ' 3^ I land t r a d i t i o n s s h a p e s i t s men t o a c e r t a i n e x t e n t . ^ C auses o f i n d u s t r i a l c o n f l i c t . The m ost a p p a r e n t • f a c t o r c o r r e l a t e d w i t h i n d u s t r i a l c o n f l i c t i s t h e g ro w th o f | ! i I [un ion s and u n io n m em b ersh ip . F i g u r e 1 shows t h i s g ro w th . j i I I In 1900, l e s s t h a n 5 p e r c e n t o f w o rk e rs b e lo n g e d t o u n io n s ] jln 1950, a b o u t 25 p e r c e n t w ere members o f d i f f e r e n t u n io n s ] I jln a c t u a l num ber, t h i s r e p r e s e n t s a n i n c r e a s e i n u n i o n mem b e r s h i p fro m l e s s t h a n h a l f a m i l l i o n t o more t h a n 15 36 J m i ll i o n . U nions and u n io n m ethod s have grown i n r e s p o n s e ; i | 't o human n e e d s . T h ro u g h them w o rk e rs h a v e g a in e d b e t t e r jwages and b e t t e r w o rk in g c o n d i t i o n s a n d h a v e s a t i s f i e d I t h e i r n e e d s f o r s a f e t y . j I I— .............. 1 1 -.. ! 3^ 1 JP F. Zweig, P r o d u c t i v i t y and T ra d e U nions (O x fo rd : B r i c k e l l and Son, L t d . , 1 9 5 1 ), PP« 26-27* ^ S m i t h , o£. c i t . , p . 2 5 8. 1C 4 20 -p < D O u © £ 10 1930 1940 1950 1 9 1 0 1 9 0 0 1 9 2 0 FIGUHE 1 PER CENT OF LABOR FORCE IN UNIONS (FROM SMITH, PSYCHOLOGY OF INDUSTRIAL BEHAVIOR The e s t a b l i s h m e n t o f a t r a d e u n io n i n a p l a n t p r o - I d u ces a r e v o l u t i o n i n t h e p ro b le m s o f m anagem ent. I t m e a n s ! t j th a t o p e r a t i o n s a r e c o n d u c te d w i t h i n t h e fram ew ork o f r u l e s jwhich m anagem ent c a n chan ge o n ly by n e g o t i a t i o n w ith t h e I ju n io n . F u r th e r m o r e , i t m eans t h e i n t r o d u c t i o n o f an o rg a n - 1 i z a t i o n w h ich h a s I t s own o b j e c t i v e s , p o l i c i e s , a n d l e a d e r s . 1 The o b j e c t i v e s an d p o l i c i e s o f th e u n io n d i f f e r f ro m t h o s e j ! I o f m anagem ent and may c o n f l i c t w ith t h e m anagem ent * s o b j e c - j 1 t i v e s and p o l i c i e s . The e x i s t e n c e o f two o r g a n i z a t i o n s a n d j jo f two s e t s o f l e a d e r s h a s tre m e n d o u s p o s s i b i l i t i e s f o r ! 3 7 e i t h e r harm ony or c o n f l i c t . Management and l a b o r som etim es f a i l t o d e v e lo p a i f e e l i n g o f m u tu a l c o n f i d e n c e and e a c h f e e l s t h a t i t s own I p o s i t i o n i s e n t i r e l y f a i r and t h a t t h e f a i l u r e t o d e v e lo p t r u s t and c o n f i d e n c e i s due t o m i s u n d e r s t a n d i n g on t h e p a r t o f t h e o t h e r . Some e m p lo y e rs b e l i e v e t h a t t h e u n io n i s u n n e c e s s a r y and c r e a t e s d i s t r u s t b e tw e e n m anagem ent and work-; i [ e r s . They b e l i e v e t h a t u n io n t a k e s c r e d i t f o r im prov em en ts; * i land wage i n c r e a s e s g r a n t e d by m anagem ent. They f e e l t h a t i t h e u n io n e n c o u ra g e s l i m i t a t i o n o f o u tp u t and a t t e m p t s t o j t assum e what a r e - r i g h t l y t h e p r e r o g a t i v e s o f m anagem ent i n ! s u c h m a t t e r s as h i r i n g and f i r i n g , t r a n s f e r s , p ro m o tio n , jand wage i n c r e a s e s f o r m ore p r o d u c t i v e w o r k e r s , j Some u n i o n s , on th e o t h e r h a n d , when t h e y f a i l t o [dev elo p c o o p e r a t i o n w i t h m anagem ent, b e l i e v e t h a t t h e em- i jp lo y e r i s n o t g e n u i n e l y c o n c e rn e d w i t h t h e w e l f a r e o f t h e j j i iw o rk e rs . They f e e l t h a t t h e m anagem ent w is h e s t o d e s t r o y t h e u n io n o r t r i e s t o w eaken t h e i r p o s i t i o n i n t h e m ind o f ^ Q j t h e i r m em bers. I i ; 1 S t r i k e s . S t r i k e s a r e t h e m ost o b v io u s , s p e c t a c u l a r , i j -^Sum ner H. S l i c h t e r , The C h a lle n g e o f I n d u s t r i a l 'R e l a t i o n s ( I t h a c a , New Y ork: C o r n e l l U n i v e r s i t y P r e s s , 0914-7), P. 29. | o O 1 Owens, o£. c i t . , p p . i4 .26-I 4 .27. i 106! i i land t h e m ost w id e ly r e c o g n i z e d fo rm o f i n d u s t r i a l u n r e s t . Jpor t h o s e who h av e g i v e n l i t t l e t h o u g h t t o t h e m a t t e r , t h e y f r e q u e n t l y may be r e g a r d e d a s t h e o n ly fo rm . Management i s o b v i o u s l y c o n c e rn e d w i t h su c h s t r i k e s a s may f e a t u r e i t s own e m p lo y e e s. B ut w e l l - i n f o r m e d m anagem ents have a much w id e r i n t e r e s t i n s t r i k e s t h a n t h a t . They r e c o g n i z e t h e f a c t t h a t s t r i k e s h a v e s o m e th in g o f an e p id e m ic n a t u r e . They a r e more o r l e s s c o n t a g i o u s . M o re o v er, t h e y may |a p p e a r as t h e r e s u l t o f a c a u s e t h a t i s common i n many i 3 9 j p l a n t s n o t y e t a f f e c t e d by th em . i j T h ere i s a g r e a t d e a l o f c o n f u s e d t h i n k i n g on t h e : I ; p a r t o f t h e p u b l i c a b o u t s t r i k e s . I t seems t o be t h e ! I ( p o p u la r i d e a t h a t a l l s t r i k e s a r e c a l l e d e i t h e r b e c a u s e i Jmanagement s e e k s t o e x p l o i t i t s w o r k e rs , o r b e c a u s e th e I |w o rk e rs w ant more money an d a r e u n a b le t o g e t i t e x c e p t j i i jth r o u g h t h e u s e o f econom ic f o r c e . T h is p o p u l a r c o n c e p tio n ! ' I jo f s t r i k e s may be k e p t a l i v e by some u n io n p ro p a g a n d a . j 1 i Jo h n L. L e w is, f o r e x am p le , i s a m a s t e r a t w in n in g sym pathy] f o r h i s m i n e r s , w h a te v e r t h e i s s u e may b e . j T h e re a r e d i f f e r e n t k i n d s o f s t r i k e s . Some, p e rh a p s 1 t h e m a j o r i t y , a r e aim ed a t g e t t i n g m o re. O th e rs a r e c a l l e d ! I t o s t r e n g t h e n t h e u n i o n ’ s f u t u r e p o s i t i o n , o r t o s e c u r e c e r t a i n a d v a n t a g e s w h ic h i t s l e a d e r s f e e l a r e i m p o r t a n t . j • I 1 1 - ^ D a le Y o d er, P e r s o n n e l Management and I n d u s t r i a l .R e l a t i o n s (New York* P r e n t i c e - H a l l , I n c . , 191+2), p . 25>9. io7: I n g e n e r a l , s t r i k e s a r e c l a s s i f i e d as eco n o m ic, j u r i s d i c - j t i o n a l , p o l i t i c a l , p u b l i c u t i l i t y , s y m p a t h e t i c , and slo w j jdown s t r i k e s . ^ i i I m p o rta n c e o f h a rm o n io u s r e l a t i o n s . The d e v elo p m e n t o f h a rm o n io u s r e l a t i o n s b e tw e e n m anagement and l a b o r i s im- ! j p o r t a n t f o r th e w e l l - b e i n g o f b o t h , a s w e l l as t h e p u b l i c . I |T he i n t e r e s t and a m b itio n s o f w o rk e r c e n t e r a ro u n d h i s jo b .; 'T he w o rk e r d e s i r e s t o a t t a i n u n i n t e r r u p t e d employment a t 1 good w ag es; and he c a n n o t a c h ie v e t h e s e p u r p o s e s i n an 1 a tm o s p h e re o f s u s p i c i o n . The w o rk e r and t h e u n i o n , a s t h e , f i , r e s u l t o f u n i n t e r r u p t e d p r o d u c t i o n , h a v e a b e t t e r c h an c e to ' I e n jo y a l a r g e r p i e c e o f p i e I n s t e a d o f c o n f i n i n g t h e i r e f f o r t s t o an a t t e m p t t o o b t a i n a l a r g e r s h a r e . A r i s i n g s t a n d a r d o f l i v i n g f o r b o t h m anagement and l a b o r i s depend-: e n t upon i n c r e a s e d p r o d u c t i o n , w h ic h i n t u r n i s d e p e n d e n t upon t h e d ev elo p m e n t o f u n d e r s t a n d i n g and c o o p e r a t i v e a t t i - , t u d e . I n many com panies u nion-m anagem ent c o o p e r a t i o n h a s r e s u l t e d i n b e t t e r m anagem ent p o l i c i e s and im proved p e r s o n n e l r e l a t i o n s h i p s . The n e c e s s i t y f o r d e a l i n g w i t h t h e u n io n h a s c a u s e d m anagem ent t o g iv e more a t t e n t i o n t o p e r s o n n e l p o l i c i e s . The u n io n h a s p r o v i d e d a c h a n n e l f o r t h e c l e a r i n g o f m i s u n d e r s t a n d i n g s an d d i s s a t i s f a c t i o n s . Man- ^■°Pred W itn e y , Government and C o l l e c t i v e B a r g a i n i n g (New Y o rk : J . B. L i p p i n c o t t Company, 1 9 5 1 ), p p . I4 .O6 f". !agement has devoted more a t t e n t io n t o the p rev e n tio n of a r b itr a r y a c ts o f foremen in m atters o f d i s c i p l i n e , and i t has d eveloped b e t t e r methods of communication. Complete co o p era tio n cannot be a ch ieved u n t i l man agement and lab or have agreed upon the p r in c ip le s fo r c o o p e r a tio n . Acceptance o f such p r in c ip le s cannot be ach ieved so lon g as each s id e i n s i s t s upon i t s r ig h t s to th e n e g le c t of i t s d u tie s and o b lig a tio n s to th e o th e r. jIn stea d , each must agree to c e r ta in b a sic p r in c ip le s and I 1 1 1 [must t r u s t th e other p a rty t o a c t in good f a i t h .^ E f f e c t s o f unions on p r o d u c t iv ity . W ithin th e in d iv id u a l p la n t, th e union a f f e c t s a c tu a l p r o d u c tiv ity both by c o n d itio n in g the gen eral m orale o f the workers and by [in flu e n c in g the r a te at which in n o v a tio n s are sought and ja p p lied . Workers p r io r t o t h e i r o r g a n iz a tio n in to unions jtend t o e s t a b l i s h job c o n tr o l and output r e s t r i c t i o n s jthrough inform al job grouping. These exp ress t h e ir p r o t e s t t and c o n s t it u t e th e workers* only d efen se during th e p ro cess o f job change. When union o r g a n iz a tio n s come in t o e x i s t ence in th e p la n ts and r e p la c e in form al groups th ey a llo w f o r com p lain ts and g riev a n ces t o be d ir e c te d a g a in st th e i [d ir ec t cau ses o f d is c o n te n t. Trade union economic demands have had a stim u la tin g i ^ O w e n s , op. c i t . , p p . 4.28- 4.2 9 . j 109 i e f f e c t both w ith in in d iv id u a lly organized p la n ts and in the | (economy as a whole upon th e r a te of d isc o v e r y and t h e ir ja p p lic a tio n . In some c a s e s , s p e c i f i c in c r e a se s in wages or improvements in c o n d itio n s o f employment have a cted as a m otive fo r em ployers t o in trod u ce in d iv id u a l t e c h n ic a l changes, to i n s t i t u t e more e f f i c i e n t methods in th e u t i l i z a tio n o f la b o r, improve th e t r a in in g and methods o f assignm ents and work measurement and to b e t t e r su p e r v isio n fo r g r e a te r lab or p r o d u c tiv ity . The very wide d is p a r it y in !th e r e l a t i v e e f f i c i e n c y of com p etitors and the im p ressive i (d iffe r e n c e s in t h e ir degree of u t i l i z a t i o n o f a v a ila b le I (knowledge and tech n iq u es and machinery a llo w fo r s i g n i f i c a n t advances in most every p la n t when th e management has jbeen p ressed by in c r e a se s in la b o r c o s t . Sometimes the 'p r o f it i s so sm all th a t the a d d itio n a l in c r e a se in labor c o s ts i s s u f f i c i e n t t o favor in tr o d u c tio n o f a new machine, p r o c e ss, product, or th e investm ent in a new lo c a t io n or p la n t. The p r a c tic e o f s e n io r it y and th e r e s t r a i n t s on the d isch arge o f em ployees at w i l l have some e f f e c t in m inim iz in g th e em p loyers’ a b i l i t y t o o f f s e t t h e ir own m arginal performance or low e f f i c i e n c y and have p revented th e de lib e r a t e s e le c t io n of workers o f h ig h e st p r o d u c tiv ity . But good p lan n in g, p r e c is e sc h e d u lin g , c a r e fu l la y o u ts , accurate (coord in ation and w e ll-d e s ig n e d job p a tte r n s and su b d iv is io n s 110 w i l l c o n tr ib u te to e x c e lle n t p rod u ction r e s u lt s and cou n ter a ct the lower output r e s u lt i n g from l e s s d isc r im in a te s e l e c t i o n of workers.^"2 i In a dynamic s o c ie t y , such as t o be found in th e j U nited S t a t e s , wage in c r e a se s and h igh lab or r a t e s have served as an a d d itio n a l im portant stim u lu s t o h igh er pro d u c t iv it y , Trade unions have found th e p resen t sa te o f in n o v a tio n in p r o g r e ssiv e companies as very h ig h . They i ' ;have p layed a s i g n if ic a n t r o le in h e lp in g t o accommodate | |workers to t e c h n o lo g ic a l changes and t o in su re a more s a t - j j is f a c t o r y d is t r ib u t io n o f th e b e n e f it s o f change t o workers! j ! ;in h ig h e r wages. These g a in s have in turn f a c i l i t a t e d and , I !stim u la te d fu r th e r te c h n o lo g ic a l im provem ents.4' i i I i ^ S olom on Barkin, "Trade-Uhion A ttitu d e s and Their ' |Eff© ct Upon P r o d u c tiv ity ," I n d u s tr ia l P r o d u c tiv ity (Cham- j jpaign, I l l . i I n d u s tr ia l Research A ssociation ^ 1 ' 9 3 ? 1 ), pp. i '1 2 0 - 12^ . ! i 1,3 ^ I b id . , p. 1 2 9 . i CHAPTER VI S PLANT AND EQUIPMENT I ! i . i "The te r m f a c t o r y o r m a n u f a c t u r i n g p l a n t m eans a b u i l d i n g o r g ro u p o f b u i l d i n g s t o g e t h e r w i t h m e c h a n ic a l e q u ip m e n t, m a c h in e r y , t o o l s , and o t h e r p h y s i c a l f a c i l i t i e s n e e d e d f o r t h e p r o d u c t i o n o f goods and t h e p h y s i c a l and m e n t a l b e i n g o f i t s e m p lo y e e s . M a n u f a c tu r in g i n d u s t r i e s a r e o f t e n c l a s s i f i e d a c c o r d i n g t o t h e n a t u r e o f t h e p r o c e s s ' (p e rfo rm e d . They c a n be e i t h e r ( a ) c o n t i n u o u s , o r {b } j J i n t e r r u p t a b l e . t j A c o n ti n u o u s i n d u s t r y i s i n t e r m i t t e n t , one i n w hich ; i t i s i m p o s s i b l e t o s t o p t h e p r o d u c t i o n p r o c e s s on s h o r t I t n o t i c e w i t h o u t s u f f e r i n g c o n s i d e r a b l e l o s s due t o o n ly j i ( p a r t i a l l y p r o c e s s e d m a t e r i a l s , damage t o e q u ip m e n t, o r t o 1 i I t h e c o s t o f l a b o r and m a t e r i a l s r e q u i r e d t o c l e a n o u t and j !r e c o n d i t i o n p r o d u c t i o n e q u ip m e n t. An i n t e r m i t t e n t i n d u s t r y , on t h e o t h e r h a n d , i s one ! I i n w hich t h e p r o d u c t i o n p r o c e s s may be s t o p p e d on s h o r t J n o t i c e w ith o u t s u f f e r i n g a n y l o s s e s e x c e p t t h o s e due t o i i d l e n e s s on t h e p a r t o f t h e w o rk e rs and t h e e q u ip m e n t. (Many i n d u s t r i a l p l a n t s w i l l c o n t a i n some d i v i s i o n s t h a t a r e c o n ti n u o u s an d o t h e r s t h a t a r e i n t e r r u p t a b l e . An i n c r e a s e i j i i P . A l f o r d and John R. Bangs ( e d s . ) , P r o d u c t i o n i Handbook (New York: The R o n a ld P r e s s Company, 19lj-6), p . 7 2 9 i ! 112} i i I iin the number and d iv e r s it y of products or in volume w i l l ! 2 make t h i s c o n d i t i o n more p r o b a b l e . I . PLANT LOCATION J The o p era tio n o b je c tiv e of the o r g a n iz a tio n i s econ- f omy in o v e r - a ll c o s ts o f m anufacturing and d is t r ib u t io n . In d esig n in g the o r g a n iz a tio n f o r o p era tio n , one of th e i |' p ro b le m s w h ic h r e q u i r e s s o l u t i o n i s t h e s e l e c t i o n o f a ' i {plant lo c a t io n . This i s part of th e o v e r - a ll management ' i p ro b le m w h ic h a l s o i n c l u d e s t h e d e t e r m i n a t i o n o f t h e p r o d - j u c t t o be made o r s e r v i c e t o b e r e n d e r e d , t h e l o c a t i o n an d j I s i z e of t h e m a rk e t t o be s e r v e d , t h e s i z e and t y p e o f p l a n t { re q u ire d , t h e num ber a n d k i n d o f m a c h in e s n e e d e d , a n d t h e i i I p r o c e s s e s t o be u t i l i z e d i n p r o d u c t i o n , a l l i n te rm s o f th e I p r o b a b i l i t y o f econom ic s u c c e s s . ^ A lthough th e s e l e c t i o n of th e p la n t lo c a t io n seems < jto be a b ig problem, the f a c t o r y ’ s exact lo c a t io n i s seldom 1 ! 'a h ig h ly im portant f a c to r in the company’s s u c c e s s . Care- * f u l in v e s t ig a t io n , w h ile im portant in s e l e c t i n g good p lan t l o c a t i o n , i s n o t a b s o l u t e a s s u r a n c e o f p e r m a n e n tly s a t i s - i i {factory r e s u l t s . | i i I ____________________________ o W illia m G. I r e s o n , F a c t o r y P l a n n in g and P l a n t L ay o u t (New York: P r e n t i c e - H a l l , I n c . , 195>2), pTTJ. ^ L , P. A l f o r d and H. R. B e a t t y , P r i n c i p l e s o f I n d u s - j .t r i a l Management (New Y ork; The R o n a ld P r e s s Company, 1 9 5 1 ) » ;p . m . 113 The l o c a t i o n o f a p a r t i c u l a r f a c t o r y may be t h e r e s u l t o f a c c i d e n t o r many m onths o f s t u d y on t h e p a r t o f [ h ig h ly p a i d s p e c i a l i s t s . Many p l a n t s a r e l o c a t e d a t a s p o t I ! [ c o n v e n ie n t t o t h e r e s i d e n c e s o f t h e i r f o u n d e r s , and many jc o n tin u e t o grow a n d e x p an d o v e r t h e y e a r s i n t h e same l o c a t i o n s . O th e r com panies make one o r m ore moves a s t h e y t I grow i n s i z e , b u t s u c h moves o c c u r o n ly e v e r y t w e n t y - f i v e t jy e a r s o r s o . A c t u a l l y , a n y g i v e n a d m i n i s t r a t i o n i n h e r i t s jan e x i s t i n g l o c a t i o n , , and v e r y few a d m i n i s t r a t o r s a r e e v e r ; t f a c e d w;ith t h e p ro b le m o f w here t o l o c a t e a f a c t o r y . i J The s t u d y o f e n g i n e e r i n g r e p o r t s on p l a n t l o c a t i o n ] jshow a g e n e r a l p a t t e r n . They commonly c o n s i d e r t h e n a t u r e j I i jo f t h e p r o d u c t and i t s p r o c e s s i n g i n r e l a t i o n t o su c h j m a tte r s as n e a r n e s s t o m a r k e t, a c c e s s i b i l i t y o f ra w m a te - < I ,r i a l s , l a b o r s u p p ly , power s u p p ly an d c o s t , f u e l r e q u i r e m e n t s , c l i m a t i c c o n d i t i o n s , and a v a i l a b i l i t y o f c a p i t a l . I n a d d i t i o n t o s u c h common f a c t o r s , a lm o s t any s p e c i f i c c a s e j j [ p r e s e n t s c e r t a i n p e c u l i a r c o n d i t i o n s . Exam ples t h a t c a n be! r ■ j ' j c i t e d a r e l o c a l t a x c o n c e s s i o n s , a v a i l a b i l i t y o f s p e c i a l i z e d t e c h n i c i a n s f o r c o n s u l t a t i o n , a d v e r t i s i n g v a l u e s o f a ! ' l o c a t i o n , o r n e e d o f p r o v i d i n g s p e c i a l i z e d e n g i n e e r i n g j | i s e r v i c e s t o t h e m ark et.^ " j i I m — ■■ - ■ .1 - ...................... I I 1.1 ■■■II . I : I , i j ^ F r a n k l i n F o l t s , I n t r o d u c t i o n t o I n d u s t r i a l Manage- I m ent (New York* M cG raw -H ill Book Company^ I n c . , l9 5 ^ )» i jPp . 