Higher Education and Business Standards Part 2

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 ma.s.s of business detail, the fact of group influences and social control still remains an important consideration to which business a.n.a.lysis must give due weight. There has been a large ma.s.s 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 ma.s.s of business which has both an acquisitive and a productive side, these forces are gradually bringing us to an att.i.tude 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 a.n.a.lysis of a business situation that omits these human factors; a working policy that fails to antic.i.p.ate 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 r.e.t.a.r.ded more than temporarily. In the absence of definite facts to the contrary he considered it safe to a.s.sume 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 compet.i.tors.

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 a.n.a.lysis 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 a.n.a.lyze 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 ma.s.s of traditional authority, and we have cla.s.sified subjects and erected barriers on the a.s.sumption 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 a.s.sociation.

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 soph.o.m.ore 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 a.s.sumes, 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 a.n.a.lyzing problems and synthesizing results. Quite as fundamental as this is the development of an intelligent and sympathetic approach to questions of human relations.h.i.+p. 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 a.s.sociations. Without such a basis we cannot hope for a nationally effective business organization.

Business is a form of cooperation 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 att.i.tude 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 att.i.tude 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 relations.h.i.+p 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, a.n.a.lysis 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 pa.s.sed 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 a.n.a.lyzing 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 a.n.a.lysis 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 s.h.i.+fting 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 a.s.sumptions 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 a.s.sume 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 a.s.sumptions about the relative dignity and social distinction attaching to different kinds of study, as well as the a.s.sumption of a purely mercenary motive in business, have impeded a wholesome reaction between higher education and business standards. These a.s.sumptions have created an atmosphere--an objective and subjective att.i.tude 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 a.s.sumptions 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 relations.h.i.+p between business and education. Scientific a.n.a.lysis and social policy are establis.h.i.+ng 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 s.h.i.+fting 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 Ma.s.sACHUSETTS U S A