OFFICE COST CONTROL: GET RID OF THE SACRED COWS!

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP72-00450R000100330009-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 6
• Document Creation Date: December 20, 2016
• Document Release Date: July 27, 2000
• Sequence Number: 9
• Publication Date: July 1, 1959
• Content Type: MISC

Approved For Release 2007/10/23: CIA-RDP72-0045OR000100330009-6
4/
OFFICE COST CONTROL:
Get Rid
of the
SACRED
COWS!
By Arthur Barcan
Executive Director
Records Management Institute
To cut office costs, take a sharp look
at The Way Things Have Always Been Done-
W WHENEVER A PROGRAM for re-
:ducing office costs is proposed,
it seems to evoke extremes of moral
fervor and crusading righteousness.
Many a new technique has been
hailed as the package solution: re-
ports control, work measurement,
integrated data processing, mecha-
nization, and "electronification."
Yet, despite the spiraling number
of devices, and despite also an in-
creasing emphasis on cost cutting,
companies are spending more money
for paperwork than ever before.
The fact is that the new tech-
niques are often used to cut the costs
of operations that are either unnec-
essary or too complicated for the
purpose they serve. If we are to cut
costs, we've got to get rid of these
operations-these "sacred cows"
that impede the progress of paper-
work.
The "wasted-dollars" mystery
In 1958, the American Manage-
ment Association held its first "Pa-
perwork for Profits Clinic," directed
by Records Management Institute,
in which two paperwork cycles were
reviewed: 1) The processing of pur-
chase orders through accounts pay-
able, and 2) the processing of
customer orders through accounts re-
Approved For Release 2007/10/23: CIA-RDP72-0045OR000100330009-6
 Approved For Release 2007/10/23: CIA-RDP72-0045OR000100330009-6
ceivable. The participants, who rep-
resented leading companies in var-
ious industries, were shocked to
learn that they were exceeding the
standard unit cost for a purchase
order-$3.53, broken down this way:
Preparation of purchase order
(including purchase requi-
sition) ... .. ..... $1.10
Preparation of receiving re-
port and purchasing follow-
up ... ...
.43
Preparation of voucher and
AP analysis .. .... .
1.60
Stationery forms (for entire
cycle) ................ .40
TOTAL .............. $3.53
The companies represented at the
clinic had actual unit costs ranging
from $5 to $12!
The rest of the clinic was devoted
to finding out where the cost leaks
for each company occurred. In every
case, the mystery of the wasted dol-
lar could be solved. It should be
-stressed that all the participants were
using modern integrated paperwork
procedures such as punched tape.
Yet many obsolete practices had
been integrated into their new sys-
tems:
Obsolete practices
Here are some examples:
1. Requisitions for purchase or-
ders were being prepared for every-
thing but standard stock items. Most
of the requisitions submitted by the
material-control department, how-
ever, could have been eliminated
-with no loss of control, but with
improvement in quality.
2. Acknowledgements were be-
ing requested and followed up in
every case. This actually hindered
the job of expediting and control
and made it more expensive.
3. To insure completion, every
purchase order was being checked
from start to finish, not only in the
purchasing and accounts-payable
departments, but also in production
and material control.
4. The accounts-payable depart-
ment conducted between 25 and 50
per cent more matching operations
than were actually required.
5. Receiving departments wrote,
transcribed, or computed far more
than the job required (which pro-
duced higher costs) and also in some
instances more than they were quali-
fied to handle (which introduced
greater errors).
These are just a few examples of
areas where money could have been
saved, without the purchase of any
new equipment. And these savings
would probably lead to improve-
ment in quality as well.
Yet, in the sophisticated transi-
tion from manual to mechanical to
punched-card and electronic proc-
essing, these obsolete practices
were preserved. No wonder the new
equipment had not fulfilled its po-
tential promises for cost reduction!
Cows that keep costs up
Buried in the welter of competi-
tive claims for all kinds of duplicat-
ing devices, punched cards, and
even "plain old interleaved carbon
Approved For Release 2007/10/23: CIA-RDP72-0045OR000100330009-6
 Approved For Release 2007/10/23: CIA-RDP72-0045OR000100330009-6
forms" is a whole series of practices
that keep up the unit cost, no mat-
ter what system is used. Some com-
panies, seemingly following the lem-
ming's law of self-destruction insist
on losing money on small orders
rather than modify their procedures.
Let's take a look at some areas
where getting rid of the sacred cows
could make a big difference in cost
and quality.
