PREMIUM BONUS

Dominion, Volume 20, Issue 41, 12 November 1926, Page 10

PREMIUM BONUS

RAILWAY DEPARTMENT’S PROPOSALS A FURTHER EXPLANATION How a premium rate is set is described bv the superintendent of workshops (Mr. E. T. -Spidy) in his latest article on the premium, bonus proposals of the Railway Department. “The ‘allowed time’ for- a job is made up of four factors,", says, the writer. ‘‘First the ‘actual time’ required to do the "job (calculated or studied) ; secondly, the addition to machine running time of, 10 per cent, for machine slip; thirdly, the addition of 20 per-cent, to all handling operations for the human factor; and fourthly, 40 per cent. is. added to the sum of the first three items as bonus allowance. Under premium the ‘time, saved’ is divided ‘fifty-fifty between the operator and the railway. I want to. point out particularly ; that-under premium, double ythe bonus- allowance is added to. the L time required to do the job,: as compared with that added under modern piecework systems; so that the earnings of the operator justify his eftortj there is an added incentive to try and mike a bonus; the railways benefit progressively with the operator. • “Under piecework the actual ‘time required—that is, , the neat time of a good average man—is found, ano 20 per cent, is then added for bonus —which under the' piecework system the operator always gets, irrespective of quantity. He gets it all If the rate is set wrong, by bad judgment, poor guess, or otherwise, the earnings of the operators go up at such a quick rate that ‘rate cutting’ develops, and there, is the trouble. Under premium the titrie required is found as outlined, and 40 per cent, is added, which, when divided fifty-fifty, means that the operator actually gets 20 per cent, as a bonus in money. This is, therefore,, the same as piecework, it being conceded that a man working on any output system at a proper rate is entitled to earn at least 20 per cent, over his wages. Get this right—double the percentage, compared with piecework, is added, and the ; final bonus, is halved. . There, is' a sound reason for this, although it does ‘bust*, •the idea of many who think the railway is taking" half the profits, which it does .not. ■ “The incentive to trv is the next reason. - All men-" are not .gifted alike.; and manv men take 50 per cent, longer, than' other men -to do the same job. We -must base ‘allowances’ on. the ‘average good man’ \ that is .only commonsense. The higher percentage ..added makes a time that , a ‘slow’ man will feel he. can reach, -and endeavouring invariably means: a. bonus. “The. railwav benefits directly under the premium system by,reason of the fifty-fifty division of time saved. The cost of each operation decreases as greater proficiency is developed — hvthe operator, and the bonus monev earnings of the operator do not go up at such a rapid rate as under piecework. Tl.iis permits of more libera) and., it provides for .a greater margin of error in fates (for rate-setters,- foo, lire ,human).” Mr."' Spidy quoted an example to show that by premium the operator earned more bonus for less -output than under piecework. -This, gave more incentive and made it. possible for. a greater range of operators to gain pi bonus. Since eight per day represented the basic rate of an average good man it was seen that at that point the actual bonus under either system was the same; the railway did not take any half of it, as was usually misconstrued. Lastly, the earnings of the super speed operator were not °o excessive as to necessitate rate cuttings at the expense of the average man..