Summary
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Through his business in changing the methods of shop management, the writer has been brought into intimate contact over a period of years with the organization of manufacturing and industrial establishments, covering a large variety and range of product, and employing workmen in many of the leading trades.
In taking a broad view of the field of management, the two facts which appear most noteworthy are:
(a) What may be called the great unevenness, or lack of uniformity shown, even in our best run works, in the development of the several elements, which together constitute what is called the management.
(b) The lack of apparent relation between good shop management and the payment of dividends.
Although the day of trusts is here, still practically each of the component companies of the trusts was developed and built up largely through the energies and especial ability of some one or two men who were the master spirits in directing its growth. As a rule, this leader rose from a more or less humble position in one of the departments, say in the commercial or the manufacturing department, until he became the head of his particular section. Having shown especial ability in his line, he was for that reason made manager of the whole establishment.
In examining the organization of works of this class, it will frequently be found that the management of the particular department in which this master spirit has grown up towers to a high point of excellence, his success having been due to a thorough knowledge of all of the smallest requirements of his section, obtained through personal contact, and the gradual training of the men under him to their maximum efficiency.
The remaining departments, in which this man has had but little personal experience, will often present equally glaring examples of inefficiency. And this, mainly because management is not yet looked upon as an art, with laws as exact, and as clearly defined, for instance, as the fundamental principles of engineering, which demand long and careful thought and study. Management is still looked upon as a question of men, the old view being that if you have the right man the methods can be safely left to him.
The following, while rather an extreme case, may still be considered as a fairly typical illustration of the unevenness of management. It became desirable to combine two rival manufactories of chemicals. The great obstacle to this combination, however, and one which for several years had proved insurmountable was that the two men, each of whom occupied the position of owner and manager of his company, thoroughly despised one another. One of these men had risen to the top of his works through the office at the commercial end, and the other had come up from a workman in the factory. Each one was sure that the other was a fool, if not worse. When they were finally combined it was found that each was right in his judgment of the other in a certain way. A comparison of their books showed that the manufacturer was producing his chemicals more than forty per cent cheaper than his rival, while the business man made up the difference by insisting on maintaining the highest quality, and by his superiority in selling, buying, and the management of the commercial side of the business. A combination of the two, however, finally resulted in mutual respect, and saving the forty per cent formerly lost by each man.
The second fact that has struck the writer as most noteworthy is that there is no apparent relation in many, if not most cases, between good shop management and the success or failure of the company, many unsuccessful companies having good shop management while the reverse is true of many which pay large dividends.
We, however, who are primarily interested in the shop, are apt to forget that success, instead of hinging upon shop management, depends in many cases mainly upon other elements, namely,—the location of the company, its financial strength and ability, the efficiency of its business and sales departments, its engineering ability, the superiority of its plant and equipment, or the protection afforded either by patents, combination, location or other partial monopoly.
And even in those cases in which the efficiency of shop management might play an important part it must be remembered that for success no company need be better organized than its competitors.
The most severe trial to which any system can be subjected is that of a business which is in keen competition over a large territory, and in which the labor cost of production forms a large element of the expense, and it is in such establishments that one would naturally expect to find the best type of management.
Yet it is an interesting fact that in several of the largest and most important classes of industries in this country shop practice is still twenty to thirty years behind what might be called modern management. Not only is no attempt made by them to do tonnage or piece work, but the oldest of old-fashioned day work is still in vogue under which one overworked foreman manages the men. The workmen in these shops are still herded in classes, all of those in a class being paid the same wages, regardless of their respective efficiency.
In these industries, however, although they are keenly competitive, the poor type of shop management does not interfere with dividends, since they are in this respect all equally bad.
It would appear, therefore, that as an index to the quality of shop management the earning of dividends is but a poor guide.