And now, having noted the principle characteristics of
the two fundamental methods of wage payment day pay
and piece pay we come to the systems which I have called
" advanced " ; that is, the special systems designed to correct
or to reduce greatly the evils of the straight day wage and
the straight piece rate. The principal of these are the
Halsey premium plan, the Taylor differential piece rate,
the Gantt bonus system, and the Emerson efficiency or in-
1 The objection is inseparable from the straight piece-rate system. It
is, however, removed by the " piece-rate with guaranteed day wages,"
which is becoming well-known, especially in railway shops.
dividual-effort system. They are placed in this order for
reasons that will appear as we go on. And the Halsey
premium plan is placed first because it is simply and only
a wage system, while the others are rather parts of philoso-
phies and methods of handling labor in which the wage
system is only one element.
The Halsey premium plan 1 bears the strong impress of
intimate familiarity with the shop of complete knowledge
of the traditions of the shop, the suspicions of the shop
men, and the weaknesses of shop managers; and it seems
to be marked further by a conviction of the strength of
these long-established institutions and by a tenderness to-
ward disturbing or offending them. It is, in short, a char-
acteristically well-informed effort to get good results, to
bring about better conditions, without making any trouble.
The essence of the Halsey premium system is to pay men
the established day wage under any circumstances, and then
to reward them further by a voluntary extra payment if
they do better than the established record of past perform-
ances. When the system is introduced there is no necessary
or conspicuous change from the way things have always
been done. Every man gets his regular day wages on pay
day exactly as before. But by reference to past records,
standard times are set for the various operations upon
which the workmen are engaged. In setting these stand-
ard times some allowance may be made for the probable
shortening of the old records under the incentive the pre-
mium system is going to offer; but in the main the controlling
consideration is, how long did the job take on the average
when it was done by good workmen in the past? These
standard times are tabulated, recorded in the office for ref-
erence, and the times taken by the men day by day in doing
1 " The Premium Plan of Paying for Labor," by F. A. Halsey; Trans.
Am. Soc. M. E., June, 1891.
these same jobs, or performing the same operations, are
compared with these standards. When any man shortens
the standard time on any job after the plan has been put
in force, he is credited with a premium, which is equal to
his wages at his regular hourly rate for a portion of the
time he saved on the job. This portion is usually either
30 or 50 per cent of the time saved. The idea of grant-
ing only part of the saved time to the workman is twofold.
First, he uses the shop facilities harder uses more power,
wears out more tools, etc., and so the shop should have
part of the gain; second, as the employer thus profits as
well as the man, he is less likely to be tempted to cut rates
when the time is a good deal shortened.
Premium earnings are kept separate or may be kept sep-
arate from the regular payroll and enclosed in separate
pay envelopes. Their acceptance by the men is wholly
voluntary. The workman can take his premium or leave
it ; but he usually takes it if not at first when the ac-
cumulation begins to look tempting. It is, however, plain
that the introduction of the system raises no issue which
could well be a basis of a strike, as the introduction of piece
rates into the day-work shop might do. It does not abolish
old conditions and introduce new ones, which must be ac-
cepted whether they are liked or not. It simply offers a
new, non-compulsory opportunity for the men to earn more
money if they choose, without any arbitrary or even neces-
sary imposition of a forced rate of working. Furthermore,
the calculation of the premium is the simplest sort of a sum
in elementary arithmetic. The standard times are posted.
The workman can keep a record of his own times. All
he has to do is to find by subtraction how much time he
has saved, take one-half of it or 30 per cent of it, as the
case may be, and he knows his own premium at once. On
account of its simplicity and its conciliatory characteristics,
probably, the Halsey premium plan is in use in a larger
number of shops than any other of the advanced wage
systems.
Halsey puts no upper limit on a workman's earnings.
