Management History

Text and Cases

Morgen Witzel

• Publisher: Routledge
• Year: 2010
• ISBN:
  9781135240189
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Management History is not simply a book about the history of business or even the history of management. The goal of this book is to demonstrate that despite the relative newness of management science as an academic subject, management has been around since ancient times. Through understanding the history of management - both in practice and theory - one is able to approach the complex and challenging problems of modern management from a new perspective.

The book not only traces the development of management from history to the present day, but also examines the way this evolution impacts how management is practiced today and how it may develop in the future. It incorporates case studies from around the world cutting across a range of time periods, from the Egyptian royal tomb builders of Deir el-Medina, to H.J. Heinz, Cadbury Brothers and Tata Steel.

Management History is ideal for instructors wishing to incorporate historical content and analysis into management education courses, modules, and training programs, particularly at the MBA level and higher.

1
Introduction to management history

1.1 Introduction

1.2 Definitions

1.3 The origins of management

1.4 The qualities of the manager

1.5 Evolution and complexity

1.5.1 New firms, new industries

1.5.2 Turbulent times

1.6 Towards a system of management

1.6.1 Scientific management

1.6.2 External influences on management

1.6.3 Management: art or science?

1.7 Questions and discussion: the way we manage now

Case study 1A The Medici Bank

Case study 1B The tomb workers of Deir el-Medina

Case study 1C Hudson’s Bay Company

Case study 1D Robert Owen

Learning objectives

This chapter is intended to help readers do the following:

1 understand the evolution of management in its historical context;

2 understand the nature of managerial tasks and responsibilities, including both how they have changed and how they have remained constant;

3 see how the systematisation of management in the late nineteenth and early twentieth centuries impacted the profession;

4 compare and contrast how management was done in earlier times with how it is done now, or may be done in future.

Industry is not a machine; it is a complex form of human association. The true reading of its past and present is in terms of human beings – their thoughts, aims and ideals – not in terms of systems or of machinery. The true understanding of industry is to understand the thoughts of those engaged in it.

–Oliver Sheldon, The Philosophy of Management

The enterprise can decide, act and behave only as its managers do – by itself the enterprise has no effective existence.

–Peter Drucker, The Practice of Management

1.1 Introduction

Management is one of the essential features of civilisation. Throughout recorded history, wherever human beings have gathered together to undertake great works – build monuments, found cities, establish trade routes, create business and industrial concerns, establish hospitals or universities or religious foundations, publish books and music – there have been managers working on these projects. Indeed, we can go so far as to say that most of these projects could not have been completed without managers, who planned and guided the projects and saw them through to completion.

As the late Peter Drucker observed, businesses do not run themselves. A business enterprise cannot survive without good management, or at least not for long. That was as true four thousand years ago as it is today.

Why study the history of management? It is an interesting subject, full of surprising facts, and the careers of some managers in the past can provide us with useful ideas, even inspiration. Much more importantly, though, the study of management in the past can tell us a great deal about what management is, and how it evolves and changes. And understanding the nature of management is in turn important when we come to the search for best practice today.

The titles of the two works quoted above are as important as the quotes themselves. Oliver Sheldon, who at the time he wrote these words was a senior executive with the Rowntree company in Britain, argued that management is a mental activity. Management, he said, is not something that can be delegated to machines; it is something that must be done by people. How those people conceive of management, how they think about management and its tasks and responsibilities – in other words, their philosophy of management – has a direct impact on how well they carry out those tasks and shoulder those responsibilities. That argument continues to be made today, for example by Richardson (2008) who argues that managers need to spend more time thinking about philosophy and less about science.

Drucker, still the world’s most popular and widely read management guru, would have agreed with Sheldon, but he believed that the managerial tasks and responsibilities themselves were of paramount importance. Ultimately, in Drucker’s view, management is about doing things. It is about making things happen, getting results, satisfying customers, generating profits, creating value. It follows that anything managers can do to improve their performance will result in more satisfactory outcomes: more satisfied customers, more profits, more value and so on.

A little reflection will show that both are right. Philosophy and practice are both essential; indeed, they complement each other. Management is an activity which is carried out by people (albeit with the assistance of various bits of technology, ranging in sophistication from the abacus to the BlackBerry). Any business is only as good as the people who are running it, and of all the parts of a business, it is management that in the end makes the greatest contribution to success – or failure. That means we must pay attention to both process – what managers do and how they do it – and purpose – why they do it.

Before these questions can be answered, however, there is another that should first be considered. What is management? How do we define the term, whether we are speaking philosophically or practically? All too often, this question is sidestepped. We assume that we already know what management is, and proceed blithely to talk about the management of technology, or innovation, or people, or finance, without really stopping to think what tasks and responsibilities are involved, or about what it really means to be a manager.

A second assumption is that management is relatively new. We are told repeatedly that management – sometimes the caveat ‘professional management’ is added – only began in the twentieth century. But consider the following:

• The Duties of the Vizier, the first text on management which set out the goals of management and the tasks of the manager, was written over 3,500 years ago during the 18th Dynasty of Ancient Egypt.

• in the mid-fifteenth century, one of the richest men in Europe, Giovanni d’Amerigo Benci, was a professional manager who had worked his way up from the bottom to become managing partner of Europe’s largest business venture of the day, the Medici Bank.

• the first known brand, in the modern sense of using an identifying mark on a product to establish reputation and quality, was established by the Liu family in northern China in the 11th century AD.

• the first modern business school, established with the purpose of teaching managers the necessary skills to do their jobs more effectively, was founded by the East India Company at Hayleybury, Bedfordshire in 1805.

