  Someone once said—probably it was Mr. Schwab—that given the right organization it was no harder to manage the U. S. Steel Corporation than to operate a peanut stand. And Mr. Schwab ought to know, although no life-sized portrait of him all dressed up like a peanut vendor has ever been brought to our attention. However that may be, his statement is interesting—especially interesting because his appraisal of the job of managing very nearly approaches ours. In "The Knack of Managing," you see, much of the emphasis will be on the fact that the fundamental PRINCIPLES OF MANAGEMENT apply to every business alike. And if we may start out with the premise that managing THE PRINCIPLES OF MANAGEMENT vary not at all, however different may be the MECHANICS OF APPLICATION. How often the editor, how often the equipment salesman, listens to that time-worn tale of woe: "My business is different. So-and-so can do that sort of thing. But I make gadgets—and your conveyors, your air conditioners or whatever it is you write about or sell, won't do me a bit of good." Of course his business is different—different in its individual characteristics, its financial, sales, production, labor problems. But they are only the CLOTHES the business wears. They may differ from the clothes of another enterprise as widely as the frilly importation from the Rue de la Paix differs from the sleazy issue of the East Side sweat shop. But underneath the Doesn't it all boil down to something like the Colonel's lady and Judy O'Grady? One, presumably, wore a brief peignoir with a Paris label; the other, a substantial bungalow apron from a department store basement. But weren't they "sisters under the skin"? Stripped of all the furbelows—the details of operation, of tools, of materials—the objectives of our steel master, our peanut vendor, our pretzel maker, our furniture manufacturer, are one and the same thing. Their every-day job, in short, is to get something well done with maximum dispatch and at minimum expense. That's management's job. It goes for every type of enterprise; whether it in Consider one of the simplest forms of business enterprise—the delivery of a message. The errand boy—if he's worth his salt and is really managing his job—does in principle exactly what the general manager of the glass plant, the automobile factory, the textile mill, does when he comes face to face with his problems. In principle, mind you. FIRST—this is the errand boy managing his job—he settles in his mind exactly where he has to go. Not just over to Federal Street—but to 63 Federal. In a word, he ANALYZES THE BUSINESS or the job to be done. ANALYSIS, then, is the first step. SECOND—he figures out the shortest, most economical way to go there. In other THIRD—shall he walk or shall he ride? Shall he do the work himself? Or shall he hire someone else to do it for him? His third step, you see, is ORGANIZATION. He organizes the handling of his work. The "right organization," said Mr. Schwab—— FOURTH—he must get service. There are other errand boys. There are elevator men, office boys to meet and get along with if he is to execute his errand with the greatest dispatch. Now, you see, he's HANDLING THE HELP. The manager of the piano plant, the agent of the cotton mill, would call that phase of his job INDUSTRIAL RELATIONS. FIFTH—All the time he's planning, going and doing, he never loses sight of the final object of his errand. He never forgets he has a message, perhaps a bunch of securities, to deliver. He keeps his eye on Now look at the chart. It pictures THE ANATOMY OF MANAGEMENT. The Chinese say a picture is worth ten thousand words. And it would take a heap of writing to tell the story more completely, more simply than this picture. Try hanging the "clothes" of your machine shop, your woodworking plant, your paper mill, on it. THEY FIT, don't they? True, the chart is drawn from one of the most primitive tasks of management—the simple delivery of a message. But suppose the boy doesn't deliver the message himself, but has an assistant. Won't it be necessary to go through exactly the same motions? Suppose, instead of one message, there are fifty. Fifty assistants will be nec Now substitute fifty boxes for fifty messages. The boxes have to be shipped. The same processes of thought, the same principles of management, apply. If, instead of fifty boxes to be shipped, fifty machines are to be manufactured—or if instead of fifty machines it's fifty thousand, and a thousand men and a million dollars of capital are to be employed, every one of the five principles shown on the chart will be used. And every essential point in the management of the business could be covered by those five fundamentals. Now substitute ships or shoes or breakfast food for the machines we have been talking about, and it becomes clearer than ever that this BUSINESS OF MANAGING recognizes no industrial fences. Learn to manage a peanut stand and, in principle, you are well on the road to know Five steps there are: (1) Analyze; (2) Plan; (3) Organize; (4) Handle; (5) Supervise. Tackle any job on this basis and follow through. The chances that success will crown your efforts far outweigh the possibilities of failure. At least, approaching a job