2 9 9 -3 0 0 . j 134 The id e a l lo c a t io n would have every advantage and no d isa d v a n ta g es. At t h i s id e a l lo c a tio n every c o st o f opera t io n would be th e minimum. It would be c lo s e t o the m arket. I f th e company’ s market area I s not n a tio n a l, i t s id e a l l o c a tio n would be w ith in i t s market area but a ls o c lo s e to raw m a te r ia ls , so th a t tr a n s p o r ta tio n c o s ts would be low and s e r v ic e good. I t would be in a lo c a t io n where th e sup p ly o f good workers i s ample, and, in sh o r t, every c o s t of o p era tio n , con sid ered se p a r a te ly , Is the lo w e s t. But no i t llo c a tio n e x i s t s where every c o s t , tak en s e p a r a te ly , i s the i |le a s t p o s s ib le . The b e s t lo c a t io n f o r any company i s th e i j s it e where the o v e r - a ll c o s ts are and, as fa r as can be I £ ifo re see n , w i l l con tin u e t o be th e lowest.-^ ! The c lo s e n e s s of lo c a tio n t o th e market and th e con- | sequent sa v in g s in tr a n sp o r ta tio n c o s t s are o fte n f a c t o r s I {of major importance in th e s e le c t io n o f a fa c t o r y s i t e , but j ! ;in many c a s e s th ey are not so important as th e y at f i r s t \ | jappear. There i s a n a tio n a l market fo r most com m odities. | I a m anufacturer t r i e s to rea ch a l l o f th e market or some ! p a r tic u la r part o f i t . The la r g e m anufacturers u s u a lly | I 1 serv e th e n a tio n a l market by m u ltip la n t o p e r a tio n s, each I f p la n t se r v in g th e area in which i t i s lo c a te d . Large com- j p an ies f in d th a t t h e ir market i s everywhere and th e y lo c a te j c -'Franklin G. Moore, M anufacturing Management (Home wood; I l l i n o i s * Richard D. Irw in, I n c ., 1 9 5 3 )7 PP« 9 8 -9 9 . 115 f a c t o r ie s a c c o r d in g ly . Small m anufacturers, on the other 6 hand, u s u a lly , serve the market near t h e ir p la n t s . I t i s d e s ir a b le to be near th e source o f raw mate- i r i a l s in order t o save tr a n sp o r ta tio n c o s t s . P la n ts u sin g heavy, bulky raw m a te r ia ls w i l l save f r e ig h t c o s ts by l o c a tin g near th e sou rce o f su pply, w h ile p la n ts making bulky f in is h e d products can save tr a n s p o r ta tio n c o s ts by lo c a t in g near th e m arket. ; : The p o s s ib le tr a n s p o r ta tio n sa v in g s are g e n e r a lly a ! ; I jminor, but not an i n s i g n i f i c a n t , f a c to r In th e ch o ic e o f j I the p la n t lo c a t io n . For sm all m anufactured item s o f h ig h j l ;v a lu e , such as w atches and cameras, tr a n s p o r ta tio n c o s ts ' iare such a sm all p ro p o rtio n of th e t o t a l c o s t s th a t one l o - | i c a tio n can have no Important tr a n s p o r ta tio n advantage over ; ^ i ' 7 I !an oth er. j i | i In many c a s e s , other f a c t o r s , such as a wage d i f f e r - j | i J e n tia l, outweigh tr a n s p o r ta tio n s a v in g s . Wages g e n e r a lly j make up one th ir d , or more, of a f a c t o r y 's o p era tin g c o s t s . 1 | lYears ago both th e q u a n tity and th e q u a lit y of the a v a ila b le lab or supply were h ig h ly im portant in th e ch o ic e of a lo c a -j t io n . Today th e number o f workers se e k in g employment i s j I very im portant, but the q u a lity o f employees w ith r e fe r e n c e j 6 I b i d ., p . 100. 7I b i d . , p . 1 0 1. 116 t o t h e s k i l l s t h e y b r i n g t o t h e jo b i s o f l e s s I m p o r ta n c e . Of p a r t i c u l a r im p o rta n c e i s a d e p e n d a b le and e f f i c i e n t l a b o r g ro u p when l a b o r c o s t s c o n s t i t u t e a s u b s t a n t i a l p o r t i o n o f 8 t o t a l p r o d u c t i o n c o s t s . C lim a te i s i m p o r t a n t i n seme i n d u s t r i e s , a l t h o u g h i t i s p o s s i b l e t o c o n t r o l t e m p e r a t u r e , h u m id i t y , d u s t , v e n t i l a t i o n , fum es a t r e a s o n a b l e c o s t i n s i d e t h e p l a n t . C lim a te p l a y s an i m p o r t a n t p a r t i n t h e way t h a t f a c t o r y o f f i c i a l s 1 I Imust w ork w here t h e f a c t o r y i s l o c a t e d and m ust l i v e i n t h a t i ' ( g e n e r a l a r e a . I t i s u n d o u b t e d l y t r u e t h a t t h e c h o ic e o f i j ' l o c a t i o n , when t h e . p r o b l e m comes u p , i s som etim es i n f l u - j e n c e d by t h e o f f i c i a l s 1 p e r s o n a l p r e f e r e n c e s a s t o w here j 9 ith e y w ish t o l i v e . i I I . AMOUNT OF CAPITAL PER WORKER P r o b a b l y no s i n g l e f a c t o r h a s a m ore i m p o r t a n t e f - j f e c t on t h e p r o d u c t i v i t y o f l a b o r t h a n -the amount o f c a p i - j t a l em ployed i n c o n j u n c t i o n w i t h l a b o r . I t i s o b v io u s t h a t a w o rk e r h e l p e d b y m a c h in e s w i l l n o r m a l ly p ro d u c e more t h a n a w o rk e r o p e r a t i n g w i t h l i t t l e o r no m a c h in e r y , i The im p o r ta n c e of t h e amount o f c a p i t a l p e r w o rk e r i on p r o d u c t i v i t y c a n b e i l l u s t r a t e d on t h e b a s i s o f i n t e r - i 8 F o l t s , 0£ . c i t . , p . 305* ^Moore, op. c i t . , p . 10 £. 117 c o u n t r y c o m p a r is o n s . Compared t o m ost a r e a s o f t h e w o rld , c a p i t a l eq u ip m en t i s c h e a p i n r e l a t i o n t o l a b o r i n t h e j I U n i t e d S t a t e s . j i I A lm ost e v e ry o n e a g r e e s t h a t t h i s i s a n i m p o r t a n t I 1 r e a s o n why o u tp u t p e r w o rk e r i n m ost i n d u s t r i e s i n t h e i U n i t e d S t a t e s i s so much g r e a t e r t h a n i n o t h e r c o u n t r i e s . j T h ere i s l i t t l e i n d i c a t i o n , h o w ev er, t h a t t h e d i f f e r e n c e i s due t o b a c k w a rd n e s s i n t e c h n o l o g i c a l k now ledge o r l a c k o f ! m anagem ent a b i l i t y i n o t h e r c o u n t r i e s , a t l e a s t n o t i n \ ( w e s te r n E u ro p e . I n l a r g e p a r t , t h e r e a s o n t h a t an A m erican i !p l a n t u s e s more e q u ip m en t p e r w o rk er t o p ro d u c e a c e r t a i n I p r o d u c t t h a n a F r e n c h p l a n t , f o r e x am p le, m ak in g t h e same | | I [ p r o d u c t, i s t h e c h e a p n e s s o f c a p i t a l e q u ip m en t i n r e l a t i o n ito l a b o r . 10 , C a p i t a l e q u ip m en t may be c l a s s i f i e d a s p l a n t o r j i b u i l d i n g s , p r o d u c t i o n m a c h in e r y , and m a t e r i a l h a n d l i n g J (e q u ip m e n t. D i f f e r e n c e s i n t h e q u a l i t y , s i z e , ty p e and e f - s 1 i j f i c i e n c y o f c a p i t a l e q u ip m en t from one p l a n t t o a n o t h e r a r e I ; i j q u i t e a s i m p o r t a n t i n t h e i r e f f e c t s on p r o d u c t i v i t y a s | 1 1 d i f f e r e n c e s i n t h e a c t u a l amount o f e q u ip m en t p e r w o rk e r. Sam uel Thompson, " F a c t o r s A f f e c t i n g I n t e r - P l a n t D i f f e r e n c e s i n P r o d u c t i v i t y , " I n d u s t r i a l P r o d u c t i v i t y (C ham paign, 1 1 1 .: I n d u s t r i a l R e s e a r c h A s s o c i a t i o n , 1 9 5 1 ) , p . 2ll|_. i 1 1 I n t e r n a t i o n a l L ab o r O f f i c e , H ig h e r P r o d u c t i v i t y i n (M a n u fa c tu rin g I n d u s t r i e s (G eneva: I n t e r n a t i o n a l L ab o r Of- !f i c e , 1 9 5 k ), P7 ~ Z E ~ . i 118 This was em phasized, fo r example, by th e French e l e c t r i c a l j c o n str u c tio n p r o d u c tiv ity team, which s t a te d th a t nThe | | c a s tin g s purchased by U nited S ta te s e sta b lish m e n ts in th e j e l e c t r i c a l c o n s tr u c tio n in d u str y were much su p e rio r t o th o se o b ta in a b le in France. D efec ts in French c a s tin g s o fte n appeared on ly in th e cou rse o f f a b r ic a t io n , and French in d u s t r i a l i s t s thus fr e q u e n tly found th em selves o b lig e d to r e j e c t work th a t had been alm ost com pleted. Such occur- ' 1 2 i Irences were unknown in the U nited S t a t e s . ” ! [ ( i i j I I I . PLANT LAYOUT j i j Plant la y o u t i s a management r e s p o n s i b i l i t y . I t i s ! I i itrue th a t mueh o f th e f a c t g a th e rin g , a n a ly s is , and i n s t a l - | : i l a t i o n are d e le g a te d t o th e la y o u t s p e c i a l i s t , but funda- 1 ] ! m e n ta lly even th e top management of a p la n t can h ard ly ; i i a ffo r d not t o be in t e r e s t e d in the arrangement of i t s p la n t j i ( f a c i l i t i e s . | | The la y o u t o f a p la n t, both o f departments and of j , t m achines, i s of major im portance, f o r i t a f f e c t s th e flo w j o f m a te r ia ls and p r o c e s s e s , la b o r e f f i c i e n c y , su p e r v isio n land c o n tr o l, use of equipment, use o f sp ace, expansion i i p o s s i b i l i t i e s , and p la n t appearance. When la y o u t i s prop- j e r ly execu ted , i t p reven ts w aste o f tim e, u nn ecessary j I 1 2I b i d . , p . 5 0 . r ~ 119 i e f f o r t , and l o s s of money due to u s e le s s movement and jtr a v e l o f work in p r o c e ss. It in c r e a se s th e w orker's e f - i j f ic ie n c y and s a t i s f a c t i o n , as i t f r e e s him from ta k in g un n e c e s s a r y s te p s or making n e e d le s s m otions and p erm its him t o d ir e c t h is energy in to p rod u ctive e f f o r t s . P roperly execu ted la you t not only b e n e f it s workers but a ls o a s s i s t s management in m a in ta in in g th e e s ta b lis h e d q u a lity of prod u c t , in m eetin g d e liv e r y sc h e d u le s, and thus in e s t a b lis h - . in g b e t te r r e la t io n s h ip s w ith cu stom ers. I t p revents th e ! n e e d le s s d u p lic a tio n o f m achinery and equipment and keeps ' th e c a p it a l investm ent a t a minimum. In sh o r t, th e fa c to r y ) i ilayou t o rg a n izes th e p h y sic a l p lan t in t o a p rod u ction . i I !mechanism, th e e f f i c i e n c y o f which determ ines t o a la r g e I I 1? ' j e x te n t th e economy of th e e n tir e o p era tio n . ^ j , Most p eop le seem to th in k of la y o u t as the arrange- I i jment of f a c i l i t i e s in new f a c t o r i e s . Such a la y o u t i s of (the utm ost im portance when a new fa c to r y i s b u i l t , but f a c - ' i ! i ; it o r ie s seldom move in t o new q u a r te r s. That does not mean i th a t th e y do not la y o u t work. On the co n tra ry , th ey do a j g r e a t d e a l o f i t and t h e y do i t c o n t i n u a l l y . Com panies | £ making s u b s ta n tia l a lt e r a t io n s and improvements in t h e ir j I la you t o fte n rep o rt th a t th e c o s ts of making the changes ! ^ A l f o r d and B e a t t y , op. c i t . , p . 197; B ic h a r d ;M uther, "M anaging t h e P l a n t L ay o u t F u n c t i o n , 11 A dvanced Man- ;a g e m e n t, V o l. XX, No. k ( A p r i l , 1 9 5 5 ), p . 20. |were recovered out of sa v in g s in l e s s than one y ea r . A la r g e part of sa v in g s from r e la y o u t comes from red u cin g the h a n d lin g and tr a n sp o r tin g of m a t e r i a l s . ^ The problem f a c in g th e management i s u s u a lly one o f jrelayou t to improve th e o p era tin g e f f i c i e n c y o f an e x i s t i n g I [manufacturing p r o c e ss, or t o provide fo r making new prod u c t s . This d i f f i c u l t y can be so lv ed by u sin g th e f a c t s ’gathered from m otion and tim e stu d y, methods a n a ly s is and 'production p o s s i b i l i t i e s of m achines, th e m anufacturing r e - :quirements o f new m a te r ia ls , and above a l l , th e m anufactur- 'in g requirem ents o f th e products b ein g m anufactured. By jrecombining a l l the known f a c t s one can a r r iv e at one or more id e a l la y o u ts which w i l l have th e lo w est o v e r - a ll co st I 15 ■of p rod u ction . i ‘ Larger o rg a n iz a tio n s have found i t p r o f it a b le to s e t 'up a s p e c ia l department whose on ly duty i s t o stud y prod u c t s and p r o c e sse s fo r the purpose o f im proving m anufactur- jing la y o u ts . Many sm a ller p la n ts a ls o r e c o g n iz e th e im p o r ta n c e of good la y o u ts and from tim e t o tim e rev iew t h e ir equipment arrangements in s u p e r v is o r s 1 m eetin gs or by sp e- i jc ia l s t u d ie s . i i____________________________ ^ K o o r e, op. c i t . , pp. 166-170. ' i d | ■'Charles A. Koepke, Plant Production Control (New 'York; John W iley and Sons, I n c ., 19i|-l) , p . S i * I IV. MATERIAL HANDLING j I J Over the y e a r s, c e r ta in terms th a t have s p e c ia l j meanings w ith regard t o m a te r ia ls h an d lin g have been adopted. Some o f th e se terms have become fir m ly f ix e d in th e in d u s t r ia l vocabu lary, w hile o th e rs are s t i l l su b ject to c o n sid e r a b le m isu nderstand ing. I t i s im portant th a t th e s e terms be understood as th ey r e la t e to m a te r ia l han- ! id lin g . A lso fo r a proper c o n s id e r a tio n of m a te r ia ls han- ( 'd lin g problems and t h e i r s o lu t io n i t i s n e c e ssa r y t o have a t i j c le a r understanding o f th e term u sed . A lford d e fin e s j i [m aterial h an d lin g as "Picking up and p u ttin g down, moving 1 i i in a h o r iz o n ta l or v e r t i c a l p lan e, or b o th , by any means, j : * ! m a t e r ia ls or products o f any kind in t h e i r raw, sem i- j '! . i 'fin is h e d , or com p letely f in is h e d c o n d itio n ." ! | He d e fin e s h an d lin g equipment as "All mechanisms j iused in m a te r ia ls h a n d lin g , to g e th e r w ith a u x ilia r y d e v ic e s 1 i T * 7 I th a t may be req u ired t o make com plete o p era tio n u n it s ." 1 A ccording to Ireso n , m a te r ia ls h a n d lin g i t s e l f r e fe r s t o "any movement o f m a te r ia ls , whether th e movement i s v e r t i c a l or h o r iz o n ta l or b oth , and a ls o whether th e movement i s i 18 :being accom plished by m echanical means or by hand." I ! I _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ i i I 16A lfo rd and Bangs ( e d s .) oj,. c i t . , p . 93 5. ! ' 17 L oc. c i t . I I I n many f a c t o r i e s $ 0 t o n s o f m a t e r i a l a r e l i f t e d , ! moved, l o a d e d , u n lo a d e d , r e l o a d e d f o r e v e r y t o n o f f i n i s h e d i I p r o d u c t p r o d u c e d . H a n d lin g c o s t s may amount t o a n y t h i n g j 19 ■ fro m 15 t o 60 p e r c e n t o r m ore o f t o t a l p r o d u c t i o n c o s t s . j M a t e r i a l s m ust be t r a n s p o r t e d from t h e in b o u n d f r e i g h t c a r j t o t h e p o i n t w here t h e y r e c e i v e i n s p e c t i o n , t h e n on t o t h e i I 1 p l a c e w here t h e ra w m a t e r i a l s a r e s t o r e d . From t h e r e t h e y j go t o t h e f i r s t o p e r a t i o n on t o s u c c e e d i n g o p e r a t i o n s , t o : i and fro m te m p o r a r y s t o r a g e p o i n t s b e tw e e n o p e r a t i o n s , t o ! j f i n i s h e d s t o r e s , t o t h e s h i p p i n g room, and, f i n a l l y , t o t h e , ■ outgoin g f r e i g h t c a r . E v ery k in d o f t r a n s p o r t a t i o n o r j m a t e r i a l s h a n d l i n g i s w a s te , i n t h a t i t c o n t r i b u t e s n o th in g ! 20 ■to c h a n g in g t h e fo rm o f t h e p r o d u c t . H ere i s a l a r g e and I ' f r u i t f u l f i e l d f o r e c o n o m ie s, w hich may be a c h i e v e d ( a ) j t I ;t h r o u g h c a r e f u l l y p la n n e d l a y o u t , e n s u r i n g a p r o p e r se q u e n c e I o f o p e r a t i o n , and (b ) t h r o u g h m e c h a n i z a t i o n , j "The g r e a t e s t e c o n o m y ," A l f o r d m a i n t a i n s , " i n p r o - i ■ I , j g r e s s i n g m a t e r i a l s t h r o u g h a m a n u f a c t u r i n g p l a n t i s s e c u r e d 1 * I Iwhen t h e m a t e r i a l s move a minimum d i s t a n c e i n p a s s i n g from ! j 21 ‘ o p e r a t i o n t o o p e r a t i o n . " F o r h i g h e s t e f f i c i e n c y i n ma- i 1 i t e r i a l s f lo w and t o a c h i e v e b e t t e r m a t e r i a l s h a n d l i n g , j 1 i ------------------------------------------- I 19 ' H ig h e r P r o d u c t i v i t y i n M a n u f a c tu r in g I n d u s t r i e s , 1 jo p . c i t . , p . 7 2 . I 20M oore, o£. c i t . , p . I 87. I 1 21 A l f o r d and Bangs ( e d s . ) , op. c i t . , p . 9 36. s t e a d y movement w i t h minimum d i s t a n c e b e tw e e n s u c c e s s i v e I o p e r a t i o n s i s d e s i r a b l e . The u se of s p e c i a l m a c h in e s and ! |e q u ip m e n t s u c h as o v e rh e a d c r a n e s , h o i s t s , c h u t e s , c o n v ey o r s y s te m , h i g h - l i f t f o r k t r u c k s , t r a i l e r t r a i n s , an d c ra n e t r u c k s c o n t r i b u t e s i g n i f i c a n t l y t o e c o n o m ic a l m a t e r i a l s 22 h a n d l i n g . The A n g lo -A m e ric a n C o u n c il o f P r o d u c t i v i t y h a s made j I a s t u d y on t h e p ro b le m s o f m a t e r i a l s h a n d l i n g . The C o u n cil! s u g g e s t e d f o u r p r i n c i p l e s f o r good m a t e r i a l s h a n d l i n g . j F i r s t , t o e l i m i n a t e m anu al h a n d l i n g w h e re v e r p o s s i b l e ; j ]s e c o n d , t o a v o id r e h a n d l i n g ; t h i r d , t o u s e e q u ip m en t t h a t i i s e t s a u n if o r m p a c e ; and f o u r t h , p a l l e t i z e a n d u s e u n i t i l o a d s . ! i > : ; I t i s i n t e r e s t i n g t o q u o te p a r t o f t h e C o u n c il* s r e - ! p o r t c o n c e r n i n g t h e U n ite d S t a t e s d r o p - f o r g i n g i n d u s t r y . I t r e a d s : " I n t h e U n i t e d S t a t e s d r o p - f o r g i n g i n d u s t r y me- j c h a n i c a l h a n d l i n g i s an im p o r ta n t f a c t o r i n h i g h p r o d u c - < ' t I t i v i t y . The American dictum i s not t o put anythin g on th e | \ f l o o r , a s somebody m ust be p a i d t o p i c k i t u p . I n t h e ■ l a r g e p l a n t s e l a b o r a t e c o n v e y o rs a r e u s e d , b u t even i n t h e j ! ' ; J s m a l le s t s h o p s , w here l i t t l e m e c h a n ic a l h a n d l i n g was i n j i i ! ! 22 ' G eorge R. T e r r y , P r i n c i p l e s o f Management (Heme- ! wood, 1 1 1 .: R ic h a r d D. I r w i n , I n c . , 1951+)> p . 5 > 3 5 > . j i a H ig h e r P r o d u c t i v i t y i n M a n u f a c t u r i n g I n d u s t r i e s , i io p . c i t . , p . 