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r.4- 


UNIVERSITY   OFNfORONTO 
DEPARTMENT  OF   PSYCHOLOGY 


'-  \ 


PURCHASING 

AND 
EMPLOYMENT 


ORGANIZING  A  PURCHASING  DEPARTMENT 

TRAINING  YOUR  WORKING  FORCE 

HIRING  AND  PAYING  HELP 


A.  W.  SHAW  COMPANY 

CHICAGO  NEW  YORK 

LONDON 


600580 


Copyright,  1914,  by 
A.  W.  Shaw  Company 

Copyright,  Canada.  1914,  by 
A.  W.  Shaw  Company 

Entered  at  Stationers'  Hall,  London 
A.  W.  Shaw  Company,  Ltd. 

Under  the  title 
•THE  LIBRARY  OF  BUSINESS  PRACTICE"— V«L 

Reprinted  1917 
Printed  in  U.  &  A. 


CONTENTS 

I—  PURCHASING  FOR  STORE,  OFFICE 
AND  FACTORY 


Editorial  6y  K  J-  Murphv  .......  7 

I      SCIENTIFIC  PURCHASING     .....        .  9 

By  Wheeler  Sammotu 

II     MATCHING  PRICE  AGAINST  FINAL  COST    .        .  29 

By  J.  V.  Hunter 

III  WHEN  THE  SALESMAN  DROPS  IN      .        .        .        .         SO 

By  Carroll  D.  Murphy 

IV  WHEN  THE  BUTEB  GOES  TO  MARKET      .        .       .         44 

By  Neil  M.  Clark 
V     BUYING  EQUIPMENT  BT  STANDARD  .        ,       .         51 

By  Harry  Franklin  Porter.  M.  E. 

VI     How  TO  AVOID  PITFALLS  IN  BUYING        ...          60 
By  Fred  Cook 


H—  SYSTEM  IN  THE  PURCHASING 
DEPARTMENT 

editorial  bv  J.  D.  Lawman  .......  f,y 

VII     SHORT-LINE  METHODS  IN  RETAIL  BUYING        .        .         71 

By  Neil  M.  Clark 
VIII     How  THE  SUPPLY  BUYER  WORKS     ....         78 

By  Neil  M.  Clark 
IX     FACTORY  PURCHASING  BY  MINIMUM  STOCKS     .       .         80 

By  F.  B.  Johnson 

X     ADAPTING  A  PURCHASING  SYSTEM  TO  YOUR  BUSINESS         93 
By  Stunner  B.  Roger*, 
Production  Manager.  Sangamo  Electric  Company 

XI     HOLDING  THE  SUPPLIER  TO  His  BARGAIN        .       .       1M 

By  Carroll  D.  Murphy 

XII     How  TO  FILE  PURCHASE  DATA        ....       Ill 
By  O.  N.  Manner* 

m—  HIRING  AND  TRAINING  YOUR 
WORKING  FORCE 

Xditorial  6y  S.  P.  Ripltv  .......         110 

XIII     WHERE  TO  FIND  THE  BEST  WORKMBM     .       .       .       117 
By  W.  S.  Bail 


CONTENTS 


XTV     HIRING  FACTORY  HELP 125 

By  Surnner  B.  Rogers, 
Production  Manager,  Sangamo  Electric  Company 

XV     How  WORKMEN  ARE  FITTED  TO  THE  JOB        .        .        131 

By  Henry  Beach  Needham 
XVI     MAKING  THE  BOY  A  BETTER  WORKER     .        .        .        139 

By  L.  I.  Thomas 

XVII     HIRING  AND  TRAINING  OFFICE  HELP        ...        146 
By  Marshall  D.  Wilber, 
President,  Wilber  Mercantile  Agency 

XVIII     BUILDING  UP  A  RETAIL  SALES  FORCE      ...        152 
By  C.  M.  Jones, 
Formerly  Superintendent,  The  Fair,  Chicago 

XIX     LEGAL  POINTS  IN  HIRING  AND  DISCHARGING  MEN  .        158 
By  Arthur  E.  Ooddard 


IV— HANDLING  AND  PAYING  HELP 

Editorial  6y  H.  L.  Gantt  168 

XX     PLANS  AND  CONTESTS  THAT  INCREASE  EFFICIENCY  .        165 

By  William  Hamilton  Burquest 
XXI     PAYING  DIVIDENDS  TO  WORKERS       ....        174 

By  Kendall  Banning 

XXII     PLANNING  AHEAD  FOR  THE  WORKMAN'S  NEED         .        179 
By  F.  M.  Feiker 

XXIII  MAKING  WORK  INTERESTING 187 

By  Harrison  McJohnston 

XXIV  APPOINTING  THE  EMPLOYEE  His  OWN  JUDGE  .        .        196 

By  A.  L.  Filene, 

General  Manager  and  Treasurer,  Wm.  Filene's  Sons 
Company 


SPECIAL  ILLUSTRATIONS 

I  WHAT  THE  BUYER  NEEDS  TO  KNOW 11 

II  BUYING   METHODS   IN   INTENSIVE  MERCHANDISING         .           .  15 

III  STOCK  CLASSIFICATION  THAT  SIMPLIFIES   BUYING          .           .  25 

IV  TESTING  FIRST  AND  FINAL  COST 30 

V  LOSS  DUB  TO   "CHEAPEST  FIRST*'   BUYING   .           .           -           .  31 

VI  BOW  TO  JUDGE   MACHINE   "POINT*"    .          .            .           •           .  A3 


PART  I-PURCHASING  FOR 

STORE,  OFFICE  AND 

FACTORY 

The  Buyer's  Responsibility 

CTOCKS  that  go  into  the  store  are  the  food 
^  with  which  strength  is  built.  The  method 
•  >f  -riling,  the  courtesy,  the  display,  important  as 
they  arr.  only  depose  of  that  which  you  buy. 
The  good  buyer  is  the  builder  of  your  future,  and 
as  surely  as  time  makes  days  into  yr-tmla.v  I, 
just  so  surely  the  buyer  holds  within  his  hand 
the  major  part  of  your  business  destiny. 

Mr.  Buyer,  remember  that  the  net  cost,  the 
net  quality,  the  net  value,  and  the  net  possible 
selling  price  >|ia|>e  your  results. 

Labor  and  material  have  advanced  steadily, 
and,  to  keep  the  wheels  of  business  in  motion, 
you  must  realize  that  the  price  paid  is  to  be 
judged  only  in  relation  to  the  values  .secured. 
Business  counts,  loyalty  counts,  and  each  buyer's 
mite  toward  helping  our  big  national  industries 
counts  in  the  pro6ts  of  all. 

Build  so  that  your  business   may   whisper  to 
you  at  the  end  of  a  year  that  the  tide  ha - 
carried  you  out.  away  from  Achievement  rightly 
won,  to  leave  you  to  sink  a  loser. 


M.  J.  MURPHY 

President.  Murphy  Chair  f'omjtany 


SCIENTIFIC  PURCHASING 

By  Wheeler  Summon* 

RIGHT  buying  is  like  the  healthy  constitution  which 
pulls  you  through  a  fever — you  don't  think  much 
about  it  until  the  doctors  mention  it.  You  will  not 
know  the  real  worth  of  your  buying  policies  until  they 
are  tested  by  one  of  the  temporary  periods  of  hard  sledg- 
ing through  which  business  tugs  from  time  to  time. 

Indications  of  trouble  which  scudded  ahead  of  such 
a  recent  depression  gave  the  purchasing  agent  for  a 
Connecticut  manufacturing  firm  an  opportunity  to  dem- 
onstrate in  dollars  and  cents  the  value  of  right  buying 
during  business  stress.  He  is  famous  for  the  sagacity 
with  which  he  follows  market  tendencies.  Analysis 
of  his  information  files  containing  bank  statements,  in- 
vestigation reports  and  clippings  from  trade  papers 
called  to  his  attention  the  earliest  signals  of  the  de- 
pression. He  immediately  reduced  his  material  pur- 
chases to  the  lowest  ebb  possible.  As  he  expected,  th«- 
slump  drove  the  raw  material  down  to  unprecedented 
price  levels.  His  stock  room  reports  of  material  on  hand 
were  hovering  around  the  zero  mark. 

The  president  of  the  company  called  him  into  th<» 
office  and  said,  "Blake,  we're  in  difficulties."  They 
stepped  to  a  window  beyond  a  secretary's  earshot  and 
overlooking  the  sawtoothed  roofs  of  the  factory  build- 


10  HOW    TO    BUY 


ings.  "We  take  pride  in  the  record  that  our  men  have 
never  been  without  work,  but  I  can't  keep  going  in  the 
face  of  cancellations  which  the  slump  is  bringing.  I'm 
afraid  we'll  have  to  close  temporarily  before  the  week 
is  out  and  you  should  purchase  accordingly." 

"I've  been  having  some  long  thoughts  on  conditions 
and  I'm  prepared  for  that,  Chief,"  the  purchasing 
agent  replied.  "The  material  on  hand  don't  amount  to 
a  hill  of  beans.  But  I  think  I  've  got  a  better  solution. 
We  can  buy  today  in  the  open  market  raw  material  at 
from  thirty-five  to  forty  per  cent  below  normal  prices. 
Why  don't  we  buy,  make  up  a  few  attractive  special 
lines  and  offer  them  at  about  half  our  Usual  prices? 
The  retailers  have  got  to  sell  something,  slump  or  no 
slump,  and  they  can  not  resist  such  a  slash.  It 's  worth 
breaking  a  little  less  than  even  if  we  keep  the  men 
busy." 

The  special  lines,  rushed  into  the  market,  unidentified 
by  trade  marks,  sold  splendidly  without  injury  to  the 
company's  regular,  price-maintained  products.  Today 
the  company  counts  the  loyalty  of  its  men  the  most 
valuable  of  its  intangible  assets.  The  feeling,  openly 
expressed  by  the  older  workers,  that  "We'll  have  jobs, 
no  matter  what  happens — look  at  the  last  time  there  was 
trouble  and  factories  in  our  line  closed  down — we  kept 
working  right  along,"  wins  an  interest  in  its  progress 
profitable  to  the  company. 

WHERE  and  what  to  buy  are  the  first  big  problems — 
detailed  information  regarding  your  needs  must 
be  supplemented  by  accurate  knowledge  of  suppliers. 

Accurate  market  information  and  detailed  reports  on 
your  sources  of  supply  make  for  right  buying  in  both 
the  factory  and  the  store.  Today  men  who  buy  to  sell 


FORECASTING     DEMAND 


11 


again  use  intensive  merchandising  methods;  men  who 
purchase  for  production  work  with  practically  the  same 
principles.  Intensive  merchandising  and  the  new  way 
of  buying  materials  have  a  common  object  and  both 


BUYING  IN 
THE  NEW  WAY 


INFORMATION 

ABOUT 
MATERIALS 


Bounces  ANO  VOLUMC  or  «U*»LY 

ONAPMIC  ftCCOMO*  Or  PMICC*  PAID  IN  PAST 
MAHKCT  MOVEMENTS 

roftECAST  or  SUPPI*  ANO  CONSUMPTION 

PMICC  FLUCTUATION* 
PftOOUCT  TCNDCNCIC* 


f  rTANOANOIZCO  rACTOHT  NEEDS 
PURCHASING    J   DETAIL  SPECIFICATIONS 

METHOD*  |  MAXIMUM  ANOMINIMOM  •TOCH  WHIT* 

I   SCHEDULED  OCLIVCRI  t» 


TESTS  or 

MATERIALS 
ANO  PRODUCT     1  *CT 


I  INSPECTION  SYSTEM 

I  LABORATORY  MEPOMTS  ON  RAW  MATEHIALS 


FIGURE  I:     Information  and  methods  which  enable  the  modern  buyer 
to  tecure  the  right  quantity  and  quality  in  his  goods  are  here  lifted 

come  of  straight  thinking,  sound  planning  and  a  desire 
for  scientific  methods. 

You  desire  to  know  exactly  what  you  can  get  and  who 
is  best  able  to  supply  your  wants  when  you  go  into  the 
market.  To  secure  this  information,  purchasing  agents 
visit  frequently  the  sources  which  furnish  their  raw 
materials  and  carefully  investigate  delivery  and  pro- 
duction capacities.  A  record  is  kept  of  formulas  and 
working  drawings.  It  is  also  important  to  know  about 
the  man  who  makes  what  you  use,  and  about  his  fac- 


12  HOW    TO    BUY 


tory,  and  his  workmen,  and  his  bank  account.  File 
these  facts  on  cards  and  constantly  freshen  them;  ar- 
range market  and  product  tendencies  to  be  accessible  on 
a  moment's  notice;  clip  the  trade  magazines  carefully; 
question  salesmen  and  see  that  quotations,  price  fluctua- 
tions and  credit  ratings  are  recorded.  But  only  by  per- 
sonal investigation  can  the, man  who  buys  raw  material 
in  large  quantities  get  the  detailed  resource  information 
he  needs. 

The  retail  buyer  always  has  his  weather-eye  open  for 
attractive  "jobs."  He  "sweetens"  his  stocks  with  them. 
There  are  also  "snaps"  in  the  purchasing  agent's  mar- 
ket. The  successful  retail  man  buys  for  his  community 
and  hands  on  the  profits  from  "snaps"  to  his  customers 
through  reduced  prices.  His  reward  is  a  quick  stock 
turn  and  new  friends.  More  indirectly,  but  not  less 
definitely,  the  factory  buyer  wins  when  he  buys  close  to 
the  market,  for  he  also  is  hired  by  the  community  to  go 
to  market.  He  cuts  prime  costs  and  gives  better  service 
when  he  makes  good.  His  rewards  are  increased  sales 
and  more  friends. 

Having  found  where  and  when  you  can  most  advan- 
tageously get  what  you  want,  the  second  problem  is  to 
fix  your  own  needs.  The  employment  man  standardizes 
the  requirements  of  a  job,  and  looks  for  a  man  to  fit. 
The  retail  buyer  analyzes  the  conditions  his  stock  meets. 
The  purchasing  agent  works  to  get  down  in  black  and 
white  the  standards  up  to  which  his  raw  material  must 
measure.  His  market  and  resource  information  then 
enables  him  to  satisfy  to  best  advantage  these  standard- 
ized needs. 

To  standardize  your  wants  it  is  necessary  to  consult 
with  the  department  heads  or  foremen.  You  will  find 
technical  advice  and  information  invaluable.  The  stan- 


FORECASTING     DEMAND 13 

dardized  needs  can  then  be  filed  on  cards  which  will  tell 
at  a  glance  exactly  what  you  expect  of  the  supplier.  If 
a  standard  60-mesh  cloth  is  not  satisfactory,  for  instance, 
the  standardized  requirement  card  specifies  that  a  spe- 
cial 65-raesh  weave  is  needed.  Dimension  lumber  is  an- 
other instance — it  usually  offers  savings,  and  standard- 
ized needs  enable  it  to  be  definitely  specified  whenever 
possible. 

The  card  file  of  standard  wants,  if  it  is  to  give  full 
value,  demands  frequent  overhauling.  One  manufac- 
turer goes  over  the  cards  every  six  months.  He  plans 
to  make  standard  at  these  semi-annual  inspections  any 
improvements  or  inventions  offered  by  the  market.  He 
uses  raw  material  made  to  many  formulas,  each  fitted 
to  the  demands  met  by  the  particular  product  into 
which  it  is  to  be  moulded,  and  the  mixtures  require  re- 
standardization  in  order  to  keep  up  with  everyday 
progress  in  applied  science. 

Once  your  requirements  are  standardized  and  you 
know  where  they  can  be  satisfied  profitably,  it  is  pos- 
sible to  buy  by  specification.  If  you  are  purchasing 
paint,  pig  iron  or  tool  steel,  you  can  usually  specify  a 
formula  determined  by  your  standardized  needs.  Bab- 
bitt metal,  for  instance,  is  commonly  mixed  to  specifica- 
tion— if  85  per  cent  of  tin  is  specified  you  can  see  that 
it,  and  not  20  per  cent  of  tin  and  65  of  lead,  is  there. 
A  saw  manufacturer  specifies  sixty  odd  formulas  in  his 
mill  contracts  and  samples  every  shipment  to  see  that 
it  satisfies  his  specifications.  His  photo-micrographs 
and  acid  immersions  enforce  contracts  and  assure  him 
full  value. 

Equipment  buying,  after  your  wants  are  standard- 
ized and  the  sources  studied,  is  also  a  matter  of  specifica- 
tion. Both  the  planer  and  the  new  unit  type  selling  fix- 


14  HOW    TO    BUY 


ture  are  valuable  only  in  proportion  to  producing  capa- 
city. You,  therefore,  set  up  standards  that  enable  you 
to  specify  feeds,  ease  of  manipulation,  constancy  of  op- 
eration, accuracy,  speeds  and  range  of  capacity.  Then 
you  figure  the  customary  charges — labor,  power,  inter- 
est, supervision,  depreciation,  space  and  repairs.  First 
cost  being  a  secondary  consideration,  the  one  calculation 
left  is  to  find  capacity  by  combining  the  charges  and  the 
needs.  A  Rhode  Island  manufacturer  cut  his  collar 
milling  cost  fifty-five  per  cent  by  closing  his  eyes  to  first 
cost  and  replacing  a  modern  one  thousand  dollar  machine 
with  a  new,  high  capacity  model  at  two  thousand  five 
hundred  dollars. 

OTANDAKDIZATION  of  your  needs  means  that  you 
^•J  can  buy  by  specification — and  laboratory  inspection 
test's  assure  you  of  receiving  the  right  quality. 

The  final  question  the  purchasing  agent  struggles  with 
is :  ' '  Have  they  given  me  what  I  bought  ? ' '  You  study 
the  manufacturer,  analyze  the  visible  market  supply, 
make  standards  for  your  wants,  specify  these  needs  in 
your  contracts — and  then  the  whole  scheme  falls  flat 
unless  you  check  to  see  that  the  supplier  has  lived  up 
to  it.  You  test  and  inspect.  The  larger  manufacturing 
plants  have  put  laboratories  on  their  pay  rolls.  Since 
the  laboratories  are  also  used  to  determine  specifications 
and  test  the  finished  product,  at  least  a  portion  of  their 
expense  can  be  legitimately  charged  directly  to  produc- 
tion. The  laboratories  may  be  set  to  check  three  points : 
the  quality,  quantity  and  fitness  of  the  raw  material; 
process  standardization  and  economy;  and  analysis  of 
material  consumed. 

If  you  can  not  afford  a  testing  office  or  a  chemist,  the 
services  of  reliable  commercial  laboratories  are  on  the 


FORECASTING     DEMAND 


market.  These  organizations  make  tests  of  all  degrees 
of  complexity  at  nominal  charges.  If  you  are  purchas- 
ing equipment,  use  your  competitors'  shops  as  laborato- 
ries, and  watch  in  them  machines  working  under  prac- 
tical conditions.  But  a  laboratory  is  often  not  half  as 
formidable  as  its  name.  .Numerous  firms  have  taken 


(%ABT  BALCB  BCCOHOB 

1 

TMIICI  ruu.  LINCB 

MMUi 

IHTIHMtDIATC  PftlCIO  »»BO«TMf  »T« 

INTENSIVE 

THC  BUYING 
PLAN 

LINO  BCLOW  CMCAPtrr  fULL  LINt 

MERCHANDISING 

"OUT-  Bins 

•  I  ABONAL  NOVt  LTIC» 

^MOUBt  •PCCIALTIC* 

MICOMDB  Or  IAKLV  Of  HAM 

OB 

TCST»  Of 

"WANTCO"  BLIPS 

PURCHABim 

SMOPPtW  MCPOMT* 

* 

HCPOIIT*  BY  CMPLOTCCB  A 

NO  rmcNO* 

j>ecooo  or  COMPLAINT* 

FIGURE  II:     How  the  buyer  classifies  hit  ttoclu,  tests  out  new  lines  and 

determine*  demand — this  chart  shout  the  characteristic  working  method* 

of  the  buyer  in  intensive  merchandising 


bright  young  fellows  out  of  the  shops  and  trained  them 
into  first  class  practical  chemists.  Six  months  of  special 
schooling  is  not  an  unusually  short  formal  preparation 
for  this  work. 

Buying  by  test  demands  delicate  and  complicated  in- 
struments which  put  the  scientist  at  the  purchasing 
agent's  elbow  and  supplement  the  expert's  trained  eye. 
Dynamometers  fix  motive  power,  scleroscopes  pass  or 


16  HOW    TO    BUY 


reject  steel  with  an  authority  beyond  dispute,  torsional 
machines  measure  twists,  and  the  pyrometer  watches 
heat.  The  purchasing  agent  can  measure  compression 
and  tensile  strengths  with  an  accuracy  equal  to  the 
insurance  doctor's  manometer  blood  pressure  test.  The 
balancing  machine  by  which  the  factory  buyer  deter- 
mines if  a  crankshaft  is  capable  has  anticipated  the 
psychologist's  delicate  experiments  for  picking  men  to 
fit  the  job's  demands.  It's  worth  while  when  signing  a 
contract  to  know  that  you  can  pick  up  a  sample  cutter 
and  find  out  if  it  really  contains  the  8y2  per  cent  of 
molybdenum  you  specified. 

The  purchasing  agent  doubly  tests  his  work  by  linking 
the  laboratory  findings  with  a  cost  system.  Quality  and 
delivery  come  before  cost,  but  raw  material  charges  de- 
mand investigation  if  they  run  away  with  the  net 
profits.  Cost  accounting  systems  enable  you  to  trace  in 
detail  the  part  purchases  play  in  fixing  the  selling  price. 
"With  their  aid  you  can  figure  standardized  buying  limits 
and  work  to  secure  unusual  quality  at  profitable  costs. 

Forewarned  by  accurate,  systematized  market  and  sup- 
ply knowledge;  guided  by  approved  standards  for  his 
needs,  and  protected  by  reliable  laboratory  and  cost 
accounting  tests,  the  buyer  is  prepared  to  figure  out 
how  much  and  when,  under  normal  conditions,  he  should 
buy.  Goods  purchased  year  in  and  year  out  in  reason- 
ably constant  quantities  are  usually  bought  under  con- 
tracts calling  for  scheduled  deliveries.  This  plan  gives 
the  supplier  an  opportunity  to  lay  out  his  work  in 
advance.  You  share  in  the  savings  which  result.  Inter- 
mittent needs  can  be  satisfied  through  current  buying 
adjusted  to  capitalize  the  most  favorable  market  con- 
ditions. 

Routine  buying,  if  done  by  standards,  specifications 


FORECASTING    DEMAND 


17 


and  tests,  becomes  nothing  more  than  a  question  of  when 
to  go  to  market  You  want  some  sort  of  an  alarm  which 
will  warn  you  at  the  proper  time  to  be  up  and  doing. 
Standardized  maximum  and  minimum  stock  limits, 
which  a  few  weeks  of  testing  will  almost  automatically 
fix,  serve  this  purpose.  You  can  then  index  these  limits 
on  cards  which  give  a  perpetual  inventory,  the  costs, 
the  resources,  and  the  order  authorizations.  A  manufac- 
turer of  electrical  goods  uses  the  form  (I)  illustrated. 


•  TO.  PKG 

LOCATION 

DESCRIPTION                                                        W.C.NO. 

Mrw*  .NO. 

MtMMUM                             MAXIM 

1IM                          CtASS'N 

••ft 

^.^», 

MTC 

•V»TlT* 

^^o,,. 

.MM.M 

MM 

•CCfnrt* 

»••»•€••»  [no   »i«n»«t   «MMOT  BtTMaT 

1 

1 

I 

1 

1 

1 

1 

I 

1 

1 

FORM  I:    A  card  like  thii  Iceept  a  perpetual  inventory  on  each  kind  of 

good*,  thawing  amount  on  hand,  maximum  and  minimum  limit*,  quant  it  iet 

ordered,  and  other  information  which  helps  the  purchasing  agent 

The  left-hand  columns  are  for  the  inventories,  the  next 
six  columns  tabulate  the  orders,  and  the  spaces  to  the 
right  handle  cost  details  so  that  they  can  be  constantly 
compared.  The  two  squares  in  the  upper  left-hand  cor- 
ner care  for  the  standardized  package  size  and  the  shelf 
location  in  the  stock  room.  References  to  the  card  file 
of  detailed  resource  information,  the  market  informa- 
tion file  and  the  cost  accounting  classification  sheet  are 


18  HOW    TO    BUY 


provided  for  by  the  three  blanks  in  the  upper  right-hand 
corner. 

Right  buying  for  the  factory — with  supply  and  mar- 
ket records,  standardized  requirements,  accurate  specifi- 
cations, satisfactory  tests,  and  maximum-minimum  order 
limits — is  only  intensive  merchandising  in  terms  of  man- 
ufacturing, equipment  or  supply  purchases.  The  inten- 
sive merchandiser  and  the  purchasing  agent  who  buys 
right  use  the  same  principles  and  want  to  do  well  the 
same  task — making  it  easier  for  somebody,  somewhere, 
sometime,  to  sell.  The  retail  buyer  purchases  goods  to 
be  sold  in  his  own  store;  the  factory  man  gets  material 
in  one  market  which  the  boss's  salesmen  sell  in  another 
market.  Buying  raw  material  right  helps  when  the 
prospect's  door  is  reached  and  the  sales  talk  started. 

BUYING  methods  used  by  the  merchant  are  not  essen- 
tially different  from  those  of  the  factory  buyer — how 
past  sales  records  help  forecast  future  demand. 

Twelve  pink  call  slips  for  sweaters  lay  on  the  buyer's 
desk.  Twelve  customers  had  asked  for  sweaters,  found 
a  depleted  stock  and  taken  their  money  to  rival  stores. 
Sweaters  were  at  a  premium.  Unexpected  popularity 
had  exhausted  the  manufacturers'  stocks  and  set  a  day 
and  night  schedule  for  the  mills.  Purchasers  gladly 
paid  unusual  prices  to  the  lucky  stores  which  were  still 
stocked. 

The  buyer,  who  knew  he  must  either  replenish  his 
stock  or  continue  to  lose  fancy  profits  and  regular  cus- 
tomers, went  to  the  merchandise  manager. 

"Mr.  Simpson,"  he  said,  "I  am  telegraphing  Hastel 
that  we  will  pay  $5  for  their  regular  $4.50  sweater,  and 
take  three  hundred  and  fifty-five  dozen  if  we  can  have 
immediate  delivery.  I  am  sure  of  my  market.  I  am 


FORECASTING     DEMAND 19 

sure  that  Hastel  will  act  without  holding  out  for  more 
when  he  sees  the  extra  profit.  The  market  is  bare  at  the 
regular  price.  Will  you  0.  K.  the  order  T" 

"You  are  paid  to  know  your  manufacturers  and  the 
market,"  the  superior  replied,  and  approved  the  order. 

The  sweaters  arrived  by  express  the  next  day.  They 
sold  satisfactorily  at  sixty  cents  over  the  usual  retail 
price  and  pleased  four  thousand  two  hundred  and  sixty 
customers  who  found  it  difficult  to  locate  full  stocks 
elsewhere.  The  manufacturer  made  two  thousand  one 
hundred  and  thirty  dollars,  besides  his  customary 
profit,  and  the  store  cleared  the  regular  mark-up  in- 
crease by  four  hundred  and  twenty-six  dollars. 

The  buyer  had  been  guided  by  card  records  of  his 
dealings  with  Hastel,  tabulated  reports  of  sweater  sales, 
and  filed  market  information.  The  Hastel  "resource" 
card  gave  the  store's  total  yearly  purchases  from  Hastel 
for  five  years  back,  the  mark-downs,  the  terms,  the  an- 
nual profit  resulting,  and  added :  ' '  The  product  is  peri- 
odically tested  and  has  always  been  satisfactory.  The 
sales  are  good  and  our  mark-downs  on  this  resource  are 
limited.  Hastel  can  make  quick  deliveries  and,  though 
always  striving  for  the  best  profits,  he  takes  reasonable 
profits  and  holds  to  contracts."  A  complete  report  on 
the  Hastel  factory  and  the  financial  condition  of  its 
owner  was  filed  with  the  card.  The  general  files  on  mar- 
ket information  traced  style  tendencies  in  sweaters  and 
collected  clippings  which  hinted  at  growing  popularity. 

Sales  figures  divided  for  five  years  the  average  num- 
ber of  sweaters  sold  into  three  price  lines — low,  medium 
and  high.  The  buyer  found  that  between  twelve  thou- 
sand two  hundred  and  fifty-five  and  twelve  thousand  five 
hundred  and  two  sweaters  had  been  sold  annually  for  five 
years  in  the  medium-priced  line.  His  opening  stock  of 


20 


HOW    TO    BUY 


twelve  thousand  five  hundred  had  been  exhausted  in 
about  two-thirds  of  the  selling  season.  He  counted. on 
the  unexpected  popularity  to  move  an  extra  hundred  or 
so,  and  ordered  four  thousand  two  hundred  and  sixty 
from  Hastel. 

The  following   sales  figures  are  tabulated   to   bring 
out  three  full  lines: 


)• 

January  .  .  . 
February  .  . 
March  .... 
April  .... 
May  

!3.10 
180 
131 
92 
214 
261 

$3.45 
201 
234 
251 
305 
273 

$3.90 
81 
206 
101 
48 
62 

$4.50 
675 
821 
805 
981 
1,463 

$5.15 
19 
71 
8 
76 
181 

$5.95 
86 
214 
162 
185 
436 

June  

292 

204 

81 

2,022 

102 

1,021 

September  .  . 
October  .  .  . 
July  . 

141 

202 
83 

302 
265 
209 

35 

599 
541 
2,141 

1 

18 
39 

28 
86 
621 

August  .  .  . 
November  .  . 
December  .  . 

65 

301 
262 

151 
241 
343 

ei 

92 

804 
601 
802 

22 
21 

51 
125 

241 

2,224   2,979    767  12,255    558   3.256 

The  lowest  priced  full  line  is  at  $3.45,  the  medium 
priced  at  $4.50,  and  the  highest  priced  at  $5.95.  The 
$3.10  line  is  the  cheapest  advertised. 

Stores  which  buy  to  sell  quickly  and  secure  rapid, 
profitable  turnovers,  carefully  record  sales  tendencies, 
sales  figures,  market  knowledge  and  information  about 
manufacturers.  They  find  it  worth  while  to  let  manu- 
facturers know  that  the  profit  or  loss  on  every  article 
put  into  stock  is  watched.  They  have  subdivided  sales 
until  the  buyer  can  put  his  finger  on  several  profitable 
prices — usually  low,  medium,  high — and  show  how  much 
stock  his  department  normally  markets  in  these  lines. 
Buyers  backed  with  these  records  go  to  market  fore- 
warned. They  are  prepared  to  buy  scientifically. 

Intensive  merchandising,  a  new  term  in  the  retailer's 
vocabulary,  simply  means  using  market  and  sales  and 
supply  and  customer  knowledge  in  a  system  by  which 


FORECASTING     DEMAND 21 

thin  stocks  can  be  sold  quickly.  Intensive  merchandis- 
ing, therefore,  plans  for  quick  turnovers  with  a  profit 
on  each.  Merchandising  will  come  as  near  to  being  a 
science  as  a  business  can  when  buyers  are  able  to  go  to 
market  with  such  a  system. 

INTENSIVE  merchandising  require*  the  use  of  ideal 
A  stock-  plant  built  around  classified  line*  of  good*,  and 
the  ability  to  be  always  ready  to  buy. 

A  merchant  whose  name  is  known  the  length  of  the 
northern  Atlantic  coast  and  who  has  lifted  his  store  "by 
its  boot-straps"  to  a  yearly  sales  volume  high  in  the  mill- 
ions, declares,  "give  me  a  buyer  with  very  little  ex- 
perience, but  who  uses  a  system  which  insures  rapid  turn- 
overs, in  preference  to  the  man  gray  in  market  knowl- 
edge and  old  in  contact  with  goods.  The  intensive  mer- 
chandiser new  to  the  market  can  hardly  help  buying  for 
profits  which  will  at  least  double  what  the  older  man  has 
been  averaging  from  the  market  for  a  quarter  of  a  cen- 
tury." 

A  system  which  gives  intensive  merchandising  this 
advantage  calls  for  two  methods — a  plan  for  suitable, 
thin,  complete  stocks;  and  a  way  always  to  keep  in  the 
market  ready  to  buy.  These  two  methods  must  be  sup- 
ported by  schemes  for  gathering  effective  market  and 
sales  knowledge.  They  must  be  constantly  tested  by  a 
definite  system.  Surrounded  by  these  precautions;  they 
are  the  beginning  and  the  end  of  intensive  merchandis- 
ing. 

Salable,  thin,  complete  stocks  are  secured  by  buying 
according  to  ideal  stock  plans.  These  plans  are  usually 
built  up  and  around  three  lines — a  lowest  priced,  a 
medium  priced,  and  a  highest  priced.  Estimates  for 
safe  purchasing  limits  are  made  from  records  of  the 


22  HOW    TO    BUY 


sales  of  these  lines  over  previous  years.  The  stocks  are 
often  bought  on  a  basis  of  a  clearance  every  three 
months,  or  four  turnovers  a  year,  and  are  complete  in 
styles,  sizes,  colors  and  materials.  The  number  of  turn- 
overs for  which  you  can  safely  plan  depends  entirely  on 
the  nature  of  your  business. 

The  lowest  priced  full  line  in  a  three  line  basic  stock 
retails  for  the  price  at  which  large  sales  commence ;  the 
best  selling  full  line  marks  the  most  popular  price ;  and 
the  highest  priced  full  line  sells  for  the  highest  price  at 
which  quantities  can  actually  be  sold.  For  example,  a 
well-to-do  woman  buys  the  best  selling  line  for  everyday 
use ;  the  customer  with  a  less  liberal  purse  will  buy  from 
it  only  for  Sunday  wear.  The  woman  who  can  spend  her 
money  freely  will  buy,  let  us  say,  $1.50  gloves.  The 
woman  who  must  economize  will  not  pay  $1.50  unless 
she  desires  the  gloves  for  dress  occasions.  The  one  wears 
the  quality  glove  every  day;  the  other  on  special  occa- 
sions only,  her  daily  glove  being  cheaper.  The  best 
selling  full  line  for  your  gloves  will  probably,  there- 
fore, be  at  $1.50.  You  will  find  little  trouble  in  locating 
your  full  lines  by  accurate  sales  records,  careful  testing 
and  close  observation. 

Once  the  lines  are  located,  the  remainder  of  the  stock 
plan  is  easy  sailing.  You  have  studied  your  source  of 
supplies  and  decided  on  the  typical  pieces  you  will 
offer  your  customers.  You  can  now  figure  on  the  less 
important  stock.  A  cheapest  advertised  line  and  a  cheap- 
est regular  priced  line  are  usually  carried  below  the 
lowest  priced  full  line  to  give  publicity  values  and  ac- 
commodate unusual  customers.  Small  quantities  at  be- 
tween-line  prices  will  fill  in  the  price  gaps  which  divide 
the  three  full  lines,  and  novelties  are  often  carried  at 
prices  above  the  highest  priced  full  line  figure. 


FORECASTING    DEMAND 28 

Each  full  line  has  five  subdivisions.  First  of  all,  it 
carries  the  best  articles  in  your  city  at  the  price.  On 
these  you  plan  to  build  trade  and  expect  little,  if  any, 
profit.  The  second  sub-line  is  a  more  profitable  article 
which,  because  of  added  "ideas"  and  touches  of  finish 
or  fashion,  will  sell  in  at  least  equal  quantities  with  the 
best-in-your-city  line.  Then  there  are  staples,  novelties 
and  sizes.  It  is  worth  while  to  also  prepare  to  secure 
unusual  stock  with  an  advertising  value — a  short-waisted 
coat,  a  shoe  for  cripples,  a  novel  perfume  or  a  rare  drug. 

In  buying  stock  to  fit  a  basic  line  plan,  you  first  get 
the  best-in-your-city  sub-line  of  the  lowest  priced  full 
line  right.  Then  decide  upon  the  same  feature  in  your 
best  selling  full  line.  This  will  force  you  to  fix  the  full 
lines.  You  will  naturally  lay  out  your  samples  and  your 
stocks  to  see  that  they  fit  into  these  lines  and  compete 
with  themselves.  If  the  stock  is  laid  out  regularly  once 
in  two  weeks,  the  full  lines  can  be  carefully  checked. 
When  your  goods  fall  away  from  the  full  lines,  profits 
will  not  continue  unless  the  stocks  are  hammered  into 
shape  by  mark-downs  or  new  purchases. 

The  planned  stocks  when  estimated  can  easily  be  pur- 
chased on  a  definite  basis  which  prevents  overbuying. 
Establish  a  rule  that  your  stocks  shall  not  exceed  the 
sales  you  feel  sure  you  can  make  the  next  month  and 
that  your  orders  for  delivery  the  next  month  shall  not 
at  the  end  of  the  month  exceed  one-half  the  sales  you 
are  positive  will  be  made  the  next  month. 

These  rules  will  prevent  stock  growing  old  and  leave 
you  always  free  to  buy  unusual  offers.  They  will  help 
you  only  if  you  make  laws  of  them.  A  buyer  for  a  large 
carpet  house  which  uses  scientific  merchandising  meth- 
ods attended  an  auction  which  threw  four  million  dol- 
lars' worth  of  carpets  into  the  markrt.  His  rivals  could 


24  HOW    TO    BUY 


not  resist  the  unusual  offerings  and  bought  heavily.  He 
held  to  his  rule,  "Buy  only  one-half  next  month's  sales." 
He  had  not  been  back  at  the  store  a  week  before  he  re- 
ceived word  that  a  second  and  totally  unexpected  auction 
was  to  be  held  on  account  of  market  changes.  This  sec- 
ond sale  announced  new  patterns  normally  held  for  the 
regular  trade.  His  rivals  could  only  buy  at  a  danger  of 
heavily  overstocking.  He  was  still  free  to  buy,  and 
secured  plenty  of  fresh,  new  patterns  at  remarkable 
prices. 

r  I  BESTING  demand  for  the  goods  you  select  is  essential 
1.    in  buying  by  the  basic  line  plan — three  methods 
which  help  you  use  the  customer's  own  eye. 

When  stock  has  been  bought  to  a  basic  line  plan,  it 
must  be  tested  carefully  for  completeness  and  sales  value. 
The  work  of  studying  the  market  and  your  manufactur- 
ers, of  planning  out  the  basic  lines,  of  keeping  always 
open  to  buy  under  the  two  rules — all  may  go  for  nothing 
if  you  fail  to  test  and  make  sure  you  are  right.  Testing 
in  done  in  three  ways:  a  ticket  system,  call  slips  and 
shopping  rival  stocks. 

If  you  are  selling  wearing  appearel,  for  instance,  and 
have  made  several  guesses  at  what  will  be  popular,  you 
can  mark  this  new  stock  with  pink  tickets,  which  are  a 
warning  against  selling.  Keep  the  tickets  on  the  goods 
for  several  weeks  and  record  all  decisions  to  buy.  Offer 
to  secure  duplicates  for  customers,  but  forego  sales  if 
they  cannot  wait.  Within  a  few  weeks  the  records  on 
the  pink  tickets  will  point  the  one  or  two  popular  styles. 
Then  take  off  the  tickets  and  place  small  re-orders  for 
the  popular  styles  which  customers  have  picked  for  you. 
Your  first  buying  was  a  guess,  but  your  re-orders  will 
be  the  choice  of  your  customers. 


FOKKCASTIM;    DKMAND 


The  work  of  the  ticket  system  can  often  be  safely 
supplanted  by  watching  your  purchasers.  Pick  out  a 
typical  custonu-r  who  usually  buys  in  a  full  line — the 
lines  represent  classes  of  customers — and  find  out  how 
your  season's  selections  at  the  line  price  please  him. 
Do  this  for  all  the  full  lines.  Your  friends  and  your 
employees  can  also  help  you  test  out  your  stock. 

Want  slips  are  blanks  tilled  out  by  the  salesman  whi-n 
a  customer's  wants  can  not  be  supplied  from  stock.  They 
are  not  of  full  value  unless  salespeople  are  continually 


THE  BASIC 
STOCK  PLAN 


CHEAPEST  REGULAR  LINE 
LOWEST  PRICED  ADVERTISED  LINE 

'•CST  AMTICLC  IN  TMC  CITY 
re ATURC  SI 

LOWEST  PRICED  FULL  LINC      !  „.,<,„.,  NOtffLTie. 

"OUT-    SIZCS 
MOU»e  S»f  CIALTICS 
INTERMEDIATE  PRICED  ASSORTMENT* 

'•1ST  AMTICIC  IN  TMC  CITY 

rcATunt  SUSLINC 
•  CST  SELLING  FULL  LINC 

"OUT  •  SIZC* 
VMOOSC  SPCCIALTICS 
INTERMEDIATE  PRICED  ASSORTMENTS 

'•CST  AMTICLC  IN  TMC  CITY 


HIGHEST  PRICCO  rULL  LINC 


•mnn 

•  IASONAI    NOVCLTIC* 
"OUT"  «IICS 


ASSORTMENT  ABOVE  HIGHEST 
PRICED  FULL  LINE 


'IK  III:     The  modern  buyer  classifies  ku  stocka  in  high-priced, 
medium-priced  and  loic-priced  lines,  and  alto  according  to  popularity 
among  hit  customers 

encouraged  to  use  them  and  you  act  upon  them  at  once. 
It  is  worth  while  to  keep  a  careful  record  of  the  goods 
asked  for  on  the  slips.  There  is  no  necessity  to  place 
bulk  orders  when  filling  wants  for  unusual  stock,  but 
breaks  in  regular  lines  demand  immediate  correction, 


26  HOW    TO    BUY 


Shopping  is  a  third  way  to  test  your  buying.  Large 
stores  employ  expert  shoppers  to  go  over  rival  stores. 
A  small  retailer  can  either  shop  himself  or  use  a  sales- 
man's spare  time.  It  is  important  to  make  sure  that 
the  shopping  reports  are  well  founded  before  acting  on 
them.  {Department  stores  instruct  shoppers '  to  visit 
their  own  stocks  and  criticise  impartially. 

After  all,  in  buying,  goods  are  only  worth  what  they 
will  bring.  Your  customers  set  this  deciding  figure. 
You  plan  to  buy  with  their  eyes ;  you  test  to  make  sure 
that  you  have  succeeded.  This  is  only  self-interest — 
but  a  kind  of  self-interest  from  which  always  springs 
business  and  community  progress.  Every  subdivision 
of  a  line  represents  a  class  of  customers.  When  you 
carry  these  different  lines  you  are  giving  maximum 
service,  for  you  have  practically  fitted  your  pieces  to  the 
economic  levels  of  life.  The  bank  president  has  his 
full  line,  and  so  also  the  bank's  messenger,  and  both 
benefit  from  the  savings  of  a  common  roof  and  a  common 
management.  Then  you  ask  the  bank  messenger,  and  the 
banker,  and  all  the  rest  of  us,  to  vote  for  what  we  want 
most  in  our  price  lines.  You  buy  according  to  this  vote 
— buy  as  a  paid,  selected  representative  of  the  com- 
munity. Service  well  done  for  the  community — either 
right  buying  or  right  law  making — is  well  rewarded. 
"Intensive  merchandising"  is  only  a  shorter  way  of 
saying,  "Know  your  customer  and  buy  accordingly  for 
a  quick  turnover." 

The  best  place  to  meet  your  customers  is  at  the  coun- 
ters. A  system  for  scientific  merchandising  is  valuable 
because  it  assigns  the  detail  to  an  ambitious  clerk's 
spare  time  or  an  assistant  buyer  and  leaves  you  free  to 
buy — and  sell.  Watch  the  purchasers  and  hear  what 
they  say  about  your  stocks.  The  goods  may  look  differ- 


FORECASTING    DEMAND 27 

cut  to  the  customer  than  they  did  to  you  under  the  care- 
fully selected  surroundings  of  a  New  York  salesroom. 
Your  ears  may  burn  first  on  one  side  of  your  head  and 
then  on  the  other.  But  whether  the  criticisms  are  favor- 
able or  adverse,  correct  errors  and  capitalize  successes 
at  once.  Your  customers  are  always  right,  and  there  is 
no  reason  for  hesitating. 

It  is  worth  while,  whether  you  buy  for  a  little  shop — 
a  department — in  a  big  city  store,  or  run  a  place  of  your 
own  in  a  town,  to  record  your  customers'  wants  individ- 
ually. Make  out  a  card  for  each  steady  purchaser,  and 
have  a  bright  salesman  jot  down  on  it  what  is  bought. 
You  get  then  a  little  detailed  picture  of  the  big  pano- 
rama which  your  sales  statistics  supply.  Run  over  these 
cards  on  a  dull  afternoon  and  have  a  silent  customers' 
conference.  The  cards  are  used  by  both  big  and  little 
stores  to  supply  lists  for  mailing  follow-ups  and  notices 
of  special  sales. 

Right  buying — of  materials,  to  be  shaped  into  prod- 
ucts ;  of  goods,  to  be  sold  again ;  of  equipment,  to  handle 
manufacturing  and  selling;  of  supplies,  to  satisfy  the 
daily  wants  of  business — is  one  of  the  great  steps  in  dis- 
tribution. Unsystematic,  blundering  distribution  levies 
an  invisible  tax  on  the  clothes  you  wear,  the  food  you 
eat  and  the  utensils  you  use.  Prosperous  and  youthful 
people,  we  have  shouldered  the  tax  cheerfully ;  growing 
older,  we  plan  to  reduce  it  in  order  to  preserve  our 
prosperity.  Business  men  in  all  the  great  cities  see  the 
need,  and  are  thinking  out  their  distribution  problems 
to  economical,  sound  methods.  Thousands  of  business 
men  in  towns  are  helping  to  set  distribution  aright  by 
careful  buying  according  to  tested  principles  of  which 
their  fathers  were  ignorant. 

