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Sunday, May 14, 2006

Things we can learn from History - Textiles in the 18th and 19th Centuries

As a reader of my Blog you are probably aware that I am in the middle of a part time MBA course. Its hard work, lots to balance with business and personal life commitments but its really worth it as I am learning a great deal of relevant stuff and coming up with lots of new ideas for how TCL can develop, broaden and strengthen.

In our current course we are looking at the making and integration of management. It's an interesting approach to bringing together all aspect of management with a view to understanding how we got to these approaches, why we are using them, who were the key people involved in getting us there and seeing what we can learn from them.

I found our recent short project on Textiles in the 18th and 19th Century very interesting and have copied an extract from my short paper on workforce management below. Hope you enjoy it.......

.....In the 18th century there was a manufacturing revolution within the textiles industry which brought it from ‘cottage industry’ where there were many small scale producers to a much more significant scale through the introduction of mass production. This revolution was facilitated by technological innovations in terms of the equipment that was developed to process the raw materials involved in textiles production.

Large volume production created a lower per unit cost, and thus enabled lower prices to the consumer, with better profit margins for the producer. This created mass markets which generated large profits for owners, and fuelled a period of intense competition.

Manufacturing plants brought people into unfamiliar environments which were crowded, noisy, unhygienic and in many cases unsafe. There were many issues related to staff recruitment reflective of the environment, and this was particularly seen in the countryside where a majority of mills were located.

When workforces were successfully recruited and trained they were likely to become transient, primarily in search of better wages but also in search of better working environments. They chose to suffer the individual problems of one factory for only short periods.

In the early stages of the manufacturing boom the owners and managers were faced with a very militant workforce. The harsh conditions spurred large scale demonstrations and unrest. Physical violence against managers, owners and overseers was common place and this in turn fuelled counter behaviours such as beatings and even shootings.

At the centre of a great deal of the unrest was the sentiment that this ‘new way of working’ was about concentrating capital at the expense of the labour force. It had made the owners and managers incredibly wealthy which magnified the situation, and created a social divide.

Over time things had to change. There was no way that the industry could continue in this way and in particular the owners had the following drivers:
• Factories being burnt down by militant workers caused massive disruption
• Couldn’t get workers into countryside factories
• Massively transient workforce created knowledge and skill difficulties
• Mass markets were creating large amounts of money and potentially large profits – people like Richard Arkwright were among the wealthiest people in the nation
• Heavy competition.

Recognition began to evolve that there was inherent value in the Human Component within the manufacturing process, and that as great investment was being placed in the technology of large scale manufacturing artefacts so should there be similar investment in the people.

A preliminary step forward was the offering of better wages. This is a natural market force, in that as the workforce became hard to attract the cost of those workers became higher. A plateau was soon reached on this approach though, as the market would not sustain perpetual advancement in this area.

The most consistently successful entrepreneurs were the ones that stamped their personal culture and values on the company and thus created a common unity and drive to their organisation. While not all these cultural models were utopian, they did create more ‘team working’ and generated greater efficacy from the human component of the process.

Within the more utopian models a great deal of social engineering took place, in that the companies:
• Built villages around the factories to house the workers
• Developed education and healthcare programmes
• Hired people with large families – and looked to employ most of them within the factory creating communities with the factory at the centre.

These approaches created dependencies between the workers and the company and effectively tied them to the location and to the specific factory. It also raised the standard of living for a great many people and this was something that other fields of endeavour would be unlikely to match.

There was a great diversity between the individual models used. Some seem to be derived from placing the workers at the centre of the process, others by military backgrounds or personal values. Examples of these include:
• Arkwright – A system of Industry, order and cleanliness
• Sir Robert Peel – Order, arrangement and subdivision – like a military drill
• Pollard – methods to institute and Maintain the regime – corporal punishment, fines and threats of dismissal

Towards the end of the 19th century great stock was placed in the notion that it wasn’t enough to drive the workers, but that it was more effective to motivate them. Related to this idea the concept of splitting ownership and control of companies started to carry more favour. It allowed the management to find a solution to meet the goals of the owners, without the owners themselves dictating what it should be.

In today’s working environment within the western, more knowledge based industries there are significant challenges around recruitment, staff retention, efficacy and motivation of the workforces. The solutions to these challenges seem most likely to be found within the cultural models and social frameworks which the companies themselves form.

A great deal of time and effort is expended on creating good team working. It is a firmly held belief that as organisations mature they need to continually re-invent themselves to create the right environment – and thus generate effective team working. At the root of this is that teamworking is contingent on shared goals. With Ownership and Control being increasingly differentiated under the ‘best practise’ governance around listed companies this brings us to the concept that the people within the company need to share the goals of the owners and thus ensure the longevity of the company.

Examples of this can be seen in:
• Semco – where it is run very democratically, even electing the senior management team
• TCL – where the company is run in part along the lines of a ‘mutual’ organisation, ensuring a very transparent organisation and recycling a high percentage of profits back to each employee.

I draw much inspiration from the idea brought forward by Robert Owen that:

‘managers who managed solely for pecuniary gain were destructive of the happiness of the nation and of society’.

To me, this shows us very clearly the reason as to why companies have to continually reinvent themselves and their organisations in that for only a few people, and for only a short time, will the destruction of a society or nation be tolerated and after that the people involved will force a change. This has been seen with industrial, political and civil unrest across the world and across history. Within a company if the people aren’t at the heart of the organisation and receiving value from their contributions then they will look to change it, enhance it or even destroy it.

A long term, successful company will therefore be a vehicle whereby capital is concentrated to be shared amongst those that help to concentrate it. The social and cultural frameworks put together by the company will therefore act in the best interests of the people, and thus overall for the company as a whole.

In this regard the socialist models along with the tools and methods introduced during the textiles industry revolution have a place in our thinking and management methods today. While our contemporary implementation of these models may be driven perhaps more by self interest and less for socialist reasons, the reality is that for businesses to exist and to have a long term future they must keep people at the centre of their thinking. Where they do not, they are likely to fail.

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