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1/15/2009
Is Scientific Management Dead?

What’s Wrong with Management?
Management is taught and practiced as a distinct and important skill that affects the performance of organizations and the lives of people at work. New management ideas are developed, and they are often hailed as “paradigms” necessary to guide us to more profitable futures. The originators of these ideas become “gurus”, commanding very large consultancy and lecturing fees. The ideas seem to work initially, but in the longer term difficulties set in: confusion arises because the new methods do not seem to address the actual skills, knowledge, and attitudes of the people most concerned, key people are moved or removed, people become dissatisfied and leave, and there is a general perception that management is remote, demanding and uncaring. The recent phenomenon of “Business Process Re-engineering” (BPR) is a classic example: it was presented by its authors as the unique and necessary panacea for the survival of American companies. It is ironic that later books on the subject have tried to explain why the quack medicine did not work. Another example is the widespread adoption of the international standard on quality systems, ISO9000. The method is expensive, bureaucratic, and counterproductive, but nevertheless business leaders are mesmerized into adopting it and imposing it upon their suppliers. There are other examples of ineffective and damaging management practice, and these will be discussed later.

Of course not all teaching and practice is bad. Excellent modern teachers of management ideas include Rosabeth Kanter, Charles Handy and Peter Senge. There are many examples of gifted, charismatic leaders who have built successful businesses or transformed failing ones. At lower levels we have all experienced excellent managers, whose teams win. What is the fundamental difference that determines whether management philosophy and methods are good or bad?

Good management is based upon the principles first taught by Peter Drucker in his book “The Practice of Management”, published in 1955. Without exception, bad management ideas are based upon the principles of “scientific” management, as taught by Frederick Taylor in 1920. Drucker explained why “scientific” management is wrong and damaging. Despite this, Taylor’s ideas still strongly influence much management thinking and practice.

The Birth of Scientific Management
In the early years of this century the American engineer Frederick W. Taylor studied the way that work was performed by people in industry. He observed that when tasks were described unambiguously, and when the people performing them were made to follow these detailed instructions, efficiency and productivity were increased. These studies were made in the context of the industrial and social conditions that applied at the time. The tasks studied required little or no skill, training or education. The workers were men accustomed to the idea that their role was to obey orders. Engineering production methods were becoming less reliant on individual craftsmanship, and more on putting numbers of people to work on repetitive, simple tasks. Eli Whitney had demonstrated the principle of mass production in the manufacture of army rifles in 1864, by having men make interchangeable parts using templates and machines, rather than each rifle being an assembly of uniquely crafted parts. The monotony and discipline of plantation work was being reflected in the new industries: Whitney had grown up in pre-Civil War cotton plantation society, and slavery was not far from peoples’ memories.

Taylor described his ideas in his book “The Principles of Scientific Management”, published in 1911. His thesis was that industrial production processes should be managed on the basis of scientific principles of measurement and control. The selection of workers, their training and the methods they used should be determined by managers, who were the “scientists” of the production processes. Workers’ skills could be most usefully applied if they were made to specialize. Managers could improve productivity by providing conditions conducive to greater output, such as better lighting, tools and work plans. Since the production worker was seen basically as a provider of manual effort, with little or no mental contribution, management’s objective was to secure as much working time as possible, for the minimum cost.

Taylor’s theory was widely adopted by the developing manufacturing industries. It led directly to the development of the mass production line. “Work study” was a further development, in which tasks were broken down into basic activities such as lifting, reaching, and turning, all with standard times, so that the time required to perform a manufacturing task could be analyzed and minimized. The production workers were not consulted, and were not permitted to interfere with or to change the processes. The term “operative” for a production worker became part of the industrial lexicon, and “de-skilling” of tasks an objective of management.

The basic, unspoken tenet of scientific management was that people could be managed in the same way as machines. So long as their tasks were specified, and the conditions under which they worked were optimized, they would perform in ways that would be efficient and predictable. The concept was readily accepted by managers, and particularly by engineers, since their education was based on rationality and on science. What could be more rational than the application of science to the world of work? Managers could conceive of no other way of establishing order and efficiency at work: any alternative would have appeared to be anarchic and unproductive.

The Influence of Culture
Western management style reflects its cultural background. The dominating influences of this are the Socratic philosophy of ideas being either “right” or “wrong”, and of disputation as the way of demonstrating and deciding on “rightness”. Democratic legislative systems, in which government and opposition parties argue, rather than seeking agreement, also reflect this philosophical genesis.

