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.
CHAPTER I
121
"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 CHAPTER I
122
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 CHAPTER II
123
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 CHAPTER II
124
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 CHAPTER II
125
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 CHAPTER II
126
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 CHAPTER II
127
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 ol