Standards in Business

THE ROYAL BANK OF-CANADAHEAD OFFICE, MONTREAL

3ugust, 1947

I T is a long time since a Greek philosopher remarked

that men cannot hope for success in life withouta knowledge of standards, but it is just as true

today, as it was 2,400 years ago.

Standards help the school pupil, the beginner atwork, the master craftsman, the shop foreman, thegeneral manager and the president; they guideprofessional men and statesmen; they are of use toeveryone in judging sports, work and goods for sale.

There are people who rebel. They don’t like thisor that rule, though a million others may approve it.If every rule and convention and standard objectedto by someone were wiped out, there would be astate of confusion worse than that in Alice’s Wonder-land, where people made up their own rules as theywent along.

Many volumes have been written on every phase ofstandards. These have set up new aims, clarified oldideas, and built ideals of high principles yet to beattained. This short article is designed to drawattention to only one kind--the kind useful inproducing, buying and selling.

Standards perform two functions: they enable usto identify goods and grades, thus buying with greatercertainty of getting value for our money, and theyenable the producer to make more goods with thesame effort and investment, thus spreading com-modities over a wider area at prices within the reachof more people.

What IsA Standard?

A standard is something established by authority,custom or general consent, a unit ofmeasurement of some sort, againstwhich an actual object or deed may

be judged. The standard is something "right" or"correct" or "conforming to justice." Standards areset for the basic units of length, weight and energy.There are standards for the nutritive value of food,the use of drugs, and safety in the preparation andpacking of canned goods. Makers agree on standarddimensions of parts which must fit together, such asa light bulb and its socket.

There are standards of identity, quality and quantity.The first describe the characteristics a product musthave in order to be called by that name; quality

standards measure the commodity against a markindicating perfection; and quantity standards assert,for instance, that cans and jars must contain such-and-such proportions of fruit and liquid. When youbuy silverware with a full-length picture of Britanniaon it, you know that you are buying silver of theperiod 1697-1720 which has 11 ounces 10 pennyweightof fine metal to each 10 pennyweight of alloy.

Dimensional standards have been reduced to veryclose limits. A wonderful technical accuracy, providedby expensive machinery operated by skilled workmen,cuts and grinds and fits adjustable parts true to theten-thousandth of an inch. How different this is fromthe yard-length standard which was set by KingHenry I in 1101, when he decreed that a "yard"should be the length of his arm!

As we have moved along in mechanical knowledge,we have continued to trail in our wake some standardswhich would not be logical according to our presentknowledge, but which are so woven into the web ofour lives that they cannot be dispensed with. Wemeasure steam and electric energy by horse power,and electric light by candle power. But new ways ofmeasuring have been devised. For example, theUnited States Bureau of Standards broadcastsstandard frequencies and standard time continuouslyfrom station WWV. These signals provide a commonunit of frequency measurement both in the radiospectrum and the audible range, and a standard one-second time interval. This standard is checkedastronomically, so that the error is less than one partin ten million. One practical use of the standardaudible frequencies might be in tuning a piano. Thetuner would carry his portable short-wave receiverto the job, and, using the standard frequency corre-sponding to A above middle C from the WWV broad-cast, he could tune the piano to agree precisely withany other standard instrument.

Why SetStandards?

There are two ways of standardizing: we maystandardize ourselves to unalterablefacts around us, or we may standard-

ize the outside facts. Some animals stay where theyare in winter and grow thick fur to keep out the cold;others suit the climate to their taste by picking outthe weather they want and migrating to where it is.

There is no better example of standardization thanin nature. Organized life would be impossible withoutit. Some persons may point to the wide differencesbetween animals, birds, fish and plants, but it shouldbe noted that within each species there is the mostminute agreement of structure and function. Ifhuman beings were not standardized in their anatomy,there could be no surgery, because the surgeon wouldnot know where to look for an organ.

Upon this standardized basis there is built a greatdiversity of appearance, a circumstance which pro-vides a hint for standardization in production andcommerce. One of the most important characteristicsof merchandise from the sales viewpoint is attractive-ness. Nature shows that this need not be sacrificedwhen standardization is adopted. All the workingparts, upon which efficiency depends, may be castin the same mould but dressed in different ways.When a firm has the reputation of producing a depend-able article which works according to a high standardof efficiency and length of service, then it does nothave to stress this aspect of its goods, but can con-centrate upon the competitive attractions of patternand "frills."

