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diff --git a/29674-8.txt b/29674-8.txt new file mode 100644 index 0000000..d191408 --- /dev/null +++ b/29674-8.txt @@ -0,0 +1,1728 @@ +The Project Gutenberg EBook of Higher Education and Business Standards, by +Willard Eugene Hotchkiss + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Higher Education and Business Standards + +Author: Willard Eugene Hotchkiss + +Release Date: August 12, 2009 [EBook #29674] + +Language: English + +Character set encoding: ISO-8859-1 + +*** START OF THIS PROJECT GUTENBERG EBOOK HIGHER EDUCATION, BUSINESS STANDARDS *** + + + + +Produced by The Online Distributed Proofreading Team at +https://www.pgdp.net (This file was produced from images +generously made available by The Internet Archive/Canadian +Libraries) + + + + + + +_Barbara Weinstock Lectures on The Morals of Trade_ + +HIGHER EDUCATION AND BUSINESS STANDARDS. +By WILLARD EUGENE HOTCHKISS. + +CREATING CAPITAL: MONEY-MAKING AS AN AIM IN BUSINESS. +By FREDERICK L. LIPMAN. + +IS CIVILIZATION A DISEASE? +By STANTON COIT. + +SOCIAL JUSTICE WITHOUT SOCIALISM. +By JOHN BATES CLARK. + +THE CONFLICT BETWEEN PRIVATE MONOPOLY AND GOOD CITIZENSHIP. +By JOHN GRAHAM BROOKS. + +COMMERCIALISM AND JOURNALISM. +By HAMILTON HOLT. + +THE BUSINESS CAREER IN ITS PUBLIC RELATIONS. +By ALBERT SHAW. + + + + +HIGHER EDUCATION +AND +BUSINESS STANDARDS + + + +By + +WILLARD EUGENE HOTCHKISS + +DIRECTOR OF BUSINESS EDUCATION +AT THE UNIVERSITY OF MINNESOTA + + + +BOSTON AND NEW YORK +HOUGHTON MIFFLIN COMPANY +_The Riverside Press Cambridge_ +1918 + +COPYRIGHT, 1918, BY THE REGENTS OF +THE UNIVERSITY OF CALIFORNIA + +ALL RIGHTS RESERVED + +_Published March 1918_ + + + + +BARBARA WEINSTOCK +LECTURES ON THE MORALS OF TRADE + + +This series will contain essays by representative scholars and men of +affairs dealing with the various phases of the moral law in its bearing +on business life under the new economic order, first delivered at the +University of California on the Weinstock foundation. + + + + +HIGHER EDUCATION AND BUSINESS STANDARDS + + +Last summer, when we reached California for a year's sojourn, we had +the good fortune to secure a house with a splendid garden. A few weeks +ago, after the early warm days of a California February had opened up +the first blossoms of the season, our little five-year-old discovered +that the garden furnished a fine outlet for her enterprise, and she +soon produced two gorgeous--I will not say beautiful--bouquets. Barring +a certain doubt about her mother's approval, she was well satisfied +with her achievement, she felt a sense of completeness in what she had +done--and well she might, for she had not left a visible bud. + +There is a strong tendency to go at business the way Helen went at the +garden. She knew what to do with bouquets; raw material for making them +was within her reach; what more natural than to turn it, in the most +obvious and simple way, into the product for which it was designed. +From her standpoint such a procedure was entirely correct--she was +making bouquets for herself and her friends; every one in her circle +would share the benefit of her industry. + +Whenever in the past business enterprise has proceeded from a similar +viewpoint, we have stood aside and let it proceed; it was not our +garden; we were quite willing to take the rôle of disinterested +spectators. Recently we have discovered that it is our garden; we have +learned that we are not disinterested; we now see that business plays a +large part in the life of every one of us. That being the case, we +assume the right to question its processes, its underlying policies, +and its results. We are gradually coming to think of business in terms +of an integrated and unified national life. We desire the national life +to be both wholesome and secure. + +What the public really wants from business, then, is a contribution to +national welfare, and it has become convinced that, by taking thought, +it can make the contribution more certain and more uniform than it has +been in the past. Many business men share this view; with varying zeal +they are trying to work out standards of organization that will insure +the kind of regard for general welfare which the public has come to +demand. + +This is the new idea in business; it has already taken deep root; but +it needs to be further developed. We have the difficult task of +reducing an idea to a practical working plan. How shall we go about it? +Fortunately the idea itself contains a hint for further procedure. A +new attitude in business must be coupled with a new attitude in public +policy. + +When my enterprising child made an onslaught on the garden it would +have been easy enough to punish her; but it is doubtful if mere +punishment gets very far in a case of that sort. Unless we can teach +the child to enjoy the garden without destroying it, the restraining +influence of punishment will be no stronger than the memory of its pain +or the fear of its repetition. This memory of the past and fear of the +future usually wage a most unequal contest with the vivid and alluring +temptation of the present. + +But should not the child be restrained? As far as necessary to protect +the garden, and perhaps also to make her conscious of an authority in +the world outside of her own will, yes--but that is not the main task. +The main task is to educate her, to develop an understanding of the +garden, to get her in the frame of mind in which she will derive her +greatest enjoyment when she cultivates it and sees it grow, and when +she restricts her picking to a reasonable share of what the garden +produces. + +In the actual case before us, the child was after quick and easy +results, the only kind she could comprehend; she was unable to look +upon the garden as a living thing whose life and health must be +preserved to-day in order that it may yield returns to-morrow and next +week. Analyzed with adult understanding, her essential fault was a +failure to get beyond immediate results and to view the garden from a +long-time angle. We ought not to expect her to do this now, but we do +expect her to do it when she is grown up. We expect in time so to +educate her that she will be able to think of the garden in terms of +permanence and growth and to make an effective use of it from that +standpoint; and this same education in long-time effectiveness is what +we want in business. + +Business standards must be discussed from the standpoint of efficiency, +but efficiency needs to be interpreted. We may as well admit at the +start that the efficiency ideal is not entirely in good repute at this +moment.[1] If I may import an expression from England, we have been +somewhat "fed up" with efficiency during the recent past and the ration +has been rather too much for our digestion. + + [1] At the time this was written, in the spring of 1916, it will + be recalled, the German war machine for nearly two years had been + demonstrating its efficiency; the Allies had not yet matched it, + and we did not like the work that efficiency was doing. + +Away back in the eighties, before the dominance of business in American +society had been questioned, efficiency, as the term was then +understood, had a place among the elect; it was the intimate associate +of business success. Then came the muck-raker, and with him came also +anti-trust cases and insurance investigations. We turned our attention +to labor outbreaks, to graft prosecutions, and to land steals. We +talked about "malefactors of great wealth." We even became interested +in Schedule K. And so, during the first decade of the new century a +whole train of revelations, incidents, and phrases tempered our regard +for business and brought many business practices under the ban of law +and hostile sentiment. Efficiency was in bad company and suffered in +reputation. + +But efficiency was able to prove an alibi; we were told that the thing +which posed as efficiency was not efficiency, but special privilege, +and we were again persuaded of the great service a regenerate and +socialized efficiency could render. Just at this point came the +outbreak in Europe; efficiency was again caught in bad company, and we +began to hear such phrases as the "moral breakdown of efficiency," +"efficiency, a false ideal," and others of similar import. In an +article bearing the title, "Moral Breakdown of Efficiency," published +in the "Century" for June, 1915, it was maintained that pursuit of +efficiency had led and was still leading civilization on a downward +path. + +In addition to the reputation of keeping bad company, efficiency has to +bear the odium of many foolish and inefficient deeds performed by its +self-appointed prophets. The quest for efficiency has called forth in +business a new functionary known as the "efficiency expert." Many of +these men have done a vast amount of valuable work, but many others +have not. While the real expert has been raising the level of business +organization, the others have been piling up a large wastage of poor +work and lost confidence. + +But these are side issues. The main fact stands out above them. We have +been steadily adding to the burdens on industrial and commercial +equipment; even more have we increased the stresses and the strains on +human life. A devastating war is now suddenly taking up the slack, and +the slow and painful task of making the world efficient must be +hastened in order that society may bear the load. In these +circumstances we need not apologize for making efficiency the main +support of business standards. Nor need we assume, as does the author +just cited, that the efficiency ideal in any way conflicts with the +ideal of moral responsibility and service. + +Of course, if we reflect, the abstract and impersonal thing which +engineers define as the ratio