72 . j e v id e n c e, the i n t e l l i g e n t use o f wheelbarrows saved much tim e and c o s t s . V. MAINTENANCE The m aintenance o f p la n t, b u ild in g s , m achinery, and jequipment p lays an important part in d eterm inin g th e l i f e exp ectancy o f th e p la n t 's p h y s ic a l a s s e t s . The a c tu a l is e r v ic e l i v e s may be len gth en ed co n sid er a b ly by a good i imaintenance program. This purpose of p la n t m aintenance Is |u s u a lly secondary, however, t o th e need fo r k eep in g in dus t r i a l b u ild in g s and t h e i r equipment in good working order. T h erefore, th e o b je c tiv e o f m aintenance i s tw o fo ld : f i r s t , t o keep th e p la n t In op era tin g co n d itio n , and second, to 1 a r r e s t d e p r e c ia tio n and f o r e s t a l l o b so le s c e n c e . i I : Maintenance may be p r e v e n tiv e or c o r r e c tiv e in char- ja c te r . P re v en tiv e m aintenance im p lie s freq u en t In sp e c tio n Ito d e te c t minor f a u l t s and th e e a r ly c o r r e c tio n o f them, i ;supplemented by p e r io d ic overh au lin g so th a t th e p o s s i b i l i t y o f a major breakdown i s alm ost e lim in a te d . Correc t i v e m aintenance im p lie s th a t a c tio n i s taken p la ce on ly ' 2^ when th e need fo r i t becomes ob vious. f ; In sm all p la n ts m aintenance a c t i v i t i e s are combined j 2i| i b i d . , p. 73. 2^ A l f o r d a n d B e a t t y , op. c i t . , p . 61 9. 1 2 5 w ith the work o f other departm ents. In la r g e p la n ts th e work i s organ ized s e p a r a te ly , w ith an e x e c u tiv e in charge who re p o r ts d i r e c t l y t o a work manager or p la n t su p erin te n d e n t. In order th a t m aintenance work s h a ll be e f f i c i e n t l y h and led, th e re must be a c a r e fu l plan n in g to u t i l i z e th e a v a ila b le m aintenance manpower where i t w i l l do th e most good. I f m aintenance work i s c a r r ie d out e x c lu s i v e l y under th e orders o f m aintenance en g in eers or m ainte- jnance su p e r v is o r s, th e r e may be u n n ecessary d elays in j |a tte n d in g to or f o r e s t a l l i n g breakdowns. In some indus t r i e s the producers of machine t o o ls might make an impor- i ta n t c o n tr ib u tio n t o h igh er p r o d u c tiv ity by d ev elo p in g m aintenance s e r v ic e s e s p e c ia ll y fo r th e b e n e f it of sm all | u ser f a c t o r ie s which are not e a s i l y ab le to m aintain t h e ir 26 Imachines as th ey sh ou ld . t ' VI. AGE O P EQUIPMENT The p r o d u c tiv ity of a p la n t i s in flu e n c e d not on ly by th e ex te n t t o which i t s m achinery embodies th e newest te c h n o lo g ic a l improvements, but a ls o by how much the fu n c t i o n i n g of th e m achinery i s im paired by a g in g , which may r e s u lt in more shutdowns fo r r e p a ir s , slow er o p era tin g sp eed s, reduced q u a lity of output, e t c . These two fa c to r s i 26 ' Higher P r o d u c tiv ity in M anufacturing I n d u s tr ie s , jo p . c i t . , p . 76. 1 I a r e o f t e n r e f e r r e d t o as o b s o l e s c e n c e and p h y s i c a l d e p r e c i a t i o n . B o th d e p en d on t h e r a t e o f r e p la c e m e n t o f c a p i t a l e q u ip m en t and t h e q u a l i t y o f m a in te n a n c e p e r f o r m e d . I P l a n t s w i t h new er m a c h in e ry w ould be e x p e c te d t o j i h av e an a d v a n ta g e o v e r p l a n t s w i t h o l d e r m a c h in e r y . An i n - j d i c a t i o n of v a r i a t i o n s i n t h e a v e r a g e age o f p r o d u c t i o n J | m a c h in e r y i n 19ip9 and 1950 i s g iv e n i n T a b le I below , w hich i n c l u d e s com panies m akin g c o n s t r u c t i o n and m in in g m a c h in e r y i ! g e n e r a l i n d u s t r i a l e q u ip m e n t, m ac h in e t o o l s , and m e t a l ! ■ fo r m in g e q u ip m e n t. The a v e ra g e age o f t h e m a c h in e ry i n most ! I I io f t h e 85 f i r m s w h ic h r e p o r t e d was b e tw e e n 6 and 15 y e a r s . | i Pew f i r m s h a d m a c h in e r y w hich a v e r a g e d 5 y e a r s o r l e s s i n 1 a g e , b u t a c o n s i d e r a b l e number a v e r a g e d 16 y e a r s o r m o re. j TABLE I VARIATIONS IN THE AVERAGE AGE OP PRODUCTION MACHINERY IN 1949 AND 1950 Average age of m achinery Number 1949 o f p la n ts 1950 0 - 5 years ................................................... .............. 3. 4 6 -1 0 years .............................................................. 33 33 1 1 -1 5 years ............................................................... 31 30 16 years or more .................................................. 17 18 Average age of m achinery, a l l p la n ts . . 1 2 .8 1 2 .7 Source: I n d u s tr ia l P r o d u c tiv ity , o p . c i t . , p . 217. i D ire ct co n c lu sio n s as t o th e e f f e c t o f age on pro- jd u c tiv ity cannot be drawn from th e data summarized above, 127 but i t i s i n t e r e s t i n g t o n ote th a t more than h a lf th e s e p la n ts were u sin g m achinery th a t averaged 11 years old or ! 2*7 {more. The age o f a machine d oes, however, in d ic a te in a ! . i 1 g en era l way i t s u s e fu ln e s s in a f a c t o r y . A machine over j I t h i r t y years o ld i s l i k e l y t o be to o worn t o fu n c tio n e f f i c i e n t ly or t o produce a cc ep ta b le work. More im portant i s th a t a m anufacturer who u ses i t cannot compete w ith other p la n ts which have more modern m achinery. O c c a sio n a lly , of j * 2 3 i cou rse, an o ld model may be e x c e p tio n a lly good. { I _ : i V I I . SIZE O P THE PLANT ! I • ' I i ! i f The r e l a t i v e s iz e of p la n ts or o p era tin g u n its | i appears t o have some e f f e c t on p r o d u c tiv ity . Large com- I ipanies are in v a r ia b ly m u ltip la n t companies w ith p la n ts in | j 1 'many lo c a tio n s throughout th e cou n try. They can, th e r e - j I |f o r e , p la ce p la n ts near each source of raw m a te r ia ls i f [there are .sev era l sou rces o f th e p r in c ip a l raw m a te r ia l ; used and i f i t i s an advantage to be near th e so u rce. i i M u ltip lan t companies can m igrate e a s i l y i f m arkets or laborj c o n d itio n s change or i f , fo r other re a so n s, a new or d i f - | fe r e n t lo c a t io n seems a d v isa b le . i i j M u ltip la n t companies can compare th e c o st o f produc-j I « jtio n of one p la n t w ith th a t o f another engaged in th e same I i i_________________ ■ [ 2^Samuel Thompson, op. c i t . , pp. 2 1 6 -2 1 7 . oft I ___________ Koe p k e , _up. c i t . , p . ___________________________________ ;work. I f t h e r e a r e d i f f e r e n c e s , i t may be p o s s i b l e t o a d o p t t h e p r o c e d u r e s o f t h e e f f i c i e n t p l a n t i n t h e l e s s e f f i c i e n t o n e . I f t h e e f f i c i e n c y seem s t o be t h e r e s u l t o f b e t t e r m anagement i n one p l a n t t h a n i n a n o t h e r , t h e e f f i c i e n t m an a g ers c a n be t r a n s f e r r e d t o t h e i n e f f i c i e n t p l a n t , t o t h e a d v a n ta g e o f t h e w hole company. I t i s a l s o p o s s i b l e i i t o expand o p e r a t i o n s i n t h e e f f i c i e n t p l a n t s and t o r e d u c e I j o p e r a t i o n s i n t h e i n e f f i c i e n t o n e s . j L a rg e co m p anies h a v e d i s t i n c t a d v a n ta g e o v e r s m a ll com pan ies i n t h e d e v elo p m e n t o f f u t u r e e x e c u t i v e s . T h e i r j i | J p r e stig e draws good young men and th ey can have th e p ic k of; ! I (th e c r o p . S m a ll c o m p a n ie s, on t h e o t h e r h a n d , f i n d i t J h a rd e r t o a t t r a c t good y oung men, an d t h e y c a n n o t p r o v i d e I jfo rm a l t r a i n i n g o r t h e v a r i e d e x p e r i e n c e n e c e s s a r y f o r t h e j d e v e lo p m e n t o f t o p e x e c u t i v e s . i L a rg e com pan ies o r d i n a r i l y have a g r e a t a d v a n ta g e jo v e r s m a ll com panies i n t h e amount and q u a l i t y o f e n g i n e e r i n g and a l s o i n t h e u s e o f l a r g e , e x p e n s iv e , b u t f a s t - p r o d u c i n g l a b o r - s a v i n g m a c h in e r y . They h a v e t h e e n g i n e e r s t o d e s i g n su c h m a c h in e s , t h e money t o buy them , and t h e volum e n e c e s s a r y t o a ll o w them t o o p e r a t e a t low u n i t c o s t s . L a rg e p l a n t s o f t e n c an e c o n o m ic a lly a d o p t m etho ds r e q u i r i n g l a r g e c a p i t a l i n v e s tm e n t w h ich a r e n o t a s f e a s i b l e f o r s m a ll p l a n t s . M e c h a n i z a t i o n . and a u to m a t i c co n - t r o l o f m a t e r i a l s movement w i l l more q u i c k l y and s u r e l y p a y 29 f o r i t s e l f i n a l a r g e s i z e , l a r g e volum e p l a n t . 2^Moore, og . c i t pp. 2 l \ . -26. | CHAPTER V II I ! | ORGANIZATION AND C O N TR O L OP PRODUCTION j I W henever tw o o r m ore p e r s o n s u n i t e t o a t t a i n a com mon p u r p o s e an o r g a n i z a t i o n i s fo rm e d . The s t r u c t u r e o f i n d u s t r i a l o r g a n i z a t i o n u n d e r u s u a l c o n d i t i o n s o f o p e r a t i o n I i s t h e r e s u l t o f g ro w th . C on cerns s t a r t i n a s m a ll way and g r a d u a l l y e x p a n d . One o r two men have a u t h o r i t y and a l l r e s p o n s i b i l i t i e s a t f i r s t and, b y f o r c e o f c i r c u m s t a n c e s , ! I j o p e r a t i o n c e n t e r s i n a n d a ro u n d th e m . As g ro w th c o n t i n u e s , j j t h i s m ethod o f o p e r a t i o n and c o n t r o l becom es i n e f f e c t i v e 'and i t i s e v i d e n t t h a t a p la n n e d s t r u c t u r e or o r g a n i z a t i o n i s n e e d e d . A l f o r d d e f i n e s o r g a n i z a t i o n a s nThe p r o c e s s o f so c o m b in in g t h e work w h ic h i n d i v i d u a l s o r g ro u p s have t o p e r fo rm w i t h t h e f a c u l t i e s n e c e s s a r y f o r i t s e x e c u t i o n , t h a t ! ! ithe d u t i e s , so fo rm e d , p r o v i d e t h e b e s t c h a n n e ls f o r t h e ! I i i ^ e f f i c i e n t , s y s t e m a t i c , p o s i t i v e , a n d c o o r d i n a t e d a p p l i c a - | t i o n o f t h e a v a i l a b l e e f f o r t . ” ^ I i j The purpose o f o r g a n iz a tio n in econom ic a c t i v i t y i s i ( e f f i c i e n t c o o p e r a tio n t o a t t a in r e c o g n iz e d o b j e c t iv e s o f | ^L. P. A l f o r d and Joh n R. Bangs ( e d s . ) , P r o d u c t i o n .Handbook (New York* The R o n a ld P r e s s Company, 1 9 4 6 ) , p . 3 . 1 o L. P. A l f o r d and H. R. B e a t t y , P r i n c i p l e s o f I n d u s t r i a l Management (New Y ork; The R o n a ld P r e s s Company, 19 j? 1) # ■p. « 9 . j i ! t h e e n t e r p r i s e . The p r o c e s s of o r g a n i z a t i o n i s c a r r i e d on t o a t t a i n t h a t p u r p o s e . As a r e s u l t o f t h i s p r o c e s s , an o r g a n i z a t i o n i s d e v e lo p e d and c o n t i n u a l l y m o d i f i e d . T h is r e s u l t i n g o r g a n i z a t i o n i s a s t r u c t u r e , o r s y s t e m a t i c [a rra n g e m e n t, i n w h ic h d u t i e s and r e s p o n s i b i l i t i e s o f a l l p a r t i c i p a n t s a r e d e f i n e d . I n t h i s s t r u c t u r e , e a c h s p e c i a l - ! i z e d d e p a r t m e n t , d i v i s i o n , s e c t i o n , and em ployee i s a s s i g n - j jed a p a r t . The r e s u l t i n g s t r u c t u r e i n b u s i n e s s o r i n d u s t r y i jmay be a f a c t o r y o r p r o d u c t i o n o r g a n i z a t i o n , a f i n a n c i a l ; J o r g a n i z a t i o n , a s a l e s o r g a n i z a t i o n , o r a c o m p o s ite s t r u c - | I t u r e . - ^ j I ; T h e re a r e t h r e e b a s i c p a t t e r n s o f o r g a n i z a t i o n ; l i n e , 1 s t a f f , a n d f u n c t i o n a l . The l i n e o r g a n i z a t i o n i s t h e o l d e s t jand s i m p l e s t t y p e . I n i t , a l l r e s p o n s i b i l i t y an d a u t h o r i t y ! j r e s t w i t h t h e p r e s i d e n t of t h e company. I n a d d i t i o n t o j S i m p l i c i t y , t h e l i n e o r g a n i z a t i o n h a s t h e c o n s i d e r a b l e ad v a n t a g e o f m ak ing r e s p o n s i b i l i t y c l e a r . E ach man h a s o n ly , Jone b o s s t o g i v e him o r d e r s and t o d e c i d e i s s u e s i n v o l v i n g j ,him. i ! The s t a f f o r g a n i z a t i o n a d v i s e s t h e p r e s i d e n t on w hat I d e c i s i o n s h e s h o u l d m ake. I t i s composed o f a v a r i e t y o f : i s p e c i a l i s t s s u c h a s l a w y e r s , e n g i n e e r s , a c c o u n t a n t s , e t c . I At t h e r e q u e s t o f t h e p r e s i d e n t t h e y i n v e s t i g a t e p ro b le m s ; i • j ■^Dale Y od er, P e r s o n n e l P r i n c i p l e s and P o l i c i e s (New | t Y ork: P r e n t i c e - H a l l , I n c . , 1 9 5 2 ), p . 1(36. j 1 1 r 1 3 2 1 land o f f e r him a d v i c e . In t h i s way t h e p r e s i d e n t c a n , t o a c e r t a i n e x t e n t , r e l i e v e h i m s e l f o f much o f t h e tim e r e q u i r e d f o r p e r s o n a l i n v e s t i g a t i o n . As a r e s u l t , h e can 1 imake q u i c k e r and m ore c o m p e te n t d e c i s i o n s t h a n he c o u ld a l o n e > t The te r m f u n c t i o n a l i s o c c a s i o n a l l y u s e d t o r e f e r to* i t h e d e p a r t m e n t a l a rr a n g e m e n ts u s e d i n l i n e o r g a n i z a t i o n s . j The d e p a r tm e n ts a r e s a i d t o b e f u n c t i o n a l when t h e y s p e - J 1 ; c i a l i z e i n c e r t a i n t y p e s o f w ork. T h is u s e o f t h e te rm 1 ! - ■probably o r i g i n a t e d w i t h F r e d e r i c k T a y lo r i n t h e l a t e n i n e - i 1 j t e e n t h c e n t u r y . As a fo re m a n o f t h e M id v a le S t e e l Company j i n 1880 T a y l o r fo u n d t h a t h e was su p p o s e d t o do many d i f - 1 f e r e n t k i n d s o f w ork. T h e re was s u c h a v a r i e t y o f work t h a t o b v i o u s l y he c o u ld n o t be e x p e r t i n a l l . And ev en i f he h a d b e e n e x p e r t i n s o many j o b s , t h e r e w ould be i n s u f - ' c I f i c i e n t tim e i n a day t o a c c o m p lis h them a l l . j I I ' F u n c t i o n a l o r g a n i z a t i o n s a r e t h e m ost co m p lex . They I • t have t h e p r im a r y a d v a n ta g e o f p r o m o tin g i n d i v i d u a l e f f i - j c i e n c y , f o r t h e y u s e t h e s p e c i a l a b i l i t i e s and e x p e r i e n c e s jof I n d i v i d u a l s t o t h e g r e a t e s t a d v a n ta g e . The em p lo y ee, oni |th e o t h e r h a n d , c an e a s i l y become c o n fu s e d and d i s t u r b e d b y 1 I . i I - - - - - - - - - - - - - - - - j , n e n r y C. S m ith , P s y c h o lo g y o f I n d u s t r i a l B e h a v io r ' (New Y orkj M cG raw -H ill Book Company, I n c . , 1 9 5 5 ) > p p . 229- ! ^ 230. I F r a n k l i n G. M oore, M a n u f a c tu r in g Management (Home- ' ,wood, 1 1 1 .; R ic h a r d D. I r w i n , I n c . , l9 i? 3 ) » p . 08. 1 th e number o f b o s s e s who su p e r v is e h i s . a c t i v i t y . As a r e s u l t , th e f u n c t io n a l o r g a n iz a tio n p la c e s th e g r e a te s t de mands upon m utual u n d ersten d in g and c o o p e r a tio n . W ithout j jth e s e , such o r g a n iz a tio n s may lo s e t h e ir p o t e n t ia l advan t a g e s in in t e r f u n c t io n a l d is p u te s and d isa g r e e m e n ts. The b e s t com panies c o n ta in a l l th r e e ty p e s o f organ i z a t i o n . They s e l e c t and t e s t th e b e s t o r g a n iz a tio n p a tte r n jfo r each s e t o f f u n c t io n s . C h a r a c t e r is t ic a lly , th e b a s ic ' i ' ( o r g a n iz a tio n a l framework i s o f th e l i n e ty p e . Em ployees in ' p ro d u ctio n work, w hich o fte n c o n s t it u t e more th an 90 per cen t o f th e em ployees o f a f a c t o r y , a re t y p i c a l l y in a l i n e 1 J i o r g a n iz a tio n . Superim posed upon t h i s framework are s t a f f and f u n c t io n a l o r g a n iz a tio n s . Thus, a p ro d u c tio n worker has a su p e r v is o r who i s in g e n e r a l charge o f h is a c t i v i t i e s . At th e same tim e , how ever, th e s u p e r v is o r ’ s a u th o r- j i ( ( it y i s lim it e d by th e fu n c tio n a l a u th o r ity or th e e n g in e e r , j (p erso n n el m anager, and so on.^ j i . 1 I i I i I . M A N A G E M E N T AND ADMINISTRATION i i i When we th in k o f p r o d u c tiv ity in th e p la n t , we a re j in c lin e d t o th in k o f th e o r g a n iz a tio n o f m ach in es, p ro c e s s e s and w ork ers, s in c e th a t i s where a t t e n t io n on th e i i 'problem has b een fo c u s e d . W e a re in c lin e d to fo r g e t th a t I :- - - - - - - - - - - ,- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - j ^ S m ith , o p . c i t . , p . 2 3 1 . m anagement p e o p le m ust a l s o be o r g a n i z e d and m o t i v a t e d f o r maximum p r o d u c t i v i t y . I n f a c t , i f t h e m a n a g e r i a l o r g a n i z a t i o n i s u n so u n d and t h e m a n a g e r i a l p e o p le a r e i n e f f e c t i v e l y i m o t i v a t e d , we can h a r d l y e x p e c t good r e s u l t s on t h e p r o d u c t i o n l i n e . i j Management may be d e f i n e d i n s e v e r a l ways d e p e n d in g j on t h e a s s u m p tio n s upon w h ic h t h e d e f i n i t i o n i s p o s t u l a t e d , i ! Prom t h e b r o a d , s o c i a l p o i n t of v ie w , m anagem ent i s a t e c h - , t ■nique o r m eth od d e v e lo p e d a s a r e s u l t o f t h e human te n d e n c y | t o fo rm g r o u p s . W h atev e r t h e g ro u p may b e , i t m u st h ave i t s own m anagem ent. I n t h i s c o m p re h e n s iv e s e n s e , m anage ment may be d e f i n e d a s T ,a t e c h n i q u e by m eans o f w h ich t h e p u r p o s e s and o b j e c t i v e s o f a p a r t i c u l a r human g ro u p a r e d e - i 7 jte rm in e d , c l a r i f i e d , an d e f f e c t u a t e d . " j The f i r s t r e q u i r e m e n t f o r c a r r y i n g o u t t h e a c t i v i t y jof m anagem ent i s know ledge o f t h e o b j e c t i v e . When t h i s i s i j c l e a r l y e s t a b l i s h e d o r known, m anagem ent c an b e g in t o t a k e i jshape. A l l m a n a g e r i a l e f f o r t s c e n t e r a ro u n d t h e g o a l t o be ja c c o m p lish e d . I n any e n t e r p r i s e t h e r e a r e s i x b a s i c e l e m e n ts , t h e s o - c a l l e d " s i x Mf s " : men, m a t e r i a l s , m a c h in e s , I m e th o d s , money, and m a r k e t s . T h e re a r e t h e e le m e n ts w i t h w h ich m an a g ers d e a l i n v a r i o u s q u a n t i t i e s and c o m b in a tio n s 7 | E lm ore P e t e r s e n and E. G. Plowman, B u s in e s s Organi* z a t i o n a n d Management (Homewood, 1 1 1 .: R i c h a r d D. I r w i n , I n c . , 1 9 5 3 ) , P . 