Their  motives  are   selfish — the  business  man  must 


28  HOW    TO    BUY 


either  buy  right  when  distribution  has  tightened,  or  go 
into  the  receiver's  hands.  But  the  reaction  is  to  your 
benefit  and  for  the  community's  welfare.  Men  who  buy 
right  make  life  easier  for  others — render  a  good  service 
to  the  country. 

Developments  in  distribution  have  been  remarkable. 
The  buyers  who  are  growing  old  in  the  harness  tell  mar- 
ket stories  which  are  all  but  incredible  to  their  succes- 
sors. Still  more  effective  developments  are  to  be  ex- 
pected. "The  next  ten  or  fifteen  years  will  see  greater 
changes  in  distribution  than  the  last  decade,"  declares 
the  president  of  a  store  known  from  coast  to  coast  and 
beyond.  "My  wholesale  departments  have  raised  the 
credit  standing  of  an  entire  section  of  this  country  by 
showing  retailers  how  to  buy.  Our  work  is  only  started." 


nPITREE  things  requisite  in  a  buying  organization  are: 
•*•  first,  a  set  of  able,  experienced  buyers;  second,  one  man 
at  the  top  to  coordinate,  unify,  and  direct  in  a  general  way 
the  work  of  these  buyers;  and  third,  a  system  which  will  get 
the  best  prices,  the  quickest  shipments,  and  an  absolutely 
accurate  knowledge  in  regard  to  stock  on  hand. 

— Every  M.  Paget 


II 

MATCHING  PRICE  AGAINST 
FINAL  COST 

By  J    V    Hunter 

RAW  material  is  a  most  important  element  of  factory 
cost  in  almost  every  manufacturing  business.  Yet 
labor  cost  is  generally  watched  more  closely.  How  the 
manufacturer  does  his  purchasing  often  determines  very 
largely  whether  red  or  black  figures  will  show  up  on 
the  balance  sheet  at  the  end  of  the  year. 

Too  often  the  factory  manager,  buried  in  the  near  view 
of  his  problems  and  trusting  to  a  subordinate  to  tend 
to  this  important  phase  of  his  business,  allows  the  mar- 
gin which  would  determin~  financial  success  to  slip  away 
through  unscientific  purchasing.  The  criterion  is  too 
often — buy  the  cheapest.  But  cheapest  in  first  cost 
is  by  no  means  always  or  oftenest  most  economical  in 
final  cost ;  and  it  is  from  the  angle  of  final  costs  that  a 
manager  must  view  his  purchases. 

The  unwisdom  of  a  purchase  based  on  lowest  first 
cost  is  illustrated  in  Figure  IV.  In  this  particular  case 
the  purchasing  was  entrusted  to  a  purchasing  agent 
who  had  been  appointed  to  his  position  because  of  his 
ability  as  a  clerk  and  bookkeeper,  but  who  knew  little 
or  nothing  about  manufacturing.  Nor  was  he  provided 
with  specifications  governing  the  quality  of  the  materials 
he  should  purchase.  Naturally  enough,  he  tripped  upon 
cheapest-in-first-cost.  He  bought  some  three-year  maple 


so 


HOW    TO    BUY 


for  early  use.  The  purchase  was  delayed  several  weeks 
— during  which  time  the  material  should  have  been  on 
hand  and  drying — while  he  was  writing  all  over  the 


122%—* 
119%  * 

114%—* 
107%  —  » 

100%  —  * 

98%  * 

FINAL  COST 

REPLACEMENTS  OF  PARTS  IN  STOCK 

LABOR  LOSS      FINISHED  PARTS 

MATERIAL  LOSS       FINISHED  PARTS 

LABOR  LOS 

>S  WORKING  SCRAPPED  PARTS 
FINAL  COST 

FINISHED  PARTS       LABOR  LOSS 

MATERIAL    LOSS        FINISHED  PARTS 

96%  » 

91%  * 

SCRAP  IN 

RE-WORKING  SHOP 

LABOR  LOSS  WORKING  SCRAPPED  PARTS 

SCRAP  IN  RE-WORKING  SHOP 

86%  » 

76%  » 

74%  * 

SCRAP  IN 

"SAW  MILL"                                   ~* 

SCRAP  IN  SAW  MILL 

LOSS  IN  YARD 

COST  OF  GOOD 

LUMBER 

66»%—  * 

LOSS 

IN  YARD 

COST  OF 

LUMBER 

FIGURE  IV:     The  final  cost  here  should  have  been  100%.    Owing  to  the 

•purchase  of  cheap  materials,  losses  in  working  up  the  materials  brought  the 

actual  final  cost  to  122% 

country  for  prices,  in  order  to  save  a  few  dollars  per 
thousand.  The  lumber  came  only  half  cured.  The  fac- 
tory was  obliged  to  work  it  up  at  once.  Consequently, 


FIRST    AND    FINAL    COST 


there  was  a  heavy  loss  through  the  checking,  warping 
and  twisting  out  of  shape  of  finished  parts.  The  pur- 
chasing clerk  was  pleased  at  a  saving  in  purchase  price 


NEW  COST  TO  FACTORY 

DELAY  OF  REGULAR  WORK 

REHANDLING  AND  DELIVERY 

SHEARED  TOO  SHORT      SHOP  LOSS 

INTEREST  ON  SHOP  EQUIPMENT 

100%  » 

DEPRECIATION  AND  REPAIR  OF  TOOLS 
ORIGINAL  TOTAL  COST  TO  FACTORY 

RE-HANDLING  AND  DEI 

(VERY 

9T«%—  —  » 

POWER 

RECEIVING  AND_ 

STORING 

1 

1 

NET 

WASTE 

LABOR  SI- 

EARING  TO  LENGTH            STC 
_..  

CK   CUT  TO 
LENGTH 

I 
1 

DELIVERY 

TO  CUTTING  SHOP 

< 

6Tt%          > 

UNLOAD 

..„„„  - 

68%            > 

STOCK  IN 

UNCUT  LENGTHS 

I'!' -''RE  V:      Lack  of  cooperation  between  the  purchasing  department 

and  the  thop,  at  here  thovm,  resulted  in  a  loit  of  fife  and  one-half  per  cent 

instead  of  a  tuppoted  taring  of  three  per  cent 


of  seven  and  a  half  per  cent,  shown  on  Figure  IV  as  the 
difference  between  sixty-six  and  one-half  and  seventy- 


32  HOW    TO    BUY 


four  per  cent.     Actually,  however,  there  was  a  loss  on 
this  lot  of  lumber  of  twenty-two  pe"r  cent. 

ECONOMICAL    buying  very    often    results    in    the 
selection  of  the  article  which  at  first  seems  most 
expensive — determine  your  needs,  then  consider  price. 

Another  case  is  illustrated  by  Figure  V.  Here  again 
the  purchasing  department  was  uninformed  as  to  prac- 
tical conditions.  The  shop  had  previously  bought  cer- 
tain stock  in  cut  lengths,  thus  avoiding  the  labor  of  cut- 
ting. The  purchasing  clerk  asked  the  superintendent 
what  it  cost  in  direct  labor  for  cutting  to  length,  allow- 
ing a  proper  per  cent  for  waste  in  cutting.  On  this 
basis  he  figured  they  could  save  three  per  cent  by  buy- 
ing the  undimensioned  lumber  and  cutting  it  up  them- 
selves. Elated,  he  called  this  saving  to  the  attention  of 
the  manager  and  claimed  credit.  What  the  actual  saving 
was,  or,  rather,  was  not,  is  shown  by  the  diagram  (Fig- 
ure V).  The  clerk  forgot  to  take  into  consideration 
such  items  as  power,  depreciation  and  repairs,  interest 
on  investment  in  shop  equipment,  expense  of  extra  han- 
dling involved,  and  delay  incurred  in  regular  work.  So 
instead  of  a  saving  in  material  of  ten  per  cent  and  an 
apparent  net  saving  of  three  per  cent,  there  was,  in  real- 
ity, an  actual  loss  of  five  and  a  half  per  cent. 

Now,  if  the  buyer  in  either  of  these  instances  had  had 
practical  experience  in  the  shop  or  experience  in  figur- 
ing cost,  or  if  he  had  been  guided  by  specifications  and 
instructions  prepared  from  the  point  of  view  of  the 
man  in  the  shop  and  the  cost  expert,  he  would  have 
wasted  no  time  in  attempting  to  buy  the  cheapest  kind 
of  lumber.  Many  factory  managers  tolerate  purchas- 
ing methods  of  this  sort.  Many,  indeed,  consider  their 
material  as  only  so  much  raw  stock  whose  cost  ceases 


_  FIRST    AND    FINAL    COST  _  S3 

the  moment  it  is  unloaded  on  the  ground  and  paid  for. 
Most  managers  consider  the  purchasing  department  effi- 
cient when  a  comparison  of  the  prices  paid  with  the 
market  quotations  shows  that  their  stock  has  been  pur- 
chased at  or  below  the  market  price.  Few  take  the 
vital  step  of  analyzing  their  purchases  from  the  view- 
point of  final  —  which  is  the  only  true  —  economy. 

Many  factories  now  have  an  "engineer  of  material" 
whose  duty  it  is  to  act  as  a  mediator  between  the  shop 
and  the  purchasing  department  in  cases  of  this  sort. 
He  ascertains  by  actual  test  the  suitability  of  all  mate- 
rials proposed  and  prepares  specifications  to  guide  the 
purchasing  department. 


connection  between  the  purchasing  department 
V_/  and  the  shop  if  essential  for  right  quality  —  how  the 
"engineer  of  material'  acts  as  an  arbitrator. 

In  one  establishment  employing  an  "engineer  of  ma- 
terial,"  the  arrangement  works  out  as  follows:  When- 
ever the  designing  department  produces  a  new  design 
calling  for  a  new  kind  of  material,  it  refers  the  matter 
to  the  "engineer  of  material."  The  latter  consults  his 
records.  If  he  has  no  information  on  hand  covering  the 
kind  of  material  needed,  he  takes  up  the  matter  with 
the  purchasing  department  This  department  then 
writes  to  different  producers  of  the  material  in  question 
requesting  samples  and  prices.  The  engineer  makes  the 
tests  which  he  deems  necessary  and  eliminates  at  once 
those  samples  which  are  defective.  The  rest  of  the 
samples  are  then  given  a  try-out  in  the  shop.  Those 
only  which  stand  this  test  are  considered  for  purchase. 
Sometimes  the  purchasing  clerk  buys  the  cheapest  ; 
again,  he  may  buy  upon  the  basis  of  iMiv«T.v.  Or,  if 
doubtful  about  any  of  the  firms  he  is  dealing  with,  he 


34  HOW    TO    BUY 


may  place  a  small  trial  order  with  a  number  of  them 
and  base  his  final  order  upon  the  showing,  not  of  the 
sample,  but  of  the  trial  order.  Material  good  in  sam- 
ples sometimes  falls  far  short  in  quantity  orders. 

Not  infrequently  shop  prejudices  hold  back  the  buyer 
from  effecting  economies  in  his  purchases.  Foremen  may 
strongly  favor  certain  supplies,  particularly  such  things 
as  tool  steel  or  oils  and  paints.  Growing  accustomed  to 
one  kind,  learning  to  handle  it  in  a  certain  way,  they 
become  convinced  it  is  the  one  brand  that  is  suited  to 
their  line  of  work,  although  there  may  be  dozens  on  the 
market  that,  with  a  little  change  in  method,  could  be 
adapted  to  their  purposes  with  great  saving.  Again, 
the  favoritism  may  be  due  to  unionism.  The  favorite 
brand  bears  the  union  label;  the  proposed  does  not. 
There  are  a  score-and-one  other  reasons,  fancied  or  real, 
for  combating  a  change. 

The  manager  or  owner  himself  may  stand  in  the  way 
of  wise  buying.  A  very  large  concern  bought  all  of  its 
coal — thousands  of  tons  annually — of  one  local  dealer, 
who,  outside  of  business,  was  a  great  friend  of  both  the 
manager  and  the  owner.  The  owner  himself  placed  this 
contract  regularly,  without  question,  taking  his  friend's 
word  for  both  price  and  quality. 

But  there  came  a  time  when  purchasing  in  his  firm 
was  put  on  a  scientific  basis;  material  was  bought  on 
specification;  an  "engineer  of  material"  was  given  au- 
thority over  these  matters,  and  the  placing  of  contracts 
even  by  the  president  was  checked.  The  coal,  supposed 
to  be  all  right,  was  found  on  test  to  be  very  inferior. 
Samples  were  secured  from  other  dealers,  tested  and 
compared,  and  it  was  found  that,  on  the  heat  unit  basis, 
the  favorite  brand  was  the  least  efficient. 

The  value  and  function  of  the  material  engineer  is 


FIRST    AND    FINAL    COST 85 

plainly  evident  in  all  these  cases.  He  dictates  purchases 
on  the  basis  of  careful,  unbiased,  often  technical  inspec- 
tion. Moreover,  not  having  worked  in  the  shop,  his 
judgment  is  not  warped  by  the  natural  inertia  of  the 
shop  man  to  change.  Finally,  he  has  the  necessary  prac- 
tical and  technical  knowledge  and  experience,  and  the 
broad  viewpoint  on  the  problem  necessary  to  dictate 
purchases  to  the  best  advantage  and  to  know  for  a  cer- 
tainty that  material  purchased  is  not  only  right  in 
quality  and  cheapest  in  final  cost,  but  is  receiving  a 
square  deal  in  the  shop.  He  does  not  look  at  final  costs 
through  the  obscured  goggles  of  first  cost,  but  views 
each  first  cost  through  the  clear  glass  of  final  cost. 


T)EPEND  ABLE  quality  as  well  as  service  it  expected  by  the 
*^  factory  purchaser.  One  of  the  first  question*  the  buyer 
asks  is,  "What  service  can  I  exptctf"  and  the  answer  that 
the  manufacturer  girts  mutt  be  based  primarily  upon  his 
knowledge  of  what  is  in  his  raw  materials.  Unless  the 
manufacturer  knows  just  what  requirements  his  raw  material 
will  meet,  he  can  not  say  with  confidence  what  service  kit 
product  will  five. 

— T.  K.  P.  H*ine» 


Ill 

WHEN  THE  SALESMAN 
DROPS  IN 

By  Carroll  D.  Murphy 

HE  salesman — that  shop  and  field-trained  defender 
•I  of  samples  against  the  daily  pessimism  of  buyers — 
is  a  "traveling  directory"  of  all  that  pertains  to  selling. 
And  what  touches  selling  touches  buying. 

In  sharing  his  knowledge  with  the  buyer,  however, 
the  salesman  naturally  hammers  the  spots  in  his  goods 
that  ring  true  and  taps  gingerly  on  other  features. 
Therefore  the  successful  buyer  sitting  in  judgment  on  all 
the  lines  offered,  forced  to  consider  salability  and  serv- 
iceability above  personal  claims,  must  use  every  idea  that 
comes  and  dig  for  others.  He  must  have  no  ear  for  flat- 
tery and  "rush"  talk.  He  must  remember  that  till  he 
has  signed,  he  has  the  advantage  and  can  use  his  own 
judgment  despite  the  salesman's  hypnotism.  He  will 
test  every  opinion,  catch  at  only  the  real  pointers  of- 
fered, and  complete  the  goods  comparisons  of  which  each 
seller  gives  his  own  partial  view. 

The  first  step  in  learning  from  a  salesman  is  to  learn 
the  man  himself.  Some  men  are  born  judges  of  human 
nature,  but  any  buyer  can  measurably  develop  this  fac- 
ulty. To  study  a  man's  face  and  eyes,  his  voice  and 
actions;  to  get  specific  statements  and  put  them  on 
cards  awaiting  proof  or  denial,  are  some  of  the  ways 
which  in  a  few  weeks  tell  a  buyer  what  sellers  are  accu- 


POINTS    FROM    SALESMEN 37 

rate,  business-like  and  square.  Sales  stories  that  leave 
the  haphazard  listener  confused  bring  interesting  facts 
to  the  buyer  who  tabulates  the  talk.  Try  to  repeat  your 
own  story  and  you  will  see  how  six  versions  of  a  buying 
proposition  serve  as  counter-checks  on  accuracy.  More- 
over, in  casual  conversation,  character  quickly  shows. 
The  buyer  cannot  afford  to  neglect  acquaintance  with 
his  selling  friends.  Frequently,  he  can  also  supplement 
personal  judgment  with  simple  tests  of  the  seller — a 
strategic  short  cut  to  knowledge. 

O  ALESMEN  possess  a  mine  of  valuable  information 
O  about  the  goods  they  carry — how  the  tactful  buyer 
draws  on  this  to  supplement  hit  own  knowledge. 

It  was  a  salesman  who  recently  instanced  this  fact. 
He  had  handled  stiff  hats  for  a  decade  and  was  now  put- 
ting his  savings  into  a  haberdashery  in  his  native  town. 
Through  his  road  experience  he  had  become  an  expert 
in  hats.  In  some  other  lines,  however,  he  was  like  a  cow- 
puncher  in  a  locomotive  cab. 

A  salesman  appeared  one  morning  and  opened  with 
his  tactics  in  a  masterly  way.  His  jobbing  house  was 
well  located  to  handle  the  haberdasher's  trade  and  the 
latter  saw  that  his  relations  with  the  salesman  might  be 
constant.  The  traveler  had  an  extraordinary  fund  of 
information,  but  it  meant  nothing  until  the  buyer  knew 
once  for  all  how  to  rate  it — till  he  knew  how  accurate  his 
man  was. 

"How  long  have  you  been  handling  your  lines?"  the 
store  man  inquired. 

"About  eight  years,  most  of  them." 

"You  ought  to  know  the  goods." 

"I've  taken  considerable  pains  to,"  the  salesman  ad- 
mitted. 


38  HOW    TO    BUY 


"You  know  hats?"  the  buyer  insisted.  The  salesman 
smiled. 

"Well,  you  say  you've  got  a  line  there  that  I  can't 
beat.  In  the  back  of  the  store  are  samples  at  the  same 
price  from  three  other  houses,  and  I'm  not  sure  but  they 
beat  yours.  We'll  shuffle  the  bunch  and  each  pick  the 
best  hat  without  looking  at  a  label." 

"If  you've  got  a  better  bargain  than  this  first  one  I 
offered,  I'll  recommend  it,"  agreed  the  salesman. 

The  buyer  arranged  the  test,  slipping  in  two  higher 
grade  samples. 

"Well,"  the  salesman  laughed,  after  an  instant's  ex- 
amination, "here's  the  best;  that's  next — both  better 
than  mine.  If  either  quality  comes  at  my  figure,  take 
it.  I  don't  believe  they  do." 

"How  do  you  judge?"  inquired  the  haberdasher 
naively.  In  two  crisp  paragraphs,  the  salesman  sketched 
the  ideal  hat  after  the  buyer's  own  heart. 

"As  it  happens,"  the  haberdasher  rejoined,  "I  know 
hats  too.  But  I  couldn't  swear  whether  linens  and 
leather  are  vegetable  or  mineral. 

"You've  proved  that  you  know  goods  and  have  faith 
to  walk  yours  on  their  own  legs.  What  do  I  look  for  in 
linens?" 

The  salesman  saw  a  chance  to  score  by  fairness  and 
jumped  at  it.  He  understood  that  a  buyer  who  de- 
manded concrete  information  would  eventually  get  it  and 
test  it  against  deliveries.  Misrepresentation  dropped  be- 
low par. 

At  one  stroke  the  buyer  had  proved  the  salesman's 
knowledge,  warned  him  against  whitewashing,  put  him 
upon  his  honor  and  established  a  basis  of  mutual  respect. 
Information  is  now  freely  exchanged  between  the  two 
and  every  idea  stands  test. 


POINTS    FROM    SALESMEN 89 

The  wise  buyer  primes  himself  for  his  sales  interviews 
by  reading  and  study.  He  keeps  samples  at  hand.  He 
learns  enough  to  question  keenly  and  to  press  for  exact 
points  needed  to  fill  his  data  sheet. 

KNOWING  nothing  about  a  certain  line  of  good*  he 
withed  to  carry,  one  buyer  tecured  a  matt  of  in/or, 
motion  by  tactfully  questioning  talesmen  who  called. 

How  to  test  goods,  distinguish  grades,  figure  costs, 
recognize  values;  how  to  choose  profitable  fashions  and 
base  quantities  on  sales  elsewhere ;  these  are  points  which 
the  traveler  understands  but  may  wish  to  keep  dark. 
Weight,  for  example,  is  often  telltale  in  fixing  the  cost 
of  stoves,  farm  machinery,  brass  fixtures  and  even  un- 
copyrighted  books.  The  buyer  who  finds  salesmen  mak- 
ing these  quick  tests — displaying  this  sleight-of-hand — 
meets  the  exhibition  with  a  keen  eye  and  the  pointed 
query,  "How  do  you  know!" 

One  clever  buyer  started  from  black  ignorance  and 
by  playing  the  chief  talking  points  of  three  salesmen 
against  each  other,  shortly  gained  a  fair  knowledge  of 
plated  silverware.  To  the  first  salesman  the  buyer 
merely  named  a  make  of  goods.  The  salesman  laughed. 

"Why,  our  spoons  will  strip  a  third  more  silver  than 
that  brand,"  he  replied. 

"Well,"  said  the  second  salesman  an  hour  later,  "the 
designs  we  handle  include  all  the  big  sellers." 

"What  about  metal — how  much  silver  will  your  No. 
3  spoon  strip?"  inquired  the  buyer  confidentially.  AncJ 
straightway  the  seller  took  on  greater  deference  and 
talked  more  technically  to  this  buyer  evidently  so  ex. 
pert  in  knowledge. 

"You  see,"  he  concluded,  "our  metal  is  placed  to 
catch  the  wear — under  the  bowl  and  at  the  toe  of  the 


40  HOW    TO    BUY 


spoon.    This  adds  years  to  its  service. ' ' 

"I  see,"  said  the  buyer;  and  twenty  minutes  later  he 
was  talking  expertly  of  patterns,  stripping  and  the 
placing  of  the  metal  to  a  third  salesman  who  had  boasted 
that  the  backing  of  his  ware  was  neither  too  soft  nor  too 
brittle,  but  a  stiff  steel  core,  perfectly  adapted  to  its 
purpose. 

The  buyer  does  not  need  to  take  a  long  step  or  pre- 
tend any  thorough  knowledge  in  this  work.  He  can  con- 
jure marvelously  with  the  formula,  "What  about ?" 

if  only  he  knows  a  few  catch  phrases  of  the  trade  to  fill 
in  the  dash.  In  consequence,  every  salesman  strains  to 
meet  competitive  talking  points  which  he  might  other- 
wise gloss  over  and  all  treat  the  buyer  as  a  man  who 
understands  the  product.  » 

Novelty  samples  in  a  salesman's  display  stir  a  swarm 
of  questions  along  a  different  line.  There  is  a  young 
college  man  in  a  Massachusetts  store  who  turns  his  back 
to  the  light,  faces  his  visitor  and  artfully  leads  out  along 
these  lines: 

"What  are  my  competitors  doing  with  this  contriv- 
ance?" 

"How  has  it  acted  at  the  centers  where  it  first  went 
on  sale?" 

"What  flaws  has  it  developed?" 

"How  wide  and  how  permanent  is  its  appeal?" 

' '  To  what  extent  is  it  advertised  and  how  much  of  the 
advertising  that  I  pay  for  would  I  get?" 

"What  competition  has  it,  and  how  do  you  meet  the 
talk  of  competing  lines?" 

"What  likelihood  has  it  of  going  out-of-date?" 

"Can  you  keep  me  supplied  with  it?" 

"What  are  the  best  things  I  can  tell  people  about  it?" 

"What  are  the  latest  ideas  on  displaying  it?" 


POINTS    FROM    SALESMEN 41 

The  buyer  must  count  forces,  nicely  adjust  his  strategy 
to  his  opponent's  personality  and  meet  aggressiveness 
with  foresight  Often  the  salesman  gives  out  the  de- 
sir,  d  points  freely.  Frequently  his  good  nature  sweeps 
him  off  his  feet  if  you  naively  take  his  aid  for  granted. 
Samples  laid  before  him  may  bring  a  whistle,  a  smile 
or  a  word  that  means  much  to  one  who  knows  the  man. 
With  novelties,  it  may  be  possible  squarely  to  let  the 
seller  know  he  can  place  no  innovation  without  vouching 
for  it  somehow.  Again,  finesse  is  needed.  Follow  the 
salesman 's  own  example ;  come  at  him  from  his  own  side. 
Learn  of  his  work,  his  interests,  his  territory.  Set  him 
to  talking  of  himself  and  the  conversation  will  drift  to 
what  interests  you. 

Fortunately,  not  all  buying  and  selling  is  conversa- 
tional sword  play.  Growing  buyers  and  clever  salesmen 
alike  are  alive  to  selling  schemes.  The  small  purchaser, 
who  rarely  gets  to  market  centers,  should  especially  en- 
courage discussion  along  this  line.  He  should  tour  the 
shops  in  his  salesman's  person  and  ask  for  opinions 
on  displays  and  sales;  should  persuade  the  seller  to 
watch  for  adaptable  ideas  and  should  show  appreciation 
of  every  help. 

Nowhere  are  wholesale  and  retail  interest  nearer  unity 
that  here.  The  salesman  finds  the  same  dusty  wares  in 
the  window,  the  same  shelves  strewn  with  red  calicoes 
and  blue  silks,  as  on  his  last  trip. 

"No  sales  for  me,"  his  mind  registers  automatically. 
And  then  he  offers  some  suggestion,  which  the  wise 
buyer  will  receive  tactfully,  however  crudely  it  may  be 
put 

But  the  chances  are  it  will  be  the  most  diplomatic,  the 
most  alluring  description  of  a  clever  window  at  Mis- 
soula  or  Cairo  or  Wilkesbarre — "so  simple,  so  easy  to 


42  HOW    TO    BUY 


brush  up  every  morning ' '  with  a  new,  clean  touch.  Or 
it  may  be  that  "snappy  bargain  scheme  down  the  line" 
which  clears  depreciating  stocks;  that  week-end  sale 
which  built  business  for  a  shop-keeper  who  was  almost 
bankrupt ;  the  idea  Sandman  has  for  livening  his  store 's 
"insides"  every  week — any  one  of  a  hundred  sales  win- 
ners in  six  states. 

/COOPERATION  between  buyer  and  salesman  results 
V-/  profitably  for  both — clever  selling  schemes  and  valu- 
able assistance  can  be  secured  from  the  latter. 

No  storeman  who  meets  travelers  has  any  excuse  for 
nursing  last  year's  wares.  It  is  too  easy  to  get  red- 
blooded  schemes ;  to  draw  on  the  ' '  traveling  directory ; ' ' 
to  learn  the  most  important  point  of  goods  knowledge — 
how  to  clear  them  at  a  profit. 

In  many  cases  the  expert  factory  purchaser  com- 
pletely outclasses  salesmen  on  goods  knowledge.  But  in 
the  unbelievable  variety  of  things  which  he  buys,  some 
are  sure  to  be  unfamiliar  to  him. 

A  Chicago  purchasing  agent  who  for  years  worked  in 
the  steel  mills  and  who  now  belongs  with  an  office  appli- 
ance firm,  illustrated  this  point.  One  important  item  of 
raw  material,  which  till  recently  he  bought,  was  strip 
steel  of  very  high  grade  and  accurate  thickness.  So 
exacting  are  the  requirements  that  the  firm  willingly 
paid  fifty  cents  a  pound  for  the  material.  Still,  how- 
ever, the  metal  failed  to  bend  smoothly  and  seemed  un- 
satisfactory. 

Finally  the  buyer  telephoned  a  steel  company  which  he 
had  noted  as  good  on  specials  and  explained  his  trouble. 
The  sales  manager  sent  out  a  salesman  perfectly  con- 
versant with  such  grades  of  metal. 

The  purchasing  agent  was  able  to  explain  precisely 


POINTS    FROM    SALESMEN 48 

what  he  liked  and  disliked  about  his  material.  The 
salesman  came  back  instantly  with  a  list  of  the  grades 
available  and  a  minute  description  of  their  character- 
istics  under  various  tests.  A  thirty-five  cent  steel  was 
shortly  fixed  on  for  trial.  It  proved  entirely  fit  and 
has  netted  a  handsome  profit. 

From  another  buyer's  own  press  rooms  complaints  be- 
gan to  come  that  a  certain  purchase  of  paper  gave  trouble 
with  electricity — with  shrinkage  between  printings  on  a 
three-color  run — with  edges  not  squared,  which  could 
not  be  fed  straight. 

The  buyer  lacked  knowledge  on  these  fine  points,  but 
in  thirty  minutes  he  had  brought  to  his  desk  a  paper 
salesman  who  had  mastered  such  situations  a  dozen  times. 
An  hour  later  the  presses  were  rumbling  regularly  again 
and  the  salesman  was  back  on  his  beat,  grateful  for  the 
chance  to  square  himself  and  the  purchasing  agent  with 
the  latter  *s  firm. 

These  purchasing  agents  draw  on  the  expert  advice 
available  as  freely  as  they  would  turn  to  a  banker 
or  lawyer  at  need.  Their  knowledge  is  sufficient  that 
they  can  reach  the  right  source  of  information  and 
so  get  at  the  definite  "points  of  law"  under  fire.  There- 
upon it  is  easy  to  build  increased  goods  knowledge  and 
better  buying  power — both  permanent  investments. 


buyer' i  tatk  it  to  know  kit  demand,  to  know  the 
tourcet  of  tupply,  to  keep  track  of  new  good*,  and  get 
the  bett  price*.  He  mutt  cultirate  kit  powert  of  discrimina- 
tion; hit  tatk  it  to  choote  carefully  ana  ttparale  the  pottible 
from  the  impotnble,  the  tafefrom  the  unsafe. 

—Franklin  A.  Stole 


IV 

WHEN  THE  BUYER  GOES 
TO  MARKET 

By  Neil  M.  Clark 

THE  general  manager  of  a  big  department  store 
stopped  approvingly  before  a  counter  containing 
a  new  kind  of  blouse  which  had  proved  immensely 
popular. 

"How  did  you  happen  to  get  hold  of  this  style  before 
everybody  else?"  he  asked  the  department  buyer. 

"I  keep  a  card  file,"  said  the  buyer  frankly,  "of 
every  manufacturer  and  jobber  I  have  ever  bought 
from,  and  when  I  go  to  market  I  visit  every- 
body on  my  list,  big  and  little  dealers  alike.  The 
man  I  bought  those  blouses  from  hadn  't  sold  us  a  bill  of 
goods  for  six  years.  His  salesmen  had  stopped  calling 
on  me,  because  he  had  turned  his  efforts  more  or  less  into 
the  middle  West.  Nevertheless,  I  have  dropped  in  at 
his  sample  rooms  on  every  one  of  my  New  York  trips, 
and  the  last  time  he  had  those  blouses.  I  felt  that  they 
were  going  to  make  a  hit  and  so  gave  him  an  order." 

Records  such  as  this  buyer  keeps  are  invaluable  to 
every  man  who  visits  his  markets.  Nothing  is  more 
dangerous  for  the  man  who  must  keep  an  up-to-date 
stock  on  his  shelves,  as  every  live  retailer  must,  than  to 
give  up  investigating  general  market  conditions.  Scant 
looking,  or  taking  the  word  of  one  salesman  that  such 
and  such  is  "the  very  snappiest  and  most  up-to-date" 


PLACING    THE    ORDER 45 

may  lead  you  to  overlook  a  really  worth  while  article 
which  some  out-of-the-way  seller  is  carrying. 

A  big  department  store  in  the  East  requires  each  buyer 
to  have  a  card  file  of  all  the  possible  sources  of  supply 
in  the  larger  cities  which  are  visited  on  the  quarterly  or 
semi-annual  buying  trips. 

SOURCES  of  pottible  tupply  mutt  all  be  known  to 
the  up-to-date  buyer — failure  to  ritit  a  tingle  dealer 
may  mean  the  lott  of  a  profitable  telling  line. 

The  buyer  himself  is  a  man  who  has  received  careful 
training  at  the  hands  of  an  experienced  man.  He  has 
accompanied  the  latter  as  an  assistant  on  several  trips, 
has  studied  thoroughly  the  goods  in  his  department  and 
the  methods  of  their  manufacture.  He  has  sold  the 
goods  on  the  floor  and  knows  by  actual  contact  with  the 
public  just  about  what  his  class  of  customers  will  buy. 
When  he  goes  to  market  he  is  fortified  with  his  list  of 
sellers;  he  knows,  also,  the  maximum  amount  he  can 
spend,  as  well  as  the  manner  in  which  he  must  divide  his 
purchases  among  different  classes  of  articles.  At  mar- 
ket his  big  problem  is  to  find  the  right  seller — the  man 
who  has  the  right  quality  at  the  right  price.  If  there 
are  several  such,  choice  lies  with  the  man  who  is  known 
to  deliver  goods  promptly  on  the  contract  date,  and  live 
up  to  every  word  of  his  agreements. 

The  first  thing  the  shrewd  buyer  does  is  to  visit  the 
retail  stores  which  sell  his  line  of  goods.  He  does  this 
to  find  out  what  they  are  offering.  These  visits  are  con- 
ducted systematically,  and  the  buyer  proceeds  from  the 
dealers  who  carry  strictly  high  priced  articles  to  the 
cheap  stores,  and  back  from  them  to  the  middle  class 
stores.  His  purpose  in  so  doing  is  to  find  the  newest 
kink  in  fashions.  The  aim  which  the  dealer  in  high 


46  HOW    TO    BUY 


priced  goods  has  always  before  him  is  to  sell  the  new 
thing  while  it  is  new,  before  it  has  been  seized  upon 
by  the  medium-priced  or  cheap  manufacturers  and 
placed  in  every  store  in  the  country.  The  eye  of  the 
experienced  buyer  is  quick  to  catch  the  latest  trend  of 
styles  in  the  articles  lying  on  the  up-to-the-minute  deal- 
er's counters. 

When  he  knows  where  the  fashions  tend,  by  studying 
the  stocks  displayed  in  the  high  priced  shops,  the  buyer 
visits  the  cheapest  stores.  Here  he  corrects  his  first 
impressions  or  corroborates  them.  He  also  tries  to  learn 
whether  the  late  fashions  can  be  duplicated  in  cheaper 
materials.  If  so,  he  may  prefer  to  buy  the  cheaper  qual- 
ity, especially  if  his  trade  happens  to  be  not  the  most 
exclusive.  Again,  he  may  be  unable  to  find  the  right 
article  in  the  cheap  store,  but  is  able  to  locate  it  in  the 
medium-priced  shop. 

This  policy  of  seeing  what  his  neighbors  are  selling 
is  invaluable  for  every  storekeeper.  It  freshens  his 
sense  and  gives  him  new  ideas  adaptable  to  his  own 
business. 

"I  buy  exclusively  from  salesmen,"  said  the  manager 
of  a  jewelry  store,  "but  we  visit  the  market  several 
times  every  year.  I  have  just  returned  from  a  two 
weeks'  trip  with  one  of  my  assistants.  It  was  essen- 
tially a  buying  trip,  but  we  did  not  place  an  order  for 
a  single  article  and  had  no  intention  of  doing  so  when 
we  left.  We  went  to  see  what  other  big  jewelry  firms 
are  doing,  what  new  patterns  the  manufacturers  are 
bringing  out,  what  ideas  we  could  pick  up  by  the  way. 
I  know  it  paid." 

In  the  crowd  of  salesmen  who  beset  the  buyer  when 
he  arrives  at  the  market,  the  unwary  man  is  liable  to 
become  confused  and  load  himself  up  with  stock  which 


PLACING    THE    ORDER 


47 


he  can  not  hope  to  move  at  a  fair  figure. 

One  Texas  buyer  who  goes  to  market  regularly  never 
attempts  to  place  his  orders  until  he  has  returned  to  his 
own  office.  He  looks  at  the  offerings  of  every  supplier, 
tramps  mile  after  mile  through  different  sample  rooms 
and  spends  days  in  his  shirt  sleeves  listing  as  the  sales- 
men read  and  describe  all  of  their  goods  which  he 
thinks  he  may  be  able  to  use.  When  he  finally  returns 
home  he  has  a  mass  of  carefully  arranged  information, 
and  in  the  quiet  of  his  office  he  compares  the  qualities 
and  prices  offered  by  various  houses.  Here  he  can  use 
his  sober  best  judgment  to  select  the  articles  which  meet 


NAM 

' 

•••<  . 
JMCHASC* 

AMT. 

AMT.9      LI 
AT    MARK 

DELIVERY      RECORD 

AMT. 

DCSCRIPTION 

•  OLD 

DOWNS 

OUAypafltf*YSim 

RCMARKS 

FORM  J:     The  buyer' t  "lift  of  resources"  it  kept  in  a  little  file  on  cards 

similar  to  this.    Each  teller'*  previous  record  u  thus  brought  Jorcffuliy 

to  the  buyer's  attention 

his  needs ;  can  make  contracts,  place  initial  orders  and  re- 
order as  needed,  with  no  fear  of  passing  the  limit  which 
he  has  set  for  his  expenditures.  This  buying  method 
is  the  key  to  right  prices,  np-to-now  popularity,  small 
stocks  and  quick  turnovers  in  chain  store  success. 


48  HOW    TO    BUY 


All  the  information  in  regard  to  suppliers  which  the 
buyer  requires  is  conveniently  given  on  Form  I.  Here, 
in  compact  shape,  he  has  a  summary  of  all  previous 
transactions  with  each  supplier;  he  knows  by  glancing 
at  the  brief  notations  what  the  character  of  each  is  in 
regard  to  service — quality  tests  and  delivery  records 
are  his  invaluable  guides ;  and  his  ' '  resource  card ' '  tells 
him  also  whether  the  manufacturer  is  capable  of  han- 
dling a  big  order  or  rush  re-orders  promptly.  In  other 
words,  he  runs  no  danger  of  placing  a  five  thousand  dol- 
lar special  order  for  delivery  in  ten  days,  with  the 
optimistic  man  who  is  ready  to  oversell  a  factory  so  small 
that  he  could  not  turn  out  such  an  amount  of  goods  in 
less  than  a  month. 

OELECTING  the  right  supplier  means  having  a  com- 
^-Jplete  record  of  past  transactions  with  all  firms — 
how  quality  and  delivery  overshadow  first  cost. 

The  buyer  does  not  conceal  from  the  seller  the  fact 
that  he  is  keeping  this  tab  on  him.  As  a  matter  of  fact, 
he  freely  discusses  past  purchases  and  shows  where  he 
gained  or  lost.  Goods  that  once  failed  to  move  ex- 
cept at  reduced  prices  are  a  black  mark  against  both 
buyer  and  seller.  The  aim  of  the  buyer  is  to  educate 
manufacturers  and  jobbers  into  an  attitude  where  they 
are  not  only  willing  to  give  first  class  service,  but  are 
glad  and  even  eager  to  see  that  the  retailer  gets  the  best 
there  is  in  quality  at  the  right  price.  Obviously,  the 
best  thing  in  the  market — that  is,  the  most  suitable  for 
the  purpose — is  the  most  economical,  regardless  of  the 
price.  This  is  a  hard  fact  to  realize,  if  you  have  always 
bought  for  bargains,  rather  than  to  suit  your  customers. 
You  must  know  values,  and  recognize  when  price  and 
quality  are  both  right  to  re-sell  at  a  profit. 


PLACING    THE    ORDER 49 

Shrewd  buyers  rarely  strive  to  "beat  down"  the 
salesman's  figure.  That  kind  of  man  soon  establishes 
a  reputation  among  travelers,  and  the  price  which  they 
give  him  first  is  always  scaled  up  to  a  point  which  will 
enable  them  to  come  down  to  meet  the  haggling  buyer's 
demand.  This  man's  bargains  are  generally  such  in 
appearance  only.  The  final  price  is  naturally  no  lower 
than  that  given  to  your  competitor  across  the  street, 
who  knows  his  market  and  sources  of  supply  thoroughly 
and  gives  salesmen  to  understand  that  their  first  price 
must  be  rock  bottom.  If  you  haggle  into  a  lower  price 
it  will  almost  inevitably  be  at  the  risk  of  having  some 
undesirable  goods  palmed  off  on  you,  or,  since  the  jobber 
and  manufacturer  must  have  reasonable  profit,  they  will 
economize  somewhere  in  the  service  granted  the  hard 
buyer. 

"I  know  my  sources  of  supply  thoroughly,"  said  one 
up-to-date  retailer.  "When  a  salesman  offers  me  a 
price  which  I  know  I  can  beat  by  buying  from  another 
firm,  I  simply  drop  the  matter.  Never  do  I  allow  him  to 
scale  down ;  and  never  do  I  hold  the  promise  of  a  lower 
price  elsewhere  as  a  club  over  his  head  to  enable  him  to 
shade  his  figure.  My  experience  is  that  when  a  salesman 
knows  you  are  a  positive  buyer  and  must  be  given  the 
best  and  lowest  figure  to  secure  an  order,  his  best  price 
will  be  given  at  once." 

Knowing  thoroughly  all  the  sources  from  which  he 
can  buy  and  finding  among  these  sellers  the  one  man 
who  combines  excellent  service  with  a  fair  price — that 
is  the  big  problem  remaining  for  the  buyer  after  decid- 
ing what  quality  of  goods  to  get.  At  no  place  in  the 
purchasing  organization  does  real  initiative  count  so 
much  as  in  the  buying  department  The  strong  buyer 
will  not  let  himself  be  induced  by  the  salesman  to  buy 


50  HOW    TO    BUY 


a  line  of  goods  which  he  would  have  difficulty  in  selling. 
On  the  other  hand,  he  will  not  be  afraid  to  take  a  bold 
step  if  his  instinct  and  experience  tell  him  that  it  is 
wise.  The  initial  art  in  retailing,  buying  is  really  the 
foundation  on  which  rests  the  entire  success  of  the 
store. 


"C'VERY  buyer  has  att  manner  of  temptations  thrown  in 
*~*  his  path.  He  is  invited  to  dine,  to  the  theatre,  to  drink, 
smoke,  drive,  at  the  expense  of  those  who  wish  to  sell  him 
goods.  He  is  given  a  chance  to  make  a  few  dollars  on  the 
side.  He  is  always  in  line  to  receive  presents  sent  out  to 
his  house  or  his  hotel.  He  is  the  subject  of  keenest  study  by 
those  who  sell.  They  size  him  up,  AtoZ.  If  he  has  a  weak 
spot  they  will  find  it.  And  if  he  has  not  a  powerful  per- 
sonality, his  weak  spot  vnll  show  in  his  selections.  He  will 
Jkn7  to  buy  what  will  sell  the  best,  miss  it  on  quality,  or  price, 
or  style,  or  something  that  he  would  not  have  missed  it  on  if 
his  personality  had  been  strong  enough  to  keep  the  seller 
at  a  distance  and  passed  upon  his  purchases  solely  upon  his 
own  judgment. 

— A.  Montgomery  Ward 

Founder,  Montgomery  Ward  &  Company 


BUYING  EQUIPMENT  BY 
STANDARD 

By  Harry  Franklin  Porter,  M.  K. 

THE  management  of  a  large  plant  manufacturing 
railway  equipment  had  occasion  a  number  of  years 
ago  greatly  to  increase  their  manufacturing  capacity. 
Large  purchases  of  machinery  were  of  course  necessary. 
Requirements  were  determined  and  specifications  drawn. 
Then  makers  of  machinery  along  the  line  required  were 
consulted.  They  sent  their  representatives  to  the  plant, 
and  for  several  weeks  the  purchasing  agent  was  busy  en- 
tertaining their  propositions.  When  conditions  war- 
ranted it,  a  trial  order  was  placed  with  several  different 
houses  for  one  machine  each.  The  trial  machines  were 
installed  in  the  regular  machine  shop,  no  other  space 
being  available,  and  a  separate  motor  attached  to  each. 
The  regular  class  of  work  was  then  performed  on  each 
machine  and  identical  tools  of  the  same  quality  as  would 
be  used  in  regular  manufacture  used  in  each  case. 

About  three  days'  test  was  run,  when  the  results 
obtained  were  tabulated  and  the  power  consumed 
charted.  It  was  then  a  simple  matter  to  determine  who 
was  entitled  to  the  quantity  order.  The  balance  of  the 
machines  were  of  course  required  to  be  equal  to  the 
sample.  If  any  of  the  other  machines  also  came  up  to 
the  specification  as  originally  drawn  up,  they  were  ac- 
cepted ;  otherwise  they  were  returned.  The  specifications 


52  HOW    TO    BUY 


were  then  altered  to  conform  with  the  results  of  the 
test  for  the  future  guidance  of  the  purchasing  depart- 
ment. 

To  insure  that  all  of  the  representatives  were  con- 
vinced of  the  fairness  of  the  tests,  they  were  privileged 
to  attend  them  and  make  what  suggestions  they  would. 
If  any  required  a  better  grade  of  workman,  however, 
than  the  one  furnished  for  the  test,  he  was  ruled  out. 

Some  fifty  to  seventy-five  various  sized  drill  presses 
were  bought  in  this  way.  In  the  case  of  the  heavier 
machines,  it  was  not  always  possible  to  use  this  method, 
but  then  samples  of  the  work  were  submitted  to  the  dif- 
ferent makers  and  orders  placed  upon  the  basis  of  the 
records  returned  of  the  quality  and  quantity  perform- 
ances. Machines  bought  in  this  way  were  required  when 
installed  to  fulfill  all  promises  in  this  respect  before  they 
were  finally  accepted. 