between energy expended and result +obtained has no moral quality in itself. Whatever of morality or lack +of morality the word "efficiency" calls forth is given to it by the +manner in which the terms of the ratio are defined. It is for society +to make the definitions. Society may determine the forms and the +limitations under which it will have business energy expended, and it +may decide what are the social ends toward which it will have business +effort contribute. Guided by wise social policy, efficiency and service +go hand in hand. + +Since business is subject to control by society, it follows that the +efficiency factors in a particular business, in a whole industry, or in +business generally, must adjust themselves to the decisions that +society has made, and they must also take account of decisions that it +may make in the future. And these decisions are not all recorded in the +law or even in the vague thing we call public opinion. Laws and +opinions of particular groups, group morality, individual morality, +even inertia, and a long list of more subtle and often capricious +reactions are channels through which social purpose finds expression. + +It is worth our while to consider how these reactions may affect +practical administration. No reflection is needed to see that in +proportion as business men fail to take account of forces outside the +business, in that proportion they are likely to miscalculate the +results of business policies. Striking examples of such miscalculation +are found in the experience of Mr. George M. Pullman back in the +nineties, and of Mr. Patterson, of the National Cash Register Company, +a decade later. Each of these men, with apparent good faith, undertook +to surround his laborers with conditions of physical, mental, and moral +uplift, and each undertook to do it as an act of paternal bounty. Each +of them, as far as we can judge, expected appreciation, gratitude, and +increased efficiency. But they failed to take account of the group +consciousness of their laborers; they did not know what the laborers +were thinking; and because the laborers were thinking something +different from what the employers thought, policies intended to arouse +gratitude aroused instead resentment and a strike. + +But there are many things besides too much paternalism that may result +in a strike. Another concern of international dimensions and one whose +officers, I can vouch, are men of high character and public spirit, +also found itself confronted with a strike in 1910. This was a highly +organized business. For years its sales department had tried to seek +out the highest grade of talent, and the result was a selling and +distributing organization that was the model and the envy of +competitors. But questions of employment seem to have gone by default, +the general policy being confined to a sincere but vague good-will +toward employees and acceptance of things as they were. + +The issues of the strike were issues with which we are all familiar. On +the workers' side, grievances and no workable machinery for redress; +result: organization, concerted group action, force. On the other side, +there was a personal readiness to hear grievances, coupled with +insistence on the ancient right of the employer to conduct his own +business in his own way, without interference from employees or the +public. + +After weeks of deadlock the strain of a distressing situation, losses +from the interruption of business, regard for public opinion and the +opinion of friends, combined with their own desire to do the right +thing, induced the employers, probably against their best judgment, to +recede from their position. An agreement was made providing for +increased wages, standardization of piece-work, a preferential shop, +and appointment by the firm of a person to hear grievances and to +coöperate with a representative of the union in securing redress. + +The union in this case was fortunate in being represented by a +high-minded man who was a real statesman. The firm selected a trained +economist as labor expert, and he soon had an employment department in +operation. Together these men and their colleagues have kept peace in +the concern and have developed and expanded the machinery for settling +disputes into a model of industrial-relations organization. + +Some four years after the strike the business head of the firm +testified in a public hearing that he should scarcely know how to +conduct his business without the organization which now obtains for +dealing collectively with labor. He also in the same hearing expressed +the view that a large employer is a trustee of the public, responsible +for the measure of public welfare in which his business results; and +this man, remember, is not a reformer or even a radical, but just a +successful business man. + +In this bit of labor history there were, no doubt, many fortunate but +uncontrollable factors which, otherwise combined, would have brought a +less happy result. But two things stand out: first, the laborers +listened to wise counsel--they were well led; and second, the +employers, when they consented to make an agreement, gave the plan +adopted their genuine support. Combining good citizenship with business +sense they were able to understand the new social influences that make +the formulas of 1880 a poor gauge of efficiency factors in 1910. They +are now enjoying the benefits of their willingness to learn. + +The effect of social forces is seen under different circumstances and +from an entirely different angle in the present halting policy of +American railroads.[2] Here, in addition to other social elements in +the question, is the fact of definite government control. This +circumstance has accustomed railway managers to look at both the +internal and the public factors in their success. A number of years +ago, before Mr. Justice Brandeis became a member of the Supreme Court, +he pointed out, as many others have since done, that the railroads were +looking too much to the government factor, and too little to the +economy and effectiveness of their own internal administration. Even +though we concede this point, it is still clear that the highest +efficiency of our railroads must wait upon a clarification of policy +with respect to the great social fact affecting railway operation--the +fact of government control. We may not approve the precise manner in +which the railroads respond to this fact, but obviously they cannot be +efficient and ignore it. + + [2] Referring to the situation early in 1916 when this sentence + was written. + +Examples, ranging all the way from accepted and enforceable legal +restrictions to the interplay of the most subtle group sentiments, +could be multiplied at will to bring out the presence of the social +factor in efficiency standards. Were it not that internal business +policies, on the one hand, and public policy toward business, on the +other, are so frequently vitiated by failure to reckon with the +probable reactions which a particular measure will call forth, I should +not retard the discussion to emphasize a point so obvious. But though +the presence of social factors is obvious, how to measure them is not +obvious. General principles that bear on a specific case are hard to +locate and difficult to apply. Even the broad lines of social and +business policy are not always clear, and the probable trend of future +policy is still less clear. + +Just what are the principles that are being worked put in order to +determine the forms and the limitations under which business energy +shall be expended, and how do they differ from those followed a +generation ago? Take the other side of the efficiency ratio: toward +what results are we trying to have business energy directed? Again, +what are the instruments with which society is enforcing its purpose? +How effective are they, how effective are they likely to become? +Finally, what bearing will this social effectiveness or lack of +effectiveness have on standards of business efficiency for the +generation about to begin its work? + +Even though we cannot answer these questions to-day, we have, to-day, +the task of educating the generation that must answer them. More than +this, the education we provide for the generation about to begin its +work will determine, in no small measure, the kind of answers the +future will give. It is, therefore, of great importance that in our +ideals and our policies for educating future business men we should try +to anticipate the social environment in which these men will do their +work. + +We are in the habit of speaking of the present as a time of +transition--the end of the old and the beginning of the new. In a very +real sense every period is a period of transition. Society is always in +motion, but that motion at times is accelerated and at other times +retarded. Clearly we are living now in a period of acceleration--a +period which must be interpreted not so much in terms of where we are, +as of whence we came and whither we are going. This means that we +cannot hope to prepare an educational chart for the future without +understanding the past. + +In our study of business we are always emphasizing the "long-time point +of view," and we fall back upon this convenient phrase to harmonize +many discrepancies between our so-called scientific principles and +present facts. On the whole, we are well justified in assuming these +long-time harmonies, but it will not do to overlook the fact that many +important and legitimate enterprises have to justify themselves from a +short-time viewpoint. Of more importance still is the fact that in this +country enterprises of the latter sort have predominated in the past. +This circumstance has a very marked bearing on the nature of our task, +when we try to approach business from the