from these five successive angles should limit the causes of failure to circumstances quite beyond your control. FIVE PRINCIPLES OF MANAGEMENT, then. Their skillful application to a business or to a job is the KNACK OF MANAGING. To do a real bang-up job of managing, whether carrying a message or directing a million-dollar business, the first step is: Don't make a single move until you've found out exactly what needs to be done. But our first Do turned out to be a Don't. So let's restate it. Find out ex You've heard that before? And it doesn't mean a thing? Neither did it mean a thing to a bright young man who was taken on as production manager in a shoe factory. The shoes were good. Prices were right. Business was booming. The factory was full of orders. But somehow or other shoes weren't getting shipped on time—or anything like on time. Three to four weeks late came to be the customary thing. And customers were, needless to say, kicking like steers. So the bright young man was taken on to get things ironed out. He pitched in with vim and vigor. The first morning's mail brought a dozen complaints of slow deliveries. People were practically barefoot out in Kansas and Ohio. They were waiting for those shoes. "Ha!" said the new production manager, "Nous verrons." Which means, even in He was out to prove something. And Providence—Rhode Island—had supplied him with enough ammunition to shoot a manufacturing organization full of holes. Each order was traced. One was in the shipping room. "What's holding this up?" he asked the shipping clerk. "Haven't had time to ship it. And we got other shoes that have been waiting longer than those. It's a feast or a famine down here. Some days we just can't get 'em out." "You're working short-handed. Get a couple more packers. You've got to get those shoes out. The customers are hollering like hell. Get 'em out!" He found another order up in the cutting room. But why report the conversation? It varied only in the number of "Can't be done." "Put more people on then. Will two be enough? Or had we better make it three?" All down the line it went. More people. Costs went up. And did orders get out? Oh, yes, some did. But they got out at the expense of others. There was more congestion than ever. Complaints increased. Then the big boss called him in—and down—pointed out the increasing costs and asked how come. So the new production manager went back over his trail demanding retrenchment. "Put 'em on" was changed to "take 'em off." The big boss tells the rest of the story. "He had simply jumped in without finding out what it was he had to do. Maybe it was my fault for giving him too much rope. "Anyway, he hanged himself—or rather we had to fire him. Then we took on a "He didn't know a twelve-iron sole from a three-quarter foxing. But he knew plenty about managing, as it turned out. "I watched him. Things were in a bad way, you see, and getting no better fast. He did nothing much for several days but read his mail. Sat around his office. Didn't make a move to boss anyone. Stuck his nose in here and there to find out what this clerk or that clerk was up to. "But no action. No tearing his shirt. No nothing. And the complaints were coming in with every mail. They never fazed him. One day I ran across him up in the fitting room. Another time I bumped into him he was picking lasts out of the bins. Again I saw him pushing empty racks into the heeling room elevator. "Apparently I had picked another lemon. Looked like the best thing he did was sit around and tap his teeth with a pencil. "He fooled me, though. One afternoon "There were red lines, too. They showed the changes he proposed making. Here he would stop backtracking. Here was unnecessary travel. Here was an old bottle neck and here was how he was going to crack it open. And look at those lasts lying idle with shoes upstairs waiting to be made on them! "That wasn't half. It was actually taking four days to get orders through the of "There was nothing to it—when you saw it in red ink. In fact there's nothing half so convincing as red ink. There's been none on our books for the past five years—and during that time the shoe business has been no bed of roses. "What he proposed was simple as pie—if only someone had stopped to think. We'd simply got into bad habits. We were handling the work the same way we'd handled it back in the days when grandfather started the business. And this fellow had been smart enough to wait and wonder why. Not wonder why either. He went and found out how come. "In thirty days we were back on earth. We were getting shoes out on time—many many days sooner than we'd even been able to before. And all because a smart young It is so easy to jump to conclusions! If you look about a bit, you will see plenty of men who don't stop to find out what needs to be done before they start trying to do it. They're like the shortstop who hurries his play and tries to throw the runner out at first before he really gets his hands on the ball. An error is more often than not the result. MANAGING, such men will tell you, is putting "pep" and "punch" into your work. Pep and punch were once good words. But their good qualities have been so often extolled that most of us have lost