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… - Frederick Winslow Taylor

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.

I have read with very great interest Mr. Metcalfe's paper, as we at the Midvale Steel Co. have had the experience, during the past ten years, of organizing a system very similar to that of Mr. Metcalfe. The chief idea in our system, as in his, is, that the authority for doing all kinds of work should proceed from one central office to the various departments, and that there proper records should be kept of the work and reports made daily to the central office, so that the superintending department should be kept thoroughly informed as to what is taking place throughout the works, and at the same time no work could be done in the works without proper authority. The details of the system have been very largely modified as time went on, and a consecutive plan, such as Mr. Metcalfe proposed, would have been of great assistance to us in carrying out our system. There are certain points, however, in Mr. Metcalfe's plan, which I think our experience shows to be somewhat objectionable. He issues to each of the men a book, something like a check-book, containing sheets which they tear out, and return to the office after stating on them the work which they have done. We have found that any record which passes through the average workman's hands, and which he holds for any length of time, is apt either to be soiled or torn. We have, therefore, adopted the system of having our orders sent from the central office to the small offices in the various departments of the works, in each of which there is a clerk who takes charge of all orders received from, and records returned to, the central office, as well as of all records kept in the department.

I ordinarily begin with a description of the pig-iron handler. For some reason, I don’t know exactly why, this illustration has been talked about a great deal, so much, in fact, that some people seem to think that the whole of scientific management consists in handling pig-iron. The only reason that I ever gave this illustration, however, was that pig-iron handling is the simplest kind of human effort; I know of nothing that is quite so simple as handling pig-iron. A man simply stoops down and with his hands picks up a piece of iron, and then walks a short distance and drops it on the ground. Now, it doesn’t look as if there was very much room for the development of a science; it doesn’t seem as if there was much room here for the scientific selection of the man nor for his progressive training, nor for cooperation between the two sides; but, I can say, without the slightest hesitation, that the science of handing pig-iron is so great that the man who is fit to handle pig-iron as his daily work cannot possibly understand the science; the man who is physically able to handle pig-iron and is sufficiently phlegmatic and stupid to choose this for his occupation is rarely able to comprehend the science of handling pig-iron; and this in ability of the man who is fit to do the work to understand the science of doing his work becomes more and more evident as the work becomes more complicated, all the way up the scale. I assert, without the slightest hesitation, that the high-class mechanic has a far smaller chance of ever thoroughly understanding the science of his work than the pig-iron handler has of understanding the science of his work, and I am going to try and prove to your satisfaction, gentlemen, that the man who is fit to work at any particular trade is unable to understand the science of that trade without the kindly help and cooperation of men of a totally different type of education, men whose education is not necessarily higher but a different type from his own.