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 FranceThis 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.