STANDARDS  and  tests  are  the  means  used  by  modern 
concerns  to  secure  the  right  equipment — the  lowest 
first  price  machine  may  be  highest  in  final  cost. 

This  was  the  method  one  management  followed  in  ob- 
taining tangible  data  upon  which  to  base  their  purchases 
of  equipment.  Other  progressive  manufacturers  handle 
this  problem  similarly.  Such  manufacturers  have  the 
scientific  angle  on  buying — they  see  that  they  get  value 
received  for  their  money  in  the  light  of  all  factors  in- 
volved, among  which  usually  lowest  first  cost  is  not  the 
first  but  the  last  consideration,  subordinate  to  quality 
and  service.  The  points  they  consider  in  buying  equip- 
ment are  tabulated  in  Figure  VI. 

All  manufacturers,  small  as  well  as  large,  may  take 
this  same  angle  on  the  purchase  of  equipment  and  appli- 
ances, as  every  progressive  manufacturer,  small  and 


STANDARDIZING    PURCHASES 


53 


r 
OUTPUT  

IOW  TO  JUDGE  MACHINE  "POINTS" 

QUANTITY 
OUALITV 

riNST  COST 
MATERIAL  COST 

LABOR  COST 

POWCR  COST 
MAINTCNANCC 

OCMUCIATION 
•  PACK  COST 

"rccoiNO  •  COST 

TOTAL  COST 

rLCIIIILITV 
ADAPTABILITY 
SALANCC 

DMIVC 

LABOR  CCONOMT 

ACCIOCNT 

_  M0«r  MUCH  CAN  IT  DO' 
_  OMAT  KINO  Or  »0«*  WILL  IT  OOt 

_is  LOwcsT  riRST  COST  A  RCAL  INOUCCMCNTT 

M 

1 

IN«  TMC  OUTPUT* 

POWCR  COST  PCR  UNIT  or  OUTPUT* 

' 

A8LC1 

SOLCTC  IN  A  rCW  TCAR*.  CNTAIklNO  A  MCAvr  OCPRC 
CIATION  CMAMOCT 
__••  IT  COMPACT  IN  WOP.HINO  ROOM.  TMUS  RCOUlDIN 

1 

C 

"~ 

r 

1C 

OR 

» 
TS 

Or  OUTPUT! 

1 

_OOC»  IT  riT  INTO  TMC  ACNCMAL  rACTOMT  PUkN.  OR 

SAFETY  

INOt      OOCS  IT  kOOK  AS  ir  1  T  COULD  STAND  TMC  PACC1 
_!•  IT  RIOOCO  UP  rOR  OIRCCT  MOTOR  ORIVC1  CAN  IT  SC 

ecsiom 

—  COUIO  RUSS4N*  OR  STRIRINtt  PAJITS  CAU*C  MCATIN6 
AMD   •PARKIN*  ANO  SO  START  riRC' 

FIGURE  VI:     The  machine  vfiich  tatitfiet  the*  criterion*  of  judgment 

matt  nearly  it  the  machine  it  will  probably  pay  you  to  buy,  even  though  in 

frit  oott  it  may  be  the  highett  of  aU  considered 


54  HOW    TO    BUY 


large,  has  long  since  done  with  respect  to  material  pur- 
chases. No  progressive  manufacturer,  at  the  present 
stage  of  industrial  development,  takes  any  chances  with 
his  glue,  or  varnish,  or  enamel,  or  paint,  or  wood,  or 
coal,  or  what  not.  The  day  of  experimentation  is  passed. 
Manufacturers  now  buy  their  material  on  the  basis  of 
exact  knowledge — not  because  of  somebody's  say-so  or 
because  some  friend  is  the  local  agent,  or  some  other  man 
uses  it,  or  on  the  ofttimes  very  misleading  basis  of 
lowest  first  cost.  The  wise  furniture  manufacturer,  for 
instance,  no  longer  buys  nine-cent  glue;  he  has  found 
that  thirteen  cent  glue  goes  farther  and  holds  better.  If 
higher  in  first  cost,  in  final  cost  it  is  vastly  cheaper. 
Moreover,  it  saves  him  no  end  of  trouble  in  his  factory 
and  dissatisfaction  on  the  part  of  his  trade,  the  money 
value  of  which  he  can  measure  only  indirectly.  And  to 
insure  that  he  is  getting  the  best  quality  glue  on  the 
market  for  his  money  and  that  the  quality  of  the  brand 
he  has  once  found  the  best  does  not  subsequently  de- 
teriorate, he  maintains  a  laboratory,  in  charge  of  a  com- 
petent chemist,  wherein  not  only  glue  but  other  ma- 
terials of  manufacture  and  fuel  are  systematically  tested. 
This,  with  an  up-to-date  cost  system,  which  gives  real 
costs — shows  what  material  works  up  to  the  best  ad- 
vantage and  with  the  least  waste — enables  him  to  pur- 
chase on  the  basis  of  true  economy. 

So  he  buys  dimension  lumber  for  as  many  purposes 
as  he  can  because  he  has  figured  it  out  that,  taking  into 
consideration  the  elimination  of  waste — which  sometimes 
runs  as  high  as  forty  per  cent  in  ordinary  lumber — and 
the  reduced  number  of  operations  necessary  to  working 
up  dimension  stock,  he  saves  on  freight,  handling,  kiln 
drying,  and  overhead  on  the  operations  necessary  far 
more  than  the  difference  in  the  first  cost.  His  cost  sys- 


STANDARDIZING    PURCHASES 55 

tern — if  it  gets  at  vital  factors — will  show  that  to  him. 

Just  as  materials  are  now  bought  by  standards  so  the 
progressive  manufacturer  is  buying  equipment.  What 
the  other  man  says  does  not  guide  his  choice.  Shop  tra- 
ditions and  low  first  cost  are  losing  ground  as  determin- 
ing factors  in  purchasing.  Large  manufacturers  are  es- 
tablishing testing  departments,  and  smaller  factories  are 
making  use  of  a  common  testing  department,  the  com- 
nicrual  laboratory;  for  standards  are  economical.  One 
company  has  a  department  for  standardizing  standards. 

Suppose  a  manufacturer  is  in  the  market  for  motors. 
He  has  decided  to  replace  belt  drive  with  individual 
motor  drive.  He  knows  about  what  horsepower  his  ma- 
chines require  under  the  old  conditions.  He  sends  his 
specifications  to  various  motor  manufacturers.  One  tells 
him  a  fifty  horsepower  motor  is  what  he  wants.  Another 
states  that  at  least  a  hundred  horsepower  motor  will  be 
necessary.  How  is  he  to  know  which  is  right,  or  the 
nearer  soT  He  buys  the  fifty  horsepower  motor  on  the 
confident  assurance  of  the  salesman.  He  finds  that  it  is 
too  weak  and  throws  it  out.  He  may  be  so  disgusted 
by  his  experience  that  he  goes  back  to  his  old  drive  and 
so  perhaps  for  years  suffers  along  under  the  old,  handi- 
capping conditions.  I  once  knew  a  concrete  contractor 
who  allowed  himself  to  be  persuaded  that  an  electric 
hoist  was  the  thing  he  wanted.  So,  lacking  complete 
knowledge,  he  bought  and  installed  the  hoist  recom- 
mended. It  cost  him  about  seventy  dollars  for  connect- 
ing it  up.  It  worked  very  poorly  from  the  start,  hoisted 
the  concrete  bucket  painfully  slow. 

He  put  up  with  it  for  a  few  days,  while  the  salesman 
had  his  man  puttering  away  "trying  to  see  what  was  the 
matter."  Then,  results  not  forthcoming,  he  threw  it 
out  and  put  in  his  old  steam  hoist  in  which  he  had  every 


56  HOW    TO    BUY 


confidence,  because  he  knew  what  it  would  do.  It  cost 
him  a  lot  of  money  but  it  would  have  cost  him  much 
more  if  he  had  attempted  to  struggle  on  with  the  under- 
powered motor.  If  the  subject  of  motor  hoists  is 
broached  to  him  now,  he  has  no  patience  with  the  idea 
or  with  the  possibilities  of  this  type  of  drive.  Yet, 
motor  hoists  properly  powered  are  admitted  to  be  far 
superior  and  more  economical  than  the  old  steam  hoist. 
If  the  salesman  who  sold  the  machine  and  the  contractor 
had  worked  on  a  more  definite  knowledge  of  just  what 
the  machine  could  do,  an  under-powered  motor  would 
not  have  been  installed. 

HAPHAZARD  purchases  result    in    big    wastes — 
scientific  buyers  test  and  standardize,  and  aim  always 
to  find  the  "one  best"  machine  for  their  purpose. 

It  is  this  lack  of  real  knowledge  of  what  the  buyer 
has  and  what  the  seller  wants  that  is  responsible  for 
much  waste  in  equipment  buying.  Lack  of  standards 
has  much  to  do  with  "hazy"  specifications.  But  if  the 
buyer  actually  analyzes  the  ' '  points  "  of  a  piece  of  equip- 
ment in  its  relation  to  his  work,  he  will  buy  intelligently. 

Many  manufacturers  still  go  about  the  solution  of 
their  mechanical  problems  in  haphazard  fashion;  how- 
ever, they  experiment  with  this  and  that  make  or  type 
of  machine  or  tool,  under  actual  working  conditions, 
until  the  workshop  resembles  not  a  symmetrical,  well 
balanced,  carefully  co-ordinated,  and  standardized  affair 
in  its  equipment,  but  a  veritable  mechanical  museum. 

A  concern  that  was  forced  to  undergo  reorganization 
a  couple  of  years  ago  was  found  to  have  on  hand  over 
fifty  thousand  dollars'  worth  of  unsuitable  equipment. 
Laxity  in  purchasing  was  responsible  and  reorganization 
was  the  natural  sequence. 


STANDARDIZING    PURCHASES 57 

The  manufacturer  who  has  the  scientific  angle  on  this 
phase  of  his  business,  as  well  as  on  the  other  phases  of 
it,  goes  about  the  selection  of  each  piece  of  equipment 
as  carefully  as  he  would  his  razor  or  a  fine  suit  of 
clothes.  He  sees  to  it  that  each  machine  is  the  one  best 
machine  for  the  purpose,  and  if  several  machines  are 
needed  for  the  same  purpose,  that  they  are  identical  in 
every  respect,  so  that  they  will  pull  together,  any  one 
be  able  to  do  the  work  of  any  other  at  any  time,  and 
that  their  repair  parts  are  interchangeable,  requiring 
only  one  extra  set,  instead  of  six  or  a  dozen  separate  and 
distinct  sets.  He  also  sees  to  it  that  the  machines  are 
designed  so  that  motor  drives  may  be  fitted  directly  to 
them,  in  case  he  happens  at  the  time  still  to  be  using 
belt  drive.  And  he  is  careful  that  every  machine  is 
properly  safeguarded.  He  will  not  make  the  mistake 
of  the  man  in  Wisconsin  who  bought  an  unguarded 
woodworking  machine  when  he  was  urged  to  buy  a 
guarded  one,  because  he  saved  a  few  dollars  on  the  first 
cost  thereby,  but  was  compelled  a  couple  of  years  later 
by  state  statute  to  equip  all  his  machines  with  safety 
appliances  at  a  considerable  expense.  In  the  meantime 
this  man  had  a  damage  suit  over  the  loss  of  a  finger  on 
this  very  machine,  which  cost  him  more  than  a  hundred 
safety  appliances.  Nor  will  he  make  the  mistake  of 
another  woodworker  who  paid  no  attention  to  taking 
away  the  sawdust  from  his  machines,  until  again  the  law 
compelled  him  to.  He  will  see  that  each  machine  he 
buya  or  builds  is  designed  with  this  particular  end  in 
view,  not  because  the  law  may  require  dust  less  opera- 
tion, but  because  he  knows  it  pays  in  more  than  one  way 
so  to  operate.  Experience  has  taught  him  that. 

Nor  does  he  buy  equipment  which  does  not  take  into 
consideration  greatest  economy  of  labor  in  operation — 


58  HOW    TO    BUY 


the  least  lost  motion  and  fatiguing  movements  on  the 
part  of  the  operators.  Too  many  machines  have  been 
built  which  utterly  neglect  this  point  of  view.  They 
require  the  operator  to  lean  over  in  an  uncomfortable 
position,  to  do  without  sufficient  light,  or  to  move  from 
one  side  to  another  in  operating,  or  reach  high  or  stretch 
wide  to  turn  on  or  off  the  power,  when  he  might  do  so 
with  his  foot,  or  to  use  the  awkward  hand,  or  to  work 
with  a  fixed  speed  when  a  variable  one  would  be  a  very 
great  advantage,  and  so  on.  The  scientifically  designed 
and  built  machine  has  had  all  these  things  taken  into 
consideration.  It  can  be  operated  as  easily  and  with  as 
little  labor,  as  a  motor  car — everything  is  within  easy 
reach,  both  hands  and  feet  made  use  of,  and  a  com- 
fortable posture  in  working  foreseen  above  all.  Progress- 
ive manufacturers  are  designing  and  buying  machines  in 
which  these  details  are  thought  out. 

The  relation  of  the  machine  to  the  product  it  makes 
must  be  considered.  One  manager  who  bought  an  auto- 
matic machine  because  he  had  read  it  was  the  thing, 
discovered  after  he  bought  it,  that  before  it  would  show 
any  economies  over  the  old  method  he  would  have  to 
triple  his  business.  Another  man  bought  an  automatic 
to  work  on  such  heavy  stock,  that  when  he  came  to 
figure  out  his  actual  costs,  he  found  the  waste  ex- 
ceeded the  saving  on  labor.  He  failed  to  take  into  ac- 
count that,  because  volume  increases  as  the  square  of  the 
diameter,  beyond  a  certain  point  the  economy  of  auto- 
matics is  largely  offset  by  the  greater  percentage  of 
waste,  and  that  some  other  process  involving  less  waste 
— forging  or  casting — would  be  cheaper.  Automatic 
machines  often  key  tip  the  output  of  a  whole  depart- 
ment. This  is  one  of  their  decided  advantages. 

One  foundryman  installed,  without  a  careful  reckon- 


STANDARDIZING    PURCHASES 69 

ing,  an  expensive  equipment  for  mechanical  molding. 
He  was  carried  away  by  the  fact  that  with  this  equip- 
ment  he  could  get  out  practically  as  many  castings  in 
the  same  time  with  the  same  complement  of  men  and  in 
half  the  floor  space  as  by  hand.  But  he  failed  to  give 
due  consideration  to  the  interest  and  upkeep  charges, 
which  proved  very  heavy,  so  that  when  later  he  installed 
a  cost  system  which  showed  up  to  him  the  real  cost,  he 
found  that  the  labor  and  space  saving  was  more  than 
offset  by  the  heavy  overhead,  and  that  before  he  could 
begin  to  realize  any  marked  economies  it  would  be  neces- 
sary to  operate  his  plant  continuously,  day  and  night. 
It  was  not  so  much  the  fault  of  the  machine  as  his 
methods. 

So  the  investment  of  money  in  equipment  is  a  matter 
for  most  careful  determination.  A  great  many  things 
need  to  be  taken  into  consideration.  There  must  be 
exact  knowledge  about  every  detail.  It  must  be  proved 
beforehand  that  the  purchase  is  going  to  be  a  wise  one. 
And  until  purchasing  of  equipment  is  put  on  this  basis, 
it  will  remain  more  or  less  a  gamble. 


COME  ttaret  carry  twice  the  itock  they  thmdd.  I  can  put 
^  my  finger  on  merchantt  who  haw  good*  that  have  been 
on  their  thelvet  fix  or  eight  yeart.  And  vhen  they  inietted 
tome  of  their  earning*  in  thi*  dock,  they  credited  Profit  and 
Lot*  with  what  they  contidered  net.  Thit  it  the  tort  of 
•policy  that  innate*  a  bunnet*  like  a  balloon.  It  may  look 
like  a  tolid,  dependable  matt,  when  in  reality  it  it  largely 
gat.  Thete  merchantt  limply  deceit*  themtebet  by  thit 
policy. 

—Benjamin  F.  DeMutb 

FoowlOT.  D«Muth  *  CoapMr 


VI 

HOW  TO  AVOID  PITFALLS 
IN  BUYING 

By  Fred  Cook 

HHHE  merchandise  manager  of  an  eastern  department 
JL  store,  when  visiting  other  stores  or  when  with  sales- 
men and  buyers  of  other  houses,  is  always  much  more 
keen  to  learn  the  mistakes  that  others  have  made  so  that 
he  may  avoid  them,  than  to  learn  the  successful  buying 
ideas  of  others  that  might  be  adaptable  to  his  methods. 
He  maintains  that  this  policy  is  profitable  because  he 
does  not  want  to  get  the  habit  of  looking  to  others  for 
excellent  ideas.  He  says  that  knowledge  of  the  mistakes 
of  others  enables  him  to  strike  out  from  the  "beaten 
path"  with  a  greater  degree  of  safety,  while  his  lack  of 
the  knowledge  of  the  successful  methods  used  by  others 
gives  his  vein  of  originality  a  clearer  field.  He  gives 
cautious  originality  the  "blue  ribbon"  as  a  business- 
building  factor,  while  imitation,  he  says,  never  fails  to 
draw  the  "booby"  prize. 

This  man  makes  mistakes,  but  he  qualifies  the  fre- 
quently expressed  thought,  that  it  is  excusable  to  make 
a  mistake — once,  with  the  idea  that  it  is  not  so  excusable 
when  the  same  mistake  has  already  been  made  by  others. 
His  revised  statement  of  the  idea  is  this:  "It's  often 
excusable  to  make  an  original  mistake — once." 

This  seems  to  express  a  good  slogan  for  buyers  in 
general,  because  buying  is  such  a  personal,  i 


PITFALLS    TO    AVOID 61 

process  and  has  such  basic  responsibility  in  building  a 
business,  especially  retail,  that  here  originality  is  at  a 
premium.  Many  buyers  would  not  consider  some  of  the 
following  anecdotes  to  be  in  the  "excusable"  class  of 
mistakes,  as  defined  by  the  merchandise  manager  just 
quoted,  yet  their  mistakes  illustrate  violations  of  some 
of  the  cardinal  principles  of  good  buying. 

BUYING  to  suit  personal  taste*  instead  of  trying  to 
suit  customer  wan/4  was  a  stumbling  block  in  the  tray 
of  a  dealer  in  crockery  and  fancy  goods. 

"The  greatest  mistake  of  my  business  career,"  said 
a  dealer  in  crockery  and  fancy  goods,  "was  made  on 
the  buying  end.  In  selecting  my  opening  stock  I  went 
entirely  by  my  own  personal  tastes,  buying  goods  to 
sell  the  same  as  I  should  buy  goods  for  my  own  use.  I 
thought  that  was  quite  a  wise  buying  policy,  never  real- 
izing that  other  people's  tastes  might  be  different,  until 
I  tried  to  sell  the  goods.  Let  me  illustrate  with  a  spe- 
cific instance: 

"The  salesman  and  I  were  looking  over  a  line  of 
tumblers  when  he  handed  me  a  green  and  gold  one 
with  the  remark,  'Here's  one  of  our  best  sellers;  pretty 
nifty,  eh?'  I  didn't  think  so.  Altogether  too  flashy. 
Personal  taste,  you  see.  No  consideration  whatever  for 
the  fact  that  fully  one-half  of  my  customers  were  not  so 
conservative  in  their  tastes. 

"I  didn't  buy  that  tumbler  and  I  turned  down  most 
of  the  suggestions  this  salesman  gave  me.  All  through 
the  line  I  selected  modest  colorings  and  sober  hues  and 
congratulated  myself  that  I  had  a  finely  assorted  stock 
of  high  grade  goods. 

"The  first  week's  sales  showed  up  my  ignorance  of 
the  public's  taste.  Time  and  again  my  clerks  came  to 


62 HOW    TO    BUY 

me  with  the  information  that  one  customer  would  like  a 
berry  dish  with  a  heavy  gold  band,  and  another  customer 
wanted  a  green  plaque  ornamented  with  bright  pink 
roses. 

"I  was  stubborn  at  first  and  defended  my  selections, 
arguing  that  I  was  right  and  the  customers  wrong;  but 
ultimately  I  tumbled  to  the  truth  of  the  axiom  that 
business  is  not  art,  and  that  when  buying  to  sell  you 
must  keep  in  mind  the  varying  tastes  of  your  prospects. 
It  may  offend  your  aesthetic  sensibilities  to  stock  salad 
bowls  decorated  in  purple  and  yellow,  but  if  your  cus- 
tomers want  them  it's  decidedly  poor  business  policy 
not  to  put  them  in. 

* '  This  same  principle  applies  also  to  the  price  of  goods. 
Personally  I  have  always  been  a  crank  on  quality.  If  I 
buy  an  article  for  my  own  use,  I  want  the  best,  almost 
regardless  of  price ;  but  with  more  than  half  of  the  con- 
suming public,  price  is  the  unanswerable  argument. 

"  So  I  have  learned  to  stock  both  cheaper  goods  than  I 
should  buy  for  my  own  use  and  goods  of  patterns  and 
styles  that  offend  my  taster  because  the  great  buying 
public  wants  them.  I  have  learned  to  buy  for  my  cus- 
tomers, not  for  myself." 

FINDING  the  kind  and  style  of  goods  desired  by  his 
customers  was  the  way  a  retail  clothier  succeeded  in 
solving  his  problem  of  persistent  over-stocks. 

Until  he  tried  out  a  new  plan  of  buying,  a  retail 
clothier  in  one  of  the  smaller  eastern  cities  found  him- 
self with  too  large  a  stock  of  unsold  suits  on  hand  at 
the  end  of  each  season. 

To  correct  this  fault  in  his  buying,  he  devised  a  plan 
to  select  his  patterns  and  colors  according  to  his  cus- 
tomers' judgments  rather  than  his  own.  Before  placing 


PITFALLS    TO    AVOID 63 

his  orders,  he  mailed  samples  of  the  coming  season's 
most  attractive  styles  and  weaves  in  the  prevailing 
shades  of  browns,  tans,  or  grays,  with  the  range  of 
prices  marked  on  each.  A  letter,  with  a  return  post- 
card, accompanied  the  samples  and  the  customer  was 
offered  a  discount  of  five  per  cent  when  he  bought  his 
suit  if  he  would  fill  in  the  number  of  the  sample  he  pre- 
ferred. 

The  returns  he  received  enabled  this  clothier  to  deter- 
mine his  customers'  preferences  with  much  greater  ac- 
curacy than  in  previous  seasons.  One  result  was  that 
his  "leftovers"  were  reduced  by  fifty  per  cent;  another 
was  that  the  five  per  cent  discount  attracted  many  new 
customers  and  turned  scores  of  intermittent  buyers  into 
"regulars."  The  greatest  advantage  of  all,  however, 
came  from  the  increased  efficiency  of  his  stocks.  Know- 
ing the  approximate  measurement  of  nearly  every  man 
in  town,  he  was  able  to  select  an  assortment  of  sizes 
which  more  closely  corresponded  to  the  requirements 
of  the  trade. 

/"^HANGING  location*,  a  grocer  attempted  to  carry 
^*s  over  the  line  of  good*  he  already  knew — he  quicUy 
learned  the  difference  in  customers'  vants. 

"In  the  course  of  my  business  career,"  said  a  grocer, 
"I  have  changed  locations  twice.  In  making  my  first 
change  I  made  a  serious  mistake  that  I  was  able  to  profit 
by  when  locating  the  second  time. 

"My  first  business  was  located  in  a  town  of  about 
two  thousand,  and  when  for  various  reasons  this  town 
went  flat,  I  hunted  around  for  a  new  location.  I  finally 
decided  upon  a  town  of  about  the  same  population,  which 
was  enjoying  a  large  volume  of  business.  Up  to  the 
time  when  the  first  town  had  started  the  toboggan  act,  I 


64  HOW    TO    BUY 


had  done  an  unusually  good  business  and  I  flattered 
myself  that  my  methods  and  my  stock  were  right. 

"When  it  came  time  to  buy  the  stock  for  the  new 
town,  I  looked  about  and  decided  that  the  two  places 
seemed  identical  in  size  and  conditions.  I  ordered, 
therefore,  what  was  practically  a  duplicate  of  my  old 
stock,  even  sticking  to  the  same  brands. 

"I  hadn't  been  open  many  days  before  I  saw  my  mis- 
take. 'Silver'  soda  might  have  been  a  big  seller  in  my 
town,  but  here  'Blue  Ribbon'  had  been  the  favored 
brand  for  years.  You  couldn  't  give  away  my  pet  brand, 
although  I  knew  it  was  the  equal  or  superior  of  'Blue 
Ribbon.'  And  so  it  went  in  many  other  lines.  Of 
course  it  didn't  take  me  long  to  see  the  mistake,  but  it 
took  time  to  work  off  the  undesirable  goods. 

"When,  in  the  course  of  time,  I  found  an  opportunity 
to  branch  out  in  still  another  place,  I  made  it  a  point  to 
visit  other  grocery  stores  in  the  town  and  carefully  note 
the  brands  they  sold.  I  opened  up  here  with  the  assur- 
ance that  I  had  what  consumers  were  accustomed  to 
buying — and  I  started  business  with  a  rush. ' ' 

OVER-STOCKING  was  a  dry  goods  merchants  mis- 
take— he  now  makes  out  a  definite  budget,  and  is 
careful  never  to  overstep  the  limit  he  has  set  for  himself. 

"I  made  one  big  buying  mistake  that  nearly  cost  me 
my  business, ' '  said  a  dry  goods  merchant  who  now  owns 
a  large  store. 

"In  fact,  it  was  really  the  culmination  of  a  series  of 
mistakes,  but  they  were  all  of  exactly  the  same  kind. 
Four  times  annually  I  went  to  market,  and  bought  the 
bulk  of  the  goods  I  used  for  the  entire  year.  I  was 
never  a  conservative  buyer.  There  was  just  a  tinge  of 
the  spendthrift  in  my  blood  that  crept  into  my  business 


PITFALLS    TO    AVOID «5 

dealings  as  well  as  my  personal  affairs.  When  I  saw  a 
large  display  of  silks  and  satins,  I  was  tempted  to  order 
the  whole  lot.  I  nearly  always  ordered  more  than  I 
needed — much  more  than  I  had  originally  planned  to 
buy. 

"One  fall  when  my  shelves  were  already  groaning 
beneath  over-stocks,  with  many  of  the  bills  long  past  due, 
I  made  the  usual  trip  to  market  with  a  determination  to 
buy  light.  I  finally  decided  a  certain  sum  would  be  my 
limit. 

"When  the  invoices  arrived  I  was  amazed  to  find  that 
they  totalled  more  than  double  that  amount.  Before 
long  I  was  almost  hopelessly  tied  up  and  it  was  only  by 
conducting  a  big  sacrifice  sale  that  I  escaped  bankruptcy. 
When  I  got  on  my  feet  again  I  resolved  never  to  buy 
another  cent's  worth  of  goods  without  a  memorandum. 

"Since  then  I  have  followed  that  resolve  to  the  letter. 
Before  I  leave  for  market,  I  have  a  carefully  made  buy- 
ing budget  with  limited  appropriations  for  each  line.  As 
T  buy  I  jot  down  the  quantity  and  price,  and  make  the 
extension.  Frequently  I  add  up  the  column.  When  I 
reach  the  amount  of  the  appropriation,  I  stop  buying. 
If  I've  overreached  myself,  I  strike  out  the  least  neces- 
sary items  or  cut  down  quantities. 

"Over-stocks  of  merchandise  have  never  embarrassed 
me  since  I  learned  my  lesson." 

l^AILURE  to  get  novdty  good*  on  time  lott  trad*  for  a 
r  habtrdaihtr — how  a  hurtling  competitor  taught  him 
to  rely  more  on  the  tactict  of  the  "plunger" 

"My  biggest  buying  mistake,"  said  an  old-time  haber- 
dasher, "was  quite  the  opposite  of  most  buyers'  troubles. 
In  fact  I  made  it  by  trying  to  steer  clear  of  the  common 
mistakes  of  the  plunger.  I  carried  a  very  complete  stock 


66  HOW    TO    BUY 


of  staples  but  I  always  shied  at  the  novelties.  Even 
when  they  looked  like  winners,  I  was  afraid  to  stock  the 
new  things  which  hadn't  proved  themselves  solid  with 
the  trade. 

"Right  across  the  street  was  a  young  fellow  who  was 
just  my  opposite  in  this  respect.  As  soon  as  anything 
new  began  to  be  heralded  in  the  magazines,  it  would  find 
its  way  to  his  shelves.  More  than  that,  he  stocked  a 
quantity  of  high-priced  goods — stuff  that  I  believed  was 
too  expensive  for  our  locality.  I  prophesied  an  early 
crash  and  was  looking  for  the  sheriff's  tag  on  his  doors; 
but  somehow  these  doors  were  always  wide  open  bright1 
and  early  and  nearly  always  a  crowd  could  be  seen  with- 
in. 'Pretty  soon  I  realized  that  the  youngster  was  cutting 
heavily  into  my  trade,  even  getting  customers  who  had 
dealt  with  me  for  years.  Then  I  woke  up. 

"I  stocked  the  novelties  too,  and  kept  them  coming 
regularly  so  that  something  new  of  interest  would  greet 
a  customer  at  every  visit  to  the  store,  no  matter  how 
often  he  came.  Results?  Well,  let  me  say  that  there's 
nothing  like  new  stock  to  stimulate  sales.  If  you  're  ever 
tempted  to  be  ultra  conservative,  remember  my  case." 

"The  quantity  bug  stung  me  in  my  first  year's  buy- 
ing, ' '  remarked  a  general  merchant  who  is  now  doing  an 
annual  business  of  about  one  hundred  thousand  dollars. 
It  was  easy  to  figure — and  let  salesmen  figure  for  me 
— that  a  saving  of  twenty  cents  a  case  on  an  article 
gave  me  an  extra  ten  spot,  if  I  should  buy  fifty  cases. 

"So,  where  I  should  have  been  buying  dozens,  I  was 
buying  cases,  and  where  I  should  have  bought  a  single 
case,  I  was  buying  five  or  ten.  To  protect  myself  from 
almost  sure  advances,  I  would  often  book  up  even  heavier 
upon  the  tip  of  charitable  salesmen  who  were  always 
anxious  to  protect  me.  But  my  capital  was  limited,  so 


PITFALLS    TO    AVOID 67 

that  I  soon  awoke  to  the  mistake  I  was  making. 

"I  had  so  much  capital  tied  up  in  surplus  stock  that 
I  had  to  sacrifice  variety.  Had  I  carried  half  this  sur- 
plus I  should  have  been  able  to  double  on  my  variety  and 
so  double  my  chances  of  making  sales.  More  than  that, 
I  lost  fully  as  much  in  discounts  as  I  saved  on  quantity 
purchases.  One  day  I  soberly  figured  out  the  whole 
proposition,  saw  that  I  had  not  been  taking  into  con- 
sideration the  extra  insurance  which  large  stocks  made 
necessary,  nor  any  of  the  other  disadvantages  I  have 
mentioned.  On  the  spot,  I  resolved  to  change  my  sys- 
tem. 

"I  have  been  buying  in  smaller  quantities  now  for 
several  years  and  this  is  one  of  the  chief  reasons  why 
my  business  has  grown  and  prospered.  Larger  sales,  less 
dead  stock  and  fewer  risks  have  resulted.  More  than 
this,  I  believe  that  advances  which  have  occurred  have 
always  been  balanced  by  slumps,  so  that  I  have  pur- 
chased my  stocks  quite  as  cheaply  as  though  I  had 
bought  in  large  quantities." 

DEALERS    can  educate  their    cuttomert — a    grocer 
taught  his  trade  to  want  different  brand*  of  good*— 
how  he  finally  concentrated  hit  telling  cjfortt. 

"When  I  started  in  business,"  said  a  Wisconsin 
grocer  who  is  considered  a  shrewd  buyer,  "I  stocked 
three  brands  of  flour,  a  high-grade  spring  wheat,  a 
blended  flour  and  a  winter  wheat  pastry  flour.  Each 
was  as  good  as  any  of  its  class  and  my  flour  trade 
started  out  briskly. 

"Soon  a  salesman  induced  me  to  add  another  brand. 
In  a  few  weeks  I  got  a  reduced  price  on  a  competing 
brand  and  stocked  a  few  barrels  on  that.  And  so  I 
kept  on  adding  new  brands.  I  found  in  time  that  I  had 


68  HOW    TO    BUY 


made  a  vital  mistake  in  making  these  shifts.  Each  time 
I  bought  a  new  brand,  at  least  one  or  two  customers 
took  a  fancy  to  it  and  made  up  their  minds  that  it  was 
the  best  they  had  ever  used.  "When  I  tried  to  switch 
them  back  to  one  of  my  older  brands  they  objected.  I 
had  split  up  my  trade  into  six  or  seven  different  fac- 
tions, each  loyal  to  a  particular  brand.  That  meant,  of 
course,  that  I  had  to  stock  all  of  the  six  brands  in  order 
to  do  the  same  business  I  had  been  doing  before  with 
three.  More  than  that,  it  was  necessary  to  buy  re- 
spectable quantities  of  each  kind  in  order  to  get  the 
right  price  and  satisfactory  deliveries.  So  I  really  had 
to  carry  double  the  stock  I  needed. 

"Today  I  carry  a  complete  variety  of  everything  in 
my  line,  but  as  few  brands  of  the  same  quality  as  pos- 
sible. I  have  my  trade  lined  up  solidly  for  certain 
brands  that  we  both  know  are  right.  By  avoiding 
foolish  duplications  I  have  a  nice  little  reserve  fund  that 
is  working  for  me  in  another  field  and  paying  me  well. 
Too  many  merchants  are  making  my  first  buying  mis- 
take and  are  carrying  twice  the  stock  they  require  be- 
cause they  buy  too  many  duplicates." 


T^O  WORD  in  the  vocabulary  of  business  is  more  preg- 
•*•'  nant  with  significance  than  that  one  word  "quality." 
You  may  apply  it  to  goods,  to  service,  to  ability;  this  one 
truth  is  universally  the  same — no  extravagant  assertion  of 
present  advantage,  no  false  logic  of  economy  can  long  make 
headway  against  down-right  merit  in  merchandise  or  man. 

— Edwin  W.  Moore 

President,  The  Electric  C»ble  Company 


PART  II-SYSTEM  IN  THE 
PURCHASING  DE- 
PARTMENT 

What  Customers  Want 

/^  ET  the  customer's  idea.  Give  him  what  he 
wants.  If  you  haven't  got  it,  get  it  for 
him.  Willingness  to  adopt  the  buyer's  point  of 
view  I  have  found  to  be  the  most  effective  way 
of  building  a  business. 

Nine  times  out  of  ten  the  customer  knows  ex- 
actly what  he  wants.  Suggestions  intended  to 
make  him  change  his  mind,  and  offers  to  substi- 
tute, even  when  substitution  seems  to  be  to 
his  best  interest,  are  often  mistakes.  Unless  the 
man  behind  the  counter  is  in  complete  possession 
of  the  buyer's  plans,  advice  leads  to  argument, 
and  argument  to  irritation.  An  irritated  custo- 
mer is  a  lost  customer. 

Keep  a  variety  of  stock.  At  the  start,  when 
capital  is  limited,  such  a  plan  may  seem  difficult 
to  follow,  but  the  man  with  the  courage  to  hold 
to  a  few  leading  lines,  well  stocked,  until  his  busi- 
ii' —  jiMiti«'^  further  expansion,  is  the  man  who 
will  win.  Make  your  store  the  place  where  cus- 
tomers get  what  they  want.  Let  them  select. 


J.  D.  LOWMAN 

President,  Loicman-Hanford  Company  and  Former 
President,  Seattle  Chamber  of  Commerce 


VII 

SHORT-LINE  METHODS  IN 
RETAIL  BUYING 

By  Neil  M.  Clark 

ONCE  the  buyer  has  decided  what  to  buy  and  where 
to  place  his  order,  his  system  comes  into  play  to 
help  him  secure  correct  deliveries  and  secure  them 
promptly.  If  he  has  final  say  as  to  what  shall  be  pur- 
chased in  his  department,  a  requisition  need  not  be  used. 
If,  however,  the  approval  of  some  one  higher  up  is  re- 
quired, the  buyer  may  place  a  preliminary  requisition 
with  the  manufacturer,  with  the  understanding  that  the 
latter  is  to  receive  a  confirming  order  bearing  the  signa- 
ture of  the  manager  or  other  proper  official. 

Such  a  system  is  used  by  a  successful  department  store. 
It  uses  two  forms,  each  made  out  in  multiple.  The  buy- 
er's requisition^  Form  I)  is  made  out  in  triplicate.  The 
first  copy  is  handed  to  the  salesman  or  sent  to  the  manu- 
facturer. The  second  remains  bound  in  the  buyer's 
book  as  his  permanent  record.  The  third  copy  is  at- 
tached to  the  regular  confirming  order  when  the  latter  is 
sent  up  for  approval. 

The  confirming  order  (Form  II)  contains  exactly  the 
same  information  in  regard  to  goods  required  as  the 
buyer's  requisition.  In  fact,  the  buyer  himself  copies 
the  information  to  it  from  his  requisition  copy.  This 
form  he  sends  to  the  merchandise  manager  for  approval. 

There  are  five  copies  of  this  order.    If  the  purchase 


PURCHASE    SYSTEMS 


is  approved,  the  first  copy  goes  to  the  manufacturer  as 
a  confirmation  of  the  buyer's  requisition.  On  the  re- 
verse side  of  this  copy  are  the  conditions  of  purchase,  to 
which  the  seller  must  agree  if  he  accepts  the  order.  Time 
of  delivery  is  considered  the  essence  of  the  contract.  If 
merchandise  is  not  delivered  on  or  before  the  specified 


HOPKINS  A  COMPANY 

HARTFORD.  CONN. 


HOPKINS  &.  COMPANY 


FORM  I:     The  "buyer's  requisition"  is  sent  to  the  manufacturer  or  handed 

to  the  salesman  by  the  buyer.    If  the  purchase  is  approved,  a  confirming 

order  is  sent  later 


date,  the  buyer  retains  the  option  of  accepting  or  refus- 
ing it,  as  desired.  Goods  not  up  to  sample  or  standard 
may  also  be  returned,  or  held  subject  to  the  order  of  the 
shipper,  and  at  his  risk  and  expense. 

The  second  and  third  copies  of  the  order  are  returned 
to  the  buyer  as  soon  as  the  purchase  has  been  approved. 
He  keeps  the  second  copy  on  file.  On  the  third,  he 
marks  the  price  at  which  he  expects  to  sell  the  goods, 
and  then  sends  it  to  the  receiving  room,  where  it  remains 
until  the  goods  come  in.  Against  it  the  receiving  clerk 
checks  the  invoice. 


STORE     BUYING 


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74 PURCHASE    SYSTEMS 

The  fourth  copy  of  the  purchase  order  remains  in  the 
buyer's  book.  The  fifth  is  peculiar  to  the  system  of 
this  store,  which  has  a  New  York  office  where  all  orders 
are  kept  on  file.  This  last  copy  is  sent  to  New  York 
when  the  first  is  sent  to  the  manufacturer. 

PURCHASING  routine  in  the  retail  store  that  leaves 
no   loop  hole  for  the   contract-evading    supplier — 
inventory  methods  and  order  blanks  in  actual  use. 

Inventories  are  always  an  invaluable  guide  for  the 
buyer  in  knowing  how  his  stock  stands,  and  whether  his 
purchases  in  the  past  have  or  have  not  been  wise.  In 
this  store  inventories  are  taken  in  a  single  night.  A 
perpetual  inventory  keeps  track  of  increasing  or  decreas- 
ing stocks;  but  the  actual  count  is  made  periodically  to 
correct  the  errors  which  naturally  creep  into  this  sheet. 

Three  persons  are  necessary  for  the  taking  of  in- 
ventory in  each  department.  The  first  writes  the  details 
of  stock  on  Form  III  as  the  second  calls  them  off,  record- 
ing quantity,  name  or  number,  cost  and  selling  price  of 
each  article.  The  third  person  is  the  firm's  represent- 
ative, so-called,  and  he  is  responsible  for  the  return  of 
every  inventory  sheet  at  the  close  of  the  count.  He 
merely  watches  the  inventory-taking  to  see  that  it  is 
done  properly.  He  is  responsible  for  the  work  of  all 
three. 

Each  one  of  these  inventory  sheets  is  numbered,  and 
its  value  is  placed  at  $100,000,  since  the  loss  of  a  single 
one  may  necessitate  the  complete  retaking  of  the  in- 
ventory. Therefore,  the  firm's  representative  must  re- 
turn all  his  sheets  to  the  accounting  department  in  a 
sealed  envelope,  whether  they  have  all  been  written  on 
or  not.  The  envelope  bears  the  number  of  the  depart- 
ment and  the  signature  of  the  firm's  representative  certi- 


STORE    BUYING 


75 


fying  that  no  sheet  has  been  misplaced.  This  actual  in- 
ventory  is  checked  against  the  perpetual  inventory. 
Small  variations  are  expected,  because  it  is  next  to  im- 
possible to  keep  a  large  stock  of  goods  with  absolute  ac- 
curacy; but  a  large  discrepancy  calls  for  a  recount  in 
the  department  concerned.  The  second  actual  inventory 
is  considered  final. 

In  a  smaller  concern,  a  retail  jewelry  store,  Form  IV 
is  used  for  all  orders,  and  combines  in  itself  both  the 
buyer's  requisition  and  the  confirming  order  of  the  de- 
partment store.  Three  copies  of  this  order  are  made. 


INVENTORY  SLIP 

0     10     «1» 

' 

•0»tl  HO. 

Mmeu 

QUANTITY 

MM 

•  cr«n 

CO*T 

•CTAIt 
C*T«II*IO« 

idl 

,.' 

L.".  '!',» 

=D  

D«K»T«»M« 

<«C 

FORM  III:     Each  inventory  tlip  it  given  a  nominal  value  of  $100,000, 

rince  the  lota  of  a  tingle  one  may  necettitate  the  retaking  of  inventory  in  all 

departments 

The  first  goes  to  the  seller;  the  second  remains  in  the 
department  order  book;  and  the  third  is  sent  to  the 
receiving  department,  where  it  is  checked  against  the  in- 
voice and  the  goods  when  they  arrive. 

One  interesting  and  valuable  feature  of  this  system  is 
that  the  shipping  labels  are  already  made  out  and  at- 


76 


PURCHASE    SYSTEMS 


• 

.u   *      WARD  &  HITCHCOCK 

6  SOUTH  WATER  ST. 

•IIIS.CAU1 

DCPT.  N( 

4  PACKAGE*. 
1 

.      0«OtRT»«Ct 

OCX 

ORDER  NO.     <OT» 

:HEHEHEEH=::^^::^^^ 

PRICE 

AMOUNT 

*°T*  Si 

RESS    PREPAID 

G  GOODS  TO  US:                                                                J                                EXP 

MAIL    "                                     "      FORWARD  TO 

FORWARD  TO                                                                WARD  4  HI- 
WARD  &  HITCHCOCK                                      6  SOUTHS 
«  SOUTH  WATER  »T.                                                              CHIC* 
CHICAGO                                             „.„  Ma 

rCHCOCK 

ATER  ST. 
kGO 
.^,.  ./.       ">™ 

1 

FORM  IV:     This  order  form,  made  out  in  triplicate,  is  novel  became  <>f 
the  attached  shipping  labels 


STORE    BUYING  77 


tached  to  the  order  blank.  The  company's  goods  are  all 
shipped  by  mail  or  express,  being  small  in  size  and  ex- 
tremely valuable.  Notice  that  the  shipping  label  con- 
tains the  order  number;  this  makes  it  easy  to  identify 
shipments  when  they  arrive. 

To  be  valid,  each  order  must  bear  the  counter-signa- 
ture of  a  member  of  the  firm.  Orders  are  not  so  numer- 
ous that  one  man  can  not  inspect  them  every  day  in  a 
short  time. 

"We  have  tried  a  good  many  systems,"  said  one  of 
the  members  of  this  firm,  "but  our  present  order  book 
meets  our  needs  better  than  any  of  the  others.  We  have 
been  using  it  for  four  years,  and  in  that  time  have  not 
found  it  necessary  to  make  more  than  one  or  two  slight 
changes  in  the  forms." 

Correct  order  routine  means  correct  delivery.  An 
order  placed  and  accepted  by  the  seller  becomes  a  lia» 
bility  of  the  concern  which  buys  and  that  concern  must, 
therefore,  keep  as  accurate  a  record  of  goods  en  route  as 
of  goods  already  in  the  store.  Right  system  in  the  me- 
chanism of  purchasing  wins  the  respect  of  the  seller,  and 
is  a  great  help  in  getting  the  right  goods  at  the  right 
time. 


great  art  few,  the  mediocre  many,  but  the  few  who 
hare  tcored  highest  in  the  burinet*  game  are  the  men 
tcho  hate  built  on  "quality." 