Western culture is also influenced by determinism, the belief that there must be rational explanations for all that we observe. A powerful influence on the application of scientific thinking to the management of people at work was the often-quoted statement by Lord Kelvin, the British scientist, that “when you can measure what you are speaking about and express it in numbers, you know something about it; when you cannot measure it, when you cannot express it in numbers, your knowledge is of a meager and unsatisfactory kind”. This deterministic view is, of course, appropriate and rational in the field of science. For example, it enables us to distinguish between true science and metaphysics, or between believing in the theory underlying ocean tides and not believing in the myth of the Bermuda Triangle. Kelvin’s aphorism is also relevant to many practical situations, such as engineering design and test and accountancy. However, in the wider field of management, the knowledge that we must use is often and necessarily of “a meager and unsatisfactory kind”, especially when we are dealing with the performance of people.

Another feature of Western culture that influences management style is the greater tendency to apply and accept inductive, as opposed to deductive, ways of thinking about problems. The inductive approach, or mentality, seeks radical solutions, or totally new methods. The deductive approach is characterized by step-by-step thought progression. The invention of differential calculus by Newton, Galileo’s revelation that the earth orbited the sun, the invention of the Xerographic copying process and of the transistor were all inductive breakthroughs. On the other hand, the application of differential calculus to engineering problems, the discovery of Pluto by measuring the perturbations in the orbits of other planets, and the development of transistor-based circuits were primarily deductive applications of the earlier ideas.

The “New Management”
Taylor’s theory, like the contemporaneous philosophy of Karl Marx, contained a fundamental flaw. The behavior and performance of people are not amenable to scientific, rational cause and effect analyses, as are scientific processes and machines. The factors that influence people’s behavior and performance are far more complex and subtle than the principle of scientific management implied. Individuals can behave or respond to influences that are not predictable by the methods and “models” of science. The predictability of groups of people is even more uncertain. However, prediction is the logical purpose of any scientific theory.

The ways that factors can influence people, as individuals or in groups, can be powerfully positive or negative, depending on the extent to which motivating forces such as morale, security, feeling of shared destiny and happiness exist or are denied. Elton Mayo’s famous experiments of the early 1920’s provided early clues to the limitations of the application of scientific thinking to the management of people. The Hawthorne experiments were conducted on people performing simple, repetitive, specialized tasks, with little or no team involvement. Even so, they demonstrated how powerfully, and perversely, the “unscientific” human factors influenced performance. The lessons for the management of much more complex tasks such as multidisciplinary, knowledge-based team projects were, however, hardly appreciated at the time.

Peter Drucker’s landmark book, “The Practice of Management”, was published in 1955. Drucker was the first teacher to point out the basic flaws in Taylor’s theory. His destruction of the foundations of scientific management bears comparison with Mark Antony’s announcement that “I come not to praise Caesar, but to bury him”, though in Drucker’s case there was no intention to mislead. Drucker explained why scientific management was fundamentally inappropriate to the management and motivation of people at work. He taught that people want and need to feel that they can contribute to the enterprise, at whatever their level of operation. The fact that they are trained and experienced makes them competent to do so. Furthermore, such contributions should be demanded of them, not merely encouraged or passively accepted. This approach will generate far higher performance and output than coercion or threats, or “scientific” methods such as work and method studies, because it aligns the motivations of the people with the objectives of the business.

Drucker explained that all workers are managers, and lower level workers often have knowledge that managers do not. By exploiting this source of knowledge, managers can generate greater gains than if they plan and control the details. No “scientific” principles are involved. Instead, the facts of human nature are recognized and turned to the benefit of the enterprise. All people in the enterprise, from the chief executive to the lowest level, are both managers and workers, and are all on the same team.

The New Management also stressed the vital role of top level leadership as the driving force of long-term development and survival of the business. All businesses have the same basic access to resources such as finance, materials, and equipment, as well as to markets, so that the most important asset that can provide competitive advantage is the quality of the employees. This is reflected in their ideas, loyalty, flexibility and productivity. The Chief Executive is the only person who can ensure that the managers who report to him and who manage the key functions and projects will embody these qualities and will permeate them throughout their teams.

The revolutionary developments in technology and the rise in international competition for markets that were once secure and protected have made Drucker’s teaching increasingly relevant, to the extent that his prophesy has been amply fulfilled.

The American statistician W. Edwards Deming strongly influenced the acceptance of Drucker’s philosophy in Japan. His “14 points for managers”, as taught to Japanese industrialists at the invitation of the US occupying forces after the war, went far beyond his initial remit to teach modern methods of statistical process control (see box). Deming extended his teaching to include fundamental aspects of the motivation of people at work. The “14 points”, however, are totally consistent with Drucker, and are a rejection of “scientific” methods, including the setting of quantified objectives and quotas. Deming also revealed the positive correlation between quality and productivity, and the logic that proved that quality improvement will always reduce costs, in contrast to the conventional “scientific” view that there must be some optimum level of quality beyond which further improvement would not be cost effective. The Japanese quality circles movement was born out of Deming’s teaching. After they had mastered the secrets of production quality assurance, the Japanese extended the concepts further, to develop the concepts of just-in-time production and supplier partnerships (the “Toyota production system”, which will be discussed later), for both of which very high standards of product quality are essential foundations.