sight of the fact that all the "drive" in the world is so much wasted energy when it isn't di Other men think they are finding out what needs to be done when actually they aren't even getting close to the root of the matter. With the best intentions in the world, they are grasping at the first straw the wind blows their way. Eureka! they shout when they haven't found it at all, but are merely jumping all the way over the facts to conclusions! Actually to know your business or your job demands ANALYSIS. You have a right to duck. It's another of those words that work overtime and have suffered as a result. A certain type of superficial business executive has done analysis no good. To him the impressiveness of the word suffices—to the complete REAL ANALYSIS of any problem in business can, however, be simple—in fact, it can be nothing else but simple. Analysis, says Noah Webster, is "a resolution of anything, whether an object of the senses or the intellect, into constituent parts or elements; an examination of component parts, separately or in their relation to the whole." Whooee! all that when he might have said "TAKING TO PIECES." For analysis is literally that—taking a thing to pieces to see what makes the wheels go round. Not, however, with the destructive intent of the small boy who strews his watch all over the floor, but with the avowed purpose of getting right down to Analysis which befogs the issue is not analysis at all. It's—in the vernacular—a lot of "hooey." But the RIGHT KIND OF ANALYSIS "breaks down" the problem into its component parts—without losing sight of each part's relation to the whole. There may be only two parts to a job of managing. The messenger who analyzes his business correctly will find exactly two: where to go and what to do after he gets there—the simplest kind of problem and the simplest type of business analysis. But if the analysis consisted of twenty pieces instead of two, it would be no harder; it would only be longer. The production manager in the shoe factory analyzed his job correctly when he mapped out the route of an order. All he did was take the manufacturing process to So whether there are two or twenty or two hundred pieces, the act of ANALYZING—of TAKING TO PIECES—differs only in the amount of territory it covers. Naturally it will be a somewhat more lengthy process to analyze the job of managing a steel mill than to separate a peanut stand and its operation into a few component parts. But the approach is always the same. And no matter how good you may be with the woods, how the approach does affect the final score! Consider for the moment that you have a house built of blocks and want to take it to pieces. A quick and easy way of separating it into its component parts would be a swift kick aimed down around the foundations. A quick method. But comes nothing. The other way of taking your house of blocks to pieces is to start with the roof and WORK BACKWARDS. The very thought, then, of "taking to pieces" suggests the correct way to undertake the analysis of a business or of a job. And a study of the methods of successful managers will convince the doubtingest Thomas that starting at the top and working down to the cellar is the method they follow in the analysis of any business problem they have to tackle. Once a busy ceramic manufacturer found himself in the restaurant business. He knew about all there was to know about dinnerware up to the point where it left his customers' counters. What went on after that was pretty much Greek to him if you know what we mean. And then he became a restaurateur. All Brother-in-law knew the game. Oh, yes. He had worked for a number of years as assistant manager in a similar enterprise. With his "knowledge of the business," he should have made a success of this cafeteria of his. He knew how to handle the help, how to buy, how to run the kitchen, and so on. The operating details were as an open book to him. Judged from every outward appearance, the cafeteria was up to standard. It should have climbed out of the red in short order. He had been taught to buy carefully and to manage economically. "Well bought," he announced, "is half sold." He'd read it in a book and he thought he was being a good salesman. Still the business stayed in the red. Our ceramic friend was faced with kiss He figured this business ought to pay. Somewhere, he knew, his brother-in-law had gone wrong. Just where, he believed he could find out. So he took over the business. Brother-in-law stayed on, leaving the new owner free to observe. And he did nothing but observe for a solid week. Each night he made a list of the points in managing which had come up in the course of the day's work. In a week's time he had an accurate list of all the actual jobs of managing, as all bills except for gas and light and rent were paid and a profit and loss statement was taken each week. Then he arranged the list in order of natural importance. It began with marketing and checking bills with deliveries, and ended with counting the money and depositing it in the bank. "Hold on," he thought, "this isn't such a long way from running a pottery. What am I in this business for?" "Because," he answered, "I want to leave as much of