Standardization is the key to mass production. Inthis sense it means using the same design to makeparts so that they can be assembled readily into acompleted product. The more standardized theproduct, the more continuous the operations; and thelarger the scale of production within limits, the morecheaply and plentifully can goods be turned out.

Benefits OfStandards

In times of peace, standardization may mean thatthe manufacturer will have less capitaltied up; greater volume of production,with lower costs; more efficient in-

spection and consequently better customer satisfac-tion; reduced accounting, record and office cost; anda more even flow of production providing improvedservice to purchasers in quality and in promptitudeof delivery. It is obvious that a standard way ofassembling a watch or an automobile will give betterreturns in terms of quantity and quality than ahaphazard way. The problem--one of the mostinteresting facing manufacturers- is to know whento change the pattern. How far can the manufacturerof a washing machine go in keeping up with engineer-ing progress and popular fancies without bankruptinghimself by scrapping expensive tools ?

There are many benefits to the consumer throughstandardization. Let us start with one commonplacewhich is not enough emphasized--the fact thatdevelopments in science and technology whichsimplify production make it possible to place on themarket many different commodities at a wide spreadin prices, making them available to a broad range ofcustomers. These buyers are given great freedom ofchoice, and even if they cannot buy all that they seethey can select the items which will give them thegreatest satisfactions.

It is said that we could increase the purchasingpower of our incomes by 25 per cent or more if thebuying methods of individuals were as well developed

as our methods of production and distribution. Itcannot be denied that a more careful selection ofgoods on the basis of their ability to satisfy specificwants would go a long way toward increasing the realincome of any family. This would mean a changefrom emotional and uninformed buying to buyingaccording to standards in terms of price, value andusefulness. That there is such a trend is evidencedby the increasing demand for information about thequality of products. Even if a woman buys a dressmainly for its style, she will be put out if it shrinksso badly on its first cleaning that she cannot wear it.

Consumers cannot write specifications of what theywant in the way of radios, typewriters, or clothing,and then call for bids, but they can have their ownideas of what they desire and check these against thestandards of the products on the market. "[’hey willnaturally wish to know: What quantity do we get ?Will it do what I want it to do ? Is it efficient ? Is itsafe to use as I intend to use it ? What is its worthrelative to other things ?

Any housewife can illustrate the pertinence of thesequestions. She cannot standardize her work in thekitchen unless the things she uses are standardized.The ingredients of a cake must be so uniform that alevel teaspoonful from one package today will givethe same result as the same quantity from anotherpackage of the same brand yesterday. The housewifemust know what to expect of her electric apparatusin the way of load-bearing and performance. Shecannot test every article bought, and so she mustrely upon the standards of the manufacturer.

It must be said that standards are only usefulinsofar as they are intelligently used by the consumer.A camera of a high technical standard may takewonderful pictures for the man who knows how touse it, while for an amateur it may be no better thana box with a pin-hole in it. Automobiles are built tocertain standards, but one need only stand at a streetcorner to see how standard equipment can be abusedby non-standard use.

StandardSizes

Standardization can remove hazards and exaspera-tion in other fields than those of quahtyand function. Take sizes, for example.Few persons wish to have their clothing

standardized like uniforms, but everyone would wel-come a uniform way of describing sizes. Ten yearsago the United States Bureau of Home Economicsmeasured 147,000 children, and as a result revealedthat height and girth of hip are the best indicators ofa child’s size, though age had been used from timeimmemorial. Under a standardized size-by-measure-ment system of buying clothes, fitting can be basedon facts instead of such guess-work as "Judith is eight,but I think she takes an age ten."

This matter of intelligent sizing can be of economicworth to manufacturers and retailers. When size istaken for granted, because purchasers can rely upona simple standard, the manufacturer can emphasizestyle and quality which are better selling points; hecan operate with greater efficiency and lower costs,and consistent use of the same set of standards will

promote trade confidence. The retailer’s stock willkeep its appearance better, because there will befewer try-ons and less handling. There will be fewerreturns, not only to retail stores but to mail orderhouses.

Next to sizes, since we are talking about clothing,wearing qualities, colour fastness and shrinkageresistance are important. It has been suggested thattextile manufacturers, shirt makers, retailers andlaundrymen should get together to establish a standardfor, say, men’s shirts. Specifications set by a standardlaundering method could be imprinted on the shirt,indicating that it would take ten, twenty, thirty ormore launderings.