The growth of Japanese industry and its domination of so many market sectors since their adoption of these principles is a fact of modern industrial life, though it was not foreseen during the years preceding their export-led industrial blitzkrieg. Drucker had written in “The Practice of Management” that “There can be little doubt that leadership in productivity and wealth during the second half of the twentieth century will fall to the country whose managers understand and practice management in its fullest sense”. Later, Konosuke Matsushita said “We are going to win and the industrial west is going to lose. There is nothing much you can do about it, because the reasons for your failure are within yourselves. Your firms are built on the Taylor model; with your bosses doing the thinking while the workers wield the screwdrivers, you’re convinced deep down that this is the right way to run a business. For you, the essence of management is getting the ideas out of the heads of the bosses into the hands of labor.

“We are beyond the Taylor model. Business, we know, is now so complex and difficult, the survival of firms so hazardous in an environment increasingly unpredictable, competitive and fraught with danger, that their continued existence depends on the day-to-day mobilization of every ounce of intelligence. For us, the core of management is precisely this art of mobilizing and pulling together the intellectual resources of all employees in the service of the firm. Because we have measured better than you the scope of the new technological and economic challenges, we know that the intelligence of a handful of technocrats, however brilliant and smart they may be, is no longer enough to take them up with a real chance of success. Only by drawing on the combined brainpower of all its employees can a firm face up to the turbulence and constraints of today’s environment.

“Your ‘socially-minded bosses’, often full of good intentions, believe their duty is to protect the people in their firms. We, on the other hand, are realists and consider it is our duty to get our people to defend their firms, which will pay them back a hundred fold for their dedication. By doing this, we end up by being more ‘social’ than you.”

Despite Drucker’s warning and the challenge from Japan, many Western companies and managers have not implemented the New Management, and do not seem to appreciate the implications. Some of those that have were companies that had been managed, and often created, by visionary leaders, who had never been influenced by “scientific management”. Others, notably automobile, machine tool and electronic component manufacturers, have been forced to adopt the new principles in order to survive in the face of far Eastern competition. Some left it too late, notably American and British TV set and motorbike manufacturers. However, the remarkable achievements of Japanese industry from the 1950’s onwards, and later of Western companies which followed the New Management principles, have shown clearly that they have been at the heart of consistent business success and growth, as authors such as Peters and Waterman (“In Search of Excellence”, 19 ) and Canter (“The Changemasters”, 19 ) have shown.

For example, Toyota developed the Toyota Production System as a result of a careful study by their top management of the then best practice in the US automotive industry, and the application of inductive thinking to the whole manufacturing process. This encompassed every aspect, from conceptual design to final assembly. Toyota appreciated that they had to involve their suppliers much more deeply than conventional practice dictated, so suppliers became partners in all aspects of design, development and manufacture. The whole system was built on a foundation of very high and continuously improving standards of quality, efficiency and productivity. Without such trust in the quality, efficiency and productivity of the whole supplier chain, as well as of the in-house operations, JIT manufacturing would not be workable. Therefore, whilst JIT might appear to be the result of “scientific” thinking, it is based on far more than a mere reorganization of manufacturing and supply chain management. It was not imposed from outside, but carefully thought out, led and implemented by the people who would make it work, and it was developed over several years and continually refined. In other words, the human element, within the enterprise and the supply chain, was the most important determinant of its success.

Another example is the turnaround of British Airways. BA was a nationalized, fat and inefficient airline. After privatization the new management set out to revitalize the business, with remarkable results. BA identified and removed waste and inefficiency, and they identified and implemented the service enhancements that would make passengers choose the airline. By simultaneously reducing costs and increasing revenue, BA has become the only major European national airline, and one of the few in the world, that operates profitably. This achievement was led and implemented internally, over several years, and it was critically dependent on the attitude and performance of the people involved, particularly those in contact with the customers.

There are also numerous examples of the New Management principles taking American companies to the top of the world leagues in their industries. Hewlett-Packard has continuously maintained a leading position across a wide product range, from electronic parts to state-of-the art instrumentation and computing, by continual development of its people and of the way they contribute. This approach is the determining feature of practically every business that succeeds over the long term, just as Drucker.

The Legacy of Scientific Management
The ideas of scientific management impose a powerful legacy on management thinking today, despite the teaching of people like Drucker and the successful applications of the “new” management. This legacy manifests itself in a number of ways, all of which are counterproductive in relation to the performance of people and of business. We will review some of these manifestations, to demonstrate their poverty.

