The Golden Passport

by Duff McDonald

  Mayo reported his findings to the world in a November 1929 article that attributed the increases in productivity to a combination of gentle supervision and improvements in group psychology. News of the “findings” spread through both the business and academic worlds like wildfire. “What actually happened,” he later wrote, “was that the six individuals became a team and the team gave itself wholeheartedly and spontaneously to cooperation in the experiment. The consequence was that they felt themselves to be participating freely and without afterthought, and were happy in the knowledge that they were working without coercion from above or limitation from below.”11 (Again, lazy: Mayo never actually got around to writing an authoritative account of the Hawthorne experiments. That task fell to Fritz Roethlisberger and William Dickson, who published Management and the Worker in 1939, a surprise bestseller that is considered a cornerstone of modern industrial psychology.)

  It was solidarity, in other words, that made the difference, not working conditions or pay. That was music to corporate managers’ ears the world over, arguing as it did that money didn’t bring happiness to the worker; kindness and personal fulfillment did. Mayo even argued that the work itself had become incidental, that the opportunity to practice self-determination in a context of social well-being mattered even more. It all sounds very humane, of course, but it’s important to keep two things in mind. First, Mayo’s “findings” were not much more than a restatement of the thesis he had been pushing since 1919. Second, the whole point of the experiments was to identify the ways in which psychology could be used to goose productivity and to blunt the unionization impulse. And the money those workers supposedly didn’t care about? Their corporate masters sure did. If Frederick Taylor divided the world into thinkers (management) and doers (labor), Mayo went one step further, reducing labor to nothing more than a set of irrational emotions requiring manipulation.12 And the best way to manipulate someone is with a smile on your face.

  But that elitist view didn’t bother Donham one bit. In his 1931–32 letter to the president of Harvard, he elevated Mayo’s utopian theories to the level of accepted fact: “Whereas supervisors have generally tended to be talkers and ‘drivers,’ those who get the best results from their workers are now known to be good ‘listeners.’ Increases of production—quantity and quality—occur in response to social and physical improvement of condition rather than to spurs and incentives.” Donham gushed because Mayo had delivered the precise goods that Donham needed, a scientifically “rigorous” study of the human side of management that not only reinforced the argument in favor of managerial expertise (the raison d’être of HBS) but also went so far as to credit those managers with stabilizing society itself. He’d also done it through a veritable case study, one that Donham later described as “the best available ‘case’ on the question of the value of research to business.”13 And he’d done it in a way that had impressed both the academy (via the research) and industry (via its practical applications) at once. Whatever he lacked in terms of intellectual honesty, Mayo clearly had considerable academic entrepreneurial talent, and Donham committed himself beautifully to the opportunity that landed in his lap, essentially creating human relations management de nada.

  And it wasn’t just HBS for whom the timing of Mayo’s findings was auspicious. While the failure to prove the superiority of electric lighting had surely soured one corporate backer of the studies—General Electric—there was another equally gigantic corporation whose interest continued through to the end: AT&T. The telephone monopoly was at the forefront of the “New Capitalism” movement sweeping through corporate public relations offices at the time, a nationwide effort to rebrand the company not just as a person, but as a person with a soul. Said one AT&T official: “[It was necessary] to make the people understand and love the company. Not merely to be consciously dependent on it—not merely to regard it as a necessity—not merely to take it for granted—but to love it—to hold real affection for it.”14 Companies that previously had eyes for their customers alone were suddenly finding that they had a thing for their employees, too. For decades, the mythology of Hawthorne took for granted the fact that the core finding—treat workers well, and they will respond in kind—was accidental, but in 1993 Hawthorne scholar Richard Gillespie made a persuasive case that the findings were not “discovered” but rather manufactured in alignment with AT&T’s overall public relations strategy, one that was designed to keep both government oversight and the unions at bay.15

  From that point until the end of Donham’s tenure as dean, Mayo enjoyed a life at HBS afforded to few others. He taught only sparingly, which set him at odds with a faculty dedicated to teaching above all else, although his 1935 course, Human Problems in Administration, stands as the first real human relations course taught at the School, and the Hawthorne studies the foundation upon which the entire field of organizational behavior was built. One immediate intellectual heir: Chester Barnard, an influential AT&T executive who lectured at HBS in the 1930s and 1940s, and who built on Mayo’s base of bottom-up cooperation a more complete picture of the kind of manager who led not by top-down power but by moral influence.

