After a review of the status of Company Sections

ut the country, the Committee presents a frank and fearless expression of opinion reg the causes which in its judgment have led epresent general indifference toward Company n activity, and suggests the changes which it ers recessary to insure even a promise of

traci interest.

The Committee feels that it would be guilty of an stive to those whose responsibility it may later be carry on the work assigned to this or a corre

g committee, if it fails to share with you the •! of the opinions expressed by its members at meeting at which the subject was discussed, held

4: 4, Ohio, January 18th and 19th, which was organized with exceeding difficulty as nence of the incomplete development of the a Geographic Division plan, and because of instances which have been so admirably prethe 1920 report of this Committee Recom

were determined upon following the n by Geographic Division and Company retresentatives of very complete reports var ed activities of Company Employees

With the exception of the report reorganization of the New York Section, Description of which appears in the No121 issue of the NELA Bulletin, these wich covered organizations throughout the

cated that the Company Section idea, des gned, has passed out of existence re is little demand for assistance from a Electric Light Association in the devel isai employees organizations

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ta' you may fully appreciate the conuma led by the Committee, permit us to rea that the Company Section idea was in 148, under the inspiration from Naarters, which is contained in the folte assigned to talks by official representa

the idea to the employees of Class A rame'y="The future of the NELA

sment by Company Sections " Conthought are the elements of recognition romance of the development of the smail * rust form the foundation of any sucat zation, and also the reward to the indiparticipation in the program of the Na

Although with this thought eved to the members of Company Sectile background, the advantages which ta! their appeal and the Company Sec originally planned, thrived for about

ste pradual realization, however, by these ers participating in Company. Sections n through Company Sections with the swat in had little to offer that could red through the development of local of employees, the Company Section ed to wane, and today we are faced t that in so far as the Committee is able n there are throughout the country but

of Class B members, organized as a

Company Section, devoting themselves exclusively to the development of the object of the National Association. For the details of the history leading to this condition, you are reterred to the 1920 report of this Committee

With the circumstances briefly outlined to you, in mind, together with the experience of earlier committees assigned to this study, the members of the Committee, all of whom have had experience in Company Section activities and intimate contact with central station employees, reached the conclusions which are embodied in the unanimously expressed opinion that the past failure of and the present indifference toward the Company Section movement, are due primarily to the following causes:

1. That Company Sections have been given no dennite place in the National Organization 2. They have not been represented directly or indirectly on the National Executive Committee. 3 They have been given no official representation on National committees

4 They have been assigned no specific work or responsibility by the constitution of the National organization

The Committee determined upon the following recommendations which it felt, if accepted by the National Executive Committee, would serve to stimu late renewed activity along lines which rest fundamental v and essentia 'v as potent al opportunities for constructive devel pment of Company. Sections These recommendations, which have been submitted to the National Executive Commitee, are

1 That the name of the Committee be charged to "Committee on Company Sections "

2. That the obect of the Comm tree be changed and that for future activities of the Comm tee it be “To promote the organization of and f ter the activities of Company Sections of the National Electric Light Associationi

The alive changes were suggested he ause it was felt that central station company managers would be justit ably amag mye toward crits regarding relates with employers

3 That the National organizatı n chart be exteed to the Con

its conviction that substantial benefits will accrue to our industry that cannot be attained through local associations of employees, by means of the development throughout the country, with due consideration for experience gained in the past, of member company units of the National Association, devoting themselves to its object and receiving in turn from National Headquarters recognition, representation and responsibility. The intimate contact that may be obtained between the local section and national activities through the application from National Headquarters of the proper sentiment and support, means a prompt distribution and absorption of the reports of National committees, the stimulation of constructive enterprise within the Class A members, the development of future National Committee personnel, and the speedier realization of the desires suggested by the two slogans, "Pride in the Industry" and "More and Better Business."

