The Industrial Revolution led to radical changes in the way people work, socialize, engage in politics, and carry on their daily lives. Prior to the Industrial Revolution in Europe and the United States, most human labor was performed in relation to the soil. Artisans comprised a small segment of labor which was primarily confined to the cities and concentrated in the production of goods such as cloth, shoes, tools, and weapons. However, it was the advancement of technology in several key spheres that culminated in the rapid emergence and growth of industrial manufacturing.'
Foremost among the technological advancements was the discovery of how to derive energy from steam. The steam engine, as perfected by James Watt, provided a mechanism for obtaining cheap and efficient energy. Moreover, steam power allowed for the development of machinery that could lower production costs, produce larger volumes of goods, and ultimately provide for swifter transportation of those goods to markets. However, this could not be achieved without a readily available labor force. As factories based on the use of this new technology were set up, the need for greater numbers of laborers generated political tension in many European societies. With most of the laborers dispersed on farmlands, often working under conditions of virtual servitude to large landowners, attempts to reform society began to occur. Indeed, much of the political unrest in Europe during the 19th century was due to political power struggles between the aristocratic classes and a new emerging class of factory owners struggling to define the role that labor would play in the Industrial Revolution.
Ultimately, many of the peasants moved to the city to obtain work in the developing factories. As a result, human labor and energy were augmented by machines, and industrial development spread throughout Western civilization. However, an additional technological advancement was necessary in order for factories and industries to grow. While goods could be produced in greater quantities, at lower costs, and in less time, customers had to be available. Again, steam power provided the solution. Where a single city may have constituted the total market for the goods produced in a factory, railroads and ships powered by steam could now efficiently transport the goods over a much wider area to be sold to new customers. Hence, it was both the invention of new forms of energy for the production and transportation of goods and radical social changes that promoted the Industrial Revolution.
The rapid growth of factories posed management problems different from those encountered in pre-industrial organizations. The state could operate without competition or having to show a profit; the church could organize and manage its activities because of the devotion of the faithful; and the military could control large numbers of troops through a rigid hierarchy of discipline and authority. Managers of factories, however, had to find a different set of principles and techniques in order to be effective.
As an individual factory grew in numbers of employees, it became more difficult for one person to oversee the operation. The obvious solution to this problem was to hire managers to oversee parts of the production process. Yet trained managers were in short supply. Most of those employed as managers had to learn their position based on ad hoc problem solving. To complicate the management task, many laborers had not had access to education; thus, literacy was low as was the ability to perform basic mathematical calculations. Great amounts of managerial time were spent in providing oral instructions and demonstrations of tasks to be performed. The focus of managers, therefore, was more on directing subordinates than on coordinating and motivating the work force. The effect of this situation was a loss of production efficiency.
During this time, several individuals began to address issues of management both in practice and in writings. Two of the best-known theorists of this period were Robert Owen and Charles Babbage.
Robert Owen (1771-1858) was the owner of a mill in New Lanark, Scotland. He came to recognize that human resources were as valuable to the production of goods as were financial and material resources. Owen believed that factory workers would be more productive if they were motivated through rewards rather than punishments. He experimented with several motivating techniques and became a strong advocate for improving working conditions through increasing the minimum working age of children to 10 years, providing regular meal breaks for workers, and reducing the workday to 101/2 hours with no night work for children. While these ideas are widely accepted now, they were considered "too radical" by other manufacturers and politicians of that time. Frustrated by this opposition to his ideas, Owen left England for the United States and founded a communal township at New Harmony, Indiana, in 1824 which incorporated much of his philosophy. Many of Owen's ideas about the management of human resources were assimilated into a school of thought, referred to as behavioral theory, that emerged in the 1920s.
Charles Babbage (1792-1871) is considered a genius for his contribution to the development of the modern school of English mathematics, his application of mathematical principles to management, and his development of an "analytic engine" whose ideas are represented in the modern computer in the form of program control, microprogramming, multiprocessing, and array processing. Babbage's major contribution to management is his book On the Economy of Machinery and Manufactures, in which he described in great detail how mathematics could be applied to problems of inefficient use of materials and facilities.' Many of his ideas would be incorporated both in classical management theory and in quantitative management theory, which were espoused in the 1900s. Babbage also had a strong understanding of the importance of human resources as related to efficiency. He advocated profit-sharing plans and bonus systems as ways to achieve better relations between management and labor. Despite the significance of his contributions, Charles Babbage was considered by his contemporaries to be eccentric, if not on the verge of lunacy. Upset by the noise made by organ grinders on the street outside his house, he would counter by blowing a bugle in front of his house, much to the dismay of his neighbors. One friend noted that "he spoke as if he hated mankind in general, Englishmen in particular, and the English government and organ grinders most of all."'
Despite the work of Owen and Babbage, it was not until the late 1800s that owners and managers began to raise concerns about the problem of material and human inefficiency. By this time markets were becoming saturated and competition for greater profits had intensified.