—Edwin  W.  Moore 

Fmktent.  The  Htectrfc  (UbU  I 


VIII 

HOW  THE  SUPPLY  BUYER 
WORKS 

By  Neil  M.  Clark 

£1 UPPLIES  are  an  item  whose  purchase  may  result  in 
1^  big  wastes  or  savings,  according  to  the  character  of 
the  man  in  your  organization  who  does  the  supply  buy- 
ing. A  careless  man  will  inevitably  allow  little  leaks  to 
creep  in,  while  the  conscientious  man  will  frequently 
save  many  times  the  amount  of  his  salary.  Pencils,  pens, 
rubber  bands,  filing  cases,  report  blanks — all  the  inci- 
dental items  so  essential  to  the  smooth  running  of  the 
office,  store  or  factory,  will  offer  any  number  of  op- 
portunities for  the  wasted  nickel  to  become  the  lost 
dollar,  unless  a  careful  watch  is  kept  along  every 
avenue  of  expense.  Constantly  on  the  alert,  watching 
the  machinery  which  insures  the  smooth  working  of 
office  or  store,  the  supply  buyer  also  frequently  has  the 
opportunity  to  improve  the  quality  of  service. 

A  new  buyer  coming  into  a  large  department  store  in 
the  East  found  a  heavy  and  fairly  expensive  grade  of 
wrapping  paper  used  in  one  department.  The  buyer 
found  it  impossible  to  secure  a  sufficiently  durable 
quality  at  a  cheaper  price.  He  therefore  searched  the 
market  for  a  paper  possessing  the  same  weight  and 
quality,  but  having  in  addition  some  peculiarity  to  make 
it  distinctive.  He  discovered  a  paper  which,  besides 
being  heavy  enough  to  meet  all  needs,  was  also  water- 


SUPPLY    BUYING 7» 

proof.  By  substituting  this  for  the  old  style  of  wrapping 
paper,  the  supply  buyer  added  a  distinctly  new  quality 
to  the  store's  service. 

Savings  in  supplies  must  come,  if  at  all,  from  a  proper 
purchasing  organization  and  a  mechanical  system  which 
takes  care  of  the  routine  work  of  fact-gathering.  The 
supply  buyer  ordinarily  requires  four  kinds  of  informa- 
tion. When  an  article  is  called  for,  he  must  know  what 
department  or  individual  desires  it ;  what  companies  sell 
it  and  what  quotations  or  catalogs  of  theirs  are  on 
hand ;  what  purchases  of  that  article  have  been  made  in 


Of  (  iVC»  Tft 

REQUISITION    FOR   SUPPLIES 

0»T» 

OCPT. 

AMOUNT 

NAME    OF    ARTICLC 

OMDCMS   riLLI 

r> 

FORM  I:     The  requisition  for  tupplie*  which  the  ttock  clerk  mutt  receive 

before  anything  leave*  kit  department  doci  away  with  petty  vxutet  which 

otherwise  art  likely  to  creep  in 

the  past  and  at  what  price;  finally,  if  the  article  or  a 
substitute  is  ordinarily  carried  in  stock,  what  the  balance 
on  hand  is. 

The  stock  clerk  must  receive  a  requisition  (Form  I) 
before  he  can  deliver  articles  to  any  department.  Ordi- 
nary supplies,  such  as  pencils  and  standard  blank  forms 


80 PURCHASE    SYSTEMS 

which  are  being  called  for  constantly,  are  kept  on  hand 
in  quantity  lots.  The  stock  record  card  (Form  II) 
keeps  track  of  the  amount  of  each  kind  of  supply,  and 
by  comparing  the  balance  column  with  the  minimum 
limit,  the  buyer  learns  when  to  re-order. 

METHODS,   blanks  and  tactics  used  by  the  clever 
supply  buyer  to  effect  savings  and  always  have  the 
right  kind  of  material,  en  hand  uhen  called  for. 

Another  method  used  by  the  supply  purchasing  agent 
of  a  large  electrical  concern  to  keep  track  of  standard 
supplies  and  the  proper  time  to  re-order,  provides  for  de- 
tachable bin  tags  (Form  III)  of  two  colors.  A  third 
tag  (Form  IV)  is  tacked  on  each  bin.  It  gives  the  num- 
ber and  description  of  the  material  which  the  bin  con- 
tains, and  also  maximum  and  minimum  amounts  allowed. 

Every  week  the  stock-keeper  goes  over  his  stores  and 
reports  the  amount  of  each  kind  of  material  that  is  left. 
When  any  bin  has  reached  the  minimum  limit,  he  sends 
in  a  purchase  requisition  to  the  supply  buyer  for  the 
maximum  amount  or  whatever  conditions  warrant.  He 
places  the  red  tag  marked  "requisitioned"  (Form  III) 
on  the  screw-eye  over  the  bin  and  notes  the  date.  This 
tag  tells  him  automatically,  without  his  having  to  look 
through  his  files,  that  he  has  placed  the  necessary  re- 
quisition. In  a  day  or  so  he  receives  a  duplicate  of  the 
order,  if  the  matter  has  been  brought  properly  to  the 
buyer's  attention.  The  stock-keeper  then  replaces  the  red 
tag  with  a  blue  tag  marked  "ordered"  (Form  III).  As 
soon  as  the  goods  come  in,  the  blue  tag  is  also  removed 
and  the  stock-keeper  need  not  worry  until  the  minimum 
limit  is  again  approached. 

This  system  forestalls  the  possibility  of  supplies  fall- 
ing short  at  critical  times.  In  passing  the  bins  the 


SUPPLY    BUYING 


81 


stock-keeper,  several  times  daily,  glances  at  the  red  tags; 
and  in  case  they  remain  an  undue  length  of  time  before 
notice  comes  that  the  goods  have  been  ordered,  inquiry 
immediately  shows  the  reasons  for  the  delay. 

A  record  of  purchases  actually  made  in  the  past  is 
extremely  valuable  for  the  supply  buyer,  since  it  shows 
whether  purchases  are  being  made  now  to  as  good  ad- 
vantage as  formerly.  The  truly  economical  purchase, 
also,  is  brought  to  light,  and  the  firm  whose  deliveries 
have  been  less  satisfactory  in  quality  or  promptness  gets 
a  black  mark  against  subsequent  orders. 


HJUL 

MAT! 

RIAL                                                                                                «i«- 

Nccciycp 

WITHRAWN 

OALANCE 

MCCCIVCO 

WITHDRAWN 

BALANC  t- 
ON  HAND 

DATE 

AMT. 

OATC 

AMT. 

M    M  '.  SD 

OATe 

.-.  :i  r 

OATC 

AMT. 

FORM  II:     A  card  like  thit,  one  for  each  kind  of  material,  keeps  track  oj 

amounts  on  hand,  and  supplement*  the  stock  room  system,  helping  the  buyer 

to  know  what  purchases  to  make 

Important,  also,  are  the  card  index  of  quotations  and 
the  classified  list  of  catalogs.  These  records  may  be 
simply  and  effectively  kept  on  3x5  or  larger  index  cards. 
On  them  the  buyer  has  in  brief  and  convenient  entries, 
the  points  which  guide  his  purchases — the  sources 
of  his  supplies.  Comparison  of  the  prices  of  the  dif- 


82 PURCHASE    SYSTEMS 

ferent  firms,  and  a  few  test  orders,  will  soon  teach  him 
where  he  can  purchase  in  a  really  economical  way. 

The  supply  buyer  often  has  a  chance  also  to  stand- 
ardize throughout  the  establishment  in  such  a  way  as  to 
reduce  total  cost.  A  department  store  found  that  it  was 
using  several  kinds  of  stock  record  sheets  in  different 
departments.  Each  department  manager  had  suited  his 
own  fancy  in  the  matter,  and  the  printing  bill  conse- 
quently was  much  larger  than  it  should  have  been.  A 
little  investigation  convinced  him  that  one  form  would 
answer  the  needs  of  several  of  the  departments.  He 
consulted  the  department  heads  and  succeeded  in  work- 
ing out  a  single  form  which  was  suitable  for  several  of 
the  departments.  Besides  the  first  cost  of  printing, 
there  was  also  a  saving  due  to  the  fact  that  the  new 
forms  could  all  be  bound  in  one  book  form;  whereas 


FORM  III:     The  stock  clerk  hangs  a  card  like  that  at  the  left  over  the  bin 
when  goods  have  been  requisitioned;   when  they  have  been  ordered,  he  re- 
places it  with  the  card  at  the  right 

before  it  had  been  necessary  to  have  a  separate  style 
and  size  of  binder  for  each  department.  Wastes  of  this 
sort  can  often  be  caught  and  stopped  by  the  careful 
buyer. 

On  special  supplies — articles  which  are  required  in- 
frequently— the  buyer  may  have  no  information  in  his 


SUPPLY    BUYING 88 

files.  The  speediest  way  of  getting  pointers  in  such  cases 
is  to  consult  several  salesmen.  The  supply  buyer  in  a 
western  factory  uses  this  method  when  he  needs  an  out- 
of-the-ordinary  article  quickly,  and  knows  nothing  about 
his  sources. 

SPECIAL  tupplies  are  frequently  demanded — how  the 
buyer    get*    information   on   them — buying  quality 
rather  than  trying  to  tecure  initial  low  price. 

"If  I  got  a  call  for  saddles,"  he  said,  "I  should  im- 
mediately call  up  a  man  who  uses  saddles  and  find  out 
who  he  buys  from,  as  well  as  the  suppliers  he  knows 
of.  Then  I  should  call  in  the  salesmen  from  those 
houses  and  talk  with  them  one  at  a  time.  In  a  very 
short  while  I  should  know  the  good  and  the  bad  points 
about  saddles,  simply  from  listening  to  what  the  dif- 
ferent men  had  to  say  in  praise  of  their  own  lines  against 
certain  other  makes.  If  one  man  says,  'My  saddle  is 
just  as  good  as  Pearson's  and  the  price  is  lower,'  and 


DESCRIPTION. 


FORM  IV:     The  "bin  tag"  if  tacked  orer  each  bin,  and  thoua  the  fixed 

maximum  and  minimum  limits  for  that  kind  of  material.     When  the 

minimum  it  reached  the  ttock  clerk  requisitions  the  maximum  amount 

another  says,  'Pearson  has  a  good  saddle,  but  his  stirrup 
can't  compare  with  mine';  I  soon  recognize  that  Pear- 
son must  be  the  standard  man  in  the  saddle  business, 
since  every  other  dealer  wants  to  convince  me  he  is  the 
equal  of  Pearson. ' ' 

In  many  businesses,  printing  is  a  big  item ;  and  some 


84 PURCHASE    SYSTEMS 

firms  find  it  easy  to  save  here,  especially  when  they  have 
large  lots  of  standard  forms  or  circulars  which  do  not 
need  to  be  put  out  as  a  rush  order.  Price  alone  is  not 
what  the  efficient  buyer  is  seeking.  He  is  looking  for 
the  quality  which  best  suits  the  needs  of  the  user.  In 
the  letterheads  of  the  business  house,  there  is  no  econ- 
omy in  trying  to  make  a  cheap  writing  paper  do  the 
work  of  a  grade  which  better  represents  the  house. 

"  Recently  I  had  to  place  an  order  for  two  hundred 
thousand  circulars,"  said  the  buyer  in  a  mail-order 
house.  "I  had  had  the  same  job  done  before  at  the  rate 
of  $2.10  per  thousand,  which  would  have  made  the  total 
cost  on  this  lot  $420.00.  I  got  in  new  bids,  however,  and 
they  ranged  as  follows : 

First    $150.00 

Second .,  195.00 

Third    290.00 

Fourth    420.00 

Fifth  475.00 

"These  estimates  were  all  from  printing  houses  whose 
work  I  had  tested  again  and  again.  I  knew  I  would  get 
my  money's  worth  wherever  I  placed  the  order.  The 
question  then  resolved  itself  into,  how  much  do  I  want 
to  spend? 

"I  wanted  a  $420.00  job;  but  I  took  a  chance  on  the 
third  bid  of  $290.00,  thinking  I  might  save  and  still  get 
satisfactory  work.  That  was,  pure  and  simple,  a  blunder 
on  my  part.  "When  the  job  was  done,  however,  I  saw 
my  mistake.  Half  of  the  two-color  illustrations  were 
nearly  an  eighth  of  an  inch  out  of  register.  I  had  what 
I  paid  for;  but  I  had  not  bought  what  I  wanted.  I 
wanted  a  $420.00  job.  I  saved  $130.00  in  money,  but 
nobody  knows  how  much  the  firm  lost  by  sending  out  cir- 
culars that  were  not  strictly  up  to  the  mark." 


SUPPLY    BUYING 85 

Thus  the  supply  buyer  is  continually  watching  the 
corners.  lie  is  convincing  the  man  who  demands  sup- 
plies that  something  a  grade  cheaper  will  suit  his  needs 
as  well  as  a  more  expensive  article.  On  the  other  hand, 
he  sometimes  has  to  convince  others  that  what  they  wish 
to  order  is  not  of  a  sufficiently  good  quality.  lie  has  his 
eye  on  the  markets  and  a  thousand  strings  lead  to  his 
desk  from  the  desks  of  as  many  suppliers.  He  is  saving 
dollars,  if  he  is  efficient,  at  the  point  where  necessity 
shades  into  luxury.  Not  primarily  a  bargain  hunter,  he 
is  nevertheless  interested  in  knowing  the  lowest  price  for 
the  best  material  that  is  suited  to  the  odds-and-ends 
needs  of  the  business  machine. 


YTOU  con  never  accomplish  anything  permanent  in  business 
1  by  loote  tactic*  that  are  grounded  on  chance.  You  mutt 
have  system.  You  mutt  aim  at  a  definite  target.  You  mutt 
thoot  straight  and  not  in  the  air.  Every  part  of  a  business 
machine  mutt  fit  perfectly.  It  mutt  be  ad  jutted  according  to  a 
tet  plan. 

— A.  Montgomery  Ward 

Founder.  Mc*t(ua«]r  Ward  *  CoBptay 


IX 

FACTORY  PURCHASING  BY 
MINIMUM  STOCKS 

By  F.  B.  Johnson 

TO  HANDLE  the  many  details  of  a  purchasing  de- 
partment with  the  accuracy  necessary  in  such 
work  requires  a  definite,  coherent  plan  of  ordering, 
filing  and  recording.  No  half-way  methods  are  in  any 
sense  available,  for  prices  must  be  definitely  kept  in 
mind  and  deliveries  hurried  in  on  the  desired  date. 

A  system  for  expediting  the  work  of  the  purchasing 
agent  in  any  large  business  must  be  essentially  prac- 
ticable, and  it  is  such  a  system,  already  found  successful 
in  a  large  concern,  that  is  here  described.  At  the  outset, 
to  make  the  general  scope  of  the  system  clearer  a  brief 
description  of  the  size  of  this  concern  and  its  scheme  of 
organization  will  be  found  of  value. 

The  concern  is  engaged  in  the  manufacture  and  direct 
sale  of  certain  articles  made  of  wood,  paper  and  steel, 
and  its  business  has  grown  from  a  very  small  beginning 
to  large  proportions;  it  is  organized  on  the  sales  side 
first  by  large  geographic  divisions,  each  under  the  charge 
of  a  central  office,  the  manager  of  which  has  entire  con- 
trol over  his  territory  and  is  responsible  only  to  the 
directors  of  the  concern  at  the  home  office. 

On  the  manufacturing  side  it  is  divided  into  a  number 
of  factories,  located  in  several  towns  which  are,  with 
two  exceptions,  at  quite  a  distance  from  the  home  office 


FACTORY    BUYING 


87 


of  the  concern,  where  the  purchasing  agent's  office  is 
located. 

These  physical  conditions  of  location  necessarily  make 
the  system  seem  a  little  more  elaborate  than  it  would  be 
if  all  departments  or  branches  were  side  by  side,  for, 
because  of  the  distances  by  which  the  different  offices 
and  factories  are  separated  from  the  purchasing  agent's 
office,  it  has  been  found  necessary  to  give  to  each  office 
and  factory  the  right  to  make  certain  emergency  pur- 
chases. 

The  diversity  of  location  of  the  factories  has  rendered 
it  necessary  to  maintain  a  store-house  at  each  factory  for 


NO. 

•MIVO.                  |* 

1 

•oo  o 

|  PUkNT  O. 

E 

TANO  O. 

•vAMTmr 

RCQUKITIOM  NO. 

TO  O(PAHTM(NT 
rOUCKAN 

OATI 

MMWOCf                                                                                                           WANTCO  IT  WHAT 

OMOCMI  0  *T 

APPftOt 

to 

FORM  1  (front  card):    Rcqviritian  blank  made  out  by  foremen  and  tent 

to  the  tton-keeper.     FORM  II  (bock  card):    The  detailed  requisition  tent 

to  the  buyer  when  goods  are  exhausted 

the  handling  of  raw  material  and  factory  supplies,  and 
the  similar  diversity  of  location  of  sales  offices  has  ne- 
cessitated the  maintenance  of  a  stock  of  manufactured 
goods  and  stationery  and  office  supplies  at  each  office. 
Fortunately  a  well  organized  stock  inventory  system,  em- 


88 PURCHASE    SYSTEMS 

bracing  in  its  scope  both  raw  material  and  manufactured 
product,  has  rendered  the  emergency  purchase  an  infre- 
quent occurrence  involving  only  comparatively  small  ex- 
penditure. 

I/iACTORY  purchasing  methods  which  assure  each 
A  department  of  always  having  on  hand  goods  as  they 
are  needed — requisition  and  order  blanks  required. 

All  requisitions  for  the  purchase  of  raw  material  and 
factory  supplies  originate  either  from  the  store-keepers 
at  the  various  plants  or  from  the  foremen,  but  the  re- 
quisition blanks  made  out  by  the  foremen  (Form  I)  do 
not  go  to  the  purchasing  agent.  All  requisitions  on  the 
general  store-keeper  or  purchasing  agent  for  material 
for  any  factory,  whether  the  need  originates  in  the 
store-house  or  in  the  shop,  are  made  out  by  the  local 
store-keeper  at  the  factory  where  the  material  is  to  be 
used  (Form  II).  These  requisitions  are  then  approved 
for  quantity  and  date  needed  by  the  superintendent  in 
charge  of  the  factory  in  question  and  are  forwarded  to 
the  purchasing  agent's  office  through  the  general  store- 
keeper's hands.  Only  such  requisitions  as  the  general 
store-keeper  cannot  supply  reach  the  purchasing  agent 
in  their  original  form  and  these  are  marked  to  show  that 
the  general  store-keeper  cannot  fill  them.  A  requisition 
which  the  general  store-keeper  fills  does  not  go  to  the 
purchasing  agent  but  to  the  cost  and  accounting  depart- 
ment instead. 

All  requisitions,  originating  at  any  factory  or  store- 
house, are  made  out  in  triplicate  on  blanks  of  uniform 
size  and  form,  and  numbered  in  triplicate;  a  different 
color  is  used  for  each  factory.  Foremen's  requisitions 
on  local  store-keepers  are  made  out  in  duplicate,  or 
singly  as  the  various  foremen  prefer.  Each  of  the  re- 


i  \<  rom     HI  YIN<, 


quisitions  bears  (to  save  writing  and  for  cost  account 
purposes)  the  name  or  number  of  the  department  in 
which  it  originates  and  to  which  it  is  charged  in  the 
'  It-part  mi-lit.  If  chargeable  to  any  manufacturing 
order  it  bears  a  notation  to  that  effect. 

The  local  store-keeper  collates  each  day  the  foremen's 
requisitions  which  he  cannot  fill,  so  that  he  may  not  send 
to  headquarters  two  or  more  requisitions  for  small  quan- 
tities of  the  same  material.  He  also  compares  them  with 
his  file  of  foremen's  requisitions  (covering  material  he 
has  requisitioned  but  not  received),  so  that  he  may  not 
requisition  any  material  that  may  not  be  needed.  This 


PURCHASE    ORDER  NO. 


PRICE 


PROD    O.  NO. 
PLANT  O.NO. 

ron 


•  HIP  O.NO. 

•  TAMO  O.NO. 


A   T.  HUTCH  INS  &  CO 

PURCHASING  AGENT 


/Y)7?J/  7/7:     The  purchasing  agent' a  purchase  order  it  made  out  in  quad- 
ruplicate; the  copies,  other  than  that  tent  to  the  tcUer,  are  retained  /or  the 
tickler  and  general  jilc* 

means  that  he  files  alphabetically  by  name  of  commodity 
all  foremen's  requisitions  which  have  been  transcribed 
by  him  to  his  own  forms.  He  notes  on  these  foremen's 
requisitions  the  number  of  his  own  requisition  on  the 
general  store-keeper. 


90 PURCHASE    SYSTEMS 

When  a  requisition  is  made  out  by  a  store-keeper  the 
original  is  forwarded  to  the  general  store-keeper,  if 
covering  material  commonly  supplied  by  him,  but  other- 
wise direct  to  the  purchasing  agent.  The  duplicate  is 
retained  and  filed  by  number  while  the  triplicate  is  re- 
tained and  filed  by  date  wanted,  as  a  tickler  for  follow- 
ing up  the  general  store-keeper  or  purchasing  agent. 
The  requisition  number  is  used  in  all  correspondence  re- 
garding any  requisition. 

The  general  store-keeper  at  the  central  store-house 
fills  from  his  own  stock  all  requisitions  that  he  can; 
when  he  cannot  fill  a  requisition  in  full  but  does  fill  it 
in  part  he  treats  it  as  the  local  store-keeper  treats  a 
foreman's  requisition,  except  that  he  files  it  by  number, 
pending  the  arrival  of  the  goods ;  if  he  does  not  fill  any 
part  of  it,  or  if  the  goods  are  to  be  shipped  to  a  local 
store-house  direct  from  the  vendor  he  forwards  the  local 
store-keeper's  requisition  to  the  purchasing  agent  with 
his  own  memorandum  that  he  cannot  fill  it. 

The  purchasing  agent  in  placing  purchase  orders 
bunches  on  one  purchase  order  as  many  requisitions  as 
possible  for  the  same  kind  of  material.  Each  purchase 
order  bears  the  numbers  of  all  requisitions  covered  by  it 
and  each  requisition  bears  the  number  of  the  purchase 
order  which  covers  it,  also  the  name  of  the  vendor  from 
whom  the  material  is  ordered.  In  the  purchasing  agent's 
office  requisitions  are  filed  by  number  pending  receipt  of 
notice  of  arrival  of  goods. 

All  purchase  orders  are  made  out  in  quadruplicate  or 
quintuplicate  (Form  III).  The  original  is  sent  to  the 
vendor,  the  duplicate  is  retained  and  filed  alphabetically 
by  the  vendor's  name,  the  triplicate  is  sent  to  the  store- 
keeper who  is  to  receive  the  goods,  and  the  quadruplicate 
is  retained  and  filed  in  a  tickler.  The  quintuplicate  (if 


FACTORY    BUYING 


01 


used)  is  for  the  information  of  the  cost  department, 
especially  valuable  for  charging  to  the  plant  investment 
of  each  department  any  items  of  permanent  equipment, 
and  for  charging  to  shop  orders  the  cost  of  material 
ordered  for  use  on  them. 

When  material  has  been  ordered  the  store-keeper  who 
is  to  receive  it  is  sent  a  copy  of  the  purchase  order  cover- 
ing it.  If  the  material  does  not  come  in  on  time  he  noti- 
fies the  purchasing  agent  of  the  delay. 

When  the  goods  are  received  by  any  store-keeper  the 
packages  are  easily  checked  up  from  the  purchase  order. 
If  only  a  partial  delivery  on  the  order  has  been  sent,  he 
notes  the  receipts  on  the  back  of  the  order  and  reports 


REC'D  fROM 

DATE                                    PURCHASE 
ORDER  NO. 

QUANTITY 

DESCRIPTION 

CONDITION 

DELIVERED  VI* 

CHARGE*  PREPAID 

AMT.  Or  CHANGES      PAID 

PUT  IN  STOCK? 
DELIVERED  TO> 

RECEIVED  SV 

FORM  I V:     If  the  ttore-keeper  receivet  only  part  of  hit  order ;  he  maket  out 
thit  partial  delivery  report;  He  maket  a  final  report  on  the 


vhen  delivery  it  completed 


back  of  hit  copy 


his  receipts  on  a  partial  delivery  blank  (Form  IV), 
making  a  final  detailed  report  on  the  back  of  his  copy 
of  the  order  when  the  delivery  is  completed.  The  tickler 
copy  of  his  own  requisition  may  then  be  destroyed  and 
the  other  copy  filed  by  number. 

When  the  purchasing  agent  receives  the  notice  of  a 
complete  delivery  he  files  it  with  this  purchase  order  of 


92  PURCHASE    SYSTEMS 


the  same  number,  pending  the  arrival  of  the  invoice,  ap- 
proves it,  if  everything  is  O.  K.  as  to  price  and  quantity, 
and  forwards  it  to  the  auditor  for  his  approval.  He 
then  files  (by  order  number)  the  copy  bearing  the  report 
of  delivery  and  files  (numerically  by  vendor's  number) 
the  duplicate  copy  which  he  has  been  holding  in  his  al- 
phabetic file  of  unfilled  orders.  Before  filing,  each  copy 
should  be  made  to  show  in  full  the  price  of  the  goods 
covered  by  it.  His  copy  of  the  local  or  general  store- 
keeper's requisition  he  files  by  requisition  number. 

The  cycle  of  operations  is  now  complete;  the  system 
has  provided  for  furnishing  all  the  information  desired 
at  every  step  of  the  way  and  no  unnecessary  papers  have 
been  filled  out  or  filed.  Every  paper,  either  in  the  cur- 
rent or  temporary  file,  has  been  accessible  instantly  from 
the  natural  point  of  approach,  and  every  paper  placed 
in  the  permanent  file  is  likewise  accessible  in  a  similarly 
natural  manner  with  no  false  steps  and  no  delay. 


'T'HE    most  essential  possession  of  any  person  seeking 
•*•  credit,  or  anything  else  worth  while,  is  character.    Hav- 
ing this,  one  may  not  only  seek  but  readily  achieve  success. 
The  late  J.  Pierpont  Morgan,  who  was  a  masterful  judge 
of  man,  said  a  short  time  before  his  death,  that  integrity  is 
the  one  essential  thing  in  business;  that  he  would  lend  a 
million  dollars  to  a  man  of  integrity  without  collateral,  when 
he  would  not  lend,  on  government  bonds,  a  dollar  to  a  man 
without  character. 

With  no  other  asset  but  integrity  of  character  any  man  of 
business  may  gain  the  confidence  of  his  banker.  And  con- 
fidence is  the  basis  of  all  credit.  The  word  itself  meant 
faith  or  belief. 

— J.  T.  Talbert 

Vice-Prei Ident,  National  City  Bank  ol  New  York 


ADAPTING  A  PURCHASING 
SYSTEM  TO  YOUR  BUSINESS 

By  Su  mncr  B.  Rogers 
Production  Manager.  Sangamo  Electric  Company 

OXLY  within  recent  years  has  the  purchase  requisi- 
tion become  a  part  of  the  general  purchase  system. 
Even  in  small  businesses  at  the  present  time,  where  the 
superintendent  or  one  of  the  partners  acts  as  purchasing 
agent,  the  use  of  requisitions  is  dispensed  with  and  the 
purchasing  order  in  this  case  acts  as  a  requisition  also. 
In  other  words,  the  department  requisitioning  the  ma- 
terial fills  out  the  order  which  the  purchasing  depart- 
ment translates  into  trade  language.  Often  the  purchas- 
ing requisition  does  not  constitute  a  principal  part  of 
the  general  system.  It  is  used  primarily  to  facilitate 
transactions  between  the  purchasing  agent  and  the  fac- 
tory or  store-rooms  and  this  purpose  is  usually  accom- 
plished as  soon  as  the  goods  have  been  ordered  and  re- 
ceived. It  also  acts  as  a  reminder  in  case  the  purchas- 
ing department  fails  to  give  the  matter  the  necessary 
attention. 

Probably  the  principal  departments  in  which  such  a 
form  will  be  used  in  a  medium-sized  factory  are  the 
stores  and  maintenance  departments,  foreman's  and  gen- 
eral offices.  It  may  be  used  any  time  supplies  are  neces- 
sary, and  it  may  originate  from  any  of  the  departments 
mentioned.  However,  it  should  not  be  used  as  a  receiv- 
ing report,  which  is  sometimes  done.  Now,  since  it  may 


94 PURCHASE    SYSTEMS 

originate  with  almost  any  one,  the  form  should  have  a 
space  for  the  approval  of  a  department  head. 

The  purchase  requisition  is  used  only  as  a  reminder 
and  is  not  permanent.  Therefore,  under  ordinary  cir- 
cumstances it  need  not  be  filed  after  acknowledgment  by 
the  purchasing  department,  but  can  be  destroyed.  For 
this  reason,  the  form  may  be  printed  on  reasonably 
cheap  paper,  possibly  in  pad  form.  The  service  the  re- 
quisition will  perform  is  limited  and  need  not  receive 
much  attention.  The  paper  need  not  be  of  an  expensive 
or  durable  quality,  and  usually  no  color  scheme  is  neces- 
sary. Sometimes,  however,  one  red  copy  is  made  which 
is  forwarded  to  the  purchasing  department  by  the 
originator  when  no  apparent  action  has  been  taken  upon 
the  original  requisition. 

DATA  which  needs  to  appear  on  the  purchase  requisi- 
tion— how  to  draw  up  a  form  which  shall  be  most 
efficient  and  most  fully  meet  all  your  needs. 

Generally  the  following  information  should  appear  on 
a  purchase  requisition:  the  requisition  number;  date; 
to  whom  sent ;  how  material  is  to  be  used,  in  conjunction 
with  what  job,  order,  item  or  work ;  when  wanted ; 
quantity;  description  of  the  material;  where  to  be  de- 
livered ;  who  originated  the  order ;  space  for  purchasing 
department  to  specify  purchase  order  on  requisitions 
before  returning,  and  such  other  items,  depending  upon 
the  specific  requirements. 

Regarding  the  sequence  of  information,  the  title  of 
the  form,  "Purchasing  Requisition,"  should  appear  first. 
Unless  the  form  goes  outside  of  the  plant,  the  name  of 
the  company  need  not  appear,  but  in  case  the  factory 
mails  the  form  to  a  general  office  in  another  location,  it 
is  well  then  to  have  the  firm  name  printed  on  the  form. 


YOUR    ORDER    FORMS 95 

The  next  item  of  importance  is  the  destination  of  the 
form,  such  as  "To  Purchasing  Department."  This 
should  follow  with  a  general  description  of  the  materials 
required,  for  such  and  such  a  job  or  order,  and  so  on. 
Then  ample  space  should  be  left  for  the  material  re- 
quisitioned. Following  this,  spaces  should  be  assigned 
for  the  place  of  delivery;  date  wanted;  person  who 
originated  the  requisition ;  space  for  approval ;  space  for 
purchase  order  assigned,  and  so  on.  The  items  of  promi- 


RI 

TO  PURCHASING  Ol 

QUISITION  FOR  OUTSIDE  MATERIAL 

PT                                                                                                            «•»» 

QUANTITY 

DESCRIPTION 

WANTED    •? 

APPROVED 

OCPT.  MEAD 

FORM  I:     The  purctuise  requisition  reduced  to  its  simplest  term*  it  hen 

ihoicn.     It  it  handed  to  the  purchasing  agent,  and  y  he  approves,  the 

purchase  order  is  then  made  out 

nence  should  be  the  title,  the  destination  instructions, 
the  place  of  delivery  and  the  date  wanted ;  also  the  pur- 
chase number  assigned. 

Consider  the  balance  and  appearance  of  the  form,  but 
not  at  the  expense  of  any  of  the  necessary  items.    The 


96 PURCHASE    SYSTEMS 

number  of  duplicates  required,  of  course,  depends  en- 
tirely upon  the  factory.  The  different  kinds  of  type 
should  be  as  few  as  possible,  and  the  majority  an  eight 
point  Gothic.  Those  items  which  need  prominence 
should  appear  in  striking  type. 

As  soon  as  all  of  the  items  have  been  decided  upon, 
draw  up  a  sample  similar  to  Form  I.  Submit  this  to 
the  purchasing  department,  the  superintendent  and 
other  department  heads  interested  for  approval  before 
you  order  a  definite  quantity.  The  form  should  be  of 
the  same  size  as  the  purchasing  order  and  of  the  same 
general  type.  As  soon  as  the  necessary  orders  for  these 
forms  have  been  placed,  issue  standard  instructions  as 
to  the  detailed  manner  in  which  to  use  them. 

Of  course,  before  the  order  is  placed,  it  is  taken  for 
granted  that  any  objections  to  the  form  will  have  been 
considered  by  the  various  department  heads,  so  that 
no  change  in  the  design  of  the  form  will  be  necessary, 
unless  radical  changes  in  the  general  system  become 
essential. 

WHAT  information   to  put  on  the  purchase  order 
blank — points  in  layout  and  ordering  routine  that 
need  to  be  considered — how  to  keep  up  the  stock. 

Upon  receipt  of  the  purchase  requisition,  the  purchas- 
ing department  considers  this  requisition  as  its  authority 
to  issue  a  formal  purchase  order.  This  order  is  used 
primarily  to  record  transactions  between  the  company 
ordering  the  material  and  the  seller,  and  thus  eliminates 
the  major  part  of  the  correspondence  between  these 
parties.  In  addition,  it  is  often  used  in  the  factory  for 
routing  the  material  from  the  vendor  to  its  proper  des- 
tination in  the  plant,  and  also  to  see  that  it  arrives 
there  at  the  proper  time. 


YOUR    ORDER     FORMS 97 

The  purchase  order,  or  a  copy  of  it,  probably  passes 
through  as  many  hands  and  as  many  different  depart- 
ments as  any  form  used,  and,  therefore,  should  be  de- 
signed with  this  idea  in  view.  It  must  also  form  a 
permanent  record  of  transactions  between  the  company 
and  the  market.  It  will  continually  be  referred  to  and 
the  service  it  must  perform  is  fully  as  severe  as  that  to 
which  any  other  factory  form  is  put.  Therefore,  it  is 
best  to  print  these  forms  (in  triplicate  or  quadruplicate, 


.   fou«TH  (T.tlT  IOWO*    TMf  C«»<mCO.l'O.IIOMOl«  >'M<'    •'•*•• 

THE  CMANON  COMPANY 

mo        7304  0 
•mi  »»o  »»«M  Avenue 

•MMMVM 


OCUVCH  TO 

»«•« ran 


FORM  II:  In  a  large  plant  more  information  may  be  required  than  it 
ture  thown  on  the  purchase  order.  For  the  rmall  plant,  however,  thit  if 

tufficient 

as  the  case  may  require)  on  a  very  good  quality  ol 
bond  paper,  in  sizes  about  4x6  or  SV^xll,  in  the  clearest 
possible  type.  The  original  copy  which  goes  to  the 
vendor  should  be  on  white  paper,  printed  with  copy  ink. 
A  color  scheme  is  nearly  always  best  In  many  cases  8 


98 PURCHASE    SYSTEMS 

yellow  copy  acts  as  the  purchasing  department's  file 
record,  and  the  blue  the  receiving  clerk's  record,  with 
other  colors  as  required.  Often  the  production  and 
stores  departments  receive  copies. 

The  information  to  go  on  the  form  depends  entirely 
upon  the  nature  of  the  material  manufactured,  the  size 
of  the  factory  and  the  make-up  of  the  organization.  Two 
examples  of  purchase  orders  (Forms  II  and  IV)  are 
shown.  One  is  used  in  a  medium-sized  plant,  the  other 
in  a  large  factory.  Usually  the  following  information 
should  appear  on  all  purchase  orders:  the  purchase 
number,  name  of  company,  location  of  company,  to 
whom  the  order  is  charged,  the  material  wanted  in  de- 
tail, the  date  wanted,  price,  terms,  conditions  of  accept- 
ance, signature  of  purchasing  agent  and  a  notice  to  the 
effect  that  the  purchase  number  must  appear  on  the 
invoice. 

The  sequence  of  information,  while  not  of  the  most 
vital  consideration,  is  yet  very  important.  In  most 
cases  the  purchase  order  and  the  firm  name  should  ap- 
pear at  the  top,  next  the  purchase  number  and  the  loca- 
tion of  the  firm  should  appear,  then  it  is  customary  to 
state  clearly  what  is  wanted,  and  this  should  be  followed 
by  shipping  instructions.  The  size  of  the  space  allotted 
for  material,  of  course,  is  determined  by  the  nature  of 
the  business.  Down  at  the  bottom  space  should  be  left 
for  the  purchasing  agent's  signature  and  a  statement  to 
the  effect  that  the  purchase  order  number  must  appear 
on  the  invoice.  The  spaces  to  be  filled  in  on  the  type- 
writer should  be  arranged  so  that  it  will  require  the 
least  amount  of  spacing  on  the  part  of  the  operator. 

The  items  that  should  be  played  up  are  these:  the 
purchase  order,  purchase  order  number,  company  name 
and  address,  and  finally  the  statement  that  the  purchase 


YOUR    ORDER    FORMS 99 

order  number  should  appear  on  the  invoice.    This  infor- 
mation may  be  balanced  somewhat,  as  shown  in  Form  IV. 
Of  course,  the  number  of  duplicates  is  determined  by 


PURCHASE  REQUISITION 

FORM  NO.  CMANON  COMPANY 

TO  PURCHASING  DEPT  MATERIAL  A*  LISTED  BELOW  is 

ACQUIRED  "»•  ™  APPLY  Q* 

ORDER  JO*  ««">•« 


QUANTITY 


MATERIAL  REQUIRED 


DELIVER  THIS  MATERIAL  TO. 


A.  M. 
•  P.  M. 


SCHEDULE  ASSIGNED. 


PURCHASE  ORDER  NO.  ASSIGNED 

•  CMCOULCO  rOH  DELIVERY  TO  FACTORY 


PURCHASING  OEPT    WILL  RETURN  THIS  REQUISITION  TO 


NAME DEPT 


PURCHASING   AGENT  S  APPROVAL 


FORM  III:     This  purchase  requisition  contains  more  information  than 

the  one  thown  in  Form  1,  and  more  fully  meet*  intricate  need*  vhen  put 

to  actual  use 

the  specific  requirements  of  the  individual  factory  in 
the  same  manner  that  the  number  of  copies  of  the  pur- 
chase requisition  is  determined.  One  copy,  generally  the 


100 


PURCHASE    SYSTEMS 


original,  always  goes  to  the  vendor,  one  to  the  receiving 
department,  one  to  the  stores,  and  one  to  the  produc- 
tion department.  Many  times  definite  shipping  and  de- 
livery instructions  are  included  on  the  seller's  and  re- 
ceiving department's  copies.  On  the  receiving  copy,  all 
quantities  are  omitted  so  that  this  department  must  ac- 


PURCHASE  ORDER  OF  THE  EMANON  COMPANY 


HILL  ST.  AND  NASH  AVENUE 
WASHINGTON 


PURCHASE  NO.. 


.DATE. 


GENTLEMEN:  KINDLY  SHIP  TO  us  THE  FOLLOWING  MATERIAL  NOT 

LATER  THAN i 191 


DESCRIPTION 


IT  IS  UNDERSTOOD  THAT  YOU  ACCEPT  THIS  ORDER  ON  THE  TERMS 
AS  WRITTEN  UNLESS  YOU  NOTIFY  US  TO  THE  CONTRARY 


ALL  PACKAGES  AND  YOUR  INVOICE  MUST  BE  MARKED  WITH 
OUR  PURCHASE  ORDER   NUMBER 

THE  EMANON  COMPANV 


PER. 


PURCHASING  AGENT 


FORM  IV:     This  purchase  order  includes  all  the  information  that  is 

required  in  any  factory.     If  desired,  all  terms  may  be  printed  on  the  reverse, 

so  that  the  seller  accepts  them  in  taking  the  order 

tually  count  out  the  amounts  and  make  a  report  of  them 
that  must  check  with  the  original  order.  The  stores 
department  should  receive  on  its  copy  the  amounts  listed. 
The  type  used  should  be  practically  the  same  as  on  the 
purchase  requisition  and  the  method  of  preparing  the 


YOUR    ORDER    FORMS 101 

sample,  obtaining  the  necessary  approval  and  keeping 
track  of  the  stock,  would,  of  course,  also  be  the  same. 
Ordinarily  the  stock  is  maintained  by  the  maximum 
and  minimum  limits  system.  The  material  is  often  placed 
in  the  store  room,  in  packages  of  definite  quantities. 
The  lower  package  is  then  marked  as  follows — "Before 
opening  this  package  re-order  in  quantity  of  — ." 

A  few  minor  points  are  worthy  of  consideration.  If 
the  information  on  the  form  is  to  be  typewritten,  the 
spaces  for  this  purpose  may  be  made  much  smaller  than 
if  filled  in  by  hand.  The  exact  dimensions  of  the  form 
should  be  such  as  to  leave  a  small  border  around  the 
form  for  convenience  in  handling. 

Machine  ruled  forms  are  expensive  and  you  should 
avoid  them  if  possible.  When  used,  make  as  many  of 
the  lines  as  possible  of  the  same  length.  This  applies 
to  vertical  ruled  columns  as  well  as  the  horizontal  lines. 

Consider  the  eyesight  of  the  workmen.  Many  clerks 
with  poor  eyesight  will  be  called  upon  to  use  this  form, 
and  unless  the  information  is  printed  in  reasonably  bold 
type,  mistakes  will  surely  occur.  "When  any  of  the  in- 
formation is  to  be  written  in  long  hand  out  in  the  shop 
more  than  enough  space  should  be  allowed  for  the  pur- 
pose, otherwise  workmen  will  write  all  over  the  adjoin- 
ing spaces.  As  far  as  possible,  adhere  to  factory  nom- 
enclature, so  as  not  to  confuse  the  men  who  are  com- 
pelled to  fill  in  the  necessary  information. 


T  HAVE  no  hesitation  in  placing  tyiirm  at  an  dement  of 
1  tucceu  teeond  in  importance  only  to  quality  in  the 
manufacturer' t  product. 

—John  B.  Stetaoo 

.  Jeta  ».  *•<•••  Cimttm* 


XI 

HOLDING  THE  SUPPLIER 
TO  HIS  BARGAIN 

By  Carroll  D.  Murphy 

WE  HAVE  no  trouble  in  handling  incoming 
goods,"  said  the  purchasing  agent  of  a  large 
factory  in  western  Illinois.  "Being  advised  in  advance 
what  shipments  are  coming,  our  receiving  department  is 
able  to  have  freight  cars  switched  to  the  place  most 
convenient  for  unloading  and  unpacking.  This  makes 
speedy  and  accurate  checking  possible.  No  unlabeled 
packages  lie  about  for  days  waiting  final  inspection, 
which,  if  made  at  all,  must  then  be  hasty  and  unsatis- 
factory. We  regularly  get  our  materials  on  time,  we 
get  the  quality  we  order,  and  whenever  anything  goes 
wrong  we  know  where  the  blame  lies.  We  aim  to  make 
prompt  shipments  to  our  customers,  and  the  surest  way 
to  do  that  is  to  exact  prompt  and  efficient  service  from 
our  supply  houses." 

In  this  concern  the  receiving  department  insists  upon 
receiving  notification  by  mail  or  'phone,  or  in  special 
cases  by  wire,  that  shipments  may  be  expected  at  a 
certain  time.  Instead  of  arriving  unexpectedly  and  re- 
ceiving scant  attention,  advance  preparations  assure  the 
careful  treatment  and .  prompt  handling  of  all  goods. 
A  careful  check  on  all  items  delivered  by  the  railroad 
with  notation  of  articles  damaged  en  route,  or  lost,  forms 
a  basis  for  efficient  entry  of  claims.  Any  shortage  or 


ENFORCING    THE    BARGAIN 103 

defect  in  the  goods  themselves  is  referred  to  the  supply- 
ing houses. 

Prompt  inspection  saves  this  firm  annually  a  large 
amount  which  would  otherwise  be  lost  in  short  ship- 
ments, accidents  or  substitutions.  Experienced  men  are 
encouraged  to  remain  in  the  receiving  department  and 
their  years  of  service  are  a  great  help  in  protecting  the 
concern  as  to  right  quantity  and  quality  in  every  ship- 
ment. 

'T'HOROUGH  inspection  at  the  receiving  room  door 
1    it  essential  if  you  are  to  receive  right  quality  and 
honest  quantity  in  the  goods  you  have  ordered. 

As  far  as  possible,  each  shipment  is  checked  entire, 
so  that  all  necessary  charges  and  adjustments  can  be 
made  at  one  time.  Yet  the  system  fully  provides  for  the 
hurry-up  item. 

"In  fact,"  said  the  purchasing  agent,  "we  handle  so 
much  rush  stuff,  that  our  method  has  become  very 
flexible.  A  special  blank,  instead  of  a  duplicate  copy  of 
the  order,  warns  the  department  to  watch  for  the  item 
which  is  needed  at  once.  The  clerks  have  learned  to  pick 
it  out,  O.  K.  it  and  swi  g  it  instantly  into  the  current 
of  processing  and  sales.  A  frenzied  foreman  need  not 
p.hout  into  the  'phone  for  materials  whose  absence  is  halt- 
ing production  in  his  department.  The  special  blank 
and  red  follow-up  shout  for  him.  Departments  pet  their 
materials  on  time,  checked  for  quantity  and  quality.  We 
never  drive  away  our  trade  by  putting  uninspected 
goods  into  rush  orders.  Promptness,  not  omission,  is  our 
safeguard. ' ' 

Follow-up  to  insure  prompt  delivery,  right  inspection, 
and  the  rigid  enforcement  of  contracts  or  salesmen's 
agreements  are  the  purchasing  agent's  best  insurance 


104 PURCHASE    SYSTEMS 

against  short-sighted,  dishonest  or  careless  deliveries  on 
the  part  of  the  seller.  Clever  handling  of  your  receiving 
routine  will  minimize  mistakes  and  delays,  and  will  pro- 
vide against  many,  even  of  the  so-called  "inevitable" 
errors. 

