PART IV Strategy from Above
CHAPTER 28 The Rise of the Management Class
Imagine the consequences of that comprehensive bureaucratization and
rationalization which already today we see approaching. Already now,
throughout private enterprise in wholesale manufacture, as well as in all
other economic enterprises run on modern lines … rational calculation is
manifest at every stage. By it, the performance of each individual worker
is mathematically measured, each man becomes a little cog in the machine,
and, aware of this, his one preoccupation is to become a bigger cog.
—Max Weber, 1909
THE PREVIOUS SECTION was concerned with strategy from below, that is, how those who lacked power sought to acquire it for the people they claimed to represent. This section is concerned with those who already had power, in the sense of being in a position to take authoritative decisions, but had to work out what to do with it. The focus is largely on business, but much of the discussion is as relevant to those at the top of any large organization, including in the public sector. This group, which we will call the managers, has been the recipient of more strategic advice than any other group, including generals. The provision of advice to the top of organizations and then to subunits explains why the idea of strategy became so ubiquitous.
Strategy was necessary because relationships were complicated. Executives in a major corporation, for example, would have to deal at the same time, inter alia, with owners, unit heads, suppliers, competitors, governments, and customers. Each relationship was likely to involve a mixture of cooperation and conflict, often in ways that were not quite captured in the official rhetoric of partnership and collegiality internally and cutthroat competition externally. The challenges of managing down the vertical axis of the organizational hierarchy would be quite different to doing so across the horizontal axis of competitors and regulatory bodies, and thus generated different types of strategic literature. Because the advice in this literature was largely generic and often not geared to any particular scenario, it discussed relationships in broad terms, more about how to relate over time to the internal and external operating environments than how to mount specific campaigns. It was more about the impact of changes in administrative practice or available technology than how to address the power of others. The diversity of relationships, activities, and structures meant that management strategy struggled more with theory than did the military and political spheres. There developed a relationship with the social sciences as intense as it was unsatisfactory. The interactions with economics, largely in the form of game theory, and sociology, largely in the form of organization theory, demonstrated both the possibilities and the limitations of the social sciences.
In this section, therefore, we will take forward issues of contemporary social theory, which began in the last section with consideration of notions of paradigms and narratives. Just as the rise of the managers represented the logic of bureaucratization and rationalism, so too was the rise of the social sciences. They developed as reflections on and studies of modern industrial societies, with all their upheavals and conflicts, and then came to offer remedies to the troubles they described. Yet the processes of professionalization took them into forms of specialist analysis and presentation that left them detached from those who might have been expected to find their work the most valuable. Theory and action struggled to relate to each other.
The Managers
The derivation of the verb “to manage” is found in late thirteenth-century Italian. Maneggiare referred to the ability to handle a horse, drawn from manus, the Latin for “hand.” It was used in the sixteenth century in this way and eventually moved over to the conduct of any affairs, from war to marriage, from the plot of a novel to personal finances. It suggested something more than administration but less than total control, requiring persuasive or manipulative as well as coercive skills, a flair for extracting more from a person, organization, or situation than might have otherwise been expected. The sense of less than total control remained important. Managing implied coping, dealing with a state of affairs that could never fully be controlled.
The profession of management referred to people employed for their administrative and supervisory skills in handling complex affairs, such as those of an estate or business. For this reason, the role of the manager could be expected to stop short of strategy. Ultimate control, and therefore strategy, would stay in the hands of the owner. This remained the case in standard forms of business governance. Managers reported to a board appointed by the shareholders, responsible for approving budgets and making big decisions. The more complex the organization to be managed, however, the greater the dependence on the managers, and so whatever the organizational charts might say, effective power began to rest with those who actually understood the issues. Full-time managers could soon learn how to frame an issue so that their preferred outcome was the obvious one for a board to take.
As business enterprises grew into massive corporations, the managers appeared to be effectively in charge, with their own preferred candidates appointed to the boards that were notionally supervising them. Nonetheless, management still involved less than control. Managers were employees who could be—and often were—fired when affairs were badly handled. Their success would depend on an ability to get the best out of those beneath them in the hierarchy, but unlike the military chain of command (with which comparisons were natural), there was likely to be a greater range of functions to be coordinated and less reliance on unquestioning obedience.
The notion that management was a new profession of increasing importance, essential to the performance of modern businesses, was recognized in the establishment of business schools. The first was the Wharton School at Pennsylvania, founded in 1881. The management in question, however, was of potentially unruly workforces as much as complex business processes. The “labor issue” was a major preoccupation. Joseph Wharton wished the school to teach “the nature and prevention of strikes” as well as “the necessity for modern industry of organizing under single leaders or employers great amounts of capital and great numbers of laborers, and of maintaining discipline among the latter.”1 A quarter of a century passed before the Harvard Business School opened in 1908. It followed an endowment to promote an “applied science,” initially assumed to be engineering. Eventually the university opted for business, raising at once the tension between what many supposed to be vocational training and the university’s true purpose of disinterested scholarship. As the first dean, Edwin Gay, searched for a way to resolve this tension he came across the ideas of Frederick Winslow Taylor. Taylor himself was skeptical, to say the least, about the value of a university education. He declined to join the faculty, but he did give regular lectures to the new school, and more importantly, his philosophy permeated the early curriculum.