The Committee is in sympathy with the point of view which led the 1920 Committee to recommend

HENRY BOSTWICK

O B COLDWELL

D DARLINGTON H DISQUE

BA DUVALL

the changing of the name of this Committee from Committee on Company Sections to Company Employees Organizations, but we feel that the change of name was merely an adjustment of the activities. of the Committee to accommodate itself to a development which is fundamentally beyond the scope of the National Electric Light Association and which comes as a consequence of a failure to respond to potential opportunities and provide that incentive for work which is essential to continued production and enthusiasm. The Committee chose to sponsor the Company Section idea as fundamentally correct, and to submit to the National Executive Committee its opinions regarding the reason for past failures, suggestions that may open the way for renewed activity, and upon this basis permit this Committee to survive or acknowledge that it has, by virtue of its initial activities and new policies established by the National Organization, completely served its purpose and may as a consequence be removed from the list of National Committees.

THE PRESIDENT: I believe Mr. Grove has sounded the keynote as to the re-vamping of some of the activities of our Association, which is very desirable in many ways. Yesterday I referred to the fact that we had a movement under way to change our present lineup of Class B members, so as to make the copies of proceedings available to Class B membership on a nominal cost basis; and in connection with the printing the overhead should be born entirely by the Class A membership and that the Class B membership be entitled to the proceedings and the committee reports on the basis of their actual

cost.

The work of the company sections, which was so active for many years, but allowed to lapse during recent years, has a wonderful educational value. I believe the companies which have dropped this work entirely have made a serious mistake. I realize that many companies are preparing to start on some work such as was previously conducted, through their local organizations, but if the ideas back of the section work are correct, and it is my belief that

JC NORCROSS
TG SPATES
G B SPRINGER
EUGENE VINET

they are, I think that the incoming administration will take up seriously the suggestions made by the committee, as the result of their experiences and investigations this year, and attempt to put into effect the suggesions as made in order to re-vamp this activity.

I come now to the next item of business on our program this morning. Modesty, on the part of my personal association, and on account of the fact I have known the speaker to be called on for so many years, prevents me from saying what I think of him. Sufficient to say that he is the man in the organization with which I am connected who has the control of the financial operations of the organization extending throughout the country. He is one of the most earnest believers and boosters of the budget idea, but he has carried the budget beyond the question of figures, and has carried it into that of selecting men and grading men through their ability to handle and control a budget. I have great pleasure in presenting Mr. L. F. Musil, Treasurer, Henry L. Doherty & Company, of New York.

Every man to the extent that he mentally or physically performs any task is a workman; to the extent that he plans for himself or others he is an executive.

industry, like all others, is in a period durhich far greater efficiency must be developed ever before. The period which the country has ist passed through and the conditions which must tally follow cannot fail to bring about the keen est cepetition and with it an unusual demand for raged men with sound business judgment, execuesght and earnest conviction.

m. lustry is no longer the kind of a monopoly h. can depend on the action of regulating bodies re a reasonable return on whatever invest• ự may have made, whether wisely made or not. arge amount of the business is supplying immense mes of power to industrial enterprises. The inetry is weli qualined to render this service, but this as competitive as the business which is The investment which this industry makes along these growing demands must be made the recognition that it can continue that service Ing as it can compete with all rivals for

This competition must be faced on a economic basis by both the power company industries which it hopes to continue to

sure that you will bear me out in the state our most difficult task is the building of es in large enough numbers who can fully ate what is meant by, first, the acceptance,

!, the discharge of management responsi I am wire that many of you have often been salary of endeavoring to pick from the less • el men those whose methods of thinking r problems have stamped them as men of e executive judgment and ability. The selecfuture executives may be made with more and executives may be more successfully by the recognition and application of cerprinciples and procedure in organization

I call these budget principles and ocedure because, in connection with pertal expenditures, the name has already

the same principles used and the same 1owed Any contemplated expenditure res etermined and justified on the basis of nevrsity and such expenditure must be ved in relation to the overall financial position

Based on these factors an appro made and arrangements are negotiated al necessary to keep the receipts and disof cash in phase The appropriation is detrte'y distributed basis of time, and ss of the work and expenditures thereon I wed from beginning to end Dehnite is se't evident in this case, the principles

ation and the practice of tollow un It is equally obvious that these essentials ment are necessary to give the responsible 1ll assurance that proper control is being ! by those men to whom is delegated the eneity of making capital expendi

prosedure is fundamentally sound and in the control of capital expen liture, it is

equally essential and should be applied to every phase of a business enterprise

Every individual who is charged with the re sponsibility of supervising the expenditure of human energy or capital should be required to predetermine the results to be attained

