Consultants' Corner

A Historical Discussion of Business Management

Clay Ricord
Insurance Experts' Forum, January 19, 2012

Frederick Taylor’s Principles of Scientific Management was published in 1911. His views on the behavior of workers and the role of management were ahead of their time. One hundred years later, I think there are still some important lessons to learn and apply from Taylor’s ideas and observations that will work today to help companies deliver value to their customers and compete in the marketplace.

Taylor thought the objective of management should be to “secure the maximum prosperity for the employer coupled with the maximum prosperity for each employee.” A century ago, most workers were employed in factories or mines, and few had a say in management’s decisions. Taylor’s idea that another goal should be the employees’ prosperity was not widely accepted by heads of businesses. Today, we understand that the key to any organization’s ability to have a lasting advantage over competitors is its culture and employees. Taylor used the term “prosperity” broadly, but it is still relevant.

Taylor’s view was first called “task management.” He felt that each part of the work being done should be designed and structured and each worker selected and trained. But there are limits to how Taylor’s views fit our world today. I think the largest limitation comes from his view that workers be excluded from the “science” of design and decisions that were exclusively management’s role. A worker in a mine or factory would never have been asked to participate in the analysis and design of work tasks. However, those who know the work best are the ones actually performing the tasks.

To acknowledge that notion, we can turn to the Kaizen approach, a philosophy that originated in the post-World War II era with the work of Dr. W. Edwards Deming in Japan. The thought is that continual improvement leads to quality and efficiency in meeting the customer’s requirements. This approach would lead to Six Sigma.

Dr. Deming taught that, by adopting appropriate principles of management, organizations can increase quality and simultaneously reduce costs. This highly focused effort engages those doing the work to solve a problem—eliminating waste and increasing productivity—leading to better service and quality. Both Deming and Taylor agree that decision making should be based on measures and facts, and despite their varying degrees of emphasis on the doers, carried out in a structured manner, with suggestions reviewed by management for adoption.

Both Frederick Taylor and Dr. W. Edwards Deming dramatically impacted how we manage. Although much has changed, a lot has stayed the same. How will you use the tools to make continuous improvement in your organization for the prosperity of both the employer and the employee?

Clay Ricord is a senior consultant for the Robert E. Nolan Co., a management consulting firm specializing in the insurance industry.

Readers are encouraged to respond to Clay using the “Add Your Comments” box below. He can also be reached at Clay_Ricord@renolan.com

This blog was exclusively written for Insurance Networking News. It may not be reposted or reused without permission from Insurance Networking News.

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