  On the other hand, Matthew Stewart argues that Mayo’s real legacy was not his “findings” per se, but rather the notion that the kinds of things he talked about should even be counted as “findings” in the first place. His primary ones, that management is all about people and that individuals can find self-realization through social means, weren’t original, even at HBS itself. Mary Parker Follett, who lectured at Harvard in the 1920s, had expressed both well before him. In his musings on the nature of trust, too, Mayo had merely “discovered” the well-known fact that ethics is the foundation of good management.

  He veered off course, too, when he insisted that it was the skill of the therapeutic interviewer (that is, Elton Mayo) that mattered most of all. “It must not be thought that this type of interviewing is easily learned,” he wrote in 1945, seemingly oblivious to the fact that real trust—lasting trust—between workers and their employers (or colleagues) isn’t something that can be constructed by a third party, even one as learned as Elton Mayo. Third-party interventions of almost any sort tend to create not much more than the illusion of trust, the same thing that motivational speakers push on employees forced to attend team-building retreats. A true corporate culture must be painstakingly built; it doesn’t just spontaneously arise if your supervisors put on doctor’s outfits and act concerned.

  Mayo, his colleagues at Harvard Business School, and his collaborators at Hawthorne kept tight enough control over their researchers and data that the reassuring message out of Hawthorne managed to stay intact until after his death in 1949. But once exposed to actual sunlight, the findings withered under scientific scrutiny, and they’ve been under attack ever since, with suggestions that the once-lauded effect “[originated] in the personal bias of its creators rather than in the facts it seeks to explain,” and that Mayo and his colleagues were complicit in preserving “a view of workers as irrational and unintelligible and of the capitalist factor as nonexploitative and free of class conflict.”16 James Hoopes, author of False Prophets, puts it even more bluntly: “Mayo was . . . a charlatan. A greater-than-average deficit in intellectual integrity made his sparkling intelligence too facile and enabled him to ignore evidence that ran counter to his ideas.”17

  Mayo spent more than a decade in the limelight, writing a bestseller in 1933 (The Problems of an Industrial Civilization) and making the cover of Fortune in 1941. By that time, however, he’d alienated more than a few HBS colleagues, despite the fact that his actual role at the School was both marginal and externally funded.

  Some had an intellectual bone to pick with the man, arguing that his philosophy of management was, in the final analysis, too soft. Only Roethlisberger stepped across that divide, and eventually carved out a long career at HBS by positioning organizational behavior as an empirical, amoral field of study, concerned with “the way people did behave—and n
ot should behave—in organizations.”18 While he never got completely out from under Mayo’s shadow, that shift—away from a normative (that is, idealistic) point of view and toward a descriptive (realistic) one—endeared Roethlisberger to his more hard-nosed colleagues who found much to like in his idea of an organization as a “social system” in which the manager’s job was to maintain equilibrium. He eventually became one of the School’s most highly regarded teachers.

  While Donham could look past Mayo’s dubious research methods to see his contributions to the larger cause of HBS, the rest of the faculty eventually began to chafe at the gap between his actual research talents and his outsize reputation. Others took issue with his aloofness and work ethic, which generally consisted of arriving midmorning and departing midafternoon for a liquid lunch at St. Clair’s restaurant in Harvard Square. Underlying it all was an irony: Elton Mayo, the man who knew how to get others to work harder, never really worked that hard himself.