Receiving  goods  right  is  the  first  step  in  the  successful 
processing  or  selling  of  them.  Directly  contrasted  with 
the  smooth  routine  prevailing  in  the  above  concern  are 
the  haphazard  methods  followed  by  a  Southern  furniture 
dealer.  Very  often  crated  couches,  tables  and  chairs 
will  stand  for  days  on  the  sidewalk  in  front  of  his  store. 
His  success  is  on  the  wane,  and  he  is  laying  the  reason 
to  "hard  times"  and  the  growth  of  competition.  Yet 
to  the  outsider  it  seems  apparent  that  his  lack  of  method 
in  purchasing  is  one  of  the  biggest  factors  in  the  sales 
slump. 

Recently  a  carload  of  goods  came  for  him  unex- 
pectedly on  a  busy  afternoon,  and  the  lot  was  unloaded 
as  usual  on  the  sidewalk.  Labor  happened  to  be  scarce 
and  teaming  schedules  were  badly  disarranged.  As  a 
result,  the  freight  papers  gave  no  evidence  of  the  rail- 
road's responsibility  for  one  crate  which  was  badly 
smashed.  Attempting  to  adjust  this  claim  with  the 
shipper  in  far  away  Minnesota  proved  a  slow,  costly  and 
unsatisfactory  process.  In  the  meantime,  trade  was 
being  lost  on  the  item  every  day. 

One  piece  in  this  shipment  was  a  cane  couch  of  a  par- 
ticular style,  on  a  special  order  for  a  valued  customer. 
Hustled  into  a  delivery  wagon  without  being  uncrated, 
it  was  delivered  only  to  be  angrily  refused.  Inspection 
after  this  refusal  showed  the  finish  to  be  a  slovenly, 
badly  scarred  high  gloss  instead  of  the  dull,  "Early 
English"  oil  style  desired.  Re-finishing,  which  might 
have  forestalled  the  customer's  dissatisfaction,  proved 


ENFORCING    THE    BARGAIN 105 

ineffective  as  a  remedy.  The  remainder  of  the  shipment, 
meantime,  was  bundled  under  cover  and  forgotten  amid 
a  mass  of  other  incoming  goods.  Ten  days  later  the  lot 
was  unpacked  and  the  dealer  found  that  the  seller  had 
made  an  extremely  undesirable  substitution  on  the  size 
of  a  number  of  dining  room  tables  and  the  style  of  sev- 
eral chairs.  So  much  time  had  elapsed  since  the  receipt 
of  the  shipment  that  adjustment  was  difficult,  and  the 
dealer  found  himself  loaded  with  a  stock  which  he  could 
not  sell  except  at  a  price  that  ruined  his  chance  of 
profit. 

Rigid  inspection  of  goods  when  they  are  landed  at  the 
warehouse  door  would  have  protected  this  dealer  from 
the  mistakes  of  the  supply  houses,  hastened  adjustments, 
established  his  reputation  among  the  factories  as  a  buyer 
whose  order  must  go  out  correct  and  would  have  warned 
him  against  suppliers  who  habitually  blundered.  In- 
deed, such  inspection  is  the  first  simple  rule  to  be  en- 
forced by  the  purchasing  agent  if  he  is  to  get  correct 
quality  and  quantity. 

IT"  NOWLEDGE  of  supplier*'  habitual  method*  it  a 
lV  big  help  to  the  buyer  who  desire*  prompt  shipment* — 
the  quick  te*t  by  sample  that  simplifies  inspection. 

If  the  seller,  according  to  your  experience  from  previ- 
ous dealings  with  him,  is  thoroughly  honest,  and  his  own 
inspection  is  careful  and  exact,  you  have  at  once  a  certi- 
fication of  correct  quality  and  quantity,  which  may 
render  inspection  in  your  warehouse  less  burdensome. 
After  you  have  examined  the  first  few  boxes,  the  sales 
inspector's  number  on  a  pack  of  goods  or  a  crate  of 
peaches,  will  tell  you  how  nearly  correct  the  inspection 
of  each  package  has  been. 

In  iron  ore  shipments  the  law  of  averages  is  used  to 


106 PURCHASE    SYSTEMS 

insure  quality.  The  barge  of  ore  is  tested  in  a  dozen 
places.  Samples  are  taken  now  and  then  from  fore,  aft 
and  midship,  and  from  top  to  bottom  as  the  buckets 
unload  the  cargo.  The  resulting  mixture  is  tested  to  es- 
tablish the  scientific  formula  for  the  entire  shipment. 
Wise  selection  of  samples  may  similarly  be  applied  to  the 
inspection  of  many  kinds  of  goods. 

The  quick  test  is,  of  course,  the  best,  provided  the 
average  arrived  at  is  accurate.  A  stenographer  sat  at  a 
table  counting  out  blanks  of  a  certain  kind  and  putting 
them  in  piles  of  one  hundred  each.  An  office  boy  who 
had  handled  poker  chips,  counted  his  first  hundred  and 
matched  subsequent  piles  against  it,  judging  the  thick- 
ness of  the  paper  to  be  uniform  throughout.  The  supply 
buyer,  on  the  other  hand,  knew  that  the  paper  in  the 
blanks  ran  sixteen  pounds  to  the  ream,  and  he  suggested 
weighing  the  sheets,  hundred  against  hundred.  A  mo- 
ment's thought  will  tell  you  which  method  is  quickest 
and  most  accurate.  Quality  and  grade,  number,  quan- 
tity, measure  or  weight — these  are  things  to  look  for  in 
your  deliveries,  and  the  quick  test  will  relieve  you  of 
much  tedious  labor  in  the  receiving  room.  Such  a  plan 
leaves  ample  time  to  study  over  the  specials  in  each 
shipment,  where  errors  are  most  likely. 

Rigid  inspection  and  close  checking  is  never  to  be 
•  mitted,  but  right  buying  should  eliminate  the  necessity 
of  inspecting  every  pound  of  screws,  every  ingot  of  steel 
or  every  bolt  of  cloth  in  a  carload  shipment.  Correct 
order  giving  and  clean-cut  specification  are  the  basis  of 
delivery  satisfaction.  In  former  days  a  man  could  see 
his  goods  wrapped  or  packed,  and  so  judged  beforehand 
whether  they  met  his  needs.  The  method  had  certain  ad- 
vantages which  are  absent  from  the  modern  system.  The 
present-day  purchasing  agent  often  buys  with  reference 


ENFORCING  THE  BARGAIN 107 

to  the  character  of  the  supply  house,  taking  the  evidence 
of  his  own  experience  with  them  as  a  guarantee  of  the 
goods.  He  avoids  the  firm  which  continually  proves 
careless  in  the  handling  of  orders,  sends  short  weights 
or  makes  undesirable  substitutions  without  sufficient 
grounds.  His  trade  goes  to  the  concern  which  supplies 
the  right  thing  at  the  right  time  and  at  a  reasonable 
price. 

Finding  the  sellers  who  give  this  quality  satisfaction 
and  efficient  delivery  service  is  one  of  the  buyer's  big 
problems.  An  electric  motor  maker  repeatedly  experi- 
enced difficulty  in  getting  certain  complicated  stock  cast- 
ings. Finally  he  happened  upon  a  foundry  foreman 
with  the  knack  of  giving  correct  service.  Recognizing 
in  this  man  his  short  cut  to  quality,  the  buyer  gripped 
him  fast.  The  foreman  has  changed  employers  three 
times,  but  the  motor  maker's  trade  has  gone  with  him  at 
every  change. 

HOW  the  deter  buyer  it  able  to  secure  prompt  delivery 
tervice  and  quality  satisfaction  on  goods  needed  in 
a  hurry — follow-up  methods  that  count. 

Once  the  order  is  given,  your  purchasing  agent  has 
four  tools  of  follow-up :  mail,  the  'phone,  telegraph  and 
personal  representative.  The  card  index,  or  a  carbon 
copy  of  the  original  order  placed  in  a  tickler  file,  serves 
to  remind  him  of  approaching  delivery  dates. 

A  letter,  sent  a  few  days  in  advance  of  the  time  when 
goods  have  been  promised,  accents  delivery  specifications 
and  makes  a  strong  reminder  at  the  critical  date.  One 
firm  in  a  Southwestern  city  has  for  a  number  of  years 
made  successful  use  of  double  post  cards  for  the  first 
follow-up.  This  card  requests  the  supply  house  to  give 
information  on  the  return  portion  of  the  card  regarding 


108 PURCHASE    SYSTEMS 

the  progress  of  the  work  and  the  chance  of  delivery  on 
the  specified  date.  The  reply  is  filed,  and  thereafter 
single  cards  remind  the  supplier  of  this  date,  which  has 
become  the  foundation  of  the  factory's  work  schedule. 
The  underlying  principle  of  "getting  a  date"  is  vital. 

Wisely  used,  the  telephone  is  also  a  valuable  means 
for  hurrying  up  local  deliveries,  or  long  distance  de- 
liveries of  special  importance.  Coming  in  the  morning 
when  the  foreman  is  planning  his  work  for  the  day,  a 
telephone  message  puts  your  need  strongly  before  him. 
The  intonation  of  his  voice  in  reply  is  taken  by  one 
shrewd  buyer  as  a  sure  indication  of  whether  the  sup- 
plier wishes  to  avoid  the  issue  and  intends  delay,  or  has 
the  date  in  mind  and  is  processing  his  work  promptly, 
so  that  the  delivery  will  occur  on  time. 

In  certain  cases  a  telegram  is  better  than  either  a 
letter  or  telephone  message.  An  electric  power  concern 
was  in  urgent  need  of  a  big  generator  which  was  being 
built  by  an  Ohio  engine  company.  Every  day  for  three 
weeks  they  sent  a  night  letter  to  the  Ohio  concern  in 
regard  to  the  generator.  The  message  arrived  about  eight 
o'clock  each  morning  and  was  a  "first  column"  reminder 
of  the  delivery  date.  The  dynamo  was  out  on  the  day, 
having  received  particular  attention  in  a  period  of  rough 
times  when  it  might  easily  have  been  sidetracked  or  for- 
gotten. 

ABUSE  of  the  fottow-up  is  sure  to  antagonize  the 
supplier — a  reasonable  and   tactful  approach,   on 
the  other  hand,  leaves  him  unlling  to  serve  you. 

The  same  or  even  better  results  are  obtained  when 
one  of  your  representatives  visits  the  seller  and  urges 
the  need  for  haste. 

"Get  a  good  fellow  into  your  supplier's  shop,  down 


ENFORCING    THE    BARGAIN 109 

among  the  actual  cogs  of  processing  your  material.  If 
you  have  the  right  man,  your  goods  will  come  through. ' ' 
This  is  the  way  a  purchaser  of  mine  machinery  and  cast- 
ings sums  up  the  value  of  the  personal  touch  in  follow- 
up — the  laugh  and  appeal  of  human  comradeship.  It 
eliminates  the  guess-work  which  enshrouds  a  message 
aimed  at  some  indistinct  figurehead — a  distant  foreman 
or  manager  who  thrusts  the  letter  or  telegram  half-read 
into  the  waste  basket  and  promptly  forgets  the  telephone 
call.  Personality  puts  the  buyer,  whether  he  is  pur- 
chasing a  machine  which  costs  fifty  or  fifty  thousand,  on 
stilts  in  the  crowd  which  is  clamoring  for  deliveries. 

Above  all,  however,  don't  abuse  the  follow-up  or 
maintain  an  incessant  clamor  for  special  favors.  Actual 
need  is  the  only  sound  basis  of  rush  follow-up.  You  can 
shout  "Wolf"  until  the  seller  learns  to  pay  no  atten- 
tion to  your  appeal.  A  twenty-dollar  customer  in  Texas 
sent  hurry-up  wires  "collect"  to  a  St.  Louis  concern 
daily  for  a  week — and  paid  for  them  afterwards.  Such 
a  measure  on  goods  ordered  specially,  but  with  no 
agreed  shipping  date,  was  tactless  and  set  a  discount 
upon  his  reasons  in  a  genuine  crisis  which  developed 
later. 

Reason  and  tact  will  do  more  every  time  than  bull- 
headed  demands  urged  in  an  unreasoning  way.  You 
must  sell  the  sales  office  your  need.  A  fifty  thousand- 
pound  generator  in  a  city  power  house  broke  down  and 
had  to  be  replaced  at  the  earliest  possible  moment,  re- 
gardless of  expense.  A  single  telegram  was  the  only 
follow-up  used.  This  stated  the  case  in  a  few  crisp  sen- 
tences and  offered  to  bear  700  mile  express  charges. 
The  wire  carried  conviction,  and  the  generator  came 
promptly. 

On  the  boundary  between  friendly  and  forced  deliv- 


110 PURCHASE    SYSTEMS 

ery  rests  the  penalty  inserted  in  the  bonus  contract 
clause.  Since  delay  is  tolerated  by  the  supplier  for  the 
sake  of  economy,  a  bonus  is  the  logical  spur  which  in- 
duces him  to  make  his  deliveries  more  promptly.  A  fine 
of  so  many  dollars  for  every  day  delivery  is  delayed 
beyond  the  stipulated  date,  coupled  with  a  corresponding 
reward  for  earlier  delivery,  is  valuable  oil  for  the  ma- 
chine of  material-getting. 

Recourse  to  a  lawsuit  should  be  had  only  in  excep- 
tional cases.  Often  the  threat  of  proceedings  is  suffi- 
cient to  bring  the  lax  seller  to  time.  No  house  can 
afford  to  run  the  risk  of  earning  a  reputation  in  the 
trade  for  slow  deliveries  or  contract  failures. 

The  buyer  in  a  big  Pittsburgh  steel  company  scented 
a  rising  market  in  bolts.  He  at  once  contracted  with 
several  rival  salesmen  for  future  deliveries,  month  by 
month.  No  concern  was  especially  favored.  The  sales- 
men took  the  order,  although  against  their  will.  On  the 
third  delivery  date,  however,  bolts  were  so  high  and  the 
demand  for  them  so  great  that  one  concern  yielded  to 
the  temptation  to  neglect  delivery. 

Expecting  this,  the  purchaser  at  once  telephoned  to 
the  city  sales  department  of  the  supplying  house.  The 
latter  pretended  a  flaw  in  the  contract  as  the  reason  for 
non-delivery.  Instantly  the  buyer's  coat  was  off.  Backed 
by  the  plain  intention  of  the  contract  and  the  whole 
fighting  power  of  his  house,  he  suavely  suggested  a  court 
decision. 

' '  Now  is  a  good  time, ' '  he  said, ' '  for  us  to  demonstrate 
to  the  world  whether  your  concern  stands  with  the  rest 
and  respects  its  agreements  on  bolts  and  other  items." 
The  threat  and  the  loss  of  reputation  which  would  have 
resulted  from  a  suit  made  the  contract  worth  keeping. 

Having  discovered  the  brand  of  poor  quality  in  deliv- 


ENFORCING    THE    BARGAIN HI 

erics,  the  purchasing  agent  must  determine  what  his 
stand  shall  be.  He  can  be  absolutely  impartial  and  yet 
thoroughly  resolute.  If  he  is  tactful,  he  will  listen  to 
the  salesman's  side  before  he  lays  down  a  harsh  decision 
or  makes  a  definite  demand.  The  criterion  of  returned 
or  discounted  goods  used  by  one  conscientious  factory 
buyer  is  this: 

' '  If  the  supplier  has  saved  money  beyond  contract  by 
throwing  his  goods  below  specification,  or  if  the  selling 
value  of  the  goods  has  been  diminished,  an  adjustment 
is  due." 

Penalties  are  justly  aimed  not  to  punish,  but  to  reform. 
The  fundamental  thing  to  aim  at  in  your  follow-up,  in- 
spection and  adjustment  is  to  raise  the  standard  of  fu- 
ture service.  To  this  end,  you  must  demonstrate  the 
justice  of  your  present  objection  and  your  open-minded 
attitude  toward  tomorrow's  deliveries.  Inability  or  fail- 
ure to  make  an  agreed  delivery  satisfactorily  is  inexcus- 
able from  the  buyer's  point  of  view.  The  more  just 
and  firm  you  are  in  your  demands  the  better  will  be 
the  quality  of  service  accorded  you  by  the  seller. 


hardest  thing  I  know  of  in  telling  it  to  thov>  a  att- 
tamer  that  jirtt  cost  it  not  latt  cott;  to  make  him  undtr- 
ttand  that  while  the  -price  of  tome  goodt  may  be  much  lower 
in  the  beginning,  they  are  alirayi  ineariably  dearer  in  the 
end;  to  thaw  him  that  almott  alvayt  an  article  it  worth  jutt 
about  what  it  eoett;  in  thort  to  imprett  him  with  the  meaning 
qf  "quality" 

—Edwin  W.  Moore 

FMfcteM.  Th«  Electric  C*M* 


XII 

HOW  TO  FILE  PURCHASE 
DATA 

By  O.  N.  Manners 

BEFORE  the  purchasing  agent  is  ready  to  buy  goods 
he  must  have  certain  information  collected  and 
classified  in  systematic  form.  Mechanical  aids  help  tha 
man  who  is  watching  the  markets  when  he  wishes  to 
spot  the  right  seller  on  a  hurry  call  for  out-of-the-ordi- 
nary  supplies,  and  they  also  keep  him  in  close  touch  with 
his  sources  of  regular  purchase.  Full  and  up-to-date, 
yet  easily  handled  and  thoroughly  indexed — these  are 
the  qualities  needed  in  the  buyer's  information  files. 

Such  a  system  of  records  has  been  successfully  built 
up  by  a  commission  agency  engaged  exclusively  in  buy- 
ing. The  purchases  which  this  firm  makes  for  its  cus- 
tomers covers  a  wide  range  of  goods,  each  including  an 
infinite  variety  of  small  articles  and  a  great  many  prod- 
ucts that  are  continually  fluctuating  in  price.  The  sys- 
tem used  to  supervise  the  buying  details  pf  this  busi- 
ness is  simple  and  one  which  could  easily  be  adopted  by 
any  firm  making  enough  purchases  to  require  a  written 
record  of  quotations. 

Prices  are  secured  from  catalogs  and  quotations. 
For  this  reason  price  records  are  divided  into  these 
two  classes.  The  catalog  lists  standard  prices  which 
rarely  change.  Quotations,  however,  are  a  different  and 
more  difficult  proposition  to  handle.  Records  of  prices 


PILING    DATA  US 


of  special  lines  are  kept  on  cards  and  are  classified  in 
two  distinct  sets.  The  first  is  for  articles  of  special  name, 
of  which  there  is  only  one  in  a  class.  The  second  set 
is  for  articles  in  generical  name,  which  are  only  distin- 
guished by  special  classifications.  In  the  first  set  index- 
ing is  carried  out  in  several  ways.  The  whole  set  is 
first  indexed  by  means  of  a  general  alphabetical  index. 
Then  each  section  is  given  a  special  guide  card  on  which 
is  written  the  class  of  article.  Where  the  variety  of  any 
of  these  classifications  is  extensive,  a  smaller  alphabet- 
ical index  again  separates  them.  Thus,  under  the  letter 
£,  there  is  a  guide  for  extracts,  and  behind  this  again  a 
separate  alphabetical  set  of  guide  cards  dividing  the 
various  extracts  into  alphabetical  sequence. 

The  indexing  of  the  second  set  of  cards,  however,  has 
to  be  carried  out  differently.  The  variety  of  the  lines 
that  come  into  this  set  is  large,  and  if  merely  indexed 
alphabetically  would  surely  take  up  a  great  deal  of 
time  in  searching.  These  cards,  therefore,  are  numbered 
and  indexed  in  numerical  order.  A  separate  alphabetical 
index  is  provided  in  the  form  of  a  loose-leaf  book.  By 
this  means  it  is  possible  to  get  a  great  variety  of  classi- 
fications of  one  line  on  a  single  page.  This  page  form 
also  facilitates  reference,  as  it  is  simpler  to  note  the 
classifications  on  the  page  and  run  the  finger  down  the 
various  lines  than  to  search  through  two  or  three  hun- 
dred cards. 

Each  of  the  cards  contains  a  full  description  of  the 
article,  and  details  of  every  quotation  received.  Many  of 
the  special  lines  are  subject  to  modification  at  times, 
especially  in  their  uses.  This  is  especially  the  case  with 
pharmaceutical  products  in  course  of  development.  In 
such  cases  all  data  affecting  the  product  are  collected 
and  transferred  to  cards  of  a  different  color,  and  these 


114 PURCHASE    SYSTEMS 

are  filed  with  the  price  cards  of  the  product,  so  that  when 
purchases  have  to  be  made  or  shipments  sent  to  a  new 
buyer  not  likely  to  be  familiar  with  recent  developments 
in  the  use  of  the  product,  all  the  necessary  information 
is  at  hand  in  serviceable  form  and  comes  up  automat- 
ically with  the  price  card. 

Standard  prices  listed  in  catalogs  have  also  to  be 
made  accessible  at  short  notice.  To  effect  this  the  cata- 
logs are  divided  into  two  classes,  those  having  but  a 
few  pages  or  which  are  in  the  form  of  flexible  pamphlets, 
and  bulky  bound  books.  The  first  class  is  filed  away  in 
vertical  files.  The  books  are  filed  away  on  library 
shelves  having  dust-proof  fronts.  Each  catalog  is 
numbered  with  a  bold  printed  number  and  indexed  to 
firm  names  and  articles.  This  catalog  number  is  also 
noted  on  the  price  card  so  as  to  save  time  in  referring 
to  the  indexes. 


'T'HE  buyer  is  buying  not  to  please  those  he  deals  with  but 
*  the  millions  of  people  all  over  the  country  and  in  foreign 
countries,  who  will  eventually  judge  us  by  the  personality  of 
the  buyer,  worked  out  into  goods  for  the  home,  the  person, 
the  dairy,  the  farm.  He  does  not  come  in  dirwt  contact 
vrith  these  customers  of  ours — but  we  wish  he  could. 

— A.  Montgomery  Ward 

Founder,  Montgomery  Ward  &  Company 


PART  III-HIRING  AND 
TRAINING  YOUR  WORK- 
ING FORCE 

Team  Spirit 

T^OSTER  a  spirit  of  team  work.  Upon  that 
idea,  Santa  Fe  success  in  handling  its  men  i- 
based.  By  broadminded  treatment  of  the  meu 
on  the  job  and  by  our  reading  rooms,  enter- 
tainments and  pension  system,  we  try  to  make 
our  men  feel  that  they  are  members  of  a  great 
family  united  not  only  in  working  hours,  but 
in  leisure  time. 

Put  confidence  in  your  men.  Aim  to  give 
them  the  highest  ideals  of  private  and  railroad 
life.  By  making  men  better  citizens  you  make 
them  better  workmen. 

Recognize  merit.  Promote  from  the  ranks. 
Help  your  men  keep  out  of  a  rut.  Many  of  our 
executives  have  grown  up  in  our  service. 

At  heart  mo>t  mm  jiiv  fair.  They  quickly 
respond  to  fair  treatment  and  reflect  it  by  their 
pride  in  their  work.  Behind  the  loyalty  of  Santa 
Fe  men  is  team  spirit,  team  pride  and  fair  play. 


E.  P.  RIPLEY 

Prerident,  At  chiton,   Topeka  and  Santa  Fe  Railway 


XIII 

WHERE  TO  FIND  THE 
BEST  WORKMEN 

By  W.  S.  Ball 

HIRING  men  is  the  first  step  in  managing  men. 
Every  large  employer  realizes  this.  He  knows 
from  experience  that  the  superintendent  who  has  the 
least  trouble  in  handling  his  workers  is  the  best  judge 
when  it  comes  to  picking  out  new  "raw  material."  It 
takes  an  ability  which  seems  like  instinct  but  which  is 
more  often  the  result  of  long  training  to  size  up  appli- 
cants successfully  or,  when  applicants  are  lacking,  to 
know  where  to  turn  for  good  workers. 

The  owner-superintendent  of  a  small  machine  shop 
employing  some  fifty  hands  is  famous  among  his  ac- 
quaintances for  the  quality  of  the  workmen  he  secures. 
He  takes  pride  in  the  loyalty  of  his  men,  which  means 
good  products  and  easy  sales. 

"Where  do  I  find  my  men?"  he  said.  "I  don't.  I 
grow  them.  I  let  my  operatives  do  the  actual  bringing 
up.  If  you  go  through  the  plant  today  and  ask  every 
man  how  he  happened  to  come  to  work  for  me  you  will 
find  that  at  least  fifty  per  cent  of  them  are  sons  or 
nephews  or  cousins  of  older  men,  or  of  men  who  formerly 
worked  here. 

"My  rule  is  to  give  the  preference  to  sons  or  near 
relatives  of  the  men  already  here.  I'll  admit  it  is  a  rule 
that  might  not  always  work  out  well,  but  I  know  that  I 


118 EMPLOYMENT    METHODS 

am  more  interested  in  this  business  because  my  father 
founded  it  and  left  it  to  me.  And  I  reason  that  when 
I  have  a  workman  who  wants  his  son  to  follow  in  his 
footsteps  he  has  pride  in  his  work  and  is  likely  to  pass 
the  feeling  on. 

"If  it  isn't  a  son,  it  may  be  a  sister's  or  a  brother's 
son.  Practically  every  new  hand  I  have  taken  on  for 
ten  years  has  been  recommended  to  me  by  one  of  my  own 
operatives.  Sometimes  they  turn  out  badly,  of  course, 
but  even  in  cases  where  the  first  few  weeks  are  encourag- 
ing, I  find  that  by  speaking  to  the  father  or  uncle,  the 
beginner  is  toned  up  to  our  standard  if  he  has  any  good 
in  him  at  all. 

SYSTEM  in  the  hiring  of  men  is  sure  to  bring  you  a 
better  grade  of  employees — some  of  the  sources  draum 
on  by  successful  employers  for  their  workmen, 

"My  plant  is  small  enough  so  that  I  know  all  the  men 
personally.  If  one  of  them  has  a  relative,  or  even  the 
son  of  a  friend,  whom  he  wants  to  place  with  me,  I  en- 
courage him  to  see  that  the  boy  gets  as  much  technical 
training  in  the  schools  as  possible.  Once  I  refused  to 
take  a  boy  until  he  had  had  another  year  in  a  technical 
high  school.  Inside  of  four  years  that  boy  became  head 
of  a  department.  There  are  objections,  of  course,  to 
having  too  many  family  ties  in  a  big  plant.  Ill  feeling, 
based  on  the  belief  that  there  was  favoritism,  couldn't 
be  avoided  unless  there  was  good  team  work.  But  in  my 
own  business  I  have  found  that  it  pays  to  pick  out  young 
men  who  have  an  interest  in  the  plant  already  through 
fathers  or  other  relatives." 

This  is  an  unusual  case,  not  applicable  to  most  large 
factories,  although  the  superintendent  of  a  large  print 
works  admits  that  when  he  has  a  special  position  to  fill 


LABOR    SOURCES 119 

he  invariably  asks  his  own  employees  if  they  have  any  one 
in  mind  who  is  adapted  to  it  In  general,  it  is  safe  to 
say,  the  employer  has  no  definite  system  of  securing  new 
workers.  When  times  are  dull  he  takes  his  pick  of 
those  who  .apply.  When  work  is  plentiful  he  gets  along 
as  best  he  can  through  advertisements  or  various  em- 
ployment agencies. 

And  yet  those  who  prove  most  successful  in  finding 
desirable  men  usually  have  some  sort  of  system  in  their 
search,  even  though  they  themselves  may  not  recognize 
it  as  such.  Where  skilled  labor  is  required,  this  very 
largely  resolves  itself  nowadays  into  a  close  watch  of 
the  many  technical  schools.  The  employing  superinten- 
dent of  a  New  England  shop  where  highly  specialized 
machinery  is  made,  and  where  scientific  management  has 
been  installed  with  marked  success,  says  that  most  of 
his  men,  above  the  grade  of  bench  workmen,  are  sought 
from  the  schools. 

"Every  year,"  he  said,  "we  have  brought  to  our  at- 
tention graduates  of  the  technical  schools,  from  whom 
we  have  plenty  of  choice.  And  we  find  that  it  pays  to 
select  them,  because  their  own  interest  in  the  work  is 
reinforced  by  loyalty  to  the  school  and  the  desire  to 
make  good  for  its  sake.  This  applies  as  well  to  the  boys 
who  come  from  the  public  schools  as  to  those  with  longer 
preparation.  We  employ  the  promotion  system  as  far 
as  possible,  and  many  of  our  new  employees  are  taken 
young,  fresh  from  grammar  or  high  school.  If  we  get 
a  boy  from  the  technical  high  school  one  of  his  instruc- 
tors is  pretty  apt  to  drop  around  and  talk  with  him  two 
or  three  times  a  year  to  see  how  he  is  getting  on.  And 
this  helps  more  than  you  would  realize. 

"When  it  comes  to  still  younger  boys,  office  and  er- 
rand boys,  for  instance,  who  are  expected  to  develop 


120 EMPLOYMENT    METHODS 

ambition  to  get  into  one  of  the  high-paid  departments, 
we  pick  the  boy  who  goes  to  night  school  every  time.  If 
a  boy  has  ambition  and  energy  enough  to  work  in  the 
shop  all  day  and  go  to  school  at  night,  he's  got  the  stuff 
in  him  that  we  want  in  our  business.  Very  rarely  have 
I  seen  it  fail  that  he  is  the  boy  who  makes  good." 

Sometimes  the  superintendent's  system  is  the  result 
of  chance.  A  New  England  jewelry  manufacturer,  at  a 
period  when  help  was  none  too  easy  to  get,  dropped  into 
the  public  library  of  his  city  in  search  of  a  technical 
volume.  The  library  maintained  a  large  industrial  de- 
partment and  encouraged  workmen  to  use  it  as  much 
as  possible.  While  talking  with  the  librarian  he  hap- 
pened to  mention  his  need  of  a  man  for  a  certain  line 
of  work  which  involved  a  knowledge  of  designing. 

"There's  a  young  man  who  comes  in  here  who  ought 
to  suit  you,"  said  the  librarian.  "He's  one  of  the  most 
regular  readers  that  we  have.  I  don't  know  where  he 
has  worked,  but  he  must  be  out  of  a  job  just  now,  for 
he  frequently  comes  in  during  working  hours,  where  be- 
fore she  came  only  in  the  evening.  And  I  've  noticed 
that  he  is  studying  harder  now  than  ever  before,  so  I 
fancy  he  is  putting  his  spare  time  to  good  advantage." 

The  manufacturer  promptly  asked  the  librarian  to  find 
out  if  the  man  was  available  and  to  send  him  to  the 
factory  for  an  interview.  It  was  a  delicate  task  making 
the  preliminary  inquiries,  but  the  librarian  had  come  to 
be  on  good  terms  with  the  young  student  and  learned 
that  he  was  discouraged  from  frequent  rejections  at  the 
shops  where  he  had  applied.  She  extended  the  manu- 
facturer's invitation  to  see  him,  with  the  result  that  one 
jewelry  shop's  most  promising  workman  was  landed  in 
the  particular  job  that  fitted  him. 

"Since  then,"  adds  the  manufacturer  in  telling  the 


LABOR    SOURCES HI 

story,  "I  have  left  standing  orders  with  the  librarian 
that  whenever  she  finds  a  case  like  that,  where  a  man 
keeps  right  on  studying  all  the  harder  when  he's  out  of 
a  job,  to  send  him  to  me.  If  I  haven't  a  place  for  him, 
I'll  make  one.  There  are  always  men  enough  in  the 
shop  who  haven't  that  kind  of  enthusiasm.  Once  since 
then  she  has  sent  me  a  man,  and  while  the  results  weren't 
as  good  as  in  the  first  case,  he  is  one  of  my  best  workers. 
And  I  am  hoping  for  more  all  the  time." 

In  an  almost  equally  accidental  way  this  same  manu- 
facturer stumbled  on  a  source  of  supply  on  which  he  has 
relied  successfully  many  a  time.  In  a  community  where 
jewelry  making  is  one  of  the  chief  industries  it  is  nat- 
ural that  the  fraternal  bodies  should  include  a  large 
number  of  jewelers.  A  few  years  ago,  when  work  was 
more  plentiful  than  workers,  he  was  in  need  of  a  man 
for  a  particular  position.  While  discussing  the  difficulty 
of  finding  good  men  with  one  of  his  foremen  the  latter 
suggested  that  he  knew  a  man  in  his  lodge  who  had  re- 
cently left  a  similar  position,  but  was  not  the  kind  of 
man  likely  to  go  from  shop  to  shop  seeking  work. 

LODGE  MATES   of  your   present   workmen,  green 
hands  from  the  country,  employment  agency  appli- 
cant*— these  are  dependable  tources  of  man  tupply. 

A  few  questions  decided  the  manufacturer  to  try  him, 
and  the  result  was  a  vacancy  filled  by  a  man  who,  though 
he  never  developed  any  great  amount  of  initiative,  is 
still  holding  the  place  satisfactorily.  This  experience 
opened  the  eyes  of  the  manufacturer  to  the  possibilities 
of  the  fraternal  orders  as  recruiting  stations  for  th<>  in- 
dustrial field,  and  many  of  hia  employees  since  then 
have  been  secured  through  recommendation  by  work- 
men who  are  lodge  members.  This  has  become  so  well 


122 EMPLOYMENT    METHODS 

established,  his  shop  happening  to  be  one  where  condi- 
tions for  the  operatives  are  more  satisfactory  than  in 
some,  that  he  is  rarely  short  of  workers,  no  matter  how 
busy  the  season.  Fraternal  men  in  his  employ,  seeing 
a  vacancy,  are  quick  to  suggest  a  lodge  mate  employed  in 
some  other  shop  who  would  be  glad  to  change  positions. 

A  western  manufacturer  who  likes  to  "catch  them 
young"  and  bring  them  up  in  the  business  has  estab- 
lished a  regular  system  which  nets  him  two  or  three 
promising  recruits  every  year.  He  comes  from  a  country 
town  where  there  are  one  or  two  small  industries,  but 
not  very  much  incentive  to  an  ambitious  young  man,  and 
every  summer  he  spends  his  vacation  there.  On  each 
visit  he  makes  it  a  point  to  look  over  the  field  to  see  what 
"likely"  young  men  are  looking  for  opportunities  in  a 
larger  place,  or  have  shown  qualities  that  make  it  worth 
while  to  enlist  their  interest.  It  is  easy  in  a  small  place 
to  keep  in  touch  with  everybody  worth  while  and  to  size 
up  their  possibilities.  And  it  is  a  rare  summer  when 
he  does  not  find  one  or  two,  sometimes  more,  who  are 
worth  securing  for  his  plant. 

He  takes  them  back  with  him  in  the  fall,  starts  them 
at  the  beginning,  and  if  they  prove  capable,  sees  that 
they  get  a  chance  to  work  through  the  different  depart- 
ments, learning  every  angle  of  the  business.  These  men 
prove  among  the  best  of  his  employees.  He  can  rely  on 
them  personally  and  is  sure  that  they  have  more  than 
a  paying  interest  in  the  enterprise. 

A  well  known  New  Yorker,  the  head  of  a  large  publish- 
ing plant,  although  he  has  no  such  system  of  gathering 
recruits,  prefers  men  from  the  country,  the  "corn  fed" 
variety,  as  he  calls  them.  He  himself  is  a  native  of  one 
of  the  New  England  states,  and  likes  to  find  youngsters 
from  the  same  commonwealth,  although  country  blood 


LABOR    SOURCES 123 

from  anywhere  is  almost  sure  to  appeal  to  him. 

A  textile  manufacturer  in  New  England  combines  this 
preference  for  country  bred  youths  with  a  definite  sys- 
tem for  getting  experienced  men.  Through  various 
friends  in  several  small  textile  plants  scattered  through 
the  villages  and  towns  he  keeps  in  touch  with  promising 
subjects,  and  when  he  needs  more  help  makes  his  first 
overtures  to  them.  Often  they  are  surprised  that  he 
should  have  heard  of  them,  and  this  flattery  puts  them 
on  their  mettle  to  do  their  best  for  him. 

In  securing  unskilled  labor  for  simple  and  quickly 
learned  processes  less  pains  have  to  be  taken,  but  the 
employers  who  take  the  most  care  in  picking  their  men 
almost  invariably  get  the  best  results.  And  more  than 
one  superintendent  holds  his  job  by  virtue  of  being  a 
good  "sizer-up"  and  knowing  where  to  turn  for  extra 
workmen  in  an  emergency. 

Some  employers  do  not  like  to  resort  to  the  "help 
wanted"  columns  of  the  newspapers  because  the  flood 
of  applicants  that  results  is  a  nuisance  and  there  is  al- 
ways considerable  difficulty  in  selecting  the  right  men 
from  a  long  line  of  prospects.  One  Chicago  factory 
superintendent,  however,  makes  use  of  the  advertise- 
ments of  other  employers. 

He  is  a  quick  judge  of  men  and  when  he  is  in  search 
of  one  he  strolls  down  Fifth  Avenue,  where  the  after- 
noon papers  come  from  the  presses  and  a  crowd  of  men 
are  always  eagerly  scanning  the  want-ad  sections. 

Among  these  he  looks  for  promising  individuals.  Their 
general  appearance,  their  clothing,  their  manner  of  go- 
ing at  the  task  in  hand,  all  contribute  to  his  impression. 
Almost  intuitively  he  selects  those  whom  he  thinks  he 
could  use.  When  he  finds  one  he  calls  him  aside  and 
asks  if  he  wants  the  job.  Sometimes  on  talking  with  a 


124 EMPLOYMENT    METHODS 

man,  this  employer  finds  that  his  first  impression  was 
entirely  wrong,  but  quite  as  often  it  is  confirmed,  and 
this  street  corner  conference  determines  him  to  give  the 
man  a  trial. 

No  method  is  likely  to  prove  successful  in  the  long 
run  unless  the  employer  using  it  has  the  important  fac- 
ulty of  sizing  up  other  men  correctly. 

A  contractor  found  one  of  his  best  workmen  by  glanc- 
ing at  the  crowd  of  idlers  gathered  where  an  excavation 
was  in  process.  The  attitude  and  look  on  the  face  of  one 
man  appealed  to  him,  and  without  further  introduction 
he  approached  this  man  and  offered  work.  The  chance 
was  eagerly  taken  and  the  man  proved  to  be  both  efficient 
and  ambitious.  He  was  in  every  way  satisfactory. 

''Since  then,"  says  the  contractor,  "like  the  man  who 
has  once  found  a  purse  in  the  street  and  forever  after 
studies  the  gutters,  I  never  pass  a  group  watching  build- . 
ing  operations  in  progress  without  looking  to  see  if  I  caa 
find  another  man  who  looks  good  to  me." 


RESPONSIBILITY  is  what  develops  men  and  makes  them 
broad  and  strong.  It  is  a  great  creator  of  executive 
ability.  When  entrusted  vrith  it,  candidates  for  promotion 
will  show  what  is  in  them.  Throw  men  on  their  own  resources 
and  see  what  they  do.  It  is  the  petty  cramping  of  the  man 
that  keeps  down  his  abilities.  Therefore,  when  you  have 
faith  that  a  man  has  sufficient  knowledge  of  his  business, 
begin  by  slipping  out  from  under  this  or  that  responsibility 
and  let  it  fall  on  the  pupil. 

— Clarence  M.  Woolley 

President,  American  Radiator  Company 


XIV 
HIRING  FACTORY  HELP 

By  Sutnncr  B.  Roger* 
Production  Manager.  Sangamo  Electric  Company 

JOB  seekers,  not  more  than  fifteen  years  ago,  made 
their  headquarters  on  the  street  corners  near  the 
factory.  There  they  waited  for  the  morning  whistle  to 
blow,  with  the  idea  that  it  meant  a  job  for  those  lucky 
enough  to  be  selected. 

The  man  who  hired  the  help  would  come  out  of  the 
factory  gate  and,  standing  upon  a  convenient  curb,  box 
or  barrel,  would  beckon  first  to  one  man  and  then  to 
another  and  pass  them  in  at  the  gate.  Perhaps  none  of 
the  men  in  the  shoving  group  had  ever  worked  for  this 
concern  before;  perhaps  they  all  had.  It  is  safe  to  say 
that  the  man  selecting  help  in  this  manner  neither  knew 
nor  cared  whether  they  had  ever  worked  in  that  factory 
before.  When  he  had  picked  out  those  whom  he  thought 
looked  best,  he  went  back  to  his  duties  and  the  crowd 
that  was  left  ambled  back  to  its  resting  place,  the  street 
corner  or  the  nearby  saloon. 

This  was  the  general  practice  followed  for  employing 
men  for  the  factory.  By  this  crude  method,  it  made  no 
difference  whether  a  man  had  any  ability  or  integrity 
or  whether  he  was  stable  enough  to  hold  the  job  for 
which  he  was  selected.  If  he  was  lucky  enough  to  be 
picked  out  from  the  crowd,  he  was  hired. 

Since  that  time,  however,  every  employer  of  labor  has 


126 EMPLOYMENT    METHODS 

come  to  realize  that  this  is  not  the  efficient  way  to  pick 
workers.  Yet  to  get  the  most  efficient  man  for  any  class 
of  work  is  of  vital  importance  to  the  economical  and  effi- 
cient operation  of  a  factory. 

The  old-time  methods  seem  more  crude  by  contrast 
with  modern  employment  offices.  Particularly  interest- 
ing is  the  department  which  the  Western  Electric  Com- 
pany, through  long  experience,  has  gradually  developed 
to  meet  the  difficulties  of  obtaining  the  best  men  for  the 
work.  Its  methods  are  distinctive  in  two  ways : 

First,  in  the  physical  method  of  handling  the  appli- 
cant. 

Second,  in  the  clerical  method  of  hiring  and  the  care- 
ful consideration  of  the  prospective  employee's  previous 
history. 

METHODS  used  by  a  big  manufacturing  concern  to 
interview  quickly  and  effectively  a  large  number  of 
applicants  and  secure  the  right  employees. 

The  employment  department  is  divided  into  three 
main  sections,  one  for  the  handling  of  shop  men  exclu- 
sively, one  subdivided  between  hourly-rated  women  em- 
ployees, office  women  and  salaried  men,  and  one  in  which 
all  records  are  kept. 

It  has  been  realized  that  the  attitude  of  an  applicant 
toward  the  company  and  toward  the  job  for  which  he 
applies  is  of  the  most  vital  importance,  and,  therefore, 
every  means  has  been  devised  for  the  convenience  of  the 
applicant.  Well-ventilated  and  well-lighted  quarters 
have  been  provided  for  each  class  of  labor.  Here  they 
may  rest  comfortably  until  they  have  been  interviewed. 

In  many  cases  the  applicant  has  never  been  inside  the 
works  and  the  first  impression  he  receives  of  the  methods 
that  prevail  throughout  the  plant  are  formed  by  the 


HIRING    FACTORY    HELP 127 

treatment  he  gets  when  applying  for  employment.  He 
may  figure  that  if  lax  and  discriminating  methods  are 
permitted  in  the  employment  department,  they  will  UB- 
doubtedly  prevail  in  all  other  departments,  and  surely 
in  the  one  in  which  he  will  work.  If  he  receives  a  nega- 
tive impression  and  yet  accepts  a  position  due  to  neces- 
sity, his  tendency  will  be  to  use  it  as  a  temporary  means 
of  support  until  he  can  obtain  a  position  elsewhere. 

The  first  physical  means  of  separating  the  classes  of 
labor  seeking  employment  is  made  at  the  entrance.  When 
an  applicant  enters  the  works,  he  is  directed  to  the  doors, 
which  are  located  just  inside  the  main  gate.  Entering 
the  proper  door,  he  finds  himself  in  one  of  the  receiving 
rooms,  which  are  equipped  with  ample  accommodations 
for  filling  in  the  necessary  application  forms. 

To  prevent  holding  a  large  number  of  men  or  women 
for  an  unlimited  period  of  the  day,  thus  preventing  them 
from  seeking  employment  elsewhere  if  they  cannot  be 
employed  by  the  Western  Electric  Company,  a  competent 
interviewer  goes  into  each  of  the  various  rooms  as  soon  as 
the  office  is  open  and,  upon  learning  from  each  applicant 
the  kind  of  work  he  is  seeking,  disposes  of  those  apply- 
ing whom  he  cannot  use  by  telling  them  at  once  that 
there  is  no  work  for  them.  To  those  he  can  use  or  may 
be  able  to  use  later  he  gives  application  blanks,  request- 
ing them  to  fill  out  and  hand  them  in  as  quickly  as  pos- 
sible. As  soon  as  the  application  blank  is  filled  in  the 
applicant  takes  a  seat  at  the  side  of  the  room  until  his 
turn  comes  for  an  interview. 

Should  an  applicant  have  difficulty  in  making  out  his 
application,  he  is  given  all  the  assistance  he  requires. 
The  principal  aim  is  to  make  the  applicant  feel  that  he 
has  been  fairly  and  well  treated,  that  he  has  received 
the  proper  kind  of  attention  and  that  he  is  perfectly 


128 EMPLOYMENT    METHODS 

free  to  call  again  and  just  as  often  as  he  may  wish. 

Just  outside  of  the  shopmen's  room  and  just  inside  of 
the  general  office  are  the  interviewing  desks.  As  each 
man 's  turn  comes,  he  steps  through  the  doorway  directly 
in  front  of  the  interviewer,  who  is  a  specialist  in  this 
line  of  work.  His  application  is  analyzed  and  he  is  es- 
pecially interviewed  as  to  his  past  business  experience 
and  then  told  the  nature  of  the  job  that  is  open  and 
what  it  will  pay.  If  he  accepts,  he  is  given  a  pass  that 
will  admit  him  the  next  morning  to  the  department  for 
which  he  has  been  employed.  If  he  declines  the  posi- 
tion, or  if  he  is  rejected,  he  passes  out  at  once  to  make 
room  for  the  next  man. 