3 3 . ' 135 I Q | i n o r d e r t o a c h i e v e o b j e c t i v e s . f j W ith t h e o b j e c t i v e d e te r m in e d and t h e b a s i c e le m e n ts a v a i l a b l e f o r a c h i e v i n g t h i s g o a l known, a c o n v e n ie n t d e f i n i t i o n o f m anagem ent can b e s t a t e d . "M anagem ent,” T e r r y I |d e f i n e s , " i s t h e a c t i v i t y w h ic h p l a n s , o r g a n i z e s , and c o n - I t r o l s t h e o p e r a t i o n s o f t h e b a s i c e le m e n ts o f men, m a t e r i a l s , m a c h in e s , m e th o d s , money, an d m a r k e t s , p r o v i d i n g d i r e c t i o n and c o o r d i n a t i o n , and g i v i n g l e a d e r s h i p t o human | e f f o r t s , so a s t o a c h i e v e t h e s o u g h t o b j e c t i v e s o f t h e 1 ! 9 i e n t e r p r i s e . " i i i I | No e n t e r p r i s e can l o n g b e s u c c e s s f u l t h a t d o e s n o t I j i jhave a c o m p e te n t m anagem ent. M anaging a s u c c e s s f u l e n t e r p r i s e i s h a r d w ork. I t i s n o t e a s y t o k e e p an e n t e r p r i s e i g o in g , and o b j e c t i v e s a r e n o t a c h i e v e d i n some m agic way. j iThey a r e a c c o m p lis h e d a s t h e r e s u l t o f e f f e c t i v e m a n a g e r i a l i a p p l i c a t i o n . ( I A v a i l a b l e d a t a show t h a t f o r t h e y e a r 1950 t h e num- i i i ;b e r o f b u s i n e s s e s i n t h e U n i t e d S t a t e s was a p p r o x i m a t e ly j ^ 3 ,9 0 0 ,0 0 0 . Many o f t h e s e w ere new an d s m a l l . S t a t i s t i c s jf o r r e c e n t y e a r s r e v e a l t h a t o f e v e r y 100 new e s t a b l i s h - ' m en ts s t a r t e d a p p r o x i m a t e ly 50, o r one h a l f , go o u t o f ; b u s i n e s s w i t h i n tw o y e a r s . By t h e end o f f i v e y e a r s , o n ly I i ! i ______________________________________________________________________________________________ I 8 G eorge T e r r y , P r i n c i p l e s o f Management (Homewood, I 1 1 1 .: R ic h a r d D. I r w in - ]; I n c . , 155IiT> p . 3 . j s 9£E* p« 9 . ' I jone t h i r d o f t h e o r i g i n a l 100 w i l l s t i l l be i n b u s i n e s s . jprom t h i s r e m a in i n g one t h i r d w i l l em erge some of t h e b i g i i i b u s i n e s s e s o f t h e f u t u r e , and i t i s r e a s o n a b l e t o s t a t e i i * \ t h a t t h o s e h a v in g s t r o n g management w i l l s u r v i v e and c o n - 10 ; t i n u e t o grow. I t t a k e s t r a i n i n g t o a c q u i r e t h e n e e d e d s p e c i a l i know ledge and e x p e r t a b i l i t y o f a co m p e te n t m a n a g e r. T ec h n i q u e s m ust be l e a r n e d , and i n i t i a t i v e and i m a g i n a t i o n e x - I e r c i s e d . I n o r d e r t o d e s c r i b e more c l e a r l y t h e t y p e o f ! j i n d i v i d u a l b e s t s u i t e d f o r m a n a g e r i a l w ork, t h e f o l l o w i n g jte n b a s i c q u a l i f i c a t i o n s s h o u ld be m e n tio n e d . T hese t e n i | a r e ; s e lf - m a n a g e d , t e c h n i c a l c o m p eten ce, o b j e c t i v e v ie w - i p o i n t , open a t t i t u d e , a b i l i t y t o t h i n k , a b i l i t y o f e x p r e s s i o n , s a l e s a b i l i t y , e m o t i o n a l m a t u r i t y , d e s i r e f o r r e - j i : 11 I J s p o n s i b i l i t y , an d c o u ra g e a n d r e l i a b i l i t y . ! I t I s i m p o r t a n t t o . n o t i c e t h a t t h e q u a l i t y o f man agem ent i n t h e U n i t e d S t a t e s i s f a r b e t t e r t h a n t h a t i n ! i 'E u ro pean c o u n t r i e s . The A n g lo -A m eric an C o u n c il o f P ro d u c - j ! t i v i t y h a s p a i d t r i b u t e t o t h e q u a l i t y , s k i l l , a n d e n th u - : t ' f jsiasra o f management i n t h e U n i t e d S t a t e s . The m anagement ! A c c o u n tin g Team o f t h e C o u n c il h a s re m a rk e d t h a t t h e m ost s i g n i f i c a n t f a c t o r i n A m erica l e a d i n g t o h i g h p r o d u c t i o n a t | ' i ( ... ! ! no I b i d . . p . 11. • ^ I b i d . . p p . 1 4 - 1 5 . ; i x d .low c o s t i s e f f i c i e n t m anagem ent. I I . PRODUCT ION PLANNING AND CONTROL p r o d u c t i o n c o n t r o l L as d e v e lo p e d i n m odern i n d u s t r y l a r g e l y as t h e r e s u l t o f t h e e v e r i n c r e a s i n g demands w h ich h a v e b e e n made on m a n u f a c t u r in g f a c i l i t i e s . The m odern p l a n t o p e r a t e s a s a h i g h l y c o o r d i n a t e d u n i t w h ich m u st be c o n t r o l l e d t h r o u g h i t s many f u n c t i o n s by p e o p le who a r e t h o r o u g h l y aw are o f a l l t h e d i f f i c u l t i e s w h ich may a r i s e fro m im p ro p e r e m p h a sis on a n y f u n c t i o n . P r o d u c t i o n p l a n n i n g and c o n t r o l c o m p ris e t h e p l a n - i n i n g , r o u t i n g , s c h e d u l i n g , d i s p a t c h i n g , an d f o l lo w - u p f u n c t i o n s i n t h e p r o d u c t i v e p r o c e s s , so o r g a n i z e d t h a t t h e m ovem ents o f m a t e r i a l , p e rfo r m a n c e o f m a c h in e s , and o p e r a t i o n o f l a b o r ar.e d i r e c t e d an d c o o r d i n a t e d as t o q u a n t i t y , !q u a l i t y , t i m e , and p l a c e . The sy s te m w h ich i s a d o p te d I js h o u ld b e a s s im p le and e c o n o m ic a l a s p o s s i b l e and y e t be j e f f e c t i v e i n p r o d u c i n g t h e p r o d u c t f o r d e l i v e r y when prom - 13 i s e d , o f t h e p r o p e r q u a l i t y , and a t t h e p r o p e r c o s t . P r o d u c t i o n c o n t r o l i s d e f i n e d by Koepke ”a s a s e r i e s o f f u n c t i o n s w h ic h c o o r d i n a t e t h e a v a i l a b l e p l a n t f a c i l i - 1---------------------------------- ; i p ! I n t e r n a t i o n a l L ab o r O f f i c e , H ig h e r P r o d u c t i v i t y i n 'M a n u f a c tu rin g I n d u s t r i e s (G eneva: I n t e r n a t i o n a l L a b o r Q f- ; f i c e , 1 9 5 ^ ) , p . 79 . ! ^ A l f o r d a n d B e a t t y , o p . c i t . , p . 3 6 7 . t i e s and r e g u l a t e t h e o r d e r l y movement o f goods t h r o u g h t h e i r e n t i r e m a n u f a c t u r i n g c y c l e , fro m p r o c u r e m e n t o f ra w ! [ m a t e r i a l s t o s h i p p i n g o f f i n i s h e d goods a t t h e p r o p e r tim e j ' 11 1 ' land p l a c e i n t h e r e q u i r e d q u a n t i t y an d q u a l i t y . " ^ j T e r r y d e f i n e s p r o d u c t i o n c o n t r o l "as t h e p r o c e s s o f | p r e d e t e r m i n i n g p r o d u c t i v e o p e r a t i o n s i n a c c o r d a n c e w i t h r e - | i l e a s e t o m a n u f a c tu r e o r d e r s an d o f i s s u i n g n e c e s s a r y d i r e c - J j 1 i t i v e s , u s u a l l y b y means o f s p e c i a l p a p e r fo rm s, t o t h e ! t f a c t o r y so t h a t c h © p r o d u c t i o n r e q u i r e d w i l l be a c h i e v e d : w i t h i n t h e e s t a b l i s h e d q u a n t i t y , q u a l i t y , t i m e , and c o s t j I ic j i l i m i t s . " In o t h e r w o rd s, t h r o u g h p r o d u c t i o n c o n t r o l t h e ; ! j r i g h t c o m b i n a t i o n s o f t h e r i g h t o p e r a t i o n s a t t h e r i g h t j jtim e and p l a c e a r e d e t e r m i n e d ; and d i r e c t i v e s a r e i s s u e d t o I (th e p e o p le c o n c e rn e d s o t h a t a l l o p e r a t i o n s w i l l b e p r o p - ' l * l j e r l y c o o r d i n a t e d a n d c o n t r o l l e d . P r o d u c t i o n c o n t r o l h e l p s ; i j (p ro v id e t h e d r i v i n g , d y n a m ic, m o t i v a t i n g pow er n e c e s s a r y j 1 i f o r t h e a c c o m p lish m e n t o f p r o d u c t i o n o b j e c t i v e s . j I P r o d u c t i o n c a n b e c o n t r o l l e d i n many d i f f e r e n t w a y s,j I Ibut t h e v a r i a t i o n s a r e m ore i n d e g r e e r a t h e r t h a n i n f u n d a - : i | m e n ta l f u n c t i o n s t h a t a r e p e r f o r m e d . The s i z e o f t h e f a c - j t o r y , t h e p r o d u c t s m a n u f a c t u r e d , t h e n a t u r e o f t h e I n d u s - i t r y , a n d t h e w is h e s o f m an a g ers a f f e c t t h e amount o f p r o - j !_______________________ i ■ ^ C h a rle s A. K oepke, P l a n t P r o d u c t io n C o n t r o l (Few ! Y ork; Jo h n W iley a n d S o ns, I n c . , 1 9 ifl), p . 7 8 . 15 ^ T e r r y , o p . c i t . , p . 3 1 7 • \ jd u ctlon c o n tr o l work done and i t s Im portance in any g iv e n i c a s e . P ro d u ctio n c o n t r o l work s t a r t s upon r e c e ip t o f i I o rd ers t o m anufacture c e r t a in p r o d u c ts. F r e q u e n tly , t h is j i " r e le a se t o m anufacture" or " a u th o r ity fo r p rod u ction " i s g iv en th e e x e c u tiv e in charge o f p r o d u c tio n , who, in tu rn , j forw ards th e in fo r m a tio n t o p ro d u ctio n c o n t r o l. To inform j o th e r s and h e lp in su r e th a t th e work i s done a cc o rd in g to i i p la n , p ro d u c tio n c o n tr o l makes u se o f a c o n s id e r a b le amount, i o f paper work. The a c tu a l make-up o f th e n e c e ssa r y paper ; work i s s u b je c t t o w ide v a r ia t io n dep en din g upon th e r e - j q uirem en ts o f th e in d iv id u a l work and th e p r e fe r e n c e o f th e ! p ro d u c tio n c o n tr o l m anager."^ The co n tin u ed s u c c e s s o f p ro d u c tio n c o n tr o l i s th e j com p lete endorsem ent and b a ck in g by top management. Pro d u c tio n c o n tr o l r e q u ir e s c lo s e c o o p e r a tio n w ith many organ i z a t io n a l d iv is io n s and u n it s o f th e p ro d u c tio n d ep a r tm e n t.; t I In f a c t , p r o d u c tio n c o n tr o l depends upon a cc u r a te in form a- j i jtio n and a s s is t a n c e su p p lie d by t h e s e o th e r u n i t s . j • I [ P ro d u ctio n p la n n in g c o n s is t s o f d eterm in in g th e p r o - ; i posed o p e r a tio n s , t h e i r seq u en ce, and t h e ir tim in g in a c - I cordance w ith th e o b je c t iv e b e in g so u g h t. I t i s mapping ! i 1 iout and ta k in g in t o aceou n t a l l th e a c t i v i t i e s w hich w i l l i I I i 1 6 I b i d . , p p . 3 1 9 -3 2 1 . 1 , 1 1 4 -0 I have t o be perform ed in g e t t in g th e work a cco m p lish e d . In J Jproduction c o n t r o l, p la n n in g u s u a lly in c lu d e s in t e r p r e t in g | I th e s a le s d ep a rtm en t's "order t o m anufacture" in t o th e ] | language and term s o f th e shop, making up th e p ro d u ctio n o r d e r s, ch eck in g m a te r ia ls a v a ila b le , and k eep in g b a s ic 17 p ro d u ctio n c o n tr o l d ata up t o d a te . In s h o r t, p ro d u c tio n c o n tr o l s u p p lie s a means o f o p e r a tio n in ord er fo r h ig h e s t e f f i c i e n c y to be rea ch ed and I m a in ta in ed . The p la n n in g and c o n tr o l o f p r o d u c tio n a r e , o f ; c o u r se , e s s e n t i a l in order t o en su re th a t d e liv e r y d a te s are m et, th a t m a te r ia ls and com ponents are a v a ila b le when and where th e y a re r e q u ir e d , and t h a t w orkers and m achines are n e ith e r o v erlo a d ed nor l e f t i d l e . B e tte r p la n n in g o f [production sc h e d u le s may, among o th e r a d v a n ta g es, h e lp t o i I ■ ! ;reduce i r r e g u l a r i t i e s in p ro d u c tio n and employment a r is in g j jfrom s e a s o n a l and o th er f lu c t u a t io n s in demand. B e tte r j .p rod u ction c o n tr o l can do much t o e lim in a te im p e r fe c tio n s ! ;in m a t e r ia ls , im plem ents and m ach in es, w hich may have ad v e r s e e f f e c t s on p r o d u c tiv ity out o f p ro p o r tio n t o t h e i r j in t r in s lc im p ortan ce. ! i l I I I . COST AND BUDGETARY C O N TR O L ! | I j For th r e e m ajor r e a s o n s , a know ledge o f c o s t account-: [ Ing i s o f im portance t o a l l th o s e in management p o s it io n o f j i i ! j _________1 7 I b i d . , p . 3 2 6 .________________________ | lip. any i n d u s t r y . F i r s t , t h e y may know how t o f i n d , a n a l y z e , and i n t e r p r e t w i t h c o n f i d e n c e a c c o u n t i n g i n f o r m a t i o n ob t a i n e d fro m t h e b o o k s o f a c c o u n t, s t a t e m e n t s , a n d r e p o r t s o f i n d u s t r i a l e n t e r p r i s e s . S econd, t h a t t h e y may be p r e p a r e d f o r th e work o f n e g o t i a t i n g and c o o p e r a t i n g w i t h a c c o u n ti n g and f i n a n c i a l e x e c u t i v e s , by p o s s e s s i n g a f u l l u n d e r s t a n d i n g o f t h e m ea n in g o f a c c o u n t i n g te r m s and h a v in g jan i n s i g h t i n t o t h e l i m i t a t i o n s o f a c c o u n ti n g r e c o r d s an d 'p r o c e d u r e s . And t h i r d , t h a t t h e y may know how t o p ro v e t h e I ;r e s u l t s o f t h e i r work fro m t h e a c c o u n t i n g and f i n a n c i a l v i e w p o i n t s . ^ A l f o r d d e f i n e s c o s t a s " t h e t o t a l e x p e n s e s c h a r g e d I I t o c o s t a c c o u n ts f o r t h e a c q u i s i t i o n an d d i s t r i b u t i o n o f j ite m s t h a t a r e s o l d , o r f o r th e p r o d u c t i o n and d i s t r i b u t i o n j „ iq ; I o f s e r v i c e s t h a t a r e r e n d e r e d . " > ! T e r r y h a s a s i m i l a r d e f i n i t i o n f o r c o s t , " C o s t , " j Ia c c o r d in g t o him , " i s t h e d o l l a r amount p a i d o r o b l i g a t i o n i i n c u r r e d i n a c q u i r i n g o r u s i n g p r o d u c t s , s e r v i c e s , o r t h e i r i i i .com ponents i n c a r r y i n g out t h e a c t i v i t i e s o f t h e e n t e r - ; i ■ t» 2 0 j p r i s e . " ! C ost c a n b e d i v i d e d i n t o f o u r p r i n c i p a l e le m e n ts j t 1 8 A l f o r d and B e a t t y , o£. c i t . , p . 5 2 9 . ; 19t .. i L o c . c i t . i 20 T e r r y , o £ . c i t . , p . 3lj.8. (1 ) m a t e r i a l , (2) l a b o r , (3 ) s e l l i n g , and (if.) o v e rh e a d . M a n u f a c tu r in g com panies u s u a l l y sp e n d m o st o f t h e i r money f o r c o s t s i n c u r r e d i n a c t u a l m a n u f a c tu r e o f t h e p r o d u c t s , n am ely , f o r t h e m a t e r i a l s fro m -which t h e p r o d u c t s a r e made and f o r t h e l a b o r r e q u i r e d t o t u r n t h e m a t e r i a l s i n t o f i n i s h e d p r o d u c t s . T hese a r e c a l l e d " d i r e c t " c o s t s . B e s id e s j t h e s e c o s t s , t h e r e a r e " i n d i r e c t " o r " o v e r h e a d " c o s t s ( a l s o c a l l e d , i n a c c o u n t i n g , " b u r d e n " ) . I n d i r e c t c o s t s a r e t h e am ounts s p e n t f o r ite m s n o t d i r e c t l y c o n c e rn e d w i t h t h e i i ‘ !a c t u a l m a n u f a c tu r e o f t h e p r o d u c t s . They i n c l u d e wages and, I i i ' s a l a r i e s o f a l l e m p lo y ees who do n o t work on t h e p r o d u c t s , j i i s u p p l i e s u s e d up by t h e f a c t o r y and o f f i c e s , and f r e i g h t , ( i n s u r a n c e , t a x e s , and d e p r e c i a t i o n . ^ | B udget h a s b e e n d e f i n e d a s "a p l a n w hereby a g o a l i s i !se t f o r f u t u r e o p e r a t i o n s and where t h e a c t u a l a c c o m p lis h - m ent i s com pared w i t h t h e b u d g e t t o f i n d w here and f o r w hat 22 jr e a s o n t h e d i f f e r e n c e s o c c u r r e d . " | j "A b u d g e t , " a c c o r d i n g t o T e r r y , " i s an e s t i m a t e o f j i j f u t u r e n e e d s , a r r a n g e d a c c o r d i n g t o an o r d e r l y b a s i s , cover-f jin g some o r a l l o f t h e a c t i v i t i e s o f an e n t e r p r i s e f o r a j ' d e f i n i t e p e r i o d o f t i m e . " I n c o n t r a s t , " b u d g e t a r y c o n t r o l ' 1 i i s a p r o c e s s o f c o m p a rin g a c t u a l r e s u l t s w i t h t h e c o r r e - 21. 22. ’ Moore, o p . c i t . , p . 732. } K oepke, o p . c i t . , p . 110, jsp o n d in g b u d g e t d a t a i n o r d e r t o a p p ro v e a c c o m p lish m e n ts o r i rem edy d i f f e r e n c e s b y e i t h e r a d j u s t i n g t h e b u d g e t e s t i m a t e s 23 o r c o r r e c t i n g t h e c a u s e o f t h e d i f f e r e n c e s . ” P e r h a p s t h e m o st i m p o r t a n t o b j e c t i v e o f b u d g e ta r y c o n t r o l i s i t s m o t i v a t i n g , c h e c k in g , a n d r e s t r a i n i n g i n f l u e n c e o v e r v a r i o u s a c t i v i t i e s . B u d g e ta r y c o n t r o l a s s i s t s t h e m anagem ent b e c a u s e i t p r o v i d e s a know ledge o f a known o b j e c t i v e , o f what i s c u r r e n t l y b e i n g a c c o m p lis h e d , or e x c e p t i o n s t o t h e e s t a b l i s h e d g o a l , and o f w hat m ig h t be done t o b r i n g a b o u t t h e d e s i r e d r e s u l t s . Prom t h e m a n a g e r i a l p o i n t o f v ie w , i t i s alw ays h e l p f u l t o h av e a y a r d s t i c k o r b a s i s t o w h ich a c h ie v e m e n t can be c o m p a red . B u d g e ta ry c o n t r o l p r o v i d e s a m a n a g e r i a l y a r d s t i c k , f o r i t s e t s up a t a r g e t t o compare e x p e n d i t u r e s jor l e v e l s o f o p e r a t i o n s a g a i n s t c o r r e s p o n d i n g e s t i m a t e s . i jV a ria n c e s c a n be n o t e d , and d e c i s i o n s made t o d e te r m in e jwhat a c t i o n i s n e c e s s a r y . I f t h e a c t u a l o p e r a t i o n s a re jabove e s t i m a t e s , ways and means o f im provem ent an d more e c o n o m ic a l u s e o f m a t e r i a l , l a b o r , and m a c h in e s m ig h t be i n o r d e r . I n c o n t r a s t , i f o p e r a t i o n s a r e b e lo w e s t i m a t e , t h e j e s ti m a t e m ig h t be r e d u c e d o r e f f o r t t o r a i s e t h e a c t u a l t o 1 2k ;th e e s t i m a t e m ig h t be u n d e r t a k e n . ^ - 23 - T e r r y , o£. c i t . , p . 3 7 0 , ^ T b i d . . p . 