The Industrial Revolution in Great Britain • The Steam Engine • James Watt perfected the Steam Engine making it a reliable source of power for factories and transportation. • It became more economical to bring people to the work (factory) rather than taking the work home (domestic system). • As factories grew, management/leadership became more important.
The Steam Engine • Milling wheat into flour • A human turning a millstone can covert one-half bushel of wheat into flour in one hour. • Three bushels can be ground in one hour with a horse-driven mill. • A steam driven mill can do 10 bushels per hour. Steam Engine at British Science Museum Jones, D.. http://pics.tech4learning.com
Innovations in Textile production • Flying shuttle, • Spinning jenny, • Arkwright waterframe
Management: The Fourth Factor of Production • Management joins land, labor and capital as a recognized factor of production. • Richard Cantillon, currency speculator • First to use the term entrepreneur • “The work of any to sell to another at an uncertain price” • Jean Baptiste Say also wrote about entrepreneurs and noted their frequent roles as managers for others. • Also know that Joseph Schumpeter said that entrepreneurs “break down the old economic order and rebuild a new one” • Say versus Smith…Difference in views on returns to the entrepreneur…
Management Problems in the Early Factories • Labor: • Recruiting workers • Training (most were illiterate) • Discipline/Motivation • Wage incentives (the “carrot”) • Punishment or fines (the “stick”) • Use of religious morals and values to create the proper work attitudes and behaviors (the “factory ethos”) • Finding qualified managers • The Ludite movement
Management Problems in the Early Factories • Developing Managers/Leaders was also difficult. • No body of management knowledge existed. • The general view of leadership depended on character of the leader and personal traits. • James Montgomery – first management texts of managerial advice: • How to discern quality & quantity of work • How to adjust & repair machinery • How to keep costs down • How to “avoid unnecessary severity” in disciplining subordinates • Early advocate for worker incentivization (See last paragraph on page 51)
Management Problems in the Early Factories • Management Functions in the Early Factory • Planning operations • Planning against worker organization and Luddites • Planning of power sources and connections • Planning flow of work • Controlling performance • Check out pgs. 52-54 for early examples of organizing, motivating and control
Cultural Consequences of the Industrial Revolution • Condition of the Worker • Economists Thomas Malthus and David Ricardo view worker condition as dismal and inevitable. • Robert Owen, Karl Marx, and Friedrich Engels saw people as powerless in their environment. However… • Rise of capitalism released people from drudgery. • Incentive plans, steady employment and regular hours improved worker well-being. • Workers’ real wages and conditions improved.
Cultural Consequences of the Industrial Revolution • Child and Female Labor • Primarily found in the textile industry. • Entrepreneurs ranged from exploiters to good employers such as Josiah Wedgwood, Matthew Bolton, James Watt and Robert Owen. • Contradictory evidence, religious and moral concerns affect understanding of the true situation. • Over time, legislation and capitalism made it uneconomical to employ children. • Industrial capitalism created a method to gain leverage for a better life.
Cultural Consequences of the Industrial Revolution • Industrial Revolution inherited worker poverty. • Industrial efficiency reduced prices of goods and raised real wages. • Child and female labor existed long before factories began. • Victorian values of keeping women at home created the atmosphere for critics of the factory system like Charles Dickens.
Industrial Revolution – Summary • Overall • Wages were rising • Infant mortality was declining • Machinery replaced some of the drudgery • The Industrial Revolution was the beginning of improving peoples’ standard of living.
Summary • The Industrial Revolution created a new cultural environment and new management challenges. • Organizations changed by infusions of capital, division of labor, and the need for performance. • The role of the entrepreneur-manager and its need was recognized.
Chapter Four Management Pioneers in the Early Factory
Management Pioneers in the Early Factory • Robert Owen – problems in human terms • Charles Babbage – systematic management • Andrew Ure – trained managers • Charles Dupin – took Ure’s ideas to France This illustration of power loom weaving appeared in Edward Baines's The History of Cotton Manufacture in Great Britain (1835)
Robert Owen,(1771- 1858)Utopian Socialist • Learned about management by observing and trial and error on the job. • Contributions • Reformed the factory system by improving workers’ working & living conditions. • Employed child labor but worked to get a law passed to regulate hours of work. • “Silent Monitor” which relied on peer pressure or public knowledge of performance vs. corporal punishment. Robert Owen Wren, History of Management Thought
Robert Owen, Biographical Notes • Self-made, successful entrepreneur • Founded his first factory in Manchester, England at 18 • Established New Lanark, Scotland partnership with new vision in 1795 • Applied new ideas about the welfare of society to the workplace • Established utopian community New Harmony in Indiana, USA Robert Owen, Courtesy of Dr. Steven Kreis http://www.historyguide.org
Robert Owen’s Philosophy • Entrepreneurs should invest in the “vital machine” (people) as a means of increasing profitability. • He desired a communal society : • All would share equally, regardless of contribution. • There would be no division of labor. • There would be no wage system. • Individuals were “creatures of their environment;” character developed if the material and moral environment was proper.
Charles Babbage (1792-1871)Irascible Genius • Never a manager, however a keen observer of the factory and a brilliant inventor and scientist. • The Difference Engine – a mechanical calculator • The Analytical Engine – the first computer
Wrote: On the Economy of Machinery and Manufactures • Contributions: • Scientific, systematic approach in analyzing industrial operations • Descriptive cost accounting (not standard costing that Emerson developed later) • Mutual interests between the workers and management • Bonus for suggestions • Profit sharing
Andrew Ure (1778-1858)Management Education Pioneer • First “teacher of management” • Well known scientist – his courses attracted those seeking technical knowledge to obtain a managerial job Andrew Ure, courtesy of Strathclyde University Archives OP4/18
Andrew Ure • Ure wrote about the operations of the factory including: • Admonishing the workers to accept the introduction of machinery. • Organizing the factory into an “organic system” of “the mechanical, the moral and the commercial” (production, personnel, and sales & finance areas).
Andrew Ure • Had an early notion of the task of the general manager to integrate the parts to contribute to the whole (organic system). • Defended the factory claiming it enabled more benefits to society. • Believed that workers were generally non-appreciative of management’s efforts. • Defended the factory system using comparison data from the cotton mills of 1833 and 1804. (See pages 71 and 72)
Charles Dupin (1784-1873)Industrial Education in France • Taught courses similar to Ure’s management classes in France. • Unique Insights • Technical/manual work was different from managing others – “Special Study” • This “Special Study” could be taught rather than gained by experience alone. • Technological advancement did not lead to unemployment. • Through education, workers could share in industrial prosperity. Charles Dupin
Charles Dupin • Was influenced by colleague Jean Baptiste Say, industrial economist. • Influenced the work of Henri Fayol indirectly. • His materials on management and his Discours sur le Sort des Ouvries, published in 1831, influenced thousands in France.
Summary • Why did management fail to develop in this period? • Early writings emphasized techniques and not managing. • The period was dominated by the inventor-pioneer. • Illiteracy and difficulty in disseminating knowledge prevented practicing managers from knowing the works of Owen, Babbage, Ure, and Dupin.
Summary continued • The genesis of modern management can be found in Great Britain and France after the Industrial Revolution: • Robert Owen searched for harmony between the human factor and the age of machines. • Charles Babbage applied a scientific approach to management. • Andrew Ure taught and developed managers in Glasgow. • Charles Dupin taught management courses in France.