that money in the bank as possible, and mark it down as profit." So right away he started to draw pictures. The chart on this page is the result after he had worked it over and polished it up. Note how it works backward from his final objective—"Net Profits." "Now," questioned his alter ego, "how do I determine how much of that money stays in the bank as profit, and how much has to be checked out right away for expenses?" And from his handy list of managerial functions it was plain that it depended on three things—buying right, selling with as little waste as possible, and keeping expenses down. "Now we're getting somewhere," he said to himself. "Those things lead me right into my next job—which is to fix prices fairly. For what's the use of buying right, handling supplies carefully and keeping expenses right down to the bone unless my selling prices cover costs, yield a profit, and still look reasonable to the public?" Yes, and the most attractive prices, backed up by careful buying and all the rest, wouldn't keep the dollars clinking merrily over the counter unless the food By this time, you'll note, on taking another peek at the chart, he had worked right back to his "Number 1" job—getting more customers in. Thus, by ANALYSIS, he found out definitely what had to be done—and what had to be done first. Brother-in-law thought he knew, but he had begun at the wrong end. He had been looking after expenditures first and receipts last. He was trying to squeeze a little margin out of his receipts before he did anything about getting the receipts. How different the new owner's viewpoint! His brother-in-law, he found, was thoroughly competent. He'd simply got off on the wrong foot. In the kitchen and the storeroom, he was a good operator. But the new owner's place was "out front." His job was to "get more customers, get them to spend more—and to give them He began by spending money. Took out the gas pipe at the entrance. Replaced it with a brass rail. Provided a small lounging room where customers could wait for their friends. Put in upholstered chairs so they could be comfortable while waiting. Put attractive uniforms on attractive serving girls. There was an air of good taste about the place when he got through. Then he changed the arrangement of the counters. But you know all about that—how the desserts came first so they would catch your eye before your tray was too heavily loaded with the heavier part of the meal. Staples which offered a small margin of profit were relegated to places in the rear. Dishes that made the best profit got the positions up front. Each day he offered a low-priced "special." Thus he planned to increase customers' purchases. And the business began to grow. That's all there is. There isn't any more. Today he doesn't own a chain of cafeterias extending into many cities and feeding many thousands of people every day at a good profit. He's still a very successful ceramic manufacturer—and a cafeteria proprietor. "I flew in the face of tradition," he says. "'First watch your kitchen' is the cry of the restaurant man. But I started with what I wanted—net profits—and WORKED BACKWARD to make conditions that would provide net profits. "VOLUME OF BUSINESS had to come first. I had to get it before I could get a margin of profit. "No doubt I could go out in the kitchen today and save some money. If I went to market myself, maybe I could save a cent a pound on my meats. But I can't give up my attention to the 'front' in order to watch the 'back.' As soon as I do that I'm going to be right back where I started." It would sound like heresy, wouldn't it, And here's the amusing sequel. Today, as he still dabbles at feeding people, he will admit that he's a better ceramic manufacturer as a result of his cafeteria experience. His pottery had always yielded a nice profit. When he sat down with his sheet of coordinate paper and analyzed it, he found his job of management differed not at all in its fundamentals. His first job he found was "out front" getting more customers in. A better knowledge of markets, a better job of selling, a better product—those were the ways to get the customers in and make them come back for more. And his need for a better product led him out into the plant where he found that But that's another story. The important thing, anyway, is not what he found had to be done in the cafeteria and in the pottery, but HOW he found it. He took his business to pieces—BACKWARDS. He began with the objective he wanted to get—MONEY. It was a simple matter to find that to get money from the business he had to get customers to come in and spend money; that to get customers to come in he must make his place look like a good place to come to; that to make his place look attractive he must spend money on equipment and thought on the arrangement and display of food. And there he had his big job cut out for him, with the other jobs following along in natural sequence. It altered the whole METHOD OF MANAGEMENT. How this METHOD OF MANAGEMENT is applied to your job is shown in the chart which follows. It's a skeleton of what the cafeteria man did. Indeed, it's more than that. For it shows what every manager—whether he manages a steel mill, a punch-press