Military history

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.

I n 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.”4Jill 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.

Mary Parker Follett

In some respects, it became far easier to push Taylorism in the Soviet Union, where resistance was crushed, than in the United States, where resistance remained active and labor unrest high. This led to a search for a business strategy that went beyond extracting greater efficiency out of the workforce but also addressed the broader “labor problem.” The management theorists of this time claimed a way forward to harmony through better management.

Mary Parker Follett was as much a philosopher as a social scientist, with an impressive background in social work and education rather than business. She was following in the same line as Jane Addams, that of a “social feminist.” This built on a traditional woman’s role but broadened it to include “city housekeeping,” which suffered—according to Addams—because women, who understood such things, had not been properly consulted. Follett followed Addams into community work and progressive politics. Like Addams she challenged the popular dichotomies of the time, whether elite/mass or capital/labor, as imposing divisions instead of creating an integrated community. The crude elitist view that some were better than others seemed to her to be a recipe for disharmony and discord. In particular, she objected to the word masses and she challenged Le Bon’s corrupting “conception of people as a crowd,” susceptible to “the spread of similarities by suggestion and imitation.”

Her aim was to find means of bringing the community together as an integrated whole.13 Follett objected to the idea of power (“the ability to make things happen”) when it was a domineering “power over.” Exercising power in this way left the dominated resentful and reluctant to change their prior positions, which would be reasserted as soon as an opportunity arose. Better to have “power with,” because all energies—not just those of elites—would then be mobilized in the same direction toward shared goals. This faith in humanity led her to view democracy in terms of the evolving views of individuals coming together in groups. There was so much going on within any group, with ideas interweaving, modifying, and reinforcing each other; returning in new forms; and focusing on shared problems. Crude assertions of interest would be undermined and prejudices challenged. The outcome would represent integration, her key goal. There would neither be individuals nor society but “only the group and the group-unit—the social individual.” In this context, consent should be positive and not grudging, a result of participation in decisions and a sense of shared responsibility and ownership. She was not after partnerships between previously antagonistic entities, such as negotiated agreements between management and unions, for these were inherently non-creative. The integrated outcomes she sought would be far more valuable. In this way (and following Dewey), democracy was a process as much as an attainment, informed by the interplay of individual interventions. Authority would come not from specific individuals but from “the law of the situation” which required all to accept and address the problem as framed. If anything, therefore, her approach was anti-strategic, creating situations which it would be difficult for individuals to manipulate.

Although her views developed as she addressed the larger issues of democratic theory, her stress on the importance of group processes, and her determination to turn conflict into a creative rather than a destructive factor, led her naturally into the study of organizations. From 1926, she began to challenge business groups about the need to view their enterprises within the wider social context. She urged them to reassess their reliance on delegation and take advantage of the social bonds forged within groups,14 arguing the need for more bottom-up approaches to management and innovation. Follett now appears ahead of her time with her strictures against micromanagement (“bossiness”), in favor of flatter management structures and participatory approaches. She argued the importance of the more informal aspects of business organization, noting how social interactions contributed to overall performance. At the same time she did not challenge Taylorism directly, accepting the expanded role for management and the advantages of authority being vested in those with technical expertise and access to knowledge. This did not remove hierarchy, but at least it was not based on social position nor exercised arbitrarily. The problem went back to consent, and was reflected in her definition of management as “the art of getting things done through people.”15