standpoint of education. + +There are strong historical and temperamental reasons why +nineteenth-century Americans were inclined to take a short-time view of +business situations. Our fathers were pioneers, and the pioneer has +neither the time, the capital, the information, the social insight, nor +the need to build policies for a distant future. The pioneer must +support himself from the land; he must get quick results, and he must +get them with the material at hand. + +Every one of our great industries--steel, oil, textiles, packing, +milling, and the rest--has its early story colored with pioneer +romance. The same romantic atmosphere gave a setting of lights and +shadows to merchandising and finance and most of all to transportation. +Whether we view these nineteenth-century activities from the standpoint +of private business or of public policy, they bear the same testimony +to the pioneer attitude of mind. + +Considering our business life in its national aspects, our two greatest +enterprises in the nineteenth century were the settlement of the +continent and the building-up of a national industry. In both these +enterprises we gave the pioneer spirit wide range. With respect to the +latter, industrial policy before 1900 was summed up in three items: +protective tariff, free immigration, and essential immunity from legal +restraints. This is not the place to justify or condemn a policy of +_laissez-faire_, or to strike a balance of truth and error in the +intricate arguments for protection and free trade; nor need we here +trace the industrial or social results of immigration. We need only +point out that the policy in general outline illustrates the attitude +of the pioneer. The thing desired was obvious; obvious instruments were +at hand--immediate means used for immediate ends. From his viewpoint, +the question of best means or of ultimate ends did not need to be +considered. + +In building our railways and settling our lands the pioneer spirit +operated still more directly, and in this connection it has produced at +the same time its best and its worst results. The problem of +transportation and settlement was not hard to analyze; its solution +seemed to present no occasion for difficult scientific study or for a +long look into the future. The nation had lands, it wanted settlers, it +wanted railroads. If half the land in a given strip of territory were +offered at a price which would attract settlers, the settlers would +insure business for a railroad. The other half of the land, turned over +to a railroad company, would give a basis for raising capital to build +the line. With a railroad in operation, land would increase in value, +the railroad could sell to settlers at an enhanced price and with one +stroke recover the cost of building and add new settlers to furnish +more business. + +In its theory and its broad outline the land-grant policy is not hard +to defend. The difficulties came with execution. We know that in actual +operation the policy meant reckless speculation and dishonest finance. +We know that no distinction in favor of the public was made between +ordinary farm lands, forest lands, mineral lands, and power sites. We +know that the beneficiaries of land grants were permitted to exchange +ordinary lands for lands of exceptional value without any adequate +_quid pro quo_; and we know that there were no adequate safeguards +against theft. + +Wholesale alienation of public property was intended to secure +railroads and settlers, but the government did not see to it that the +result was actually achieved. Speculation impeded the railways in doing +their part of the task, while individuals enriched themselves from the +proceeds of grants or withheld the grants from settlement to become the +basis of future speculative enterprises. All this seems to show that in +execution at least our policy from a national standpoint was +short-sighted. Careful analysis and a more painstaking effort to look +ahead might have brought more happy results. + +And how about the railroads from the standpoint of private enterprise? +A railway financier once described a western railway as "a right of way +and a streak of rust." The phrase was applicable to many railways. +Deterioration and lack of repairs were, of course, responsible for part +of the condition it suggests, but much of the fault went back to +original construction. It was the wonder and the reproach of European +engineers that their so-called reputable American colleagues would risk +professional standing on such temporary and flimsy structures as the +original American lines. Poor road bed; poor construction; temporary +wooden trestles across dangerous spans--everything the opposite of what +sound engineering science seemed to demand. Why did not the owners of +the roads exercise business foresight to provide for reasonably solid +construction? + +What seems like an obvious and easy answer to all these questions is +that both the Government and the road were controlled in many cases, as +the people of California well know, by the same men, and these men were +privately interested. As public servants or as officers of corporations +they were supposed to be promoting settlement and transportation; as +individuals they were promoting their own fortunes. This result was +secured by the appropriation of public lands and the conversion of +investments which the public lands supported. That this sort of thing +occurred on a large scale and that it involved the violation of both +public and private trusts is fairly clear. + +Public sentiment has judged and condemned the men who in their own +interests thus perverted national policy; and we approve the verdict. +But it is not so easy to condemn the policy itself or to indict the +generation that adopted it. Looking at the matter from the standpoint +of the nation, it was precisely the inefficiency and the corruption in +government which augmented the theoretical distrust of government and +made it unthinkable to the people of the seventies, that the Government +should build and operate railways directly. The land-grant policy +entailed corruption and waste, of course; but what mattered a few +million acres of land! No one had heard of a conservation problem at +the close of the Civil War. Resources were limitless; without +enterprise, without labor and capital, without transportation they had +no value, they were free goods. The great public task of the nineteenth +century was to settle the continent and make these resources available +for mankind. This task it performed with nineteenth-century methods. +From our standpoint they may have been wasteful methods, but they did +get results. In its historical setting, the viewpoint from which the +task of settlement was approached was not so far wrong. + +When we examine the counts against the railroads as private +enterprises, we find that the poor construction, which from our point +of vantage looks like dangerous, wasteful, hand-to-mouth policy, is +only in part explained by the fact of reckless and dishonest finance. I +am advised by an eminent and discriminating observer that the +distinguished Italian engineer to whom Argentina entrusted the building +of its railroad to Patagonia, produced a structure which in engineering +excellence is the equal of any in the United States to-day. But the +funds are exhausted and the Patagonia railroad is halted one hundred +and fifty miles short of its goal; there are no earnings to maintain +the investment. + +The reaction of high interest rates on the practical sense of American +capitalists and engineers has made operation at the earliest possible +moment and with the smallest possible investment of capital the very +essence of American railway building in new territory. Actual earnings +are expected to furnish capital, or a basis for credit, with which to +make good early engineering defects. All this, of course, is but +another way of saying that the criterion of engineering efficiency is +not "perfection," but "good enough." This distinction has placed a +large measure of genuine efficiency to the credit of American +engineers, and it explains why Americans have done many things that +others were unwilling to undertake. It is a great thing to build a fine +railroad in Patagonia, but I am sure we all rejoice that the first +Pacific railroad did not have its terminus in the Nevada sagebrush. The +standard of technical perfection set by the Italian engineer did not +fit the facts. It is not the failure to attain his standard but the +failure to measure up to a well-considered standard of "good enough" +that stands as an indictment against American railway enterprise. + +Viewed in historical perspective the business environment of the +pioneer appears to have been dominated by two outstanding facts: one, +seemingly inexhaustible resources; the other, a set of political and +economic doctrines which told him that these resources must be +developed by individual initiative and not by the State. The faster the +resources were developed the more rapidly the nation became +economically independent and economically great, and since they could +not be developed by the State it is not strange that private initiative +was stimulated by offering men great and immediate rewards. These +rewards have encouraged individuals and associations of individuals to +aspire to a quick achievement of great economic power, and their +aspirations have been realized. Such achievements have been a +dominating feature of our business life, and we have regarded them as +an index of national greatness. + +Abundance of resources, if it did not make this the best way, at least +made it an obvious way, for the nineteenth century to solve its +business problems. From our vantage point we can see that serious +mistakes were made. When we set the