Business Process Re-engineering
Business process re-engineering, commonly referred to as BPR, is the latest in a line of management concepts that have been presented as the revolution that must be followed in order for businesses to compete and survive. In the words of the founders of the BPR revolution, Michael Hammer and James Champy, in their book “Reengineering the Corporation: a Manifesto for Business Revolution” (1993), BPR is “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed”. The authors claim that the concept represents a “conceptually new business model”, and that they are “reversing the industrial revolution”. Furthermore, the alternative to the application of BPR is for “corporate America to close its doors and go out of business”.
These are strong claims indeed. Corporate America, as well as businesses around the world, have embraced the BPR revolution with fervor. There has been an enormous growth, starting from zero, in the expertise offered by the management consultancy industry since the publication of the book, and the fact that over two million copies have been bought attests further to the fact that the ideas have taken a firm hold on management thinking. Nevertheless, in the short period since its inception, surveys and articles are already trying to explain why BPR efforts often fail, and competing experts are beginning to disagree on the principles. What is then wrong with a concept that has generated such widespread acceptance and application, and how does it relate to the management principles represented by Taylor and Drucker?

The concept of BPR is firmly rooted in scientific management thinking. The idea that the efficiency and productivity of people at work can be optimized by a complete reshaping of the accustomed organization, imposed by external agents, and with information technology (“the essential enabler”) providing the data and communications, is entirely “scientific”, and takes little account of the factors that affect the performance of the individuals and teams that make the business work. It is notable that BPR teaching and application neglects most of the long-term “enablers” such as morale, training and leadership. An overriding principle of Drucker’s teaching is that organizations must be led from the front (or from the top, in more conventional management terms); while at the same time the contributions of all of the people in the business must be developed and exploited to mutual benefit.

Of course there are organizations that need changing, and every process can be improved by incremental change or, if the process contains serious flaws, by drastic overhaul. Therefore successes are inevitably claimed for BPR, particularly by those who sell the concept. However, a large proportion of BPR implementations fail to achieve the planned breakthroughs. This is inevitable, since most existing processes in well-managed businesses will not be improved by “radical redesign”. More importantly, however, humans do not respond in ways that are “scientifically” predictable: improving the system does not necessarily improve the performance of its human components. People are likely to react in ways that seem perverse to the management professionals who expect rational and mechanical adjustment to the new order. Commonsense observation, experience and understanding of people at work indicates that change is most effective, particularly in the long term, when it is driven from the front, when everyone is involved, and when it is progressively implemented and supported, particularly by training.

BPR is in conflict with some of the fundamental tenets of good management. The idea of teams, separate from the people actually responsible for performing the work, instituting changes that will be imposed on those who are the core of the business is a guaranteed way of creating distrust, fear and reaction, exactly as work study did when applied to Taylor-style mass production lines. The ideas of the great majority of the workforce are ignored, in contrast to Drucker’s teaching and best modern practice, that encourage and demand that everyone participates in the improvement process. BPR can also result in the elimination of processes which were sound and understood, and their replacement with procedures that are untried, incomplete, and unsupported by experience and training. Anyone who argues that this judgment is alarmist or biased has probably not been subjected to BPR.
There is a further aspect of the BPR revolution that is probably even more disturbing. Not only is it based upon “scientific” thinking, it has metaphysical, almost quasi-religious, overtones. The vaunted claims made by its proponents seem designed to frighten rather than to inspire. Will corporate America, or individual companies, really “close their doors and go out of business” if they do not accept the party line of this cultural revolution? How did excellent companies like Hewlett-Packard, ICL, and Toyota manage before BPR, and will they now die if they do not embrace it? There can be little doubt that the explosive growth of BPR has been generated to a large extent by the exaggerated and fervid way in which it has been proselytized by its gurus and their acolytes.

ISO9000 and Management of Quality
The international standard for quality systems, IS09000, has been developed to provide a framework for assessing the management system which an organization operates in relation to the quality of the goods or services provided. The concept has been developed from the US Military Standard for quality, MIL-Q-9858, which was introduced in the 1950’s as a means of assuring the quality of products built for the US military services. The UK Ministry of Defense developed a similar standard (Def Stan 05-21), as did NATO (AQAP-l). In the ISO9000 approach, supplier’s quality management systems (organization, procedures, etc.) are audited by independent assessors, who assess their compliance with the standard, and issue certificates of registration.

