The same plan has been applied (Weir’s method) with a premium that equally divides between the workman and the employer the time saved.  By Rowan’s method the premium is not a fixed sum but a percentage of the standard rate per hour equal to the percentage of reduction in time consumed.  For example, if in the foregoing example the time were reduced 20 per cent (to 8 hours) the premium would be 20 per cent of 30 cents, and the workman would receive 36 cents per hour.  By this plan the premium becomes less for the later reductions than in either of the other plans.  The utmost possible wages would be double the standard rate.

A number of other variations have been worked out by the promoters of recent scientific management, and are known as Taylor’s, Gantt’s, and Emerson’s plans.  The authors of all these plans agree as to the importance of fixing the standard rate so that it will leave a possibility of considerable improvement with unusual effort, and of leaving the standard rate and premium unchanged as long as no new process or new machinery is introduced into the business.  If this is not done the employees lose faith in the plan and refuse to make the necessary effort to earn the premium.  Most of these plans of payment recently have been connected with experiments and studies in scientific management to reduce the time and increase the ease of the operations.

In a variety of ways a bonus or a premium may be paid for quality, or for economy in the use of materials (as to a fireman for using less coal), or for various other results.  Every business has its peculiar conditions, which make certain results especially desirable, and certain methods of reward practicable.  In some industries, for example, the various plans of piece work and of premium payment are applied to groups of workers (as in collective piece work), the total payment being then divided among the members of the group in some agreed proportion.

Sec. 9. #Aim of profit-sharing.# Profit-sharing is rewarding the laborer with a share of the profits in addition to his usual contract wages.  Payments by the piece and premiums for output are solely dependent on the efforts of the particular workman (or collective group), but in the plan of profit-sharing a premium is given in addition to the regular wage if, at the end of the year, the business as a whole has yielded a profit above a certain amount.  Profit-sharing is not merely a gift; it is done usually in accordance with a definite promise in advance.  The employer adopting the plan does not intend to lose by it.  His purpose is to stimulate the industry of the workers, thus reducing waste and cost of labor and supervision, and thereby increasing profits.  He offers to divide with the workman the additional profits which are expected to result from their efforts.  There is, in every factory, greater or less waste of materials, destruction of tools, and loss of time, that no rules or penalties can prevent.  If the worker can be