The empirical school in scientific management

The empirical school in scientific management

The representatives of the Empirical School are closely connected with the management practice.

For all the variety of views developed within the empirical school, its adherents are characterized by a pragmatic orientation, which is based on the study of management practice to gather and justify recommendations that have immediate practical significance. Reference: “Emergency and development of scientific management in the USA”, https://www.worldforgemagazine.com/emergency-and-development-of-scientific-management-in-the-usa/

Although the representatives of this school usually emphasize that the achievements of mathematics, cybernetics, and other sciences should not be neglected, they attach the greatest importance to the immediate experience in organizational management, proving that management itself remains an art, which is taught not so much by theory as by practice. Undoubtedly, the representatives of this school are the most numerous and experience the constant influence of other currents, concepts, theories, etc. They speak of the need to create a “unified theory” of management to help leaders as they do not deal with individual aspects of management, but with the whole set of its functions.

Seeing management more as an art that is taught not so much by theory as by practice, “empiricists” make it dependent on the knowledge and talent of managers, their ability to quickly navigate specific situations and find the right solutions.
Among the numerous representatives of this school can be mentioned: Charles McCormick, James Lincoln, Pierre Dupont, Alfred Sloan, Louis Newman – practicing managers; Peter Drucker – academic scientist and others.

Representatives of the empirical school before the 1930s:

Pierre Dupont runs the Dupont de Nemours company

Dupont is mostly interested in the problems of the top management level. He is the businessman, the entrepreneur, the leader, who set the beginning of the modern theory and practice of the top management. In the early twentieth century, most companies were run by the owner alone. So it is with Dupont de Nemours. DuPont not only revolutionized the directorial level by introducing procedures for forecasting, long-term planning, budgeting, and resource allocation but also introduced professional management in the organization. Creates functional departments for production, sales, supply, finance, and transport. At the top of the functional structures of the individual divisions, DuPont puts a strictly centralized head office for the whole company. The governing body of the company becomes the committee of directors, composed of the president and the heads of the main functional departments. To enhance the board’s ability to make the right resource allocation decisions, DuPont created a department to collect, process, and submit information. At the beginning of its construction, the department deals with the submission of information on the budget balance, including expenditure data, to the various departments. The department, which is the prototype of modern management information systems, not only controls and coordinates stocks, the physical movement of goods at all stages, but also monitors the changing demand for working capital.

DuPont is also taking the first steps in the practice of business diversification, and in this area, he came to the idea that senior management should be separated from day-to-day resource allocation decisions.
Pierre Dupont’s main contributions can be summarized as follows:

  • 1. Replacement of the sole management with a Committee of Directors, consisting of the president of the company and heads of the functional departments.
  • 2. Establishment of functional departments for production, supply, finance, and transport; introduction of forecasting, long-term planning, budgeting, and resource allocation.
  • 3. Establishment of a centralized head office for the whole company, and after the transition to diversification the first is the beginning of decentralization of management.

Alfred Sloan, President of General Motors

Alfred Sloan. He became president of General Motors, where he formalized the system of decentralized operations and centralized control and accountability. This system allows senior management to control the various parts of the company more efficiently and rationally. Each behavior or department is considered a separate operating company with its functional departments. Each of the company’s divisions must strive to achieve the goals set by senior management. The way to achieve these goals is in the prerogatives of the management of the divisions. Under this system, individual departments are required to develop detailed cost, sales, supply, and profit data so that senior management can authorize productivity levels. While the divisions make current decisions, ultimately the general policy for investing resources and the direction of the company’s activities are taken by the top management. This system, called the “federal principle of governance,” was later developed and substantiated by Peter Drucker.

Representatives of the empirical school in the 30s – 70s of the twentieth century:

Charles McCormick, President of McCormick

McCormick’s program justifies how employees at all levels and engaged in various activities in the company, in the administration, in production, in marketing, can share responsibilities in the management of the company. “Multilateral management” as the plan is called, is a precursor to many of the modern approaches to participation in business management. The first part of the program consists of the establishment of the Board of Young Directors. It involves 17 young, proven managers who are given the freedom and access to much of the company’s documentation, including detailed financial information. In return, they give advice, suggestions, and recommendations. The junior board was a great success and made several proposals that were successful and proved very useful to the company during the Great Depression. The concept is expanding to include two more boards: a Factory Board, which includes low-level managers and ordinary workers; a Sales Council, composed of members of the “Placement” and “Sales” departments.
McCormick’s concept of employee participation in management includes the following key points:

  1. Participation. Allows employees and managers from lower levels to get involved in making important decisions for the company.
  2. Communications. Both vertical and horizontal communications in the company are open.
  3. Management development. The factory council and the company sales council are used to determine and evaluate the specific personal and professional abilities of the employees. The aim is not only to increase their efficiency but also to appoint them to more challenging positions.
  4. Mentoring. Each member of the relevant board is guided, consulted, and supported by a senior manager. This helps the employee to socialize and adapt faster in the organization and is an invaluable tool for gaining experience.
  5. Evaluation. Using senior and junior advice, the company benefits from having a variety of sources of ideas and perspectives for evaluating new and existing programs.

McCormick’s views on management development are ahead of their time. According to McCormick, the main goal of management is to build people. The manager must put the human factor above profit, knowing that if the human organization is built of good material, profit will come by itself.