Furthermore, experience having demonstrated that individual opinion is an unsound basis for action, proper organization must provide for the concurrence by designated executives in these predeterminations of results

Too many men fail to give consideration to the amount of working capital necessary in their bust ness and the method by which they can establish a more uniform load factor to put the fewest peak strains on the cash resources of the business. They sometimes forget that working capital must be considered from the same viewpoint of profitable employment as the permanent capital invested in plant For example, let us assume that a new business manager desires to put on a special campaign for the sale of appliances and he recommends a very attractive purchase contract for the merchandise, costing $50,000, to be shipped at once and paid for in thirty days It immeFately becomes somebody's business to know over what period of time the appliances to be purchased are going to be re sold and over what period of time they will be paid for by the ultimate purchaser. The exact months in which the payment for the new goods must be made and the months in which the proceeds from their sale will be received must be closely estimated because the business as a whole has a great many other cal's on its available cash It might ready be that the peak leads of a'l requirements would fail in the same month The elimination of smultaneous demands creating high peaks in the curve of cash requires ments is entitled to the same amount of study that has been given to the elimination of high prak demands on the capacity of generating stations The same reasons apoly A careful executive receiving this recommendation from the new business man ager must superimp se it on a comporte of les other requirements If it increases the demand at any time bevord the cap tal capacity, it is obviens that some mod cation of the program is

For mistarve tlas peak demand may comande with the payment of semanal i terest on the funded delt, or a dividend disbursement date of payment of previously contracted ol' gratior, may be reepstored at a time when the cash pr diced from the earrings of the ompany is very lowest ell

The new business fata, et before prisEDE his desired program wi'ler leavor to arran which will pat no cash hur len on the coes is required to chan the concurrence of the execu tive who has the timare al resperish 15 facturer of art lit agree to carry the a count urt the gaw's are paid for by the inmate consumer with a reas I ven n Pel the dis he has learned!

such a case the executive las 1. U Pa charge of his respeito

from the records of past performances how fully he may rely on the new business manager's estimate of the length of time it will take him to sell these appliances to customers and collect the money. If he is assured that the new business manager's judgment of what he can do is correct, and the program recommended imposes no cash strain on the company he can very properly and with very little consumption of his own time, reach a proper conclusion in this important matter. He need not then study the many details which the new business manager must handle in producing the sales on a proper basis of profit to the company. Obviously it must be the business of the executive to have recommendations brought to him in such a form that he knows what to expect, and more important still, such that he can look backward after the campaign is over and appraise the judgment of the man upon whose recommendation he has relied. Equally important, he must be able to point out to that man the lesson to be learned from the estimate and from comparing it with the actual results obtained. It is clear how great a saving of his own time the executive can effect by administering the business in this way. without leaving any doubt in the other man's mind of the executive's appreciation of the other man's knowledge and control of the results in his depart

If this kind of cooperative functioning between the principal executive and the new business manager is wise, then the same procedure should certainly be followed with all other departments all the way down the line of organization. Let every member of the organization learn to feel that to the extent that he mentally or physically performs a certain task, he is a workman, and, to the extent that he plans for himself, or others, he is an executive.

May I submit for your consideration the fundamentals which must be incorporated in any system of budget procedure.

1. The executive must recognize that his function is to create and enforce policies rather than to work out the problems resulting from such policies. If the expected results of policies laid down are predicted and mutually accepted there will be little question in determining their merit or in determining the changes that may be neces

sary.

2. The executive must have knowledge of the control which is exercised by every individual in his organization to whom he subdivides responsibility. He must give evidence as to his knowledge of that control or the lack of that control and reward all individuals accordingly.

3. Individual merit can better be gauged by comparing a man's results with an accepted estimate by him of his future performance than by comparing his results with the results of some other individual.

4. It is therefore necessary for each individual in the order of his responsibility to recognize the

necessity of adopting some common system of estimating the possibilities ahead of him.

5. Each individual must recognize the necessity of making his own estimate of what he is going to do and how he is going to do it before he, or his associates, or his executives can concede his qualifications or expect a full measure of results.

6. Each individual must further recognize that, through such a system, by the constant comparison of results with expectations, the leaks resulting from human omission and human judgment can most effectively be minimized.