At  this  particular  step  a  great  deal  depends  upon  the 
interviewer;  he  must  know  men  and  he  must  be  thor- 
oughly familiar  with  manufacturing  processes,  as  well 
as  able  to  make  fine  distinctions  in  trades.  This  inter- 
view must  of  necessity  be  short,  but  the  one  cardinal 
principle  of  it  all  is  civility.  If  the  applicant  is  not 
hired,  but  is  a  desirable  employee  to  keep  in  touch  with, 
his  application  is  taken  and  it  is  explained  to  him  that 
as  sopn  as  an  opening  occurs  he  will  be  communicated 
with,  and,  therefore,  it  would  be  well  for  him  to  keep  the 
company  notified  of  all  changes  of  address. 

This  application  is  carefully  filed  in  a  cabinet  under 
classified  trade  or  work  headings,  such,  for  instance,  as 
clerks,  bookkeepers,  accountants,  mill-wrights,  machin- 
ists, tool-makers,  and  so  on.  As  soon  as  a  man  is  needed 
in  anyt  of  these  branches  of  work,  these  applications  are 
very  carefully  gone  through  and  the  most  desirable  appli- 
cants selected  from  them  and  sent  for. 

If  he  is  hired,  his  application  goes  through  the  regu- 
lar routine  and  is  finally  placed  in  what  is  known  as  the 
"live  files."  The  applications  of  employees  who  have 


HIRING    FACTORY    HELP 129 

left  the  company  are  placed  in  the  "dead  files"  for  po»- 
aible  reference  later. 

Men  seeking  salaried  or  office  positions  enter  the  em- 
ployment department  through  the  "Office  Entrance," 
and  pass  down  the  corridor  to  the  room  designated  "Sal- 
aried Men."  Here  the  same  general  routine  is  followed 
as  carried  out  with  the  shop  men,  except  that  the  appli- 
cant receives  a  personal  interview  from  the  managing 
head  of  the  employment  work. 

Should  the  applicant  be  a  woman  seeking  a  salaried 
position,  she  enter;  the  door  marked  "Office  Entrance," 
and  passes  down  the  corridor  to  the  room  designated 
"Salaried  Women."  She  is  interviewed  in  an  adjoining 
room,  and  the  same  routine  is  followed  as  with  the  sal- 
aried men. 

Women  for  factory  work  pass  through  the  entrance 
marked  "Entrance  for  Shop  Women,"  to  the  room  as- 
signed for  this  class  of  Lelp,  where  the  same  methods 
are  employed  as  in  the  other  departments. 

A  man  looking  for  a  special  interview  for  a  position 
such  as  production  engineer,  assistant  superintendent  or 
master  mechanic  is  conducted  by  the  watchman  in  the 
vestibule  of  the  employment  department  directly  to  the 
office  of  the  managing  head  of  the  employment  depart- 
ment Although  this  special  interview  is  given,  if  he 
wishes  to  be  considered  as  an  applicant  for  a  position, 
he  must  file  an  application,  giving  a  record  of  his  past 
experience,  the  same  as  all  other  applicants. 

The  works'  legal  department,  occupying  desks  in  the 
office  of  the  employment  department,  handles  the  legal 
phases  of  the  employment  work,  such  as  garnishments, 
salary  loans,  apprentice  contracts,  and  so  on. 

Employees  from  other  departments  requiring  infor- 
mation or  data  from  the  files  pass  through  the  "Office 


130 EMPLOYMENT    METHODS 

Entrance,"  down  the  corridor  and  into  the  general 
office  of  the  employment  department,  without  passing 
through  any  of  the  rooms  in  which  the  applicants  are 
located  or  coming  in  contact  with  them  in  any  way. 

The  department  is  supplied  with  daylight  from  two 
large  skylights,  as  well  as  side  lights  from  two  sides  of 
the  building ;  in  addition  to  this,  an  almost  perfect  sys- 
tem of  artificial  lighting  has  been  provided  in  the  event 
of  any  necessity. 

Drinking  fountains  and  lavatories  are  installed  at  con- 
venient points.  The  windows  of  the  employment  depart- 
ment are  all  of  such  a  height  that  it  is  impossible  for 
any  one  to  see  in  from  the  outside,  thus  insuring  the 
degree  of  privacy  that  is  required. 

The  entir2  -equipment  has  been  installed  for  the  pur- 
pose of  attracting  desirable  people,  making  them  com- 
fortable while  it  may  be  necessary  for  them  to  wait  for 
an  interview,  treating  them  civilly  when  being  inter- 
viewed, providing  for  the  health  and  comfort  not  only  of 
the  high-grade  engineer  or  office  man,  but  of  the  office 
boy,  shop  man  and  shop  woman  alike,  making  no  dis- 
tinction between  them  except  that  distinction  that  makes 
them  happier  and  better  pleased. 

On  an  average,  twelve  thousand  people  per  month,  or 
about  four  hundred  and  fifty  applicants  a  day,  are  in- 
terviewed quickly,  efficiently  and  satisfactorily,  and  the 
advantages  gained  by  the  arrangement  have  more  than 
justified  the  expense  and  outlay  required  to  establish 
this  department  of  the  work. 


"CTFICIENT  and  high  priced  labor  only  results  when  the 
•^  latent  natural  ability  in  men  is  developed  and  utilized 
by  careful  selection  and  training. 

— W.  L.  Saunders 


XV 

HOW  WORKMEN  ARE 
FITTED  TO  THE  JOB 

By  Henry  Beach  Needbam 

TRAINING  men  for  business  is  a  time-worn  specialty. 
But  in  all  of  this  "educating"  there  is  a  varying 
degree  of  altruism — and  little  real  business.  There  is 
practical  business  and  a  surprising  amount  of  altruism  in 
the  twentieth  century  training  in  business.  The  reason  is 
that  it  pays.  When  a  corporation  that  sells  sixty-five 
million  dollars  of  its  product  annually,  provides  a  year's 
training  within  its  organization  to  a  large  group  of 
young  men,  receives  practically  no  labor  return  during 
the  period,  and  yet  pays  them  a  living  wage  while  they 
are  learning  the  business,  that  corporation  must  place 
great  value  on  training  men  in  business. 

In  the  Western  Electric  Company,  for  instance,  col- 
lege men  receive  what  amounts  to  a  credit  for  their 
academic  work.  That  is  to  say,  the  college  trained  man 
is  taken  into  the  student  course,  which  occupies  the  first 
year  of  his  service  with  the  company,  and  during  that 
time  he  is  paid  an  average  of  twelve  and  a  half  dollar? 
a  week.  The  non-college  man  is  not  admitted  to  this 
course.  He  must  get  his  training  as  best  he  can,  taking 
his  chances  with  the  men  who  are  similarly  unqualified 
— and,  in  the  last  analysis,  with  the  collegian. 

The  collegian  engaged  by  the  Western  Electric  Com' 
pany  is  carefully  selected  from  a  large  list  of  candidates. 


132 EMPLOYMENT    METHODS 

During  his  training  in  the  organization  the  student  re- 
ceives ten  dollars  a  week. 

The  student  course  has  been  worked  out  with  much 
detail,  even  down  to  days  and  half-days.  A  large  part 
of  the  business  of  the  company  is  the  manufacture  of 
telephones  and  telephone  supplies.  Therefore  the  student 
is  first  instructed  concerning  the  telephone  industry — its 
beginning  and  development. 

ACTUAL  shop  practice  is  supplemented  by  lectures 
and  class-room  work  in  one  large  concern  which 
employs  a  number  of  untrained  college  men  each  year. 

Then  follows  a  day's  inspection  of  the  plant  at  Haw- 
thorne. Next,  there  is  a  half -day's  lecture  on  the  work 
of  the  general/  manufacturing  department  and  its  rela- 
tions to  other  general  departments,  its  organization  and 
its  integral  divisions.  This  information  is  conveyed  spe- 
cifically by  taking  a  piece  of  apparatus  which  is  to  be 
manufactured  and  explaining  how  it  passes  from  one 
department  to  another. 

Next  comes  the  question  of  the  raw  material — the 
value,  the  purchase  and  the  inspection  of  the  basic 
product.  The  half-day's  lecture  covers  not  only  this, 
but  the  work  of  the  assembly  department,  final  adjust- 
ing and  inspection,  shipping  and,  at  last,  the  installing. 
This  is  followed  by  a  visit  to  the  company's  telephone 
exchange,  with  general  instruction  on  the  functions  of  a 
telephone  exchange. 

At  this  point  the  students  divide — one  set  receiving 
training  for  the  manufacturing  production,  inspection 
and  installation  departments  of  the  business;  the  other 
group  receives  training  designed  to  fit  the  men  for  com- 
mercial work. 

When  all  of  the  students  have  completed  both  courses 


TRAINING    WORKMEN 183 

they  are  assembled  for  a  general  discussion  of  the  works. 
Following  this,  they  spend  two  weeks  in  the  inspection 
department  office.  Next  they  are  engaged  for  twelve 
weeks  in  general  installing  work.  The  students  are  di- 
vided into  "gangs"  and  are  sent  out  with  the  regular 
workmen  whose  business  it  is  to  install  the  equipment 
of  telephone  exchanges,  or  to  put  in  place  and  make 
ready  for  operation  the  switchboards  in  offices,  hotels, 
clubs,  and  so  on. 

The  student  now  has  in  examinations  a  forceful  and 
probably  an  unpleasant  reminder  of  his  college  days. 
But  it  is  only  a  one-day  test.  He  must  prepare  a  paper 
reviewing  the  work  of  about  six  months.  This  is  not 
merely  a  recital  of  what  he  has  seen  and  learned.  He 
must  record  his  impressions. 

The  examination  paper  is  a  factor  in  determining  sev- 
eral things.  To  the  student  the  most  important  of  these 
is  his  tenure  of  service  with  the  company.  For  his 
" period  of  probation"  is  over.  Does  the  company  want 
him  permanently  in  its  organization?  Does  he  like  the 
work  and  does  he  want  to  stayt  These  questions  are 
answered  at  this  time.  Either  the  student  leaves  to  seek 
employment  with  some  other  company,  perhaps  in  a  less 
technical  industry,  or  he  casts  his  fortunes  with  the 
Western  Electric.  Incidentally,  his  weekly  honorarium 
of  ten  dollars  is  increased  to  fifteen  dollars. 

Now,  follow  the  college  man  who  is  to  make  his  voca- 
tion "selling  goods." 

The  "students'  six-month  commercial  course  for  col- 
lege graduates"  is  planned  for  the  "purpose  of  training 
men  for  the  sales  department,  instructing  them  in  the 
manufacture,  the  stock  material  and  the  distribution  of 
telephone  supplies."  The  first  eight  or  ten  weeks  are 
devoted  to  following  up  customers  and  stock  orders, 


134 EMPLOYMENT    METHODS 

from,  the  time  they  are  filed  until  shipment  is  made  or 
the  goods  are  sent  to  stock.  This  is  called  "chasing," 
work  which  familiarizes  the  student  with  the  routine  of 
an  order  and  with  the  importance  of  exactness.  He  ob- 
tains a  clear  idea  of  the  apparatus  in  process  of  manu- 
facture. This  experience  is  not  without  its  peculiar 
value.  Foremen  with  whom  the  college  men  deal  in 
this  kind  of  work  are  busy  men  and,  as  a  rule,  do  not 
have  the  patience  to  answer  the  many  questions  of  the 
novice.  They  are  normally  of  the  opinion  that  the  work 
under  them  is  going  forward  with  all  possible  speed,  and 
to  be  asked  by  a  "college  student"  to  hurry  up  a  job 
does  not  meet  with  an  enthusiastic  response  on  the  fore- 
man 's  part.  Therefore,  in  this  business  of  ' '  follow-up, ' ' 
the  student  must  exercise  tact,  sometimes  diplomacy. 
If  he  is  successful,  he  has  made  a  good  beginning  in  the 
difficult  task  of  handling  men. 

When  the  student  has  become  an  expert  chaser  he  puts 
in  four  weeks  in  the  apparatus  store  room,  from  which 
parts  are  drawn  for  assembling  in  the  switchboard  de- 
partment or  for  shipment  on  ' '  customer  orders ' '  to  tele- 
phone exchanges  throughout  the  world.  In  the  filling 
and  checking  up  of  these  orders,  the  student  handles  ap- 
paratus of  almost  every  description.  Thus  he  becomes 
familiar  with  the  finished  product  of  the  shops.  The 
arrangement  of  the  stock  is  an  important  factor  of  the 
business  to  master.  This  applies  not  only  to  the  smaller 
apparatus  in  the  racks  and  bins,  but  to  "packed  stock." 
Material  which  will  be  least  called  for  must  be  so  dis- 
tributed that  it  need  not  be  continually  overhauled  when 
apparatus  for  which  there  is  a  constant  demand  is  drawn, 
and  if  the  student  gets  this  into  his  head,  he  will  have 
obtained  a  knowledge  necessary  to  be  a  warehouse  in- 
spector. 


TRAINING    WORKMEN 135 

The  service  department  is  thv,  next  "laboratory." 
Each  branch  house  has  in  this  department  its  own  repre- 
sentative, who  keeps  a  record  of  the  orders  from  his 
respective  branch.  He  files  the  "promises  of  delivery" 
received  from  the  output  department  and  notes  all  short- 
ages. All  correspondence,  either  from  the  customer  or 
from  the  branch  house  is  handled  by  the  service  depart- 
ment. By  this  method  the  exact  condition  of  an  order 
is  known  by  the  seller  and  the  buyer. 

The  law  of  supply  and  demand  is  shown  in  its  prac- 
tical workings  in  the  stock  maintenance  department. 
Studying  the  stock  records,  not  only  of  the  previous 
months,  but  of  the  preceding  years,  the  student  learns 
that  during  established  periods  there  is  an  increased  de- 
mand for  certain  kinds  of  apparatus;  for  example,  dur- 
ing July  and  August  the  orders  for  heat  coils,  protectors 
and  fuses  are  ten  times  greater  than  in  the  winter 
months.  By  learning  how  to  schedule  stock  orders  on 
the  shop  so  as  to  keep  the  supply  on  a  par  with  the 
demand,  and  to  avoid  "over  filling"  or  running  short 
on  the  stock,  the  student  is  in  a  position  to  "keep  the 
stock"  of  a  branch  warehouse,  or,  for  that  matter,  the 
regular  stock  supply  of  the  Hawthorne  works. 

HPRAINING  in  ihop  work  it  etttntialfor  the  man  who 
M.    it  to  tell  good*  at  well  at  for  the  man  who  intend* 
to  devote  himtelf  tolely  to  manufacturing. 

Mistakes  are  unavoidable  in  the  best  regulated  busi- 
nesses, and  for  their  adjustment  there  is  the  claims  de- 
partment. In  his  work  in  this  "laboratory"  the  student 
handles  all  complaints  from  customers.  When  parts  have 
been  overlooked,  although  the  orders  have  been  shipped 
as  complete,  the  matter  must  be  investigated,  the  over- 
sight charged  to  the  proper  department,  settlement  made 


136 EMPLOYMENT    METHODS 

with  the  customer,  or,  where  the  customer  has  no  fair 
basis  for  complaint,  the  claim  dismissed.  The  policy 
of  the  company  is  "a  satisfied  customer,"  and  the  stu- 
dent learns  to  get  at  the  customer's  viewpoint. 

The  billing  section  next  occupies  the  student's  atten- 
tion. Here  he  examines  the  method  of  shipment  from  the 
shops  to  the  customer,  or  to  the  branch  warehouse,  to- 
gether with  the  routing  of  carload  lots  and  single  orders. 
A  short  period  of  time  is  also  allotted  to  the  cable,  in- 
sulating and  rubber  plant.  The  student  sees  the  pure 
rubber  washed,  mixed  and  rolled,  preparatory  to  the 
making  of  receivers  and  mouthpieces  for  telephones. 
"Wires  of  different  kinds  are  insulated,  covered  and  at- 
tached to  plugs  for  switchboard  cords,  or  they  are  woven 
and  baked  and  then  drawn  for  underground  or  sub- 
marine cables.  Distributing  rings  and  various  other 
switchboard  supplies  are  insulated  in  the  cable  depart- 
ment. 

Through  the  commercial  course  the  company's  idea  is 
to  afford  the  student  every  possible  opportunity  to  in- 
vestigate "manufacture"  and  "method."  With  the 
knowledge  thus  gained,  with  the  training  thus  afforded 
him,  the  student  is  presumed  to  have  the  proper  founda- 
tion to  make  himself  a  valuable  employee  in  the  branch 
house  service — the  selling  end  of  the  business.  Then  he 
learns  how  to  sell  goods. 

Before  the  director  of  the  educational  department 
makes  his  annual  tour  among  some  forty  or  fifty  col- 
leges and  universities  the  managers  of  the  branch  houses 
send  in  their  requisitions  for  men.  For  example,  the 
manager  of  the  Seattle  branch  writes  the  director  that 
he  will  need  two  additional  men  on  his  staff  a  year 
hence.  It  is  the  business  of  the  director  to  fill  these 
requisitions.  He  carefully  selects  his  "raw  material" 


TRAINING     WORKMEN 137 

from  the  available  supply  of  college  men.  He  supervises 
their  basic  training  in  the  business.  Then  he  sends  them 
out  to  the  branch  houses  and  the  local  managers  put  the 
finishing  touches  on  their  commercial  education  and  fit 
them  into  subsidiary  organizations.  This  training  applies 
to  college  men  only. 

¥  I OW  a  manufacturing  concern  ettablithed  an  evening 
11  training  school  which  vxu  vxll  attended  by  employee* 
and  brought  excellent  result*  in  efficiency. 

In  another  concern,  a  large  hardware  house,  the  secre- 
tary was  desirous  of  helping  young  men  to  help  them- 
selves, and  he  believed  in  personal  contact.  He  began 
by  inviting  a  few  of  the  promising  young  men  of  the 
organization  to  his  home  evenings.  Non-college  men  were 
included  in  the  invitation.  On  these  occasions  he  dis- 
cussed with  them  problems  of  practical  business  in  which 
he  and  they  were  engaged.  One  night  in  every  week 
was  devoted  to  this  "get-together"  function,  at  which 
the  employer  was  guide,  philosopher  and  friend.  So 
popular  did  these  gatherings  become  that  the  library  in 
this  home  could  not  accommodate  the  young  men  who 
were  willing  to  devote  time  outside  of  long  business 
Lours  thus  to  increase  their  own  efficiency.  The  in- 
structor and  the  students  began  to  meet  at  the  store  one 
evening  a  week,  and  from  this  was  developed  what  was 
first  known  as  the  "school  of  salesmanship." 

The  "fetish  of  names"  at  first  proved  a  handicap. 
With  few  exceptions,  every  young  employee  became  ob- 
sessed  with  a  notion  that  the  place  for  him  was  "on  the 
road."  Reports  of  what  this  or  that  salesman  was  mak- 
ing in  the  matter  of  commission  raised  the  hopes  of  many 
a  young  fellow  who  was  in  no  wise  fitted  for  the  art 
of  salesmanship.  The  name  was  changed  to  the  "hard- 


138 EMPLOYMENT    METHODS 

ware ' '  school.  Immediately  there  was  a  falling  off  in  the 
number  of  students.  Men  who  handled  hardware  from 
early  morning  until  five-thirty  o'clock  at  night  lacked 
inspiration  to  continue  the  study  of  keen-edged  tools 
after  hours — unless  they  were  exceptional  young  men. 
But  in  the  end  the  company  was  embarrassed  because  the 
number  was  so  large. 

Men  are  still  taught  salesmanship  in  the  school.  Often 
experienced  salesmen  who  have  served  long  on  the  road 
and  who,  with  advancing  years,  are  permitted  to  live  at 
home  and  occupy  a  desk  at  the  store,  or  those  who  have 
completed  a  trip  and  are  back  at  headquarters,  give  prac- 
tical talks  to  the  students. 

The  more  progressive  manufacturers  and  jobbers  to- 
day are  committed  to  the  policy  of  training  employees 
under  the  company's  guidance  and  control.  This  policy 
is  fast  spreading  in  the  retail  trade — at  least,  among 
the  large  department  stores.  Attention,  service  and 
value — that  is  what  the  buying  public,  alive  to  what  it 
wants  and  what  it  is  entitled  to,  is  demanding  more 
and  more;  and  department  store  owners  and  managers 
appreciate  the  necessity  of  training  the  selling  force  to 
meet  this  demand,  in  so  far  as  their  work  can  meet  it — 
to  be  intelligent,  courteous  and,  to  the  greatest  possible 
degree,  "error  proof." 


the  individuals  of  a  business  house  are  thinking 
beings  and  should  work  freely  as  a  co-ordinate  whole, 
they  must  work  also  together — they  must  be  molded  into  a 
tmoothly  running,  precise  machine. 

—John  V.  Farwell. 

President,  John  V.  Harwell  Company 


XVI 

MAKING  THE  BOY  A 
BETTER  WORKER 

By  L.  I.  Thomaa 

A  REGULAR  piece  of  work  was  submitted  to  a 
Chicago  printing  establishment  with  the  request 
that  they  give  an  estimate  of  the  time  it  would  take  an 
experienced  workman  to  do  it.  They  agreed  that  if  they 
had  a  man  who  could  do  the  job  in  six  hours  they  would 
be  perfectly  satisfied.  An  apprentice  in  this  plant  com- 
pleted the  job  in  a  little  over  four  hours. 

This  boy  had  been  taken  fresh  from  school  at  the  age 
of  fourteen  and  was  being  taught  the  printing  trade  in 
a  school  for  apprentices.  Would  such  an  efficient  job 
have  been  done  by  the  boy  after  the  same  period  of 
service  if  his  printing  knowledge  had  been  gained  by 
picking  up  what  he  could  learn  here  and  there,  as  is 
the  case  where  no  system  of  training  is  in  force? 

The  average  boy  of  legal  working  age  leaves  public 
school  with  his  working  certificate  in  his  pocket,  a  con- 
fused mass  of  facts  and  figures  in  his  head  and  a  pair 
of  soft,  unskilled  hands,  utterly  unfitted  for  any  prac- 
tical work.  Such  a  youth  is  not  worth  twenty-five  cents 
on  the  dollar,  and  the  most  pitiful  part  of  it  is  that  he  is 
not  to  blame.  In  attempting  to  make  himself  of  par 
value  this  youth  will  lose  job  after  job,  although  perhaps 
striving  with  all  his  honest  efforts  to  fit  himself  for  the 
place  in  which  he  has  landed. 


140 EMPLOYMENT    METHODS 

The  most  adaptable  period  of  his  life,  the  years  in 
which  he  might  be  laying  the  secure  foundation  for  some 
trade  or  business,  developing  character,  earning  steady 
wages  and  acquiring  loyalty  both  to  his  trade  and  his 
employer,  are  spent  as  a  chance  messenger  or  errand 
boy,  or  hanging  around  the  streets  or  pool  rooms. 
Many  of  these  boys  want  work  and  need  it.  Industrial 
education  is  solving  the  problem  in  many  instances. 
Authorities  feel  that  learning  only  a  part  of  a  trade  is 
one  of  the  chief  disadvantages  of  many  present-day  ap- 
prenticeship systems,  that  establishments  have  become  so 
large  and  have  so  many  departments  that  the  time  of  the 
apprentice  is  fully  employed  in  mastering  details  of  one 
department  to  the  exclusion  of  all  other  departments. 

A  PPRENTICESHIP  systems  of  the  old-fashioned 
•iV  kind  are  rapidly  giving  way  to  training  schools 
which  avoid  specialization  evils  by  all-round  preparation. 

The  old-time  apprenticeship  system,  except  in  a  very 
few  cases,  has  disappeared  within  the  last  thirty  years. 
Toward  the  latter  part  of  the  time  the  system  was  still 
in  operation  there  was  such  a  demand  for  men  that  a 
strong  tendency  existed  to  use  the  apprentice  as  an  op- 
erator long  before  he  was  thoroughly  versed  in  all  phases 
of  his  trade.  As  a  result  of  this  state  of  affairs,  the 
apprentice  started  out  as  a  rather  poorly  equipped 
journeyman. 

Manufacturers  found  themselves  seriously  hampered 
by  a  lack  of  skilled  workers.  So  many  of  them  have 
established  apprenticeship  schools.  Training  in  these 
schools  differs  from  that  furnished  by  the  old  apprentice- 
ship system,  in  that  the  object  in  view  is  to  give  the 
boys  instruction  in  such  subjects  as  mathematics,  mechan- 
ical drawing,  and  so  on,  necessary  for  a  more  rapid 


DEVELOPING     BOYS 141 

advancement  in  their  trade,  as  well  as  in  the  complete 
practical  training.  Instead  of  being  "bound  out"  to 
some  man,  as  formerly,  each  apprentice  to  a  different 
man,  one  skilled  employee  have  charge  of  the  boys  and  is 
tlu-ir  instructor. 

The  term  of  indenture  is  generally  four  years.  The 
boys  are  taken  from  their  shop  work  and  required  to  at- 
tend the  school  a  certain  number  of  hours  each  week. 
At  the  completion  of  the  term  bonuses  of  varying 
amounts  are  generally  given.  As  a  rule,  lesson  sheets 
prepared  by  instructors  take  the  place  of  text  books, 
these  sheets  closely  following  the  work  which  they  are 
performing  in  the  shop. 

This  modern  system  has  an  advantage  over  the  old 
one  because  greater  care  in  laying  out  courses  and  care- 
ful watch  of  shop  work  enable  the  boy  to  get  in  a  shorter 
period  of  time  the  fundamentals  that  go  to  make  him 
a  skilled  workman. 

In  a  large  Illinois  factory  employing  several  hundred 
men  the  employers  were  many  times  greatly  annoyed  in 
trying  to  secure  adequate  help.  They  finally  decided  to 
open  a  school  for  apprentices  in  their  own  plant.  This 
school  was  organized  along  lines  that  met  the  demands 
of  both  employer  and  apprentice.  It  has  the  follow- 
ing advantages:  first,  it  is  within  the  walls  of  the 
plant;  second,  the  boy  is  learning  a  definite  trade  and 
becoming  versed  each  day  in  its  needs  and  possibilities; 
third,  the  work  is  just  what  he  will  have  to  do  when  he 
graduates ;  fourth,  he  is  under  the  constant  supervision 
of  an  instructor. 

Besides  being  taught  the  trade,  the  boy  continues  his 
school  studies  under  competent  instruction,  being  taught 
the  things  that  are  most  applicable  to  the  business  and 
trade,  and  studying  half  a  day  in  the  school.  He  works 


142 EMPLOYMENT    METHODS 

the  other  half  day  in  the  shop,  thus  immediately  becom- 
ing a  wage  earner. 

A  special  room  is  provided  for  the  school.  One  part 
is  equipped  as  a  modern  school  room  and  the  other  part 
as  a  model  workshop. 

The  general  academic  instruction  is  similar  to  that 
carried  on  during  the  first  two  years  of  a  high  school 
course,  but  those  studies  or  parts  of  studies  which  bear 
directly  on  the  business  are  particularly  emphasized. 
For  instance,  arithmetic  is  reviewed  from  the  factory 
side.  A  specially  applied  arithmetic,  much  condensed  as 
compared  with  the  ordinary  text  book,  has  been  pre- 
pared, and  bookkeeping,  algebra  and  geometry  are 
similarly  taught. 

To  be  admitted  to  the  school  a  boy  must  be  a  grammar 
school  graduate  between  fourteen  and  fifteen  years  of 
age ;  his  school  work  must  show  good  standing,  and  if  it 
is  deemed  necessary,  he  must  pass  a  physical  examina- 
tion. He  must  have  good  moral  character  and  be  desir- 
ous of  learning  the  trade.  His  parent's  or  guardian's 
promise  to  cooperate  with  the  company  in  looking  after 
his  welfare  is  also  secured. 

Although  application  is  generally  made  by  letter,  both 
the  parents  and  the  applicants  are  finally  interviewed 
personally.  If  all  is  satisfactory  the  boy  is  given  a  fair 
trial,  and  if  both  parties  are  then  satisfied  a  two-year 
pre-apprenticeship  agreement  is  signed.  During  this 
time  the  firm  offers  to  teach  the  boy,  with  the  provision 
that  if  he  is  satisfactory  to  the  employer  he  shall  con- 
tract for  five  additional  years  as  a  full  apprentice  in 
such  department  as  the  firm  deems  best  suited  to  his 
ability.  The  parents  must  agree  that  the  boy  shall 
remain  until  the  trade  is  learned. 
Monthly  reports  inform  the  parents  of  the  boy's 


DEVELOPING    BOYS 143 

progress,  conduct,  adaptability,  improvement  and  effi- 
ciency. At  the  end  of  the  pre-apprenticeship  period,  if 
his  work  is  satisfactory,  he  is  taken  on  for  a  full  five* 
year  apprenticeship  term,  at  the  end  of  which  time  he 
is  a  finished  workman. 

T  NTELLIGENT  direction  of  the  boy't  e/orU  along 
•1  practical  lines  gives  him  a  broader  ricic  and  make* 
him  a  workman  rather  than  a  mere  machine. 

Pre-apprentices  whose  average  standing  for  six  consec- 
utive months  is  95  per  cent  or  above,  are  given  a  bonus  of 
$24  semi-annually  in  addition  to  their  regular  wages. 
When  the  apprentice  begins  the  second  year  of  his  regu- 
lar apprenticeship  one  dollar  each  week  is  deposited  to 
the  joint  account  of  the  firm  and  the  apprentice.  This 
sum  is  paid  at  the  end  of  the  term  as  a  bonus  for  good 
work  and  is  no  part  of  the  regular  wages.  Two  weeks' 
vacation  on  pay  is  allowed  each  student  whose  average 
standing  is  95  per  cent  or  above. 

The  agreement  guarantees  to  the  boy  steady  employ- 
ment at  a  regular  increase  of  wages  and  a  chance  to 
learn  a  complete  trade  from  A  to  Z  under  competent  and 
careful  supervision.  The  boy  realizes  that  promotion  de- 
pends upon  himself  and  that  he  must  do  work  up  to  a 
certain  grade. 

Actual  factory  methods  are  taught  and  the  apprentice 
is  accustomed  to  factory  work.  He  works  side  by  side 
with  experienced  workmen.  In  the  school  a  thorough 
training  in  English,  applied  arithmetic,  elementary 
science,  mechanics  and  applied  art  is  given.  The  library 
includes  standard  literature,  trade  journals  and  the 
latest  catalogs.  The  object  of  this  course  is  act  only  to 
develop  first-class  workmen,  both  in  theory  and  prac- 
tice, but  to  provide  eaaili  apprentice  with  a  general, 


144 EMPLOYMENT    METHODS 

practical  education  that  will  fit  him  for  his  duties  as  a 
reliable,  broad-minded  citizen. 

In  some  concerns  it  is  the  practice  to  apprentice  the 
boy,  not  to  the  journeyman  master,  as  in  the  old  appren- 
tice system,  but  to  a  department,,  the  foreman  of  which 
is  supposed  to  look  after  the  boy.  In  one  factory,  in  order 
that  the  foreman's  time  may  not  all  be  taken  up  with 
instructing,  a  training  room  has  been  established.  The 
principal  machine  tools  in  this  room  are  placed  under 
the  direct  charge  of  a  practical  mechanic  and  his  assist- 
ant. These  instructors  tell  how  and  why  the  work  is 
done.  The  boy  is  taken  directly  into  the  training  school 
and  serves  a  period  of  two  months  under  observation  and 
instruction.  While  he  may  be  willing  to  become  a 
mechanic,  the  firm  wants  to  find  out  if  there  is  a 
mechanic  in  him.  If  he  stands  the  test  he  engages  on  a 
period  of  four  years'  apprenticeship,  receiving  fair 
wages,  which  are  increased  each  year,  with  a  bonus  of 
$100  at  the  end  of  his  term. 

These  boys  do  actual  work  that  would  otherwise  have 
to  be  done  in  the  shop.  They  do  more.  When  an  ap- 
prentice has  mastered  one  branch,  he  is  not  allowed  to 
take  up  the  next  step  until  he  has  broken  in  a  young 
apprentice  who  has  just  come. 

Such  team  work  gives  excellent  results.  A  large  num- 
ber of  apprentices  are  handled  with  few  journeymen  in- 
structors. While  the  training  produces  specialists  even- 
tually, they  are  "all  around  men"  first. 

In  one  company  the  general  supervision  is  entrusted 
to  a  wise,  practical,  fatherly  man,  who  has  passed  the 
most  cf  his  life  in  the  service  of  the  company.  The  boys 
are  also  carefully  watched  by  each  foreman  and  records 
kept  of  their  progress  and  efficiency.  A  boy  whose 
record  for  both  shop  and  school  shows  a  standing  of  95 


DEVELOPING    BOYS 145 

per  cent  is  given  a  handsome  cash  bonus  at  the  end  of 
his  apprenticeship.  If  he  shows  a  better  standing  than 
95  per  cent  and  seems  to  have  executive  tendencies,  he 
is  given  a  double  cash  bonus.  Should  he  happen  to  de- 
velop extra  adaptability  along  certain  lines,  the  com- 
pany gives  him,  at  its  own  expense,  training  at  some 
first-class  technical  school,  working  one  week  in  the 
business  and  one  week  in  the  school. 

One  factory,  which  has  had  several  years'  experience 
with  an  apprenticeship  school,  claims  to  have  had  but 
two  boys  who  ever  "went  wrong."  Their  graduates 
develop  into  upstanding,  practically  educated,  loyal,  re- 
liable young  men  who  make  the  best  of  citizens. 


T?  VERY  ONE  trAo  employ  $  labor  knotr*  that  torn*  men 
can  do  tiro  or  three  time*  at  much  work  in  a  day  at 
others.  Thit  it  not  to  much  physical  capacity  at  it  it  a 
certain  native  ability  in  the  man  which  enable*  him  to  get 
ouicker  retultt  than  hit  fellow.  He  may  u*e  lett  exertion, 
he  may  teen  hare  lett  general  ability,  but  he  know*  how  to 
separate  the  chajf  from  the  wheat;  he  teemt  adapted  for  that 
datt  of  work  in  vhich  he  it  enoayed  and  kit  productive 
capacity  exceed*  that  of  hit  neighbor. 

— W.  L.  Saunders 


XVII 

HIRING  AND  TRAINING 
OFFICE  HELP 

By  Marshall  D.  Wilber 
President,  Wilber  Mercantile  Agency 

TO  MY  mind,  hiring  an  office  boy  is  just  as  im- 
portant as  engaging  a  chief  clerk,"  said  the  office 
manager  of  a  well-known  concern.  "And  it  might  be 
considered  even  more  important,  because  the  right  kind 
of  a  boy,  trained  right,  has  greater  possibilities  and  may 
in  time  prove  more  valuable  to  the  firm  than  the  older 
man.  The  office  boy  of  today  may  be  the  executive  ten 
or  twenty  years  hence. ' ' 

Any  office  manager  who  has  once  had  a  really  good 
office  boy  appreciates  his  value  and  knows  that  it  is 
worth  while  to  go  to  some  trouble  in  finding  and  train- 
ing this  employee.  Ordinarily  the  best  boys  are  those 
who  come  from  families  of  the  middle  class  and  from 
homes  where  they  have  learned  the  importance  of  hon- 
esty and  obedience.  Those  who  contribute  at  least  a 
part  of  their  earnings  to  the  family  support  are  most 
satisfactory. 

Boys  about  fourteen  are  most  suitable,  because  if  they 
are  older  than  that  they  are  inclined  to  feel  above  their 
work,  while  younger  boys  seldom  have  the  requisite  edu- 
cation. Demand  a.  thoroughly  good  knowledge  of  read- 
ing, writing,  spelling  and  arithmetic.  But  even  more 
essential  than  the  education  already  possessed,  look  for 
the  ability  to  pick  up  duties  quickly  and  the  ambition 


OFFICE    WORKERS 147 

to  develop  as  a  business  man  and  win  promotion. 

Choosing  and  hiring,  however,  are  only  the  first  steps 
in  handling  an  office  boy.  He  must  be  developed  by  the 
office  manager  or  others  who  direct  him.  This  necessi- 
a  thorough  understanding  of  the  boy  himself  and 
square  treatment  of  him  at  all  times.  More  than  almost 
any  other  employee  in  the  office,  the  boy  is  affected  by 
the  treatment  accorded  him,  for  he  is  just  at  the  age 
when  his  character  and  habits  are  most  subject  to  out- 
side influence. 

/~\FFICE  boys  should  be  selected  with  care  and  trained 
V_x  trith  a  new  to  hating  them  assume  larger  rerponsi- 
bUitits — how  to  select  good  stenographers. 

Comparatively  few  office  executives  seem  to  realize 
the  value  of  having  a  thorough  understanding  with  all 
their  employees,  even  to  the  office  boy.  When  he  is 
engaged  he  should  be  told  clearly  just  what  is  expected 
of  him  and  what  he  may  expect  from  the  firm.  There 
can  be  no  better  way  of  handling  him  than  by  giving 
him  specific  things  to  do  and  impressing  him  with  the 
fact  that  he  alone  will  be  held  responsible.  If  his  duty 
is  to  carry  notes  and  papers  between  different  depart- 
ments of  the  office,  show  him  that  that  is  a  division  of 
work  which  he  alone  has  in  charge.  If  he  is  stationed 
at  the  information  desk  to  receive  and  report  visitors, 
impress  him  with  the  fact  that  he  is  in  a  way  a  depart- 
ment head,  an  executive  on  a  small  scale.  This  can 
scarcely  fail  to  prompt  him  to  do  his  very  best. 

More  than  this,  however,  a  boy  should  understand  that 
the  firm  is  anxious  that  he  should  fit  himself  for  some- 
thing better.  Prom  the  very  beginning  he  should  be 
given  all  the  help  and  encouragement  possible.  No 
office  manager  can  make  a  mistake  by  getting  acquainted 


EMPLOYMENT    METHODS 


with  his  office  boys  and  making  them  feel  that  he  has  a 
personal  interest  in  them  and  their  success.  A  kindly 
word  of  greeting  in  the  morning,  or  an  occasional  com- 
mendation when  work  has  been  well  done  will  go  far  in 
inspiring  the  boy's  interest  in  the  work  of  his  employer. 

The  hiring  of  a  force  of  stenographers  differs  from  the 
engaging  of  most  other  office  employees,  in  that  a  cer- 
tain degree  of  efficiency  is  required  of  the  beginner.  In 
selecting  a  stenographer  from  a  number  of  applicants, 
little  can  be  judged  except  from  recommendations  based 
on  past  work  and  the  apparent  ability  of  the  candidate. 
Test  letters  at  the  time  of  the  first  interview  are  of  little 
value,  except  to  show  how  efficient  the  applicant  is  in 
grammar,  spelling  and  punctuation.  The  average  appli- 
cant is  inclined  to  be  nervous  on  taking  first  dictation 
from  any  one,  and  no  candidate  should  be  refused  simply 
because  of  failure  to  take  dictation  correctly  at  the  first 
endeavor. 

Probably  no  quality  in  a  stenographer  is  more  appre- 
ciated than  absolute  secrecy  with  respect  to  the  affairs  of 
the  firm.  The  average  employer  wants  the  particulars 
of  his  business  never  to  go  outside  his  office  door.  The 
most  desirable  stenographer  will  always  show  the  great- 
est discretion  in  keeping  to  herself  even  the  most  trivial 
details  concerning  her  employer's  affairs. 

Every  executive  should  train  his  stenographer  to  be, 
in  fact,  a  private  secretary,  to  take  care  independently 
of  the  details  of  his  work.  Some  employers  do  not  realize 
how  much  of  their  work  could  just  as  well  be  turned 
over  to  an  assistant. 

Some  executives  answer  only  a  very  small  percentage 
of  their  letters  by  personal  dictation,  turning  the  great 
mass  of  them  over  to  a  stenographer  with  brief  instruc- 
tions as  to  how  each  letter  should  be  treated.  This  not 


OFFICE    WORKERS 140 

only  relieves  the  executives  of  a  great  deal  of  detail  work, 
but  develops  stenographers  and  fits  them  for  higher  posi- 
tions. 

The  executive  who  has  a  number  of  stenographers  in 
his  department  cannot  be  too  careful  in  seeing  that  they 
are  given  a  square  deal  and  that  each  one  is  suitably 
promoted  or  given  better  pay  as  ability  warrants.  A 
firm's  reputation  with  respect  to  its  treatment  of  its  em- 
ployees travels  fast  and  once  a  concern  is  known  to  ill- 
treat  its  stenographers,  it  cannot  hope  to  have  their  en- 
thusiasm in  its  work  or  get  the  best  service  from  them. 
Frequently  trouble  or  lack  of  fairness  among  the  stenog- 
raphers is  due  to  enmity  on  the  part  of  some  sub- 
executive. 

"My  youngest  stenographer,  Miss  McGuire,  was  re- 
ported by  my  head  stenographer  as  not  making  good," 
said  the  manager  of  an  eastern  concern,  "and  I  adver- 
tised for  her  successor.  The  advertisement  called  for  an 
experienced  stenographer  and  typewriter  capable  of 
handling  correspondence  and  of  acting  temporarily  as 
office  manager.  I  signed  it  with  a  newspaper  number. 

"In  the  first  twelve  hours  I  got  156  answers.  Some 
were  written  with  pen  and  ink  and  on  the  stationery  of 
the  most  expensive  hotels  in  town.  Others  were  badly 
spelled  or  sloppily  typewritten.  One  applicant  sent  a 
carbon  copy  of  a  letter  originally  dated  'Nov.,  '06';  the 
date  was  crossed  off  and  the  new  date  inserted  in  pencil. 
One  envelope  had  a  special  delivery  stamp  on  it  and  had 
been  mailed  before  9  o'clock  the  morning  the  advertise- 
ment appeared.  It  was  from  Miss  McGuire. 

"It  was  a  clean-cut  business  letter  and  closed  with  the 
sentence,  4My  reason  for  wanting  to  leave  my  present 
employer  is  that  there  are  three  stenographers  ahead  of 
me  and  I  am  not  getting  a  square  deal  from  the  head 


150 EMPLOYMENT    METHODS 

stenographer.  I  could  make  good  right  here  if  I  was 
willing  to  squeal  to  my  employer.  Kindly  consider  this 
confidential  and  oblige,  very  truly  yours.' 

"Inside  of  a  week  I  had  the  tangle  straightened  out 
and  had  discharged  three  stenographers.  Miss  McGuire, 
with  one  assistant,  is  now  doing  the  work  that  the  bunch 
were  doing  before." 

CARE  needs  to  be  exercised  in  hiring  office  clerks — 
qualities  required  for  the  position  and  the  kind  of 
man  best  fitted  to  perform  the  work. 

In  no  class  of  employees  is  it  more  difficult  to  get  com- 
petent men  than  in  office  clerks.  Clerical  work  demands 
a  number  of  qualities  almost  impossible  to  judge  until  an 
applicant  has  been  tried  out  in  his  specific  work.  Mod- 
ern business  done  under  high  pressure  demands  absolute 
exactness  in  all  its  records  and  reports.  Hence  the  good 
clerk  must  have  a  combination  of  speed  and  accuracy. 
Every  large  business  must  have  a  department  devoted 
simply  to  the  correction  of  errors  in  its  records  of  trans- 
actions. The  man,  therefore,  whose  figures  can  be  de- 
pended upon  is  welcome  in  any  accounting  department. 

There  is  a  notable  tendency  on  the  part  of  extensive 
employers  of  clerical  help  to  enlist  their  men  from  the 
ranks  of  college  graduates.  In  many  business  offices 
there  is  a  prejudice  against  the  college  man  because,  it  is 
said,  he  considers  himself  too  good  to  begin  at  the  bottom 
and  work  up.  Statistics,  however,  show  a  large  per- 
centage of  college  men  in  clerical  positions  and  the  great 
majority  of  them  are  making  good. 

One  manufacturing  concern  in  the  middle  west 
adopted  the  policy  of  starting  a  number  of  young  college 
men  in  its  offices  each  year  at  nominal  salaries  and  ad- 
vancing them  as  their  ability  became  evident.  The 


OFFICE     WORKERS 151 

records  of  this  firm  now  show  that  over  90  per  cent  of 
these  men  made  good,  as  compared  with  10  per  cent  of 
the  non-college  men  who  were  taken  in  under  similar 
circumstances.  Today  a  majority  of  the  executive 
officers  of  this  company  are  college  graduates  and  the 
engaging  of  college  men  in  all  departments  has  become 
a  fixed  policy  of  the  firm. 

When  applicants  are  being  considered  for  clerical  po- 
sitions or  other  departments  of  office  work,  the  employer 
can  ordinarily  depend  more  on  the  general  past  asso- 
ciations and  training  than  upon  particular  evidence  of 
ability  at  the  time  of  his  interview.  Influences  of  early 
life  go  far  toward  laying  a  foundation  for  future  de- 
velopment. This  is  particularly  evident  in  the  case  of 
men  who  spend  their  early  life  on  farms  or  in  small 
towns  and  villages.  This  does  not  infer  that  city-bred 
men  are  incompetent,  but  simply  that  records  show  the 
greater  percentage  of  success  on  the  part  of  the  country 
boy.  The  country  youth,  while  he  may  be  inexperienced 
in  the  line  he  undertakes,  is  not  afraid  to  work.  He  is 
honest,  loyal  and  willing  to  start  on  a  small  salary  and 
ordinarily  his  habits  are  good.  These  are  the  prime 
qualities  you  need  in  any  office  employee,  qualities  that 
will  make  the  new  recruit  in  a  few  years  one  of  your 
trusted  executives. 