The major difference between ISO9000 and its defense-related predecessors is not in its content, but in the way that it is applied. The suppliers of defense equipment were assessed against the standards by their customers. By contrast, the ISO9000 approach relies on “third party” assessment. Certain organizations, such as the US Underwriter’s Laboratories (UL), the British Standards Institution (BSI), Lloyds Register, and several others, are “accredited” by the appropriate national accreditation service, which entitles them to assess companies and other organizations. The justification given for third party assessment is that it removes the need for every customer to perform his own assessment of all of his suppliers.
The other main difference is that IS09000 is applied to every kind of product and service, and by every kind of purchasing organization. Today, schools and colleges, consultancy practices, local government departments, and window cleaners, in addition to large companies in every industrial sector, are being forced by their customers to become registered or are deciding that registration is necessary for future business success.
ISO9000 does not specifically address the quality of products and services. It describes, in very general and rather vague terms, the “system” that should be in place to assure quality. In principle, there is nothing in the standard to prevent an organization from producing poor quality goods or services, so long as procedures are followed and problems are documented. Obviously an organization with an effective quality system would normally be more likely to take corrective action and to improve processes and service, than would one which is disorganized. However, the fact of certification cannot be taken as assurance of quality. It is often stated that registered organizations can, and sometimes do, produce “well-documented rubbish”. An alarming number of purchasing and quality managers, in industry and in the public sector, seem to be unaware of this fundamental limitation of the standard.

The effort and expense that must be expended to obtain and maintain certification tend to engender the attitude that optimal standards of quality have been achieved. The publicity that typically goes with initial certification of a business supports this belief. The objectives of the organization and particularly of the staff directly involved in obtaining and maintaining certification, are directed at the maintenance of procedures and at audits to ensure that staff works them. It becomes more important to work to procedures than to develop better ways of working.

Total quality management (TQM) is the approach which was pioneered by teachers such as Deming and K. Ishikawa, and initially applied in Japan in the late 1950’s, in which every person in the business becomes committed to a never-ending drive to improve quality and productivity. The drive must be led by top management, and it must be vigorously supported by intensive training, the application of statistical methods, and motivation for all to contribute. The total quality concept links quality to productivity. It has been the prime mover of the Japanese industrial revolution, and it is fundamental to the survival of any modern manufacturing business competing in world markets. Such organizations set standards for quality, internally and from their suppliers, far in excess of the requirements of ISO9000. These are aimed at the actual quality achievements of the products and services, and at continuous improvement in these levels. Much less emphasis is placed on the “system”.

Third party assessment is at the heart of the ISO9000 approach. However, the total quality philosophy demands close partnership between supplier and purchaser. A matter as important as quality cannot safely be left to be assessed spasmodically by third parties, who are unlikely to have the appropriate specialist knowledge, and who cannot be members of the joint supplier-purchaser team.

Defenders of ISO9000 say that the total quality approach is too severe for most organizations, and that ISO9000 can provide a “foundation” for a subsequent total quality effort. However, the foremost teachers of modern quality management all argue against this view. (It is notable that none of these serve on the national or international committees that prepare and “update” the standard). They point out that any organization can adopt the total quality philosophy, and that it will lead to far greater benefits that will certification to the standard, and at much lower costs. It is notable that ISO9000 is very little used in Japan, and then mainly by companies which perceive that it will provide advantages in Western markets, not because they believe that it will lead to improvements in quality. The recently developed US automotive industry quality systems standard, QS9000, is more stringent than ISO9000, reflecting the industry’s perceived needs. However, third party assessment is used, and it will be interesting to see how the new industry standard influences the competitive position of the American automakers. Their Japanese competitors have not followed this approach,

Since its inception, ISO9000 has generated considerable controversy. Small organizations are questioning the value of the exercise, as they do not see how the expensive process of preparing documentation and undergoing registration improves the quality of their products and services, and large organizations are also querying the benefits in relation to the high costs of compliance and questionable effectiveness. The evidence is, however, variable. Some organizations have generated real improvements as a result of certification, and many consultants and certification bodies provide good service in quality improvement.
As remarked above, the leading teachers of quality management all argue against the “systems” approach to quality, and the world’s leading companies do not rely on it. So why is the approach so widely used? The answer is partly cultural and partly coercion.
The cultural pressure derives from the tendency to believe that people perform better when told what to do, rather than when they are given freedom and the necessary skills and motivation to determine the best ways to perform their work. This belief stems from the concept of scientific management, as described earlier.

The coercion to apply the standard comes from several directions. For example, the UK Treasury guidelines to public purchasing bodies states that they should “consider carefully registered suppliers in preference to non- registered ones”. In practice, many agencies simply exclude non- registered suppliers, or demand that bidders for contracts must be registered. All contractors and their subcontractors supplying the UK Ministry of Defense must be registered, since the MoD decided to drop its own assessments in favor of the third party approach, and the US Defense Department has recently decided to apply ISO9000 in place of MIL-STD-Q9858. Several large companies, as well as public utilities, demand that their suppliers are registered. European Community policy for public purchasing is not explicit on ISO9000, and of course there are no such conditions regarding commercial trade, but this has not prevented certification providers in the USA from advertising that ISO9000 registration is “a condition for doing business in Europe”.