Follett was influential in her time more as a social philosopher than as a management theorist, although she did have practical experience in Boston on management-union relations and the development of personnel policies. Her mission can be discerned from the title of her 1918 book: The New State: Group Organization—The Solution of Popular Government. Here she observed, “Our political life is stagnating, capital and labor are virtually at war, the nations of Europe are at one another’s throats because we have not yet learned how to live together.”16 Her remedy, however, only worked when the conditions were already in place, when there was a prior willingness to work together on shared problems. Beyond that, there was little more than an injunction to put differences aside and think about power relations differently. The method required that people did not think strategically for themselves but only on behalf of the group. This did not of course mean that the integrated outcome would be wise or appropriate, noted much later in reference to “groupthink” when individuals reinforced each others’ wrong assumptions.17 Furthermore, as representatives of groups met with each other in a higher group, were they supposed to disregard the views of the lower group in pursuit of a higher integration? If each group was responding to the laws of its own situation, then at some point the variations in group situations would matter, and there would still be conflict to be resolved by hard bargaining or else a tough fight. Follett’s shrewd observations on group dynamics illustrated the organizational benefits of enlightened self-interest, but they provided no answer to the problems of conflict, the point at which strategy would be most needed.

The Human Relations School

Follett overlapped with another group of management theorists, with whom she is often associated and almost certainly influenced, the so-called human relations school. These other theorists had a harder edge to their philosophy and were more clearly part of the elitist school, although they also stressed the importance of social networks in making organizations work. A key figure here was Elton Mayo, an Australian who managed to get himself attached to Harvard Business School in 1926 and whose name has come to be linked to the first sociological studies of industrial practice at Western Electric’s Hawthorne plant near Chicago. Before considering how he got to Harvard and the Hawthorne studies, it is worth noting his general views.

Mayo did not present himself as a fan of Western civilization, individualism, or democracy. In his view, democracy took advantage of voter emotions and irrationality, left little room for reason, encouraged class war, and favored “collective mediocrity” rather than the sovereignty of the “highest skill.” The idea of workplace democracy, which appealed to Follett, was anathema to Mayo, for it would hand over control to people who had no real understanding of business issues. His knowledge of psychological theory encouraged him in his belief that economics could not grasp the human factor because it ignored the extent to which feeling and irrationality shaped motives. It also suggested how to deal with conflict without addressing what were claimed to be the underlying issues. Radical movements and industrial unrest were not responses to genuine grievances but more the expression of the “hidden fires of mental uncontrol.” If agitators were essentially neurotic, “prone to conspiratorial delusions, with minds obsessed with rage and the savage lust of destruction,” then democratic processes could do little to help. In fact they made matters worse, dividing society into two hostile camps and leading workers, unaware of the real sources of their discontent, to pursue “will-o- the-wisp phantasies with all the energy of his starving intellect and will.” Mayo’s remedy was to treat not the material conditions of the working class but the psychopathological tendencies of democracy, reflected in disoriented lives, disintegrated personalities, and disordered values.18

Mayo’s views were well known when the dean of the Harvard Business School, Wallace Donham, approached him about joining the faculty. Donham was a banker who had trained at Harvard Law School. After being appointed in 1919, he stayed until the early 1940s. He saw his task as raising the academic standards of the school while also improving links with business. This was essential for fundraising, but Donham also had to contend with the university’s reputation for harboring radicals and socialists. Funding for Mayo eventually came directly from industry rather than the university. The attraction of Mayo lay in his underlying views, which Donham shared, and in his claimed expertise in psychology. The gap to be filled was explained in a letter to the university’s president in 1927: “I see no really promising hope of lessening the critical nature of the Labor Problem in Industry except through a scientific study of Industrial Physiology including Psychology.” As O’Connor observed, “Mayo’s research spoke directly to the core of executive concerns: it revolved around how to calm the worker’s irrational, agitation- prone mind and how to develop a curriculum to train managers and executives to do so.” In 1933, Mayo reinforced the point. The problem was not the lack of an “able administrative elite,” but the elite’s lack of understanding of the “biological and social facts involved in social organization and control.” Donham saw training this elite as an essential task for the business school.19

Complementing the efficient physical engineering of the ordinary worker by Taylor, Mayo offered a psychological revival. Like Taylor, Mayo also had a story about how he realized this could be done, this time based on a flash of inspiration as he pondered the meaning of experiments with a small group of workers at Western Electric’s Hawthorne plant. The research, which had begun well before Mayo joined, was designed to see whether changes in physical conditions, such as better illumination, made much difference to productivity. In this regard, the most important stage in the experiments involved a group of six women working on relay assembly. The aim was to ascertain the impact of rest periods and hours of work. Eventually it was decided to consider them on a group rather than an individual, so that there was a shared bonus for higher productivity. The researchers found a 30 percent increase of productivity over two and a half years, along with greater work satisfaction.