foresight of our fathers against +our own informed and chastened hindsight their methods appear clumsy +and amateurish. But in the main they did solve their problems: they +gave us a settled continent; they gave us transportation and +diversified industry. We now have our garden and the tools with which +to work it. If the pioneer allowed the children to pick flowers and in +some cases to run away with the plants and the soil, he did not fail to +develop the estate. + +Our inheritance from the pioneer is not only material but +psychological. The pioneer attitude of mind has made a real +contribution to our business standards. The very magnitude of our +enterprises, the fact that we have had to develop our methods as we +went, our success in approaching problems that way, have given us a +confidence in ourselves and a readiness to undertake big things without +counting the cost. This readiness is a large, perhaps a dominant, +factor in our contribution to world progress. It is not an accident +that the greatest problems of mountain railway building have been met +and solved by American engineers, or that they have carried a great +railroad under two rivers to the heart of our greatest city. These in a +private way, and the Panama Canal in a public way, are typical of +American engineering enterprise. + +As with engineering, so with general business. Our pioneer managers did +not lack imagination; they were not afraid to undertake; they were not +constrained by worry lest they make mistakes. They made many mistakes. +Some were corrected, others ignored, but many more were concealed by an +abundant success. The pioneer could afford to do the next thing and let +the distant thing take care of itself, and in large measure he escaped +the penalties which normally follow a failure to look ahead. + +Substantial forces have tended to keep the pioneer spirit alive. If +some resources have been depleted, other resources have been found to +take their place. Scientific discovery, invention, and the development +of technique have placed new forces at our command. Products have been +multiplied, but the demand for products has multiplied faster. We have +been able to continue offering men great and immediate rewards for the +development of new enterprises. As labor was needed, our neighbors have +continued to supply it. The result is that our business has continued +to go ahead without being too much concerned about the direction in +which it was going. + +Business has eagerly appropriated the results of science without itself +becoming scientific. The difficult way of science makes slow progress +against the dazzling rewards of unbridled daring. So many strong but +untrained men have been enriched by seizing upon the immediate and +obvious circumstance--there has been so little necessity for sparing +materials or men and so little penalty for waste--that we have +developed a national impatience with the slow and tedious process of +finding out. + +Along with our technical and business enterprise, with the courage and +imagination of which we are justly proud, a too easy success has given +us a tendency to drop into a comfortable and optimistic frame of mind. +Imagination, intuition, power to picture the future interplay of +forces, courage and capacity for quick action--all these qualities are +as essential to-day as they ever were to business success. The pioneer +environment reacting on our native temperament has given us these +qualities in full measure, but it has also given us a habit of doing +things in a hit-or-miss fashion. Our very imagination and courage +applied to wrong circumstances and in perverted form have often borne +the fruit of national defects. + +There is a strong inclination to assume that the old approach to +problems will bring the same results that it did in the past, and to +forget that we are living in a new world. The problems confronting the +pioneer were not the problems we face to-day. It requires great ability +to draft a prospectus; in many of our greatest enterprises drafting the +prospectus has been the crucial task. But a prospectus is not a going +concern. There is a vast difference between promotion and administration. +In the promotional stage of our business life we were solving problems +made up of unknown quantities, problems for which the only angle of +approach was found in the formula _x_+_y_=_z_. We still have and shall +always have problems of the _x_+_y_=_z_ type, but if we apply that +formula to a problem in which 2+2=4 we are not likely to get the best +results. + +Business may not yet be a science, but it is rapidly becoming +scientific. Scientific inquiry is all the while carrying new factors +from the category of the unknown to that of the known, and by so doing +it is setting a new standard of business efficiency. The more brilliant +qualities, like courage and imagination, must be coupled with capacity +for investigation and analysis, with endless patience in seeking out +the twos and the fours and eliminating them from the equation. When it +is possible by scientific research to distinguish a right way and a +wrong way to do a task, it is not an evidence of courage or imagination +but of folly to act on a faulty and imperfect reckoning with the facts. + +The person who uses scientific method takes account of all his known +forces; he prepares his materials, controls his processes and isolates +his factors so as to reveal the bearing of every step in the process +upon an ultimate and often a far distant result. In other words, he +tries at every stage to build upon a sure foundation. His trained +imagination and judgment working on known facts set the limit on what +he may expect to find, and interpret what he does find, all along the +way. + +In so far as particular business enterprises have rested on +engineering, chemistry, biology, and other sciences, a scientific +method of approach has long had large use in business; but the +scientist in business has usually been a salaried expert--a man apart +from the management--and it has been his results, and not necessarily +his methods, that have influenced business practice. We are now coming +to understand that scientific method is the only sure approach to all +problems; it is a thing of universal application, and far from being +confined to the technical departments of business, where the technical +scientists hold sway in their particular specialties, it may have its +widest application in working out the problems of management. + +The way in which a man trained in scientific method may determine +business practice in a scientific manner finds illustration in a +multitude of practical business problems, ranging all the way from the +simplest office detail to the most far-reaching questions of policy. To +cite an example, of the simpler sort: if an item in an order sheet is +identical for eight out of ten orders is it better to have a clerk +typewrite the eight repetitions along with the two deviations or to use +a rubber stamp? Of course, there are not one or two, but many, items in +an order sheet and the repetitions and deviations are not the same for +all items. In practical application, the rubber-stamp method means a +rack of rubber stamps placed in the most advantageous position. It +requires also a decision as to the precise percentage of repetitions +which makes the stamp advantageous. Then arises the further question, +why not have the most numerous repetitions numbered and keyed and thus +avoid the necessity of transcribing them at all? + +The rule-of-thumb approach to this kind of problem would proceed from +speculations concerning the effect of interrupting the process to use +the stamp, the result of such interruptions on the accuracy of work, +difficulties in the way of necessary physical adjustments, and many +other questions that would occur to the practical manager. + +The scientific method of approach would first inquire whether there are +any principles derived from previous motion study or other +investigations, that apply to the case in hand. In accord with such +principles it would then proceed, as far as possible, to eliminate +neutral or disturbing third factors and to arrange a test. The results +of the test would lead, either to a continuance of the old practice, or +to the establishment of a new practice for a certain period, after +which, if serious difficulties were not revealed, the new practice +would be definitely installed. + +It should be emphasized at this point, that there is a fundamental +difference between investigations or tests which contemplate an +immediate modification of practice and those investigations in which +research--that is, the discovery of new truths--is the sole object. +Tests which are carried on within the business must never lose sight of +the fact that a business is a going concern and that it is +impracticable and usually undesirable to transform a business into a +research laboratory. Scientific methods in business should not be +confused with the larger problem of scientific business research. This +larger task, if undertaken by the individual business concern, is the +work of a separate department. For business generally, it will have to +be conducted either by the Government, or by business-research +endowments. The point at which, in practical business, research should +give place to action is a question that wise counsel and the sound +sense of the trained executive must determine. + +An example of the contrast between a scientific and a rule-of-thumb +approach, as applied to a question of major policy, is found in +discussions of the relative advantages of a catalogue and mail-order +policy over against a policy of distribution by traveling salesmen. A +few years ago the head of one of the largest wholesale organizations in +the United States, talking with