37 2. | m I ! In sh o r t, th e Im portance o f th e c o n tr ib u tio n th a t I I I c o s t i n g and b u d g e ta r y c o n t r o l c an make t o t h e e f f i c i e n c y o f Imanagement h a s b e e n r e c o g n i z e d by m anagem ent o f m o st f a c - J j t o r i e s . I t i s n e c e s s a r y t h a t c o s t s be compared a t r e g u la r in t e r v a ls not m erely w ith th e p a st but w ith budget f o r e c a s t s b a sed upon sta n d a rd s o f perform an ce. Such com pari son s show up f a i l i n g s and sh o rtco m in g s, su g g e s t a c t io n th a t may be ta k e n t o c o r r e c t them, and a ffo r d im portant guidance! • |in p la n n in g fo r th e f u t u r e . C o stin g and b u d g eta ry c o n tr o l j I : jmay a l s o f a c i l i t a t e th e d e le g a tio n o f a u th o r ity and r e sp o n -j i s i b i l i t y . Top management sh o u ld make u se o f stan d ard s o f I perform ance and o f a c c o u n tin g c o n tr o l te c h n iq u e s to en a b le ! i t to d e c e n tr a liz e r e s p o n s i b i l i t y , and th a t a l l stan d ard s o f perform ance sh o u ld be a g reed w ith th o s e who are to work them. IV. SIMPLIFICATION, STANDARDIZATION, AND SPECIALIZATION i Methods improvement i s a permanent o b je c t iv e in a l l i i 1 m a n u fa ctu rin g o r g a n iz a tio n s . There are d if f e r e n c e s , how- jever, in th e e f f o r t put in t o th e se a r c h f o r im proved methods, ,in th e assignm en t o f work to d if f e r e n t d ep artm en ts, and in j th e k in d s o f improvement p o s s i b i l i t i e s which r e c e iv e th e m ost a t t e n t io n . M anufacturing m ethods are g e n e r a lly con s id e r e d t o be im proved i f th e u n it c o s t s o f th e prod uct are redu ced or i f th e q u a lit y i s improved a t no e x tr a c o s t . Shower u n i t c o a t s o r q u a l i t y im provem ents c an come from t h e i n c r e a s e d u s e o f m a c h in e s , b e t t e r d e s i g n o f m a c h in e s , r e - i Id esig n o f t h e p r o d u c t , c o m b in a tio n o r e l i m i n a t i o n o f o p e r a - t I t i o n and r e d u c t i o n o f t h e human work r e q u i r e d i n o p e ra tio n s .! The sc o p e f o r t a k i n g a d v a n ta g e o f t h e s e e co n o m ie s, o f c o u r s e , w i l l d epend i n l a r g e m ea su re u p o n t h e s i z e and j n a t u r e of t h e m a r k e t, and any a c t i o n t h a t c a n be t a k e n t o j e n l a r g e t h e m a rk e t and t o r e d u c e t h e v a r i e t y demanded w i l l ! ih e lp . But w i t h i n any g iv e n m a rk e t s i t u a t i o n i t may s t i l l ; !be t r u e t h a t o p p o r t u n i t i e s f o r s i m p l i f i c a t i o n , s t a n d a r d i z a - i i t i o n , and s p e c i a l i z a t i o n a r e n o t b e i n g f u l l y e x p l o i t e d . ^ The te r m s s i m p l i f i c a t i o n , s t a n d a r d i z a t i o n , and s p e c i a l i z a t i o n a r e o f t e n u s e d t o mean much t h e same t h i n g ; a l t h o u g h d i s t i n c t , t h e t h r e e c o n c e p ts a r e i n f a c t c l o s e l y r e l a t e d . Work s i m p l i f i c a t i o n i s a t e c h n i q u e f o r f i n d i n g t h e m ost e c o n o m ic a l u s e o f human e f f o r t , m a t e r i a l s , m a c h in e s , t i m e s , and s p a c e so t h a t e a s i e r and b e t t e r ways i j jof d o in g work c a n be em ployed. S p e c i a l i z a t i o n d e n o te s t h e c o n c e n t r a t i o n o f a f a c t o r y o r p r o d u c t i o n u n i t on a v e r y n a rro w r a n g e of p r o d u c t s . S t a n d a r d i z a t i o n i s t h e e s t a b - t ;lish m e n t and u s e o f d e f i n i t e s i z e , t y p e s , s t y l e s , m e a su re s 1 I i b a s e d on s t a n d a r d s . I t p r o v i d e s d e f i n i t e p a t t e r n s f o r [ ( o p e r a tio n s a n d p e rf o r m a n c e s w hich c o n t r i b u t e t o e f f i c i e n c y ! I : I ----------------------------------- S i pq ^ T e r r y , o p . c i t . , p . 5 6 1 . i Uj.6 26 and e x p e d ite c o n t r o lli n g . W e sh ou ld have in mind t h a t s ta n d a r d iz a tio n does n ot c r e a t e , nor i s i t in ten d ed t o be a c r e a t iv e d e v ic e o f m anagers. I t h e lp s t o make permanent 1 l th e program a ch ie v e d by o th e r te c h n iq u e s in th a t th e b e s t ' and th e m ost p r a c t ic a l i s made known and u t i l i z e d . j Many o f th e d i f f i c u l t i e s o f ta k in g advantage o f th e ! " i econom ies o f s im p lif ic a t io n , s ta n d a r d iz a tio n and s p e c i a l i - | 1 z a tio n a r is e from th e f a c t t h a t consum ers w ant, or are b e - ; 1 lie v e d t o w ant, v a r i e t y . A fir m w hich c o n c e n tr a te s on th e ! !p ro d u ctio n o f one product or a narrow range o f p ro d u cts to , ! ! [the e x c lu s io n o f a l l e l s e , and whose equipm ent i s d e sig n ed ! i ! [fo r t h is s o le p u rp ose, may purchase t e c h n ic a l e f f i c i e n c y a t; 1 jthe c o s t o f l o s s o f f l e x i b i l i t y and a d a p t a b ilit y t o changes in t a s t e s or market c o n d itio n s . A p ro d u c tio n p o lic y th a t would g iv e th e b e s t r e s u l t s in a p e r f e c t l y s t a b le and a s su red m arket may n ot g iv e th e b e s t r e s u l t s in th e c o n d i t io n s o f u n c e r ta in ty a c t u a lly p r e v a ilin g . i | Much depends upon th e n a tu re o f th e product co n - 1 jcerned and on th e demand f o r i t . For many g o o d s, e s p e c i a l l y consumers* good s, th e r e are e x c e ll e n t r e a so n s f o r demanding wide v a r i e t y . However, i t sh o u ld be remembered f i r s t t h a t , e s p e c ia ll y in la r g e n a tio n a l m arket, s p e c i a l i - ! R a tio n and s ta n d a r d iz a tio n in p r o d u c tio n are n ot incom pat- 26 I b i d . , p . 3 1 1 ; A l f o r d a n d B e a t t y , o p . c i t . , pp, ,2i|.2 - 2 ^ 3 . j ib le w ith th e m ainten an ce o f a w ide v a r i e t y f o r consum ers, ■for d if f e r e n t u n d erta k in g s may s p e c i a l i z e in th e p ro d u ctio n o f d if f e r e n t v a r i e t i e s . Second, a s in g le u n d erta k in g , even w ith o u t narrow ing th e ran ge o f i t s en d -p ro d u c ts, may y e t fin d scop e fo r c o n s id e r a b ly in c r e a se d s im p lif ic a t io n and s ta n d a r d iz a tio n o f com ponents, equipm ent, and p r o c e s s e s . T h ird , p rod u cers m ight o fte n f in d i t w orth w h ile t o d evote s p e c ia l s a le s e f f o r t s t o persuade custom ers n ot m erely to buy more but a ls o to c o n c e n tr a te t h e i r demand on a narrow er i p7 orange o f p r o d u c ts. ' | D esign T e ch n ica l problem s o f d e s ig n , which vary enorm ously from one branch o f in d u str y t o a n o th er, are o u ts id e th e scope o f t h i s p ap er, but i t sh o u ld be m en tion ed th a t de s ig n e r s may make an im portant c o n tr ib u tio n to h ig h e r pro d u c t i v i t y . | The d e s ig n e r s are o fte n in c lin e d t o f e e l th a t once a d e sig n has b een a c c e p te d t h e ir o n ly r e c o u r se i s t o p la n i t s im anufacture in th e m ost econ om ical way. D esig n s are not perm anent; th e y can be changed, and i f improvement i s th e r e s u l t and th e a c t i v i t y o f th e job i s s i g n i f i c a n t , th en th e change sh o u ld be made. ! —— — — —— ———— — —— ——— --------------------------------- 27 ; H igher P r o d u c tiv ity in M anufacturing I n d u s t r ie s , op. c i t . , p . 9 0 . To im prove t h e d e s i g n , t h e a n a l y s t s h o u ld k eep i n m ind t h e f o l l o w i n g p o i n t s f o r l o w e r - c o s t .d e s i g n s : 1 . Reduce th e number o f p a r t s , t h u s s i m p l i f y i n g t h e d e s i g n . 2. Reduce t h e number o f o p e r a t i o n s and l e n g t h o f t r a v e l i n m a n u f a c t u r i n g by j o i n i n g p a r t s b e t t e r a n d m aking t h e m a c h in in g and a sse m b ly e a s i e r . 3 . U t i l i z e a b e t t e r m a t e r i a l . i 4 . R ely f o r a c c u r a c y upo n k e y o p e r a t i o n s r a t h e r ! 28 ith a n upon s e r i e s o f c l o s e l y h e l d l i m i t s . 1 ( I t i s a l s o i m p o r t a n t t h a t d e s i g n and p l a n n i n g s t a f f s h o u ld be k e p t in fo rm e d o f th e c o s t o f t h e v a r i o u s e q u i p ment an d m a t e r i a l s u s e d , s o t h a t t h e y may be b e t t e r a b l e t o I jd e v is e t h e m ost e c o n o m ic a l m eth o d s and t o o l d e s i g n s . I Work s t u d y I ! Work s t u d y i n c l u d e s two co m p lem e n ta ry t e c h n i q u e s , n a m e ly : (a ) m ethod s t u d y ; and (b) work m e a su re m e n t. B o th I t e c h n i q u e s can .make im p o r ta n t c o n t r i b u t i o n s t o h i g h e r p r o - j d u c t i v i t y . M ethod s t u d y c a n l e a d t o im provem ents i n , tt h e l a y o u t o f f a c t o r i e s and w o r k p la c e s and i n t h e d e s i g n o f E q u ip m e n t, t o a b e t t e r w o rk in g e n v iro n m e n t, s i m p l i f i c a t i o n o f work and r e d u c t i o n i n f a t i g u e , a n d c a n r e s u l t i n b e t t e r 1 • 28 B e n ja m in W. N i e b e l , M o tio n and Time S tu d y (Home- ;wood, 1 1 1 .: R ic h a r d D. I r w i n , I n c . , 195>5l, PP» 2 1 -2 2 . U t i l i z a t i o n o f m a t e r i a l s , e q u ip m e n t, and m anpower. Work m ea su re m e n t, on t h e o t h e r han d , c an l e a d t o im p ro v e p l a n n i n g an d c o n t r o l o f p r o d u c t i o n and t o m ore e f f i - i . c i e n t m anning o f p l a n t ; c a n p r o v i d e i n d i c e s o f l a b o r p e r - I fo rm a n c e ; and c an s e r v e as a b a s i s f o r c o n t r o l o f l a b o r c o s t s an d , i n a p p r o p r i a t e c o n d i t i o n s , f o r s y s te m s o f p a y ment by r e s u l t s . Thorough work stu d y may be a somewhat c o s t l y m a tter, jand m anu factu rers may n ot be co n v in ced th a t th e r e s u lt s w i l l j u s t i f y th e o u tla y . I t cannot be claim ed th a t th e I t e c h n i c a l p ro b le m s e n c o u n t e r e d i n work s t u d y , and e s p e c i a l l y i n work m e a su re m e n t, h av e a l l b e e n s a t i s f a c t o r i l y i Js o lv e d . Time s t u d y I s t h e m ost s a t i s f a c t o r y m eth o d o f work I jm easurem ent, b u t e v en tim e s tu d y i s by no m eans a p e r f e c t l y j o b j e c t i v e t e c h n iq u e f o r m e a s u r in g t h e work c o n t e n t o f a jo b jThere are s u b j e c t iv e elem en ts in th e r a t in g o f in d iv id u a l i .w orkers and a l s o i n t h e f a t i g u e and o t h e r a llo w a n c e s i n c l u d e d i n t h e s t a n d a r d t i m e . Two d i f f e r e n t tim e s tu d y e n g i n e e r s may r e a c h d i f f e r e n t r e s u l t s on t h e b a s i s o f t h e j o b s e r v a t i o n o f i d e n t i c a l w o rk e rs u n d e r i d e n t i c a l c o n d i t i o n s . ^ ; ^ H ig h e r P r o d u c t i v i t y i n M a n u f a c tu r in g I n d u s t r i e s , ■ o n . c i t . , p p . 92 -§ C ; D. B. K irk. nI n c r e a s e d E f f i c i e n c y T h ro u g h P r o d u c t i o n P l a n n i n g , " A dvanced M anagement, V ol. X V III, No. k ( A p r i l , 1 9 5 3 ), p p . 2 5 -2 6 . Standards W ebster d e fin e s a stan d ard by th e sim p le d e s c r ip tio n o f "An a cc ep te d or e s t a b lis h e d r u le by a u th o r ity fo r th e m easure o f q u a n tity , w eig h t, e x t e n t , v a lu e , or q u a lit y ." A more com p lete and u s e f u l d e f i n i t i o n o f stan d ard fo r our purpose here may be th ou gh t o f "as an e s t a b lis h e d m easure, ! ! i som ething to s t r i v e tow ard, a model f o r com parison, a meansj | by which one th in g may be compared w ith a n o th er. » ! Standards are w e ll a cc ep te d by m ost b u s in e s s ex ecu - I ,'tiv e s as e s s e n t i a l fo r th e a d m in is tr a tio n o f any in d u s t r ia l; j | o r g a n iz a tio n . T here i s , how ever, no g e n e r a l agreem ent on j < ; i what i s meant by th e term " sta n d a rd s," how b ro a d ly sta n d - j i ards are a p p lie d in a company*s o p e r a tio n s , or what t h e ir b a s ic s ig n if ic a n c e i s fo r a d m in is tr a tio n . j i Standards can be arranged a cc o rd in g t o t h e ir p o s i t io n in a s c a le ra n g in g from g e n e r a l t o s p e c i f i c , and can be c l a s s i f i e d in t o th e fo llo w in g p a ir s o f s u b c la s s e s , each 1 ip a ir o f which in c lu d e s a l l sta n d a rd s, (1 ) s u b s ta n tiv e and ; 1 p r o ce d u ra l, (2 ) o r a l and w r itte n , and (3 ) in tr a -a n d in t e r - j d ep a rtm en ta l. S u b sta n tiv e stan d ard s are w o rk -con ten t or j ! g o a l- o r ie n t e d , w h ile p ro ced u ra l sta n d a rd s are m ethods or ; - - i r e la t io n s h ip s - o r ie n t e d . In g e n e r a l, s u b s ta n tiv e stan d ard s \ OQ ! I J Howard C oonley. " I n te r n a tio n a l S ta n d a rd s," In d u s-i ■ t r i a l S ta n d a r d iz a tio n , V o l. X V III, No. 8 (A u gu st, 19U7), i p . 190; C ited by T erry, op. c l t . , p . 299. - j ! 151 j d e f i n e what i s t o be a c c o m p lis h e d w h ile p r o c e d u r a l s t a n d a r d s d e f i n e how i t i s t o b e a c c o m p lis h e d . | The n e e d f o r d i s t i n g u i s h i n g o r a l from w r i t t e n s t a n d a r d s i s o b v io u s , a l t h o u g h t h e d e c i s i o n t o u s e one o r t h e o t h e r i s f r e q u e n t l y v e r y d i f f i c u l t t o m ake. The d i s t i n c t i o n b e tw e e n i n t r a - a n d i n t e r - d e p a r t m e n t a l s t a n d a r d s i s , h o w ev er, r e l e v a n t i n a n a l y z i n g t h e o r g a n i z a t i o n o f s t a n d - 0 a r d s w o rk . ^ ' I ‘ jM a r k e tin g , P r i c e P o l i c y , an d S a le s m a n s h ip j The work o f many e n t e r p r i s e s i s h o t c o m p le te d u n t i l ' i ! |t h e p r o d u c t s and s e r v i c e s c r e a t e d o r t h e t i t l e t o t h e i r ; \ 1 1 I jo w n ersh ip i s t u r n e d o v e r t o t h e c o n su m er. M a r k e tin g i n - i » • } jc lu d e s t h o s e a c t i v i t i e s commonly r e f e r r e d t o a s " s e l l i n g ” t jor d i s t r i b u t i n g . I t c o n s i s t s o f t h e e f f o r t s t h a t a r e r e q u i r e d t o s a t i s f y b o t h t h e s e l l e r ' s n e e d s and t h e b u y e r ' s w a n ts . M a r k e tin g i s v e r y e x t e n s i v e ; i t a f f e c t s t o some d e g re e n e a r l y e v e r y e n t e r p r i s e and c o n c e rn s n e a r l y e v e ry p e r s o n . ^ j i i j I t h a s b e e n s a i d t h a t many o f t h e f a c t o r s a f f e c t i n g , j i i n d u s t r i a l p r o d u c t i v i t y a r e l a r g e l y i n f l u e n c e d by t h e s i z e and n a t u r e o f th e m a r k e t. T h is i s n o t t o s a y , how ever, | I | - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - j l - ^ D ic k s o n R eck. "The R ole o f Company S ta n d a r d s i n . ;I n d u s t r i a l A d m i n i s t r a t i o n , ” A dvanced M anagement, V ol. XIX, I |No. 4 ( A p r i l , 1 9 5 4 ), PP- 1 9 -£ 0 . | ^ ^ T e r r y , o p . c i t p. 6 0 6 . 152 th a t th e y are w h o lly determ ined by m arket f a c t o r s . Even in p r e v a ilin g m arket c o n d itio n s th e r e may be o p p o r tu n itie s fo r in c r e a s in g p r o d u c tiv ity by i n s t a l l i n g a d d itio n a l c a p it a l ! equipm ent, e n la r g in g th e s c a le o f o p e r a tio n s , m a in ta in in g j more r e g u la r work s c h e d u le s , or red u cin g th e v a r ie t y o f j I p r o d u c ts. j i I The s i z e o f th e market depends p a r t ly upon th e j i p r ic e s at w hich goods are s o ld . The h is t o r y o f au tom ob ile ' i ; i lin d u str y r e v e a ls an i l l u s t r a t i o n o f how, i f goods can be | ip la ced on th e m arket more ch ea p ly , new so u rc es o f demand i | J imay ap p ear, and o f how t h i s in tu r n may en a b le p ro d u ctio n 'to ta k e p la c e in g r e a te r volum e, w ith a tte n d a n t econom ies I j ' !due to g r e a te r m achine u t i l i z a t i o n , lo n g e r runs and more J j e f f e c t iv e u se o f la b o r . i The s i z e o f th e market f o r a firm or an in d u str y de pends not o n ly on p r ic e but a ls o on sa lesm a n sh ip ; and isalesm an sh ip and m ark etin g te c h n iq u e s u nd oub ted ly have a i v er y im portant p a rt t o p la y in in c r e a s in g p r o d u c t iv it y . ; | S a le s prom otion, in c lu d in g b o th p u b lic it y and a d v er-j t i s i n g , must be c o o r d in a te d w ith th e s a le s program o f th e J company i f i t i s t o be most e f f e c t i v e in a s s i s t i n g th e : |s a le s fo r c e in s e l l i n g th e p ro d u ct. The purpose o f pub- j j l i c i t y and a d v e r t is in g i s t o in c r e a s e th e a c c e p t a b ilit y o f i ^ H igher Produc t i v i t y in M anufacturing I n d u s tr ie s , .op. c i t . , p . 9 5 . 153 a company and i t s p r o d u c t by t h e p o t e n t i a l b u y e r and t o c r e a t e i n him a d e s i r e f o r t h e p r o d u c t . ^ 3k, A l f o r d and B e a t t y , op. c i t . , p . 26 8. f | CHAPTER V I I I PERSONNEL POLICY » The u ltim a te su c c e s s o f an in d u s t r ia l e n t e r p r is e de pends la r g e ly upon th e a b i l i t y o f th e le a d e r s t o secu re from th o se a s s o c ia t e d w ith th e u n d erta k in g , th e w illin g n e s s and d e s ir e t o g iv e t h e ir b e s t e f f o r t s in fu r th e r in g th e ob j e c t i v e s and id e a ls fo r w hich th e con cern has b een e s ta b - f li s h e d . The r e s p o n s i b i l i t y o f b u ild in g str o n g group m orale l i e s w ith each in d iv id u a l in a le a d e r s h ip p o s it io n . T hese in d iv id u a ls are a s s i s t e d in c a r r y in g out t h i s r e s p o n s i- i | b i l i t y by th e p e r so n n e l a d m in is tr a tio n group, com prised o f s p e c i a l i s t s in v a r io u s p h ases o f human r e l a t i o n s . In th e famous Hawthorne Experim ent c a r r ie d on by i Harvard U n iv e r s ity and th e W estern E le c t r ic Company a t th e jHawthorne P la n t i t was le a r n e d th a t an in d iv id u a l’ s produc t i v e e f f e c t iv e n e s s in c r e a s e s w ith an in c r e a s e in th e p e r - jso n a l s a t i s f a c t i o n d e r iv e d from th e work and work e n v ir o n - i jment ♦ i j M orale can be o b ta in ed o n ly by good le a d e r s h ip u s in g Jgood p er so n n el p o l i c i e s and p r a c t ic e s , w hich c r e a te in th e worker a f e e l i n g o f p e r s o n a l s a t i s f a c t i o n in h is work and a p le a sa n t p er so n a l r e la t io n s h ip among a l l th o se who are a s s o c ia te d in th e e n t e r p r is e . The r e s u lt in terra o f th e |worker i s en th u siasm about th e th in g s he and h is group are ja c c o m p lis h in g and a d e s i r e t o c o o p e r a t e w i t h a l l t h o s e w i t h whom he d e a l s . I n g e n e r a l i t may be s a i d t h a t p e r s o n n e l management ! I j i s s im p ly one p h a se o r a s p e c t o f t h e g e n e r a l f i e l d o f man- I ag em en t. I t d e a l s w i t h t h e e f f i c i e n t c o n t r o l of manpower, as d i s t i n g u i s h e d fro m th o s e p h a s e s w hich a r e c o n c e rn e d w ith o a l l o t h e r s o u r c e s o f pow er. A l f o r d d e f i n e s p e r s o n n e l a d m i n i s t r a t i o n "a code of |t h e ways o f o r g a n i z i n g and t r e a t i n g i n d i v i d u a l s a t work so ' I ' i I t h a t t h e y w i l l g e t t h e g r e a t e s t p o s s i b l e r e a l i z a t i o n o f j t h e i r i n t r i n s i c a b i l i t i e s , t h u s a t t a i n i n g maximum e f f i - j c i e n c y f o r t h e m s e lv e s an d t h e i r g ro u p , and t h e r e b y g i v i n g t o t h e e n t e r p r i s e o f w h ich t h e y a r e a p a r t , i t s d e te r m i n i n g c o m p e t i t i v e a d v a n ta g e and i t s optimum r e s u l t s . ”-^ | I f t h e p e r s o n n e l a d m i n i s t r a t i o n p ro g ra m i s aceom- i p l i s h i n g t h e d e s i r e d r e s u l t s , t h e w o rk er w i l l f e e l t h a t he j ! j i s a member o f t h e team , and n o t j u s t a s e r v a n t o f t h o s e onj I i ;th e tea m . The jo b t h a t he i s d o in g w i l l n o t o n ly e a r n him : Ja l i v i n g , b u t w i l l a l s o s a t i s f y h i s noneconom ic n e e d s by g i v i n g h i s l i f e m ean in g and h i s p e r s o n a l i t y d i g n i t y . ; j ! ■ *"L . P. A l f o r d and H. R. B e a t t y , P r i n c i p l e s o f I n d u s - ! I t r i a l Management (New Y ork: The R o n ald P r e s s C o ., 1 95l)> ! jpp. 6 3 ^ -6 3 6 . | i 2 ; D ale Y oder, P e r s o n n e l Management and I n d u s t r i a l Re- j l a t i o n s (New Y ork: P r e n t i c e - H a l l , I n c . , 19ij.2), p . if. ! O j ^ A lf o r d and B e a t t y , o p . c i t . , p . 