A PROLIFIC CAUSE OF INEFFICIENCY

In the same way, there are latent illnesses and inefficiencies in many commercial organizations which never reach the point of strikes and lockouts. For some reason or other that lively germ, the walking delegate, fails to get a foothold. Perhaps there would be a beneficial house cleaning if he did. Discontent, dissatisfaction, unrest, and constant changes in personnel load the body up with wastes, inefficiencies and unnecessary expenses. Any employer who thinks at all, and who has any basis for judgment as a result of observation, knows that what he desires to purchase, when he pays wages, is not a prescribed number of days and hours, is not a standard number of foot pounds of physical energy, but rather human intelligence and human willingness and enthusiasm in the use of that intelligence in his service. It is true that most employees do a certain amount of physical work, but it is also true that the value of that work depends entirely upon the amount of intelligence and good will the employee puts into it. The employee who is doing work for which he is not fitted and is unhappy and discontented is doubly inefficient. He is inefficient because he is not well fitted for the work and could not do his best even if he were perfectly satisfied and happy. And he is inefficient because he is in a bad psychical state. With his mental attitude, he could not do good work even if he were in the place for which he was best fitted.

Efficiency experts maintain that the average employee in our industrial and commercial institutions is only from twenty-five to thirty-five per cent, efficient. Sixty-five to seventy-five per cent, loss in productive power on the part of the forty million workers in this country constitutes an almost incalculable sum.

Who is to blame for this loss? Are we not too intelligent, too well versed in the laws of cause and effect and too courageous to try to blame the Almighty for it or to lay it to the public schools or to hold the employee accountable? As a matter of fact, no matter how we may try to shift the blame, those of us who are executives know only too well that our board of directors and stockholders hold us strictly responsible for results. What they want is dividends, not excuses. They do not care to hear how hard it is to find good men. They are not interested in the stories of employees who are so ungrateful as to leave just when they have become most useful. They will not permit you to shift any of the blame upon the shoulders of the employee. They expect you to use methods in selecting and assigning employees and handling them after they are selected that will yield the largest possible permanent results.

HIGH COST OF HIRING AND FIRING

Employers who will take the trouble to study their records for some years past, will, unless they are very exceptional, find that the average length of service in their organization is much shorter than they would be prepared to believe unless the actual figures were before them. We have the word of its manager in regard to a certain foundry in the Middle West that the average period of employment for any one man in that foundry is only 30 days. We know a large steel mill employing 8,000 where the average length of service per employee is a few days more than four months. These figures were given to us by the employment manager of the mill. The head of the employment department of a large electrical manufacturing company stated to us that the average length of service per employee for his organization was one year or a little less.

From "Current Affairs," Boston, we quote the following significant editorial:

"Do employers realize the waste and extravagance and actual money loss due to haphazard hiring and firing?

"Twelve typical factories were recently investigated as to their employment records by Mr. M.W. Alexander. He chose the normal industrial year of 1912. He chose representative factories, big and little, in several States. The results of this inquiry were reported in an address before the National Association of Manufacturers.

"Mr. Alexander found that this group of factories had 37,274 employees at the beginning of 1912, and 43,971 at the end of the year—a net increase of 6,697 workers. But the books showed that the factories had actually hired 43,571 new hands, 35,874 having been dropped during the year Of course, not all were fired. Some were absent because of sickness, some died, some left voluntarily; but these were only a small proportion. And the fact remains that in order to increase their working force by 6,697 these twelve industries had to break in 42,571 new employees and suffer the consequent extra expense of instruction cost, reduced production, and beginners' spoiled work. Making liberal discounts for the workers unavoidably withdrawn, it is estimated that these twelve factories suffered a definite money loss of more than $831,000 during the year on account of reckless hiring and firing.

"The conclusion seems justified: 'The highest grade of judgment in the hiring and discharging of employees is needed. The employment "clerk" of to-day will have to be replaced by the employment "superintendent" of to-morrow, not merely by changing the title and salary of the incumbent of the office, but by placing in charge of this important branch of management a man whose character, breadth of view, and capacity eminently qualify him for the discharge of these duties.'"

It is probable that most executives and employers do not know because they have not fully considered what this rapid ratio of change costs. This cost, of course, varies over a very wide range, according to the kind of work to be done and the class of employees. The sales manager of one organization told us that it cost his concern $3,000 to find, employ, train, and break-in to his work a new salesman. The employment manager of one of the largest corporations in the world in-forms us that it costs him $10,000 in actual money to replace the head of a department. The employment manager of a large factory employing people whose wages ran from $5 a week up, told us that the records of his department showed that it cost $70 to get the name of a departing employee off the payroll and to substitute thereon the name of a new permanent employee to take his place. But these are only costs that can be computed. There are other costs perhaps even greater, records of which never reach the accounting department or the employment department. Let us tell you a story:

A COMMONPLACE STORY

Joe Lathrop, foreman of the finishing room, had a bad headache. It had been along toward the cool, clear dawn of that very morning when, having tearfully assured Mrs. Lathrop for the twentieth time that he had taken but "one li'l' drink," he sobbed himself to sleep. His ears still range disconcertingly with the stinging echoes of his wife's all-too-frank and truthful portrayal of his character, disposition, parentage, and future prospects. His heart was still swollen and painful with the many things he would like to have said in reply had he not been deterred by valor's better part. It was a relief to him, therefore, to take advantage of his monarchical prerogatives in the finishing department and give vent to his hot and acrid feelings.

With all his flaying irony and blundering invective, however, Joe Lathrop never for a moment lost sight of the fact that there were some men upon the finishing floor whom it was far better for him to let alone. With all his truculence, he was too good a politician to lay his tongue to the man tagged with an invisible, but none the less protective, tag of a man higher up. And so Joe Lathrop let loose his vials of wrath upon those whose continuance upon the payroll depended upon merit alone. One of these was Robinson.

HATED FOR HIS EFFICIENCY

Robinson had been finishing piano frames upon this floor for twenty months. He was a young married man, in good health, ambitious, faithful, loyal, skilful, and efficient. He was a man who worked far more with his brains than with his hands. He understood the principles of piano construction, and was, therefore, no rule-of-thumb man. He had studied his work and, as a result, had continually increased both its quantity and quality Robinson was not self-assertive, perhaps a little taciturn, but there was something about him which made people respect him. Over the dinner pails at noon there had been many a conjecture on the part of Robinson's fellow-workers that he was in line for promotion and that he might be made assistant foreman at any time.

Joe Lathrop knew that Robinson's quiet efficiency and attention to business had not escaped the superintendent's eye. He felt that the day might come almost any time when, on account of his "just one li'l' drink," or its consequences, he might have to yield his scepter to the younger man.

DISCHARGED WITHOUT CAUSE

Along about nine o'clock of this particular morning, Lathrop was brow-beating one of the men for some fancied fault near the place where Robinson was working. Seeing Robinson quietly doing his work, paying no attention to the wrangle so near him, only further irritated the suffering foreman.

"Robinson," he yelled. "You have been here long enough to know better than this. What do you mean by standing there like a wooden post right beside this man and letting him make such a botch of these frames?"

Robinson, of course, being a wise man, kept his own counsel, and went on with his work. He could not acknowledge himself at fault when he was not at fault. His manhood revolted. His business was to concentrate upon his own work. Since he could not acknowledge the fault, he therefore said nothing. This, of course, was just what Lathrop did not want.

"Speak up," he bawled, "explain yourself."

"I have my own work to attend to, Mr. Lathrop, as you know," he said quietly.

"I'll have no back talk from you, you sulky dough-face," roared Lathrop. "Get to hell out of here. Go to the office and get your time."

Robinson knew better than to protest. He even hesitated to go to the superintendent, but finally decided to do so.

"It's a shame, Robinson," admitted the superintendent, "but Joe is an awfully good man when he is right, as you know, and as long as we keep him in our service we have to stand behind him in order to maintain discipline." And so Robinson walked out with half a week's pay in his pocket.

THE BEGINNING OF LOSSES

Let us estimate roughly what Joe Lathrop's "one li'l' drink" and his suspicious jealousy cost the piano company.

Of course, his first cost was the loss of time in the finishing room while Robinson's place stood empty. It is fair to suppose that the company was making some profit on Robinson. It, therefore, lost the profit of those two days. Besides this, the machinery and the equipment Robinson operated stood still for two days eating up, in the meantime, interest on investment, rental of floor space, depreciation, light, heat, and all other overhead charges that it ought to have been making products to pay. In addition to all the overhead charges, the machinery ought also to have been making a profit for the piano company.

But there were other losses. Robinson's absence disorganized the shop routine. There were delays, conflicts, piano parts piled up in one end of the room while other departments clamored for finished frames at the other end of the room. Then, at least one-half a day of Joe Lathrop's valuable time went to waste while he was out trying to find some one to fill Robinson's place. His first attempt was made at the gate of the factory, where the sea of the unemployed threw up its flotsam and jetsam. But finishing piano frames is rather a fine job and none of the willing and eager applicants there could fill the bill. Joe then made the round of two or three employment agencies who had helped him out in previous similar emergencies. This time, however, they seemed to be without resource, so far as he was concerned. Being in considerable perspiration and desperation by this time, he was probably gladder than he ought to have been to receive a summons to appear at the court of Terrence Mulvaney. Terrence, who sat in judgment in the back room of his own beverage emporium, the place where Lathrop secured his "li'l' drinks," had heard, in the usual wireless way, that there was a finisher needed at the big factory Lathrop still owed Terrence for a good many of his "li'l' drinks." Furthermore, Terrence, by virtue of some mysterious underground connection, pulled mysterious wires, so that an invitation from him was a command. For these reasons, also, Joe Lathrop found it discreet in his own eyes to engage on the spot Tim Murphy, a very dear friend of Mulvaney and, according to Mulvaney's own impartial testimony, a very worthy and deserving man.

BREAKING IN AN INCOMPETENT

Valuable hours and moments of the company's time were consumed in initiating Tim Murphy into the employ of the company. There were certain necessary processes in the paymaster's department, the accounting department, the liability department, the tool room, and the medical department.

Now, while Murphy had had some experience in finishing piano frames, he was utterly unfamiliar with the make of piano produced in this factory. Likewise, he was ignorant of the customs, rules, and individual methods which obtained in the factory. This meant that his employers paid him good wages for five or six weeks while he was finding his way around. It was good money spent without adequate return in the way of service. In fact, during these weeks, the company would probably have been better off without Tim Murphy than with him, for he spoiled a good deal of his work, took up a great deal of his foreman's time which ought to have been applied in other directions, broke and ruined a number of valuable tools and otherwise manifested those symptoms which so often mark the entrance into an organization of a man propelled by pull rather than push.

The trouble in Tim Murphy's corner continued to halt and disorganize the work in the department so that there were still further delays and losses up and down the line. All this was bad enough, but by the end of five weeks of Murphy's attachment to the payroll he had demonstrated that he was not only incapable, indolent, careless, and unreliable, but that he was a disorganizer, a gossip, and a trouble maker.

BAD EFFECT UPON OTHER EMPLOYEES

Finally the superintendent, who in some mysterious way had managed to escape the entanglement of underground wires running from Terrence Mulvaney's saloon, issued a direct, positive order to Foreman Lathrop, and Murphy's place in that factory knew him no more. Nor was Murphy astonished or disappointed. He had been expecting this very thing to happen, and was prepared for it. So when he walked out, two skilful, but easily influenced companions, walked out with him. Thus Joe Lathrop had, added to one of his frequent early morning headaches, the serious trouble of trying to find three men to fill yawning vacancies. The company was faced with a new series of losses even greater than those which had followed the discharge of Robinson. Furthermore, there was trouble and disorganization among the men still remaining in the department. Every man there had liked and respected the competent young worker, Robinson. They all knew that he had been discharged largely because Joe Lathrop was jealous and somewhat afraid of him, and because Joe had had a bad headache and grouch. They resented the injustice. Their respect for their foreman dropped several degrees. Their interest in their work slackened. "What is the use," they thought, "to do our best when superior workmanship might get us thrown out of here instead of promoted?"

And so Joe Lathrop's series of "li'l' drinks" finally resulted in decreasing the efficiency of his department to such an extent that the superintendent was obliged to discharge him. Then the superintendent was in for it. He had to find a new man. He had to take the time and the trouble to break the new man in, and the company had to share the losses resulting from disorganization until the new foreman was installed.

This is not a fanciful story, but was told to us by a man who knew the superintendent, Joe Lathrop, Robinson, Terrence Mulvaney, and Tim Murphy. Nor is it an unusual story. Just such headaches, discharges, troubles, and losses are occurring every day in the industrial and commercial institutions of this country.

This story illustrates not only the high cost of constant change in personnel, but also the high cost of leaving the important matter of hiring and firing to foremen. Where this is done, discharges without cause, the selection of incompetents, grafting on the payroll, inside and outside politics, the indolent retention on the payroll of those who are unfit, and many other abuses too numerous to mention, are bound to follow.

ONLY ONE LEGITIMATE REASON FOR HIRING

There is only one legitimate reason for putting any man or woman on the payroll, namely, that he or she is well fitted to perform the tasks assigned, will perform them contentedly and happily and, therefore, be a valuable asset to the concern. But with foremen, superintendents, and other minor executives selecting employees, for any reason and every reason except the legitimate reason, it is small wonder that employees grow discontented and leave, are demoralized and incompetent so that they are discharged. For these reasons it is an unusual organization which does not turn over its entire working force every year. The average of the concerns we have investigated shows much more frequent turnover than this.

Under these circumstances, it should be easy to understand why our efficiency engineers and scientific management experts find the average organization only 25 per cent efficient. And this is not the only trouble we make for ourselves as the result of unscientific selection in the rank and file. In many cases we use no better judgment in the selection of even our highest and most responsible executives. If it is true, as has been so often stated, that a good general creates a good army and leads it to victory, and a poor general demoralizes and leads to defeat the finest and bravest army, then it is more disastrous for you to select one misfit executive than a thousand misfits for your rank and file.

In our next chapter we shall attempt to show some of the troubles which overtake a man who selects the wrong kind of executives.



CHAPTER II

THE SELECTION OF EXECUTIVES

The President and General Manager of a large manufacturing and sales company, who, for the purpose of the present narrative, shall be called Jessup, was making a trip from Chicago to New York on the Twentieth Century Limited. In the smoking room of his car he met a gentleman whose appearance and manner attracted him greatly. Acquaintanceship was a matter of course, mutual admiration followed swift upon its heels, and friendship soon began to crystallize in the association. As the train sped on through the night, the Big Executive became more and more delighted with his new-found acquaintance. The man agreed with him in many of his sentiments; belonged to the same political party; was a member of the same fraternal order; wore the same Greek letter society pin as his oldest son; and, what was, perhaps, more important, entertained what seemed to him intelligent, clean-cut, forceful, progressive ideas in regard to business.

As their talk proceeded, President Jessup found that the gentleman was a Mr. Lynch, advertising manager of a firm manufacturing jewelry, located in Providence, Rhode Island. He had been in this position for five years and during that time had planned, assisted in designing, and sold to a national market several profitable jewelry specialties. Lynch's graphic story of how these advertising campaigns had been planned, executed, and carried through to success fascinated the President of the western concern. To his mind, his own enterprise, the manufacture and sale of steam and hot-water heating plants, had long been in the doldrums. He himself had spent many sleepless nights trying to plan some way of extending its business; of opening up new markets; of creating a wide new patronage; of manufacturing something which would bring in more profits than their regular line, and finding a successful sale for it. It now seemed to him that he had found just the man to assist him in carrying out these vaguely formed plans, which as yet were little more than dreams. He told Lynch something of his ideas and ideals, and, as the two men parted for the night, he said:

"I have just a glimmering of an idea, Mr. Lynch, that we might be able to make an arrangement whereby you would be greatly profited in increased opportunities and bigger income, and perhaps we also would reap an advantage in increased business. Think it over."

SELECTION BY PERSONAL PLEASURE

Long after he had retired, President Jessup pondered over the situation, and the more he pondered, the more he became convinced that he had found just the man he wanted. True, he had not had in mind, during any of his midnight vigils, the taking on of any new help—his payroll was already heavy enough. He had a good advertising manager and a good sales manager, men who were competent to take care of the business of the concern. In response to their efforts, patronage was growing, not rapidly and spectacularly, yet steadily and substantially. Now, however, he saw an opportunity to produce something which would be different enough from the product of any of his competitors to warrant him in undertaking a national advertising campaign. Up to the present he had had only a local business. A few hundred miles from his factory in all directions could be found all the heating plants which he had manufactured and sold. His dream was to produce some special form of apparatus which would sell wherever there were homes, stores, offices, churches, theaters, and schools to be warmed. Mr. Lynch was just the man to study their business carefully, decide upon some such product, help to design it, and plan and execute the national advertising campaign which would develop a local into a national business. Jessup dropped to sleep with his mind made up.

Next morning, as the train sped along between the Catskills and the Hudson, the two men, over the breakfast table, began negotiations. Jessup was surprised, and somewhat disappointed to find what a large salary his new friend was drawing in Providence. He was still more surprised and disappointed to find that Lynch's future prospects in the jewelry business were so bright that it would take a considerably larger salary to entice him away. The Westerner's mind, however, was made up and the future profits he saw arising from a national business were so attractive that he finally threw aside caution and offered Lynch twelve thousand five hundred dollars a year and moving expenses to the western city where his factory was located. This offer was finally accepted, the two men shook hands, and arrangements were made for Lynch to report for duty in the West within thirty days.

THE NEW MAN IN A QUANDARY

Now, President Jessup had no intention of dismissing his advertising manager and his sales manager. Each knew the business from beginning to end; each was thoroughly familiar with the trade already built up and personally acquainted with many dealers who handled the products, and could be depended upon not only to hold the present trade, but to increase it. Therefore it seemed good judgment to retain these two men on the local trade while turning Lynch loose upon the campaign for the securing of a national market. So it was decided to retain both of the old men and to give the newcomer the title of sales promotion manager. There were some heart-burnings on the part of those already in the office when the new man came in and took charge. It was not pleasant for men who had been with the business for years and served it faithfully and helped to build it up, to have a man placed over them who knew nothing about it and whose salary was more than their two salaries combined. However, Lynch's personality was so pleasant and he was so tactful and agreeable that this little feeling of inharmony seemed soon to disappear. Presently all were working together in the happiest possible way toward the inauguration of the new policy of the concern.

As time went on, however, Lynch began to show signs of restlessness and uneasiness. Being a man of keen, alert mind and quick intelligence, he had quickly grasped the fundamentals of the heating business. He was soon able to talk with the firm's designers and engineers in their own language. But the more he studied boilers and radiators, the less interest he took in them. He had sense enough to know that the only thing that would win in the plan he had in mind was a radical change in design which would increase the amount of heat delivered in proportion to the amount of fuel burned, or the amount of heat delivered in proportion to the cost of fuel burned, or would reduce the amount of supervision required, or would do away with some of the long-standing sources of trouble and annoyance in heating apparatus. Long and hard he thought and conjectured, and studied statistics, and followed reports of experiments, but for the life of him he could not take any interest in any such line of research. He hated the gases, ashes, soot, smoke, and dirt generally. Huge rough castings of steel and iron seemed gross and ugly to him, and the completed product seemed coarse and unfinished. The only improvements he could think of were improvements in beauty of line, in refinement of the design, in added ornamentation, and other enhancements of the physical appearance of the product. In these he took some interest, but he had the good sense to know that no change of this kind would accomplish what they wished in the matter of going after a national market.

THE HIGH-SALARIED ONE FAILS

For a while President Jessup waited patiently; then, as the big salary checks came to him to be signed month after month, he began to grow restless. No result had yet been announced and in his conferences with Lynch, he could not determine that any hopeful progress was being made. Finally, in desperation, he called his engineers and designers together. For three weeks he worked with them night and day, studying, analyzing, making records, and computing results. They took cat-naps on benches in the laboratory while waiting for fires to burn a standard number of hours; ate out of lunch-boxes; and finally, unshaven and covered with soot and ashes, they triumphantly produced a fire-box and boiler which would burn the cheapest kind of coal screenings satisfactorily, with but little supervision and a high degree of efficiency. This was the best thing they had ever done in the laboratory. This was the attainment which he had so long desired. This, properly advertised and handled, certainly ought to revolutionize the steam and hot-water heating business. But it was not one of Lynch's brain-children. However, Lynch would now have an opportunity to prove his value and return to the concern large profits for the amount they had spent and would spend upon him. At any rate, he knew how to plan and conduct an advertising and selling campaign.

Lynch, intensely relieved by the solving of this problem, the utility of which he very readily saw, threw himself, heart and soul, into the construction of the advertising campaign. As this work progressed, Jessup began to have some misgivings. While the advertisements, circulars, catalogues, and other literature were beautiful; while the English in them was elegant, and the form of expression refined, somehow or other, they seemed to lack the necessary punch or kick which Jessup knew they ought to have. The two big things about the new product were, first, economy of fuel; second, ease of operation and small demand for supervision. These points were not brought out clearly enough. They did not grip. They did not get home as they should. There was a good deal of talk in all the advertising about the beauty of the new apparatus; about the refinement of its finish; about its workmanship, and many other things which, to Jessup's mind, detracted from the main issue. The one thing he wanted to hammer into the minds of the readers of his advertising was the fact that here was a heating apparatus for which fuel could be purchased in the usual quantities and at half the regular price. What he wanted to do was to make them actually see the dollars and cents saved, not only in fuel, but also in the cost of operation. He wanted suburbanites to see the fact that they could attend to their furnaces each morning before going to town, and that the fires would not need any further attention until the following morning; but, somehow or other, the advertising did not seem to picture this clearly enough. The statements were made, yes; there was plenty of evidence produced to show this; but it was done in a way which, somehow or other, did not produce an intense conviction.

Jessup had secured from his board of directors an appropriation of fifty thousand dollars for a national advertising campaign. Upon the result of his first attempt would depend his securing a further appropriation for such a campaign as he had planned and as he wanted to execute. This being the case, he did not feel that he was justified in permitting Lynch's advertising to go out as it was. The result was that, just before the time came when copy must be sent to the magazines, newspapers, and street-car advertising companies, Jessup called his old advertising manager into conference and for a week they struggled together, revising the copy, rewriting the selling argument, and placing emphasis in clear, strong, unforgetable figures where it would do the most good.

WHY THE "GREAT FIND" WAS A DISAPPOINTMENT

The result of all this was that Lynch, seeing the writing on the wall, tendered his resignation—which was all too gladly accepted. In offering his resignation, however, Lynch had stipulated that he was to receive four thousand dollars out of the six thousand five hundred still due him on his year's contract. President Jessup's error in selecting an employee had cost him ten thousand dollars in salary. Besides this was the still larger sum in expenses, in wasted effort, and in the disorganization of his entire factory and selling force as the result of the introduction of a man who did not belong there.

His mistake was due to two fundamental errors. In the first place, the facts that a man is personally agreeable, that he belongs to the same political party, that he belongs to the same lodge or fraternity, that his ideas and opinion on matters outside of business agree with his employer's, are merely incidental and by no means adequate reasons for employing him. Nor is the fact that he has made a good record, even an extraordinary record, in some other line of business a good reason for employing him. Perhaps, on the other hand, the fact that his record is made in a totally different business is a good reason for not employing him. It certainly was so in this case.

In the second place, President Jessup did not take into consideration the natural aptitudes of his man, natural aptitudes which he might very easily have determined with a moment's casual observation. Lynch was exceedingly fine in texture; his hair, his skin, his features, his hands, and his feet were all fine and delicate. He, therefore, loved beauty, refinement, small articles, fine lines, elegant designs. These things appealed to him strongly, and because of this he was able to make them appeal to others. Anything which was heavy, rough, coarse, crude, uncouth, or ugly repelled him. He could not take an interest in it except in the most theoretical way. For this reason he could not interest others in it. He had an unusual knack for selling things to people which would appeal to their love of the beautiful and their desire for adornment; in short, to their vanity; but he had no qualifications for selling to people on a purely commercial basis, and especially selling something which was so matter-of-fact and commonplace in its character as the saving of coal and the freedom from necessity of frequent attention.

A WEAK MAN AND HIS TEMPTATION

In the winter of 1914-1915, the people of New York were shocked at the downfall of a man who had held a very high social, church, and business position. He had a wife and two or three beautiful children; he occupied a very prominent place in church and Sunday-school; he was well connected socially; he was a prominent member of one of the more popular secret fraternal organizations; he had a good position at a large salary, and enjoyed the complete confidence and respect of his employers and business associates. Like a bolt out of a clear sky, therefore, came the revelation that he had robbed his employers of more than a hundred thousand dollars. This money he had lost in speculation.

It was the old, old story. He had begun speculating with his own reserve; this was quickly wiped out. Then, in order to win back what he had lost, he had begun to borrow, little by little from his employer. He would win for a little while; then he would lose, and, as a result, would have to borrow more in an attempt to make good his losses and repay what he had borrowed.

This man's employers had to make good a loss of about one hundred and twenty-two thousand dollars. In addition to this, they lost time, money, service, energy, and physical well-being because of the upset in their business and the bitter disappointment to them in the defalcation of their trusted employee. They also spent money tracing him in his flight and bringing him back to face trial and receive his penalty. More money was spent trying to discover whether he had concealed any of the funds he had stolen, so that they might be recovered. All of this might have been saved and the man himself, perhaps, might have been protected from the fate which overtook him, if, instead of judging him by his church record and his pleasing personal appearance and manner, they had taken the trouble to learn something about the external evidences of weaknesses which this man possessed in such a marked degree.

WHY HE GAMBLED AND STOLE

If they had learned some very simple principles, they would have been able to determine at a glance at his curly blond hair; by his secretively veiled eyes; by his large, somewhat fleshy nose, not particularly high in the bridge; by the weakness and looseness of his mouth, and the small and retreating contour of his chin, and by other important indications, that he was selfish by nature, grasping, extravagant, too hopeful, too optimistic, too fond of money, too self-indulgent; that he lacked conscientiousness; that he lacked caution; that he lacked foresight; that he lacked any very keen sense of distinction between what was his and what belonged to others; that he lacked firmness, decision, self-control, will-power. Notwithstanding his lack of all these things, he had made a success for himself, up to the time of his defalcation, by means of a keen, penetrating intellect, excellent powers of expression, the ability to make himself agreeable, ease in mingling with strangers, a natural talent for piety and pious profession, and considerable financial and commercial shrewdness.

A man of this type is nearly always a gambler if he has an opportunity; but he ought to be placed in a position where there will be no temptation to him to rob others to satisfy his gambling proclivities. He is one of the last men in the world who ought to be placed in a position of responsibility, trust, and confidence. For the protection of others and for protection against himself, he ought to be under the most careful supervision. His intellectual powers, his suavity, his ability to meet and handle strangers, his commercial and financial shrewdness, ought all to be given full scope by his employers, but any opportunity to handle money or help himself to the funds of others should be carefully shut away from him.

AN ENGINE WITHOUT A BALANCE WHEEL

Some years ago we had an opportunity to look into the affairs of a mail-order house which had just failed for a large sum, so that its creditors, in the final adjustment, received about eleven cents on a dollar for their claims. The business had been established by a capitalist of considerable wealth, who had made his money in an entirely different line. For some years it was operated in a conservative way by a man who had had years of experience in the mail-order business. The man was well along in years and rather old-fashioned in his ideas. While his management was safe and sane, it had not produced a very large return upon the capital investment. For this reason, the owner determined to engage, as advertising manager, a young man who had several years' successful experience in advertising, but no first-hand knowledge of the mail-order business. The young man did brilliant work. The business of the house began to grow, dividends began to come in, and the owner was delighted. But the new advertising manager and the old general manager did not get along well together. The young man was progressive, optimistic, had ideas of expansion and growth, while the old man was conservative, careful, and somewhat out of date in his ideas as to business.

There could be no result of such a combination except the final resignation of the old general manager. This was only too gladly accepted, and the young man who had come in as advertising manager was placed in full charge. Following his appointment there was a period of rapid expansion. Many new lines were added; the concern rented two more floors in the building where it was located, and eventually purchased ground and built a fine new building. The payroll doubled, then trebled, then quadrupled. All these things, of course, took more capital, and the owner was compelled to add many thousands of dollars to his original investment, first, for permanent improvement; then, from time to time, for working capital. He was glad to do this, because the business was growing. There seemed to be every prospect that in the near future there would be profits far in excess of anything the owner had ever dreamed of under the old management.

SUPERSTRUCTURE WITHOUT FOUNDATION

Then came a time when other ventures of the owner compelled the use of all of his spare capital. He could no longer add to the funds invested in his mail-order business. He called his new general manager in and said: "I have put a great deal of money into this mail-order business. You have your beautiful new building; you have a goodly amount of working capital; you have expanded and added new lines; and I think the time has come when you ought to be able not only to run along without any more investment on my part, but very soon to show me a nice little profit. I assure you that it will come in exceedingly handy in the new venture which I have undertaken."

"Oh, certainly," the young man said, "there is no doubt that we shall soon be paying you larger profits than any other enterprise you control, with the new business we have secured and the splendid profits on all lines we are now handling. There is no reason why we should need any more capital, and I do not think it will be very long before we will have repaid you in dividends for every penny of money you have recently put into the business."

And so the owner turned his back on his mail-order business and gave his time, thought, and energy to his other ventures. Reports, of course, reached him regularly, but he had full confidence in the manager, and he was very busy, so he paid but little attention to them.

THE INEVITABLE COLLAPSE

A little more than a year had passed when the capitalist was profoundly astonished and dismayed to have one of his best business friends call upon him and request: "Charlie, I wish you could do something for me on that account. It's long past due and it's getting altogether too large for me to carry as business is now."

"Why, what account is that? I didn't know I owed you a cent."

"Why, for that mail-order business of yours. They've been ordering goods from me for over a year now, and what they have ordered during the last six months has not been paid for. I knew that you were good, of course, and so was perfectly willing to extend the credit. But you know, as a businessman, that there is a limit to such things, and I think it has about been reached. I hope you can take care of it immediately, as I can very readily use the funds."

"Why, how much is this wretched account of mine, Will? I didn't know I owed you a cent. It can't be very much."

"Well, it all depends upon what you call very much. It's something like thirty-five thousand dollars."

"Thirty-five thousand dollars! Why, man, you must be dreaming," and the capitalist turned to his telephone and called up the general manager of his mail-order business.

"Why, yes," came back the cheerful, confident tone of the optimistic young manager, "we do owe them around thirty-five thousand, I think. I supposed, of course, you knew all about it. I've been sending my reports in every week."

"But why haven't you paid it? Certainly your sales are big enough and your income from them good enough for you to pay your bills."

"Well, I'll tell you; it is taking us just a little longer for us to get on our feet than I had expected. Then, after your decision not to put any more money into the business, I found it necessary, in order to round out and complete our line, to add some new items which cost us quite a little. But we are in good shape now and the sales are increasing. We shall soon be able to take care of all of our outstanding obligations."

"How much are your outstanding obligations?" asked the capitalist, with a sinking heart.

"Well, about two hundred and fifty thousand dollars, I should say. But it won't take us long to clean that up now that we've squared away."

"You'd better come right over here and bring your books with you. I want to go into this thing."

WHY HE FAILED

It took only a few hours' investigation of the books to convince the capitalist that his mail-order business was hopelessly insolvent. It took expert accountants to find out why it was insolvent. The trouble was that the young manager had proceeded with only the vaguest and roughest kind of an estimate of cost, based, not upon facts, but mostly upon his own superb guesswork. New business had been brought in by reducing prices. "Low prices" had been one of the slogans of the young man's campaign, and he had cut under all of his competitors. On the other hand, there had been the slackest kind of management inside. Overhead expenses had mounted and mounted. The young man had been altogether too easy and generous in fixing salaries, granting promotions and increases, and in giving positions to those who applied. He was really a splendid young fellow, with a sympathetic heart and a generous hand, and it was very difficult for him to turn away anyone who could tell an artistic hard-luck story. Expensive equipment had been purchased which had far greater capacity than the needs of the business required; therefore, many machines and other fixtures had stood idle seventy-five per cent of the time, eating up money in interest charges, depreciation, space, light, heat, and other expenses. In addition to these out-and-out expenditures, there were dozens of little leaks in all the departments of the business, all busily draining away not only possible profits, but the working capital, and, finally, the limit of the concern's credit.

As a result of this kind of management, the final accounting showed the liabilities of the concern to be in the neighborhood of four hundred thousand dollars and its assets only about forty-five thousand. No one could be found to take the business, even as a gift, and assume its obligations. The owner himself had his capital so tightly involved in other ventures that he was unable to save this concern, and it was therefore sold under the hammer. The creditors received their little eleven cents on the dollar. The owner's capital investment was, of course, a total and complete loss.

This man made his mistake in placing a business in which there is a multitude of detail and a necessity for the closest possible scrutiny of every cent of expenditure—a business which must be done upon the smallest possible margin in order to be successful—in the hands of a man who could look only outward and forward and upward. The young man was, indeed, a splendid business getter. He was a natural-born advertiser, salesman, and promoter. His personality was forceful, pleasing, and magnetic. In his intentions and principles he was honest and highly honorable. He was keen, positive, quick in thought, quick in action, progressive, eager, buoyant; he had a splendid grasp of large affairs, principles, and generalities. But he had no mind for details; he rather scorned them. He was perfectly willing to leave the details to someone else, and even then did not care to hear any more about them himself. He never ought to have been placed in charge of a business involving such minute carefulness as the mail-order business. He was dangerous in any position of responsibility without a partner or an auditor and treasurer competent to look after the finances and all of the details of the accounting and administration. This young man's function was getting in the business, but he was not equipped by nature or by training to take care of the business after it came into the house or to administer the funds which came in with it. The capitalist would have known, if he had exercised one-half the care in choosing a general manager that he did in selecting a driving horse, that the young man was unfitted for the work he was expected to do.

A COMMON TYPE

He would have known that anyone as blonde in coloring and as round-headed as this young man was unfit for a position which required the minutest and most careful scrutiny of every detail of administration. He would also have noticed his wide-open, credulous, and generous eye; the narrowness of his head just behind the ears, indicating his inclination to side-step anything in the nature of a disagreeable contest or combat. The high dome of his head just above the temple and the turned up tip of his nose, both indicating extreme optimism; his very short fingers, indicating dislike of detail and the inability to handle it; his rather soft-elastic consistency of hand, showing inability to bear down hard and firm in cutting expenses and holding down salaries.

This young man's type is very common. We meet it constantly in business, and wherever we have met it, we have always found that, unless it was associated with a man of dark complexion, hard consistency, keen, shrewd eyes, the ability to fight and to stick, a sort of bull-dog tenacity, it simply ran away in over-optimistic ventures, dissipated its earnings, and ended in dismal failure.



ROOSEVELT AND TAFT CONTRASTED

When Mr. Roosevelt was about to end his term as President of the United States in 1907, he and his more prudent advisors did not consider it good political judgment for him to seek at that time nomination for what would have been, in effect, a third term. He therefore began to cast about to find a successor who would carry out his policies. As President, he had inaugurated certain policies of administration which he regarded as being of the highest possible importance to the country, and to the world at large. We are not here discussing the common sense, wisdom, and statesmanship of those policies. The fact to which we are calling attention is that Mr. Roosevelt wished to use his influence as President and as the leader of his party to have placed in nomination, as his successor, a man upon whom he could rely to continue to administer the office of President according to the policies he himself had inaugurated.

Mr. Taft had long been a member of Mr. Roosevelt's cabinet and had also been a very close personal friend. As Governor of the Philippines, and as Secretary of War, he had made a splendid record and was considered to be one of the most loyal and able of the President's official family. Accordingly, he was selected by Mr. Roosevelt as his successor. In his campaign for election, and in his inaugural address, Mr. Taft repeatedly gave assurance to the voters that it was his intention to carry out the Roosevelt policies. There is practically no one, even those who disapprove most heartily of Mr. Taft's record in the Presidency, who thinks that he was anything but sincere and honest in making these promises to the voters.

HOW IT WORKED OUT

Now, without discussing for a moment Mr. Taft's administration as President from the standpoint of its true value to the country, or the actual quality of his statesmanship, there is no question in the mind of anyone that he signally failed to carry out the Roosevelt policies. In fact, he became the titular leader of that faction of the Republican party, before the end of his administration, most violently opposed to the Roosevelt policies. He has subscribed to and preached a totally different political doctrine from that of his former friend and chief ever since. This course of action may have been right; it may have been wrong; it may have been wise, or it may have been unwise. It may have been fully justified, or it may not have been justified. These are not questions which interest us here.

The point is that Mr. Roosevelt, in all good faith, and believing in the wisdom of his choice, selected Mr. Taft to carry out his policies in the government, and that Mr. Taft, no doubt with the best of intentions, failed to carry out those policies. The result was a split in the Republican party, the election of a Democratic President and Congress, and other far-reaching consequences, the full meaning of which we have not yet begun to see. They may be good; they may be unfortunate. That is not the question at issue. The question is, could Mr. Roosevelt, if he had had a scientific understanding of human nature, have foretold Mr. Taft's course of action?

INDICATIONS OF DIFFERENCES IN CHARACTER, IDEAS, IDEALS, AND ACTIONS

The Roosevelt policies were aggressive and bold, cutting across traditions, flinging down the gauntlet, and throwing defiance into the faces of powerful political and business interests. They assumed for the executive office at least all of the powers which, according to the Constitution, belong to it, working in harmony with a group of men who had interested themselves in a number of progressive—perhaps some might say radical—reform measures. Furthermore, these policies were a perfectly natural expression of Mr. Roosevelt's personality.

Do Mr. Taft's physical characteristics, as easily observable indicate that he is of a character, temperament and aptitude to continue such policies as these. A comparison of the two men should give us the answer.

Mr. Taft is very much lighter in color than Mr. Roosevelt. As a general rule, the lighter blond coloring is an indication of mildness of disposition, instead of the fierceness and eager determination to dominate of the man who is as ruddy as Mr. Roosevelt.

Mr. Taft's forehead is very much more practical in type than Mr. Roosevelt's. He is, therefore, far more interested in the practical application of such principles as he has than in theories, hypotheses, and reform.

Mr. Taft's nose, by its roundness and softness of contour, indicates mildness, good nature, refinement, and delicacy of feeling, while Mr. Roosevelt's is the large-tipped, bony-bridged nose of aggressiveness and combativeness.

Mr. Taft's mouth is a good-natured, smiling, laughing, jovial mouth, instead of the grim, hard, fighting mouth as shown in Mr. Roosevelt's type.

Mr. Taft's chin is of the rounded and rather retreating type, an indication that he is probably far better qualified by disposition to follow a strong and aggressive leader than to take the aggressive, dominating, fighting leadership himself.

Mr. Taft is a very much larger man than Mr. Roosevelt. This, while not particularly important, is just one more indication of his good nature and his dislike for a hard, grueling fight. It is an interesting fact that almost all of the great fighters of the world have been little men. Alexander, Caesar, Napoleon, Grant, Lord Roberts, Sheridan, Sherman, Wilhelm II, and many others have been below medium in stature. Of the others, Kitchener, Wellington, Frederick the Great, Washington, and von Hindenberg have been men of not more than medium size. It is almost unprecedented to find a fighter in a man of Mr. Taft's huge size.

In structure, Mr. Taft is essentially of the judicial type. This type is always a defender of property, an upholder of the Constitution, a strong advocate of making the best of things as they are, rather than plunging into violent innovations, the results of which are unknown and may very easily prove to be disastrous. On the other hand, Mr. Roosevelt is of restless, active, pioneering structure—the bony, muscular type of man who has always led reform movements and led in fighting for changes he thought would add to the freedom of humanity.

Mr. Taft's texture is finer than that of Mr. Roosevelt. He is, therefore, more interested in the refinements, the luxuries, and the delicacies of life than is Mr. Roosevelt. He is also less vigorous, less virile, and less insistent upon reform and the right of the people to rule. It is an interesting fact that most of the great friends of the people, most of those who are eager in demanding the rights of the proletariat, are men of medium or coarse texture.

Mr. Taft is soft elastic in consistency of fiber, while Mr. Roosevelt is hard elastic. This indicates more impressionability or amenability to influence, more desire for finding an easy and pleasant way to accomplish his end on the part of Mr. Taft than on the part of Mr. Roosevelt.

In Mr. Taft the vital element leads—in Mr. Roosevelt, the motive. The vital element conduces to putting on of flesh, enjoys the good things of life, loves an easy time, and naturally inclines to make the best of things as they are. On the other hand, the motive element demands outdoor activity, freedom, liberty of movement, and not only liberty for itself, but liberty for everyone else.

Mr. Roosevelt's jaw is square and determined, which shows an inclination to push things through regardless of obstacles; to pursue his ends no matter what difficulties stand in the way. Mr. Taft's jaw is rather rounded and not so prominent. This indicates less determination, less perseverance, less persistence in pushing against obstacles and difficulties.

Note the difference in width between Mr. Roosevelt's and Mr. Taft's head just above the ears. Mr. Roosevelt is very wide-headed. This indicates energy, aggressiveness, impatience, a certain amount of destructive tendency. It is this which not only makes Mr. Roosevelt an aggressive, eager, fighting, dominating politician and statesman, but also a mighty hunter.

On the other hand, Mr. Taft's head is medium narrow just above the ears. This indicates mildness, an inclination to use diplomacy rather than force, and a tendency to take things as they are rather than to push ahead aggressively and make radical changes.

Mr. Roosevelt's head is high in the crown. Mr. Taft's head is low in the crown. A high crown indicates firmness, decision, love of power, love of authority, a demand to rule, and great ambition. A low crown, on the other hand, indicates amenability to authority, a willingness to compromise, and a lack of domineering quality.

Compare the expression of the two men. Mr. Roosevelt's expression is intense, vigorous, and almost belligerent. Mr. Taft's expression is mild, calm, judicial, good-natured, and jovial.

By what stretch of the imagination could anyone suppose that a man of Mr. Taft's character and aptitudes, as shown by the indications pointed out in the foregoing, could even begin to carry out the policies of a man of Mr. Roosevelt's character, as shown by the indications we have pointed out? And yet, all of the political history of the United States since 1909 has been completely changed as the result of Mr. Roosevelt's lack of knowledge of the plain facts of the science of human nature. Indeed, the result of Mr. Roosevelt's choice of a successor is found in Mexico, in Germany, in England, in France, and, in fact, throughout the world.

IF NOT SCIENTIFICALLY, HOW?

Woodrow Wilson has been criticized, perhaps, as severely for his selection of men for various posts in his administration as for any other cause, if reports are to be believed. He has probably suffered far more from unfortunate selection of lieutenants and of men for special tasks, and has more deeply regretted his mistakes of this nature, than any other thing in his administration up to the time that these lines are written.

The few examples we have given in this chapter of men who gave excellent promise and then failed to live up to their expectations are typical. They are occurring every day in every line of business and industry, as well as in politics and government. We are told by some who have made a study of this subject that the only way to find out what a man can do, what his aptitudes are, what are his abilities, his capacities, his type, and what his performances will be, is to put him in a place where he will have an opportunity to show what there is in him. If this is the best that science can do for us, we are, then, groping in darkness through a tangled maze of pitfalls. We have nothing left but to go on using disastrous and impracticable methods in the selection of men for commerce, for industry, for financial responsibility, and for the highest positions of honor, responsibility, and power in the gift of the people.



CHAPTER III

THE REMEDY

True, we can determine a man's fitness by giving him a trial. But, if he is a failure, and we learn nothing by experience, the next incumbent may be a hundred-fold worse. Furthermore, in many places, selection by trial is an impossibility, as in marriage, in the presidency of a bank, or in a general to lead a forlorn hope. There must be some better way.

Some years ago we were asked to make an investigation at a printing and publishing house. Two years before this time the proprietor had ceased to receive any profits from the enterprise and, at this particular time, complained that for months he had been putting money into the business in order to keep it going. He himself was not a practical printer and was not in immediate management of the concern. His manager, however, was an able man, a good printer, and was considered to be a good business man.

At the very outset of our investigation, we found that the foreman of the composing-room purchased type, leads, and slugs, furniture, cases, and all of the other materials used in his department. The foreman of the press-room purchased paper, ink, rollers, twine, and other things. The foreman of the shipping-room purchased packing-cases, wrapping paper, twine, nails, hammers, marking ink, and other materials he used. The foreman of the bindery purchased glue, cloth, leather, boards, paper, and wire. The office manager purchased typewriter ribbons, carbon paper, clips, paper fasteners, pins, mucilage, rulers, pens, and pencils. The foreman of the electrotyping department purchased copper, acids, metal, and tools. We were rather surprised to find that the coal and lubricating oil for the engine room were purchased by the manager himself, but not at all surprised to learn that he had never heard of such a quantity as a British Thermal unit and that he had absolutely no records to show the kind of coal most efficient under his boilers. A little further investigation showed that each head of department had charge of the stores of materials and supplies for his department and gave them out to employees upon a mere verbal request. We were not long in discovering that the foreman of the composing-room received "tokens of regard" from salesmen; that the foreman of the press-room was regularly on the payroll of several companies furnishing inks and rollers, and had a brother-in-law running a little print shop around the corner and spending very little money for ink, paper, and other such materials. Each head of a department also had full power to "hire and fire," as he called it. The foreman of the composing-room said to us, when we questioned him in regard to this matter, "Why, if I didn't have the power to hire and fire I could not maintain discipline in my department; rather than give that up, I would resign my position."

As a result of this state of affairs, we found a brother of the foreman occupying an easy position in the composing-room, a brother-in-law, two nieces, two nephews, and a son occupying easy positions at good salaries in the press-room and various other nephews and other semi-dependents working away under foremen who were related to them in the various departments. In the composing-room, also, we found, upon careful investigation, that several of the employees were very heavily overpaid at times and that they divided the surplus in their pay envelopes with the foreman.

When we called these things to the attention of the manager, he was deeply surprised and pained. "Why," he said, "every head of a department in this printing and publishing house is a personal friend of mine. I have the highest regard for them and have held their honor and uprightness so high in my estimation that it has never occurred to me to investigate their administration in their several departments. You know, of course, that this is the usual procedure in the printing business. The foremen regard these prerogatives as being especially theirs and would very deeply and bitterly resent any attempt on the part of the management to take them away." The manager was only partly right. It is true that these practices have been followed in many printing and publishing houses; that they are followed in some even to-day; but even in his time the most progressive and successful had long ago abolished this inefficient and dishonesty-breeding system.

SCIENTIFIC PURCHASING ENDS ABUSES

To-day in every well-managed printing office, as well as every other industry, there is a purchasing department. Materials are purchased, not through favors, or on account of bonus from the salesmen, but upon exact specifications which are worked out in the laboratory. Materials are accepted and paid for only after a laboratory analysis to ascertain their true worth. Materials are kept in a stores department and are issued only upon written requisitions. Requisitions are carefully checked up, records kept to show that each department is using only its proper quota of materials and supplies of all kinds.

While the purchasing of mere inanimate material, which after all is only secondary in importance, has thus been reduced to science and art in charge of specialists, the methods of selection, assignment, and handling of employees in nearly all industrial and commercial institutions continues to-day on the same old dishonest basis as that which we found in the printing and publishing house described. Foremen, superintendents, and heads of departments still guard jealously their prerogatives of hiring and firing. So deeply rooted is this prejudice in the minds of the industrial and commercial world, that many managers have said to us in horror, "Why, we can't take away the power to hire and fire from our foremen. They couldn't maintain discipline. They would not consent to remain in their executive positions if they did not have this power of life and death, as it were, over their employees."

Incidentally, we may say, that we have had almost no trouble in securing the enthusiastic and loyal co-operation of foremen and superintendents where employment departments have been installed.

SCIENTIFIC EMPLOYMENT THE REMEDY

It is becoming increasingly clear to employers that, only by following the example of the purchasing department, can industry and commerce cure the evil which we have briefly described and exemplified in the two preceding chapters. We find that employment, instead of being left to the tender mercies of foremen, Tom, Dick, and Harry—who may or may not be good judges of men, who may or may not be honest, who may or may not indulge in nepotism, who may or may not pad the payroll; who may or may not be unreasonable, tyrannical and otherwise inimical to the best interest of the concern from whom they draw their living—selection of help is now delegated to specialists and experts. Employment departments are now established with more or less complete control over the selection and assignment of men and women in the organization. In some of these departments complete records are kept. Exact and painstaking care is used in securing data, hunting up applicants, watching the actual performances of those who are put to work, determining whether or not they live up to their opportunities. In other employment departments this system is very loose and the departments exist principally for the purpose of securing applicants who are then turned over without recommendation to the foreman who still has the power of employing and discharging.

The remedy for which we have been looking is to be found in an employment department, organized with a carefully selected personnel, which will perform the same careful, analytical research and record-keeping functions as a scientific purchasing department. Perhaps, for the sake of clearness, it would be well for us to describe rather in detail the work of such a department.

ORGANIZATION

The organization of such a department depends entirely upon the number of applicants and employees with which it must deal and the character of the work to be done. Suppose, for example, we have a factory with two thousand employees, seventy-five per cent of them skilled, fifteen per cent of them unskilled, and ten per cent office employees. The work of such a department could be very well carried on by one employment supervisor, one assistant supervisor, one clerk and record-keeper, and part of the time of one stenographer. The employment supervisor is a staff officer. His position in the company is that of a member of the staff of the general manager or president. His work should be subject to oversight by the president or general manager alone, and he should not be answerable to any other officer or member of the corporation. It is the function of the employment supervisor to direct the work of his department, to conduct its relations with all other departments of the business, to interview, analyze, and recommend for employment all executives and employees of more than ordinary importance; to hear and adjudicate all cases of complaint or disagreement between executives or between executives and their employees and also to review cases heard by his assistant in which there is any degree of dissatisfaction with the settlement proposed.

It is the duty of the assistant employment supervisor to interview and analyze, select, and recommend for employment all applicants for minor positions in the factory and office. It is also his duty, under direction of the supervisor, to number and carefully analyze every position in the organization, determining its requirements, and, having made a careful list of these requirements in a card index, to keep it in the files of the department where it can be readily consulted. It is the duty of the clerk and record-keeper to make out all reports, to record all reports sent from heads of departments, to keep the files, to make out notifications to the paymaster and to other officers as occasion requires, and in general to keep the records and files of the department in a neat, orderly condition, up to date every moment of the day, and so managed as to yield readily and instantly any information desired.

It is the duty of the stenographer to attend to all correspondence of the department, including dictation from the supervisor and the assistant supervisor.

FUNCTIONS OF AN EMPLOYMENT DEPARTMENT

Briefly, it is the function of the employment department to secure, interview, analyze, select, and recommend for employment men and women who will pre-eminently fit into the various positions in the organization; by competent counsel, upon request, to assist the line executives in the management of employees, and, in all its activities, to act in the capacity of expert in human nature, conducting all phases of relationship between the corporation and its employees.

In detail, however, the functions of a well-organized and efficient employment department are these:

ANALYSIS OF POSITIONS

1. Theoretically, the first function of an employment department is to analyze carefully every position in the organization, listing its requirements, noting the environment and other conditions which surround it; in short, painting what will be to the members of the department a clear and easily recognizable word-picture of the aptitudes and character of the man or woman best fitted to fill that position. While this is the theoretical first function of the department, in actual practice certain conditions may arise which will make this inadvisable. But it ought to be done as quickly as possible, and the records tabulated on cards in a convenient way in a card file. These are the specifications for the human material needed in each place. The method of making this analysis varies under different circumstances.

ANALYSIS OF EXECUTIVES

2. The next step in the work of an employment department is the analysis of all executives. Each executive is interviewed and carefully analyzed for two purposes; first, to find whether he is indeed the right man in the right place; second, to observe his characteristics, his peculiarities, his personality, and to learn from him his preferences. All of these are carefully listed, and, in selecting employees, care is taken to select only those who will work harmoniously and happily with the executives under whom they are placed.

ANALYSIS OF EMPLOYEES

3. Employees in the organization at the time of the installation of the employment department are analyzed as opportunity offers. In this way the supervisor determines whether or not they are well placed as they are, or whether they have talent and abilities which would make them far more valuable in some other part of the institution. The analysis of each employee is made out either completely and in detail or in a general way, according to his importance, his future possibilities, his probable length of service with the institution, and other conditions. Clearly a great deal more time would be spent and a great deal more careful analysis made in the case of an important executive, than in the case of a day laborer engaged as a member of a temporary shoveling gang.

These analyses, after having been written out, are filed in folders. Each employee has a folder of his own, and in this are placed not only his analysis, but a sheet for the keeping of his record and all letters and papers referring to him.

SECURING OF APPLICANTS

4. Inasmuch as every live organization is always growing and, therefore, taking on new employees, and inasmuch, also, as there is a state of flux in every organization, vacancies occurring for one reason or another, it is a function of the employment department to secure as many of the most desirable applicants possible for all of the positions in the enterprise. Some of these applicants come to the employment department in the natural course of events, others come as the result of advertisements; still others because the employment supervisor and his assistant take means to ferret them out and send for them. Promising young men in schools and colleges and in the employ, perhaps, of other organizations are kept under careful observation. Data in regard to them is listed in the reserve file, and their records, as they come in various ways to the employment supervisor, are filed with them.

5. Applicants having been secured in these ways, the next step is carefully to analyze them. Under ideal conditions this analysis is made by observation, unknown to the applicant, during a pleasant interview. He may be asked certain questions, not chiefly for the sake of bringing out direct information, but for the sake of observing the effects of the interrogations upon him.

In some large organizations, in the rush season, 100 new employees may be added every day. In order to select this number, perhaps several hundred applicants may be interviewed. Obviously, a detailed and thorough analysis of each cannot be made. Under such conditions, however, the work is usually of such a character that the most casual observation on the part of a trained interviewer will reveal at once the fact that the applicant either is or is not fitted for the work to be done.

As a result of the analyses made by the employment supervisor and his staff, applicants are recommended to foremen who have made requisitions for the filling of vacancies. Bear in mind, it is not the function of the employment department arbitrarily to employ. When a desirable applicant has been found, he is sent, with a recommendation, to the head of the department which has made requisition for an employee. Then the foreman or superintendent or the manager either rejects or accepts the applicant. In case of rejection, the executive returns the applicant to the employment department, stating his reason for his action.

When an applicant is accepted, the employment department notifies the paymaster, also places a folder for a new employee in the file. It is often highly desirable, also, before sending an employee to a foreman to inform him fully and in detail as to the work he is expected to do, the conditions under which he will be expected to work, the rate of pay he will receive, the opportunities for advancement, and all other information which may decide the applicant for or against accepting the position if it is offered to him.

REPORTS AND RECORDS

6. The employment department organizes methods for receiving regular and complete reports upon the performance and deportment of every employee in the organization. These reports include punctuality, attendance, efficiency, special ability, deportment, home environment, and habits, companions, and other necessary and valuable information. Every employer who has the good of his employees and their advancement at heart ought to know these things. Reports are received from foremen and superintendents, also from others who are especially assigned by the employment supervisor to secure the information.

RECOMMENDATION FOR TRANSFER, PROMOTION AND INCREASE

7. As a result of these reports and of its own analysis, the employment department recommends for transfer from one department to another, or for promotion, or for increase of pay, such employees as merit these changes in their positions and relationship with the company. In cases where necessity seems to demand it, the employment department may also recommend the discharge of an employee.

CONSULTATION ON RATES OF PAY

8. In co-operation with properly constituted authorities, and as the result of careful, scientific study of the whole situation, the employment department assists in establishing rates of pay commensurate with the work done, with the conditions in the industry, and with their probable effect upon the loyalty, happiness, and consequent efficiency of the employees.

SPECIAL INFORMATION TO MANAGEMENT

9. Upon request of the general manager or any other executive in the organization, the employment supervisor may furnish complete information as to any employee in the organization when that information is legitimately required. Oftentimes, also, there will be a call made upon the employment department for some one with special ability to undertake a certain task. It may be that the employment department has had under its observation for months or even years some man already in the employ of the company who will exactly fill the new position or the vacancy just created. Or it may be that, upon consultation of the records, the employment department will find just the man it is looking for. In case neither of these things happen, then the right man may be found listed and described in the reserve file.

TRANSFER AND DISCHARGE

10. When a foreman or other executive can no longer use any man in his employ, he does not discharge him, but sends him instead to the employment department with a report and recommendation. Oftentimes the employment supervisor or his assistant can adjust the matter and return the man to his position, better fitted than ever to perform his task. It may be that the executive and not the employee is at fault. On the other hand, it is often the case that the employment department can take the man so returned and place him in another department, where he will be happy and efficient. It may be that the work that he has been doing is suited to him, but that his executive is not the right kind of personality for him. Whatever the employment department finds in regard to the man, action is taken in accordance therewith. In case there is real cause for it, the employee is paid off and dropped from the rolls of the company.

AID IN MANAGEMENT AND DISCIPLINE

11. Owing to his peculiar knowledge of human nature, it is often possible for the employment supervisor or his assistant to aid executives in discipline in their several departments. It has been our experience that an efficient employment department is not in existence very long before many executives begin to come in for consultation and to ask the employment supervisor or his assistant what course to pursue in reference to some particular man or some particular set of circumstances. This has been found to be one of the most valuable functions of an employment department.

SETTLEMENT OF DISPUTES

12. Also because of his expert knowledge of human nature, the employment supervisor or his assistant is often called upon to adjudicate between executives, between fellow-employees or between an executive and his subordinate. Disputes and differences of opinion usually arise because people fail to understand each other. The employment supervisor, understanding both parties in the quarrel, is usually able to point out some basis of amicable adjustment and the restoration of friendly relationship.

EDUCATION OF EMPLOYEES

13. Employers are learning that the finest and most valuable assets in their employees are not their bones and muscles; not their intelligence, training, and experience when they enter the organization; but, rather, the possibility of development of their intelligence, talents, and aptitudes. Educators now almost entirely agree that the best and most serviceable education possible is that afforded by work, provided the work is intelligently directed and constantly used by those who direct it as an educational force. Employers are also grasping the great possibilities for them in this theory. Corporation schools, night schools, special classes, and many other forms of education inside the walls of commercial and industrial enterprises are being used to good advantage. In an ideal economic system, every factory, every store, every shop, every place where men and women are gathered together for employment should be, in the higher sense of the word, a school for the development of the very best human qualities.

Since this is true, who is better qualified by training, by education, and by experience to conduct this education than the employment supervisor and his assistants? If he is properly chosen for his work, he has a special scientific knowledge of human nature; he knows not only the talents and aptitudes of every member of the force, but also knows the best way for developing and bringing out these talents and aptitudes. He knows for just what vocation each one under his tutelage is suited. He knows just what study and training each one ought to pursue in order to best fit himself for that vocation.

WELFARE WORK

14. Because of its peculiar relationship to all the employees in the organization, there is no department better fitted to undertake all of that activity in connection with industrial life, which is known as welfare work or social betterment, than that entrusted with employment.

ADAPTABILITY

The organization and plan of an employment department, as we have outlined it, is, as we have said, for an institution employing two thousand men and women. For larger organizations, of course, the employment supervisor must have more assistants, there must be more clerks and stenographers, according to the number of employees handled and the character of the work to be done. There are some organizations in which there is very little fluctuation in the personnel. In such cases a small employment department is all that is necessary, even although a large number of employees may be on the payroll. In other kinds of work there is a very large fluctuation, under ordinary conditions, and in such cases it is necessary to have more help in the employment department. In the case of small business, such as retail stores, the employer himself is oftentimes the entire employment department, except for such assistance as he may obtain from a clerk or stenographer. In such a case, also, the records do not need to be so complete and so voluminous, since the proprietor can carry a great deal in regard to each one of his employees in his own mind. We know many executives in large organizations, where employment departments have not been established, who constitute, in themselves, employment departments for their own little corner of the industry. They may have only five or six employees under their care, but they handle them according to scientific principles, analyzing them and their work with just as great care as if there were hundreds of them.

The method, after all, is unimportant. It is the spirit of the work that is all important. It does not matter whether you have a huge force of clerks, assistants, interviewers, and stenographers, or whether you yourself, in your little corner office with your three or four retail clerks as a working force, constitute the whole organization. The spirit of scientific analysis and the fitting of each man to his job in a common sense, sane, practical way, instead of according to out-of-date methods, is the important consideration in the remedy which we present.



CHAPTER IV

RESULTS OF SCIENTIFIC EMPLOYMENT

In a lecture to the students of the New York Edison Company Commercial School, on January 20, 1915, afterward also presented at the Third Annual Convention of the National Association of Corporation Schools at Worcester, Mass., on June 9, 1915, Herman Schneider, Dean of the College of Engineering of the University of Cincinnati, in discussing "The Problem of Selecting the Right Job," made the following statement:

"2. Physical Characteristics.

"This seems to be a development of the old idea of phrenology. It is claimed in this system that physical characteristics indicate certain abilities. For example, a directive, money-making executive will have a certain shaped head and hand. A number of money-making executives were picked at random and their physical characteristics charted. We do not find that they conform at all to any law. Also, we found men who had physical characteristics that ought to make them executives, but they were anything but executives. A number of tests of this kind gave negative results. We were forced to the conclusion that this system was not reliable."

It is of exceeding great importance for us to know whether the conclusion of Dean Schneider is to be accepted as final. He is a man of high attainment and has done some most remarkable and highly commendable work in connection with continuation schools in the city of Cincinnati. His opinion and conclusion, therefore, are worthy of the most careful consideration.

At first glance, Dean Schneider's method of investigation seems sound and his statement, therefore, conclusive. He examined actual cases; he collected evidence, and he found that physical characteristics were not a reliable guide to aptitudes and character. It is well for us, however, to remember in discussing problems of this kind, that every new scientific discovery has always been rejected by many recognized authorities after what they considered to be careful and convincing tests. Harvey nearly died in trying to maintain his theory of the circulation of the blood; Darwin's theory was insistently repudiated and rejected by many scientific men of his day; Galilo, Columbus, Boillard, the discoverer of the convolution of Broca, and Stevenson, the inventor of the steam locomotive engine, failed to convince the recognized authorities of their times. Gall, who localized the motor functions of the brain, a discovery universally accepted by all brain physiologists today, was laughed out of court by men of the highest scientific authority, who, by experiments, "proved" that he was wrong. So great a mathematician and scientist as Professor Simon Newcomb made the emphatic remark that the dream of flight in a heavier-than-air machine was absurd and would never be realized. The difficulty with all these conclusions lay in the fact that the much-vaunted "proof" was negative in character. Nothing is easier—or more fallacious, logically—than to "prove" that a thing is not so. The difficulty lies in proving that it is so; therefore, logically sound.

According to logicians, conclusions based upon negative premises are inherently unsound. In order to reach reliable conclusions, we must first have all of the essential facts in the case. We question seriously whether this was possible in the course of such a brief investigation as Dean Schneider made. Scientific selection of employees according to the science of character analysis by the observational method was first proposed in the summer of 1912, so that Dean Schneider has had only three years, during which he was much occupied with other duties, in which to make his observations. We only wish here to raise the question as to whether, in that short time, he could obtain all of the facts necessary for reaching a final conclusion. At any rate, other scientists have spent at least fifteen or twenty years in the examination of the same facts before reaching their conclusions.

The method employed as outlined in the paragraph quote does not seem to fulfill all of the necessary requirements of a careful and complete scientific investigation. Take, for example, the test of "directive money-making executives." Would Dean Schneider, or any other engineer, permit a layman, no matter how well qualified otherwise, to examine twenty or thirty different pieces of engineering work for the purpose of determining whether or not they "conform to any law." We acknowledge Dean Schneider's ability as an engineer and as an educator, but until he has submitted proof, we must question his ability and training as an observer of physical characteristics as indicative of character and aptitudes.

Again, take the test of those who have "the characteristics that ought to make them executives." We should like to know what these physical characteristics were. We should also like to know what other physical characteristics these men had. Perhaps there were some which interfered seriously with their becoming successful as executives.

Still further, it would be illuminating to know whether the men so examined had ever been properly trained for executive work; whether they had had opportunities to become executives or whether some or all of them may not have been misfits in whatever they were doing. Obviously, a sound, scientific conclusion cannot be reached until all of the variables in the problem have been adequately studied and brought under control. There is no evidence in the paragraph that we have quoted that Dean Schneider had done this.

But, after all, we shall proceed very little, if any, with our inquiry as to the reliability of Dean Schneider's conclusions if we content ourselves merely with criticizing his methods of research and reason. Even if we could prove beyond a doubt that the methods used were unscientific and the reasoning unsound, we could go no further toward establishing the contrary of Dean Schneider's conclusion than he has in establishing the unreliability of determining mental aptitudes and character by an observation of physical characteristics. The main question is not, "Is Dean Schneider right or wrong?" but rather, "Is an employment department, conducted along the lines laid down in the preceding chapter, a profitable investment, and, especially, is it possible to determine the right job for any individual by observing his physical characteristics?"

BUT IT IS BEING DONE

Fortunately, this question is no longer academic. There is no need for the bringing up of arguments, the stating of theories, the quoting of authorities, or any such controversial methods. Employment departments have been established in a number of commercial and industrial organizations, some very large—some small—and are being conducted, with some variations, according to the plan outlined in the preceding chapter. The science of character analysis by the observational method is the basis of their work. In addition, this science is the basis of employment work in several hundred other employment departments, large and small, where the Blackford plan has not been adopted in its entirety. The plan referred to was formulated in 1912. The fact that this method has been in actual commercial use under widely varying conditions and in the hands of many different individuals, for more than three years, is, on the face of it, a reasonably fair presumption of its reliability. At any rate, it is fully as convincing as Dean Schneider's purely negative "proof."

The question remains as to whether the commercial applications of this method are successful; whether the results obtained are reliable; whether the inefficiencies and losses, to which we have referred in previous chapters, are appreciably remedied by its use.

SOME PRACTICAL RESULTS

In one of the first organizations where the Blackford Employment Plan was installed there were employed about 2,500 men and women. At the time of the adoption of this plan the various foremen and superintendents in the plant were hiring about 6,600 new employees each year in order to maintain their regular working force of 2,500. Within six months new employees were being taken on at the rate of only 4,080 a year—and this notwithstanding the fact that many changes were necessitated by sweeping reorganization and adoption of new methods of manufacture in the industry.

Excellent results were obtained in reassignment of executives as the result of a careful analysis of those holding positions when the department was installed. One executive instantly recognized as being clever, designing, and essentially dishonest was replaced by another of a reliable, efficient type. Under the new executive, the department more than doubled its output, at the same time cutting the payroll of the department down to 43 per cent of its former size. Still another executive, holding a position of highest trust and responsibility, was reported upon adversely after analysis by the employment department. An investigation made as the result of this report revealed serious irregularities covering a long period of months. Another man properly qualified for the position was selected by the department, and immediately began to effect noticeable savings, as well as greatly increasing the value of the department's work in the institution. Still another executive selected by this department increased the output of one of the shops by 120 per cent, with a very slight increase in the payroll. In another organization, careful records showed that among employees selected according to this plan, 90 per cent were efficient, satisfactory, and permanent; 8 per cent fairly satisfactory but not permanent; and 2 per cent unsatisfactory and discharged.

AN UNUSUAL HARMONY OF JUDGMENT

But these results, while desirable, are not wholly convincing. It is easy enough to explain them on the ground that any man or woman of common sense, keen observation and good judgment, devoting all his or her intelligence and time to employment problems, might have gained the same results without using a method for determining aptitudes and character from an observation of physical characteristics.

More specific and more convincing evidence may be found in a series of incidents which occurred in connection with an employment department established in a textile factory, employing twelve hundred men, located in New England. The supervisor of this department is a young man who has been a student and practitioner of this method in employment work since August, 1912. Previously to taking up this work, he had taken an engineer's degree and had some experience as an executive, in a large factory.

In January, 1915, the supervisor analyzed carefully twenty executives then at work in the plant, carefully wrote out the analyses and submitted them to the management with recommendations for transfers and readjustments of rather a sweeping nature. The management, wishing to make an experiment, agreed to make the changes, provided we were also to analyze the executives in question, submit our analyses in writing, and show agreement as to the character and aptitudes of the men. We accordingly proceeded to the factory, and there, without consultation with the supervisor or his report, proceeded to analyze the twenty executives independently. It would not be fair to the executives in question to publish all of these analyses in full, but a comparison of the essential points in a few of them will be instructive:

Supervisor says of No. 1: "Sociable, scheming, secretive; poor judge of men; lacking seriously in executive ability; decidedly a 'one-man-job' man; does not plan ahead; clannish, narrow-minded; very low intelligence for a foreman. Any organization he builds will be close-mouthed, unreliable, and selfish in structure. Because of the technical knowledge of the business which he has gained, and which can be gained only by long experience, he should do good work in experimental lines. Any change made, however, should separate him completely from the regular productive organization."

Dr. Blackford reports on No. 1: "He is, however, an undesirable man to be in charge of others. He is far more destructive than constructive, more disorganizing than organizing. He is ultra-conservative, non-progressive, and is not disposed to take on any new methods unless he himself can get the credit for their installation. In disposition he is stubborn and obstinate. He is also reserved and suspicious. Being of the selfish type, he will look after his own interests first in all things. No. 1 lacks straightforwardness and frankness of disposition, so he will be tricky, slippery, and do things in an underhanded way. He has very great dislike of detail and will have a tendency to procrastinate if given an opportunity, I believe he has passed the age limit of mental growth."

Supervisor thus summarizes No. 2: "A well-intentioned, honest and reliable man, lacking absolutely in executive ability. Should have a job as inspector or like, where he would have no one to look after but himself."

Dr. Blackford says of No. 2: "No. 2 is a simple-hearted man of very ordinary ability. He is not systematic or orderly; is very susceptible to criticism; exceedingly emotional, apprehensive, and watchful. No doubt men will like him because he is easy with them. However, he will not be a particularly good executive, because he cannot maintain discipline."

Supervisor thus analyzes No. 3: "Very clannish, lacking absolutely in intelligence, executive ability, frankness; in fact, every attribute that is necessary for a good foreman. Is wholly unfitted for an executive job of any kind. Under very strict supervision, would make a fair workman."