However much the man's skill and ingenuity may shorten
the times he gets his regular proportion of the gain. One
objection sometimes raised to the plan is that as the times
are not scientifically set (that is, as the operations are not
scientifically studied and figured down to the shortest prac-
ticable time), they may sometimes prove to be very much in
error against the shop, and the discovery that they are and
that the men in consequence are making very high premiums
may tempt the employer to cut them down, something in
the same way as piece rates are so often cut down.
the two fundamental methods of wage payment day pay
and piece pay we come to the systems which I have called
" advanced " ; that is, the special systems designed to correct
or to reduce greatly the evils of the straight day wage and
the straight piece rate. The principal of these are the
Halsey premium plan, the Taylor differential piece rate,
the Gantt bonus system, and the Emerson efficiency or in-
1 The objection is inseparable from the straight piece-rate system. It
is, however, removed by the " piece-rate with guaranteed day wages,"
which is becoming well-known, especially in railway shops.
dividual-effort system. They are placed in this order for
reasons that will appear as we go on. And the Halsey
premium plan is placed first because it is simply and only
a wage system, while the others are rather parts of philoso-
phies and methods of handling labor in which the wage
system is only one element.
The Halsey premium plan 1 bears the strong impress of
intimate familiarity with the shop of complete knowledge
of the traditions of the shop, the suspicions of the shop
men, and the weaknesses of shop managers; and it seems
to be marked further by a conviction of the strength of
these long-established institutions and by a tenderness to-
ward disturbing or offending them. It is, in short, a char-
acteristically well-informed effort to get good results, to
bring about better conditions, without making any trouble.
The essence of the Halsey premium system is to pay men
the established day wage under any circumstances, and then
to reward them further by a voluntary extra payment if
they do better than the established record of past perform-
ances. When the system is introduced there is no necessary
or conspicuous change from the way things have always
been done. Every man gets his regular day wages on pay
day exactly as before. But by reference to past records,
standard times are set for the various operations upon
which the workmen are engaged. In setting these stand-
ard times some allowance may be made for the probable
shortening of the old records under the incentive the pre-
mium system is going to offer; but in the main the controlling
consideration is, how long did the job take on the average
when it was done by good workmen in the past? These
standard times are tabulated, recorded in the office for ref-
erence, and the times taken by the men day by day in doing
1 " The Premium Plan of Paying for Labor," by F. A. Halsey; Trans.
Am. Soc. M. E., June, 1891.
these same jobs, or performing the same operations, are
compared with these standards. When any man shortens
the standard time on any job after the plan has been put
in force, he is credited with a premium, which is equal to
his wages at his regular hourly rate for a portion of the
time he saved on the job. This portion is usually either
30 or 50 per cent of the time saved. The idea of grant-
ing only part of the saved time to the workman is twofold.
First, he uses the shop facilities harder uses more power,
wears out more tools, etc., and so the shop should have
part of the gain; second, as the employer thus profits as
well as the man, he is less likely to be tempted to cut rates
when the time is a good deal shortened.
Premium earnings are kept separate or may be kept sep-
arate from the regular payroll and enclosed in separate
pay envelopes. Their acceptance by the men is wholly
voluntary. The workman can take his premium or leave
it ; but he usually takes it if not at first when the ac-
cumulation begins to look tempting. It is, however, plain
that the introduction of the system raises no issue which
could well be a basis of a strike, as the introduction of piece
rates into the day-work shop might do. It does not abolish
old conditions and introduce new ones, which must be ac-
cepted whether they are liked or not. It simply offers a
new, non-compulsory opportunity for the men to earn more
money if they choose, without any arbitrary or even neces-
sary imposition of a forced rate of working. Furthermore,
the calculation of the premium is the simplest sort of a sum
in elementary arithmetic. The standard times are posted.
The workman can keep a record of his own times. All
he has to do is to find by subtraction how much time he
has saved, take one-half of it or 30 per cent of it, as the
case may be, and he knows his own premium at once. On
account of its simplicity and its conciliatory characteristics,
probably, the Halsey premium plan is in use in a larger
number of shops than any other of the advanced wage
systems.
Halsey puts no upper limit on a workman's earnings.
However much the man's skill and ingenuity may shorten
the times he gets his regular proportion of the gain. One
objection sometimes raised to the plan is that as the times
are not scientifically set (that is, as the operations are not
scientifically studied and figured down to the shortest prac-
ticable time), they may sometimes prove to be very much in
error against the shop, and the discovery that they are and
that the men in consequence are making very high premiums
may tempt the employer to cut them down, something in
the same way as piece rates are so often cut down.
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