UNIT – 3
SCIENTIFIC MANAGEMENT
F. W. Taylor is known as the Father of scientific Management. Fredrick Winslow Taylor was an American, he worked for American steel. He was an engineer by profession and most of his work was concerned with experiments to find the best method of doing jobs.
Definition:
According to F. W. Taylor, “Scientific Management is an art of knowing exactly what is to be done and the best way of doing it.”
Taylor advocated the ideas of scientific management by publishing in 1911 his famous book entitled. “The principles of scientific management.” According to Taylor management problems should be solved by experiments and scientific techniques rather than thumb rules or trial and error methods. Taylor’s principles were based on the following four areas:
1) Each worker should have a clearly defined daily task.
2) Certain standards must be determined to ensure that the task is easily accomplished
3) Proper persons should be selected and trained for the jobs.
4) The work should be done efficiently.
Principles of Scientific Management:
1.] Development of Science for each part of men’s job: According to this principle the manager should be The Scientific method to determine every activity by the employee in the organization. For this he should consider the following points.
a) To calculate the time required for each job by observing the employee.
b) To determine how much work can an employee perform in a day.
c) To find out the best way to do a particular job.
d) Instead of using trial and error method for determining the job use systematic way such as data collection, Analysis of data and then drawing conclusions.
2.] Scientific Selection, Training & Development of Worker: According to Taylor selection of employees is an important task before the manager. The Selection procedure should be perfect and systematic. For this purpose the following points should be considered.
a) The procedures of selection should be scientific. It means the selection should not be based on the judgment of a single person.
b) The physical, mental, technical or other qualities required for the job should be clearly defined. This makes the selection easier.
c) These Employees should be selected on the basis of tests and interview.
d) The employees should be trained from time to time. Training makes employees capable to survive in the job.
e) The manger should provide opportunities for development of worker having better capabilities.
f) The manger should develop each employee in such a way the that employee shows maximum
3.] Co-operation between Management and Employees: To achieve the objectives or goals there should be proper co-operations between the employees and management. The relations between them should be harmonious. Following points should be noted in this regard:
a) In the organization the emphasis should be given to co-operative between the management and workers and not to individuals.
b) The goals can be achieved effectively only by co-operation.
c) The interest of the management and the workers should be one and the same. They should harmonies.
4.] Division of Responsibility: While dividing the work there should be the division of responsibilities between the managers and the employees. This can be done by the following ways:
a) The nature and role played by different levels of managers and employees should be determined properly.
b) The managers should be given the responsibility of planning whereas the workers or employees should concentrate on the execution.
c) This principle helps the employees to perform their best.
5.] Mental Revolution: This principle focuses on the complete change in the attitude of the management and Employees as regards their relations are concerned. For this change the following points should be taken in to Account.
a) The managers should create a suitable working condition for the employees.
b) All the problems should be solved scientifically.
c) The employees should perform their jobs carefully and with devotion.
d) The employees should use the resources carefully. They should not waste the resources.
e) On the other hand management should provide fair remuneration to the employees and boost up their morale.
6.] Maximum prosperity for Employer and Employees: This aim of scientific management is to give maximum prosperity to the employer and employee. However it is possible with the help of following points.
a) Each employee should be given proper opportunity to attain this highest efficiency.
b) The employees should give maximum output.
c) There should be optimum utilization of resources.
The principles of scientific management cannot be applied unless the techniques of scientific management are studied. They are given below.
Techniques of Scientific Management:
The techniques of scientific management help a manager to apply the principle of scientific management effectively. These techniques are discussed below:
1.] Time Study: This technique helps a manager to calculate the time required to perform a particular job. He can take the decision about production or completion of an activity with the help of this technique. The time study is based on the speed of average worker. Every enable the manager to ascertain the standard time taken to complete a specific job. The managers can decide the remuneration to be paid to the worker based on this.
2.] Motion Study: Motion study is the close study of body movements. That is the movements of hands, legs and other body parts. Managers should study these movements. This study helps the manager to understand the movements required for a person to do a particular task. This technique can be used by the manager to eliminate the unnecessary movements for doing the job. With the help of motion study the managers can eliminate or combine some actions in the process. Motion study increases efficiency and productivity of the employees.
3.] Functional Foremanship: This technique refers to the guidance given to the worker by a specialist foreman. According to this technique a single worker is supervised by different supervisors. For doing a particulars job the worker performs various small tasks. While doing this job he will get the guidance and will be supervised by different supervisors for each task. This technique is exactly opposite of Fayol’s principle of unit of command. According to Fayol there should one boss for workers but according to this technique for one worker there can be many supervisors. Taylor says that work can be done accurately by this technique. This method is mainly useful for production department.
4.] Standardization: Standardization in the production implies (i) Selecting the standard tools and equipment for production and (ii) Maintaining standard working conditions at the place of work.
The management should provide good quality of tools and equipment’s used for production of a good quality. This helps the workers to perform the job easily and efficiently. Secondly the working conditions should be Good so that the workers can give their best output. This technique minimize the cost of production and makes best use of available resources.