Taylorism
Taylor had begun work as an engineer in the steel industry where he started to address the question of how the workforce could be used more efficiently. He claimed that he had hit upon a form of management that was “a true science, resting upon clearly defined laws.” So the attraction of Taylor was that he offered a way to bring together a business culture, inclined to the practical and suspicious of unnecessary erudition, with an academic culture prone to disparage the merely technical. Dean Harlow Person of the Dartmouth Business School, which had been founded in 1900, described Taylorism as the “only system of management which was coherent and logical, and therefore was teachable.” In 1911, Person organized the first international conference on scientific management.2 For the new managers this was an important development: their expertise and professionalism could now be recognized with proper qualifications and cloaked in academic respectability.
The starting point for Taylor’s method was the belief that for each elemental task of an organization there should be “one best way” found through careful analysis and
measurement. Those who analyzed and measured, and acted upon the findings, would become a new profession. Here he posited an extremely sharp distinction between planning and doing. The first required very clever people; for the second it did not matter if people were stupid. A doer, he remarked, would not be able to “understand the principles of this science,” because of either a “lack of education or insufficient mental capacity,” and so would have to be guided at all times by the educated.3 It required people to work smarter but not by being smart themselves.
The more a worker could be treated as an unthinking machine the better, because without the complication of independent thought it would be possible to calculate how best to extract optimal performance. Part of the pretence of science was the presence of quantification and mathematics in establishing the most efficient way to work with given tools when accomplishing defined tasks. Work tasks would be broken down into constituent elements and then standardized in a form that simple workers could follow. “Time-and-motion” studies used stopwatches to time each element so a rate could be set for its completion. Once the scientific basis of work could be demonstrated, there should be no argument about how it should be done. Thus this would also represent progress in solving the “labor problem.” Taylor wrote about workers as natural “loafers,” who failed to work as hard as they could. Their managers let them get away with this because they did not know any better. They evaluated performance by rules of thumb and looked to the workers to use their “initiative,” which to Taylor meant only that they persisted with traditional, inefficient ways of working. Moreover, without greater efficiency, the management would have to reward the workers with means other than pay, and Taylor clearly thought that pay was the best motivation of all.
Taylor’s claims about the efficiency improvements he had achieved in the steel industry were exaggerated. Those for which he took credit could often be attributed to other sources. The limits of his actual achievements were established long after his death, and after his path-breaking work had been described to generations of management students. His basic story was about a worker called Schmidt at Bethlehem Steel (one quarter of this company was owned by Joseph Wharton). Schmidt was presented as an exemplary worker, none too bright but ready to work harder for better pay, who met the target of quadrupling the amount of pig iron loaded. Charles Wrege and Amadeo Perroni, who discovered just how flawed Taylor’s research had been, regretted that he had not been scrutinized early enough, before this idol with “feet of clay” had been “hoisted onto a pedestal.”4 Jill Hough and Margaret White later came to Taylor’s defense, arguing that his purpose was to argue for a new approach, that the discrepancies between his account and the evidence were not that great, and that others successfully replicated his results. The original story must have been embellished, but this was still a compelling way to illustrate his arguments about industrial efficiency. The stories were part of Taylor’s strategy: acts of communication rather than research reports. He should therefore be viewed “with an artistic appreciation for his story telling style” and recognition that his principles have served as a building block for later theorists addressing issues such as how to select and train workers, especially for standardized procedures. The basic lesson remained: “Even the most basic processes can be substantially improved while providing benefit to both employer and employee.”5
Certainly Taylor packaged his ideas in a systematic and coherent manner. By this means he was able to turn himself into the first management “guru” providing seminars to business leaders and with a bestselling and influential book, The Principles of Scientific Management. After he died in 1915, described on his gravestone as “The Father of Scientific Management,” his followers—such as Henry Gantt and Frank and Lillian Gilbreth—continued to develop and spread his ideas.6 They promoted a form of “aggressive rationality,” with science sweeping away custom and superstition for the benefit of all.7 This involved, as Taylor put it, a “mental revolution,” required of both the workers and the management. Instead of arguing about the division of the current profit they should work together to increase the size of the profit to mutual benefit. Here was the key to another part of Taylor’s appeal. He was offering a great compromise between management and labor, made possible by a new caste of “efficiency engineers.” Peter Drucker, who three decades later saw himself picking up where Taylor had left off, suggested that scientific management
may well be the most powerful as well as the most lasting contribution America has made to Western thought since the Federalist Papers. As long as industrial society endures, we shall never lose again the insight that human work can be studied systematically, can be analyzed, can be improved by work on its elementary parts.8
This philosophy was in tune with the temper of the times. Taylor opened his book by urging efficiency as a great national goal rather than just one for companies. He hoped the principles could be applied to all social activities, from the management of homes to churches, universities, and government departments.