636. 156 The p u r p o s e o f p e r s o n n e l a d m i n i s t r a t i o n m ig h t r e a s o n a b l y b e i n f e r r e d fro m i t s r e l a t i o n s h i p t o t h e g e n e r a l f i e l d o f m anagem ent, f o r t h e y a r i s e out of t h e o b v io u s p u r p o s e s ? i i o f m odern b u s i n e s s a d m i n i s t r a t i o n . The b a s i c p u r p o s e of j | a l l p e r s o n n e l management and a d m i n i s t r a t i o n i s t h a t o f s e - t c u r i n g maximum p r o d u c t i v e e f f i c i e n c y from th e manpower i n v o lv e d , and a l l o f i t s p r i n c i p l e s and p r a c t i c e s a r e b a s e d upo n t h a t fu n d a m e n ta l p u r p o s e . i i The w hole o f m odern i n d u s t r y i s som etim es r e f e r r e d ito a s b e i n g f u n c t i o n a l i z e d . E ach p a r t i c i p a n t and e a c h s p e - 1 ! I c i a l i z e d p a r t i c i p a t i n g g ro u p i n t h e p r o c e s s h a s a s p e c i a l - ! ; i z e d t a s k t o p e r f o r m . Owners sa v e fu n d s and i n v e s t them in : I | c a p i t a l g o o d s. M an ag ers, em ployed b y t h e ow ners, c o n t r o l , ! | | ' d i r e c t , and c o o r d i n a t e t h e a c t i v i t i e s o f t h e p r o d u c t i v e ; i 1 i p r o c e s s , b r i n g i n g t o g e t h e r f o r t h i s p u rp o s e t h e c a p i t a l j i 1 |s u p p l i e d b y ow ners an d t h e s e r v i c e s s u p p l i e d by w o r k e r s . ! ; i I I : I . LABOR MANAGEMENT COOPERATION | I j I t i s g e n e r a l l y a g r e e d t h a t e f f o r t s t o p ro m o te h i g h - l I j e r p r o d u c t i v i t y i n an u n d e r t a k i n g w i l l make l i t t l e headw ay | I : :w ith o u t t h e c o o p e r a t i o n o f w o r k e r s . V a rio u s s t e p s may be I ! jta k e n t o e s t a b l i s h su c h c o o p e r a t i o n . The l e a s t f a r - j r e a c h i n g o f t h e s e s t e p s i s t h a t w o rk e rs a n d t h e i r r e p r e - ; i | — ^Yoder, o£. c i t ., pp. 5 -7 . 1 5 7 s e n t a tiv e s should be given adequate in form ation about the firm and e s p e c ia ll y about any changes th a t th e management proposes to in trod u ce, and th a t the reason s f o r such changes should be ex p la in ed . A v a r ie ty o f media of com m unications are a v a ila b le , in clu d in g inform al p erson al con t a c t s , m eetin gs, c h a r ts, d isp la y p o s te r s , house m agazines, pamphlets and l e t t e r s . Many companies have found foremen and union r e p r e s e n ta tiv e s to be th e most e f f e c t i v e means of communication fo r most purposes, s in c e th ey can provide the! t ;l e a s t a r t i f i c i a l and the most inform al and p erson al chan n e ls . One-way communication, however, s u f f e r s from the disad vantages th a t in form ation provided i s not always under sto o d u n le s s i t i s d isc u sse d and m isunderstandings are c le a r e d up, and seco n d ly th a t the workers are m erely in formed of what i s goin g on without b ein g given any oppor t u n it y to form ulate view s and comments. Only in t h i s way 5 I can th e in d iv id u a l worker be made t o f e e l th a t he co u n ts. | Another form of worker p a r t ic ip a t io n t o which grow- j in g a tte n t io n has been given in r e ce n t years i s th a t work- [ I e r s ’ r e p r e s e n ta tiv e s may be given th e op p ortu n ity to j p a r t ic ip a t e in th e te c h n ic a l p r o c e sse s of tim e and m otion j study and r a te f i x i n g . The purpose of t h is c o n s u lta tio n cj ■ ^John M. P f if f n e r , The S u p erv isio n o f Personnel (New ;York« P r e n tic e -H a ll, I n c ., 1954)> PP» 263-25!;. 15> 8 i jis t o secu re f u l l r e c o g n itio n o f the importance of the human element in in d u stry , to make workers f e e l th a t th e y count as in d iv id u a ls and to g iv e them a g re a te r in t e r e s t in the gen eral op era tio n of t h e ir u nd ertak in g. C ooperation through com m ittees composed j o i n t l y of r e p r e s e n ta tiv e s from workers and management has had a con s id e r a b le e f f e c t in r e la t io n s between la b o r and management, p a r t ic u la r ly in th e r a ilr o a d and c lo th in g in d u s t r ie s . The jAmerican Management A s s o c ia tio n ’s Research Report in d ic a te s jthat t h is type of coop eration e x i s t s in other areas of in - j £ d u stry and seems to be bn the in c r e a s e . i There i s an area where th e immediate su p e rv iso r can |gain co o p eration by c o n su ltin g the a t t it u d e and sentim en ts i of th ose whom he s u p e r v is e s . T his i s the area where th e inform al d is c u s s io n of a su p e rv iso r in flu e n c e s group opin i o n . S u p ervisors should be on guard to see th a t th ey do ;not get in v o lv ed in o v e r -s u p e r v isio n . In order to expect co o p er a tio n , th e y should t r y t o m ain tain the maximum p os s i b l e area o f job freedom fo r each worker. The worker itakes great p rid e in th e p o s s e s s io n of more freedom and r e se n ts in te r fe r e n c e in th o se areas in which he co n sid ers ih im self ad eq u ately. ; S u p ervisors should c r ea te the sense of p a r t ic ip a t io n i I 6 I b i d . , p . 26k. ; 159 through t h e ir manner of d ir e c t in g and g iv in g o rd ers. In ste a d o f g iv in g an a r b itr a r y order, th e c le v e r su p erv iso r w ill perm it th e worker t o su ggest th e obvious procedure. People w i l l agree t o t h e ir own id eas whereas th e y may r e - i 7 s i s t th o se of o th e r s, p a r t ic u la r ly of th o se in a u t h o r i t y .' I t i s not only th e part of management th a t th e r ig h t s p i r i t i s im portant. T his s p i r i t w i l l be la c k in g u n le ss i (workers who p a r t ic ip a t e in jo in t machinery combine a stro n g l (sense of r e s p o n s i b il it y towards th o se whom they rep resen t t t •with a regard fo r th e w e ll-b e in g o f the esta b lish m en t in ;which they work. I I . EM PLO YM ENT SERVICES AND POLICIES | The p erson n el movement had i t s s t a r t during th e f i r s t World War, when m aintenance of th e lab or fo r c e becam e1 ja major problem. The need fo r b e t te r s e le c t io n tech n iq u es ;was re co g n ized p rio r t o th is' time by T aylor, and th e impor-j jtance o f human r e la t io n s in management by Grant. However, j I 1 ! J I the estab lish m en t o f s t a f f departments t o a s s i s t l i n e e x - , I j e c u t i v e s w i t h p e r s o n n e l work d id n o t d e v e lo p u n t i l t h e i (s h o r ta g e o f s k i l l e d l a b o r f o r c e d i n d u s t r y t o o r g a n i z e j e s p e c ia ll y to handle t h i s problem. Employment departments j ! | (were s e t up in many p la n ts , and p s y c h o lo g is ts began to ex- i 7Ibid., p . 269. | 16 d i j p e rim e n t w ith a p t i t u d e t e s t s i n an a t t e m p t t o im prove s e l e c t i o n t e c h n i q u e s . T hese d e p a r tm e n ts w ere f r e q u e n tly - c a l l e d p e r s o n n e l d e p a r t m e n t s , a l t h o u g h t h e i r a c t i v i t i e s l w ere l i m i t e d l a r g e l y t o t h e m a in te n a n c e o f t h e l a b o r f o r c e . | i B ecau se o f t h e h i g h c o s t o f workmen*s c o m p e n s a tio n 1 I ! c h a r g e s , th e n e e d became a p p a r e n t f o r p h y s i c a l e x a m in a tio n s , p r i o r t o em ploym ent a n d prom pt m e d ic a l s e r v i c e f o r t h e i n - i j u r e d . I n l a r g e p l a n t s , m e d ic a l d e p a r tm e n ts w ere e s t a b l i s h e d and w ere o f t e n a t t a c h e d t o t h e employment d e p a r t - ] i i m e n t. As t h e g a in s p o s s i b l e th ro u g h a w e l l o r g a n i z e d J s a f e t y p ro g ram became a p p a r e n t , many co m p an ies ad ded t h i s ; I f u n c t i o n t o t h e i r p e r s o n n e l d e p a r tm e n t. The n e e d f o r s p e - ’ ‘ i c i a l i s t s i n l a b o r r e l a t i o n s and wage an d s a l a r y a d m i n i s t r a - . i O t i o n d i d n o t d e v e lo p u n t i l t h e e a r l y t h i r t i e s . ! i ! A c c o r d in g t o A l f o r d , "Employment i s t h a t d i v i s i o n o f p e r s o n n e l a c t i v i t i e s w hich i s c o n c e rn e d w i t h r e c r u i t i n g , Q | s e l e c t i o n , h i r i n g , and p la c e m e n t o f w o r k e r s . " In some o r g a n i z a t i o n s , t r a n s f e r s , p ro m o tio n , and d i s c h a r g e a r e added t o t h e d u t i e s o f t h e employment d e p a r tm e n t. Some com panies a l s o c e n t e r i n d u s t r i a l r e l a t i o n s a c t i v i t i e s i n t h e employ ment d e p a rtm e n t, t h e h e a d o f w h ich t h e n f u n c t i o n s s u b s t a n t i a l l y a s i n d u s t r i a l r e l a t i o n s m a n a g er. 8 A l f o r d and B e a t t y , o p . c i t . , p . 710 . ^ A lf o r d and B angs, o£. c i t . , p . 151{.6. S e l e c t i o n and P la c e m e n t S e le c tio n r e fe r s to th e "n egative p r a c tic e of e lim i n a tin g from among a l l the can d id ates con sid ered f o r pos s i b l e employment th o se who appear unprom ising. I t in v o lv e s making a d e c is io n as to which of a number of can d id ates fo r 10 'p o s it io n s are to be given an op portu nity t o work." : I i I < Placem ent, as the term i s used in con n ection w ith s e le c t io n , r e f e r s to th e "determ ination of the in d iv id u a l p o s it io n to | which an accep ted candidate i s t o be a ssig n e d . I t i s the { f J p ro cess of a llo c a t in g newly s e le c te d employees t o t h e ir i t ! ta sk s and r e s p o n s i b i l i t i e s in the b u sin e ss o r g a n iz a tio n . i ; The co n scien ce of s o c ie t y w i l l In c r e a sin g ly demand t th a t peop le be provided w ith and p laced in occup ations , s u it a b le to t h e i r variou s s k i l l s and a p titu d e s . I f a p er- : son i s t o do h is b est work and t o r e c e iv e th e f u l l e s t s a t i s f a c t io n from h is job, i t i s c l e a r l y im portant th a t he , should be employed on work fo r which he i s p h y s ic a lly and , p s y c h o lo g ic a lly s u it e d , and th a t he should f i t in w ith th e group w ith which he works. V ocation al guidance or employment c o u n s e llin g ap- ' proaches t h i s problem from th e p oin t of view of th e in d i v id u a l, and asks what jobs he is b e st s u ite d f o r . Improved ^ °Y o d er, o£. c i t . , p . lj?9. ■*"^Loc. c i t . 162 tech n iq u es fo r th e s e l e c t i o n and placement of p ersonn el i approach the same problem from the p o in t of view of th e j < j job, th e aim b ein g t o f in d persons s u ite d t o i t s r e q u ir e - | I ■ j jm ents. Such tech n iq u es may not only save employers money ; 1 I I by h e lp in g to avoid p la c in g persons in work fo r which th ey J I ( i i are not s u ite d but may a ls o supplement v o c a tio n a l guidance j s e r v ic e s in d isc o v e r in g a p titu d e s and t a le n t s in in d iv id u - i l 1 ? i !a ls which might oth erw ise have remained u nrecogn ized . i ! : In sh o r t, i t can be s a id th a t management i s in cr ea s-i I !in g ly r e c e p tiv e t o the u se of Improved tech n iq u es f o r s e - ! i l e c t i o n and placem ent. D i f f i c u l t i e s encountered on th e part of management appear to a r is e la r g e ly from la c k o f s u it a b ly q u a lif ie d p erson n el and la c k of f a c i l i t i e s fo r » l ap plyin g t e s t s . These d i f f i c u l t i e s are n a tu r a lly more in I : j sm all fir m s. 1 I Employment P o lic ie s i I f workers are t o cooperate in measures t o r a is e p r o d u c tiv ity It i s e s s e n t i a l th a t th e y should have c o n f i dence th a t ev e ry th in g p o s s ib le i s b ein g done t o prevent the r i s e o f unemployment. A ction to m aintain a h igh gen eral i l e v e l of employment i s p rim a rily a r e s p o n s i b i l i t y of government. The government should p r o te c t th e l i v i n g standards of workers unemployed between jobs but the g ran t- ^ 2P f i f f n e r , op. c i t . , p p . 275 -2 7 7 . 163! •in g o f severance pay by in d iv id u a l firm s may make an im- ,portant c o n tr ib u tio n to t h is end. Some in d u s tr ie s have :e s ta b lis h e d funds fo r the r e l i e f o f workers who lo s e t h e ir I jobs as a r e s u lt of te c h n o lo g ic a l improvements. 1 t The problem of m ain tain in g th e l e v e l o f employment | i in an undertaking in which an in c r e a se in labor produc- i , 1 i j i t i v i t y has made i t p o s s ib le t o produce the same output withj a sm aller lab or fo r c e i s not m erely a m atter of p ersonn el 'p o lic y . It c a l l s fo r u n ited e f f o r t s on th e part of a l l or most departments in the undertaking. I f employment i s to ,be m aintained, s a le s must be expanded and th e s a le s d e p a r t-1 raent, t h e r e fo r e , has an important r o l e to p la y . B esid es more vigorou s s a le s e f f o r t s , p r ic e r e d u ctio n s may be n eces-: sa ry , and the d esig n , production and other departments may , i 1 be c a lle d upon to make s p e c ia l e f f o r t s to reduce c o s t s . I t i s d e s ir a b le th a t advance n o tic e be given t o workers and t h e ir r e p r e s e n ta tiv e s of expected d isp lacem ents of la b o r . The problem of absorbing d isp la c e d workers can o fte n be g r e a tly eased i f such n o t if ic a t io n can be given some tim e in advance. T h is, of cou rse, i s p o s s ib le only i f the changes r e s u lt in g in the displacem ent of la b o r are th em selves planned ad eq u ately in advance. A lon g p erio d of n o tic e en ab les th e workers a f fe c t e d t o make p lans fo r t h e ir fu tu r e ; i t en ab les the union t o gauge the e f f e c t of th e new p ro cess or machines on i t s members, in terms not only of I " 164 I employment but of workload, ea rn in g s, s e c u r it y adjustm ents, p h y sic a l co n d itio n s of work and th e lik e and a ls o en ab les the government a g en cies concerned, p a r t ic u la r ly th e employ- |ment s e r v ic e , to tak e a c tio n t o cou n teract in d iv id u a l unem- ip lo y m e n t.^ ! I | I I I . TRAINING i j T rain ing of employees i s one of th e most w id ely r e c - j ognized fu n c tio n s of modern in d u stry . T rain ing i s a con tin u in g p r o c e ss. New employees must fr e q u e n tly be tr a in e d ' .f o r th e s p e c i f i c jobs th e y are t o perform . E xperienced era-' p lo y ee s req u ire tr a in in g t o f i t them selves f o r more respon s i b l e and d i f f i c u l t p o s it io n s w ith more money and to pre- i I pare them fo r te c h n o lo g ic a l changes. Employees may be | i i i g iven t r a in in g t o improve t h e ir performance in the jobs they f i l l at p r e s e n t. S u p ervisors may be given a wide range o f tr a in in g o p p o r tu n itie s, based on in c r e a sin g reco g n it i o n of th e need fo r g re a te r competence in s u p e r v i s i o n .^ T rain in g has many o b je c t iv e s , a l l of which may be r e f l e c t e d in statem en ts of p o lic y on t r a in in g . I t h elp s employees in se lf-d ev elo p m en t, t o improve job performance, •^Higher P r o d u c tiv ity in M anufacturing I n d u s t r ie s , op. c i t . , p p . 1 1 0- 1 1 6. "1 ✓ ^ D a le Yoder, Personnel P r in c ip le s and P o lic ie s {New York: P r e n tic e -H a ll, I n c ., 19i?2),'"pl 2 1 7 . 165 t o reduce w aste, t o prevent ab sen teeism and t a r d in e s s , to reduce c o s ts of su p e r v isio n and overhead, t o Improve super v is io n and a d m in istra tio n , and to a s s i s t in making fo r e f - 15 f e c t i v e teamwork. v I A h ig h ly p rod u ctive economy i s a dynamic economy; it; ' I (responds r a p id ly and e f f i c i e n t l y t o changes in demand and ! 1 I : in co n d itio n s of supply, and promptly in co rp o ra tes new and j improved tech n iq u es of p rod u ction . I t fo llo w s th a t empha s i s should be p laced in v o c a tio n a l t r a in in g on a d a p ta b ility 1 i and v e r s a t i l i t y . V ocation al t r a in in g requirem ents fo r i i ; |in d u s tr y Include tr a in in g fo r h ig h er management; tr a in in g I of s c i e n t i s t s , en g in eers and te c h n ic ia n s ; t r a in in g of su p e r v iso r s; t r a in in g fo r s k i l l e d workers; t r a in in g fo r I I o p e r a tiv e s; and in d u ctio n course f o r a l l c a te g o r ie s o f new , , i I ;em ployees. Apart from normal tr a in in g requirem ents fo r a l l th ese c a te g o r ie s of persons th e re may a ls o be a need fo r s p e c ia l tr a in in g f o r s e le c t e d persons in tech n iq u es fo r 16 r a is in g p r o d u c tiv ity . In r e ce n t y ea r s, one type of s p e c ia l purpose course th a t has r e c e iv e d wide a t te n t io n and emphasis i s to ex p la in 'th e co m p etitiv e economic system . By showing employees how com p etition ten ds t o e f f e c t the most e f f i c i e n t a llo c a t io n 1^I b id . , p . 219. 1 Z L Higher P r o d u c tiv ity in M anufacturing I n d u s t r ie s , op. c i t . , p. 119. ! 166 and u t i l i z a t i o n o f r e so u r c e s, th e se courses seek to ex p la in |and j u s t i f y u su al b u sin e ss p r a c tic e in the U nited S ta te s and t o cou n teract propaganda fa v o rin g s o c i a l i s t i c or com- I m u n istic econom ies. Many managements have concluded th a t i {they must take th e i n i t i a t i v e in ex p la in in g elem entary 1 ;. I ip r in c ip le s o f econom ics, in clu d in g r e la t io n s h ip between | i ; lproduct p r ic e s , c o s t s , and wages and the reason s fo r in - ; j 'vestm ent, c a p it a l accum ulation, and p r o f it , t o su p erv iso rs 17 and r a n k -a n d -file em ployees. : I In t r a in in g th e employees one must r e c o g n iz e the j :wide range of in d iv id u a l d iffe r e n c e s in le a r n in g . Some p eople le a r n much more r a p id ly than o th e r s. Moreover, in d iv id u a ls show great d iffe r e n c e s in t h e ir le a r n in g speed as I a p p lied t o d iff e r e n t ty p es of le a r n in g . A ll t r a in in g pro- ; ! j ■ grams should make allow ances fo r t h is v a r i a b i l i t y . Job a n a ly ses and s p e c if ic a t io n s are of major importance in s e t - . ;tin g the o b je c tiv e s in t r a in in g . They in d ic a te what needs t o be lea rn ed , what knowledge and s k i l l may be req u ired on each job. T ra in in g should be geared to th e se needs as de fin e d in job d e s c r ip tio n s . Many t r a in in g programs are only p a r t i a l l y e f f e c t i v e •because p a r tic ip a n ts , e s p e c ia lly the t r a in e e s , have l i t t l e , m o tiv a tio n or in t e r e s t in them. T rainees must be encour- ■^Yoder, o£. c i t . , p. 22?. i 167 ! aged to reco g n ize th e s ig n if ic a n c e of such programs to t h e i r own p erson al in t e r e s t s . In p a rt, t h i s r e s u lt can be a tta in e d by p e r s o n a liz in g procedure in t r a in in g , by b rin g ing tr a in e e s in to d is c u s s io n , g e t t in g them t o s t a t e t h e ir i |problem s, making t h e ir p a r t ic ip a tio n a c tiv e ra th er than ! 