The Policy Plus The Manager
BUSINESS AND INDUSTRY
BY GEORGE CARLING IN SYSTEM
How modern business methods downed old time prejudice and turned a deficit into a dividend.
FULL operating control?” Irritation tinged the president’s echo of the other’s question. To be catechised by a prospective employe—just in time he remembered his urgent need of this man to handle the factory.
“To be sure—to be sure, Mr. Worthley,” he promised blandly. “It has always been my policy to give the general manager a free hand.”
The passing show of temper was not lost on Worthley. It confirmed his friend Chambers' warning that John Burleigh had had his own way so long in the conduct of the Dupled pump works that no man could work with him and ' retain individuality or freedom of opinion. As director, Chambers was in touch—and admitted frankly that Burleigh, the majority stockholder, dictated its decisions to the board.
“With certain restrictions, that is,” the president amended aggressively ; “we are not yet on a dividend basis and I must insist that you incur no extra expense and purchase no new equipment without my approval.”
Worthley reflected. An expert in pumps, he knew that the Duplex works had been selling its full output at good prices. Inspection had shown the plant well arranged and in fair physical condition. Lack of money for dividends, therefore, must be due to faulty management. Given time these conditions could probably be corrected.
Ambition, the passion for achievement which puts work above pay,, prompted him to take hold of this waste-ridden business and put it on a paying basis. Even with a self-centred domineering owner like Burleigh, a written agreement would protect him from interference. Worthley had that within him—self-knowledge, strength proved in previous battles—which told him he could hold the older man within bounds, perhaps turn his undoubted energy and drive to their common good.
“I'll take the management, Mr. Burleigh,” he announced quietly. “I’ll have to ask for a two-year contract. You offer five thousand dollars salary—I’ll want the same amount as a bonus il I make the stock pay a six per cent, dividend.”
Part of the older man’s oft-quoted policy was never to accept a policy as it was made to him. He could not bind his directors beyond the year for which they were elected, he declared. In the end, the two men put their names to an agreement which gave the new manager clearly defined authority for one year and promised a bonus of three thousand in the event of a dividend.
When he took over the management the following week, Worthley’s first point of attack was general expenses— the spigot through which so many industries drain strength and profits. The factory records — under his direction summarized and analyzed for the first time—showed small chance of reducing this. The office departments were undermanned and figures on costs, the time roil and other vital subjects were collected and collated in the most rudimentary fashion. The Burleigh factory system, as the new executive sized it up, was to buy materials at the lowest prices obtainable, keep labor below a certain individual maximum and. peiforce, expect a profit on the finished product.
Saving in office or factory being out of the question, but one course remained open to him—production must be increased while expense was held nearly stationary. Worthley sent at once for the superintendent.
“How can we increase our output. Mr. Semper ?” he asked.
“We might crowd up some of the departments, I guess, and put in more machines,” Semper answered slowly. “But Mr. Burleigh wouldn’t listen to that.”
“How much over-time work have you been doing ?”
“Very little; Mr. Burleigh doesn’t like the idea of over-time. It gets the men used to more money every week, he thinks, and that leads to demands for higher wages.”
Worthley’s eyes widened. This was an original viewpoint on over-time, especially as the regular piece-work and day rates were not advanced for night-work. In the half-hour of question and answer which followed, the superintendent defended every awkward point in his factory system by quoting an order, an opinion or a prejudice of the president’s. It was as Chambers had cautioned him—Burleigh dominated the business at every turn.
“Did you never take any orders from the manager, Mr. Semper ?” Worthley inquired angrily.
“Of course, sir, of course,” replied the superintendent hastily. “But you see, Mr. Burleigh would not always—er —well, you see, he didn’t always approve of the orders.”
Closing the interview, Worthley sent for the paymaster.
“I want you,” said he, “to give me a report of the total number of hours put in by all the workers, weekly, for the past six months.”
Geraldson looked surprised.
“I can give you the day-workers, Mr. Worthley; I have no data of the pieceworkers.”
“What’s that ?” exclaimed the manager. “Do you mean that no record is kept of the piece-workers’ time ?” .
“No, sir,” the paymaster admitted, “we notify the superintendent if they come in late, but nothing more. Mr. Burleigh thinks it unnecessary expense to keep time of men who are paid only for what they do."
Worthley felt his burden a little heavier than he had expected. He directed Geraldson to begin taking the piece-workers’ time as carefully as the day-workers’ was taken.
“I'm afraid, Mr. Worthley,” stammered the paymaster, “that I 11 have to put on an extra clerk. We’re working to the limit now.”
“All right, Geraldson, get a bright young fellow. You don’t need a bookkeeper for that. See that it’s done ac-
curately, and let me have a detailed report from him every week.”