5.] Different Piece Rate Plan: According to Taylor there should discrimination between the efficient and inefficient workers. The payment should be made according to the performance of the worker. The efficient workers should be paid more whereas inefficient workers should be paid less remuneration. In this method a standard is fixed for production. These who produce more than the standard should be paid more in the form of an incentive and those who perform less than the standard should be paid less as penalty. This system gives Encouragement to those who perform well and motivates those who have underperformed to improve their Performance.
6.] Other Techniques: In addition to the technique some other technique are also suggested by Taylor. They includes the use of instruction cards, strict rules of discipline, and use of charts, graphs, slides, charts to instruct the workers etc. These techniques are also used to develop better relations between the employers and employees.
According to the resolution passed by the conference, the main aims of rationalization are:
(1) Securing the maximum efficiency of labour with minimum effort;
(2) Eliminating waste of power and raw materials;
(3) Facilitating reduction in the variety of patterns (where such variety offers no obvious advantages) search into the methods of manufacture and use of standardised parts;
(4) Simplifying distribution of products by eliminating unnecessary transport, burdensome financial charges and useless interposition of middlemen;
(5) Securing to the community greater stability and a higher standard of living;
(6) Ensuring to the consumer lower prices of goods;
(7) Ensuring a higher and steadier remuneration to be equitably and fairly distributed among the various classes of producers,
According to the Bombay Textile Labour Inquiry Committee 1941, rationalisation has three aims:
(a) “Increase in production per man and machine and its relation to wages:
(b) Improvement in the efficiency of workers and in the working conditions;
(c) Financial and Industrial re-organisation.
The objectives of rationalisation may be summed up as follows:
(1) To eliminate waste and inefficiency of every kind;
(2) To bring about an adjustment in aggregate production and the aggregate demand by initiating agreements among various firms in the industry;
(3) To undertake the measures of absorption, amalgamation and reconstruction for the protection of weaker and inefficient units;
(4) To maintain stable and fair prices in the best interest of the manufacturers and the consumers;
(5) To ensure maximum allocation and utilisation of available resources;
(6) To check over-capitalisation and under-capitalisation of financial resources in order to ensure fair return and rational allocation of finances;
(7) To achieve, the goal of self financing or ploughing back of profits in order to minimise the burden of bank loans, debentures and other long terms loans;
(8) To introduce the techniques of cost and management accounting, budgetary control and internal audit etc., in order to ensure proper financial control and management.
(9) To introduce a system of scientific selection, training, promotion and wage payments for workers;
(10) To provide better working conditions like ventilation, lighting, proper working hours, absence of noise, drinking water, canteen, rest-rooms etc.;
(11) To institute various schemes like unemployment or sickness accident insurance, housing facilities etc;
(12) To protect the interests of the consumers by supplying they better quality products to reasonable prices and ensuring their regular and uninterrupted supply.
Methods of Wages Payment
The methods of remuneration can be classified into:
1. Time Rate System
2. Pieced Rate System
3. Incentive Schemes
1. Time Rate System: In this system, a worker is paid on the basis of attendance for the day or according to the hours of the day, regardless of the output. This system is also known as time work, day work, day age rate or day rate. The wage rate of the day worker may be fixed on hourly, daily, weekly, fortnightly, or monthly basis depending
On the practice followed in the concern. There are two variants of this system, each differing only in so far as the fixation of the time rate is concerned. They are:
i.Measured Day work or Graduated Time Rate
Ii.Differential Time Rate
i. Graduate Time Rate: Under this method wages are paid at time rates which vary according to
A. Merit-rating of the workers, or
B. Changes in the cost of living index.
It the cost of living goes up, the wages also go up proportionately, and vice versa. Thus the works get the real wages. Similarly, the workers having higher merit rating get higher wages, and the workers with lower rating get lower wages.
Ii. Differential Time Rate: Workers are paid rate accounting to their individual efficiency. They are paid normal rate upto a certain percentage of efficiency and the rate increases in steps for efficiency slabs beyond the standard. As the efficiency is measured in terms of output, this method does not fall strictly under the area of time rate system.
2. Piece Rate System: The payment of wages under this system is based upon the out turn of the worker. The rate is fixed per piece of work and the worker is paid according to the pieces of work completed or the volume of work done by him, irrespective of the time taken by him in completing that work. A workman is free to earn as much as his ability, energy, or skill would allow to him to produce. The piece rate System can be classified into:
A. Straight Piece Rate
B. Differential Piece Rate.
A. Straight Piece Rates: It is a simple method of making payment at a fixed rate per unit for the units manufactured. Earnings = Number of units X Rate per unit.
B. Differential Piece Rates: Under this system, efficient workers are paid wages at a lower rate. A definite standard of efficiency is set for each job and for efficiency below or above the standard different piece rates are paid according to different levels of efficiency.
The following two methods of wage payment are studied under this system:
i. Taylor Differential Piece-rate Method, and
Ii.Merrick Differential Piece rate Method
i. Taylor Differential Piece-Rate: F.W. Taylor thought to improve the efficiency of workers by suggesting two rates of payment of wages: A higher rate to the workers who product equal to or more than the standard fixed for production during the day (120%), and a lower rate to the workers who do not achieve the standard (80%).