Explanations of exactly why this had happened were uncertain until, as Mayo reported, he had his “great éclaircissement” and realized what made the difference was that the researchers were actually showing interest in them. His large conclusion was that psychological conditions were more important than the physical and that workers responded to their own group dynamics and informal social networks. Motivations went beyond self-interest into seeking recognition and security. The recommendation was that management should seek a good working relationship with their staff, and that happy workers would be more productive. As with Taylor, the original story was embellished and interpreted within Mayo’s own preconceived notions. Once again a simple explanation was offered to make sense of a complex set of facts. In retrospect, the best explanation for the improvements in productivity was a combination of pay incentives (in a non-unionized plant and against the background of the depression) and the attitudes of individual workers. The replacement of two women who had not joined in the spirit of the experiment by two who did was a turning point.20 Mayo’s conclusion was not in itself preposterous. It fit in with the theories of Follett in encouraging managers to view their workers in more rounded, softer, human terms and was widely considered to have encouraged a turn for the better in management practice.

In this way the so-called human relations school was founded, attending to the informal aspects of the organization and the social conditions of the workplace. Mayo’s place was assured in the history of industrial sociology, though were it not for the Hawthorne experiments he would by now be forgotten. He had exaggerated his own qualifications, including his psychiatric training, and was considered by colleagues to be snobbish, lazy, and uninterested in teaching, with only the occasional publication to his name. As we have seen, Mayo’s underlying philosophy was deeply conservative, seeing conflict as in effect a “social disease” to be remedied by healthy cooperation across the supposed divides.21 By the same token, cooperation among workers for their own ends was unhealthy. Because he saw politics as aggravating the problem, and was generally reluctant to consider the problem of power, any solution was the responsibility of the administrative elite, who must be trained to develop social competence to match their technical competence.

In the Hawthorne Studies, the claimed positive response had been to inadvertently enlightened researchers rather than truly enlightened managers. In the mid-1930s, Mayo made acquaintance with Chester Barnard, president of New Jersey Bell, a cerebral man and a voracious reader with hard experience in industry and practical administration. By 1938 he was giving lectures at Harvard. With some rewriting, these were turned into what is now considered to be a seminal text on management thought, The Functions of the Executive. Barnard forged an extraordinary bond with the physiologist Lawrence Henderson, a leading figure in the university and a colleague of Mayo’s. This was based on their shared interest in the Italian sociologist and notable elitist Vilfredo Pareto.

Having discovered Pareto in the mid-1920s, Henderson became something of an evangelist in the 1930s, establishing what became known as the “Pareto Circle” at Harvard. To Henderson’s scientific mind, Pareto’s notions of social equilibrium struck a chord as well as matched his own conservative inclinations. Although he dominated the circle, with a seminar technique that was said to be “only feebly imitated by a pile-driver,” the group did include people such as Talcott Parsons and George Homans among the most influential of their generation of sociologists.22 It was also a refuge for conservative academics seeking an alternative to Marx and attracted by the underlying treatment of society as an interdependent and largely self-correcting system. Henderson was impressed by Barnard as a man who not only had read Pareto originally in French but had sought to apply his ideas in the real world.