The paymaster left the office, astonishment on his face. Engagement of an extra clerk had always taken weeks— nay, months—of strenuous pleading.
To an executive accustomed to accurate records for comparison, absence of such records leaves him in much the same plight as a mariner without a compass.
Worthley saw, at once, that he would have to go on dead reckoning. He got among the departments without delay, but the foremen met his inquiries cautiously and, sometimes, it seemed to him, evasively.
“Why is that lathe standing idle ?” he asked one.
“The man left two days ago,” replied the foreman. “Haven’t been able to pick up another yet.”
“Why did he leave ?”
“Said he wasn’t satisfied with the pay,” Mr. Worthley.”
Such cases he found ip every department. No concrete knowledge of the reasons behind the condition, however, came to him until he struck Dan Marble foreman of the automatic screw machine room. A few minutes’ talk with him showed the manager that he was an unusual man, and he led the way to the office for a consultation.
“We’re not getting enough stock from your department, Dan,” he said as they found chairs. “How are we going to bring it up ?”
“That’s just the question that's troubling me, Mr. Worthley,” replied the man. “I’m getting thin over the kicks about the work.”
“All your machines busy, Dan ?” “Part of the time, yes; but they’re standing idle too much to please me.” “What’s the trouble ? Can’t you get men ?”
“I get men, but I can t hold them,” replied Marble.
“Why not ?”
One moment Marble hesitated. Then with a frank smile, he said :
“Mr. Worthley, I’ve been with the company six years, but the chances are, when I’ve told you my story, you’ll tell me to quit. I know Mr. Burleigh
wouldn’t wait till I’d got through—he’d see that I’ve known right along the piece-work prices were too high.”
“Piece-work prices too high ?” Worthley was genuinely astonished by this novel explanation.
“And yet you can’t hold your men ! I don’t understand what you mean by such a statement as that.”
“That’s precisely the reason, Mr. Worthley,” replied Marble, with a grin. “And it’s so all over the plant, I think.”
“It’s this way, ” he continued, as the manager waited. “It’s been the policy of the works, right along, to cut down the piece-workers the moment they make over a certain sum. The management won’t admit that there’s a limit on any man. They’ve always said that they want every man to drive ahead and make all he can. All the same, if any of the men on my floor run over fifteen a week, there’s a slash in the rates the next Monday morning.
“You can see how it works. Perhaps two-thirds of my men can’t make over fifteen at present prices—some of them can’t make that—a big bunch of ’em could run up to eighteen or twenty, if they dared. They’re the good men, Mr. Worthley, who are all the time looking for other jobs, and getting them.
“When a man quits, his machine stands idle for two or three days—-maybe a week. We foremen know that the men soldier to keep their wages down to the fifteen dollar limit. But if we say much about it, they quit and more machines are standing idle.”
“How long since rates were cut in your department, Dan ?”
“No cut in standard operations for two or three years. No excuse for it. The men are only working out fifteen dollars, at the most. If we made a cut now, they’d claim that fifteen dollars isn't a cent more than they should make—and it isn’t. It’s what other shops are paying.”
“And yet, you know they are able to make more.”
“I know that the best men are and I guess they feel sorer at having to keep to the same limit as the poor trash,
than they really do over the pay. It’ll
always be so, Mr. Worthley, uniil there’s a sliding scale for piece-work—or else a guarantee that there’ll be no changes in prices for a year. Then they’d jump in and run the production up, all right. And at the end of a year you’s have some figures to base a cut on. Now, you haven’t any!”
Marble’s manner was so earnest and sincere that the manager forgot he was receiving advice, instead of information.
“I’ll look into what you have been telling me, Marble. If I had been manager, I’d feel that concealment of this condition was a very serious matter.” “Perhaps it wouldn't have been concealed,” said Dan, with a grin, as he walked out.
Remarkable corroboration of Marble’s views came nearly a week later. Geraldson, the paymaster, brought in a pay slip.
“I think I ought to call your attention to this, Mr. Worthley,” he explained. “This is the piece-work account of a man who is getting through —thirty-one dollars and sixty cents for a week’s work !”
“Thirty-one sixty !” exclaimed the manager in surprise.
“Bennett explains,” said the pay master, “that a large portion of this is for work not turned in last week.”
“How much pay did he draw last week ?”
“Forty-six dollars and sixty cents for two weeks’ work, eh ? Does it check up all right ?”
“Yes, sir. everything is straight.” “Pay1, him, of course. But let me have that account when you are through with it. By the way, is he in your office now ?”
“Send him in here.”
“Bennett,” he said pleasantly, when the man entered. “We’re not disputing this account of yours but I’d like to ask about it. You tell Mr. Geraldson part of the work was done last week.” “Yes, sir, I knew I was going to quit so I hustled for all I was worth for the two weeks.”