A  LL  the  great  creators  of  the  vorld  hate  planned  out  their 
*"•  crrationi  to  the  tmallest  detail;  all  great  achifttmentt 
hate  firit  exiited  in  the  mind  of  tome  man. 

—Clarence  M.  Woolley 


XVIII 

BUILDING  UP  A  RETAIL 
SALES  FORCE 

By  C.  M.  Jones, 
Formerly  Superintendent,  The  Fair,  Chicago 

IN  A  retail  establishment  the  superintendent  should 
hire  all  but  the  lowest  grades  of  employees  himself.  To 
handle  such  work,  which  in  the  course  of  two  hours 
may  demand  interviews  with  between  one  and  two  hun- 
dred applicants  in  order  to  select  twenty,  he  must  be  a 
keen  judge  of  men  and  women,  an  observer  of  human 
nature.  This  ability  requires  long  experience  in  han- 
dling men  and  detailed  information  regarding  the  needs 
of  the  store  itself. 

It  is  valuable  to  have  applicants  fill  out  the  usual  ap- 
plication blank — giving  their  name,  address,  previous 
employment  and  employers,  and  references.  Aided  by 
his  observation  of  an  applicant's  personal  appearance 
and  general  make-up,  a  shrewd  observer  from  wide  ex- 
perience with  this  class  of  people  can  read  in  a  few 
written  facts  the  history  of  an  applicant.  He  is  forced 
to  rely  principally  upon  these  facts.  The  references  can 
only  be  looked  up  after  the  applicant  is  hired,  and  are 
chiefly  of  use  for  verification. 

It  is  not  the  best  policy  to  ask  written  answers  to  ex- 
haustive and  intimate  questions.  They  can  be  secured 
in  the  course  of  a  short  conversation  almost  without  the 
applicant's  knowledge.  Applicants  object  to  answering 
in  writing  inquiries  regarding  their  family  history,  their 


STORE    EMPLOYEES 


153 


EMPLOYMENT  APPLICATION 


•  ••(  IN  full     NO  ""•"«••' 


«HO  »»T  OCHftcO- 


.TCICPMONC. 


N*TION*IIT<  . 


_M*MMiio  on 


PUVIIC  •CMOOI.. 

MIGM  «CMOOl_ 
COlLCGC 


ir  8O.  GIVf  NAUKl  ANO  »ft«ITinM«  

POSITION    THC  Lf  MOTH  Or  TOOK  I  MPlOTMf  NT  WITH  CACM  'WITH  OATtSI  AND  TMC    HEACOM 
rOH  LEAVING  CACM  imTA«T  WITH  THf  IA»T  riMM  »OU  WOKHID  WITM  AND  STATE  TO  OATCI 

ftCFCRENCCS 
NAME  Aoonimm 


FORM  I:     It  u  dffirable  to  have  a*  much  information  at  ptunble  about 

tack  applicant  for  a  position.    Question*  covered  by  thi*  form  an  not  too 

pcrtonal,  yet  are  luflicicntly  eompnkmnft 


154 EMPLOYMENT    METHODS 

circumstances,  living  expenses,  and  so  on,  because  they 
think  an  employer  has  no  right  to  ask  them.  They  do 
not  understand  that  you  ask  because  you  want  to  know 
whether  they  can  live  on  the  wages. 

Competition  demands  that  we  pay  what  the  labor  is 
worth,  not  what  the  laborer  is  worth.  A  girl  earning  six 
dollars  a  week  may  be  capable  of  filling  positions  which 
pay  ten  dollars,  but  as  long  as  she  is  filling  the  six  dollar 
position  her  work  is  worth  only  six.  It  is  our  advantage 
and  duty  to  put  her  in  the  ten  dollar  class  as  soon  as 
possible.  In  common  with  all  employers  who  wish  tc 
build  up  an  efficient  force  you  often  pay  more  than  the 
competitive  price,  when  you  know  that  an  employee  can 
not  support  himself  and  those  dependent  upon  him  on 
the  standard  wage — for  no  employer  can  afford  to  have 
employees  so  underpaid  that  they  must  seek  outside 
sources  to  eke  out  a  necessary  income. 

When  a  man  is  employed,  it  is  wise  to  send  him  first 
to  his  department  head  for  instruction  in  his  specific 
duties.  If  a  salesman,  he  should  study  the  stock  behind 
the  counter  sufficiently  to  present  it  to  the  customer. 
The  department  head  and  the  assistant  superintendent 
can  keep  their  eyes  upon  employees,  especially  the  new 
ones,  and  be  ready  to  answer  questions  regarding  the 
stock  or  give  detailed  instructions  in  regard  to  the  goods 
and  the  finer  points  of  salesmanship. 

METHODS  of  employment  and  training  followed  by 
a  large  retail  department  store  to  secure  efficient 
and  loyal  employees — judging  the  applicant  quickly. 

A  series  of  lectures  will  help  when  instructing  em- 
ployees. They  can  be  delivered  informally  during  the 
dull  hours  of  the  day.  They  usually  treat  of  some  phase 
of  salesmanship  or  individual  betterment,  and  if  the 


STORE    EMPLOYEES 155 

lecturer  is  a  regular  employee  of  the  store,  they  will  be 
particularly  strong,  since  his  regular  work  enables  him 
to  draw  his  suggestions  and  illustrations  from  the  life  of 
the  store  itself.  The  lectures  may  be  written  along  gen- 
eral lines  laid  down  by  the  superintendent  and  revised 
by  him.  The  lecturer  can  be  admitted  into  conference 
with  the  department  heads  or  officials,  so  that  he  may 
understand  the  points  on  which  the  superintendent  is 
working  and  grasp  the  needs  of  the  store. 

A  feature  which  will  bring  good  results  is  the  intro- 
duction of  special  salesmen,  or  men  and  women  ex- 
perienced in  retail  selling.  They  walk  about  the  part  of 
the  store  assigned  to  them,  and  when  they  see  a  dissatis- 
fied customer  or  a  salesman  in  difficulty,  go  to  the  rescue. 


FORMER  EMPLOYEE 

S  RECORD 

NAME                                                                                                 |    ENTERED 

NUMSCR                                                                                   |   LAST  DAY  WORKED 

ADDRESS 

RECORD  OF  SERVICC 

CHECK  CAUSE  LEFT 

ABILITY 

RESIGNED 

DEPORTMENT 

LAID  OFF 

WORK 

DISCHARGED 

IS  THERE  OBJECTION  TO  RE-EMPLOYING? 

REASONS   FOR  NOT  RE-EMPLOYING 

CLASS  OF  WORK    PERFORMED 

EDUCATIONAL  WORK  OONC 

SCC  FILE  ENVELOPE 

SIGNED 

FORM  II:    Concise  information  hen  yittn  tettt  the  ttory  of  each  part 
employee,  and  it  invaluable  tcforMMT  re-employment  it  under  consideration 

Very  often  they  succeed  in  making  a  sale  when  a  cus- 
tomer has  left  the  counter  without  buying. 

Accurate   records  of  each   salesman's   time  and  his 
weekly  sales  are  worth  keeping.     Yet  these  black  and 


156 


EMPLOYMENT    METHODS 


white  records  are  not,  after  all,  the  more  important 
elements  in  the  handling  of  employees.  The  impression 
that  the  clerk  makes  personally  upon  the  employer  is 
really  most  significant.  For  this  reason  the  personal 


NOTICE  OF  EMPLOYMENT 


EMPLOYMENT  REQUISITION 

DEPARTMENT  DATE 


WORK  TO  BE  DONE  'STANDAROIZATH 


OCPT    ME« 


MALE    OR   FEMA 


LEAVING  NOTICE 


REASON  FOR  LEAVING 


FILLED   BY  NO. 


RECORDS  MADE  BV 


ENVELOPE 


FORM  III  (back  card) :  This  slip  is  sent  to  the  department  head.  FORM 
IV  (middle  card):  Requisition  for  help  placed  by  the  department  manager. 
FORM  V  (front  card) :  Notice  of  an  employee  leaving  is  given  on  this  card 


touch  between  the  two,  the  human  side  of  their  relation- 
ship, is  to  be  particularly  emphasized  and  developed. 
Encourage  all  employees  to  come  to  the  superintendent 
at  any  time,  and  never  allow  him  to  refuse  an  interview. 
Let  clerks  take  care  of  the  records — written  facts  are 
dead,  and  cannot  be  stimulated.  Use  personal  contact 
and  knowledge  of  an  employee — with  the  records  to  fall 
back  upon — urge  the  superintendent  to  spend  three 
hours  a  day  in  his  office,  six  around  in  the  store  among 
your  employees — •>£  you  have  no  superintendent,  go 


STORE    EMPLOYEES 157 

yourself.  A  man  looks  different  at  ten  in  the  morning, 
filing  an  application  for  a  position,  with  his  best  clothes 
on  and  his  best  foot  forward,  than  at  four  o'clock  in 
the  afternoon,  leaning  over  a  counter. 

Sometimes  able  work  may  be  rewarded  with  an  im- 
mediate increase  in  salary  from  the  superintendent.  In 
some  instances  department  heads  recommend  a  raise,  but 
usually  the  employee  will  ask  for  it  before  its  necessity 
becomes  altogether  plain  to  his  superior.  This  is  to  be 
encouraged,  not  frowned  upon.  Very  often  the  increase 
is  justified  and  in  any  event  it  is  well  to  know  what  a 
clerk  thinks  of  his  position.  It  is  better  to  go  to  the 
trouble  of  convincing  him  that  he  is  receiving  what  he 
deserves,  as  shown  by  his  sales  record,  than  to  have  him 
brood  into  chronic  discontent. 

Suggestions  as  to  changes  in  stock,  or  in  management 
details,  may  profitably  be  invited  from  your  salespeople. 
They  can  be  required  whenever  goods  are  asked  for 
which  the  store  does  not  carry  or  has  not  in  stock,  to 
make  out  a  special  report. 

If  you  lead  an  employee  to  feel  that  his  side  of  the 
question — his  opinion,  his  suggestion — is  going  to  be 
considered  and  to  know  that  his  relations  with  his  em- 
ployer are  those  of  one  human  being  toward  another, 
you  have  done  much  to  make  him  contented  and  effi- 
cient. 


CHOW  me  a  house  vhere  all  the  employee*  are  educated 
^  to  think  kindly  of  the  customer*,  to  that  in  speaking  of 
them  even  they  use  courteous  phrases,  and  I  can  tafely  pre- 
dict for  that  house  a  rapid  and  continuous  success  so  long 
as  that  policy  prevail*. 

— Daniel  Louis  Hanson 

S»lM  Mu*r«.  Tht  Ptdml  Conpuy 


XIX 

LEGAL  POINTS  IN  HIRING 
AND  DISCHARGING  MEN 

By  Arthur  E.  Goddard 
I 

PRACTICALLY  every  man  in  the  business  world  is 
a  party  to  one  or  more  contracts  of  employment, 
either  as  employer  or  employee.  Thousands  of  such  con- 
tracts, oral  or  written,  formal  or  informal,  are  made 
every  day,  usually  with  little  care  and  consideration  and 
very  seldom  with  a  definite  knowledge  of  the  legal  effect 
of  the  transaction. 

There  are  generally  few  questions  of  importance  which 
arise  in  connection  with  the  employment  of  ordinary 
"help."  Applicants  answer  an  advertisement  in  the 
newspaper ;  they  inquire  ' '  at  the  office ' '  and  ' '  begin  work 
next  Monday"  at  so  much  a  day  or  week.  The  hours  of 
work  and  other  small  details  are  either  understood  or 
quickly  arranged  with  the  superintendent  or  foreman, 
and  a  simple  daily  or  weekly  contract  of  employment  has 
been  made,  terminable  by  either  party  at  the  end  of  any 
day  or  week,  as  the  case  may  be ;  and,  in  the  absence  of 
express  agreement  or  firmly  established  custom,  termin- 
able at  the  end  of  such  a  period  without  notice.  In 
general,  little  attention  is  ever  paid  to  the  fact  that 
there  are  actually  laws  governing  these  matters. 

Although  the  same  general  legal  principles  apply  to 
the  case  of  clerks,  stenographers,  bookkeepers  and  other 
subordinates  employed  by  the  week  or  month,  yet  on 


LEGAL    POINTS  1.,!) 


account  of  the  greater  dignity  of  their  office  and  the 
closer  personal  relation  with  their  employers,  custom  and 
perhaps  to  some  extent  law  require  a  rather  more  cere- 
monious treatment  of  their  relationship  than  in  the  case 
of  an  ordinary  workman. 

In  this  country  they  are  rarely  employed  by  the  year, 
although  of  course  there  are  exceptions.  From  the  na- 
ture of  their  employment  they  are  generally  held  to  be 
employees  either  "at  will" — that  is,  dischargeable  at 
any  time  without  notice — or  at  most  employed  by  the 
week  or  month,  dischargeable  at  the  end  of  any  week  or 
month  as  the  case  may  be  without  notice  and  without 
cause.  The  contract  comes  to  an  end  at  the  expiration 
of  each  such  period  and  either  party  may  decline  to  re- 
new it  for  any  reason  or  for  no  reason  at  all. 

/CONDITIONS  of  employment — when  the  employer 
\*s  may  discharge  a  man  and  for  what — duration  of 
work — what  tpecificationt  to  make  in  the  contract. 

An  employer  has  the  absolute  right  to  discharge  for 
late  arrivals  at  the  office,  early  departures,  relatives' 
funerals  and  other  interruptions  in  the  service  whether 
attributable  to  long  evenings  the  night  before,  baseball 
games  in  the  afternoon,  or  even  actual  illness. 

There  is  another  sort  of  employment  of  more  impor- 
tance because  of  its  longer  duration  and  the  greater 
amount  involved.  In  this  class  belong  managers,  super- 
intendents, executives,  editors,  and  a  host  of  other  em- 
ployees ranging  from  traveling  salesmen  and  bookkeepers 
to  railroad  presidents,  who  hold  office  under  a  more  or 
leas  permanent  tenure  and  whose  compensation  is  politely 
called  "salary"  instead  of  "wages," 

If  the  contract  of  employment  is  to  last  for  a  longer 
period  than  one  year  from  its  date,  it  must  be  in  written 


160 EMPLOYMENT    METHODS 

form,  either  in  a  series  of  letters  or  otherwise,  and 
signed  by  the  party  who  is  to  be  bound  or  his  authorized 
agent.  If  this  is  not  done,  the  contract  is  absolutely 
void  under  the  Statute  of  Frauds. 

Even  if  the  contract  is  to  run  for  one  year  or  less,  it 
is  vastly  better  to  have  all  of  its  terms  in  writing  so  that 
nothing  will  be  left  to  oral  understanding.  A  difference 
as  to  one  or  two  words  of  the  agreement  may  involve  an 
entire  year's  employment. 

There  is  no  general  rule  in  this  country,  as  there  is  in 
England,  that  an  employment  for  an  unspecified  time  is 
employment  for  a  year.  Here  an  employment  for  an  in- 
definite time  is  one  at  will;  that  is,  either  party  may 
terminate  it  at  any  time  without  notice.  On  the  other 
hand  if  the  words  or  acts  of  the  parties,  or  the  circum- 
stances of  the  employment,  show  an  intention  to  make  an 
agreement  for  a  year,  they  will  be  bound  for  that  length 
of  time  even  if  the  employee  is  to  be  paid  at  the  rate  of 
so  much  a  month,  or  even  a  week. 

For  instance,  the  owners  of  a  hotel  wrote  to  the  man- 
ager of  a  hotel  in  a  distant  city  offering  him  a  position 
as  their  manager  at  a  salary  of  $200  a  month  with  rooms 
and  board  for  his  family.  He  accepted  the  offer  and 
brought  his  family  with  him.  He  was  discharged  after 
a  few  months  and  sued  his  new  employers  for  the  balance 
of  a  year's  salary.  They  defended  on  the  ground  that 
his  employment  was  paid  by  the  month.  The  court  held, 
however,  that  on  account  of  the  nature  of  his  employ- 
ment, taken  together  with  the  fact  that  he  was  known  to 
have  a  large  family  and  had  brought  them  from  a  dis- 
tance of  hundreds  of  miles,  the  parties  must  have  con- 
templated a  year's  employment  at  least,  and  the  ex-man- 
ager won  his  case. 

The  provision  that  the  employment  is  to  continue  so 


LEGAL    POINTS  161 


long  as  the  employee  proves  "satisfactory"  is  to  be 
avoided  by  an  employee  who  needs  to  make  sure  of  a  per- 
manent position  so  long  as  he  does  good  work,  since  in 
general  when  this  provision  is  inserted,  the  employer  is 
made  the  sole  arbitrary  judge  as  to  whether  the  work  is 
satisfactory.  It  is  advisable  to  have  all  such  matters 
settled  and  in  writing. 

In  the  absence  of  a  special  agreement,  no  notice  is 
required  of  either  party  in  this  country.  Either  may 
end  the  employment  upon  the  very  last  day  of  the  term, 
whether  it  be  by  the  week,  month  or  year.  As  notice 
is  often  desirable,  it  should  sometimes  be  provided  for 
in  the  contract  of  employment. 

Unless  the  contract  provides  that  this  notice  may  be 
given  by  mail,  it  should  be  delivered  to  the  other  party 
in  person,  preferably  in  writing. 

In  one  case  in  New  York  an  actress  had  been  em- 
ployed for  the  season,  unless  her  employment  should  be 
terminated  by  two  weeks'  notice.  Instead  of  delivering 
the  notice  to  her  in  person,  her  employers  posted  it 
upon  the  door  of  the  green  room,  as  was  their  custom. 
It  was  a  simple  matter  for  the  actress  to  testify  that  she 
did  not  see  this  notice  and  of  course  the  jury  took  her 
view  of  the  matter. 

If  an  employee  is  allowed  to  continue  in  the  service  of 
his  employer  after  his  contract  of  employment  has  ex- 
pired, the  contract  is  automatically  renewed  for  another 
year,  month  or  week,  according  to  the  length  of  the  term 
of  the  original  contract.  For  this  reason,  unless  the 
parties  intend  to  renew  the  entire  contract,  they  should 
make  a  provision  for  such  a  continuation,  either  in  the 
original  agreement  or  at  the  end  of  the  term. 

The  employer,  however,  has  several  causes  for  dis- 
charging an  employee.  In  addition  to  the  case  of  illness 


162 EMPLOYMENT    METHODS 

or  disability  mentioned  above,  he  has  the  right  to  dis- 
charge for  any  misconduct,  inattention,  carelessness,  un- 
faithfulness, dishonesty,  or  insubordination,  which  does, 
or  may,  tend  to  injure  the  interests  of  the  employer. 
Whether  they  are  of  sufficient  importance  or  not,  de- 
pends somewhat  upon  circumstances.  In  an  actual  case 
it  was  held  that  a  superintendent  with  large  discretion- 
ary powers,  with  authority  over  many  subordinates,  and 
having  charge  of  a  great  mass  of  business  detail,  should 
not  be  held  to  the  same  exact  obedience  in  a  trifling 
matter  as  an  ordinary  clerk. 

An  employee  who  is  discharged  and  wishes  to  contest, 
should  be  careful  not  to  acquiesce  in  the  discharge  any 
further  than  to  leave.  His  acquiescence  may  release  his 
employer  from  all  liability.  If  the  discharge  is  not  abso- 
lute, the  employee  should  tender  his  services  until  they 
are  refused. 

Wrongfully  discharged,  an  employee  may  require  his 
former  employer  to  make  good  any  loss  of  salary,  but  he 
is  bound  to  seek  other  employment  of  the  same  kind,  in 
the  same  general  locality,  and  must  deduct  his  earnings 
from  the  damages.  He  is  not  bound,  however,  to  accept 
employment  of  a  substantially  different  kind,  nor  to  ac- 
count for  what  he  may  earn  " after  hours"  in  his  new 
employment. 


'T'HE  executive  must  also  be  an  inventor:  he,  too,  studies 
•*•  out  a  working  machine,  where  all  the  parts  are  to  work 
in  harmony  to  produce  a  given  result;  but  he  deals  not  with 
inanimate  material,  but  with  men  with  wonderful  possibilities 
and  initiative  to  help  or  hinder  the  working  of  the  great 
organization. 

— James  Logan 

Chairman,  Executive  Committee,  United  States  Envelope  Company 


PART  IV-HANDLING 
AND  PAYING  HELP 

Working  the  One  Best  Way 

I  )  EALLY  efficient  labor  can  only  be  obtained 
and  continuously  maintained  when  the  three 
following  conditions  are  fulfilled: 

That  the  method  of  working  is  the  best  we 
ca.i  devise; 

That  the  workman  is  trained  to  become  ex- 
pert in  following  that  method; 

That  he  is  rewarded  liberally  for  success. 

If  these  three  conditions  are  intelligently 
adhered  to,  the  employer  can  pay  his  workman 
higher  wages  than  any  union  will  ask. 

We  all  know  that  unless  workmen  are  trained 
alike,  hardly  any  two  will  do  the  same  piece  of 
work  by  exactly  the  same  method.  There  is  a 
best  method  of  doing  everything,  but  we  seldom 
arrive  at  it  without  careful  study.  As  a  matter 
of  fact,  the  only  way  to  find  the  best  way  of 
doing  a  piece  of  work  is  to  analyze  it  into  its 
elementary  operations  and  determine  separately 
thf  IM  >t  \\;iy  of  doing  each  element.  We  can 
then  find  the  time  needed  for  each  element  and 
hence  the  total  time  required. 


H.  L.  GAXTT 

Engineering  and 

Management  Cim 


XX 

PLANS  AND  CONTESTS  THAT 
INCREASE  EFFICIENCY 

Hy  William  Hamilton  Hurqucst 

OI'II  clerks  are  getting  stale,"  admitted  the  junior 
partner,  snapping  a  rubber  band  around  a  piti- 
fully small  bundle  of  sales  slips.    He  was  store  super- 
intendent, and  part  of  his  job  was  to  keep  the  clerical 
force  "up  to  concert  pitch." 

"They  are  stale,"  declared  the  senior  partner  with 
a  frown.  He  had  been  tempted  by  the  unusual  values 
of  jobbers,  and  had  loaded  up  with  "mill-ends."  These 
goods  were  now  the  drawing-card  at  the  "mill-end  sale" 
— an  annual  institution,  the  purpose  of  which  was  to  in- 
duce buyers  to  visit  the  store  during  the  dull  season 
of  mid-summer. 

The  "opening"  and  the  first  week  had  broken  all  rec- 
ords— in  the  matter  of  attendance.  Customers  flocked  to 
the  store.  But  with  a  taste  both  economical  and  dis- 
criminating, they  confined  their  purchases  almost  wholly 
to  the  bargain  counters.  In  other  departments  the 
women  merely  "shopped" — stopped,  looked,  gossiped, 
and  took  samples.  The  store  was  profiting  not  a  penny 
from  the  sale.  For  this,  the  proprietor  knew,  the  clerks 
were  in  a  large  part  to  blame.  Their  mental  attitude,  if 
put  into  words,  would  have  been  translated  thus : 

"The  boss  oughtn't  to  expect  us  to  sell  goods  at  this 
time  of  the  year.  It's  trying  enough,  goodness  knows, 


166 PAY     ROLL    PROBLEMS 

to  be  polite  to  customers  in  this  hot  weather." 

"How  about  a  prize  contest?"  suggested  the  junior. 
They  argued  the  matter  long ;  finally,  like  a  flash,  came 
the  inspired  idea. 

"Let's  offer  vacations  on  full  pay,"  the  junior  pro- 
posed, "to  every  clerk  who  increases  her  sales  a  certain 
percentage  over  the  'mill-end'  of  last  year.  We  needn't 
make  the  increase  over  twelve  per  cent  to  move  every 
special  you've  bought  and  cut  a  big  hole  in  our  regular 
stock.  To  keep  everybody  on  the  jump  till  the  gong 
rings,  we'll  also  promise  three  round-trip  ticket  to  Chi- 
cago as  extra  prizes  for  the  three  high  scores,  and  ten 
dollars  in  gold  to  the  man  or  woman  who  makes  the 
biggest  individual  increase.  That'll  make  'em  wake  up 
all  right!" 

VACATIONS  on  full  pay  offered  by  one  concern  to 
all  employees  who  increased  their  sales  by  a  certain 
per  cent  livened  up  the  summer  dull  season.      » 

The  senior  partner  objected.  He  didn't  believe  in  va- 
cations— had  never  taken  one  in  his  life  other  than  trips 
to  buy  goods. 

"We  can  spare  half  our  people  next  month,"  the 
younger  man  insisted,  "if  only  to  keep  them  from 
getting  lazy  and  bored.  But  we  '11  profit  on  the  deal.  To 
earn  a  vacation  a  clerk  will  have  to  make  money  for  us. 
And  we'll  have  a  force  in  the  fall  with  plenty  of  snap 
and  ginger." 

He  had  his  way.  Details  were  worked  out  then  and 
there,  and  marks  set  for  clerks  less  than  a  year  in  the 
firm's  employ  and  for  others  whose  records  had  been 
satisfactory.  Announced  next  morning,  the  newspapers 
devoted  considerable  space  to  the  contest. 

In   the   store   an    instantaneous   change   took   place. 


EFFICIENCY    CONTESTS 167 

Every  clerk  was  charged  with  energy.  Real  salesman- 
ship  was  devoted  to  listless  bargain-hunters  and  sample- 
takers.  Patient  urging  brought  out  the  needs  of  each, 
both  current  and  future ;  then  the  remnant  or  article  to 
satisfy  such  needs  was  dug  out  of  the  heterogenous  stock. 
To  reach  possible  buyers  who  did  not  appear,  clerks 
wrote  memoranda  on  postal  cards  furnished  by  the  store, 
calling  attention  to  special  bargains,  and  mailed  them  to 
their  special  customers. 

From  front  door  to  alley,  from  basement  to  roof,  the 
store  vibrated  with  vitality,  and  hummed  with  energy. 
After  eight  days  of  the  contest,  it  become  evident  that 
every  clerk  in  the  store  would  qualify  for  the  vacation 
with  pay.  The  senior  partner  smiled  as  he  telephoned 
for  supplementary  bargain  lots  to  fill  holes  in  the  stock 
and  provide  the  force  with  "something  to  sell"  during 
the  grand  wind-up.  The  race  for  the  round  trip  tickets 
and  the  added  prize  money  became  more  engrossing 
every  day. 

The  net  gain  over  the  preceding  year  was  more  than 
thirty  per  cent.  More  important  far  was  the  dynamic 
energy  and  added  efficiency  gained  by  the  clerical  force 
through  rest  and  recreation  unhampered  by  any  worry 
over  loss  of  wages. 

Vacation  contests  have  become  a  settled  policy  of  the 
store.  Moreover,  the  plan  has  been  extended  to  cover 
the  entire  year.  Each  month,  the  three  clerks  with  the 
highest  selling  records  are  given  a  day  off,  with  a  free 
junket  to  the  state  capital  where  they  visit  the  big  shops 
and  attend  the  theatre — at  their  employer's  expense.  To 
equalize  chances,  the  departments  are  grouped  in  three 
divisions,  the  groups  changing  as  they  enjoy  seasonal 
advantage. 

When  the  old-fashioned  methods  failed  to  work  in 


168 PAY    ROLL    PROBLEMS 

this  case,  a  specific  plan  was  devised  to  meet  the  emer- 
gency. You  can  try  something  of  this  kind  in  your 
business,  or  "follow  the  leader"  in  other  ways  set  down 
here  and  secure  top-notch  efficiency.  All  that  is  needed 
is  an  appreciation  of  conscientious  effort.  In  any  com- 
mercial undertaking,  latent  ambition,  the  spur  of  com- 
petition and  the  human  and  harmless  hunger  of  em- 
ployees for  pleasure,  can  all  be  coined  into  extra  divi- 
dends. 

DISTRIBUTION  of  business  literature,  free  scholar- 
ships at  technical  schools  and  cooperative  schemes 
are  some  of  the  methods  which  increase  efficiency. 

Offering  good  "business  literature"  to  employees — • 
giving  the  books  away,  not  circulating  them,  is  the 
method  used  by  the  general  manager  of  a  big  machinery 
house.  He  presents  his  salesmen,  both  in  the  house  and 
on  the  road,  with  books  on  salesmanship  and  kindred 
subjects.  He  gives  free  subscriptions  to  magazines  on 
business  and  selling  to  new  salesmen. 

"Our  men  seem  glad  to  read  these  books  and  maga- 
zines. In  several  instances,  notable  improvements  in 
salesmanship  have  been  secured.  There  are  many  sales- 
men, naturally  shrewd  and  business-like,  who  lack  finesse 
and  the  potency  of  personality  which  grips  a  customer's 
favor.  The  literature  we  distribute  deals  with  practical 
matters;  the  cultivation  of  personal  appearance,  good 
manners,  the  proper  inflection  of  voice  and  such  details 
in  a  salesman's  make-up  that  go  to  make  him  interest- 
ing." 

Another  aid  to  superior  salesmanship  is  found  in 
snappy,  business  lectures,  "live-wire"  talks  at  regular 
meetings  at  the  main  office  of  a  company.  By  one  large 
firm  of  wholesale  grocers,  this  is  considered  a  great  in- 


EFFICIENCY    CONTESTS 169 

c-ntive  toward  top-notch  effort.  There  is  an  annual 
gathering  of  road  salesmen  from  all.  parts  of  the  country. 
Several  evenings  are  devoted  to  the  discussion  of  matters 
of  general  interest. 

The  executives  and  heads  of  departments  give  instruc- 
tive talks.  New  ideas  are  taken  up  and  considered  from 
the  salesman's  viewpoint,  as  well  as  the  manager's. 
Withal,  the  amount  of  good  fellowship  brought  about 
and  the  degree  of  enthusiasm  promoted,  constitute  a 
source  of  great  satisfaction  to  managers  and  officials. 

A  unique  and  desirable  form  of  rewarding  high  grade 
work  is  the  donation  of  free  scholarships  in  technical 
schools.  The  chief  executive  of  a  western  house  manu- 
facturing electrical  appliances  tried  various  schemes  to 
speed  up  individual  employees.  All  were  unavailing, 
however,  until  he  tried  the  scholarship  idea.  His  ex- 
planation is  that  he  made  the  mistake  of  watching  the 
advance  of  all  his  men.  After  he  had  concluded  that  the 
majority  of  his  men  were  going  back,  he  found  that  it 
was  only  relative,  and  that,  as  a  matter  of  fact,  the  great 
mass  of  the  men  were  turning  out  just  as  many  ma- 
chines per  capita  as  ever.  Deciding  to  try  something 
new,  he  sent  ten  men  who  had  shown  consistent  ad- 
vances to  a  technical  school,  paying  their  tuition  and  al- 
lowing them  an  average  wage,  for  a  special  four  weeks' 
course. 

"The  boys  immediately  woke  up,"  he  testifies  now. 
"The  competition  was  strong.  Month  after  month  five 
men  were  given  this  opportunity  for  special  instructions, 
and  the  plan  resulted  not  only  in  a  largely  increased  gen- 
eral improvement,  but  in  developing  several  extra-good 
designers,  foremen  and  constructors  who  have  been  given 
new  positions  and  higher  salaries.  Both  old  and  young 
are  eligible  to  this  course  of  instruction.  Our  oldest  em- 


170 PAY    ROLL    PROBLEMS 

ployee  was  one  of  the  first  to  win  a  course  and  made  a 
creditable  record  at  this  school." 

Coming  now  to  a  consideration  of  real  profit  sharing, 
the  results  achieved  by  one  of  the  greatest  of  wholesalers 
are  noteworthy.  For  the  last  five  years,  the  pay  of  road 
salesmen  has  been  based,  not  upon  gross  sales,  as  was 
the  old  plan,  but  upon  the  net  profit  realized.  Not  only 
are  prices  better  maintained,  but  expense  accounts  are 
kept  down. 

"Our  general  scheme  of  paying  road  salesmen  on 
what  they  make  and  not  on  what  they  sell  is  logical,  fair 
and  shrewd, ' '  says  the  president  of  the  company.  ' '  The 
man  who  went  out  merely  to  sell  $250,000  worth  of  goods 
in  a  year,  cared  little  what  price  he  got.  He  made  con- 
cessions too  freely,  and  kept  the  average  gains  too  low. 

"Under  our  present  plan  the  compensation  of  the 
saleman  bears  a  direct  relation  to  the  profit  on  his  busi- 
ness. "When  selling  a  merchant  a  mixed  bill  of  dry 
goods,  therefore,  he  resists  the  temptation  to  overload 
his  customer  on  low  priced  lines  because  the  additional 
items  will  bring  him  (the  salesman)  no  additional  profit. 
All  the  salesmanship  he  possesses  is  concentrated  on  the 
higher  priced  lines.  This  is  profitable  to  the  house,  and 
in  consequence  pays  the  salesman  better. 

"Formerly,  too,  a  salesman's  expense  account  was  al- 
ways high.  Under  the  new  system  the  items  come  out 
of  his  own  pocket  and  he  is  concerned  about  the  odd  dol- 
lar he  used  to  toss  to  the  porter.  It  has  a  positive  value 
to  him  at  the  end  of  the  year. 

Cooperation  makes  the  employee  a  vital  part  of  the 
business.  He  is  both  worker  and  part  owner.  Taking 
the  good  men  into  partnership  was  Andrew  Carnegie's 
pet  hobby.  An  establishment  in  which  all  skilled  em- 
ployees were  partners  as  well  as  workers  would  come 


EFFICIENCY    CONTESTS 171 

very  near  solving  the  labor  problem.  And  the  standard 
of  efficiency  would  seldom  fall  below  that  of  the  largest 
active  stockholder. 

4 'Pay  'em  and  drive  'em!"  was  the  eighteenth  century 
rule.  Profit  sharing  and  stock  distribution  have  become 
the  ideals  of  the  twentieth  century.  Between  the  two 
range  various  plans — all  with  the  single  purpose  of 
securing  greater  efficiency  among  employees.  If  dealt 
with  broadmindedly,  and  with  some  small  degree  of 
altruism,  the  human  element  in  a  business  undertaking, 
regarded  as  an  unstable  factor,  may  prove  to  be  a  handle 
of  opportunity  in  securing  larger  and  better  results, 
rather  than  a  daily  handicap  and  source  of  embarrass- 
ment. 


•BUSINESS  it  not  entirely  a  matter  of  dollars  and  emit, 
'  of  organization  and  method*,  of  routing  and  detail. 
The  more  scientific  business  become*,  the  higher  the  plane 
to  which  it  develops,  the  more  100  mutt  realize  that  business  it 
human — that  the  personal  touch  it  the  strongest  bond  beticeen 
the  parties  to  commercial  transactions — that  man-power  it 
tai  influential  element  in  business. 

— William  Judaon 

Proldnt.  JadKM  Grocw 


XXI 

PAYING  DIVIDENDS  TO 
OFFICE  WORKERS 

By  Kendall  Banning 

WITH  forty  average  employees  in  their  offices,  the 
owners  of  a  thriving  eastern  business  undertook 
two  years  ago  to  develop  a  livelier  interest  in  the  detail 
work  of  the  departments.  Profit  sharing  was  taken  as 
the  basis,  and  a  plan  was  worked  out  which  gave  each 
individual  a  share  in  the  profits  commensurate  with  his 
services,  and  a  chance  to  enjoy  a  practical  interest  in  the 
business  itself.  After  two  years'  trial,  the  success  of  the 
experiment  is  beyond  question,  and  the  methods  seem 
applicable  to  the  solving  of  some  of  the  stubborn  prob- 
lems in  management  which  every  office  is  obliged  to 
meet. 

The  owner  of  a  business  is  naturally  more  concerned 
with  its  success  than  a  mere  employee.  Its  growth  adds 
to  his  labors,  but  its  profits  add  to  his  wealth.  Mistakes 
are  paid  for  out  of  his  pocket,  and  its  progress  or  failure 
carries  him  along.  It  has  been  aptly  said  that  "a  busi- 
ness is  the  lengthened  shadow  of  a  man."  To  a  peculiar 
extent,  a  man's  business  is  a  reflection  of  the  individual 
himself,  and  its  character,  its  methods  and  its  develop- 
ment are  determined  by  the  personality  which  directs  it. 

To  the  average  employee,  a  "job"  is  a  means  of  liveli- 
hood. Under  ordinary  conditions  he  will  develop  that 
job  until  it  becomes  more  valuable  both  to  the  business 


SHARING    OFFICE    PROFITS 173 

and  to  himself.  In  many  positions,  however,  especially 
those  of  a  clerical  nature,  the  workers  fall  into  a  me- 
chanical routine  which  deadens  their  initiative  and  tends 
to  keep  down  the  quality  of  their  work  to  a  common- 
place mediocrity.  It  was  to  avoid  just  this  condition 
that  this  particular  office  organized  an  employees'  co- 
operative association  which  has  stimulated  the  entire 
organization,  has  materially  increased  the  efficiency  of 
the  workers,  and  has  added  to  their  salaries  by  a  system 
of  cash  awards  for  special  services  and  money-saving 
suggestions. 

T)Rf)FIT  sharing  and  special  prize*  for  time  and 
JL  labor-taring  device*  have  been  uted  to  develop  keen 
interest  and  high  efficiency  in  one  big  office. 

Every  employee  is  a  member  of  the  association.  The 
association  has  a  chairman,  vice-chairman,  secretary  and 
treasurer,  all  of  whom  are  elected  by  the  members  them- 
selves to  serve  for  a  term  of  one  year.  Each  member 
pays  a  monthly  due  of  one  quarter  of  one  per  cent  of  his 
or  her  salary.  These  dues  make  up  a  loan  fund  for  the 
assistance  of  any  member  who  may  be  in  need  as  a  result 
of  illness  or  other  emergency.  When  the  fund  reaches 
the  sum  of  $1,000,  dues  are  discontinued  until  they  are 
needed  again. 

The  association  holds  two  regular  meetings  each 
month.  The  "business  meeting"  is  devoted  to  the  affairs 
of  the  association,  the  election  of  officers  and  the  dis- 
cussion of  business  short-cuts  and  other  suggestions  made 
from  time  to  time  by  the  various  employees.  They  are 
held  on  the  second  Monday  of  each  month.  The  "edu- 
cational meetings"  are  held  in  the  office  immediately 
after  office  hours  on  the  fourth  Monday  in  each  month. 

At  each  of  these  "educational  meetings"  an  official 


174 PAY    ROLL    PROBLEMS 

of  the  company  or  other  business  man  addresses  the 
members  on  some  subject  pertinent  to  the  business,  and 
one  of  the  employees  is  designated  by  the  chairman  to 
describe  in  detail  his  or  her  part  in  the  day's  work.  A 
regular  schedule  of  these  talks  is  kept  and  each  member 
has  his  turn  to  make  a  talk. 

Other  members  are  also  expected  to  offer  any  sug- 
gestions they  may  have  for  the  facilitation  of  the  work 
described.  Such  suggestions  are  not  discussed  immedi- 
ately, but  are  held  over  for  consideration  at  the  next 
meeting.  In  this  way  each  employee  is  made  familiar 
with  the  details  of  the  business.  It  is  often  found  that 
much  time  may  be  saved  by  transferring  some  work  from 
one  person  or  department  to  another  which  may  in  some 
way  be  better  equipped  to  handle  it,  and  in  case  of  the 
absence  of  one  of  the  employees,  to  distribute  his  tasks 
among  others  and  thus  prevent  the  work  from  getting 
behind. 

The  profit-sharing  feature  of  the  association  is  ar- 
ranged on  a  dividend  basis.  At  the  end  of  each  year, 
every  employee  is  given  a  bonus  equal  to  a  certain  per- 
centage of  his  or  her  yearly  salary.  This  percentage  is 
based  on  the  profits  of  the  business  for  the  year,  and  is 
determined  by  the  executive  officers  of  the  company. 
Last  year,  in  addition  to  salaries,  $2,000  was  distributed 
among  the  members  of  the  association  as  a  bonus,  on  the 
basis  of  six  per  cent  of  the  yearly  salary  of  each  em- 
ployee. 

When  the  association  was  organized,  a  system  of  merits 
and  demerits  was  inaugurated.  These  merits  and  de- 
merits are  based  on  a  unit  of  five  dollars  and  are  credited 
to  or  deducted  from  the  amount  set  aside  for  the  bonus 
at  the  end  of  the  year.  Last  year,  the  merits  exceeded 
the  demerits,  and  the  bonus  was  increased  one  and  one- 


SHARING    OFFICE    PROFITS 175 

half  per  cent,  making  it  seven  and  one-half  per  cent  of 
the  salaries.  One  clerk,  who  drew  a  salary  of  $1,000  a 
year,  received  in  addition  a  bonus  of  seventy-five  dollars, 
while  stenographers  who  make  eighty  dollars  a  month 
got  a  bonus  of  seventy-two  dollars.  Five  per  cent  of  this 
is  paid  at  Christmas  and  the  balance  on  demand  after 
the  first  of  the  year. 

The  merit  system  affects  each  worker's  pay.  A  merit 
is  awarded  to  any  one  who  suggests  an  acceptable 
"short-cut"  in  business,  or  any  system  which  will  save 
time,  labor  or  expense  in  any  branch  of  the  business. 
The  name  of  the  employee  to  whom  the  merit  is  awarded 
is  posted  on  a  bulletin  in  the  office,  together  with  a  de- 
scription of  the  improvement  suggested.  This  bulletin 
is  counted  as  a  roll  of  honor,  and  the  services  noted  are 
recalled  when  promotions  are  made. 

The  largest  merit  was  fifty  dollars  for  a  suggestion 
made  by  the  assistant  treasurer  for  the  simplification  of 
one  of  the  complicated  details  of  the  business.  Formerly 
the  checking  department  kept  large  .books  of  checking 
sheets  where  the  record  of  each  customer  was  maintained. 
It  was  necessary  for  the  accounting  department  to  wait 
until  the  end  of  the  month,  then  transcribe  the  records 
from  the  checking  sheets,  in  longhand  and  turn  them 
over  to  stenographers  to  be  typed  for  billing.  As  a 
result  of  this  cumbersome  system  the  accounting  depart- 
ment fell  behind  more  than  a  month  on  the  books  and  a 
corps  of  public  accountants  was  called  in.  The  account- 
ants installed  an  elaborate  system  which  did  not  prove 
effective,  as  the  same  delay  recurred  in  less  than  three 
months. 

Then  the  employees  got  together  and  worked  out  a 
plan  whereby  the  two  departments  were  practically  com- 
bined. Several  changes  were  made  in  the  checking  sheet. 


176 PAY     ROLL    PROBLEMS 

and  a  form  was  designed  for  an  itemized  bill  to  cor- 
respond to  each  checking  sheet,  and  to  be  commenced  the 
first  of  each  month.  These  bills  are  so  designed  that 
certain  figures,  which  must  appear  in  the  office  duplicate, 
can  be  detached  from  the  original,  by  means  of  perfor- 
ated margins,  before  sending  them  out.  The  bills  are  ar- 
ranged in  the  same  order  as  the  sheets  in  the  checking 
books,  and  original,  carbon  and  duplicate  are  held  to- 
gether with  paper  fasteners.  At  the  end  of  the  month 
it  is  now  necessary  merely  to  fill  in  the  total  space  and 
rate  columns  and  the  bills  are  ready  to  be  sent  out.  The 
improvement  meant  a  saving  of  several  hundred  dollars 
annually. 

A  WARDS  are  open  to  all  employees,from  office  boy  to 
•*»•  treasurer — demerits  against  entire  departments  for 
individual  delinquencies  stimulate  team  spirit. 

Another  typical  award  of  merit  was  made  to  a  young 
fellow  who  had  just  been  advanced  from  office  boy  to  as- 
sorter  of  newspapers.  This  boy's  duty  calls  for  the  as- 
sorting of  a  large  number  of  newspapers,  which  are 
placed  in  tall  stacks  and  passed  to  the  checker.  The 
papers  were  returned  to  the  assorters  in  all  sorts  of 
shape ;  frequently  the  stacks  had  fallen  over  and  it  was 
necessary  to  spend  a  great  deal  more  time  in  sorting 
them  again  before  filing. 

One  evening,  at  home,  this  lad  made  a  wooden  box 
about  three  feet  deep  and  proportioned  to  hold  the 
largest  newspaper  folded  twice,  with  a  slot  down  one 
side  about  four  inches  wide  and  extending  to  the  bottom. 
Several  of  these  boxes  are  now  in  use;  the  papers  are 
sorted  into  them  alphabetically  and  the  boxes  are  passed 
on  to  the  checkers,  who  in  turn  check  the  advertising 
and  drop  the  papers  in  reverse  order  into  another  box. 


SHARING    OFFICE    PROFITS 177 

This  keeps  them  straight  until  they  are  returned  to  the 
sorters  for  filing.  It  is  necessary  then  only  to  transfer 
them  from  the  boxes  directly  to  the  files,  saving  a  great 
deal  of  time  and  labor. 

Another  example  of  the  value  of  the  organization  to 
the  company  is  furnished  by  an  instance  when  a  twenty- 
five  merit  was  awarded  to  a  clerk  for  suggesting  a  com- 
bination voucher  check  which  is  found  to  save  hundreds 
of  dollars  annually.  Formerly,  in  sending  out  checks,  it 
was  usually  difficult  and  frequently  impossible  to  get 
back  the  receipted  bills.  Much  money  was  spent  for  this 
purpose  in  postage  alone,  as  it  was  necessary  in  all 
cases  to  place  the  receipted  bills  in  the  hands  of  clients. 
By  the  use  of  a  special  voucher  form,  it  is  only  neces- 
sary to  fill  out  both  check  and  voucher  and  send  them  to 
the  debtor.  He  must  sign  the  receipt  before  the  bank 
will  accept  the  check.  The  bank  returns  the  cancelled 
voucher-check  and  the  receipt  portion  is  detached  and 
sent  to  the  customer. 