  Longtime HBS faculty member Abraham Zaleznik even saw damage in his wake: “The legend of the Hawthorne effect is that Mayo had a blinding flash of creative insight and designed [part of] the experimental study to demonstrate its validity. This legend led to an idealization of the creative moment at the Harvard Business School and set back research at that institution at least one generation. As young researchers, we felt defeated if the creative flash or the éclaircissement did not occur. It usually did not. Alas, the reality of research is that at best we are toilers in the vineyard. We must toil daily or nothing will come of the work. If one is blessed by some creative inspiration, more power to him. But this is not the stuff of which science is made.”19

  When Wallace Donham handed the keys to the dean’s office to Donald David in 1942, Mayo’s days were numbered. He hung around for another five years, during which time he attempted to expand his remit from advising industry to advising all of society. (He wouldn’t be the last high-profile HBS professor to do so.) Dean David signaled the beginning of the end when he closed the Fatigue Laboratory in early 1947. Mayo retired shortly thereafter, in May 1947. He was sent off with a farewell conference, “The Mayo Weekend,” which included participants from the Rockefeller Foundation, Western Electric, AT&T, and Standard Oil.20 Unfortunately for Mayo, the Rockefellers were bidding him adieu in more ways than one. A possible job at England’s National Institute for Industrial Psychology fell through when its people realized that the Rockefeller funding had run dry.21 He died on September 1, 1949.

  For all his puffery, Elton Mayo focused corporate America on some central truths about the task of modern management that many of his contemporaries had lost sight of, including the timeless aphorism that if you’re nice to others, they’re likely to be nice to you. (Put in more corporate terms, there is a link between supervision, morale, and productivity.) If he was a tad hyperbolic, it’s not as if he was the first (or the last) sociologist to be gripped by the apocalyptic conviction that this time, things really were falling apart.

  And at least one alarm he sounded was very real indeed: “The world over we are greatly in need of an administrative elite who can assess and handle the concrete difficulties of human collaboration,” he wrote in 1933’s The Human Problems of an Industrial Civilization. “But no university in civilization offers any present aid to the discovery and training of the new administrator.”22 Fast-forward more than eighty years: In August 2015, Amazon.com—which hires shopping carts full of MBAs each and every year—found itself the subject of a devastating exposé in the New York Times for . . . treating its employees like crap. The search for Mayo’s new administrator isn’t over yet.

  9

  A Decade in Review: 1920–1929

  Within weeks of his appointment as the new dean of HBS in late 1919, Wallace Donham began putting his own stamp on the institution. He made clear how the students would be taught, via the case method. He made official a shift in the curriculum that was already in process, away from an industry orientation (for example, steel, lumber) and toward a functional one (production, marketing, finance, accounting, business statistics). To help students effectively tailor their elective curriculum toward their career goals, he oversaw the rearrangement of the School’s courses into eight study groups: Accounting, Banking and Finance, Business Statistics, Foreign Trade, Industrial Management, Lumbering, Marketing, and Transportation. And most important, he made clear what the students would be taught—not just business but the responsibility of business to society itself.

  None of that was controversial. What was? Donham’s proposal of a policy that was anathema to the academic mindset—the sharing of teaching materials and cases among the faculty so that any of them might be tasked with teaching a particular course. Few people, in any field, are receptive to the suggestion that they are interchangeable. For professors used to jealously guarding their teaching materials and experience, the suggestion that they might also be viewed as such came as a particular shock. One professor felt the insult large enough to resign.