“If you could make twenty-three dol-
lars a week, why didn't you do it right along ?"
"The boys wouldn't let me, sir ! If anyone runs over fifteen dollars, we’re in trouble in a minute.”
Worthley looked at him inquiringly and, after a •moment’s pause, the man continued :
"That's why I’m leaving, Mr. Worthley, I don’t belong to any union, and this isn’t a union shop, but it might as well be—we are allowed to do only so much, anyway.”
"Go on !” said the manager, encouragingly. He saw that the man was full of the subject.”
"Well, it’s like this," Bennett went on. “You fix piece-work prices according to what the average man can do, and a good man—who’s willing to dig in when the whistle blows and hustle till it blows again—has to keep down to the average man’s output. If he doesn’t the prices are cut at once, and he gets it hot from his shop-mates. Either he throws up the job, or settles down to their level. I'd rather quit.”
"I’m much obliged, Bennett. That's what I wanted to know,” said Worthley. "Have you got another job ?”
"No, sir, but I know where there is one.
"Come in and see me to-morrow, then. I think I can fix it so you’ll not have to leave.”
Before Bennett had quit the office, the manager had decided upon radical action.
Mr. Burleigh had gone to New York for a fortnight—that meant a fair trial for the plan he had in mind, with no opposition until the men were fairly settled into their new stride. Caution was one of Worthley’s traits, however, but it was not till the next morning that he wrote and posted this bulletin on all the factory boards :
SHOP NOTE NO. I.
In view of accumulating orders, it is necessary that production be increased as rapidly as possible. To encourage everyone to help us secure the needed output, the management lias decided that the present piecework rates will continue in force
without reduction for one year from
March 13, 1906.
It was Mr. Burleigh’s boast that he made a "systematic inspection of the plant” every Monday—a measure of
keeping in touch which would have been more effective had not foremen and workers alike known the exact hour of his coming. Returning from New York, news of Worthley’s announcement drove him to the factory without awaiting the usual inspection day. His sense of the dramatic kept him silent until, with the manager, he halted before the fresh bulletin board.
Crimson with anger and indignation lie turned on Worthley. The general manager met his eyes coolly.
"Hadn’t we better talk this thing over in my office ?” he suggested, his glance indicating the curious, expectant workmen all about.
By an effort the president restrained himself—even held to his ostensible purpose.of inspection, though his questions and comments on the buzzing activity in the departments—obviously on edge to make the most of the new conditions —grew more biting and arrogant as they proceeded.
"How did you dare, sir ?” he demanded furiously when they were again in Worthley’s office. This is my factory and my business, and my policy must be carried out in both. You’ve taken advantage of my absence to make foolisli concessions to my men. But you’ve got to withdraw them, sir ; you’ve got to withdraw them. I’ve always kept a firm hand on wages and I don’t intend to let you come in and upset everything I’ve done. That absurd notice must come down, sir; and the men must understand that it was all a mistake.”
The blood burned in Worthley’s cheeks, but he kept his temper in hand. He crossed to his desk and slid the rolltop back.
Picking up a flat packet of papers he turned on his raging chief.
"Mr. Burleigh,” he asked quietly, "do you know the number of work-hours this
plant represents, running at full capacity ?”
The president choked, sputtered, exploded in exasperation.
“I do not, sir ! Nor has it any bearing on piece-work prices, whatever. It is piece-work prices we are discussing, Mr. Worthley, and I desire you to keep to that point.”
“I’m right on it !” retorted the manager dryly. “The answer to my question is : thirty-six thousand hours per
week. That amount of work should be done here, if every machine was running and every bench was occupied. I’ve not been able to get figures on actual time worked before I came here. There are no records to show that; the pieceworkers’ time has never been kept.”
“What do you want it kept for ?” demanded the president shrilly. “The men aren’t paid that way.”
The manager ignored the question.
“I have the figures for the past two weeks—25,140 last week, about the
same the week before—thirty per cent, less than the record ought to show, Mr. Burleigh.”
“Whose fault is that ? Why don’t you fill up ?”
“The output of my first week here”— in the grip of the factory problem, Worthley was losing sight of the president’s insolence—“was just up to the normal average of the past year. Since I posted that notice you read ruin, we’ve had one pay-day—one accounting of work done. Mr. Burleigh, our production has increased twenty-five per cent. I’m satisfied it will go to thirty —perhaps forty per cent.”
“And the men’s pay will increase thirty—perhaps forty,” the president mimicked savagely.
“What of it ?” Worthley countered boldly. “The cost of production is not increased and your enormously expensive equipment here is not earning what it ought to earn.
“That’s a point just as important to stockholders as getting earnings out of the men.”