If the above fundamentals can be accepted, there is no question that budget procedure will develop the yardsticks by which the executives can determine to what extent responsibility has been successfully assumed; without such a measure no one can do full justice in judging the ability of an individual who is trying to assume responsibility and who is entitled at all times to know to what extent he has or has not succeeded.

On the other hand, no executive can afford to pass control in the subdivision of responsibility to any individual without complete assurance that such responsibility is being accepted and continually carried. Otherwise, he is not fulfilling his own executive duty.

Does not the foregoing show how the application. of budget principles and procedure accomplishes the development of men for executive positions and makes it an easier problem to regard the right men with the result not only of encouraging them but inspiring constructive thinking on the part of all

others?

With the ever increasing size of organized business, these matters become increasingly important. The few men in whom the ultimate responsibility must in the end repose have not the time to make detailed analyses. Their decisions must be made from analyses prepared by others. They must be able to tell by inspection that the policies in which they acquiesced are being carried out and that the results are in accordance with their expectations. They cannot be satisfied that their mere selection of men to assume individual responsibilities will necessarily result in a satisfactory fulfillment of the trust reposed in the executives by the security holders who supply the capital. The executives must not rely upon the future analyses to show the results. that are expected from the use of this capital. They must know what the goal is and what progress is being made toward that goal at all times.

Without question, more attention can be profitably given to the teaching of correct methods of thinking by the individuals of any organization. This can be done only by a recognition of principles and procedure at the top and the insistence that those principles and that procedure be carried down the line.

It is always true that the employee, no matter in what position, looks upward for the examples that he follows. If the rank and file are to be expected

get real efficiency out of their labors, whether al or mental, they must approach their daily wh a mental attitude produced by their being it these principles. They will not do so unless feel that their foreman, or their superintendent, •er manager, or their president does likewise very man will think before he acts if he believes tut the man above him approaches his problem in same way and if he feels that he will be rear ed relatively on his merits. His first thought then be what am I trying to accomplish? His I thought will be, does the man above me are that if I do accomplish this it will be a job e His next thought will be: have I aconed what I started out to do and have I been zed as having done it? When men approach

ems in this way, they have adopted budget ; es and procedure.

v organization that is successful in getting its
wn the line to proceed on this basis of thought
ssed at the over-all results as compared
thing that the same group of men have pro-
un ler any previous conditions
per-luctiveness of labor, skilled and unskilled,
much increased by an effort on the part of

to attain this state of conditions, and I bemore they recognize what I have termed balget principles and budget procedure the rar's will this goal be reached.

often said the man who could do today do tomorrow with today's experience wonderful man indeed We can appossibility if we adopt these principles 'ems We must first, however, appreciate èles ourselves and to be the most successsecutives, we must have the ability to "sell" to those to whom we delegate responsibility

The larger the organization the more difficult but the more necessary is this executive task

One of the greatest problems of the day is that of human relationship which gives a mutual consciousness of knowledge and understanding to all whose efforts are being exerted in the solution of any prob lem; to the extent that this understanding is lacking, prejudice and selfishness in one form or another undo much that would otherwise add to our surplus accounts I believe this understanding and the greatest centralization of the aim of organized effort can be furthered by the recognition of these fun-lamental principles.

The budget is too often used only as a check on dollars and for that reason its administration in many cases has been passed to that man or group of men who are able to check dollars very well, but in whom no recognized responsibility is vested for concurrence in or initiation of policies or programs which make it necessary for the dollars to be checked Who is it that takes the ultimate responsi bility if inefficiency and losses result? It is the executives at the top of the ladder and, for that reason, it behooves these same executives to make sure that they know that control is being exerused over all of the factors which make for pront or less

THE PRESIDENT: This has been an interesting paper, and anyone who has any interest in the subject should study it very carefully at their leisure I know that Mr Musil through his activities in the accounting division of Henry I. De herty & Company, has made great progress in this line of work in supplying the budgets for those who use them rather than those who make them

The next item on the program is the report of the Membership Committee, Walter Neumuller, chairman

ter calling attention to the work of the Association and pinting out the advantages of membership was sent to every non member Central Stat on Company throughout the country, accompanied by a copy of the AFLA Bulletin. Kate Besearch and an a;;li cation blank As a direct revit of this canvas, 38 new members were secured