The differential rate system of piece-work consists briefly in offering two different rates for the same job: a high price per piece, in case the work is finished in the shortest time possible and in perfect condition, and a low price, if it takes a longer time to do the job, or if there are any imperfections in the work. (The high rate should be such that the workman can earn more per day than is usually paid in similar establishments.) This is directly the opposite of the ordinary plan of piece-work, in which the wages of the workmen are reduced when they increase their productivity.

That there is a difference between the average and the first class man is known to all employers, but that the first class man can do in most cases from two to four times as much is known to few, and is fully realized only by those who have made a thorough and scientific study of the possibilities of men.

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It is only through enforced standardization of methods, enforced adoption of the best implements and working conditions, and enforced cooperation that this faster work can be assured. And the duty of enforcing the adoption of standards and enforcing this cooperation rests with management alone.

Scientific management... has for its very foundation the firm conviction that the true interests of the two are one and the same; that prosperity for the employer cannot exist through a long term of years unless it is accompanied by prosperity for the employe, and vice versa; and that it is possible to give the workman what he most wants high wages and the employer what he wants a low labor cost for his manufactures.

After a workman has had the price per piece of the work he is doing lowered two or three times as a result of his having worked harder and increased his output, he is likely to entirely lose sight of his employer's side of the case and to become imbued with a grim determination to have no more cuts if soldiering can prevent it.

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I dare say that most of you gentlemen know that a good many pig-iron handlers can never learn to shovel right; the ordinary pig-iron handler is not the type of man well suited to shoveling. He is to stupid; there is too much mental strain, too much knack required of a shoveled for the pig-iron handler to take kindly to shoveling.

The Chairman: Mr. Taylor, do you believe that any system of scientific management induced by a desire for greater profits would revolutionize the minds of the employers to such an extent that they would immediately, voluntarily and generally enforce the golden rule.?

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In concluding let me say that we are now but on the threshold of the coming era of true cooperation. The time is fast going by for the great personal or individual achievement of any one man standing alone and without the help of those around him. And the time is coming when all great things will be done by the cooperation of many men in which each man performs that function for which he is best suited, each man preserves his individuality and is supreme in his particular function, and each man at the same time loses none of his originality and proper personal initiative, and yet is controlled by and must work harmoniously with many other men.

The labor should include rest breaks so that the worker has time to recover from fatigue. Now one of the very first requirements for a man who is fit to handle pig iron as a regular occupation is that he shall be so stupid and so phlegmatic that he more nearly resembles in his mental make-up the ox than any other type. The man who is mentally alert and intelligent is for this very reason entirely unsuited to what would, for him, be the grinding monotony of work of this character. Therefore the workman who is best suited to handling pig iron is unable to understand the real science of doing this class of work.

The greater part of the systematic soldiering, however, is done by the men with the deliberate object of keeping their employers ignorant of how fast work can be done.
So universal is soldiering for this purpose, or under any of the ordinary systems of compensating labor, who does not devote a considerable part of his time to studying just how slowly he can work and still convince his employer that he is going at a good pace.

The art of management has been defined, "As knowing exactly what you want men to do, and then seeing that they do it in the best and cheapest way." No concise definition can fully describe an art, but the relations between employers and men form without question the most important part of this art. In considering the subject, therefore, until this part of the problem has been fully discussed, the remainder of the art may be left in the background.

Broadly speaking, then, the best type of management in ordinary use may be defined as management in which the workmen give their best initiative and in return receive some special incentive from their employers. This type of management will be referred to as the management of “initiative and incentive” in contradistinction to scientific management, or task management, with which it is to be compared.

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What I want to try to prove to you and make clear to you is that the principles of scientific management when properly applied, and when a sufficient amount of time has been given to make them really effective, must in all cases produce far large and better results, both for the employer and the employees, than can possibly be obtained under even this very rare type of management which I have been outlining, namely, the management of ‘initiative and incentive’, in which those on the management’s side deliberately give a very large incentive to their workmen, and in return the workmen respond by working to the very best of their ability at all times in the interest of their employers. I want to show you that scientific management is even far better than this rare type of management.