'p a s s iv e . M otivation may a ls o be su p p lied by r e la t in g j 1 ' | t r a in in g to in cr ea se d com pensation or t o prom otion. ! i i I I IV. UPGRADING OP EM PLOYEES j I I f a worker i s t o do h is b e st work and t o be encour- i I aged to f i t h im self fo r more r e s p o n s i b il it y , i t i s impor- ' i ta n t th a t he should f e e l he has a f a i r chance o f prom otion., Most peop le undoubtedly agree th a t a b i l i t y should be th e b a s ic gauge fo r promotion but two main o b s ta c le s appear in ' I ap plyin g t h is a b i l i t y p r in c ip le . One i s the d i f f i c u l t y of ■ r e c o n c ilin g the claim s o f s e n io r it y and of a b i l i t y as !c r i t e r i a fo r promotion; and the other i s th e d i f f i c u l t y of , I | r e c o g n iz in g a b i l i t y . I f a b i l i t y were som ething which could be o b j e c t iv e ly determ ined, the case fo r s e n io r it y r u le s , by which trade unions o fte n make great is s u e , would be g r e a tly . weakened. As th in g s .are, such r u le s provide a safeguard ag a in st fa v o r itis m and the d i s s a t i s f a c t i o n and low erin g of p lan t morale which fa v o r itis m i s l i k e l y to e n t a i l . l 8 I b i d . , p . 229. The major disad vantages of s e n io r it y r u le s are th a t they may r e s u lt in th e promotion or upgrading of u n su ita b le workers and th at th ey may keep down am bitious and able I younger men. Often the a b i l i t y r e q u is it e fo r promotion can I ; |b e acquired through tr a in in g . The p r o v isio n of adequate 1 J tr a in in g f a c i l i t i e s i s th e r e fo r e a n ecessa ry part of a \ I | j sound p o lic y regard in g prom otion. Management should a ls o ' I ; have an agreed p o lic y of promotion which could be known to ; the em ployees, so th at each man can gauge the p o s s i b i l i t i e s i ; of promotion and could know what w i l l be req u ired of him if, he i s to be con sid ered for promotion to s p e c if ie d p o s i- , t i o n s . 3 -^ ^ Higher P r o d u c tiv ity in M anufacturing I n d u s t r ie s , ; op. c i t . , pp. 1 3 2 - 1 3 3 . ! CHAPTER IX SU M M A R Y AND CONCLUSIONS I . SU M M A R Y The term p r o d u c tiv ity in t h i s t h e s is has been used j I to mean the p r o d u c tiv ity of la b o r . T his does not mean, ! however, th a t th e d iffe r e n c e s in p r o d u c tiv ity as between \ i . i |v a r io u s esta b lish m en ts and in d u s tr ie s are due e n t ir e ly to j | { !d iffe r e n c e s in the amount o f e f f o r t s which workers put into, ;t h e ir works. This i s on ly one of the fa c t o r s determ ining i th e l e v e l of p r o d u c tiv ity in any in d u stry . Among fa c t o r s a f f e c t in g p r o d u c tiv ity a great d eal of importance has been s t r e s s e d t o th e amount o f c a p it a l equip- ■ ment per worker, the ex ten t to which advantage i s taken of ' t economies r e s u lt in g from s im p lif ic a t io n , sta n d a r d iz a tio n , and th e degree of u t i l i z a t i o n of c a p a c ity . A ll th e se th in g s are in flu e n c e d by the s i z e and nature of th e m a rk et,’ i but are not w holly determined, by market f a c t o r s . Even in p r e v a ilin g market co n d itio n s th e re may o fte n be opportu n i t i e s fo r in c r e a sin g p r o d u c tiv ity by i n s t a l l i n g a d d it io n a l1 c a p it a l equipment, reducing the v a r ie ty of p rod u cts. More im portant, perhaps, is the f a c t th a t no e n te r p r is in g e s ta b lish m en t i s conten t to take th e s i z e and nature of i t s mar ket as g iv e n . The e x te n t o f a market depends p a r tly upon p r ic e and p a r tly upon s a le s e f f o r t s . I f goods can be pro- duced by continuous p roduction methods and s o ld more cheap l y , new sou rces of demand may appear in th e market, j The q u a lity of management and a d m in istr a tio n a f f e c t s jp r o d u c tiv ity in a great number of d if f e r e n t ways. Progres-i ' s iv e management w i l l seek co n tin u o u sly not m erely to i n i t i - j ' ate but a ls o to improve upon tech n iq u es and i n s t a l l a t i o n s ! I i ;in u se elsew h ere. i Improved methods of h an d lin g m a te r ia ls appear to 1 jhold great p o s s i b i l i t i e s fo r in c r e a sin g p r o d u c tiv ity . ' ;M echanical h an d lin g i s a part o f th e s o lu tio n of the prob- ! lem of r a t io n a liz in g the h an d lin g of m a te r ia ls , as a ls o a r e 1 b u ild in g and p la n t la y o u t and the d esign of p rocess ma ch in ery . P r o d u c tiv ity i s a ls o a f fe c t e d by c e r ta in i n s t i t u t io n a l fa c to r s such as ta x a tio n , the degree o f com p etition , and the a v a i l a b i l i t y of c a p it a l and the s t a t e of c r e d it . F in a lly , p r o d u c tiv ity i s g r e a tly a ffe c t e d by th e a t tit u d e s of employers and workers towards t h e ir work and towards each o th e r. A u n ite d d eterm in ation to in cr ea se produc t i v i t y can be ach ieved on ly through th e f u l l e s t understand- : in g by employers and workers o f each oth ers p o in t of view and can be c a r r ie d in to e f f e c t only through th e c l o s e s t co op eration between them. I f higher p r o d u c tiv ity i s r e a lly d e sir e d , energy and r e c e p tiv e n e s s to new id ea s on th e part of management must be matched by a w illin g n e s s on the part o f w o rk ers t o a c c e p t new m ethods o f p r o d u c t i o n ev en i f th e y l e a d t o some d is p la c e m e n t of l a b o r . W o rk e rs' p a r t i c i p a t i o n i n a d r i v e t o i n c r e a s e p r o d u c t i v i t y i s n o t l i k e l y t o be e n - ; t h u s i a s t i c u n l e s s t h e y a r e t a k e n i n t o t h e c o n f id e n c e o f 1 I |m anagem ent r e g a r d i n g t h e r e a s o n s f o r and n a t u r e o f ch an g e s j i n m ethods o f p r o d u c t i o n , u n l e s s t h e y a r e a s s u r e d t o r e a - J f i s o n a b le s h a r e i n t h e g a in s from g r e a t e r p r o d u c t i v i t y , and i j | !u n l e s s a d e q u a te m e a su re s a r e t a k e n t o p r o t e c t t h e i n t e r e s t of d i s p l a c e d w o rk e rs and of w o rk e rs t h r e a t e n e d w ith d i s p la c e m e n t. i I I I . CONCLUSIONS The s t a t i s t i c a l s t u d y o f p r o d u c t i v i t y i s n o t as y e t f a r enough a d v an ced t o th ro w much l i g h t on t h e r e l a t i v e im-! : p o r ta n c e of t h e many d i f f e r e n t f a c t o r s w hich a l l a p p e a r t o ; h a v e some i n f l u e n c e on th e l e v e l of p r o d u c t i v i t y . More o v e r, f a c t o r s w hich a r e o f g r e a t im p o rta n c e i n some in d u s - r t r i e s m ig h t be l e s s im p o r ta n t i n o t h e r i n d u s t r i e s . In t h e b r o a d e s t s e n s e , t h e p ro b le m o f r a i s i n g p r o d u c t i v i t y i s th e p ro b lem o f m aking m ore e f f i c i e n t u s e o f r e s o u r c e s i n g e n e r a l and o f u s i n g them t o p ro d u c e a s much w e a l t h as p o s s i b l e a t t h e lo w e s t p o s s i b l e c o s t . H ig h e r p r o d u c t i v i t y p r o v i d e s o p p o r t u n i t i e s f o r r a i s i n g t h e g e n e r a l s t a n d a r d of l i v i n g . I t p r o v i d e s o p p o r t u n i t i e s f o r l a r g e r s u p p l i e s b o t h o f consum ers goods and o f c a p i t a l goods a t I 172 'lower c o s ts and lower p ric es* It in c r e a se s th e r e a l earn in g s and improves the working and l i v i n g c o n d itio n s, in c lu d in g sh o rter hours o f work and a stre n g th e n in g o f the |econom ical fou n d ation s o f human w e ll-b e in g . I P r o d u c tiv ity i s a ls o used throughout t h is t h e s is jto s i g n i f y the r a t io between output and input in a p la n t, I in d u str y , or an economy as a t h o le . This r a t io can be ex- i p ressed in terms o f d iffe r e n t input fa c t o r s such as la b o r, c a p it a l, or raw m a te r ia l. For s e v e r a l re a so n s, in c lu d in g g r e a te r a v a i l a b i l i t y of manpower data, lab or i s fr e q u e n tly ! iused as the denominator in t h is r a t i o . T his r a t io seems t o have much v alu e fo r p r a c t ic a l p u rp oses. But the chahges in p r o d u c tiv ity r e v e a le d by t h is r a t io may be in flu e n c e d by changes in m achinery, equipment, p la n t la y o u t, m a te r ia ls h an d lin g, p la n t o r g a n iz a tio n , and p erson n el p o l i c i e s as w ell as by changes in the q u a n tity and q u a lity o f la b o r . Higher p r o d u c tiv ity re q u ir es th e con certed e f f o r t s on th e part of members o f a l l groups engaged d ir e c t ly or in d ir e c t ly in p rod u ction . F u ll coop eration on the part o f a l l groups can be exp ected only in a s o c ie t y which a ccep ts p r in c ip le s o f s o c i a l j u s t i c e , and in which i t i s reco g n ized th a t th e fundamental purpose o f in d u stry i s to serve th e needs of s o c ie t y as a w hole. Primary r e s p o n s i b il it y fo r a c tio n to r a is e produc t i v i t y in any in d u stry r e s t s w ith management; and no e f f o r t t o in c r e a se p r o d u c t iv it y . can succeed w ithout good r e la tio n s . between management and th e workers concerned and th e ir r e p r e s e n t a tiv e s . Every e f f o r t should be made t o ach ieve a ' g re a te r degree of s im p lif ic a t io n , sta n d a r d iz a tio n , and i s p e c ia liz a t io n as th e se are of great importance in in c r e a s- i ' Iin g p r o d u c tiv ity . I i i Management should have c o n sta n tly in mind th e ques- : j i ■ t io n of whether the i n s t a l l a t i o n of new c a p it a l equipment \ i i s needed or whether s a t is f a c t o r y improvement can be e f f e c t e d by m o d ific a tio n of e x i s t i n g equipment. E f f ic ie n t | ih an d lin g of m a te r ia ls i s an important f a c to r in r a is in g l :p r o d u c tiv ity . Economies in t h is f i e l d may be achieved through c a r e fu l p la n t layou t and m echanization of han d lin g : t o the maximum degree p r a c tic a b le . S p e c ia l care should be i I devoted to th e m aintenance o f m achinery, emphasis b ein g , p laced on p rev e n tiv e m aintenance. In order to improve the a p p lic a tio n by e x e c u tiv e and su p erv iso ry s t a f f o f sound p o l i c i e s and e f f i c i e n t te c h niques concerning p ersonn el m atters w ith in an undertaking, management should co n sid er th e appointment of q u a lif ie d p ersonnel o f f ic e r s and, where the s iz e of the undertaking p erm its, th e o rg a n izin g of personnel departments or se r v i c e s . A tte n tio n should be g iven by management to improve methods used fo r s e le c t io n and placement o f members to en sure the most e f f e c t i v e u se of the s e r v ic e s of a l l members o'f the working fo r c e in th e esta b lish m en t. BIBLIOGRAPHY BIBLIOGRAPHY A. BOOKS lA lford, L. P ., and Bangs, J . R. ( e d s . ) . Production Hand- J book. New York; The Ronald P ress Company, l51|-6. j I A lfo rd , L. P ., and B e a tty , H. R. P r in c ip le s of I n d u s tr ia l ! Management. New York: The Ronald P ress Company, 1551• I |A spley, John C ., and Whitmore, Eugene ( e d s . ) . The Handbook j of I n d u s tr ia l R e la tio n s . Chicago: The Dart h e l l Corpo- r a tio n , P u b lis h e r s, 1958. 1 ;Barkin, Solomon. "Trade-Union A ttitu d e s and T heir E ffe c t 1 j Upon P r o d u c t iv it y ,” I n d u s tr ia l P r o d u c tiv ity . Cham p aign, I l l . s I n d u str ia l’ Research A s s o c ia tio n , 1951. B e th el, Lawrence L. In d u s tr ia l O rganization and Manage ment . New York; McGraw-Hill Book Company, I n c ., 1950. Brozen, Y ale. "Research, Technology, and P r o d u c tiv ity ,” ! I n d u s tr ia l P r o d u c tiv ity . Champaign, 1 1 1 .: I n d u s tr ia l Research! A s so c ia tio n , ,1951 • ! i ! ; D avis, Hiram S. "The Meaning and Measurement o f Produc- ; t i v i t y , " I n d u s tr ia l P r o d u c tiv ity . Champaign, 1 1 1 .: In d u s tr ia l Research A sso c ia tio n , 1951. P o lt s , F ran k lin E. In tro d u ctio n to I n d u s tr ia l Management. New York: McGraw-Hill Book' Company, I n c ., 195h* G agliardo, Domenico. American S o c ia l In su ran ce. New York: Harper and Brothers- ] ! 1955. Galenson, W alter. Labor P r o d u c tiv ity in S o v iet and American In d u stry . New York * Columbia U n iv e r s ity P r e ss, 1955. Gardner, B u rleig h B ., and Moore, David G. Human R ela tio n s in In d u stry . Homewood: Richard D. Irwin, I n c ., '1955. ' Ireso n , W illiam G. F actory Planning and Plant Layout. New York: Prent ic e -Hair," I n c . , 19527 Katz, D a n iel, and Kahn, Robert L. "Human O rganization and Worker M o tiv a tio n ," I n d u s tr ia l P r o d u c tiv ity . Cham p aign, 1 1 1 .: I n d u s tr ia l Research A s s o c ia tio n , 1951. 1761 Koepke, Charles A. P lan t Production C on trol. New Yorkj John W iley and Sons, In c . , Moore, F ran klin G. M anufacturing Management. Homewood: : Richard D. Irwin^ Inc.', 1955. (N ieb el, Benjamin V. Motion and Time Study. Homewood: ; Richard D. Irw in, I n c ., 1955^ t 1 Owens, Richard N. Management of I n d u s tr ia l E n te r p r is e s . Homewood: Richard d7 Irwin, In c .', 1953"• I .P etersen, Elmor, and Plowman, E. Grosvenor. B u sin ess Or- ! g a n iz a tio n and Management. Homewood: Richard D. Irw in ,i I n c ., 1955. P eterson , F lo re n c e. Survey of Labor Econom ics. New York* Harper and Brothers'^ I95T7 P f if f n e r , John M. The S u p ervision of P er so n n el. New York; P r e n tic e -H a ll, I n c ., 1954* Ryan, Thomas A. Work and E f f o r t . New York: The Ronald P ress Company,' t 9 k 7 • Ruch, Floyd L. Psychology and L i f e . New York: S c o tt, Foresman and Company, 19i+S. S lic h t e r , Sumner H. "Economic E ffe c t of C o lle c t iv e Bargain in g ," Labor Problems by George S ch u ltz and John R. Coleman. New York: McGraw-Hill Book Company, I n c ., 1953. S lic h t e r , Sumner H. The C hallenge o f I n d u s tr ia l R e la tio n s .' New York* C orn ell U n iv e r s ity P re ss, 15Ij.7. > Smith, Henry C. Psychology o f I n d u s tr ia l B eh avior. New York* McGraw-Hill Book Company, I n c ., 1955. Terry, George. P r in c ip le s o f Management. Homewood: Richard D. Irw in, Inc.",~ T 9 5li'. Thompson, Samuel. "Factors A ffe c tin g In te r -P la n t D if fe r ences in P r o d u c tiv ity ," In d u s tr ia l P r o d u c tiv ity . Cham paign: I n d u s tr ia l Research A s'sociation , 1951. T redgold, R. F. Human R ela tio n s in Modern In d u stry . New York; In te r n a tio n a l U n iv e r s itie s P ress, I n c ., 1950. j 177 [W itney, F r e d . Goyernment and C o l l e c t i v e B a r g a i n i n g . New j York: J . B. L i p p i n c o t t Company, 1951. !' /'Y o d e r , D a le . P e r s o n n e l P r i n c i p l e s and P o l i c i e s . New York: j P r e n t i c e - H a l l , I n c . , 1952. i Y oder, D a le . P e r s o n n e l Management and I n d u s t r i a l R e l a t i o n s New York: P r e n t i c e - H a l l , I n c . , 191+2. i jZweig, F . P r o d u c t i v i t y and T rad e U n io n s . O x fo rd : B r i c k e l l and Son, L t d . , 1951. B. PERIODICAL ARTICLES jBrouha, L ucien. "Measuring and Reducing F a tig u e ." Advanced j Management. V ol. XIX, No. 1 (January, 19 5k-)* Coonley, Howard. " In ter n a tio n a l S ta n d a rd s,” I n d u s tr ia l S ta n d a rd iza tio n . V ol. XVIII, No. 8 (August, 191+7-). G itlow , A. L. "Wages and th e A llo c a tio n of Employment," The Southern Economic Journ al, Vol. XXI, No. 1 (J u ly , T 952+ 7:-------- ----------------- -------- Kirk, D. B. "Increased E ff ic ie n c y Through Production Plan n in g ," Advanced Management, V ol. XVIII, No. k (A p ril, 1 9 5 3 ). K riesberg, M artin. "Procedure fo r Measuring Employee Pro d u c t iv it y ," Advanced Management, V ol. XVII, No. 8 (August, 195?) • Muther, Richard. "Managing th e Plant Layout F u n ction ," Advanced Management, V ol. XX, No. 1 + (A p r il, 1955). Reck, D ickson. "The Role of Company Standards in Indus t r i a l A d m in istr a tio n ;" Advanced Management, V ol. XIX, No. 1 + (A p r il, 1954)* ^Towsen, Samuel. "An Alphabet o f Morale B u ild in g ," Super v is io n , (May, 1 9 5 8 ). i C. PUBLICATIONS OP THE LEARNED SOCIETIES AND ORGANIZATIONS C o n g ress o f I n d u s t r i a l O r g a n i z a t i o n . M a i n t a i n i n g P r o s p e r i t y . R e p o rt by Committee on Economic P o l i c y W a sh in g to n , D. C . : D ep artm ent o f E d u c a tio n and R e s e a rc h o f C o n g ress o f I n d u s t r i a l O r g a n i z a t i o n , 195^}-. i [ I n t e r n a t i o n a l L ab o r O f f i c e . H ig h e r P r o d u c t i v i t y i n Manu- j f a c t u r i n g I n d u s t r i e s . G eneva: I n t e r n a t i o n a l L ab o r j O f f i c e , 195*1. j I I n t e r n a t i o n a l L ab or O r g a n i z a t i o n . F a c t o r s A f f e c t i n g P r o - I d u c t i v i t y i n t h e M e ta l T r a d e s . Geneva: I n t e r n a t i o n a l L ab o r O f f i c e , 1952^ i j I n t e r n a t i o n a l L abor O r g a n i z a t i o n . P r o d u c t i v i t y i n Coal M in e s... Geneva: I n t e r n a t i o n a l L ab o r O f f i c e , T^5T7 ! .N a t i o n a l A s s o c i a t i o n o f M a n u f a c t u r e r s . P r o d u c t i v i t y , G auge: I o f E conom ic P e r f o r m a n c e . E conom ic P o l i c y D i v i s i o n S e r i e s , No. 5 3 . New Y ork: P r e p a r e d by R e s e a r c h D e p a rt-: m en t, 1952. O r g a n i z a t i o n f o r E u ro p ean Economic C o o p e r a tio n . M e asu re ment o f P r o d u c t i v i t y . P a r i s : O r g a n i z a t i o n f o r E u ro p ean C o o p e r a tio n , 1952. j S t e i n e r , P e t e r , and G o ld n e r, W illia m . P r o d u c t i v i t y . B er k e l e y : I n s t i t u t e o f I n d u s t r i a l r e l a t i o n s , U n i v e r s i t y o f C a l i f o r n i a , 1952. D. NEWSPAPERS W e ste rn I n d u s t r y . M im eog raph ed Copy, O c to b e r , 1955. U n iv e rsity or t>eutnern California U M W

