Fuentes o medios de verificación.

of management f rom

re

sponsibl

e

working

operatives

to the highest administrative

officers .

1

efficiency and expenditure outlay •

The of suitable tests for It

is ditticul t to obtain direct measures ot managerial e.fficienoy. So many ele-

menta or variables that inf'luenoe management

(

and oosts too

)

, are a heterogeneous oouplex of envi ronmental and institutional oausation - cream density o.f the area , numbe rs ot suppliers , distanoe from cool stoa:es and coal supply, condition and

age of buildings , and plant and machine ry. The impact or influence of these

variables , o r elements on management

(

while not exactly similar

)

, set a problem for management , the effectiveness of which , will still be reflected in short­ period and long-period costs . However , costs in aey one case oan be assessed only strictly with reference to the special conditions of this case , and this makes gene ml ·comparison of costs difficult.

of The following is a classification of the types of manage­

ment existing in the

96

companies comprising the butter manufacturing industry :

Type A. Senior ftmotional ope mtive . Manager works full time in factozy

Type B.

Type

C .

Type D .

Type E.

as operative . Number of ccmpanies -

4-5.

Factory Managers: .Responsible directly t o directors . Usually subs�diazy managers

(

such as store mnage rs

)

who answer partly to .factozy manager, partly to Seoretar,y, and partly to Di rectors . Factory manager worlcs about

50

pe r oent of time as a functional

ope mtive . Numbe r of companies -

9.

Manager: Fully responsible for butte r factozy and activities . Has oversight of other semi-executives and is senior to the Sec retary as an officer. Wo lks some time in faoto :xy as opemt­ ive - up to 25 per cent but usually in relief capacity.

Number of companies -

24.

Managing Secretazy

{

or equivalent

)

: Responsible to directors for

all undertakings , technical , executive and administmtive.

Usually multi-branch COOIJ?anies , mnging from small two-bmnoh

companies to the largest organi sations . Full-time ·faoto:xy managers

are under his control , so that his salazy is charged to Gene ml.

Ove rllead. Number of caopanies - 1 1 .

Managers or Geneml Managers : Purely executive duties with Sec­

retazy as distinctly subordinate officer. Usually multi-branch

and multi activities . Numbe r of companies -

7.

1 In addition to the intiUSive item o.f dep reciation, on the grounds of logical completeness othe r non-D&D8.gerial considemtions will be dis­

cussed in this Part. Past 8.dministm ti ve decisions in the shape of

current plant and equipment and their capacities are relevant to the

cost patterns of steam, power, p rocessing, repairs and maintenanoe ,

and other expenditure . Pre sent administrative decisions affect qual­

ity of product , quantity of raw material offe red, as well as gene m l cost allooa ti ons . Other non-managerial factors such as substitution, scale , and location must necessarily be discussed , while others again, are border-line o r ove rlap administrative considerations.

Of the above , Type A . represents small factories and Type E. the la�est

organisations . Type

c.

represents a medium-sized factory with some subsidiary

activity , Type B. tends to bndge Types A. and

c. ,

with the additional feature of auxiliarles �o a g�ater ex

ten

t than Types A. and

C

• •

,-:. . . ' . . ' Type

D. includes a

cross-section of all types of. multi-branch factories of a ll sizes�

� . . .

In small factories , the manager is a working manager who is both an exec-

utive and an ope rative. In oode:rate-sized factories the manager is able t o delegate and supervise va rious processes and activities but he is still an opel'­ ative to some extent . In larger companies ma.riagement i s specialised and exec­ utive in character. Aoconiing to the ·structure , size and activities ot :t;I?.e

company, managerial duties will vaey.

In the large r comPanies , managers will be executive heads responsible

for the co-o rdination of all the activities of the organi sation. They will

have oversight ot departmental managers who may control an entire plant or

t:actoxy, or who may be responsible for a distinct fUnction in the organisation. Management is distinguished practically according to the allocation of salaries .

A butte r factory manager may be responsible for a

5,000

ton-output factor.y

and its auxiliaries , but his salazy will be allooa ted o r charged t9 b�tter

etc . The general manager, however, whose function is to co-o rdinate butter,

powder, transpo rt , t rading ... store and secretarial activities , etc . ' will have

his salary apportione� e.-m:mgst the general ovemeads. These types of manage­

ment tern to merge , and ove rlap into the administrative sphere .