The idea that this was a “science,” which raised the standing of Taylor’s claims, came from progressive lawyer Louis Brandeis, who eventually became a member of the Supreme Court. During a court case in 1910, Brandeis challenged a rise in freight rates on the railroads and sought to show how the railroads could save money by introducing new techniques (described as “scientific management”) rather than by charging more. Brandeis’s advocacy went well beyond the courtroom. He linked scientific management with a wider social goal of “universal preparedness.” Planning in the form of a predetermined schedule, clear instructions, and constant supervision would bring great rewards: “Errors are prevented instead of being corrected. The terrible waste of delays and accidents is avoided. Calculation is substituted for guess; demonstration for opinion.”9 Brandeis was by no means the only figure in the progressive movement to see Taylor as the answer to a rationalist’s dream. The investigative journalist Ida Tarbell praised Taylor as one of the creative geniuses of the time, contributing to “genuine cooperation and juster human relations.”10 Science offered a way to circumvent the powerful conflicts that threatened to tear industrial society apart and a way to promote the general good out of the tangle of clashing sectional interests.
The progressives were particularly interested in Taylor because they were perplexed by the large organizations that were now essential to economic growth but challenged both liberal economic and democratic theory. Thus far they had gone for legal solutions, trying to cut the large corporations down to size. Scientific management suggested a possible administrative solution. “Efficiency” fit in with the progressive conviction that science rather than intuition could provide a neutral and objective basis for evaluating policies and reorganizing society to serve the needs of the majority rather than the self-interest of the few. Brandeis urged the labor unions to embrace it, taking the chance to become actively involved in running the enterprises which employed them. To the dismay, even bewilderment, of the progressives, the unions bitterly resisted Taylorism. They had no interest in blurring the line between capital and labor and understood that at root scientific management was not about partnership but centralized control based on strict hierarchy. Providing management with insights into core tasks undermined workers’ control over the shop floor and treated them in a patronizing and dehumanizing manner. They saw Taylor’s methods as means by which more could be extracted from workers without commensurate reward.
The hostility to Taylorism in the labor movement makes its adoption by the Soviet Union even more significant. Before the revolution, Lenin studied Taylor and pronounced his methods exploitative—at least so long as they were being applied within capitalism. A fourfold increase in productivity would not lead to a commensurate increase in wages. Yet the ideas continued to intrigue him and once in power, facing a desperate economic situation, he urged their careful study. In May 1918, he advised that this “last word in capitalism” be adapted for socialist purposes. “We
must introduce in Russia the study and teaching of the new Taylor System and its systematic trial and adaptation.” He recognized that this would mean drawing on bourgeois experts in a system that the unions had bitterly opposed. But this would be different, Lenin insisted, for now the “workers’ commissars” could watch management’s “every step.”11 It was Trotsky, charged as commissar of war, who followed this up with enthusiasm, against the objections of the so-called left-communists who saw this as another example of the new regime’s move away from true socialism.
Lenin and Trotsky had little trouble with a system dependent on an enlightened elite and docile followers. For Trotsky, this was about the “wise expenditure of human strength participating in production.” The work of Taylor and his acolytes was published and applied, and a number of theorists were invited to the Soviet Union as advisors. The urgency came because of the struggle to cope with a country whose infrastructure was in a mess and where a civil war was raging. Discipline and productivity were essential. For the same reasons, the Bolsheviks welcomed returning tsarist administrators, engineers, and officers with vital practical knowledge. Part of this package was piecework for workers and bonuses for specialists. Unions were abolished on the grounds that in a socialist society they were no longer necessary.
In the short term, all this effort did help raise productivity and sort out the infrastructure. In the longer term, it helped set the framework for the Soviet system of industrial organization, based on centralized planning and detailed instructions to workers who had little choice but to obey as well as they could, more out of fear of punishment than expectation of reward. The system as it evolved during the1920s, including the abolition of the unions and the militarization of industry, has been described as “Taylorism with teeth.”12 This is not to hold Taylorism responsible for everything that befell the Soviet Union. In the circumstances of the time, there were many reasons why Lenin and Trotsky—and then Stalin—would have been inclined to regiment the Soviet workforce. It fit in with their ideological predispositions and authoritarian leadership. Nor were they applying Taylor as his followers, who tended to be less bombastic in their claims, intended. But the grotesque version of scientific management that emerged in the Soviet Union, disconnecting planning from doing, relying on instructions from the center to a disciplined workforce, and persistent insistence on “one best way,” in the end illustrated the limits of the approach when followed to its logical conclusion.
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