The UK government Department of Trade and Industry claims that the standard is voluntary, and that it has been developed by industry to meet their own needs. This is simply untrue. Registration is often as voluntary as a donation to the Mafia. The standard has not been “written by industry”, but by people who sit on standards-writing committees, which in practice have unfettered power to “standardize” methods which directly contradict the essential lessons of the modern quality and productivity revolution, as well as those of the New Management. The result is the development and growth of a substantial industry of agencies, “certification bodies” and consultants, parasitic on productive industry. In the UK the annual direct costs of registration exceed $150 million and are growing rapidly. There is more advertising for ISO9000 services and training in the journal of the American Society for Quality than for all other services and products combined.

The only rational solution to the situation that has been allowed to develop is to dismantle the structures that have been built around the standard, and to remove all aspects of compulsion, whether stated or implied. The standard should be used only as a guide to what should be included in a minimal quality system. The systems for accreditation and certification should be abandoned. Companies and other suppliers should be encouraged to set up and audit their own quality systems, and purchasers should be free to set standards for quality of goods and services they buy, or to seek external advice and auditing if they wish. However, purchasing organizations, particularly in the public sector, must not discriminate against suppliers on the grounds of who audits their quality systems, but only on their quality management and performance.

Managing People
The influence of scientific management is clearly discernable in some of the methods that have become popular for managing and assessing the performance of people at work, particularly in supervisory and management roles. These methods include management by objectives (MBO) and performance appraisal systems that use quantitative measurement criteria. It seems obvious and rational to most managers that people should be assigned performance objectives, and that they should be measured against them. That is what we do with machines and processes, and extending the idea to people is a logical extension of Taylor’s teaching.

It was Deming who pointed out why such objective-setting and measurement could be counterproductive. Since human nature, including free will, is the consistent though unpredictable property of people, they are prone to behave in ways that optimize outcomes for them. If performance objectives are set, and peoples’ performance and therefore rewards are judged against these, they will concentrate on achieving them, even if the criteria are incompatible with the best interests of the enterprise. They will optimize over the short term, and they will be reluctant to use initiative or to perform other work if these will jeopardize achievement of the set objectives. There are many examples of well-meaning objectives and perverse interpretation. For example, a production manager might be required to reduce defects by 20%. He might work to achieve this by redefining the defect criteria, or he might neglect other important work on planning an improvement in process speed. Other “key performance indicators” against which managers are assessed include “proportion of tasks completed on time” (are they completed well, or just completed? Were the task schedules easy or difficult? Were the priorities all the same? Does the manager have control of all of the inputs that influence completion?), or “maximize the proportion of time booked to projects” (is the time spent effectively? Is training being neglected?), and even, particularly in the academic community, “publish more research papers” (regardless of quality or originality? Even if teaching suffers?).

Despite these arguments against objectives and appraisals, there are situations in which specific criteria can be appropriate, and can help to focus attention on particular needs for action or improvement. The prime requirement is that all objectives must be unambiguously aligned with the aims of the enterprise, and they must not inhibit other good work or initiative, particularly in the long term. Therefore they must be selected carefully, and accompanied by an agreed plan for achievement and measurement, to ensure that the methods to be used are understood and accepted, and that the processes involved are sufficiently under control. They must never be exclusive of other work which is to the benefit of the enterprise, and which is within the competence and authority of the individual. They must also be flexible, to enable changes to be made if situations alter.

The objectives of teams should be defined separately, though of course in harmony. Individual objectives could include personal development and training, but individual objectives must never be allowed to be in conflict with team objectives.
The ideal objectives and appraisal criteria are, however, those that demand and encourage total, balanced performance from individuals and teams. People at work should be expected to know what the aims of the business are, and what contributions are expected of them. Therefore the optimum objectives are “do your job well, and always better, in line with the aims of the business”. Then everyone has the same objective, which is totally in line with that of the team and of the business. Adopting the sports analogy, a team manager does not specify the points that individuals should score, as this would discourage teamwork. Instead he motivates and trains them to win games.

This informal, general approach to objectives and appraisal is much more likely to stimulate exceptional performance, since it tells people that they are trusted, responsible members of the team, not mere contributors of specific tasks. It reflects and encourages the innate management potential of all of the people. This sort of performance enhancement cannot, of course, be expected of machines, because they are governed by scientific, predictable cause and effect relationships.