  With enrollment surging, however—from a low of 97 in 1917–18 to 505 in 1921–22—the size of the faculty was, too, and most professors conceded that a certain level of interchangeability could be a good thing. For one, it would ensure that the increasing numbers of new faculty could be brought up to speed as quickly as possible. What’s more, with some three hundred incoming first-year students each year, HBS had by that point begun dividing them into sections, and the sharing of teaching materials—and cases—would not only reduce duplicative efforts among faculty but also allow all sections to study those cases that had been deemed most effective. This decision, which wouldn’t have been possible without the simultaneous shift toward the case method, is a crucial one in the history of the School, as it gave HBS a marked edge over the competition in its ability to handle a large class. Even in 2015, HBS remained the largest of the elite business schools in the country, with a class size of 935, larger than Wharton (859), Columbia (743), Northwestern (691), Michigan (447), Duke (440), and Stanford (410).1

  That’s not to say that HBS has ever been open to any and all comers. Indeed, a rapid rise in applications in the early 1920s led the School to begin ratcheting up its entrance requirements. As part of that effort, it began experimenting with two intelligence tests that were all the rage—the Scott test and the Carnegie (Thurstone) test. Donham was well aware of the fact that high intelligence scores didn’t automatically translate into business success, but he was nevertheless of the opinion that HBS was no place for a man who couldn’t achieve them. Given HBS’s already notoriously heavy workload, he wrote in 1921, that man’s “chances of failure are too great.”

  Even among those the School did admit, the attrition rate was high. Of 309 entering first-years in 1920–21, only 237 of them, or 73 percent, were adjudged eligible to return for a second year. And among that group, only 174, or 73.4 percent, did. When, in his third year as dean, the percentage who decided to return for a second year shot up to a record 84 percent, Donham attributed the increase to the spread of the case method and the development of study groups. An alternative explanation could be grade inflation—the percentage of those eligible to return had risen by a similar proportion, from 77 to 83 percent. (When the enrollment of first-years plummeted during the Great Depression, the percentage eligible to return spiked, topping 95 percent in both 1932 and 1933—a fairly obvious instance of the School fiddling with grading in response to external forces. It did precisely the same thing in the second decade of this century, when criticism over its treatment of women resulted in an almost instantaneous increase in female students’ grades.2)

  Whatever the reason, HBS was hanging on to more second-years than it ever had before. When Donham modestly suggested that the School could “hardly expect to ever” exceed the 84 percent return rate of 1921–22, he was wrong. In 1928–29, 89.6 percent of students returned to complete their MBA. All told, it took less than three years from the opening of the new campus in 1927 for the total number of HBS stude
nts to exceed its planned capacity of 600 first-year and 400 second-year students, with a total 1929–30 enrollment of 1,015.

  The hiring of Elton Mayo in 1926 demonstrates that Donham was not inclined to carve a curriculum in stone and keep it there. Even after the reorientation toward functional disciplines, the 1920s were a time of constant tweaking, both in the required curriculum and in the overall course mix, the latter being partly a function of new faculty hires. Always on the lookout for ways to refute accusations of academic impoverishment, Donham also built “alliances with pedigreed disciplines.”3 In 1927, he hired Harvard-trained historian Norman S. B. Gras to study management history, and made him managing editor of the newly established Quarterly Journal of Business and Economic History in 1928. He also convinced Alfred North Whitehead, one of the most famous philosophers in the world, to cross the Charles River and give a few lectures. There was even controversy: In 1921, a dispute arose between the School and some of its corporate friends over the presence of a course on labor relations in the curriculum.

  The study of business statistics, the availability of which had just begun to explode, moved closer to the core of the curriculum, coincident with a greater understanding of their usage as an effective means of management control. A notable lecturer in this realm: James O. McKinsey, the founder of future consulting juggernaut McKinsey & Company, who in 1922–23 taught “A Problem in Budgetary Control.” McKinsey only lectured at HBS that one time, but his namesake firm later became the most important corporate partner in the history of HBS, a distinction it still holds today. Another one HBS couldn’t hold on to: Adolf Berle, who lectured on industrial finance between 1924 and 1927, at which point he decamped for Columbia Law School. It was there that he wrote (with Gardiner Means) his seminal 1932 work on corporate governance, The Modern Corporation and Private Property.