Ii. Merrick Differential Piece-rate: In the Taylor Method, the effect on the wages is quite sharp in the marginal cases. To remove this defect Merrick suggested three piece rates for a job as follows:
Percentage of Standard Output Payment under Merrick Method
Upto 83% Normal piece rate
Above 83% and upto 100% 110% of normal piece rate
Above 100% 120% of normal piece rate
3. Incentive Schemes: Under this heading, we study the following methods:
A. Halsey Premium Scheme;
B. Rowan Premium Scheme;
A. The Halsey premium plan: This system is known as fifty fifty plan. It was introduced by F.A. Halsey, an American engineer. Under this method a standard time is fixed for the performance of each job; worker is paid for actual time taken at an hourly rate plus 50% of time saved as bonus.
Total wages under this scheme is calculated with the help of the following formula:
Earnings = Time taken x Rate per hour 50% (Time saved x Rate per hour)
Features of Halsey Premium Scheme: Under this plan:
i. Time rate is guaranteed and the worker gets the guaranteed irrespective of whether he completes the job within the time also takes more time to do it.
Ii. Standard time and standard work are fixed for the job or operation in advance;
Iii. The workers producing more than the standard, or the workers completing the work in less than the standard time fixed, get bonus in addition to the ordinary time wage.
Iv. The bonus or the premium, by whatever name called, is 30 to 70 percent of the wages of time saved, the usual percentage being 50%,
v. Workers who fail to reach the prescribed standard get the time wages.
Vi. Labour cost per unit of output decreases. The employer also shares the benefit of efficiency which induced him to improve the method and equipment.
Advantages
The advantages of this premium plan are mentioned below:
(i) The plan is simple to understand and easy to operate.
(ii) It creates a feeling of security among workers as the plan assures a minimum hourly rate or guaranteed wage.
(iii) The efficient workers are rewarded by way of payment of bonus, whereas the inefficient workers are not penalised.
(iv) Earnings of workers increase and productivity increases since the workers are motivated.
(v) The employers also gain since direct labour cost and overheads cost per unit decline.
Disadvantages
(i) The workers do not get the full benefit of their efforts since the employee gets a share of the wages of the time saved.
(ii) More wastage of raw materials may result due to over-speeding.
(iii) The quality of work may decline as the workers want to rush through the work.
B. Rowan System or Rowan Plan: The scheme was introduced in 1901 by David Rowan of Glasgow, England. The wages are calculated on the basis of hours worked where as the ‘bonus is that proportion of the wages of time taken which the time saved bears to the standard time allowed’.
Total wages under this scheme is calculated with the help of the following formula:
Earnings = Time taken x Rate per hour Time saved / Standard time (Time taken x Rate per hour)
Features
The main features of Rowan plan are:
i. Time rate is guaranteed and the worker gets the guaranteed irrespective of whether he completes the job within the time also takes more time to do it.
Ii. Standard time and standard work are fixed for the job or operation in advance;
Iii. The workers producing more than the standard, or the workers completing the work in less than the standard time fixed, get bonus in addition to the ordinary time wage.
Iv. Bonus is based on that proportion of the time wages which the time saved bears to the standard time.
v. Workers who fail to reach the prescribed standard get the time wages.
Vi. Labour cost per unit of output decreases. The employer also shares the benefit of efficiency which induced him to improve the method and equipment.
Vi. Wages per hour increases but in the same proportion as the output.
Advantages
The advantages of Rowan plan are as follows:
(i) The plan assures a minimum hourly rate.
(ii) The quality of output is protected since the bonus declines after the worker has reached a given level of efficiency.
(iii) Labour cost per unit and fixed overhead cost per unit are reduced with increase in production.
Disadvantages
(i) The plan is not easily followed by most of the workers.
(ii) Efficiency beyond certain point is not rewarded. It fails to distinguish between a very efficient worker and a worker with a little more than average efficiency.
(iii) Since the employer gets a share of the wages of the time saved, the workers do not get the full benefit of their efforts.
Profit-Sharing:
It is “an arrangement entered into, by which the employee receives a share, fixed in advance, of the profits.” It is paid in addition to the regular wages payable to the worker. Strictly speaking, the profit — sharing is not a system of wage payment at all.
It is rather a form of remuneration applied “to those cases in which an employer agrees with his employees that they shall receive in partial remuneration of their labour, and in addition to their wages, a share fixed beforehand, in the profits realized by the undertaking to which the profit-sharing scheme relates.”
Such share is given to the worker if the total net profit exceeds certain specified amount and such payment does not form part of the total cost of production. All categories of employees are entitled to such sharing of profits.
As to the merits of such a scheme, we can say that it ensures maximum production at the lowest possible cost per unit. There is a socialistic bias in such a scheme as the workers get the fruits of their labour and profits like employers. This encourages better relationship between labour and capital.
As a consequence, it helps in building up a more permanent labour force and, thus, the general atmosphere and work environment improves. Workers, under such a scheme, are better remunerated; hence their standard of living improves.
