MANAGING INDUSTRY.

New Zealand Herald, Volume LXIV, Issue 19677, 1 July 1927, Page 8

MANAGING INDUSTRY.

AMERICA'S NEW SCIENCE. CAPITAL HOLDS ALOOF. t EXPERTS SECURE RESULTS. ONLY SUCCESS RECOGNISED. Tilting everything into consideration, perhaps the most original and the most promising contribution that America is making to industrial science is the separation of the function of management from that of ownership, and the consequent development of management as a highly specialised and technical branch of industry, writes Mr. H. G. Adams, special representative with the Australian Industrial Mission to America, from Washington under date May 7. At first thought it might seem that the methods of mass production avo a more . striking, more novel contribution. liut mass production is in essential little more • than the inevitable result of the unique . relation of industry in America to its market. Like Topsy it " just' grew," independently of auy genius of the American people—although that genius has been quick to adapt it, direct, and capjialiso it. On the other hand the new principles of management that arc beipg worked out in 'American industry are distinctly a contribution to fundamental ideas. An Obvious Axiom. These new principles are based on an appreciation of the obvious axiom that the ownership of industry does not necessarily carry with it the highest managerial ability. To be able to finance an industry is one thing, to be able to manage it to the best advantage is quite another thing. American ownership has had the courage to recognise this fact ahead of other countries. It has practically stepped out of the management of industry and so lias opened the way to the full development of the genius for management whereever it lies, irrespective of the possession of capital or relationship with the financiers. It 'is impossible to study American industry without being impressed above everything else by the enthusiasm and the genius of its management. Management has become a definite profession, almost a definite science, taught in the great universities of America just as thoroughly as are the professions of medicine or law. The practitioners of this profession are as distinct from the owner class in industry as are the workers themselves. It is the most exceptional thing in America to find the owners of industry taking active part in its management. Their interference would be looked at askance and resentfully. The financier or group of financiers considering the investment of money in the establishment of industry first engages an expert manager who advises on the return that might be expected. If the promised return is sufficiently attractive the industry is established. The manager is required to show at least the return he hcis estimated. He carries the whole responsibility and in return hti is given complete Control. * , The Reward of Success. The man who has put up the money does not assume any right to interfere with the methods of management. If the manager does not -secure satisfactory results the owners do not bother to investigate his methods or look for the faults of his system. They are riot experts in the science. What they do is to dismiss the manager and go on appointing and dismissing managers until they find the man who can get ithem the return on their money. Once that, man is found he is cherished. His authority upon all matters obtaining to ths conduct of the business is generously acknowledged. He is extremely well paid. His own pocket profits largely by the success of the business. | Probably there is no more genius for industrial management among the American people than there is in any other country, but in America it is being given the opportunity, the inducement to develop to a far greater extent than in any other country. The attitude adopted between the owner and the manager is repeated right throughout the' business. In any big concern the manager makes no attempt to deal with detail, although invariably he has a surprising knowledge of every detail of the business. fne management of the business is divided stnd subdivided and subdivided again. The executive in charge of each division and of each subdivision is given complete control over his section, and has to carry to the manager the full responsibility for results. Nothing is asked from him but results. If he achieves results he is a success and will get greater opportunities. If he docs not achieve results he is a failure, and will be dismissed. No one will be particularly interested in the reasons for his failure. ' Keenness the Keynote. It can readily be understood how this system has led to an intensive study of the principles of successful management and to the creation of a keen, capable class of executives in control of American ' industry. The mental attitude of this class is different from that of the ownermanager. Under the old system success often brought a. diminution of incentive. If the profits of the business were very large the owner was satisfied, and, while he did not give up the authority of manager, he would often become slack in his attention to the duties. I have heard the managers of American industries complain of annoying delays in transacting business with British firms from this very * reason. The owner of the British business is on the Continent, is in the country, is away on a Thursday to Tuesday week-end; but the owner is also the manager. and no one else has authority to decide matters of importance. In America you will seldom at any time in any day of the year find an office without someone in charge to take full responsibility for the most important decisions. The manager himself is generally fit his desk from 9 a.m. until 6 p.m. He is the hardest working man in the whole concern. The prosperity of the business only impels him to greater effort, to more assiduous attention. He waits until he is ready to retire before he slackens off. Keen Group of Executives. Under the manager are a group of executives each every bit as keen as the manager himself, because each ha c full responsibility for the success of his department, and therefore a great pride and anxiety m his results. Tho delegation of responsibility throughout a big American concern is one of the most remarkable feature's of American industry. At any time,, as we found, one or a dozen chief executive officers could leave their desks and devoto themselves entirely for a day -Sr more to our industrial mission. Tho L'isiness would go on without interference, without'anxiety, because under every officer there was another ready as a matter of course to assume to the full the delegated responsibility. This system is, I believe, the explanation of a fact that amazes business men from other countries—the freedom with which the men controlling rival businesses discuss their methods among each other. These trained and expert managers regard their profession of management in much the same way as the scientist regards science. New ideas, new discoveries, should be shared freely. Their interest in the profits of the business is almost academic. In their systems of management, their, organisation, their elaborate tabulations, they have created something that has the satisfaction, the beauty of a science. They are developing and spreading in America a love for efficiency for its own sake—which is perhaps the greatest asset in industry that any nation can possess. "