Linked assets

University of Southern California Dissertations and Theses

Conceptually similar

PDF

An analysis of the institutional economics of John Rogers Commons

PDF

Analysis of Air Force pricing in negotiated procurement

PDF

The economics of specialty restaurants with particular reference to Los Angeles

PDF

How to maximize the economic efforts of war in real terms

PDF

Federal credit union operation: A case study

PDF

Russian-expansion and state export of capital

PDF

Philippine import and exchange restrictions

PDF

British credit control, 1931-1950

PDF

An analysis of Iraqi government institutions for agriculture, industrial, and mortgage banking

PDF

Economic analysis of air cargo

PDF

Federal Reserve policy in World War II

PDF

International Bank for Reconstruction and Development and the Iraqi Development Board

PDF

State intervention in agriculture: The United States and Iraq

PDF

A comparative study of the administrative procedure of the Public Utilities Commission of the state of California

PDF

Exchange control methods evaluated

PDF

The role of Federal Trade Commission in regulating false and misleading advertising

PDF

An analysis of recent expert estimates of maximum world population at a minimum adequate standard of living

PDF

Determination of consumer demand by the American Music Conference

PDF

A survey of mediation techniques

PDF

The potential impact of the High Aswan Dam on the Egyptian agricultural and industrial economy

Asset Metadata

Creator Rad, Youssef (author)

Core Title Industrial productivity

Degree Master of Arts

Degree Program Economics

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag economics, general,OAI-PMH Harvest

Language English

Contributor Digitized by ProQuest (provenance)

Advisor Garis, Roy L. (committee chair), Hall, H. Lawrence (committee member), Phillips, E. Bryant (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c20-445125

Unique identifier UC11265454

Identifier EP44748.pdf (filename),usctheses-c20-445125 (legacy record id)

Legacy Identifier EP44748.pdf

Dmrecord 445125

Document Type Thesis

Rights Rad, Youssef

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA