like old, being paid only for work actually done, only the cost of indirect labor should be assessed against the labor cost of reduced production. The above method is not strictly true, but if the ideal machine capacity is based upon the observed output of experienced operatives, it will be sufficiently correct. B. Second alternative a. Select a number of machines worked by new men and an equal number of like machines worked by men over a year in service b. Record the production of each group until the total of men reaches the total of old men. c. Time required to teach this may be taken as average learning time d. Total difference of production during this time may be spread over the number observed and the average taken as the loss for the average man hired e. For men dropping out of the groups while under consideration C. Laborers can be figured in about the same way, namely— b. Compare the number of new as against the number of old men c. Drop men as they improve so as to keep output constant d. Until number in first gang equals number in old, this gives the learning time for laborers, and the loss of production of average new laborer. 5. Excess plant cost of reduced production A. Assume that the plant investment required under present conditions will bear the same ratio to total investment in plant which would be needed if there were no turnover, as the production which would be possible with the present equipment operated by all experienced men would bear to the present actual output. In other words, if your reduced production is 20 per cent, your excess plant required is 20 per cent. This is stated as axiomatic B. Find present total inventory C. Figure on the basis of your present loss of production how much less equipment would be necessary without labor turnover D. The difference may be used as basis for figuring the amounts of— a. Interest on capital E. Figure by shops, as if separate plants, for each class of skill using equipment and spread cost over turnover in those classes Excess plant cost and labor cost of reduced production should be figured separately and then added together, instead of prorating excess plant cost as a burden on the labor cost of lost production, because the burden is not the same man for man, and department for department. Furthermore, in departments where wages are in proportion to efficiency, "excess plant" costs plus excess supervision constitute the sum lost by slow production. 6. Spoiled Work A. Select at random two equal groups of men representing evenly all grades of skill save laborers, one, a group of new employes, the other, of men over one year in service B. Compare total scrap losses for each group until approximately even per day period for some time. The point at which it began to be even may be taken as showing the average time required to reach normal scrap record C. Subtract total scrap made by old men from total made by new men and divide the difference by the number in a group, to get total scrap per new employe hired 7. Waste Figure the same as scrap. The item includes waste of oil, cutting com pound, compressed air, etc. AN ACTUAL ACCOUNT OF WHAT WE HAVE DONE TO REDUCE OUR LABOR TURNOVER BY JOHN M. WILLIAMS, Secretary, Fayette R. Plumb, Inc., of Philadelphia and St. Louis; President of the Philadelphia Association for the Discussion of Employment Problems. THE USE OF AN EMPLOYMENT DEPARTMENT I wish to speak from the standpoint of the average employer of the need of an employment department; and, to make myself entirely clear, I wish to point out conditions as they existed in our factory, and it is safe to presume in the average factory. First, I want to state that our firm is over sixty years old, and has built up a reputation for making high quality tools during all of that period. This is not intended as an advertising statement, but is to give you some idea of the class of work we do, the problems we must solve, and further, to have you feel that our employes producing such work, must be at least of average intelligence. You will thus understand that the problems we met were not due to the fact that we had a lot of underpaid, ignorant employes. In other words, our problems are about the same as the problems you have in your own factory. I also want to impress upon you the fact that while we are sixty years old, we are also sixty years young. I am the oldest man in the executive department of our organization and I am not much over forty years old. We have the reputation of being progressive along all lines of executive control and have established a record for efficiency along general factory lines. We have technical graduates who have been employed in our various departments to keep us fully abreast of the times in all branches of research work, especially in the development of steel. We have a cost system in our factory that was installed at the expense of thousands of dollars, and is to my mind the most efficient I have ever seen because it produces results, and presents them to us monthly. These points are brought out so that you will realize that we are not held back by any "old fogy" ideas on the part of our executives, and to bring home to you the appalling fact that in an or ganization such as ours, striving to be up-to-date, it has only been within the past few years that we have fully realized what a terrible drain excessive labor turnover makes on the pocketbook of the employer. COST OF LABOR TURNOVER We have learned during the past two years from authorities in their line, as to the cost of labor turnover, and I believe the fact is firmly fixed in our minds that there is such a cost, but as the statement of such cost has been so general we are more or less skeptical as to the actual amount involved. I therefore propose to tell you about one of our departments, and will consider only the actual cost to us of bringing a man in off the streets, placing him in a position that is only semi-skilled, in fact, in such a position that with average intelligence a man becomes an effective worker in twelve weeks. The department in question is run on a piece work basis and we have a plan whereby we pay each workman a day rate, in addition to a piece rate, until such time as he becomes efficient enough to earn a fair week's salary, which in this department is about six weeks, although to reach the full pay of an expert worker takes twelve weeks. Our basis is as follows: The first week we pay thirty cents per hour flat. The second week we pay twenty cents per hour and in addition pay for all At the end of that time the man should be self-supporting. We credit this man with all work turned out, and yet our records show that such a man costs us, in excess day work charges, the cash sum of $42. This, however, is only part of the cost, as in this particular department the overhead expense is 130 per cent, or for every dollar we pay in actual productive labor we pay $1.30 for unproductive expense, such as foremen's wages, instructors' wages, inspectors' wages, power, heat and light, repairs to machinery and fixtures (belts, shafting, benches, frames, etc.), oils, grease and WHY WE STARTED AN EMPLOYMENT DEPARTMENT The work of the Philadelphia Association for the Discussion of Employment Problems opened our eyes to the importance of a better system of hiring and firing men. Our system had been the lack of system used by the average employer. When we needed men, our foremen hired what men they could get through their friends, and the balance were picked up in the early morning from the floaters found at the door of every factory daily, and it is hard to conceive of a more undesirable source of supply. This method is so bad in its results that I do not intend to dwell upon it but will relate actual occurrences that crystallized our ideas as to starting an employment department. We heard one of our foremen interview an applicant one day when our need for men was urgent, and the way he handled him opened our eyes as to the possibilities for evil under such a system. We had at that time, when labor was plentiful, a scheme of partial remuneration, different from that outlined above. When the foreman appeared on the scene, after the man had been waiting almost an hour, he approached him in a belligerent attitude, with"Do you want a job?" The answer was "yes," and an inquiry as to the kind of work. This was answered in a monosyllable, and then the applicant asked what the job paid. With no attempt to explain the method of remuneration the applicant was informed that we started men in and they could make fifteen cents an hour but would soon learn and get more money. The applicant said, "I could not work for fifteen cents an hour." The foreman snarled, "Hell! You don't want work," and left the applicant standing in the hallway, with a blank look on his face. At about the same period we advertised for men, and our officewas filled daily in the early morning, and when the foremen had grabbed off as many as they needed in point of numbers, they paid no attention to the balance, but would instruct an office boy to tell the applicant that all jobs were filled. One day we received a letter from a workman who had noticed the advertisement, and wrote relating his experience in answering a previous advertisement from our factory. He stated that he did not want to try it again. He pointed out the fact that he had spent an hour and a half in the early morning to get to the factory |