The Golden Passport
Page 5
And the way he had done that was to (a) figure out what a full day’s work really was, and (b) reward full output with higher pay, but not so high that it would have to be cut. And he did that by time-and-motion studies that broke a job down into its component parts, which he then added up to prescribe “scientific” levels of productivity. Early advocates of Taylor saw the pay-for-performance aspects of his “system” as proof of his support of the workingman. But Taylor was actually up to something else entirely: He was moving knowledge out of the workers’ hands and putting it into management’s. Edwin Gay might have seen the two functions of business as production and distribution, but Taylor saw things more simply. His two functions were planning (that is, management) and doing (that is, labor). As far as Taylor was concerned, labor’s job was to labor. It wasn’t being paid to do anything else.
Even if Thomas Jefferson’s ideas of bottom-up democracy had won out in the broader culture, Alexander Hamilton’s vision of top-down power was going to rule the day inside corporate America’s doors,4 in the form of industrial aristocracy. But that wasn’t news to anyone. What was? That rising American labor radicalism suddenly found itself facing an immovable enemy in the form of a decidedly nondemocratic set of arrangements masquerading as science.
Which brings us back to pig iron. In the spring of 1899, the Bethlehem Steel Company suddenly found itself with a surplus of 92-pound pig-iron bars—two million of them—and needed to get them loaded up onto railroad wagons and out into the market. Bethlehem used a work gang of 75 men to do the job, and was convinced that they were performing below capacity. So they brought Taylor in to sort things out. At that point, the men were loading 12.5 tons of ore each per day. Could they load more? A less educated manager might have simply instructed the foremen to push them a little harder, but Taylor approached the challenge with a new kind of managerial tool. He sent a team of assistants (“college men”) down to Bethlehem armed with stopwatches, and they reported back that the actual capacity of the workers was more like 47.5 tons, nearly four times their current output. They’d arrived at this number, Taylor explained, by employing “the law of heavy laboring.”
Taylor then solicited volunteers from the work gang, landed on four, and ultimately focused in on one: a Pennsylvania Dutchman of German extraction whom he called “Schmidt.” After running a few “scientific” calculations, Taylor informed Schmidt that if he switched from a daily wage to one in which he was paid by the ton, he could raise his pay by 60 percent—provided, that is, that he could load 47.5 tons a day. And then he told Schmidt that he had to follow the orders of one of those college men to a tee: “When he tells you to pick up a pig and walk, you pick it up and you walk, and when he tells you to sit down and rest, you sit down. . . . And what’s more, no back talk.” In any case, Bethlehem got rid of all that excess pig iron, and Taylor had stumbled on the foundations of a new science, otherwise known as counting.
Taylor also cast his scientific gaze on Bethlehem’s loading yards, from which he produced his “science of shoveling.” The gist of it: Instead of having workers use the same-size shovels for coal and iron ore, he switched to different sizes that would allow workers to lift exactly twenty-one pounds of either material. He claimed production tripled. He was, by all accounts, a driven man who produced results. But that doesn’t mean that the methods by which those results were achieved merited being referred to as “science.” Because they weren’t—starting with the fact that some of his findings weren’t even true.
In 1901, Bethlehem was sold to new owners, and the new executives ordered Taylor to focus on one task—the installation of a piece-rate pay system in the company’s machine shop. Taylor responded by asking to have his purview expanded, not constrained: “I respectfully request that the various officers of the Company be instructed to carry out all orders.” The response: “[Your] services will not be required by this Company after May 1st, 1901.”5 If Taylorism was the answer, how could Bethlehem have fired him? Because it wasn’t. Several crucial details in his retelling of the Schmidt tale were later shown to have been untrue. And many companies that hired “Taylorist engineers” to introduce his techniques to their plants were less than impressed with the results.6
No matter. Taylor earned $100,000 in consulting fees (about $2.5 million today) from Bethlehem, which spent some $1,100,000 in total on Taylor’s “system.” And he had his case study, from which he then formalized a set of “principles,” packaged them, and began to sell to managers eager for new methods to corral increasingly restive workforces. In 1906, he was elected president of the American Society of Mechanical Engineers. The pig-iron tale became the core case study of the “Boxly Talks,” the management salons at his immaculately manicured estate in suburban Philadelphia.
There’s where Edwin Gay comes in. Desperate for substance on which to base his curriculum, Gay visited Taylor in Philadelphia’s Chestnut Hill neighborhood in May 1908, along with fellow Taylor fan Wallace Sabine, the dean of Harvard’s Graduate School of Applied Science. Gay already knew what he wanted. In the April 22 announcement of the School’s creation, he had written, “From the mass of accumulating business experience, a science must be quarried. Not only must fundamental principles guiding conservative business be elucidated, but the art of applying those principles in the various fields of business enterprise must be taught in a scientific spirit.” The kind of thing that Frederick Taylor was already doing. Rather, what he said he was doing.
Gay also saw in Taylor the answer to a conflict at the heart of the mission of HBS, a human bridge between the academic and business establishments. Taylor’s pretensions to science offered cover for academic respectability, and his proven track record in the field offered businesspeople proof-of-concept of the merits of teaching a system of management rather than merely engaging in said management ad hoc.