an intimate friend, expressed fear that +his house, which employed salesmen, might be at a dangerous +disadvantage with its chief competitor, which did an exclusively +mail-order business. The friend comforted him with the assurance that +there are many buyers who prefer to be visited by salesmen and to have +goods displayed before them. This fact, he held, would always give an +adequate basis for the prosperity of a house that employed the salesman +method of distribution. + +Neither the fear nor the assurance here expressed reveals a scientific +attitude of mind. Careful analysis shows, on the one hand, that the +mail-order policy is not the most effective means of cultivating +intensively a well populated territory. On the other hand, it shows +that the expense of sending salesmen to distant points in sparsely +populated areas more than absorbs the profits from their sales. +Individual concerns have arrived at these conclusions by experiment and +accurate cost-keeping and have succeeded in reaching a scientific +decision as to which territories should be cultivated by salesmen and +which ones should be covered exclusively through advertising and the +distribution of catalogues and other literature. + +The difficulty that business men find in applying scientific method +consistently in the analysis of their problems is strikingly revealed +in the labor policy of the great majority of industrial concerns. While +many men of scientific training are dealing with problems of +employment, probably no concern has undertaken to make a scientific +analysis to determine what are the foundations of permanent efficiency +of the labor force which they employ. This is not surprising, when we +remember how complicated is the problem and how short the time during +which we have been emphasizing the human relations as distinguished +from the material or mechanistic aspect of business organization. + +To state even a simple problem of management, like the one concerning +the order sheet, set forth above, is to reveal some of the difficulties +of analysis which characterize all subject-matter having to do with +human activity. This means that we should not expect results too +quickly nor should we be disappointed if the first results of efforts +at scientific analysis are not absolutely conclusive. As soon as we +recognize that business is primarily a matter of human relations, that +it has to do with groups and organizations of human beings, we see that +scientific analysis of it cannot proceed in exactly the same way as +with units of inanimate matter. The reaction of human relations to +changed influences, frequently cannot be predicted until the changes +occur. Business, in other words, is a social science and, like all +social sciences, must deal primarily with contingent rather than exact +data; likewise conclusions drawn from scientific analysis must in large +measure be contingent rather than exact. + +Although we cannot always isolate our factors, control our processes, +and otherwise apply scientific method, with results as conclusive as +those obtained in laboratories of chemistry, physics, or biology, we +need not therefore reject scientific method in favor of a +rule-of-thumb. We should, however, be suspicious of too sweeping claims +based on any but the most careful and painstaking analysis of facts by +persons who are thoroughly trained in the kind of analysis they +undertake. + +While a scientific approach will help in solving many problems of +business detail, the substitution of scientific method for a +rule-of-thumb approach will realize its object most completely in the +influences exerted upon fundamental long-time policy, influences which +cannot bear fruit in a day or a year. The circumstances of our history +have retarded the acceptance of a long-time scientific viewpoint in +business, but forces now at work are making powerfully for a scientific +approach to business management. First among these is a realization +that our resources are measured in finite terms. We have begun to take +account of what we have, and we are able in a rough way to figure the +loss from what we have squandered. The situation is not desperate, but +we can see that it may become so. To insure against possible disaster +in the future we need to exercise effective economy in turning +resources into finished goods, and we need to eliminate waste in the +distribution and the consumption of these goods. In private business +the need for such economy is reflected in rising prices for raw +materials. In its public aspect we have labeled the problem, +conservation. + +A second force making for a scientific approach to business is found in +the beginnings of a social policy to which I have referred. This policy +is showing itself in limitations upon the way in which materials and +men may be utilized and in a sharper definition of the business man's +obligations to employees, to competitors and consumers. As long as +resources are to be had for the asking, while cheap labor can be +imported and utilized without restraint, and where no questions are +asked in marketing the product, there is not the right incentive to do +things in a scientific way. As business becomes more and more the +subject of legal definition, as the tendency grows of regarding it as a +definite service, performed under definite limitations, and for +definite social ends, margins will be narrowed and it will become +increasingly necessary to do things in the right way. + +The scientific approach to business has made great progress during the +past decade. Out of the hostile criticism to which so-called big +business has been subjected have come several government investigations +and court records, in which policies of different concerns have been +explained, criticized, and compared. Besides, business men themselves +have become less jealous of trade secrets and have shown an increasing +inclination to compare results. A good illustration of this tendency is +seen in the growth of "open price associations" and in the spirit in +which credit men, sales managers' associations, and other business +groups exchange information. In the same spirit, business and trade +journals have given a large exposition of individual experience and +increasing attention to questions of fundamental importance. + +More significant still has been the scientific management propaganda. +Mr. Brandeis's dramatic exposition of this movement in the railway rate +cases in 1911 at once made it a matter of public interest. Later +discussion may not have extended acceptance of scientific management, +but it has not caused interest in it to flag. The movement has become +essentially a cult. Its prophet, the late Frederick Taylor, by ignoring +trade-unionism and labor psychology in the exposition of his doctrines, +at once drew down upon them the hostility of organized labor; the +movement was branded as another speeding-up device. More serious than +the antagonism has been the spirit in which some of the scientific +management enthusiasts--not all--have met it. They seem to assume that +their science is absolute and inexorable, that it eliminates disturbing +factors and hence needs no adjustment to adapt it to the difficulties +met in its application. This air of omniscient dogmatism, together with +the disasters of false prophets, has somewhat compromised the movement +and has diminished its direct influence. However, business men have +been stirred up. They have become accustomed to using the words +"science" and "business" in the same sentence. They are in a receptive +attitude for ideas. The indirect influence has been great. + +A final, and probably in the long-run the most permanent, influence +making for the extension of scientific method in business has been the +new viewpoint from which universities have been approaching the task of +educating men for business. Prior to 1900, university education for +business in the few universities that attempted anything of the sort +was confined to such branches of applied economics as money and +banking, transportation, corporation finance, commercial geography, +with accounting and business law to give it a professional flavor. +There were also general courses labeled commercial organization and +industrial organization, but these were almost entirely descriptive of +the general business fabric of the country, and had but the most remote +bearing on the internal problems of organization and management which +an individual business man has to face. The assumption was that a man +who was looking forward to business would probably do well to secure +some information about business, but there was little attempt at +definite professional training of the kind given to prospective +lawyers, physicians, or engineers. + +Within the past few years universities have begun to undertake +seriously the development of professional training for business. The +result has been that through organized research and through +investigations by individual teachers and students, the universities +are gathering up the threads of different tendencies toward scientific +business and are themselves contributing important scientific results. +Out of all this there is emerging a body of principles and of tested +practice which constitutes an appropriate subject-matter for a +professional course of study, and points the way to still further +research. + +One of the earliest results of an approach to business in an attitude +of scientific research, is the discovery that there are certain +fundamental principles which are alike for all lines of business, +however diverse the subject-matter to which analysis is applied. +Substituting the principle of likeness for diversity as the +starting-point of business analysis, has far-reaching consequences not +only for education and research