The Age of Industry and its management legacy

Last time, I presented studies and statistics showing that an astonishing number of people are simply not happy with their jobs and their bosses. One surprising element of this discussion, at least for me, was the number of people who say that the primary source of their discontent is that their boss makes them miserable.

So, I would like to focus a bit on what I feel is making so many workers unhappy, and on what managers and leaders might do about it. As I write this and subsequent blogs around these issues, I should state clearly that these are not the findings of an expert researcher in this field, but merely observations, based mostly on my learning and reflection during nearly three decades of managing and advising organizations.

Here is the short version of my explanation of the situation: If so many people are unhappy with their jobs and their bosses, it is perhaps because our approaches to management have not kept up with the times. To understand what I mean by this, let’s take a quick look at how the relationship between companies and workers should change as we move from an industrial economy to an information and service economy.

A backward glance at the industrial corporation: Many years ago, one of my professors stated that for a period of roughly one hundred centuries, human beings were agrarian. Then for a period of about one hundred years, beginning with the Industrial Revolution of the late 19^th century, industrial and manufacturing models dominated the world of work. Now, in our time, we are living the transition from an industrial economy to an information or knowledge economy. I am not sure about the accuracy of the “one hundred” number in either case, but it is a dramatic way to make the point about how the labor of humans has evolved—from agrarian to industrial to knowledge.

In describing the transition from the Industrial Age to the Information Age, I often contrast Ford and Microsoft, since each is an iconic example of success from its time. Let’s first address the foundations of Ford’s striking achievements in the early years of the 20^th century. Next week, we will focus on companies born in the knowledge economy, such as Microsoft.

At the dawn of the Industrial Age and beyond, Ford’s success was based on management practices and economies of scale that assured high levels of return on its physical and financial capital.  They built huge factories and learned to make their production processes increasingly efficient.

Most factory workers were part of an assembly line, a vast system of mostly interchangeable parts.  Above the factory floor, large numbers of “organization men” controlled every step of each process; layers of managers were added to provide ever-increasing and more precise control.  Since the goal was efficiency of physical assets, systems for measuring output became progressively more sophisticated, management ever more scientific, and hierarchies increasingly vertical and bureaucratic.

A model that succeeded by de-personalizing the enterprise: In the Industrial Age, the corporation was the creator of wealth, and the individual the worker was simply not very important.  Deploying their armies of “organization men”, big companies overwhelmed smaller competitors by using economies of scale, mass production, and manufacturing efficiency.  These concepts became the mantra, and bigger meant better.

In the Industrial Age, the model of “manager as bureaucrat” made sense, since business success depended on maximizing the return on physical assets. In the end, though, the formalized planning procedures, dispassionate decision making, and well-defined hierarchies that came to define bureaucratic institutions would lead to their downfall. As these organizations grew in size and complexity, “serving the system”, not performance, became the key to career success.

Speaking of General Motors in the 1980s, American business legend Ross Perot defined the problem this way: “At GM, the stress is not on getting results—on winning—but on bureaucracy, on conforming to the GM system.” Serving the system became an end unto itself, causing former General Electric CEO Jack Welch to warn that large, bureaucratic organizations tended to become places where “everyone has their face toward the CEO and their ass toward the customer”.

Of course, the heyday of vertical hierarchies and the reign of the “organization man” are now far behind us. As we have moved squarely into the Information Age, even most large and traditional companies have flattened their organizational structures. Nonetheless, I would contend—based on what I see and hear in industry—that much of the legacy of the Industrial Age is still present in our management thinking.

Decades of scientific management, of rationalizing and measuring everything, of treating the business as a machine to be optimized—all of these approaches and attitudes led to the dehumanization the workplace. As a society, we have perhaps come to understand more about managing tasks, processes and output than about leading and inspiring human beings.

Of course, I would never argue that managing our organizations for efficiency is a bad thing. However, we may have gone too far in our “business as machine” model, losing sight of this essential truth: Organizations are vast ecosystems of human behavior where the engagement, energy and attitude of individuals can have an enormous impact on company performance.

When I interview employees today, many of the unhappy ones say that they are not appreciated and not listened to, that they feel anonymous, that they see little meaning in their daily activities. My conclusion: Today’s great management challenge is to re-humanize the corporation. More on this next time…