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Examined management thought prior to the scientific management era in the U.S. Early civilizations placed a low value on economic activity. The technical and cultural changes of the Industrial Revolution presented managerial problems in : organizing, motivating people, and fusing people and processes.
THE EVOLUTION OF MANAGEMENT THOUGHT, 6TH EDITION Electronic Resource by: Regina Greenwood and Julia Teahen Chapter Six Industrial Growth and Systematic Management Industrial Growth and Systematic Management Growth of enterprise was facilitated by transportation and communication revolutions as well as manufacture by interchangeable parts Alfred D Chandler Jr Andrew Carnegie Systematic Management The Changing Environment Alfred D Chandler, Jr (19182007) Chandler wrote about the evolution of U.S Corporations in 1962 book Strategy and Structure He developed his ideas from the study of U.S corporations during this period Alfred D Chandler, Jr Courtesy of Harvard Business School Alfred D Chandler, Jr Described the late 19th century as the accumulation of resources with growth occurring because of: Horizontal combinations of firms in smaller fields Vertical integration – forward and backward Larger firms and the growth of hierarchy of managers to coordinate and integrate operations were the result Key to success was good management, Andrew Carnegie (18351919) Steel Industry Learned McCallum’s system of management on the Pennsylvania Railroad Used the new Bessemer furnace technology to begin vertically and horizontally integrating his firm in the steel industry Used cost Andrew Carnegie Courtesy of The General Libraries, The University of accounting to guide Texas at Austin Andrew Carnegie - Steel Industry He increased the “throughput” velocity to gain economies of scale and to fully utilize his resources The result was a declining price of steel for the consumer Andrew Carnegie’s first job was in a textile mill like this The Renaissance of Systematic Management Mechanical engineers (especially Henry R Towne) became important in improving factory operations – they often became the managers Numerous others began to take an interest in management The idea that good management was critical in a firm gained credence with engineers and economists Economists Edward Atkinson – management made a difference Alfred and Mary Marshall Management requires “rarer natural abilities…and training” Managers must forecast, plan, and organize to gain economies of scale Internal economies are enable by more efficient management The Renaissance of Systematic Management The Labor Question Some “Social Gospel” proponents felt that workers should join unions, share in profits, and have arbitration instead of strikes Engineers and others felt that better work methods and systems were the answer, including pay for performance incentive systems In 1895 Frederick W Taylor proposed a rate setting and piece-rate system Big Business and Its Changing Environment Business & Society Matthew Josephson characterized the business leaders of this time as “Robber Barons.” There is evidence that business leaders did engage in some corrupt practices: watering stock, bribery of government officials, manipulating stock, and conspiracy Their motivation was alleged to be “survival of the fittest” and desire for monopoly Motivation was also drive for economies of Big Business and Its Changing Environment The social conscience of the 19th century entrepreneur gave rise to individual philanthropy: Ezra Cornell – his money founded Cornell University William Colgate – college changed its name to his as result of his generosity John Hopkins – founded John Hopkins University Cornelius Vanderbilt Courtesy of The General Libraries The University of Texas at Austin Big Business and Its Changing Environment More Philanthropists Joseph Wharton – grant enabled first business school at University of Pennsylvania Edward Tuck – gift to Dartmouth started Amos Tuck School of Admin & Finance Leland Stanford – honored his son with a university John Stevens – provided for the Stevens Institute of Technology James B Duke – Trinity College (later renamed for the family) Daniel Drew – promise of funds led to Drew University Moses Brown – founded Rhode Island College; became Brown University in 1804 Famous Philanthropists – John D Rockefeller John D Rockefeller Gave half a billion dollars by the time of his death as well as establishing the Rockefeller Foundation Rockefeller is pictured here in 1907 beside a building Chicago Daily News negatives collection, DN-0051595 Courtesy of the Chicago Historical Famous Philanthropists Andrew Carnegie – gave away $350 million by the time of his death in addition to his libraries, university, and the Carnegie Foundation Courtesy of The General Libraries, The University of Texas at Austin Rockefeller and Carnegie Despite generosity by both individuals, the Congression al Committee on Industrial Relations in 1915 denounced both as “menaces to society.” Andrew Carnegie Free Library & Music Hall Rockefeller Archive Center Business and Labor The Commonwealth v Hunt decision (1842) broke the British tradition of unions as conspiracies in restraint of trade U.S craft unions and brotherhoods of railroad workers were successful in the late 19th century Efforts to organize other workers were generally unsuccessful Labor violence in the late 1800s fueled public fear of unions Business and Labor Samuel Gompers American Federation of Labor organized in 1886 under Samuel Gompers Without unions, and despite growing numbers of immigrants, U.S workers found their wages and real (purchasing power) wages rising during the period Courtesy of Library of Congress Inventive and Innovative Impulses Railroads: made travel possible and pleasurable; fostered a retailing revolution Telegraph and telephone: aided growth of commerce and transportation through communication Other industries developed and grew: Electrical Mass marketers Sewing machines Harvesters Steel Business and Government: The Seeds of Reform The “elastic clause,” the commerce clause, of the U.S Constitution expanded during this period with regulation of railroads The Interstate Commerce Act and the Sherman Antitrust Act were attempts to regulate business but these laws were generally ineffectual Woodrow Wilson (then Woodrow Wilson courtesy of The Constitution Society Summary of Part One Examined management thought prior to the scientific management era in the U.S Early civilizations placed a low value on economic activity The technical and cultural changes of the Industrial Revolution presented managerial problems in : organizing, motivating people, and fusing people and processes Figure 61 Synopsis of early management thought Additional Internet Resources Academy of Management – Management History Division Website http://www.aomhistory.baker.edu/departmen List of Internet Resources compiled by Charles Booth http://www.jiscmail.ac.uk/files/MANAGEMEN .. .Chapter Six Industrial Growth and Systematic Management Industrial Growth and Systematic Management Growth of enterprise was facilitated by transportation and communication revolutions... Chandler Jr Andrew Carnegie Systematic Management The Changing Environment Alfred D Chandler, Jr (19182007) Chandler wrote about the evolution of U.S Corporations in 1962 book Strategy and? ?Structure... Examined management thought prior to the scientific management era in the U.S Early civilizations placed a low value on economic activity The technical and cultural changes of the Industrial Revolution