but for management as well. First among +these consequences is the fact that search for elements of likeness +leads at once to replacing the trade or industry with the function as +the significant unit both of research and organization. + +If we start our study of business by separating manufacturing, +railroading, merchandising, banking, and the rest, with a large number +of more or less logical subdivisions in each field, and then try to +work out a body of principles applicable to each subdivision, we soon +run into endless combinations and lose all sense of unity in business +as a whole. As soon, however, as we approach business from the +standpoint of accounting, sales management, employment, executive +control, and when we find that lessons in statistics, advertising, +moving materials, or executive management, learned in connection with a +factory, can be carried over with but slight adaptation to the +management of a store, we at once get a manageable body of material on +which to work. + +Recognition of the principle of likeness and of its corollary, analysis +by function rather than by trade, marks perhaps the greatest single +step yet taken in the development of scientific business. The +principle, however, has its dangers. Analysis by function implies +functional specialization in research and a similar tendency in +business practice. Without specialization there can be no adequate +analysis of any large and complex body of facts. With too intense +specialization there is always danger that the assembling and digesting +of facts, and especially the conclusions drawn from them, will reflect +some peculiar slant of an individual or of a particular specialty. + +The accountant does not always go after the same facts as the sales +manager, and even with the same facts the two are likely to draw quite +different conclusions as to their bearing on a general policy. +Specialization, too, may result in setting an intense analysis of one +group of facts over against a very superficial view of other facts--or +again, an intense analysis of the same facts from one viewpoint with +failure to consider them from another, and perhaps equally important, +viewpoint. Unless these weaknesses are corrected, the business will +lack balance; the work of departments will not harmonize; there will be +no fundamental policy; goods sold on a quality basis will be +manufactured on a price basis--all of which leads to disastrous +results. + +Scientific method is the first article in the creed by which business +training must be guided. The growing necessity for critical and +searching analysis of business problems, justifies all the effort we +can put forth to develop plans for training into a structure of which +scientific method shall be the corner-stone. But analysis is not all. +Following analysis must come synthesis. Somewhere all the facts and +conclusions must be assembled and gathered up into a working plan. It +is this task of leveling up rough places in the combined work of +department specialists, that puts the training and insight of both the +executive and the director of research to the most severe test. It is a +mark of a well-trained executive that in performing his task he +instinctively follows principles instead of trusting alone to momentary +intuitions, however valuable and necessary these may be. + +And here it is that the second article in the creed of business +training appears. The executive's task is primarily to adjust human +relations, and the nature of the principles by which these adjustments +are made, determines the relations of a concern to its laborers, to +competitors, to customers, and to the public. If the executive comes to +his task without a mind and spirit trained to an appreciation of human +relations, he is not likely so to synthesize the work of his +subordinates as to make for either maximum efficiency within the +business or its maximum contribution to the life of the State. + +The term "executive" in large and highly organized concerns is likely +to mean the head of a department. A large proportion of the department +heads now in business are men of purely empirical training. Their +horizon is likely to be limited and to center too much in the +departmental viewpoint. They may perhaps be able to see the whole +business, but if they do, they will probably see it exclusively from +the inside. There is frequently nothing in their business experience +that has made them think of the great forces at work in society at +large. As the bulk of business has been organized in the past, there +has been no department in which, automatically and in the regular +course of business, a view looking outward is brought to bear. If it +came at all, it was reflected back from the larger relations and the +larger social contacts of the head of the business. Many general +executives have been promoted from the position of head of department +at a period in life when their habits of thought had become +crystallized, and it was not natural that they should entirely change +those habits with the change in their responsibilities. + +Besides, the economics of competition and a strong group sentiment +among business men have tended to make them resist social influences +which might react upon the policies of their own business. Superficial +conclusions drawn from such experiments as those of Pullman and of +Patterson, to which reference has been made, have seemed to justify +such resistance and have fortified men in the belief that business and +response to social influence should be kept separate in water-tight +compartments. + +More recently men have been coming to understand the fundamental +defects in the Pullman and the original Cash Register plans and have +come to realize that even a separate welfare department may be +successfully incorporated in a business, if only certain fundamental +policies are followed in its management. Still more significant is the +view looking-outward and the consequent harmonizing of social and +business motives, which is coming in the ordinary development of +business policies as a result of their more fundamental analysis. + +Perhaps the greatest step toward a fuller consideration of facts on the +outside is taken, when a business creates a separate department of +employment. It is hard to see how the head of an employment department +can have the largest measure of success if he sees only the facts on +the inside. A comprehensive application of scientific method to +problems of employment leads a long way into analysis of the social +facts affecting the people who are employed. + +From different angles the same thing is true in other departments of +business, notably so in the case of advertising and sales. One of the +most obvious outside facts which affect sales, is the location and +density of the population, and yet it is a fact which frequently is +neglected. Another outside fact, which ultimately advertisers will have +to consider, is the consuming power of population. They have been very +keen to study our psychological reactions, and in doing this they have +undertaken the entire charge of the evolution of our wants. But they +have not always gone at their work from the long-time point of view. +Sometime they will have to take account of the fact that unwise +consumption impairs efficiency and depletes the purchasing power from +which advertisers must be paid. + +The next step in the scientific analysis of business is to provide for +more ample analysis of facts on the outside. Weakness at this point +explains the defects in many plans for the welfare of employees, it +explains the defects in scientific management, mentioned above, and it +explains many other shortcomings in projects for increasing the +effectiveness of business. + +But men who approach business from the standpoint of university +research are not free from the same danger. In their effort to orient +themselves with the business facts, they get the business point of view +and run the risk of centering attention too much on materials and +material forces. Even psychological reactions of men and women may be +analyzed from the standpoint of their mechanics, without ever going +back to those impelling motives which have their roots in the human +instincts and complex social reactions of which the men and women are a +part. + +Approached from the standpoint of scientific method, the field of +conflict between different interests in business and between so-called +"good business" and "good ethics" becomes measurably narrowed. I do not +mean to give science the sole credit for achievements along this line. +More frequently advance in moral standards has been forced on unwilling +victims through legislation, public opinion, or class struggle, and +then men have discovered, as a happy surprise after the event, that +"good ethics" was profitable. But science has done something, and might +have done still more, if our efforts at scientific analysis had not +been so often underweighted on the human side. These very discoveries +of harmony between wholesome practice and good business constitute a +part of the body of fact of which a truly scientific method must take +account. When a review of all the cases in which compulsion has changed +existing methods shows an almost invariable adaptation and a tendency +toward better results after the level of competition is raised, a man +of scientific training immediately asks the question, whether a +fundamental law is not at work. + +A glance at social legislation during the last century reveals some +interesting uniformities. Every step in the development of the English +Factory Acts as they stood at the beginning of the present war, +starting with the first Child Labor Bill in 1802 and ending with the +Shop Regulation Act of 1912, had been taken against the protest