James Lincoln, president of Lincoln Electric

James Lincoln. In the late 1930s, he was president of Lincoln Electric. He enters the history of the empirical school with his approach to individual motivation through incentives and profit-sharing. According to him, traditional virtues such as pride in work, independence, and others are eroding. Both the individual and the business must rely on themselves and not on the conditions provided by the government, for example. The ambition of the individual must be a dominant factor in their personal and professional life. Lincoln believes that people are not motivated primarily by money or security, but by the recognition of their skills and the results of their work. The most important principles of Lincoln’s philosophy of management:

  • Periodically, associates should be assigned work beyond their means. The challenge shows the best in most people.
  • Personal growth is based solely on the results of the work of the individual and his contribution to the development and efficiency of the enterprise.
  • Teamwork is often the core of success. Every worker must feel responsible for his team.
  • The manager is a manager, not a boss. Reference: “Are you a good manager? If you are wondering about this, it’s time to think about your leadership position.”, https://managerspost.com/are-you-a-good-leader/

Louis Newman, Manager at General Electric Co

According to Newman, the personal views and value system of the manager are more important for his future success than his abilities, habits, and qualifications. Newman introduced the following principles:

  1. The collegial relations between the collaborators at all levels derive from the reasonable organizational structure. This means the proper distribution of functions between managers and associates in the organization and the establishment of rights, responsibilities, and obligations.
  2. The professional destiny of each worker must depend on the opinion of more than one manager. In practice, this means that personnel management in the organization is based on collectivity. In this way, subjectivism and personal relationships are avoided, and the demotivation of other workers is avoided.
  3. The most capable people should be promoted to a higher position in the organization.
  4. Managers should be demanding in their dealings with co-workers, but they should never be rude or unfair, as such behavior demotivates staff. This in turn leads to a decline in the effectiveness of both the individual and the entire organization.
  5. Each person must decide his destiny, and not just do what he is told. To succeed, one must fight for the place one deserves.
  6. Compensation for work must depend on the performance of the work. This is a sensitive area in personnel management. The worst option is a combination of disrespect, disrespect for the employee, and unfair pay. This can not only worsen the quality of work but also completely boycott it.

Seebohm Rowntree, President of Cocoa

Seebohm Rowntree. President of Cocoa has become a management laboratory. Seebohm Rowntree’s main views are:

The minimum wage. According to him, the worker should not receive a salary lower than a certain minimum. This is important both from a humanitarian point of view and from an efficiency point of view.

Basic requirements to the organization. Conflicts in the organization are widespread. Dissatisfaction in one form or another is a common phenomenon, as workers, individually or collectively, strive for status, prestige, and self-esteem. They want to secure their independence. They want to be recognized as important partners in the industry.

Workers must be associates of managers in management. Rowntree delves deeply into the central problem of management. Workers need to become collaborators with managers.

Initiative and responsibility. Associates should have the right to participate in all decisions that directly affect them. However, care must be taken to ensure that this participation is in line with performance requirements.

Workers’ councils. Workers’ councils are being set up at all levels of government. Later, sectional councils, branch councils, and central councils were created. The most important is the central council.

The trade unions. Managers must recognize the right of employees to negotiate with management for pay and all other matters that affect them.

Joint control. Discipline depends on absolute impartiality in dealing with cases of misconduct. An appeal committee of management and staff has therefore been set up. The Board of Appeal has real power, including to overturn the decisions of the Supreme Board of Directors.

Discipline Committee. The committee consists of representatives of management and employees. Its first goal is to create public opinion to maintain discipline.

Election of direct superiors. Employees have a direct relationship with their superiors and, less frequently, with senior managers. Therefore, these line managers play an important role in building understanding between management and staff. That is why Rowntree introduces a new procedure for selecting direct superiors. The working committee discusses the application of the person chosen by the management and approves or rejects it. This procedure is repeated until an agreement is reached.

The freedom to ask questions. Dialogue is needed to resolve issues between management and staff. Rowntree introduced the right of workers to ask questions to be answered. The aim is for the staff to train themselves to strive and get satisfaction from their work.

Technical efficiency is not enough. For the management of modern industrial organizations, technical efficiency is not enough. New visions are needed. It needs state art of the highest order to stimulate the development of people’s energy and harness their knowledge, skills, imagination, and strength to achieve their goals.

Representatives of the empirical school in the 70s – 90s of the XX century:

Peter Drucker

He is the father of modern management science, the most famous management consultant, and probably the most widely read author on the subject. He has 19 doctoral degrees. Drucker believes that management science is humanities in nature and believes that profit is necessary in any case, but should not be the only goal. The ideas, rules, principles formulated by Peter Drucker are many. Here are some of them:

According to Drucker, the manager must perform general and specific functions.

The general functions that the manager must perform are:
  • To define the goals, to decide what should be done for their realization and to ensure their realization.
  • To organize, classify and distribute the work, to determine the necessary organizational structure, and complete the relevant teams.
  • To motivate staff.
  • To analyze and evaluate the activities of the organization and the associates working in it.
The specific functions that the manager must perform are:
  • To create from the available resources a “whole” production unit.
  • To monitor and take into account the external environment.

Federal principle of management. It was first used by Pierre Dupont and then by Alfred Sloan, but the term was coined by Peter Drucker.

Drucker’s views on management.

  • Each scientific discipline is unique.
  • Each scientific discipline or subject requires a certain way of thinking, as each game has its own rules and logic. Management is a kind of game, a kind of scientific discipline with its logic.
  • Management is not an exact science.

According to Drucker, management is a practice, not an exact science. In his works “Management in Action”, “Management – what is it” there are no graphs, tables, and formulas. He knows reasonably achievable limits of precision in management and therefore believes that management is not an exact science.

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