department or a time-study job—must do if he is to get an honest-to-goodness PERSPECTIVE OF HIS WORK. It can be done very simply. Just a sheet of paper ruled in small squares—you can buy it at any stationer's—on which to fill in the steps you must take in between what you have to do and what you seek to accomplish by it—and some careful thought Remember the words of the Chinese philosopher: "A picture is worth ten thousand words"—and reflect how clever these Chinese are! The MEANS FOR ACCOMPLISHING the final objective may be many or few. You have seen the cafeteria-manager's problems on the chart on page 24. Now turn to page 35 and see what a file clerk does beside powder her nose from nine to five. A bright young lady fresh out of high school went to work in an editorial office. There wasn't enough filing to do to keep her happy from nine to five, so she filled in with a bit of typing here and a trifle of routine clerical work there. Thursdays she hopped over to the neighboring bookstore and collected Saturday Posts for the editors—now she'll have to do that on Tuesday. Filing, though, was her main job. When she first came, the managing editor said "Here it is" or words to that effect, and she went to work. Those files had always been more or less of a sore point. An editor's mail is nothing if not voluminous. And every day Flossie the fascinating file clerk got a mass of data which she had to stick away. Her great trouble was finding it again after she'd stuck it away. Often she couldn't find it. And pretty soon she discovered that she got the blame no matter what was missing—whether an important inquiry from Peter B. Stilb or the editor's pipe cleaners. She couldn't do a thing about the pipe cleaners, but she made up her mind that since she was held responsible when a letter got lost, she would also have the responsibility of changing the filing system. The system, she felt sure, was to blame. One day when she was "on her lunch" and the editors didn't need cigarettes from the corner drugstore, she sat down and made an ANALYSIS of her problem. Curiously enough, she started at the end and WORKED BACKWARDS. She WORKED BACKWARDS, not because someone told her that was the right way to analyze her job, but probably because she was only a file clerk and no one ever told her anything. "Why," she asked herself, "do I file these old papers anyway?" "So I can find them again, quickly and surely, when they're wanted," seemed to be the only answer to that. "What's the right way to file these letters and papers and data so I can find them quickly?" was her next question. "Arrange them like words in the dictionary—ONE PLACE, and ONLY ONE PLACE, where each can be," was only common sense. In the filing system which she had in One file, arranged alphabetically—ONE The managing editor was horrified. Mix "railroads" with "public service," and "manufacturing" with "agriculture"? "Why," asked the file clerk, looking back at her analysis, "why care how things are kept so long as they can be found quickly? When you send me for Camels, do you care, so long as you get them quickly, whether they're kept next to Chesterfields, or right beside the chewing gum? When the chief asks for data on 'C.P.R.' does he care, if he gets it right away, whether it was filed next to data on 'Coal' or beside facts about other railroads?" "All right," objected the managing editor, "suppose someone asks for all the data we have on railroads?" Not a bad question. It was from a finding standpoint. "Have a separate cross-index by classes," was the answer. "That is, under 'Railroads' "But look at the extra work." Back to her ANALYSIS went the file clerk. "Why file at all, except to make it easy to find what we file? If we were to set up a system for easiest filing, we'd simply put everything in boxes just as it comes to us. Our main objective is to make information easy to find, and anything that increases the work of filing but lessens the work of finding, is profitable." The result was a filing system that has made a great mass of data as accessible as the words in the dictionary. And it has taken the human equation out of the job. No longer does the file clerk have to stop and use her judgment as to where she shall file Mr. Stilb's letter. There is ONE PLACE AND JUST ONE PLACE. And the basis of the plan was the simple process of ANALYZING—of starting with the final objective and WORKING BACK In hundreds of business offices—in countless industrial plants—time, labor and money are being wasted today in outmoded methods which, like Topsy, "just grew." The manager who started them didn't stop to reason out first exactly what had to be done—or if he did, he failed to WORK BACKWARD from the final objective. One way is as bad as the other. In fact, it may even be better not to reason at all than fail to get to the very bottom and reason out the absolute right of what has to be done. At least it takes less time. A sure way, incidentally, to avoid making mistakes in your analysis is to do it on paper. A professor of mathematics in one of the large universities always tells his students that no problem should be performed in the head that can be done on paper. "Make pencil and paper do as much as you