Pareto’s influence can certainly be detected in Barnard. This was evident in his stress on nonlogical factors in human decision and action, on how choice was shaped by the logic of situations, and on the circulation of elites. Pareto is there in the idea of organizations as social systems analogous to human bodies seeking some sort of equilibrium. To achieve equilibrium, the organization needed to achieve both effectiveness and efficiency, and he emphasized how many declined because they failed both tests. By efficiency he meant the ability to satisfy the individuals who made up the organization; effectiveness involved the ability to meet goals. Management must formulate the organizational goals and decide how to meet them, but it must do so in a way that kept all members involved, not least through forms of direct and accessible communications. He emphasized the importance of respect and cooperation, suggesting—in line with Mayo—that the former was more important than material incentives and that the latter was put at risk by divisive ideologies and forms of political action. In both these aspects, the workforce was prone to mistaken notions about their interests and therein lay the special leadership role of management.23

In addition to their technical and social skills, managers should work actively to create a cooperative organization underpinned by appropriate values. Otherwise the organization would fail.24 It was therefore important “to educate and to propagandize” people to “inculcate” appropriate motives and perceptions. The executive must not only conform to a moral code but also create moral codes for others which would be reflected in high morale. To this end, “points of view, fundamental attitudes, loyalties to the organization or cooperative system, and to the system of objective authority” must be inculcated to encourage the subordination of “individual interest and the minor dictates of personal codes to the good of the cooperative whole.”25

Barnard also had a story to illustrate his point. In a popular lecture he referred to an episode involving a riotous situation at New Jersey in 1935 when he was director of the New Jersey Emergency Relief Administration. He claimed that he defused the situation by respecting the dignity of the rioters.26 According to Barnard’s account, a meeting with representatives of Trenton’s unemployed in his office had to be adjourned when some two thousand unemployed demonstrators, who had been urged on by New York radicals, clashed with the police in the street outside, leading to a number being arrested and some taking a beating. Barnard saw that publicity such as this could harm the cause of the unemployed by increasing taxpayer animosity to the relief program. This was the point he made when the delegation returned, after he had first carefully listened to a litany of their grievances, and a degree of harmony was restored. According to Barnard’s account, picked up enthusiastically by his friends at Harvard, the problem was solved through human relations rather than by economics. Dignity was important to the unemployed, even more than food for themselves or their families.

It may well be that Barnard’s sensitivity and tact did make a difference, but once his account was checked against contemporary reports of the episode it became evident that this was only part of the story.27 There was in fact a strong economic dimension: the unemployed were demanding a substantial increase in food allowances and Barnard had promised to help. Nonetheless, Barnard’s argument that more mayhem would put the whole program at risk was a serious political point. This reflects the observation made earlier about Follett’s promotion of group dynamics. There are groups within groups, and Barnard’s strategy in this case was to make common cause with the unemployed in support of the relief program against those who resented the subsidies when their own economic circumstances were so tight. Talking about groups rather than classes or parties or states did not remove the problem of conflict. Unless society could be reshaped as one big amorphous group, individuals were going to identify with some groups against others, and the interests of these groups were going to clash. The more inter-group conciliation became necessary, the more intra-group harmony was likely to be put under strain.

The original role of managers was to manage the workforce. Their understanding of what this required was shaped by the social theories of the time, many of which encouraged unflattering views of ordinary people as essentially simple-minded, suggestible, and manipulable. At best, they could be encouraged to be efficient cogs in the machine by more pay, tempered by threats of dismissal. At worst they could be swayed by agitators, drawing on the psychology of crowds. As the century progressed, the possibilities of maintaining a docile, regimented workforce receded with the growing strength of labor unions and the increasingly demanding and specialist nature of much work. Moreover, while the original inspiration for the human relations school might have been to draw workers away from socialism and unions, it encouraged managers to recognize that their organizations were complex social structures rather than simple hierarchies and that their workers might respond positively to being treated as rounded human beings. The approach risked replacing autocracy with paternalism as it struggled to work out what these developing views of organizational life meant in terms of structures of power. The more these structures had to be addressed, and the more they had to be related to the wider social and economic changes underway, the more managers would need a strategy.

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