of the +most vocal elements in the trades concerned. In nearly every case +investigation will show, either that the requirements of the measure +enacted fell considerably below the practice of the best concerns, or +that the whole industry was in need of some outside impulse to start it +in the way of more efficient organization. As long as it is permissible +to employ five women and five children to tend five machines, there is +not the right incentive to make adjustments by which all five of them +can be tended by one man. + +In this country in our forty-nine jurisdictions we have been going +forty-nine times over the experience of England and other countries, in +connection with each effort to force up the competitive level. We have +seemed to be quite unable to apply the most obvious lessons of +experience either at home or abroad to new cases, and yet essentially +the same uniformity of adaptation has occurred here as abroad. Like our +employer, whom a strike impelled to adopt an advanced policy toward +labor, we find after the event that we should not know how to do +business under the standards in force before the law compelled a +change. + +Enforcement of the Sherman Anti-Trust Law has been frequently cited as +an example of unwise government interference. With respect to many of +the incidents of enforcements, criticism has been well founded. But the +net result of that enforcement has been a much sounder body of law on +the important subject of fair and unfair competition. Besides, we now +have in the Federal Trade Commission the beginnings of an +administrative organization for dealing with the whole subject of +monopoly and restraint of trade. And more than all this, we have a +better prospect than ever before, of some sort of mutual respect +between government and business, and of honest coöperation in working +out their mutual problems. It is not likely that the Anti-Trust Law has +prevented honest men from earning legitimate profits from legitimate +business service to anything like the extent which would be indicated +by the vigor with which it has been opposed. But even if it has, we +have received something for the price paid. + +And so the list might be lengthened, pure food and drugs, meat +inspection, public service regulation, industrial safety, and the +rest,--in nearly every case, from a purely business point of view, +opposition, in so far as it related to the main point of government +policy, has been a mistake. Refusal of the business men affected to +accept a policy of regulation has tended to shut them out of the +councils in making adjustments of detail. This fact has hindered the +government in performing a service which in most cases both the public +and the business needed to have done. + +Even when we admit, as obviously we must, the persistence of conflict +between different interests with respect to a large mass of business +detail, the fact of group influences and social control still remains +an important consideration to which business analysis must give due +weight. There has been a large mass of business in this country, in +which the community has been unable to recognize any productive +service; it has been regarded only as a means of acquisition for those +who pursue it. Legislation, public opinion, and the evolution of +enforceable standards within particular business groups are tending all +the while to narrow the sphere of purely acquisitive business. With +respect to that great mass of business which has both an acquisitive +and a productive side, these forces are gradually bringing us to an +attitude of mind in which we regard gain as a by-product of service. + +The public is also recognizing that the purpose of goods and services +is to promote individual and community welfare, and as fast as public +policy to that end can be worked out, it is carrying emphasis even +beyond specific products and services to the social ends for which +these products and services exist. In these ways society too is trying, +clumsily perhaps, to take a long-time view of its business and to +conserve the human values that make for progress. + +Obviously it is but a partial and incomplete analysis of a business +situation that omits these human factors; a working policy that fails +to anticipate their force and then to reduce the zone of conflict to +its lowest limits is neglecting an important element in the definition +of long-time efficiency. And business men are beginning to see this. + +A few weeks ago the manager of a large department store in San +Francisco was kind enough to show me his record of departmental profits +for a number of months. The fluctuation in relative profits of +different departments month by month was apparent, especially the fact +that after a certain month several departments which had previously +earned high profits became relatively much less profitable. I asked the +manager to explain, and he did in this way: At the time when the change +occurred a new policy had been inaugurated by which employment of help +had been centralized and standardized for the whole concern. As a +result, when certain departments which had been decidedly sub-standard +with respect to wages were brought up to standard, they were unable to +earn anything like the profits which they had previously shown. + +Without going into the question of the connection between high wages +and profits, of which this incident in my opinion was an exception, it +was clear to the manager as to me that the increase in wages in these +particular departments had been accompanied by an immediate loss in +profits. Furthermore, the manager was unable to determine, from figures +available before and after the change, that this loss had been directly +compensated by gains in other departments. In order to get his +viewpoint concerning the change at issue, I asked him two questions: +(1) Why was he willing to make a change of such a fundamental character +without being able to ascertain in advance whether or not it would be +profitable? (2) In the absence of facts that could be incorporated in +the accounts, was it his belief that the change would in time be +profitable, and if so, how did he reach his conclusion? + +His response to the first question revealed to me an intensely natural +but nevertheless complex motive. He said, substantially, that he was +confident that standardized employment was the only acceptable policy, +from the standpoint of the general manager. Given the necessity of +standardizing, it was necessary for the general reputation of the +business to standardize upward rather than downward. He wanted his +business to be regarded as one in which the best standards of +employments obtained. Furthermore, he added, "California will soon have +a minimum wage law, and I want this business to be well in advance of +any wage standards which may be imposed by law." + +Answering the second question more specifically, the manager recognized +the advertising value of a reputation for having good conditions of +employment. He had discovered no tendency for general profits to +diminish or for the rate of increase to be retarded more than +temporarily. In the absence of definite facts to the contrary he +considered it safe to assume that as soon as the business should become +adjusted to the new standards, standardization of wages upward would be +profitable for the business as a whole. He wanted to make the change +voluntarily and to commence operating successfully on the new basis in +advance of competitors. + +It is scarcely possible to discuss this sort of business situation with +a progressive manager, without feeling that he does not approach +business exclusively from the standpoint of gain; in other words, to +use the phrase of Adam Smith, he is not exclusively an "economic man." +The manager of a modern business, on the contrary, is a man very much +like the rest of us, and being such a man he is first of all desirous +of conforming to whatever standards are in way of acceptance by that +part of society in which he moves. Obviously, these standards are made +up of both selfishness and altruism, with selfishness tending all the +time to become more enlightened as society advances. + +As we come to distinguish more clearly between reward for service and +mere one-sided gain, there occurs a parallel change in men's motives; +they become more sensitive to social disfavor and to social esteem and +less and less willing to devote their lives to activity by which no one +but themselves is benefited. In this reaction of altruism with +enlightened selfishness there emerges in men's minds a new concept of +their own interest and a better understanding of the kind of business +policy that in the long-run brings them the greatest reward. Of course, +this does not mean that enlightened selfish interest has ceased, or +that it will ever cease, to be a motive force in business. But there is +a vast difference between selfishness untempered with other motives and +selfishness eager for the esteem of one's fellows. + +Clearly it is a task of higher education to help promote response to +the more enlightened motives. The difficulty which even men of advanced +university training have in taking full account of human factors +indicates something of the nature and importance of the task. The +so-called "scientifically trained" manager tends to undervalue the +human factor of his equation. His analysis is likely to be overweighted +on the material side. When the university starts--as it is starting and +should start--to train future executives, it needs to analyze its own +problem, and take full account of the dangers against which it has to +guard. Otherwise the training itself will be overweighted on the +material side and will perpetuate the weakness that it ought to +correct. + +The greatest danger in