The New Zealand Railways Magazine, Volume 1, Issue 3 (July 24, 1926)
The question of rewarding labour for increased output is one that concerns all modern industries. Modern industrial managements realise that in absolute fairness to the men, there needs to be some system, whereby they may pay a man, for that extra output that he is capable of giving, if there is the extra incentive there for him to give it.
The workman on his side knows that very often he could turn out more output if he wanted to, but feels that as there is nothing in it for him, there is no reason why he should do more than a fair day's work, as we all call it. The question is, “How can the difficulty be overcome?” The difficulties are not so many really, if a mutual trust between the management and the men can be obtained and maintained, with regard to all the operations and methods of the whole system.
I propose to put before you the principles and operation of such systems, based on my own experience, so that the subject may become familiar to you, because at some future date such a system will be offered to you. I know only one successful way of introducing any system, and that is to put all the cards on the table, face up, and endeavour to have everybody concerned know as much about it as I do myself.
The premium system has been adopted by most of the modern factories to replace piecework, because it is more fair, it possesses advantages to the men and also to the factory, and it does away with the old rate cutting trouble that killed the old piecework systems. This is the premium system. The whole scheme is handled in terms of time—not money.
The operator is “allowed” a certain “time” to do definite work, and he is paid, as a bonus, one half of the time he saves, at his own regular rate.
For example:-Suppose the allowance for turning tyres was one hour per pairs that would be equivalent to eight pairs in eight hours. Supposing the operator turned out ten pairs in eight hours; he would save two hours for which he would be paid a bonus equal to one hour's pay at his ordinary rate. The whole of the operator's work for the period is totalled, and if no bonus is earned, the regular hourly wages are paid. The slate is cleaned; there are no penalties, no debts. Hourly wages are, of course, always guaranteed.
The method of setting times is quite different under this system; it is more liberal than is possible under piecework and at the same time, it offers greater incentives to the men. I will explain details later on. I ask you not to pass any judgment on the scheme yet. Wait till I explain more of it to you. I assure you it is absolutely a fair system. Incidentally we are not ready to start yet. When I get through explaining the whole system, I propose inviting your questions by correspondence and by personal discussion with your shop committees.
In the meantime, look up the subject. Sometimes it is called the “Fifty Fifty System”; others call it “Halsey Premium System,” and much has been written about it.