Standards are important particularly to producersand tradesmen who take a long-term view of theirbusinesses. They realize that customer satisfactionis the best builder of future sales¯ Consequently,people in business are realizing more and more thenecessity of giving purchasers adequate informationupon which to base judgments of value and usefulness.

With top management aware of the need for highstandards, and craftsmen working under the bestpracticable conditions, more will be accomplishedthrough the state of mind permeating the plant thanby all the gauges, instructions and inspections thatcan be devised. A man who knows the highest stand-ards and best methods in his job, and has professionalpride and a sense of craftsmanship, will not care tofall short of the best results. This was exemplified bythe reputation won by the livery companies of theCity of London¯ The Goldsmiths’ Company receivedits powers of assay in 1327, and the "hall mark" ofthe Goldsmiths’ Company is still of world-widerecognition on gold and silver plate.

QualitiesOf Standards

Standards need to be simple, rational, permanentyet flexible, and definite. We needto translate all standards, contents ofpackages, warranties and warnings

into language which can be understood by the con-sumer. Uniform grade names are wanted, so as togive consumers the information regarding quality.

Standards must be choosen with care, because theytend to become permanent and in some fields mightincline to freeze progress. It would be difficult tochange such standards as weights and measures, thegauge of railway track, and the gauge of screw threads,though many of them could be improved if changewere possible. Within an industry itself there is adifferent criterion¯ Standard machines and designsand methods are merely the best that are known atthe time, and are subject to change whenever bettertools and methods can be found. The standards inwhich the consumer is most interested--those ofquality in the finished product--should have apermanence that can be relied upon.

MovementsFor Standards

Many movements which have been started towardcreation ot standards in various fieldshave succeeded well. Some are asso-ciated with trade interests, others with

professional groups, and still others have no connection

except with the welfare of consumers. In the firstgroup are trade associations, better business bureaus,retailers’ bureaus of standards, and magazine "in-stitutes". In the second group are such organizationsas medical associations. In the third group are con-sumers’ clubs and various women’s groups.

After the first world war the Canadian StandardsAssociation was set up by the Canadian Manufac-turers Association, professional engineering societiesand representatives of industry. It fixed standardswhich have been accepted in the electrical, metal-lurgical, and building and construction fields. TheCanadian Engineering Standards Association wasformed to co-ordinate the efforts of producers andconsumers for the improvement and standardizationof engineering products, to promote the generaladoption of engineering standards, and to registerdistinctive marks and names applicable to materialsor products which are in accordance with standards.Publication this summer of the Fifth Edition of theCanadian Electrical Code, Part 1, is evidence ofcontinuous work on nation-wide standards in thewiring of buildings and the installation of electricalapparatus. The National Office Management Associa-tion, which has branches in several Canadian cities,has set up a committee to consider standards in officefurniture, paper, forms, records and procedures,supplies and business machines.

CanadianStandardsDivision

Canada, which was the first country to have speciallegislation for canned foods, has thisyear taken another step in standardiza-tion by setting up a Standards Division

within the Department of Trade and Commerce.This Division has to do with standards for size andquality of commodities not already regulated by othergovernment departments, and the "Canada Stand-ard" symbol it will authorize ("CS") will representthat the goods so marked conform to the requirementsestablished under provisions of an Act of Parliament.Establishment of this Division means that specifica-tions for textiles, clothing and household equipment,for example, may be set up, and manufacturers whomeet the standards may use the national trade mark.The standards will be determined by the NationalResearch Council, and "CS" will be a guarantee asto quality, size, quantity and genuineness.

In introducing the new Division, the DeputyMinister of Trade and Commerce warned againstexpecting tremendous changes all at once. Adoptionof standards will be purely voluntary and will comeabout as a result of agreement between manufacturersor because of consumer demand. "An essential partof the plan," he said, "is to have such an enthusiasticacceptance on the part of buyers that there will be areal demand for products made to the prescribedspecifications."

GradingOf Goods

This new Division may establish grades for anycommodity falling within its jurisdiction,and recommend methods of designatingthe grade. Many goods already are

graded according to quality, and the grade is markedon the container or the article. This plan has several

advantages. Buyers are informed in regard to thearticles offered, and misunderstanding is prevented.Producers of high class merchandise are protectedagainst the competition of poorer products.

Beef, butter, fruit and other foods are graded underregulations established by the Dominion Departmentof Agriculture, and complete information is includedin a booklet entitled "Buy By Grade" available freefrom that Department.