With the exception of Type A . management , too many managers allow them­ selves to become ope ratives to an extent that is p rejudicial to managerial

efficiency. As a result , insufficient time is devoted to organisation ,

planning and administrative worlt . This is partly due to labour shortage

and the inexperience of gene ral bands.

Many a manager c�o't-.;.�sist

being

one of the team to set the pace when output. is lagging behind what is no mal , whereas this should only be done in

an emergency or as an oooasi.C?nal calculated piece of leadership . The

manager tends habitually, to take his place as an opem:tive , overlooking the

tact that it is a test of manage rial ability to have the highest paid worlce r, himself , doing a task that calls for the greatest skill , that of planning , organisln:g, delegating and supervising.

Certl\in

figures and ratios act as an index of manage rial efficiency for all types of management , but cannot be regazded necessarily as a valld comparative guide , for they a re affected by environmental conside rations . These figures and ratios � have value ,

(

a

)

for internal use by managers , and

(

b

)

for gene ral assessment puzposes .

As an internal guide of efficiency , management oan check its own

efficiency through time by coll!Paring results . For eX8.1IJ>le , a manager oan examine any va riations in his nonthly coal consumption pe r uni t of output , his daily electrical powe r consumption , his ann

ual

cost ratios , his annual labour turnover o r his percentage of ove rtime.

For gene ral assessment puzpo se s , these figures have a

limi

ted utility for co�ring faoto zy with factory , provided the factories being COII!Pared a re mode rately homogeneous as regazds locality, s uppliers and output .

Of the two types of efficiency cheoks which follow, the first is u seful for cheold.ng technical efficiency , the second , economic efficiency.

I . Physical input-output ratios , and physical data , including :-

(

a

)

(

b

)

(

c

)

( d)

(

e

)

(

f

)

(

g

)

(

h

)

(

i

)

(j )

Man-hours per unit of butte r. Units of c oal pe r unit of butter. Power uni ts per uni t of butter.

Miles-per-gallon in transport haulage . Labour tumover pe r annum.

Time-mtion data : Seconds per man-oan.

Seconds per man-carton. Percentage of Premium Butte r to Ave rage Grade.

Ratio of Premium Butte r to Finest C ream.

Ratio of Average Grade to Finest

Cream.

Ratio of Fi mt and Second Grade Cream _{to p revious}

II. Cost

d

ata A!ld.

cost ratios, incb.ding:-

Surplus on

buttennaking accounta

Average p�out �or season.

Overrun r·ela-ted to Ma_rmfacturing Charges$

Charges

( e

)

Wages

Materials

{ f) Fuel , Power & Steam

!lfanufac tu.:dng

C

har

g

es (g) T0tal Costs (h) General Total oostso (i) Overheads Total costs. (j) Administrative Number of supplierso

(k)

The relative unit costs as revealed by the

W�ufacturing Account.

Where multiple regressional ana�sis has been made of a number o:f variables

related to a given function, the differential between the actual and estimate

evaluations may, to some considerable extent , be largely attributable t o

differential managerial efficiency. Depending on the nature of the regressio

and the number of independent variables in the for.mula and the

standard

error

of

estimate, these

differentials

are related to managerial ability and o ther

unexplained

variables. It is not possible to calculate precisely the per­

centage attributable to managerial efficiency, but it is evident that mana­

gerial efficiency is an independent variable functional� related to the

2

dependent variables. In

t

_ho

_s

_{e instances where}

_management

_{ha.s changed, the}

dependent variables will change too (other factors held cons tant) ,

suggesting

that

management has ple;yed. a conSiderable part in determining the deperdent

�

age

r

ial efficiency will probably be inter-correlated with other

independent variables, so that the residuals may not indicate fully the true relationship and propor�ion of man�ement as a fUnction.

variable.3

A relative� reliable guide to efficiency can be obtained by noting

the position of the factocy concerned relative to the regressional line in a scatter diagram. A factor.r below a regressional line indicates that there are certain favourable variables causing this position. But posi ti.on alone in a scatter diagram cannot be as sumed to be due to any one variable

such as managerial efficiency, unless other variables are held constant.

