The Human Element in Business
ONE reason why the Americans have gone ahead in business
methods and in industrial organization generally is that they take the subject far more seriously than we do, and are assisted by a very extensive technical and semi-technical literature with which we have little to compare. For every English business man who troubles to study in its larger aspects the occupation of his working day there are probably a hundred business men in America. We must therefore welcome the enterprise of Messrs. Ernest Benn in publishing two books which deserve to be widely read by employers and employed alike, and are valuable additions to a business library.
Mr. Henry Atkinson is well known to many factory managers as the technical expert who has done much to develop the Priestman general bonus system in Great Britain. But, although this system has greater potentialities than any other of restoring and maintaining good relations between employers and workmen, the public have probably never heard of it, and most industrialists would be unable to explain it in detail. Therefore, Mr. Atkinson has done well to describe the system at some length. The principle is simple enough. All the employees in a factory are given a bonus on their wages, corresponding to the percentage of increase in the total output of the factory over a fixed standard. Messrs. Priestman of Hull, the well-known makers of cranes and other lifting gear, hit upon the idea during the War, and applied it with great success. They adopted a standard based on tonnage. Any increase over that standard output was reflected in a general bonus, shared by all their employees. They found the system very easy to work, since it involved no alteration of trade-union rates, no change of organization, and very little calculation for the counting-house staff to do. Yet the effect on production was most remarkable. As soon as the workmen realized that they were going to benefit by increased production, the output went up ; everyone employed became ready to work harder, to reduce waste, and to suggest means of improving the organization. Workmen and employers co- operated heartily, and both parties benefited. Since then, the system has been applied in numerous other concerns of various kinds, and always with good results—provided that the standard has been properly adjusted with the consent of the workmen.
For the detailed particulars we must refer readers to Mr. Atkinson's very lucid pages. But it may be said that the relative labour-values of the various jobs in a factory are determined for a " schedule of point values." Then the total production during the standard period—preferably a normal year—is calculated in terms of " points." Next, the total number of skilled man-hours worked in the standard period is found, so that one may calculate the " standard points per man-hour," giving a constant by which to work out a schedule of " standard point values." The relative labour values of the several jobs can be readjusted if necessary. It is not easy to summarize the method in a few lines, but readers may accept our assurance that it presents little or no difficulty and that, when it is explained to them, workmen recognize its fairness. When once the standard is fixed, the percentage increase for each month (of four weeks) can be calculated in half an hour, and each employee receives the percentage bonus in cash. Mr. Atkinson contrasts the Priestman general bonus with the other methods of paying wages, whether by time or piece or the complicated and rather arbitrary forms of individual premium bonus, as well as with profit-sharing and co-partner- ship which look well on paper but seldom yield much in the way of money—and that only at long intervals. His comments on the jealousy often excited by highly skilled workmen who earn large premium bonuses or get high wages by piece-work are only too painfully emphasized by the recent case in the Midlands where 450 workmen went on strike because one of their fellows was earning a very high wage and their employers
refused to cut down his remuneration. In so far as the Friedman system avoids stirring up such horrible Fissions among workmen, it is to be commended. But it has very
many other advantages. Not only does it increase, and there- fore cheapen, production, but it introduces confidence and sympathy between employer and employed and banishes the suspicions that have done so much to hamper our industry of late years.
With these mental and moral elements Mr. Creedy is mainly concerned. He writes from a wide experience of business organization both here and in America, and yet he is an idealist, admiring Ruskin and fervently believing that somehow we might all work together in peace as we did during the War, for the good of the whole community. He is oppressed by the uncertainty of business and anxious to develop to the full the intelligence services which, though still rudimentary here, have been organized with care in America and are yielding good results. He laments the secrecy that prevails in business circles—secrecy which, as he suggests, usually defeats its own object. American manufacturers who publish their monthly figures of output have lost nothing but rather gained by doing so. The great American mail-order houses, like Montgomery Ward and Seers Roebuck, publish monthly the figures of their sales, yet they still advance in prosperity. Whether bargaining can ever disappear, as Mr. Creedy seems to think, is a nice question. But the secrecy that characterizes much of British business is absurdly over- done. Again, the author is justly grieved at the extreme difficulty of establishing a new enterprise. To estimate the demand beforehand is incredibly difficult ; to make the product known is extremely expensive. All this is true, but the remedy is not apparent.
Mr. Creedy's analysis of the average business man's mind is shrewd and penetrating. There is much sense in his parallel analysis of the young workman's mind ; baulked ambition accounts for much wild revolutionary passion. Mr. Creedy points out, too, that the current belief that all retailers are profiteers arises out of an equally widespread belief that the seller never tells the truth about his goods. Both beliefs are, of course, gross exaggerations, but they have to be reckoned with. Again, this uncomfortably frank author says that the average head of a business is isolated ; he can seldom get dispassionate advice from his subordinates, and he will not ask for it from his competitors in his own trade. Mr. Creedy calls for a complete change of outlook in the business man by asking him to regard himself as a servant of the community rather than as a mere amasser of wealth for himself. The book includes a good deal of what we may call amateur economics, which is hardly pertinent. But as a study of the average business man's attitude and of the need for higher ideals in business it is uncommonly interesting. We must, in parting, regret that Mr. Creedy has fathered on Wedgwood the famous anecdote of Palissy breaking up his furniture to feed his kiln. For, while Palissy as potter was but a brilliant amateur, Josiah Wedgwood not merely produced fine ware but also estab- lished a great industry which still endures. Wedgwood was, in fact, a very great man of business, competent, systematic, far-seeing—the very last man who would have used anything cxcept the right fuel to feed an experimental kiln.
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