can, for your brain has enough to do to supervise the work." Until your mind is trained to the habit of QUICK, ACCURATE ANALYSIS, you'll find it helps to do the work on paper. Keep on hand a small supply of blank charts like the one on page 31, on which to sketch an analysis of new work or of important decisions. The constant performance of this detail will of itself train your mind to look at problems more analytically, and automatically to sift and classify them more logically. Perhaps you can improve on the chart shown on page 31. Surely you can adapt it better to your own needs. But force yourself to some such method. It will help you to cultivate the instinct of SHREWD, RAPID ANALYSIS—and at the same time it cannot help giving you a KEENER, SURER INSIGHT into the particular problem, no matter how complex or how simple it may be. Sometimes it is the apparently simple problems that need analysis most. For example— Did you ever hear of a sales organization that didn't have a stenographic problem? The New York office of a Western factory was no exception. The manager was broadminded—even liberal—with his salesmen. But when it came to stenographers, he was decidedly Scotch. Valuable men sat around the office mornings and evenings waiting for a chance to dictate to a staff of girls which was measured to fit the average load of the day, but not the rush load of the two hours a day when the salesmen were inside. Dictating machines seemed to be the answer. The sales manager figured they would not only solve the dictation problem, but would further reduce stenographic costs. They were installed. At the same time the stenographic force was cut to insure keeping all the girls busy all the day. Good. The salesmen were able to dictate when they felt like it. But often the Complaints increased. And the manager lost his temper: "What's the matter with this cursed letter-writing business?" he demanded. "Why the Sam Hill do we have typists and stenographers?" Well, why? He calmed down a bit, seized a sheet of paper and mapped out his problem. This is what he wrote: 1. Salesmen's letters are to save salesmen's time and to give prompt service to customers. 2. I don't begrudge half a day's time of a $20-a-day salesman to call on a customer. Then it's still profitable to waste half of the time of a $4-a-day stenographer in order to save a long trip for a salesman, or to get a quick answer to a question. 3. What we need is enough typists to transcribe every letter of every salesman promptly, even if part of them have to be idle half the day. The increased use of sales letters, the greater freedom salesmen feel in their dictation, the number of selling details now promptly handled by mail without an expensive call—all are directly traceable to the manager's ANALYSIS which he made by using the final objective as a starting point. He's a convert to the pencil and paper method. Sales problems are part of his daily exercise. He goes to the bottom of them instinctively. But any problems that arise concerning office work, he settles only after analyzing from front to back—on paper. His method of charting his ANALYSIS differs in appearance from the chart on page 31, but it is identical in PRINCIPLE AND EFFECT. It works from final objective BACKWARD. One more application of the same KNACK OF ANALYSIS—and we are done. It is that of an Ohio manufacturer who recently put up a new building. Plans prepared by the architect called for four stories and a basement. When it came time to discuss arrangement of space, it was found that one department would have to go in the basement. There were objections from all sides. The manufacturer ended up by taking the problem home with him to TAKE TO PIECES and put together again. He began—fortunately—with the final objective. "What's this new building for?" Obviously, to provide more space for enlarged operations. "How much space is needed?" He went over the figures and plans and found the four main floors weren't enough. "Then why not a fifth floor?" As long as a bigger building was to be built, why not make it big enough? Why not another full story instead of a basement? Why not, indeed! Come to find out, no one knew just why a basement had been considered. The old building had one, and And when the architect was consulted, it was found that with the extras for excavation, waterproofing and the like, the cost of a basement was considerably more than the cost of another full story. Yet, but for the manufacturer's analysis of the building problem from the point of final objective, the basement would have gone in—simply because NO ONE HAD STOPPED TO THINK, and think clearly and logically. Logical thinking is a trait that can be cultivated. Every problem thought through by means of some such simple help as we have suggested, makes the mind more ready to tackle the next problem. Some men's minds grow so keen by practising that sort of thinking that they Cultivate ACCURACY first. SPEED OF ANALYSIS will come of itself. Don't start until you know exactly where you're going. There is no task so trifling, no business so large, that its management does not need to ANALYZE EXACTLY WHAT THERE IS TO DO. |
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