Gay invited Taylor to lecture at HBS. Taylor declined, insisting that scientific management could only be learned on the shop floor. (In that, he was among the first of a very exclusive group of people who have ever said no to Harvard Business School.) Gay then threatened to teach scientific management without him, at which point Taylor acquiesced, agreeing to lecture on the subject of “Task Management and Its Nature” at the School in the spring of 1909.
In 1911, Taylor published the work for which he is famous, The Principles of Scientific Management. Over time, he and his disciples Carl Barth and Clarence Thompson became familiar figures at HBS and in Cambridge’s Colonial Club, the favored social redoubt of Harvard’s elite.7 Between 1909 and 1914, Taylor visited Cambridge every winter to deliver a series of lectures. Alas, Gay’s hope that Taylor’s work could serve as a conceptual plank on which to construct his science of business was never fulfilled.
Here are some of the problems with Taylor’s “scientific” approach to management. For starters, argues Matthew Stewart, it’s not really science whatsoever, given its lack of verifiability. Taylor never revealed his data or the methods that would have allowed others to try and replicate it. “Instead of science,” writes Stewart, “Taylor offered a kind of parody of science. He confused the paraphernalia of research—stopwatches and long division—with actual research.”8 (Some even expressed this view at the time. In 1908, the same year that Edwin Gay sought out Taylor, a consultant named Alexander Hamilton Church wrote of Taylorism that apart from “a collection of procedures involving stopwatches, there is nothing tangible behind it.”9)
Another: Frederick Taylor generalized a step too far. In arguing that his methods revealed a universal science of management, Taylor engaged in metonymy—confusing just one part of management (that is, quantitative analysis) for the whole. Efficiency—and its close relative, profitability—is just one possible goal of management. Others include customer satisfaction, community relations, and quality. In Taylorism, one could argue, lie the seeds of American industry’s eventual comeuppance at the hands of the Germans and the Japanese—that is, the sacrifice of quality at the altar of quant
ity. Not only that, but by focusing managers exclusively on the goal of efficiency, he was implicitly sanctioning the idea that a company can be judged by a single metric. Today’s even more pernicious version of such: shareholder value. Writes Stewart: “The modern-day CEOs who sacrifice the long-term viability of their corporations for the sake of short-term boosts in their quarterly earnings reports are direct descendants of the pig-iron managers who undermined their work team’s morale in order to achieve temporary productivity targets.”10
Another: He encouraged a dogma of “hardness.” By focusing only on his stopwatches and charts and productivity graphs, Taylor took an excessively analytic approach to management, HBS took it even further, and the entire management consulting industry took it even further than that. There’s nothing wrong with analytical rigor, but when taken to the extreme, it can end up being myopic. Most of the so-called analysis in business tends toward cost-cutting rather than creation, for the simple reason that it’s easier to cut costs than to come up with new ideas. It also produces what Stewart calls an “irrational kind of rationalist—the kind that underestimates the impact of everything that can’t be measured easily.”
Another: His profoundly antilabor assertion that managers were the brains of the operation and workers the brawn, that workers were not paid to think. Taylor, it has been argued, was the impetus behind the creation of dead-end factory jobs that deskilled American workers.11 His work, as Walter Kiechel, author of The Lords of Strategy and former editorial director of Harvard Business School Publishing, describes it, “set off a century-long quest for the right balance between . . . the ‘numbers people’ and the ‘people people.’ It’s the key tension that has defined management thinking.”12
All that said, Taylorism was a philosophy tailor-made for the era, in which “Progressives claimed special wisdom rooted in science and captured in processes.”13 In other words, the kind of wisdom that Harvard Business School wanted to get into the business of selling. And it was dressed up in exactly the same way as HBS wanted to dress itself: for the good of all. Taylor sought “maximum prosperity for the employer, coupled with the maximum prosperity for each employee.” The columnist Walter Lippmann suggested that Taylorism wasn’t just about corporate efficiency, but also about a way to improve society itself. The logic there: Instead of arguing over the division of a company’s current profit pie, management and labor could work together to enlarge it; add up every profit pie in the nation, and the national pie would grow, too. President Theodore Roosevelt beseeched Congress to tackle “the question of national efficiency.” And by the 1920s, even Lenin and Trotsky were on board, having seen in Taylorism the solution to Russia’s own problems.14 (But theirs was “Taylorism with teeth,”15 with fear of punishment more of a motivator than the expectation of reward.)
The draw of Taylorism was that it might help bring about a value-neutral, or scientific, solution to what was at that point becoming a national emergency of sorts, the so-called labor problem. If everyone were paid precisely what they were worth, then no one had cause for complaint. Labor would get its due; management would solve a problem. Win-win. Even muckraker Ida Tarbell, no fan of management, bought into the Taylor ethos, going so far as to describe him as a “creative genius.”
Taylor’s heyday ended just five years after he became HBS’s marquee attraction. In 1914, when his followers screwed up a time study at an armaments plant, it led to a strike, which led to congressional hearings, which led to the U.S. government effectively banning time study of work at federally owned plants. All of this led HBS to begin distancing itself from Taylor—the breach wouldn’t last long, as he died in 1915—but HBS stayed committed to the idea of a science of management.