One way and another, management has been around for quite a long time. And yet when asked what the word means, many of us still hesitate. The first purpose of this chapter is therefore to answer the question: what is management? We shall then go on to consider two further questions: where does management come from? And, why do we manage businesses in the ways that we do? We begin this chapter by trying to define what the terms ‘management’ and ‘manager’ might mean, and in order to do so we shall go back and look at the origins of the words themselves.

1.2 Definitions

The English word ‘manager’ first appears in an official document of 1589, referring to someone who had been entrusted with responsibility for looking after a landed estate. The root word is the Latin manus, which means literally ‘by hand’, but also has connotations of power and jurisdiction. During the Roman Empire, if people were described as ‘under the hand’ of an official, it meant that this official had power over those people and could give them orders; but, significantly, it also meant that the official was responsible for those people, for both their safety and their conduct. The term lasted into the Middle Ages, and by the thirteenth century the Italian word maneggiare had appeared, used in a business context to refer to people who were in charge of production facilities such as cloth manufacturing workshops, or overseas trading offices. The French word manegerie (from which we also derive the word ‘menage’) had appeared by the fifteenth century with an approximately similar meaning, with the transition to English occurring in the century following. By 1700 the term ‘manager’ was in common currency, used to describe anyone whose function was to supervise the activities of others.

Between 1700 and 1850 the terms ‘management’ and ‘manager’ were widely employed. The catalogue of the British Library records over a hundred books on management published during this period – small compared to the thirty thousand-plus items currently available from online bookseller Amazon.com, but significant in terms of the overall volume of publication during that time. Most of these works are highly specialised, and refer to the management of particular industries or occupations. Agriculture predominates, but there are books on the management of forestry, shipping companies, schools, hospitals, religious institutions and charitable bodies, even the management of child care. Then, quite abruptly in the mid-nineteenth century the word fell out of fashion – very possibly because it had been overused. The term was revived in America at the beginning of the twentieth century with the advent of ‘scientific management’ (of which we shall hear much more anon).

What is this ‘management’?

Even though the word ‘management’ has been in circulation for centuries, until quite recently many people were not familiar with the concept. In 1945 Walter Puckey, chief executive of the British arm of vacuum cleaner makers Hoover, wrote a primer on the subject entitled What Is This Management? Aware that many of his audience would be unsure of the meaning of the term, he took a very basic approach. He defined ‘the manager’ as ‘every single person to whom is delegated the

control of some other person’s activities’. In describing what made a good manager, Puckey gave a list of qualities which he grouped into three areas: (1) personal, including ability to listen, judgement and leadership, (2) organisational, including organisational skills, coordinating skills and analytical ability, and (3) technical, meaning an understanding of the technical basics of one’s field of business. Of these, Puckey reckoned that personal qualities were by far the most important, followed by organisational qualities and then technical qualities last of all.

(Puckey 1945)

There were other words which denoted the same concept. Another term widely used in the Middle Ages was the Italian word fattore, which in English became ‘factor’. A fattore or factor was originally an accountant, literally ‘someone who counted’ (the term is of course also used in mathematics). Over time, the term began to be applied to people in charge of particular branches of a business, especially remote locations such as overseas trading posts. The big English trading companies such as the Hudson’s Bay Company and the East India Company continued to refer to the heads of their Canadian and Indian trading operations as factors until well into the nineteenth century, and other companies used the term as well (the trading posts themselves were known as ‘factories’, from which comes our modern word for an industrial plant). Factors were responsible not only for financial matters – though that remained an important part of their job – but also for the independent management of their business units, which were often out of contact with head office for months at a time. A considerable weight of responsibility rested on their shoulders.

Another important term is ‘administrator’, which came into vogue in the late nineteenth century. Again the original word is Latin, administratio, meaning ‘to give direction’, although interestingly there are also connotations of giving help or assistance to another person; by implication this means that administrators were originally assistants to the head of the organisation. The term was – and remains – most common in public sector management, but was popular in Britain during the 1920s and 1930s as a term for private sector management as well. And of course in 1908 Edwin Gay, dean of the newly established Harvard Business School, decided that the post-graduate degree in management offered by the school would be known as the Master of Business Administration, or MBA.

In general, though, ‘administrator’ was preferred by those who felt that the title ‘manager’ was lacking in status, with too many connotations of the shop floor. The same is true of ‘executive’, which emerged in America in the 1950s and originally referred to someone responsible for overseeing the execution of plans. By styling themselves administrators or executives, the holders of these posts sent a clear signal to the world that they were responsible for directing the manual labour of others, not for doing it themselves.

Thus we have four terms, whose original meanings we can sum up roughly as follows:

• Manager: one who has jurisdiction over others and supervises the activity of others, and is responsible for them.

• Factor: one responsible for money and accounts; someone to whom responsibility is devolved and can work independently of direct control from above.

• Administrator: one who gives direction and issues orders, assisting the owner or principal in the business.

• Executive: one who oversees the execution of a plan.

Taken together, these four definitions show something of the range of tasks and responsibilities expected of managers (and from this point on we will use the terms ‘manager’ and ‘management’ as synonymous with factors, administrators and executives).¹ When we find people in managerial roles in the past, whatever official names or titles they might have, we see several common distinguishing features. First, they do not work alone: they work with teams of people and are responsible for directing their efforts, but also very often are responsible for the welfare and well-being of the people who report to them. Second, they have fiscal responsib...

Table of contents

• Contents
• Preface
• Acknowledgements
• 1 Introduction to management history
• 2 Organisation
• 3 Strategy
• 4 Human resource management
• 5 Marketing
• 6 Financial management
• 7 Technology, innovation and knowledge
• 8 Business and society
• 9 Leadership
• 10 Conclusion: how history impacts on management
• Select bibliography
• Index