Lecture The evolution of management thought (6th edition) - Chapter 3: The industrial revolution: Problems and perspective

The Industrial Revolution created a new cultural environment and new management problems. 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.

THE EVOLUTION

OF MANAGEMENT THOUGHT, 6TH

EDITION

Electronic Resource by:

Regina Greenwood and Julia Teahen

The Industrial Revolution: Problems and Perspective

Chapter Three

Examples: Grinding grain, pumping water, transportation, etc.

How was work done before the steam engine?

Page, Brian steamrrengine05.jpg 1980 Pics4Learning 3 Dec 2008 <http://pics.tech4learning.com>

Milling Wheat into Flour

millstone can

covert one-half

bushel of wheat

into flour in one

hour.

be ground in one

hour with a

horse-driven mill.

mill can do 10

bushels per hour.

Jones, D steameng.jpg Mar-02 Pics4Learning 3 Dec 2008 <http://pics.tech4learning.com>

Steam Engine at British Science Museum

The Industrial Revolution in Great

Britain

 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/leadershi

p became more important.

Watt Double-Acting Steam Engine

A late version

of a Watt

double-acting

steam engine,

the steam

engine that

propelled the

Industrial

Revolution in

Britain and the

world, located

in the lobby of

the Superior

Technical

School of

Industrial

Engineers of

the UPM

(Madrid)

“Entrepreneur” – Richard

Cantillon

 Richard Cantillon, currency speculator

 Wrote Essay on the Nature of Commerce

 First to use the term entrepreneur in an economic sense

 “Entrepreneur” applied to anyone who

bought or made a product at a certain cost

to sell at an uncertain price

 Influenced Francois Quesnay, leader of the Physiocrats

The Fourth Factor of

Production

 Management joins

land, labor and

capital as a

recognized factor of

production.

 J.B Say provided a

more definitive

explanation of the

role of entrepreneur

 The entrepreneur

became a manager

for others and

assumed an

additional risk in

combining the factors

of land, labor, and

capital The Warren J Samuels Portrait Collection at Duke UniversityJean-Baptiste Say

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 Luddite movement – machine

breaking

Developing Managers

 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

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

Cultural Consequences of the

Industrial Revolution

 Condition of the Worker

 Economists Thomas Malthus and David Ricardo view worker condition as dismal and inevitable

Engels saw people as powerless in their environment

 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

Wages

were rising

Infant

mortality

was

declining

Machinery

replaced

some

drudgery

Began to

improve

people’s

standard of

living

 The Industrial Revolution created a new cultural environment and new

management problems.

 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.