Taylor ended up with a reputation as more of a tyrant than a humanist, putting a lie to his main premise that top-down power could be trusted; that opened the door for the human relations movement of the 1920s. Harvard Business School jumped on that trend as well with its embrace of Elton Mayo (see chapter 8), who was selling a more benign form of bottom-up management. In other words, by embracing one extreme thinker, the School inadvertently led to the need for another. If power and productivity were the bywords of the first decade at HBS, people and personality would be those of the next.
Business schools have never succeeded in distilling the much-sought-after universal laws that Frederick Taylor was selling; more often than not they have simply chased the management theory flavor of the day. In 1908, that flavor was named Frederick Taylor and his “science of management.” Business education has since become much more of a many-headed Hydra than that, and is even further from universality than when it began. The fact of the matter is that there is no Rosetta stone of management, no unified theory. (While they haven’t found a unified theory of physics, few doubt it exists.) But no matter: HBS had co-opted scientific method as a pretense to legitimacy, and they were obligated to make the effort. If there really were laws, they could be studied and taught. That’s what universities do. But if there weren’t? Did it even matter? As Walter Kiechel points out, “aspirations to scientific exactitude gave wings to the ambitions of a new, self-proclaimed managerial elite.”16
Here’s what Taylor did for Edwin Gay: His “research” made business more acceptable to the research university. He was a “name” in the theory of management when there were precious few names to choose from. Harlow Person, the first permanent dean of Dartmouth’s Tuck School, centered his entire curriculum on scientific management, because it “was the only system of management which was coherent and logical, and therefore was teachable.”17 In short, in arguing that management was actually an applied science, Taylor helped both Gay and Person justify the existence of their respective schools.
Of course, scientific inquiry requires data, and lots of it. To that end, Gay established the Bureau of Business Research (BBR) in 1911 to collect statistics on a variety of industries. The effort started with the retail shoe industry, and more than six hundred shoe stores cooperated with HBS’s five field agents. That was followed by retail grocers, wholesale shoe firms, and then expanded into a wider range of subjects. By the late 1920s, the bureau employed thirty field agents. (Gay’s predilection for data went well beyond that; he was also involved in the founding of the National Bureau of Economic Research.)
The BBR led to the creation of the now-defunct Harvard Business Reports. The purpose of the reports was to collect the experiences of many businesses in the hopes of distilling those sought-after principles of management. But the effort lasted only six years, at which point the HBS faculty decided that the effort to identify universally applicable rules was pointless. The majority of the research performed in the early years of HBS can be characterized as benchmarking. There’s no question that’s a valuable thing, but it’s not science, either.
Here’s what Taylor did for management: He gave it a name. He also gave management “scientific” rules on which to base not just a justification for increased demands on labor, but also entirely new methods of production. Henry Ford’s engineers, for example, used Taylor’s stopwatch ideas when they designed their line production system,18 understanding that “the same ingenuity that went into improving the performance of a machine could go into improving the performance of the workmen producing the machine.”19 His system also helped put America on the path to industrial greatness, by focusing it on the fact that the simple act of measurement could lead to significant improvement.
Management guru Peter Drucker once 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.” Perhaps, but it was certainly one of the most important developments in the emergence of managerial power, one that was wrested away not just from labor but from capital itself. Taylorism stripped workers of both knowledge and power, and handed control of the productive processes over to professional managers.20 And to professional consultants, of which Taylor was one of the fi
rst, although the fledgling management consulting industry later found its greatest success by inverting Taylorism, focusing its efforts not on the bottom of the organizational pyramid, as Taylor had done, but on the top.
It also provided management with a useful dodge, the co-opting of “the rhetoric of mechanical engineers to portray themselves as coordinators rather than masters of labor—thereby grounding managerial authority in science rather than in economic, social, or political power, and dissociating management from any taint from the violent struggle between capital and labor.”21 It helped Americans delude themselves into ignoring the realities of management power—power that derived not from personal sublimity but from the fact that without power nothing gets done. It was also psychological balm for managers—if one social group is to dominate another with a clear conscience, it helps if they truly believe in their superiority. Management was brains; workers were brawn.22 It also led to the self-serving conclusion that the only people capable of solving management problems are management itself.
Taylor’s most important contributions to management, though, weren’t about how much pig iron a man can carry in a day. Rather, his techniques of managerial accounting helped shift the discipline away from a backward-looking summary of accounts to a forward-looking tool of managerial control, and served as the foundation of modern management information systems. Via Taylor, accounting became accountability. The legacy of these insights, which include capital budgets, financial controls, planning, and scheduling, far outweighs that of his stopwatch studies.
Here’s what Taylor did for Science-with-a-capital-S: nothing. Counting is not science. Neither is efficiency. Nor are “principles” of efficiency. What Taylor was selling was a tautology: a more efficient labor force is a more productive labor force. “Americans . . . fell in love with the effects of science, not the method,” writes Stewart. “They had little patience for the tedious work of testing hypotheses against controlled observations. They wanted fast cures to slow problems.”23