Mr. Gantt's system is useful for transitioning workers from regular to high speed work. It allows workers to gradually increase their speed without threatening their wages. The differential rate payment system applies higher payment for tasks completed at the expected high speed, and lower payment for slower work. This incentivizes workers to maintain high productivity. An example at Midvale Steel Works showed the differential rate doubled workers' output from 5 to 10 pieces per day, while reducing the per-piece cost. When the differential rate was later removed, output immediately dropped back down.

1. USEFULNESS OF
GANTT'S SYSTEM - F.W.
TAYLOR
Rajan Kumar

2.  Mr. Gantt's system is especially useful during the
difficult and delicate period of transition from the
slow pace of ordinary day work to the high speed
which is the leading characteristic of good
management.
 Mr. Gantt's system enables the workman to go
smoothly and with gradually accelerated speed
from the slower pace of improved day work to the
high speed of the new system.

3.  No workman can be expected to do a piece of
work the first time as fast as he will later.
 It should also be recognized that it takes a
certain
time for men who have worked at the ordinary
slow rate of speed to change to high speed.
 Mr. Gantt's plan can be adapted to meet both
of
these conditions by allowing the workman to
take a longer time to do the job at first and yet
earn his bonus; and later compelling him to

4.  The higher pressure of the differential rate is
the stimulant required by the workman to
maintain a high rate of speed and secure high
wages while
he has the steady swing that belongs to work
which is repeated over and over again.
 When, however, the work is of such variety
that each day presents an entirely new task,
the pressure of the differential rate is some
times too severe.

5.  engineering business of considerable variety
or engaged in constructing and erecting
miscellaneous machinery, it is necessary to
employ continuously a number of especially
skillful and high-priced mechanics.
 During off season shift from Regular skilled
work to Unskilled work
 Differential rate of Payment

6. Case study on introduction of
Differential rate of wages
 The first case in which a differential rate was
applied during the year 1884, in The Midvale
Steel Works Ltd.
 A standard steel forging, many thousands of
which are used each year, had for several
years been turned at the rate of from four to
five per day
under the ordinary system of piece work, 50
cents per piece being the price paid for the
work.

7.  After analyzing the job, and determining the
shortest time required to do each of the
elementary operations of which it was
composed, and then summing up the total, the
writer became convinced that it was possible
to turn ten pieces a day.
 In place of the 50 cent rate, that they had been
paid before, the men were given 35 cents per
piece when they turned them at the speed of
10 per day; and when they produced less than
ten they received only 25 cents per piece.

8. COST OF PRODUCTION PER
LATHE PER DAY
Man’s
Wages
Machine
Cost
Total Cost No of
Pieces
Produced
Cost Per
Piece
Ordinary
System
$2.50 $3.37 $5.87 5 $1.17
Differential
Rate
System
$3.50 $3.37 $6.87 10 $0.69
The exceedingly dull times that began in July, 1893 the differential rate
on the particular job above referred to was removed, and a straight
piece work rate of 25 cents per piece was substituted for it. The result
of abandoning the differential proved to be the best possible
demonstration of its value. Under straight piece work, the output
immediately fell to between six and eight pieces per day