“Besides,” the manager warmed to his topic. “We need that increased output the worst way, Mr. Burleigh. Our letter files are full of complaints from
customers due to delayed shipments, full of kicks from our salesmen that they are losing contracts because we can’t make deliveries on time.”
But the president was beyond reach of argument.
“That’s a temporary condition,” he stormed in answer. “This increase in wages is a blow at the permanent welfare of the business. It’s ruinous policy young man, and I’ll not consent to it. If you knew the men were loafing, you should have cut the piece-work rates and made ’em work for their pay. That’s been my unfaltering policy—and I expect you to follow it out, sir.”
“Mr. Burleigh,” said Worthley, sternly, his patience sorely tried. “Your policy is one thing—systematic development of this business is quite another. I was engaged to pull you out of a hole. I intend to do it—and in my own way. Cutting1 rates will not do it—we’ve nothing to base a cut on, for the men have been earning only fifteen dollars a week—we’d simply lose all our best men and fall further behind.
“I'm well within my contract”—he checked the other’s excited protest and continued—“I am not increasing cost of production or buying new machinery. I’m taking steps—policy or no policy— to earn a dividend for your stockholders, and incidentally, that three thousand dollar bonus for myself. That's my plan—and I propose to carry it out.”
“Not increasing expense,” the president retorted triumphantly. “What’s that new clerk in the pay office and Trampoon’s new man — ‘a statistic clerk,’ he calls him—but increasing expense ?”
“There’s such a thing as percentage, Mr. Burleigh,” the manager said quietly. “The increased output will take care of those two clerks. The moment the percentage of expense runs higher, I’ll step down and out. As a matter of fact, I expect to lower it enough to pay that dividend.”
“That’s very probable,” sneered the president. “As a matter of fact, I’ll lay this matter before the directors and let the, say whether you are the boss or I am.”
Worthley took a moment to consider. He knew that the directors were puppets in the president’s hands.
“We may as well understand each other, Mr. Burleigh,” he said finally. “If the board interferes with my operation of the plant, I’ll go back to your antiquated methods and earn no dividend. But I shall sue the company for the three thousand bonus which the interference has prevented my earning. And I’ll win my case, Mr. Burleigh.”
“All right, young man, go ahead and see where you land,” the president snorted, slamming the door behind^ him by way of emphasizing his final ambiguous threat.
Worthley’s jaw took on a more pugnacious slant as he faced the task before him.
His reputation, he knew, was at stake. He had taken hold of this unprofitable business; if he failed to show a decided gain, his standing as an executive would be gone. Stockholders and directors look at results—not conditions. His claim of interference by the president would be dismissed as a lame excuse. There was nothing to do but bring this industrial derelict into port —against all opposition, all obstacles.
Steadfastly he drove ahead with his factory changes, waiting the next move of the president.
Nothing came. From Chambers, lie
learned that Burleigh had reported his “contumacy” to the board but made no recommendation. Lacking their usual
orders, the directors took no action on the complaint.
“It’s up to you to save us, Ned,” Chambers laughed. “Burleigh left the thing to us, so that if you fail to make good he can put the responsibility on us for not backing him up. If you do make good he can hedge and claim the credit of hiring you.”
Worthley made good. It was a year of unending hustle and unpleasantness, but to his great surprise, the president contented himself with expressions of disapproval and made no effort actively
to interfere with the manager's program. But there was sunshine among the clouds.
As the months passed Worthley saw production jump up twenty-five, thirty, forty per cent., the sales keeping pace with the output. There was a vim and snap about the works which had been sadly lacking before.
He had gained the confidence of his foremen and his men, and was getting the best there was in them. He saw the records and statistics taking such shape as made them things of value, instead of snares of disaster.
Mr. Burleigh continued his weekly “systematic inspection” of the works and the pay-roll. A spasm of pain would twitch his face as he noted, at frequent intervals, in the columns, a sum of eighteen, twenty, twenty-two dollars against some man’s name—but beyond slamming the book viciously as he closed it, he seldom voiced his sentiments. In fact, he cut the manager completely, confining his observations to the treasurer and the chief accountant.
It was the treasurer’s annual report, of course, which told the final story. It showed net earnings sufficient to pay six per cent, and leave a respectable surplus.
Worthley sent in a comprehensive report of his methods, and the factory conditions, and with it, his resignation.
He told Mr. Chambers, when that gentleman remonstrated with him (almost tearfully) that it was not right for officials to be working together—or rather against each other—in such a manner as they were here.
He had gained his points—had made a brilliant record—had earned his bonus— and had seen the stock advance over twenty points.
“I leave the work in good running order,” he said, “I’ve made a dividend for the stockholders, and eight thousand dollars for myself. But I’ve lived with trouble for a year and there’s no prospect of anything better. I’m through !”