Another example of misguided “scientific” thinking applied to people is psychometric testing. There is a wide variety of such tests, including personality, numeracy, and IQ tests. Proponents of such testing argue that it removes subjectivity and “randomness” from the task of selecting and promoting staff. Of course no manager should select or promote staff randomly. However, for every such decision, a large amount of information on the candidates already exists, in the form of school and university results and job performance. Aptitudes, attitudes, experience and knowledge are all described. Even more important, the candidates are known and can be assessed as people. There are aspects of personality that cannot be put on a measurement scale, such as integrity, character and vision, identified by Drucker as the key qualities of managers, or tenacity, humor and honesty of people working at lower levels. Such qualities are all more important than numeracy or the ability to recognize patterns. Psychometric testing is a one-way process, a measurement of selected attributes in isolation from the actual world and from the people and pressures that will be involved.

Important aspects of personality and attitudes are formed by experience and by relationships with others. They are not frozen at the time of the psychometric test, and personal qualities are not static, like the performance of a machine. We all know of people who are reported to perform badly in one role, but who perform well elsewhere. The reason for such discrepancies is often the complex interplay of personalities between the individual, his manager, and the other members of the team, as well as external factors such as health, family situation, etc.

Psychometric testing can contribute to managers’ knowledge of their people. It can help to identify undeveloped aptitudes, as an aid to planning development and training. It can also be used to help in short listing candidates for interview, when they are not known as individuals. However, the limitations of the tests must always be recognized, and they must never be used to replace experience and judgment.

The way that businesses reward their people for work also reflects scientific thinking. The payment of bonuses for achievement, particularly at senior management levels, implies that money will be a prime motivator towards better performance. Of course financial incentives can be motivating, but they can and do encourage short-term thinking, a classic example being the common drive to eliminate “unnecessary costs”. This leads to confusion between investments and waste: cutting training, research, information services, and involvement in community activities might benefit the bottom line for a few years, earning bonuses on the way. However, the long-term effects of cutting such investments in the capability of the most important asset will not be noticed by the present generation of managers. Remuneration policy should reflect the realities of people at work, by stimulating teamwork, loyalty, and, of course, performance. Performance bonuses should be paid to the teams that have performed, including those who support them, not only to the people in charge.

In 1955 Drucker asked: “is personnel management bankrupt?” He proceeded to answer it, in his famous chapter with that title, by suggesting that, whilst not bankrupt, it is insolvent, “unable to honor the promises it so liberally makes”. Scientific thinking about people at work still pervades most of the “human resources” profession. Managing people is the job of their managers, not to be passed off to HR specialists, whose role should be constrained to providing the administrative support that managers might need in the most important aspect of their work.

Production
Taylor’s teaching was directed primarily at people engaged in production processes. Production processes, whether performed by people or by machines, are, of course, capable of being dissected and analyzed. It is not surprising, therefore, that scientific management principles have been applied to them. However, as Drucker wrote, “the belief that work is best performed as it is analyzed is wretched engineering”. The human does not perform a series of separate, controlled tasks. The human performs a job, integrating, balancing and controlling the different facets, and making adjustments for changes, problems and opportunities. To deny him this is to relegate him to the level of a machine, and to deny the possibility of satisfaction and improvement. Note that this is exactly what is achieved by conformance to written procedures, as required by most interpretations of ISO9000.
The adoption by many manufacturing businesses of the manufacturing resource planning method MRPII provides a classic example of overemphasis on the mechanistic aspects of modern production. MRPII is a computerized system that plans every aspect of the manufacturing process, starting with the required outputs and determining all ordering of materials and scheduling of processes. The reason why MRPII has been such a costly disappointment to so many companies is because it is based upon the premise that detailed planning of all of the separate elements of a system will result in optimum performance. However, this ignores the complexity of real systems, particularly those that include people. It confuses tactics, based upon a single computer program, for strategy.

At about the same time as MRPII was being sold as the panacea for manufacturing planning, Toyota were developing what became known as the Toyota production system. The Toyota system is a strategy. It does not prescribe a static system in detail, but provides a framework for individual initiative, teamwork, and continuous improvement, exploiting the full capabilities of all of the people involved. It does not treat manufacturing as a process separate from upstream activities such as design and supplier selection, but fully integrates them all. Its operation is not totally dependent upon a computer program. For the classic description of the approach, see “The Machine that Changed the World”, by James Womack, Daniel Jones and Daniel Roos (Macmillan 1990).

The fact that all world-class manufacturing is now based upon the Toyota principles was a response generated by the need to survive in a market environment made significantly more competitive by the straightforward application of Drucker’s teaching.