3

Labour turnover, as

measured

by multiple correlation ana]ysis, oan

be considered as caused by a number of independent variables, housing , scale, and wages

(

the measured independent variables

)

, ani the resi­

duals be conceived

as

a complex of managerial efficiency, sociological

and psychological propensities of the employees, and other locational

factors.

If

sociological and psychological propensities are not ab­

normal, and other factors are constant , then it � be assumed that

8D\Y' residual deviation can be attributed to managerial efficiency

(

or the lack of it

)

.

To illustrate : From the labour turnover regression it was computed

that ·about

1 4

per cent of labour turnover in the butter ind.ustr,y is

a constant factor due to normal staff wastage arising from death,

retirement,. transfers eto. . About

7

per cent was due to lack of satisfactocy accolii!IOd.ation, 24 per oent was due to scale or output, and 2 per cent was due to salary. That is,

47

per cent o f turnover in the industxy can be accounted for; the balance of 53 per

cent is

caused by oth�!' reasons, largely employer-employee relationships

(

if

we can assume other elements constant

)

.

In one large faotocy the actual turnover for the year was exactly

₅₀₁

whereas the estimated turnover calculated for that identical faotor.y

by� the regressional formula was

88.51 .

That is, the fact� was

some

77

per cent more efficient in handling labour than the average faotor.r of that size with similar housing and salary conditions.

In

this faotor.y, employer-employee conditions were excellent, and no

effort was spared to keep the staff happy. This was verified by sub­

jective enquixy. On the other hand, another factory with smaller

output had a labour turnover of

1 32,

whereas a standard faototy of

that size and working oond.i tions should have had a turnOV'er of

76.

This latter factory was inefficient as regards h�dling labour, and

subjective en

quiry

confirmed that there was DJJCh

to

be desired in ·

employerw��loyee relationships.

Limitations : The question still rema.ins as to what constitutes efficiency

in management. Whilst efficiency itself is a relative measure, indicated

by the ability to produce the most profitable level of output at the lowest possible total costs, there are certain other features including quality of output.. which DllSt be considered..

A manager may be proficient in technical efficiency if he is able

to produce a

high

percentage of premitDil butter

from

a relatively high percentage of 1 st and 2nd grade cream. But this technical efficiency 'I1J8Y be at the expense of economic efficienoy, in that the technical efficiency was made possible by the relatively high cost expedient of double vacreation.

Or, economic efficiency may be at the expense of eJJ�>loyer-employee relation­

ships, which although not reflecting on costs immediately, have a long-term

adverse effect on labour costs.4

Again,

a manager may be relativel,y

efficient teohnicall,y but inefficient administrativ�� or in other respects. Finally, in measuring efficiency, it Dllst be recognised that it is

nigh-well

�ssible to hold other factors constant in endeavouring to

assess relative efficiency between managers of various factories. Efficiency is a subjective quali'tu' measured by objective evaluations. It is relativel,y safe to measure one manager from season to season, for other factors tend to be constant, but not necessarily so. But to rank all managers in an

.

efficiency scale DllSt be based on certain assumptions, the most important of

which is the ceteris assumption, an assumption which is not always

true. ldoreover, it should not be assumed that all managers above the median

in

_{an array} are necessarily efficient and those below the median are in­

efficient. All may be efficient, but

sane more

than others; or conversely,

all JMY be inefficient but some more than others.

Efficiency has no coDIDOl'l denominator.

40ne season is a relatively short-term period. Efficiency can be assumed by examining data relative to one season, but several seasons need to be examined conjointly as it is possible to post­ pone expenditure or to overlook the influence of a · favourable season. Efficiency is a d;ynamic rather than statio attribute.

SECTION

.f!•

TECHNICAL ASPECTS - UTILIZATION OF POWER.*

rnTRODUCTION : This section deals with the efficiency of power

utilization in the manufacture of butter.

Power is required for

(

a

)

motive power in driving and activating plant

ani

machinery,

(

b

)

processing,

(

vacreation, sterilizing , cleaning, pasteurising etc.

)

, and

(

c

)

lighting. It is derived from electricity supply, steam, . .fuel-combustion engines

ani

water power

(

turbine

)

.