The sacred cow of personnel
Personnel management is one im-
portant area. Job specifications for
routine, repetitive clerical operations
continue to call for bright, ambi-
tious, curious, skilled employees. But
if these people are filling monoto-
nous jobs, their brightness may en-
courage early boredom; their ambi-
tion may stimulate a wandering eye
for greener pastures; and their curi-
osity may lead them to question just
when all their required skills are go-
ing to be used. The result is low-
ered productivity.
How to solve this problem? There
are at least two alternative ap-
proaches. Either increase the
amount of interest and opportunity
in the jobs, or-if these are really
routine jobs that lead nowhere-
don't insist on hiring overqualified
people.
Quality control
Quality control is pretty firmly es-
tablished in the factory. The produc-
tion man knows that quality doesn't
mean 100 per cent perfection. But
in the office, layer upon layer of in-
spection is imposed, in an effort to
reduce errors. These layers of in-
spection build up impressive statis-
tics on the errors caught each day,
but they do little or nothing to elim-
inate the causes of these errors.
1 he same quality-control proced-
ures used in plants can work in the
office, too, to establish realistic
standards for cost and quality.
Through such procedures * we can
-establish just how accurate it pays
to be. Also, we can often pinpoint
and eliminate the factors that cause
most of the errors.
Common sense
Some people, of course, feel that
scientific methods of handling pa-
perwork don't hold a candle to the
do-it-yourself approach. This ap-
proach goes on the assumption that
"anyone with common sense" can
tackle all problems as long as he's
read an article or two on forms con-
trol and attended a couple of ses-
sions on filing.
Undoubtedly, there are many in-
stances in which common sense and
intuition have saved the day. But
how do you use unaided common
sense to select from hundreds the
one piece of equipment best suited to
your needs? How do you use com-
mon sense to decide what specifica-
tions are needed, and in what order
to rank these needs-let alone mak-
See Cut Costa with Quality Control, by
Arthur I. Heim, Jr., SM, January, 1959.
Approved For Release 2007/10/23: CIA-RDP72-0045OR000100330009-6
 Approved For Release 2007/10/23: CIA-RDP72-0045OR000100330009-6
ing sure that you've even considered
all the available equipment?
Common sense is a valuable asset
-and few people will admit to be-
ing without it. It's also invaluable in
medicine-but, we hope, a doctor
wouldn't try to practice medicine on
the strength of common sense alone.
The almighty folder
From the early days of manu-
script paper until today, office prog-
ress seems to have been measured
in terms of how many additional
papers we can accumulate within
the confines of one folder, and how
many additional folders within one
records container. We are no longer
content with folders revealing only
name and number. We have de-
signed complementary records on
vertical cards, visible cards, punched
cards, and the like.
Now, since we have augmented
the folder with so many aids, some
spoilsport may suggest modifying
the use of the folder itself. But that
approach is entirely too radical. It
just wouldn't be fair to take a really
close look at, let's say, the personnel
folder. It's such a handy item. For
one thing, the folder holds in per-
petuity all the initial reference
checks. These letters, which verify
what the employee originally told
us, would have to be thrown away
if we didn't have the handy folder.
We also post all personnel chang-
es onto some kind of payroll or per-
sonnel card. Once these changes are
approved, processed, and audited,
they too would have to be thrown
out, were it not for our handy fold-
er. Luckily, about 10 per cent of the
folder may be essential-like the last
merit rating, letters of commenda-
tion, and warnings. And once we
have the folder for 10 per cent of
the\\papers, why be choosy-why
not include' the other 90 per cent,
too?
Scores of companies or depart-
ments within companies might get by
just with the data posted on the per-
sonnel card record-but that would
be unthinkable. The next thing we
knew, many offices would be work-
ing only with nonbulky records con-
No Free Rides
OFFICE MANAGEMENT must seek to dispel whatever remains of the
misconception that the office is simply "overhead"-a sort of free-
riding (or at least, poorly paying) passenger. We who are responsible
for office management today must strive to make it an important and
contributing partner, working and producing for profit, just as the
other departments of our companies are, and operating toward that
end in an economically controlled and efficient manner.
-NORMAN J. BROWN
Comptroller, The Steel Company of Canada
Approved For Release 2007/10/23: CIA-RDP72-0045OR000100330009-6
 Approved For Release 2007/10/23: CIA-RDP72-0045OR000100330009-6
veniently near the person maintain-
ing them. There would no longer be
those familiar banks of file cabinets.