Masters of Business Administration (MBAs)
The MBA management credential has become, for many organizations and individuals, a criterion for management selection, advancement and status. Over the last few years there has been a great expansion in the number of MBA courses on offer. Inevitably this has led to perceptions that the quality of some of the courses has been diluted, and the value of the qualification has been the subject of controversy. However, the belief that management can be “learned” on a course lasting up to 2 years , or, in some cases, by undertaking a correspondence course, betrays a misapprehension of the most fundamental aspects of management. For most management roles, the way that people are managed is much more important than “systems” aspects such as organization, methods, plans and budgets. To a large extent the management or leadership of people is an inborn talent, which can be developed and improved through experience and training. In this way management is not different to other human capabilities, such as musicianship or engineering inventiveness. Excellence in fields such as these, which rely on the unique capabilities of the human brain, is not generated by providing only the basic knowledge. The MBA, as its name implies, primarily teaches administration. In other words, it provides useful knowledge on tools of management, but it does not create managers. The MBA qualification signifies that some basic knowledge has been learned: it is not a statement of managerial competence or excellence, which can be fully developed and judged only by experience, as Drucker emphasized.

Obviously the better MBA courses provide managerial and leadership lectures and exercises which are valuable in developing innate talents, in the same way as military staff courses help to develop such skills. However, a person cannot be “modified” like a machine to high levels of performance in any skills that are based upon innate talent and long-term development. The emphasis and status given to MBA training has been exaggerated and often misguided. It has often been pointed out that the Japanese companies that spearheaded the productivity revolution since the 1960ís place little or no reliance on MBA type training or qualifications.

Other Manifestations
We can see scientific thinking in other common management practices. The use of organization charts to describe reporting and supervisory lines, with written terms of reference for the positions on the chart, constrains and inhibits the people involved: again it assumes that the system is the key to performance of people. The use of PERT charts to plan and manage projects assumes that projects are simply collections of discrete tasks, with predictable outcomes and simple interfaces. This approach to project planning can help at a macro level, and for relatively simple sequential work, like building a house. However, for complex projects, involving teamwork, iteration of jobs, and optimization across a range of factors (such as cost, reliability, and time to market), overemphasis on PERT results in severe suboptimization and loss of teamwork.

The influence of scientific management is also seen in the reports on companies by industry analysts. These reports attempt to forecast future performance and share value, by taking account of factors such as past performance, market conditions, competition and other quantifiable factors. However, these analyses rarely take account of the quality of the people involved. Of course this is a much more difficult factor to evaluate, particularly in the short time normally available for such work, and personal qualities are not discussed in company reports and accounts. Recent past performance might obviously reflect the quality of management, but any forecast of future performance should be based upon knowledge of the quality and talents of the key people, and the effects of their contributions.
Conclusions.

The great advantage of the New Management over the forms and ideas that are based upon “scientific” management are revealed time after time when people have the freedom, motivation and leadership required to generate results that are often astounding. Good examples are the Lockheed “Skunk Works” aircraft projects (the U2, SR71 “Blackbird” and the F117 stealth fighter), Apple Corporations’ development of the Macintosh computer, the development of the Land Rover Discovery 4X4 vehicle, and the development of the telephone-based “Direct Line” insurance business. In all of these cases, and many others like them, the combination of individual flair and well-directed teamwork produce results that far exceed those of conventional, controlled management. Controls must be in place to prevent gross overspends or failures, and, particularly for public-funded projects, to satisfy requirements for public accountability. However, the challenge faced on such projects is how to keep controls to the absolute minimum. This places a premium on ethics, trust and courage, which are not qualities that can be measured or audited. Without these leadership qualities the stealth fighter would not have been built: it took the secrecy surrounding the project to remove the bureaucratic constraints which otherwise would have generated the time and cost overruns so common on large government projects.
Scientific management is not dead. Its influence pervades management teaching and practice in most businesses and other organizations. The influence is most pervasive in the USA and Europe, the Japanese having been generally more receptive to Drucker’s teaching. Its influence is most damaging in businesses where the higher aspects of human performance, such as specialist knowledge and skills, inventiveness and team working, are crucial to success.

Drucker stated, in “The Practice of Management”, that economic leadership in the late 20th. Century would pass to the countries whose managers understood and applied the New Management. His prophesy has been fulfilled, and will continue to be relevant into the future.

It is never too late for managers and companies to realize this truth and to discard “scientific” approaches to management in favor of the principles taught by Drucker, and proved to be right.

Articles were written by John Seddon (Managing Director) and Vanguard Consulting Ltd.  He is an occupational psychologist, author and consultant.  John describes his work as a combination of systems thinking – how the work works, with intervention theory – how to change it.  This article has been edited by the people of Bryce Harrison Inc. (USA).  The Bryce Harrison website is www.newsystemsthinking.com.