this connection, as I see it, arises out of the +distinction between the so-called "cultural" and the "vocational" point +of view. This distinction comes to us with a large mass of traditional +authority, and we have classified subjects and erected barriers on the +assumption that the distinction is real. As far as the training of +business executives is concerned, I am confident that the distinction +is one which ought never to be made. It is a great misfortune, when +young men and women who are preparing for a serious career are +permitted to think of culture as a non-functioning ornament; equally +unfortunate is it for them to think of their prospective vocations as +activities devoid of cultural association. + +A few days ago a student who had already selected his profession and +was anxious to be about it confided to me, as many others have done, +how distasteful he was finding the task of "working off his culture." +Does any one really suppose that the sophomore who is "working off his +culture" under faculty compulsion, in order to get his college degree, +is really absorbing from his study anything which, as the faculty +assumes, makes him a better man and yet, as he himself believes, +contributes nothing to effectiveness in his profession? Or take the +case of the man who devotes himself with professional earnestness to +his two, three, or four years of college work--will he find that he has +invested his time and his money on a purely ornamental luxury that has +no relation to his later work? + +The first great element of training which the university can give to +future business men is a mastery of scientific method as a means of +analyzing problems and synthesizing results. Quite as fundamental as +this is the development of an intelligent and sympathetic approach to +questions of human relationship. Only the beginning steps in the +direction of business efficiency can be taken while attention is +confined to the material and mechanistic side of business organization. +No secure basis for permanent efficiency can be established until we +are prepared to go deeply into the question of human motives and to +understand something of the complex reactions that come from individual +and group associations. Without such a basis we cannot hope for a +nationally effective business organization. + +Business is a form of coöperation through which men exercise control +over natural forces and thereby produce things with which to satisfy +human wants. Any subject well taught, which gives an insight into human +relations or into nature and man's control over it, will help prepare a +person to deal with the intricate problem of human relations in +business--that is, if the student has studied the subject in an +attitude of mind to see its bearing on what he is preparing to do. + +The question is not so much one of too few or too many so-called +culture subjects, but rather of the attitude of mind in which all +subjects are undertaken. It is a question of getting such a survey of +the great facts of human experience and of so pointing their +significance as to enable men to approach a problem of human +relationship with sympathy and something of a long-time dynamic +viewpoint. When this is accompanied by a mastery of scientific method, +the foundations are reasonably secure. Without such foundations, +secured either in college or out, analysis of problems in a specialized +business field is almost sure to be one-sided and incomplete. + +The kind of professional training that I would suggest for the future +business executive would be laid on the foundation of a college course +of two, three, or four years in which the viewpoint and the varied +methods of study in several diverse branches of knowledge had been +thoroughly instilled. When the student passed to the professional study +of business he would be expected to master the fundamentals of business +organization and management, including the basic elements of subjects +like accounting, finance, and other divisions of organization common to +all lines of business. All of these studies would be pursued with +constant reference to the fact that business is carried on in a +community in which certain public policies are enforced and in +recognition of the fact that business should conform to these policies +and help to make them effective in contributing to public welfare. + +As the student advances, the course would proceed toward greater and +greater specialization, and would finally culminate in an intensive +study of some fairly narrow business problem, pursued until the student +has mastered it in principle and in detail. The result of his study +would be set forth in dignified readable English which an intelligent +layman could comprehend and which would make the article acceptable for +publication in a journal of standing. + +Professional study of business, then, should give students a +comprehensive many-sided survey of business and a thorough grasp of +scientific method as used in analyzing business facts. It should +prepare the student to think complicated business problems through to +the end and to put the results of his thinking together into an +effective working plan. Finally, it should maintain an atmosphere in +which business problems are regarded in a large and public-spirited +way. + +We are well under way with professional training for business; but if +students fail to get the general educational foundation for it, it will +not accomplish the best results. If the two, three, or four years of +college study is regarded as something purely ornamental and +irrelevant, while they are getting it, if it fails to arouse an +appreciation both of scientific method and of human values, or if these +values are thought of as something to forget when the student comes to +the analysis of practical problems, the university will not have done +what it might do for the promotion of high standards of efficiency in +business. + +In all of the discussions I have tried to point out how emphasis in +business is gradually shifting from acquisition, to production and +service; how there are gradually evolving in business, professional +standards of fitness, of conduct, and of motive; and how more and more +these standards enter into the measuring of business success. Our +educational assumptions still rest too largely on the old dollar +standard of success with its well-known inferences about the +blood-and-iron equipment with which that success can be attained. + +Psychologists tell us that we tend to get what we expect. If we fail to +create enthusiasm for the opportunity for service in business; if we +assume that young persons who enter business are going to measure their +returns in dollars alone; or if we continue to feature, as we have +done, the break between the so-called "cultural" and the professional +parts of the university course, there will be danger that we shall +continue to get the thing for which we plan. + +There can be no doubt that many of our old assumptions about the +relative dignity and social distinction attaching to different kinds of +study, as well as the assumption of a purely mercenary motive in +business, have impeded a wholesome reaction between higher education +and business standards. These assumptions have created an +atmosphere--an objective and subjective attitude of mind, a set of +motives and desires, of appreciations and valuations, all of which +stand in the way of the most far-reaching educational results. + +So far as these assumptions can be rationally explained, they rest on +ideas that are in part mistaken, in part exaggerated, and in part +obsolete. The application of scientific method to business has created +an entirely new relationship between business and education. Scientific +analysis and social policy are establishing a new connection between +the material and the human facts of business. In the new atmosphere the +business executive requires those fine qualities of mind and spirit, +and the ability to command these qualities for a given task, which +peculiarly it is the work of the university to cultivate. + +In proportion as universities have vigorously undertaken this work, and +have applied scientific method to their own problem of articulating it +with higher education in general, the line of approach to professional +business training has become increasingly clear. Among the notable +developments of the past decade has been a shifting of emphasis from +the training of specialists to the training of business executives. As +preparation for executive work comes to be generally recognized as an +appropriate field for systematic professional study, the standards that +scientific method has already achieved will become fixed and better +standards of business efficiency and service will emerge. + + +_The Riverside Press_ +CAMBRIDGE · MASSACHUSETTS +U · S · A + + + + + + +End of the Project Gutenberg EBook of Higher Education and Business Standards, by +Willard Eugene Hotchkiss + +*** END OF THIS PROJECT GUTENBERG EBOOK HIGHER EDUCATION, BUSINESS STANDARDS *** + +***** This file should be named 29674-8.txt or 29674-8.zip ***** +This and all associated files of various formats will be found in: + https://www.gutenberg.org/2/9/6/7/29674/ + +Produced by The Online Distributed Proofreading Team at +https://www.pgdp.net (This file was produced from images +generously made available by The Internet Archive/Canadian +Libraries) + + +Updated editions will replace the previous one--the old editions +will be renamed. + +Creating the works from public domain print editions means that no +one owns a United States copyright in these works, so the Foundation +(and you!) can copy and distribute it in the United States without +permission and without paying copyright royalties. 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