The office would look strange and
empty; we might even have to use
partitions instead of files to divide
the work space. There is such a
thing as going too far.
Cows in the files
Nothing typifies the sacred-cow
problem as well as our traditional
manner of filing records: We read
records from top to bottom, but we
file them sideways.
This not only causes neck cran-
ing-an occupational hazard among
file clerks-but also wastes equip-
ment and space.
Reporting
Reporting has always been an
area where the sacred cows are well
entrenched. The nice part about re-
porting is that everyone can get into
the act. There are the reports top
management has asked.for, some re-
ports it once asked for and forgot to
stop, and some that "have always
been prepared."
Distributing reports is the same
kind of problem. Since the introduc-
tion of carbon paper and duplicating
processes, it is always a matter of
prestige to see that you get on all the
important distribution lists, and a
matter of courtesy for the preparer
of the report to go along with such
requests. Every once in a while,
some eager beaver will attempt to
cut down his list by sending out a
questionnaire about who really needs
this report. The resulting list usually
ends up longer than ever: Someone
who was not on it before suddenly
discovers the oversight and demands
corrective action.
In dollars and cents, these are
large overhead costs that usually
grow by default, expand with ambi-
tion, and continue with inertia.
Cows and costs
Even the process of cost cutting
itself has its sacred cows. In com-
panies where factory-production
costs are computed down to each
nut and bolt, total paperwork costs
are lumped into miscellaneous over-
head expenses. The only time we
break down, post, and process costs
is for items like labor and material.
We'd learn a lot from a cost
breakdown: For example, the aver-
age company should maintain no
more than 2,000 pieces of paper for
every person on the payroll. Proces-
sing these records at a conservative
20 cents apiece creates an overhead
cost for paperwork alone of $400
per year (equipment, supplies, per-
sonnel, etc.) for every man on the
payroll. Multiply these figures by 10
for accounting offices or by 5 for
personnel and purchasing offices
that carry out concentrated paper-
work operations. There is 65 cents'
waste in the average dollar spent for
paperwork today.
But you can't go ahead and cut
costs without knowing your present
costs. You might just as well dis-
Approved For Release 2007/10/23: CIA-RDP72-0045OR000100330009-6
 Approved For Release 2007/10/23: CIA-RDP72-00450R000100330009-6
cuss health in terms of "temperature
reduction." Determining how much
something now costs and how much
it should cost creates a tangible tar-
get and a basis for prompt action by
the office manager.
Replacing sacred cows
with science
There are many challenging pos-
sibilities for analysis and standards
improvement, but any such analysis
must be in terms of functional re-
quirements that minimize the sacred
cows of departmental desires and
traditional paperwork "needs."
Scientific records management
makes it possible not only to rate
paperwork operations within one to
two days, but to make improve-
ments in a comparably short time.
There's no need to wait for months
to know what remains to be done or
how to do it.
The Rage for Beige
BEIGE, THE NATION'S 1958 color favorite, will extend its reign
throughout 1959, according to Faber Birren, color consultant to Mon-
santo Chemical Company's Plastics Division. This noted authority
predicts that the remainder of the top ten consumer color prefer-
ences will be, in order of popularity: sandalwood, pink, oyster white,
light green, turquoise, light blue, yellow, light gray, and rose. .
As Birren sees it, the shift in consumer color preference is toward
the more refined and muted hues; America is still.in a "pastel era"
that began in about '1956 when the dark and vivid colors fell from
favor. Beige and sandalwood rode in on a current trend that is now
pulling up subdued tones 'of rose, brown, and gold. Meanwhile, pink,.
light gray, and light green-the big three of 1955-are clearly giving
ground.
Birren's predictions are based on actual records of consumer sales;
since 1946, he has been tabulating and analyzing sales figures on a
number of retail products, including paints, wallpapers, fabrics, car-
peting, appliances, housewares, and miscellaneous plastic goods.
Here are some of his other observations: Ivory, which in 1946
accounted for more than half of all demand in ready-mixed paints,
has fallen badly. Dark green and chartreuse, so popular years ago,
have virtually disappeared. Dark gray (charcoal) has risen, descend-
ed. and returned in the form of taupe in the past ten years. And
orange, despite vigorous promotion, has never made the grade-and
probably never will.
-Manufacturing and Industrial Engineering
Approved For Release 2007/10/23: CIA-RDP72-00450R000100330009-6