Similarly,  merits  are  awarded  not  only  for  short-cuts, 
but  also  for  special  work  which  increases  the  efficiency  of 
the  organization  or  shortens  the  regular  work.  The  five 
dollars  thus  earned  is  not  paid  to  the  individual  but 
credited  to  the  funds  of  the  association  and  all  the  mem- 
bers profit  in  proportion  to  their  respective  salaries. 

An  extra  bonus  of  five  merits,  twenty-five  dollars,  is 
added  to  the  fund  for  each  month  during  which  there 
are  no  demerits.  Demerits  are  given  for  mistakes  which 
entail  the  loss  of  money,  or  cause  such  inconvenience  or 
delay  as  to  necessitate  the  sending  of  a  letter  of  explana- 
tion to  a  customer.  It  may  be  only  a  typographical  error 
on  the  part  of  one  of  the  stenographers,  but  if  it  is  of  a 
serious  nature  and  is  not  noticed  in  time  for  correction 
before  going  out,  her  department  is  given  a  demerit 


178 FAY    ROLL    PROBLEMS 

and  the  description  of  the  mistake  is  posted  on  the 
bulletin. 

Employees  report  their  own  tardiness  in  coming  to 
business.  If  any  one  is  late  one-third  of  the  total  work- 
ing days  in  the  month,  his  department  is  given  a  de- 
merit of  ten  dollars,  which  is  charged  against  the  bonus 
fund.  The  amount  of  the  demerit  is  not  charged  to  the 
individual,  but  is  deducted  from  the  bonus  fund,  and 
every  member  must  share  the  loss  or  the  consequences  of 
the  mistake.  This  has  the  moral  effect  of  making  each 
employee  more  careful  than  he  might  be  if  he  had  to 
stand  the  loss  alone.  If  any  employee  is  responsible  for 
continuous  mistakes  through  carelessness,  correction  of 
the  fault  or  resignation  from  the  company's  service  is 
suggested  by  the  other  employees. 

Since  the  inauguration  of  this  system,  the  percentage 
of  mistakes  made  in  the  routine  of  business  has  been  re- 
duced fifty  per  cent.  As  a  result  of  the  numerous  short- 
cuts suggested  by  the  different  employees,  the  entire  or- 
ganization has  been  raised  to  a  plane  of  more  than  aver- 
age efficiency. 


"C^ACH  employee  is  an  indispensable  unit  in  the  operating 
force  of  the  modern  office.  No  matter  whether  it  be  the 
office  boy,  receiving  cards  of  visitors,  the  stenographer,  han- 
dling in  her  work  important  secrets  of  the  firm  or  executing 
details  of  correspondence;  the  office  clerk,  recording,  comput- 
ing and  analyzing  the  month's  sales  or  the  year's  profits,  each 
is  playing  an  essential  part  in  the  business  game,  and  each  is 
deserving  of  proper  credit  and  consideration  on  the  part  of  the 
man  higher  up. 

—Marshall  D.  Wilber 

President.  Wilber  Mercantile  Agency 


XXII 

PLANNING  AHEAD  FOR  THE 
WORKMAN'S  NEED 

By  P.  M.  Feiker 

IT  RIDS  me  of  a  lot  of  worry,"  said  the  superin- 
tendent of  labor  for  one  of  the  largest  concerns  of 
its  kind  in  the  world.  "Before  our  benefit  association 
was  formed  I  had  dozens  of  little  complaint  cases  to 
look  after.  A  man  would  meet  with  an  accident;  a  few 
days  later,  a  lawyer  who  made  his  living  by  following 
up  such  cases,  would  present  a  claim  for  damages;  or 
the  bread-earner  of  the  family  had  the  grippe  and 
wouldn't  be  out  for  two  or  three  weeks.  In  the  mean- 
time his  family  would  depend  upon  the  grocer  and 
butcher. 

"Now,  these  cases  and  others  are  attended  to  auto- 
matically. A  mutual  association  looks  after  the  man's 
health  and  pays  the  bills." 

This  is  the  viewpoint  of  the  man  who  handles  men 
intimately.  It  makes  clear  one  of  the  practical,  mutual 
advantages  of  employees'  relief,  benefit,  pension  or  mu- 
tual associations,  as  they  are  termed. 

In  all  lines  of  work,  in  factories  large  and  small,  there 
is  a  tendency  today  to  substitute  for  the  haphazard  meth- 
ods of  the  past  a  definite  plan  for  the  relief  of  workmen 
who  are  incapacitated  on  account  of  accident,  sickness 
or  disability  which  results  from  advancing  years.  Many 
a  factory  superintendent  has  paid  the  grocer's  bill  for 


180 PAY     ROLL    PROBLEMS 

an  employee  in  need.  On  the  other  hand,  many  bitter 
quarrels  have  arisen  between  workmen  and  firm  because 
of  damage  suits.  Many  owners  have  for  years  acted  with 
humanitarian  motives  in  standing  between  their  em- 
ployees and  want.  But,  until  recently,  the  business  ad- 
vantage of  having  a  plan  for  handling  such  cases  auto- 
matically has  never  been  considered  in  any  general  way. 
A  mutual  benefit  association  is  merely  a  mutual  in- 
surance society  in  which  the  parties  to  the  contract  are 
employer  and  employee.  The  employee  pays  dues  to  a 
society  in  whose  management  he  has  a  voice.  The  com- 
pany pays  some  of  the  overhead  expenses  of  the  society 
(depending  upon  the  plan  proposed)  for  the  benefits 
which  it  receives.  The  plan  is  developed  in  different 
ways  in  different  companies.  Some  of  the  mutual  benefit 
associations  have  been  established  for  many  years  and 
interesting  stories  are  told  of  their  early  development. 
One  of  the  most  interesting  of  these  plans  is  that  of  the 
Allis-Chalmers  Company. 

OICKNESS,  injury  and  death  benefits,  with  free  physi- 
O  dan  and  hospital  service  are  the  aims  of  a  highly  suc- 
cessful mutual  aid  association  in  one  concern. 

The  formation  of  this  mutual  aid  society  for  the  work- 
men came  about  almost  by  accident.  In  the  fall  of  1883 
in  what  was  then  the  "new"  carpenter  shop  of  the  Ed- 
ward P.  Allis  &  Company's  Reliance  Works,  a  house 
warming  and  banquet  was  held.  After  the  evening's 
entertainment  it  was  found  that  there  was  $65.10  in  the 
treasury.  It  was  suggested  that  the  sum  be  laid  aside  as 
the  nucleus  of  an  aid  fund  for  the  use  of  needy  em- 
ployees. After  canvassing  among  the  men,  it  was  found 
that  three  hundred  were  willing  to  cooperate  in  the 
formation  of  a  society,  for  which  an  initiation  fee  of 


PENSIONS    AND    BENEFITS 181 

fifty  cents  and  clues  of  twenty-five  cents  per  month  were 
agreed  upon. 

Ai'ter  the  society  had  lived  successfully  for  three 
months,  Mr.  E.  P.  Allis,  president  of  the  company, 
volunteered  to  duplicate,  man  for  man,  all  dues  paid  in 
by  members.  The  first  year's  membership  reached  a 
total  of  five  hundred  and  thirty-three  and,  a  year  after 
consolidation  into  the  present  Allis-Chalmers  Company, 
the  membership  grew  to  over  thirteen  hundred.  It  has 
now  about  doubled  its  size. 

The  plan  under  which  the  society  operates  is  at  once 
simple  and  effective.  A  member  who  is  injured  while 
in  the  shops  or  on  business  for  the  company  is  entitled  to 
seventy-five  cents  a  day  during  his  disability,  not  ex- 
ceeding ninety  days  in  any  one  membership  year,  and 
the  amount  he  can  draw  each  year  is  limited  to  $67.50. 

In  case  of  sickness,  the  member  is  entitled  to  the  same 
benefit  after  the  first  week.  In  addition  to  the  weekly 
amount  to  which  the  man  is  entitled,  he  may  also  avail 
himsrlf  of  the  services  of  the  society  physician  free  of 
all  charge,  from  whom  he  obtains  medical  attendance, 
medicines  and  dressings.  If  the  services  of  a  specialist 
are  required,  this  expense  is  also  borne  by  the  society. 
In  the  event  of  the  death  of  a  member  a  benefit  of  one 
hundred  dollars  is  immediately  paid  to  his  family. 

The  physician  who  is  employee!  by  the  society  is  chosen 
by  direct  vote  of  all  members.  Once  when  the  physi- 
cian was  to  be  chosen,  there  were  ten  candidates,  and  the 
man  to  whom  the  choice  fell  received  over  half  the  total 
vote.  He  holds  a  contract  with  the  society  for  a  period 
of  three  years,  or  until  removal.  His  salary  is  one  dol- 
lar for  each  member  per  year.  The  choice  of  physician 
is  conditional  upon  his  residence  within  easy  access  of 
the  works.  He  is  required  to  appoint  a  substitute  who 


182 PAY    ROLL    PROBLEMS 

may  be  called  in  the  absence  of  the  regular  physician, 
for  the  convenience  of  members  at  either  the  West  Allia 
or  Reliance  Works.  The  society  physician  is  required 
to  make  at  least  one  official  visit  daily  in  every  case  re- 
quiring treatment,  until  recovery.  His  signature  is  re- 
quired in  all  cases  before  benefits  are  paid. 

The  working  plans  by  which  the  Mutual  Aid  Society 
governed  itself  were  long  believed  to  be  comprehensive 
enough  to  provide  for  the  pressing  needs  of  all  injured 
and  sick  members.  But  it  developed  that  men  were 
sometimes  so  injured  that  long  periods  of  disability  fol- 
lowed, which  soon  exhausted  the  provisions  made  for 
them  by  the  society  and  sometimes  left  the  men  destitute. 

In  the  hard  times  following  the  depression  of  1893, 
these  conditions  became  so  acute  that  it  was  necessary 
tD  provide  additional  relief  and  the  result  was  the  found- 
ing of  the  Allis  Relief  Fund.  The  entire  income  for  this 
fund  is  the  result  of  benefits  and  entertainments,  includ- 
ing an  annual  ball  held  under  the  auspices  of  the  aid 
society. 

From  the  first  the  custody  and  control  of  this  fund 
have  been  retained  by  the  society.  The  limited  amount 
of  income  early  showed  the  necessity  of  restricting  the 
aid  to  be  granted  any  one  individual  and  accordingly  it 
was  enacted  that  aid  to  the  extent  of  fifteen  dollars  per 
month  be  granted  to  an  injured  or  sick  employee  whose 
case  was  known  to  be  worthy  of  such  support. 

Although  the  provisions  of  both  society  and  relief 
fund  are  very  modest,  after  long  experience  they  have 
proved  to  be  sufficient  for  the  main  wants  of  those  in 
misfortune,  and  the  cost  to  the  individual  is  very  low. 

The  management  of  the  society's  affairs  is  left  entirely 
in  the  hands  of  employees,  and  although  the  company 
yearly  contributes  thousands  of  dollars  to  its  treasury, 


PENSIONS    AND    BENEFITS 183 

duplicating  the  amounts  contributed  by  members,  it  has 
no  voice  in  the  management.  It  merely  stipulates  that 
medical  attendance  be  given  to  all  who  are  injured 
whether  they  are  members  of  the  society  or  not. 

The  general  officers  of  the  society  are  president,  vice- 
president,  secretary  and  treasurer.  An  executive  com- 
mittee of  eighteen,  made  up  of  representatives  from  each 
shop  and  subdivision,  is  the  actual  governing  body.  This 
body  controls  all  money  and  transacts  all  business  con- 
nected with  the  society  and  relief  fund. 

Some  idea  of  the  importance  of  the  society's  transac- 
tions may  be  deduced  from  the  fact  that  since  its  found- 
ing the  total  disbursements  are  upwards  of  one  hundred 
and  twelve  thousand  dollars.  Over  seventy  thousand 
dollars  have  been  paid  out  in  sick  and  accident  benefits 
and  over  fourteen  thousand  dollars  for  death  benefits." 
Over  twenty-one  thousand  five  hundred  dollars  have  been 
expended  for  the  services  of  the  society's  physician.  All 
surplus  funds  are  carefully  invested  in  safe  interest- 
bearing  bonds. 

/CONTRIBUTIONS  equal  in  amount  to  those  of  the 
^*s  employees  are  one  company's  method  of  encouraging 
its  mutual  aid  society — excellent  results  obtained, 

In  some  of  the  concerns  which  have  established  benefit 
associations,  the  company  associates  itself  with  em- 
ployees. Such  is  the  case  in  the  Employees'  Benefit  As- 
sociation of  a  large  threshing  machine  company. 

The  object  of  this  association  is  to  provide  members 
with  a  certain  income  when  sick  or  disabled  by  accident, 
either  on  or  off  duty  and  to  pay  to  the  families  of  the 
members  certain  and  definite  sums  in  case  of  death.  It 
maintains  a  fund  which  belongs  to  the  employees  and 
which  is  used  in  paying  benefits  to  them. 


184 PAY     ROLL    PROBLEMS 

The  organization  of  the  association  is  interesting.  The 
executives  consist  of  a  board  of  trustees  made  up  of 
members  representing  different  departments  of  the  com- 
pany, and  a  superintendent.  The  headquarters  of  the 
superintendent  are  at  the  general  offices  of  the  com- 
pany. 

The  benefit  fund  consists  of  contributions  from  mem- 
bers of  the  organization,  income  or  profit  from  invest- 
ments or  such  contributions  as  may  be  made  by  the 
company  from  time  to  time. 

The  company  contributed  one  thousand  dollars  to  the 
fund  at  the  start,  and  agreed  to  contribute  five  hundred 
dollars  more  as  soon  as  the  membership  of  the  benefit 
association  equalled  fifty  per  cent  of  the  company's  fac- 
tory employees.  An  additional  five  hundred  dollars  was 
to  be  contributed  as  soon  as  the  membership  of  the 
benefit  association  equalled  seventy-five  per  cent  and  a 
further  sum  of  five  hundred  dollars  as  soon  as  the  mem- 
bership equalled  ninety  per  cent  of  the  total  number  of 
factory  employees. 

After  the  first  year,  the  company  agreed  to  contribute 
annually  a  sum  equal  to  ten  per  cent  of  the  total  amount 
paid  by  all  members.  The  company  also  agreed  at  the 
time  the  regulations  were  put  into  effect  that  it  would 
advance  funds  for  payment  of  the  benefits. 

In  handling  the  benefit  association  fund,  contributions 
from  members  are  used  only  for  the  payment  of  benefits 
due  to  the  members  of  the  organization  and  for  the  ex- 
pense of  administration.  If  a  surplus  accumulates,  it 
remains  under  the  control  of  the  members  of  the  asso- 
ciation through  their  representatives,  the  board  of  trus- 
tees; and  if  a  deficit  arises,  the  company  is  to  make  tem- 
porary plans  to  pay  it. 

A  board  of  trustees  of  six  members  is  chosen  annually. 


PENSIONS    AND     BENEFITS 185 

Three  of  the  members  of  the  board  of  trustees  are  chosen 
by  the  employees,  who  are  members  of  the  organization, 
and  three  are  chosen  by  the  board  of  directors  of  the 
company. 

The  president  of  the  company  is  also  an  official  mem: 
ber  and  chairman  of  the  board  of  trustees  and  is  entitled 
to  vote.  He  has  the  power  to  appoint  a  temporary  chair- 
man in  his  absence.  The  number  of  trustees  can  be  in- 
creased or  decreased,  but  at  all  times  one-half  must  be 
elected  by  the  employees  and  one-half  by  the  board  of 
directors  of  the  company. 

The  agent  for  the  trustees  is  the  superintendent  of  the 
benefit  association,  who  is  appointed  by  the  trustees.  He 
is  also  eligible  to  membership  in  the  association.  Under 
the  direction  of  the  board  of  trustees,  the  superintendent 
has  charge  of  all  office  boys,  clerks  and  systems,  pre- 
scribes the  form  of  blanks  to  be  used,  signs  all  orders  for 
benefits,  furnishes  to  the  board  such  reports  as  it  may 
desire,  and,  in  general,  acts  as  the  executive  of  the  benefit 
association.  He  has  authority  to  appoint  business  and 
medical  examiners  and  visiting  nurses  and  has  the  gen- 
eral supervision  of  all  medical  and  surgical  affairs  of  the 
association. 

Benefits  are  paid  for  sickness  and  accident.  Special 
benefits  are  provided  in  case  of  serious  accident.  The 
constitution  is  so  drawn  that  in  case  of  any  grave  injury 
or  sickness  when  a  member  of  the  association  desires  to 
accept  a  lump  sum  instead  of  benefits,  the  superintendent 
has  authority  to  make  full  and  final  settlement  with  such 
a  member  on  terms  which  may  be  agreed  upon  in  writ- 
ing. 

Payment  in  case  of  death  if  classed  as  due  to  sickness 
is  fixed  as  equal  to  the  total  average  wages  of  one 
year  or  of  three  hundred  working  days'  average 


186 PAY    ROLL    PROBLEMS 

wages.  If  death  is  caused  by  accident,  the  amount  paid 
is  equal  to  the  total  average  wages  for  two  years  or  six 
hundred  working  days.  If  a  member  commits  suicide 
before  the  end  of  the  first  year,  the  beneficiary  receives 
one-half  of  the  amount  the  member  has  contributed  to 
death  benefits. 

Pension  systems  and  benefit  associations  such  as  these 
tend  to  establish  more  closely  the  commercial  relations 
between  industrial  cost  and  social  responsibility.  Many 
concerns  are  doing  the  same  thing  in  their  own  way.  Re- 
cognizing that  the  employee  himself  cannot  or  will  not 
provide  against  his  time  of  need,  great  companies  are 
coming  more  and  more  to  put  this  provision  for  the 
future  on  a  definite  and  sound  business  basis. 


'T'HE  employee  must  know  and  feel  that  he  is  with  the 
•*•  house  for  the  good  of  the  house;  and  every  duty,  every 
difficulty,  every  action  is  for  its  service;  that  the  organization 
is  bigger  than  the  individual  units.  If  this  understanding 
is  established,  and  if,  at  the  same  time,  a  sympathy  with  the 
•policy  of  the  house  is  aroused  in  the  employee,  a  real  beginning 
for  coordinate  service  has  been  started. 

— John  V.  Farwell, 

President,  John  V.  Farwell  Compur 


XXIII 
MAKING  WORK  INTERESTING 

By  Harrison  McJohnston 

TWO  years  ago  a  young  man  entered  the  employ  of  a 
manufacturing  plant  whose  policy  it  was  to  keep 
the  men  ignorant  about  the  business.  This  secrecy  ex- 
tended from  important  plans  and  proposed  develop- 
ments, where  it  is  sometimes  essential,  down  to  trivial 
details,  concerning  which  secrecy  is  seldom  necessary 
and  is  often  a  disorganizing  influence. 

The  young  man  enthusiastically  started  to  work.  He 
checked  and  footed  up  bills.  He  asked  the  meaning  of 
the  papers  he  worked  on,  and  met  rebuke.  Again,  he 
asked  what  was  done  with  them  when  they  left  his  desk, 
and  was  "called  down."  At  first  this  strange  treatment 
amused  him.  Gradually  his  amusement  developed  de- 
rision. He  settled  down  for  six  months  with  disgusted 
indifference  to  anything  but  his  own  inkpot.  Then  he 
quit. 

Buried  under  long,  machine-like  training  was  a  streak 
of  progressiveness  in  his  department  head.  The  loss  of 
an  ambitious  young  clerk  troubled  him.  He  clearly  saw 
the  uninterested  feelings  of  the  listless  automata  in  his 
department.  Everywhere,  lack  of  interest  was  apparent 
and  the  expensive  result  of  this  lack  was  much  more  ap- 
parent He  resolved  to  change  things.  So  he  approached 
the  general  manager  with  a  plan  for  enthusing  the  men. 


188 PAY    ROLL    PROBLEMS 

His  chief  listened  and  agreed  to  let  him  try  out  the 
idea. 

Straightway  this  executive  began  to  tell  his  men  about 
their  work,  how  it  fitted  in  with  the  work  of  other  de- 
partments and  its  importance  to  the  business  in  general. 
Result:    within  six  months  the  cost  of  running  his  de 
partment  was  reduced  twenty  per  cent. 

TELLING  men  the  story  of  their  work,  interesting 
them  in  its  romance,  acquainting  tliem  with  unusual 
details — these  things  lighten  the  load  of  routine. 

This  marked  the  beginning  of  an  open-minded  policy 
in  the  entire  plant.  The  general  manager  began  to  tell 
all  the  men  about  the  business  on  a  broad  scale,  me- 
chanics and  common  laborers  as  well  as  the  office  force. 
A  monthly  magazine  was  started.  The  men  read  it 
eagerly — and  started  to  think  about  tlie  business.  Fre- 
quent meetings  of  foremen,  gang  foremen  and  depart- 
ment heads  were  held.  Their  interest  was  focused  on 
important  problems.  "What  shall  we  tell  the  men?" 
was  the  leading  question.  And  the  cost  of  this  reversed 
policy — the  time  consumed  in  these  meetings,  and  the 
magazine,  which  cost  about  twenty-five  dollars  each  issue, 
were  a  mere  drop  out  of  the  bucket  of  increased  profits, 
judged  by  the  present  interest,  loyalty  and  initiative  of 
all  the  men  in  comparison  with  the  lack  of  these  qualities 
two  years  ago. 

The  problem  of  getting  the  kind  of-  news  to  men  that 
will  stimulate  personal  interest  and  pride  in  their  work 
and  will  make  each  man,  the  scrap  sorter  and  the  office 
boy  as  well  as  the  department  head,  feel  that  he  is  an 
important  cog — this  vital  idea  of  creating  "family  in- 
terest" among  all  employees  is  an  organization  policy  to 
which  efficient  execution  of  the  actual  work  of  a  busi- 


MAKING     WORK     INTERESTING 189 

ness  owes  allegiance  more  than  to  any  other. 

It  is  safe  to  say  that  the  lack  of  family  interest  among 
the  workmen  of  any  organization,  caused  by  the  policy 
of  extreme  secrecy  or  by  failure  to  get  the  right  kind  of 
news  to  men  at  the  right  time,  taxes  that  organization  a 
big  sum  of  money  in  comparison  with  the  cost  of  judici- 
ously exploiting  its  business  to  its  own  workmen — the 
cost,  for  instance,  of  keeping  one  department  in  touch 
with  the  work  and  the  plans  of  other  departments. 

A  western  salesman  for  a  machine-tool  manufacturer 
received  from  the  home  office  a  trade  circular  that  an- 
nounced an  electric  crane — a  new  line  with  his  firm.  In 
acknowledging  this,  the  salesman  wrote : 

"The  Jones  Bridge  Company  has  just  placed  a  sixty- 
thousand-dollar  contract  for  cranes.  In  view  of  the 
satisfactory  service  of  other  machines  we  have  sold  this 
company,  I  feel  sure  that  had  I  known  a  month  ago  that 
you  were  designing  a  crane  I  could  have  landed  an 
order." 

Contrast  with  this  the  policy  of  another  company, 
where  district  sales  managers  are  almost  as  much  a  part 
of  the  engineering  staff  as  though  they  visited  the  shops 
every  day  to  find  out  what  is  going  on  there.  No  im- 
portant change  is  made  in  any  of  this  company's  ma- 
chines that  is  not  first  laid  before  these  district  sales 
managers  for  suggestions,  objections  or  approval.  The 
entire  organization  from  shippers'  helpers  up  to  the  gen- 
eral manager  works  unitedly  for  increased  output  and 
for  decreased  expense — to  smash  last  year's  record  daily 
— and  they  do  it  chiefly  because  the  business  is  advertised 
to  them.  Monthly  and  weekly  periodicals,  also  daily 
bulletins,  are  issued  in  all  the  sales  districts.  These 
bulletins,  which  are  distributed  among  all  the  men  at 
home  and  on  the  road,  not  only  keep  salesmen  in  touch 


190 PAY     ROLL    PROBLEMS ^ 

with  all  important  production  problems  and  changes,  but 
also  show  their  exact  relative  sales. 

The  best  news  to  give  out  and  the  best  method  of  com- 
munication largely  depend,  of  course,  upon  the  number 
of  employees  and  the  kind  of  work  they  do.  If  the  news 
is  of  a  general  character  interesting  to  a  great  number 
of  men,  it  can  best  be  communicated  by  means  of  a 
periodical.  If  it  is  important  news  of  immediate  value, 
bulletins  or  circulars  may  be  sent  out  for  the  signatures 
of  those  interested.  Or,  most  effective  of  all  methods 
for  the  big  business  as  well  as  for  the  small  one,  news 
may  be  disseminated  even  among  the  rank  and  file  by 
word  of  mouth. 

WHEN  the  executive  comes  into  actual  contact  with 
his  employees  and  speaks  to  them  as  man  to  man, 
they  get  broader  viewpoints  and  a  new  interest. 

"When  we  took  this  contract  we  promised  deliveries 
one  week  earlier  than  any  one  else  could  figure.  We 
cut  the  margin  pretty  close,  perhaps,  but  if  we  all  think 
and  work  togetlier,  we'll  put  the  job  through  on  time. 
We  can't  afford  to  and  we  won't  fall  down  on  this  con- 
tract. So  u*e'll  tell  the  men  and  get  things  started." 

The  head  of  a  manufacturing  plant  thus  spoke  to  a 
council  of  his  factory  executives  consisting  of  the  super- 
intendent, foremen  and  gang  foremen.  He  had  just  an- 
alyzed the  strenuous  conditions  under  which  an  order 
was  captured  and  must  be  filled.  The  chief  of  the  plan- 
ning department  had  sketched  the  program  and  the 
schedule  on  operations,  and  had  indicated  the  points 
where  danger  would  focus.  If  any  outsider  had  seen  the 
rapt  attention  given  to  both  speakers,  he  would  have 
been  certain  that  this  was  a  crisis  in  the  affairs  of  this 
company.  But  this  conference  was,  and  is,  a  daily  oc- 


MAKING     WORK     INTERESTING 101 

currence.  And  these  meetings  tell  about  all  of  the  suc- 
cess story  of  this  prosperous  industry — best  expressed  in 
those  significant  words  of  the  president:  "So  we'll  tell 
the  men." 

Follow  the  head  of  this  business  out  into  the  shops. 
His  eye  catches  the  ticklish  combination  of  a  new  work- 
man machining  parts  to  be  used  in  filling  the  order  of  a 
new  customer.  He  picks  up  a  finished  wheel,  not  gin- 
gerly, as  one  who  considers  his  finger  tips,  but  firmly. 
Calipers  and  gauges  are  handy,  but  he  ignores  them  and 
saves  the  workman's  pride.  He  is  not  an  inspector  of 
parts;  he  is  a  handler  of  men.  His  way  is  to  mold 
them,  not  hammer  them,  into  confirmation  with  the  com- 
pany's requirements. 

"That's  the  GP  job,  isn't  it?"  he  asks  the  new  work- 
man. Then  confides  in  him:  "We  had  to  do  some  tall 
figuring  to  land  that  work.  They  buy  lots  of  machinery, 
but  they  think  too  much  about  the  price,  and  this  is  the 
first  time  we've  been  able  to  sell  them.  We're  not  mak- 
ing much  on'  the  order.  But  we  count  on  giving  them 
such  a  good  job  that  they'll  see  the  difference  and  will 
buy  our  stuff  in  the  future." 

Not  a  word  of  caution  or  command,  no  hint  of  watch- 
fulness or  distrust,  just  a  few  frank,  informing  words 
that  invest  a  bunch  of  ugly  castings  with  meaning  of 
vital  interest  to  this  laborer.  Forthwith  this  man  in 
overalls  sees  his  task  and  himself  in  a  new  light.  An 
otherwise  wearisome  job  becomes  interesting  and  worth 
study.  The  workman  feels  responsible.  His  brains  are 
needed  as  well  as  his  hands.  He  is  part  of  an  organiza- 
tion that  recognizes  the  importance  of  the  individual  and 
confides  in  his  ability.  In  this  one  detail  this  workman 
feels  that  he  is  the  company  and  the  organization.  He 
is  the  competitor  with  rival  manufacturers.  Without 


192 PAY    ROLL    PROBLEMS 

ministering  to  his  conceit,  without  "jollying,"  he  gets 
an  admirable  first  lesson  in  house  spirit.  If  he  measures 
up  to  the  company's  standard,  the  lessons  continue  until 
they  cease  to  be  lessons — they  become  problems  he  is 
helping  the  company  to  solve.  All  of  which  results  from 
the  significant  policy:  "So  we'll  tell  the  men." 

Costly  formal  annual  banquets  may  be  worth  while, 
but  informal  daily  meetings  with  the  men  are  worth 
much  more — and  the  one  tactful  interview  of  the  presi- 
dent with  the  man  in  overalls  is  an  example  potentially 
worth  a  dozen  formal  banquets. 

From  that  particular  instance  the  step  is  short  to  the 
general  principle.  The  dependence  of  the  sales  force 
on  the  factory  organization,  the  handicap  of  high  pro- 
duction cost  in  figuring  contracts  successfully,  the  close 
connection  of  the  sales  force  with  every  economy  in 
production  and  the  sympathy  between  profits  and  pay 
envelopes — all  these  vital  interdependencies,  constantly 
and  concretely  impressed  on  the  minds  of  the  men  con- 
cerned, build  business. 

"I  have  always  tried  to  show  the  men,"  another  execu- 
tive explains,  "that  cooperation  is  the  mercury  in  the 
thermometer  of  our  earning  power.  Wages  and  profits 
rise  and  fall  together.  They  know  this  for  a  fact ;  they 
know  why  it  is  true;  and  our  interests  are  never  far 
apart." 

This  management  is  willing  to  tell  the  men  not  only 
the  cost  of  materials  and  labor,  but  also  general  costs, 
overhead  expense  and  the  elements  on  which  these  de- 
pend. Even  specifications  of  contracts  are  given  out 
under  certain  restrictions  to  employees  who  desire  to 
know  them. 

"Discovering  and  initiating  improved  methods  are  not 
alone  foremen's  and  front-office  jobs,"  he  continued.  "If 


MAKING     WORK     INTERESTING  193 

you  want  your  tool  makers  and  machine  tenders  to  add 
the  function  of  thinking  to  their  regular  function  of 
doing,  you  must  first  prove  that  it  is  to  their  advantage. 
This  kind  of  cooperation  must  spread  down  before  it 
grows  up.  That  is  why  we  tell  the  men  what  we  are 
sometimes  told  the  men  should  not  know." 

The  decisive  test  of  this  young  president's  idea  came 
with  the  financial  collapse,  of  1907.  Three  years  before, 
he  had  taken  charge  of  a  demoralized  industry,  had 
eliminated  its  labor  difficulties,  reorganized  the  factory 
and  restored  the  company  to  dividends.  He  had  just  ac- 
complished many  economies  and  cost  reductions  and  was 
moving  cautiously  onward  when  the  sudden  paralysis 
of  business  forced  his  hand. 

PUTTING  confidence  in  men  is  a  sure  way  of  having 
them  at  your  side  in  times  of  trouble — and  at  all  times 
such  a  policy  makes  for  lower  production  costs. 

Prom  desirable  changes  his  contemplated  improve- 
ments became  immediate  necessities,  if  production  were 
to  continue  and  the  force  be  held  together.  Machinery 
buyers  were  cancelling  orders.  Nothing  except  radical 
price  concessions  would  tempt  them  to  enter  the  market. 
Cost  cutting  must  accompany  the  scaling  of  prices.  But 
cost  cutting  wa»  this  executive 's  treasured  purpose.  He 
made  the  slump  in  orders  the  front  of  opportunity,  not 
of  calamity.  Immediately  he  closed  a  contract  that 
troubled  his  sales  department.  Then  he  called  in  his 
superintendent  and  his  council  of  foremen : 

"I  have  accepted  a  $10,000  chain  job  at  cost,"  he  con- 
fided. "If  I  had  figured  in  our  usual  percentage  of 
profit,  I  could  not  have  closed  the  order  and  the  shops 
would  have  to  shut  down.  This  condition  must  govern 
our  business  for  many  months.  To  make  sales  enough 


194 PAY    ROLL    PROBLEMS 

to  keep  us  all  busy,  we  must  quote  prices  at  about  our 
present  cost  levels.  The  only  alternative  is  to  run  half 
time  or  lay  off  a  lot  of  men.  I  don't  want  to  do  either. 

"This  is  your  contract  and  your  men's  contract  just 
as  much  as  it  is  the  company's.  If  the  men  can  help  us 
cut  the  costs,  we'll  not  have  to  cut  their  wages  and  we 
can  take  other  orders  on  the  same  basis.  We  want  their 
ideas,  therefore,  on  getting  this  work  out  more  expedi- 
tiously.  "We  '11  make  it  worth  their  while  to  think.  We  '11 
pay  twenty-five  dollars  for  every  suggestion  which  re- 
sults directly  or  indirectly  in  cutting  cost.  And  when 
we've  run  this  order  through  we'll  know  whether  we 
can  keep  everybody  busy  at  his  old  rate  or  whether 
we'll  have  to  cut  the.  pay  roll.  Explain  the  situation  to 
the  men.  Put  the  issue  up  to  them." 

A  few  days  later  the  president  and  superintendent 
sifted  out  a  mass  of  suggestions,  six  of  which  promised 
important  savings.  One  proposed  to  saw  out  the  blanks 
from  which  chain  links  were  forged  instead  of  heating 
the  bars  and  forging  them  to  length  by  hand.  With  a 
form  cutter  at  least  forty  bars  could  be  sawed  cold  at 
one  time.  Two  forgings  were  not  necessary.  Five  men 
could  do  the  work  that  ten  do  now  and  in  half  the  time. 

Many  other  valuable  suggestions  were  proposed  and,  as 
the  job  progressed  through  the  shops,  change  after 
change  was  made.  When  the  actual  costs  on  this  job 
were  finally  figured  the  net  profit  for  the  company  was 
four  per  cent! 

Every  man  took  a  personal  pride  in  the  successful 
outcome.  They  had  begun  to  think  operations  as  well  as 
execute  them.  They  had  demonstrated  for  themselves 
the  value  of  cooperation  and  the  reality  of  their  mutual 
interests  with  the  company.  They  had  developed  indi- 
vidual organization  consciousness.  They  were  a  team— 


MAKING     WORK     INTERESTING 195 

the  principals  in  a  big  fight — because  they  were  told 
what  the  fight  meant. 

Not  long  ago  a  visitor  in  a  great  electrical  plant  saw 
this  inscription  plainly  chalked  on  the  side  of  a  huge 
piece  of  apparatus:  THIS  MACHINE  GOES  TO  PERU — IT 

WILL  HELP  BUILD  THE  RAILROAD  ACROSS  THE  ANDES. 

"Traveling  advertisement?"  the  visitor  asked  the 
superintendent.  But  that  gentleman  smiled  as  he  an- 
s\\vred:  "No,  only  our  ad  to  our  own  men  here  in  the 
plant.  We  let  the  employees  know  all  about  the  products 
of  the  firm.  It's  good  policy.  Our  shippers  will  handle 
that  machine  more  carefully,  see  that  it  is  blocked  up 
and  fastened  more  securely  because  they  know  how  far 
it  has  to  go.  'Going  to  Peru!'  they  will  say.  'That's  a 
mighty  long  trip.  "We'll  have  to.  fix  her  up  so  she'll 
stand  that  trip  and  we'll  have  to  be  dead  sure  every 
part  is  all  right,  for  she'll  be  a  long  way  from  the  re- 
pair shop  up  on  top  of  the  Andes.'  You  see,  they  will 
take  great  interest  in  that  shipment.  Instead  of  just  a 
huge,  troublesome  block  of  metal,  that  machine  at  once 
is  invested  with  a  personality. 

"I  have  never  known  it  to  fail,"  he  concluded,  "that 
when  you  take  the  men  into  your  confidence  it  proves 
a  great  incentive  to  better  work." 


T     HAVE  nrrrr  Jtnotm  of  a  great  butinrtt  ntccei*  without 
*•    a  per»onalily.     I  hate  never  known  of  a  great  ptrtonaiity 
in  burinet*  rrithout  a  tyttrm. 

—Henry  C.  Lytton 

Fmldrat.  TtM  Hub.  Cbtcaco 


XXIV 

APPOINTING  THE  EMPLOYEE 
HIS  OWN  JUDGE 

By  A.  L.  Filene 
General  Manager  and  Treasurer,  Wm.  Filene's  Sons  Company 

JUSTICE  in  all  decisions  involving  the  relations  be- 
tween employer  and  employee  is  the  essential  for 
holding  a  loyal  working  force.  Give  the  employee  a 
chance  to  present  his  side  of  the  case  before  a  jury  which 
he  has  helped  elect  and  he  must  recognize  the  fairness 
of  its  decision  whether  it  is  for  or  against  him. 

I  consider  the  right  of  arbitration  given  to  our  em- 
ployees, and  the  way  it  has  been  used  during  this  period 
of  years,  the  most  important  contribution  we  are  making 
toward  the  promotion  of  practical  and  just  cooperation 
between  employer  and  employee ;  and  I  believe  that  in  its 
essential  principles  this  type  of  arbitration  can  be  ap- 
plied to  any  business. 

Since  July,  1901,  an  arbitration  board  has  been  annu- 
ally elected  by  the  Filene  Cooperative  Association — an 
association  to  which  every  employee  of  William  Filene's 
Sons  Company  belongs  by  virtue  of  employment.  This 
board  is  made  up  of  a  representative  from  each  of  the 
various  sections  of  the  house.  Having  jurisdiction  at 
first  only  over  matters  regarding  reductions  in  salary, 
it  has  gradually  improved  its  usefulness  and  value  until 
today  it  has  the  power  of  deciding  all  questions  of  dis- 
agreement as  to  wages,  positions,  tenure  of  employment 
and  any  point  of  controversy  between  employer  and 


EMPLOYEE    ARBITRATION 197 

employee  or  between  one  employee  and  another. 

The  board  is  at  present  composed  of  nine  members,  all 
of  whom  are  employees  and  are  elected  by  general  vote 
of  the  employees.  The  chairman  is  appointed  by  the 
president  of  the  F.  C.  A. 

So  satisfactory  has  been  the  work  of  these  boards 
that  there  is  probably  not  a  person  in  the  store  who 
would  give  up  the  arbitration  board.  We  have  had  more 
than  400  cases  of  arbitration,  and  a  professor  of  law 
who  has  made  a  study  of  them  says  that  for  average 
good  sense  and  justice  the  decisions  compare  well  with 
some  10,000  civil  cases  which  he  has  studied.  From  a 
two  years'  summary  of  the  cases  some  interesting  figures 
have  been  obtained.  Forty  per  cent  of  the  cases  have 
been  decided  in  favor  of  the  firm,  fifty-two  per  cent  in 
favor  of  the  employees.  The  other  eight  per  cent  were 
withdrawn  or  settled  outside  of  the  arbitration  board. 
Dismissals,  missing  sales  slips  and  cashier's  shortages 
constitute  the  basis  for  appeal  in  the  majority  of  cases. 

JUDGMENT  of  ditpuie*,  whether  between  employ*** 
or  between  employer  and  employee  by  juries  they  have 
elected,  make*  for  a  satisfied  working  force. 

In  addition  to  this  arbitration  board  elected  by  em- 
ployees, any  profit  sharer  in  the  Filene  corporation  can 
bring  any  question  before  a  special  Profit-sharer's  Arbi- 
tration Committee  of  three.  One  member  of  the  com- 
mittee is  chosen  by  the  appellant,  one  by  the  manage- 
ment, the  third  by  these  two. 

At  first  sight  it  might  appear  that  the  employees, 
knowing  their  right  to  appeal  against  a  decision  of  those 
in  authority,  would  take  advantage  of  their  position, 
and  discipline  would  be  lax.  Several  years'  trial  of 
the  plan  has  shown  that  the  attitude  of  the  employees 


198 PAY    ROLL    PROBLEMS 

is  exactly  the  opposite. 

That  employees  may  understand  their  privileges  and 
their  relations  to  the  arbitration  board,  a  printed  card 
is  given  to  all  employees  when  they  enter  the  organiza- 
tion. A  similar  statement  is  printed  on  the  pay  envel- 
opes as  shown : 


You  have  the  right  to  appeal  to  the  Arbitration 
board  any  question  relating  to  the  powers  given 
you,  your  scope  of  work,  promotion  or  remunera- 
tion. The  Arbitration  board  is  elected  annually  by 
the  employees,  and  any  appeal  should  be  made 
to  the  representative  of  your  division,  Mr 

Positions  in  the  house  are  filled  by  promotion, 
if  possible. 

The  important  factors  in  considering  you  for 
promotion  are: 

1.  Successful  work  in  your  present  position. 

2.  The  fact  that  you  have  developed  an  un- 

derstudy capable  to  take  up  your  work. 

3.  The  fact  that  you  have  made  yourself 

familiar  with  the  duties  of  the  position 
desired. 

Go  freely  to  the  F.  C.  A.  Counsellor  for  advice 
on  either  personal  or  business  matters.  Her  prov- 
ince is  to  help  clear  the  way  for  you  to  succeed. 

Keep  a  copy  of  the  rule  book  always  in  your 
possession — know  your  rules  and  live  up  to  them  in 
every  particular.  The  Filene  Co-operative  Associ- 
ation, of  which  you  are  a  member,  has  power  to 
make  or  change  any  store  rule  by  a  majority  vote. 


Because  there  is  an  appeal  to  the  arbitration  board, 
a  floor  manager  or  head  of  a  department  or  any  execu- 
tive is  very  careful  in  weighing  all  sides  of  a  question 
before  discharging  an  employee.  Floor  managers  have 
the  right  of  removal,  but  not  of  dismissal.  If  a  clerk 
is  removed  by  the  floor  manager  she  takes  her  case  to  the 
store  manager.  If  he  believes  it  just,  he  may  either  rein- 


EMPLOYEE    ARBITRATION 199 

state  her  or  transfer  her  to  some  other  department.  And, 
on  the  other  hand,  if  he  decides  to  dismiss  the  sales- 
woman, she  can  appeal  to  the  arbitration  board,  whose 
decision  is  final. 

Because  of  the  fairness  of  this  treatment,  a  strong 
feeling  of  respect  for  decisions  has  been  engendered  in 
the  store.  If  an  employee  is  discharged,  a  feeling  is 
manifest  that  he  deserved  it. 

One  case  in  particular  makes  this  point  clear.  An  em- 
ployee in  a  position  of  responsibility  appropriated  money 
not  his  own.  When  his  theft  was  discovered  and  he  had 
been  discharged  by  the  store  manager,  he  appealed  to  the 
arbitration  board  for  reinstatement,  urging  a  number 
of  extenuating  circumstances  which  were  not  without 
effect.  The  board,  however,  upheld  the  manager's  posi- 
tion and  he  left  the  store. 

Under  these  circumstances  and  ordinary  conditions, 
this  employee  would  have  felt  embittered  toward  the 
management  and  the  store,  however  just  was  his  dismis- 
sal. In  this  case,  however,  he  had  been  given  an  oppor- 
tunity to  present  his  side  of  the  case  before  a  jury  of 
his  peers  and  make  the  best  plea  possible,  and  when  he 
left  the  store  it  was  with  the  double  conviction  that  his 
dismissal  was  just  and  that  it  was  not  a  case  where  the 
management  would  not  show  mercy,  but  one  where 
his  fellow  employees  were  compelled  to  insist  upon  his 
dismissal  for  their  own  protection  and  the  good  of  the 
business. 

Nor  is  the  employee  the  only  party  benefited  by  this 
method  of  handling  dismissals.  A  clerk  in  a  bookkeep- 
ing department  was  doing  poor  work  and  was  removed 
by  the  department  head.  The  store  manager,  when  the 
case  came  to  him,  decided  to  transfer  the  man  to  his 
own  department  and  took  occasion  to  have  him  under- 


200 PAY    ROLL    PROBLEMS 

stand  that  inefficient  service   was  the  reason   for  his 
transfer. 

A  few  months  later  this  same  clerk  was  selected  by 
the  head  of  a  department  to  be  his  understudy  and 
showed  such  ability  that  he  was  advanced  to  a  position 
of  responsibility  where  he  was  in  charge  of  the  men 
with  whom  he  had  not  been  able  to  make  a  showing  in 
the  first  place.  The  man,  appreciating  the  situation,  had 
taken  night  courses  of  instruction  and  developed  himself. 
The  firm  had  retained  a  valuable  and  loyal  employee. 


TT  IS  very  desirable  to  take  men  into  employment  when 
they  are  young.  We  do  not  want  to  take  on  men  who 
have  not  within  themselves  the  capability  of  becoming  execu- 
tives. Our  best  executives  today  came  in  as  boys  and  made 
the  business  a  part  of  their  nature.  We  are  taking  in  many 
young  men  who  want  to  make  their  way  in  the  world,  and  if 
they  can  devote  themselves  to  the  tasks  before  them,  they  will 
succeed.  The  incentive  to  work  is  great  if  the  man  knows  that 
sure  advancement  awaits  him  and  the  department  executive 
has  great  inducement  to  train  an  understudy,  if  he  knows  by 
doing  so  he  is  not  training  himself  out  of  employment,  but 
turning  himself  into  a  higher  and  more  remunerative  occu- 
pation. 

— Clarence  M.  Woolley 

President,  American  Radiator  Company 


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