Power is consumed, broad

�

speaking,

in

three main functions 1

(

a

)

providing motive power,

(

b

)

providing steam for processing , ani

(

c

)

refrigeration.

While most factories utilise electricity for motive power, all

factories must have steam for various operations in processing and cleaning.

A few factories use steam

and/

or internal canbustion engines or other

device for motive power instead of electrici�.

Consequentl;y care needs to be exercised to ccmpare those factories

generating steam for processing o� and not for motive power,

(

unless

special meters or separate boilers were used

)

.

The total cost of ".fuel, �r end steam" as revealed by. the N.z.

Dai:cy Board' a 26th Annual Report is 5 per cent of the total manufacturing

costs. But these costs refer solel;y to fuel, electrical power, and cost

of transport · of fuel to the facto:cy.5

The total cost of power is much greater, for the cost of power in this section is meant to include not onl;y " fuel, power and steam" 1 but also

c osts relating to generating, supplying,

procuring

and transmitting power

together with

all

costs relating to providing, operating and maintaining

plant or equipment 1

and

providing or transmitting power.

The main elements of power utilization costs, other than fuel,

electricity

and

steam include :-

5see "The

Accounts 1 9501 Govt.Printer,

Wellington, P • •

•

Certain asp ects of Secti on I l , such as plant capacities, ins tru-

mentation and scal e p rop erly bel ong to Part V, but are d i scussed here for the sake of compl eteness .

Labour - firemen, engine drivers , engineering staff etc. Repairs and. maintenance of power plant.

Consumable stores - oil , grease , cleaning equipment. Brine , amnonia, freon.

Depreciation of plant used for supplying or transmitting power.

Interest

and

insurance on plant used for supplying or

transmitting power.

Administrative and IDS--'la.gerial charges.

Overhead and other distributable charges relative to factor,y buildings etc.

When these other elements are included, the total cost of power of

a medium-sized plant

was

1 1 .7

per cent of total costs of butter manufacture

- or put differently, " fuel , power

and

steam" is about

42.5

per cent of

total power costs. Power thus plays an important and costly function in

butter manufacture.

Source of Data: A survey was made of all plant and equipment generating or utilising power, together

with

number of units consumed, in order to relate power consumption to butter production. To this end, each company was

asked to supply the following data :

(

a)

(b)

Total units of power for

1 949/50

season consumed in butter manufacture -

(

monthly units

wi th

power and lighting dis­ tinguished where possible) .

Total coal utilised for

1 949/50

season in butter manufacture - (by the month where possible) .

This information was cross-checked by analysing the accounts of the company (when available ) and by referring to Electrical Power Boards far

oonfinnation in certain dis tricts . In addition, copies of returns made

to Census and Statistics Department and also the

1 950

Survey of Refrigeration

and

Mechanical factors as applied to Butter Factories were obtained. 6

6rt JJJ.lst be recorded that in many of these auxiliary surveys, the data were carefully canpa.red. and checked, and in most oases,

discarded. In this latter survey

25

factories recorded their annual

coal tonnage to the nearest

1 00

tons , and another

44-

returns showed ooal to the nearest

1 0

tons.

c. and s.

official returns were only

Motive Power in factories: Of the

1 1 4

factories examined,

1 6

utilized steam as motive power either in place of 1 or auxiliary to electrical power, five used diesel power plants 1 one a gas engine

(

from gas produced on the premises

)

, and one a water turbine. The rest used electric motors for motive power.

In

medium-sized factories it was usual to find two

25 H.P.

motors for refrigeration plant ,

20

to

25 H.P.

motors for churns,

1 0

to

1 5 H.P.

motors for vacreator water pump1 and a number of smaller powered motors

(

up to

3 H.P. )

for water cooler, valve pumps , butter-milk pumps, va.creator cream pumps, churn pumps , boiler-feed puD�>S1 cream pumps, mechanical

stokers , cool room plant, can-washers , packers , patting machines ,

salt

crushers ,

D.E .

h olding vats , and grinding machines.

Most factories had individual motors for driving various units ,

but

a few took a number of belt drives off a common powe�riven shaft. A few

factorie s had separate meters for different processes , but most of the

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