Besides the satisfaction of knowing the quality ofgoods sold by grade, the housewife has the advantageof being able to select food economically. She maydecide, knowing what the various grades mean,whether she should pay the extra amount for ahigher grade, or whether a lower, cheaper grade willdo for the purpose she has in mind. Some, of course,may suffer from what Dr. Paul Agnew, Secretary ofthe American Standards Association, called aninferiority co.mplex which compels them to buy themost expenmve grade always. This may appearlaughable to practical-minded people who recognizethat there is no sense in buying canned whole fruit ifthe purpose is to put it through a squeezer, but it isno joke to the producer. It is, as Dr. Agnew says, agood thing that the retail trade does a job of "soften-ing this emotional situation for us by blurring forour vision the harsh grading lines which the wholesalemarket finds useful."

LabelingStandards

A considerable number of manufacturers includeuseful information about the product ontheir labels. Purchasers are inclinedsometimes to confuse grade marking with

trade marking. These are not the same, ,thoughhundreds of manufacturers have established theirtrade marks as sure-enough grade marks. These firmshave demonstrated the advantage of making thebrand name or other designation a symbol of highstandard merchandise, and it is not uncommon tohear people say "If it’s So-and-so (brand name) it’sOK." Such a reputation built for a brand or tradename is worth many thousands of words of high-sounding phrases which convey no real information.

It is not a simple thing to decide what informationto include on a label. A statement of physical orchemical content which would be quite clear to anexpert might mean nothing to the ordinary buyer,and it is difficult to translate technical data so thatit will mean the same thing to all consumers and notbe misleading. In some cases it is hard to get all mem-bers of an industry to agree on a standard form oflanguage. The word "pure" may mean in varioususes: free from blemish, unadulterated, sheer, orsimply "good".

AdvertisingStandards

Somewhat similar difficulties meet the manufac-turer in advertising. It is axiomaticthat if consumers are to get a max-imum of satisfaction from their ex-

penditures they should have an opportunity toappraise the probable satisfaction that will attend

their choice. Consumers need advertising as a directoryof up to the minute information about goods. Withoutadvertising, large-scale production, wide distribution,low prices and a high standard of living would beimpossible. But advertising performs its function onlywhen it is educational, a broadcaster of news, and adependable guide.

Thoughtful consumers welcome precise, specificinformation about the product’s qualities and per-formance. They need all the facts which will helpthem to judge what is the best value for the moneyand most suitable for their needs. It is quite possiblethat greater attention to the making known of qualitystandards and durability of goods might contribute avitalizing element to the advertising technique ofconcerns willing to be specific in telling qualities whichtheir goods possess.

StandardizationDifficulties

It would be strange if there were no difficulties inthe way of setting up and operatingstandards. Even nature makes mis-takes in carrying standardization too

far. Having found how to reproduce things in greatnumbers, nature proceeds without reserve: look atthe way dandelions, grasshoppers, bud worms andrabbits multiply. Each is perfect to its own standard,but there are too many of them. The fault is not inthe idea of standardization, but in its use.

Some persons fear regimentation. They confusedifferent aspects of things. Every man is standard,every tree is standard, and yet no two men and notwo trees are exactly the same. It is inconceivablethat Canadians should ever tolerate being fed alike,housed alike, clothed alike, but they might welcomestandardization in the sense of a guarantee of certainspecific qualities attaching to food, houses and clothes.

A man will stand having his suit standardized asto the number of pockets and the number of buttons,but he wishes to choose his material and his right ofdecision as to the finer points of cutting and fitting."His wife’s clothes are apparently standard only inthe distance her skirt must be from the floor:" remark-ed K. H. Condit in an article in the Annals of theAmerican Academy of Political and Social Scienceaway back in 1928. (Around that time the height washovering between 15 and 17 inches; fashion designerssay that this fall’s late afternoon dress hems will be10 inches from the floor).

Freedom of choice and changing styles provide thegreatest safeguards against useful standards degenerat-ing into regimentation. Standards present facts uponwhich people can exercise judgment, but their judgmentis moved by their desires. When consumers are willingto pay for variety and uniqueness there is no fear ofmanufacturers going too far in standardization. Theconsumer is not merely a customer: he is a com-pendium of biology, psychology, economics and manyother sciences and some of the arts. A makeup likethat does not lend itself readily or willingly to regi-mentation.

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