MANAGEMENT II 1. The function of management. § 2. Direction of simple and in terrelated groups. # 3. Selection of managed and of managers. § 4. Division of labor in management. * 5. A large commercial policy. f 6. Obtaining of capital. § 7. Profit-seeking borrowers and the rate of inter est. § 8. Buying materials and labor. # 9. Various policies to up build the personnel. § 10. Management of technical processes. § 11. Management of men. § 12. The right proportioning of the factors. f 13. Adjustment of production to changing conditions.
§ 1. The function of management. The owner of a fund of purchasing power can not leave it to invest itself. The primary function of enterprise is the choice of a business in which to invest; the next, and essentially last function, is to provide competent management. Every act of labor and every use of goods calls for some decision and direction. This is management, which is one of the forms and aspects of labor, quite easily distinguishable from mere physical action. In the simplest kinds of individual production the amount and quality of the goods obtained depends on intelligent choice often far more than on physical force. Even for the solitary worker the choice of the right time, kind, place, and method of work is most important. The first thing Robinson Crusoe did was to go to the ship and to save as much as possible of the cargo before it was dashed to pieces by the waves. If he had begun first to till the soil to provide a future supply of food it would have shown foresight, but very poor judg ment. Every moment of delay in recovering the cargo of the wrecked vessel cost him many useful materials. The humblest farmer has a great range of choice and a need of 327 good judgment in fixing the time to sow, to reap, to do each simple task. There is the same need to-day for small pro ducers of all kinds, whether shopkeepers or blacksmiths, to make wise choice of time in the use of their own labor. There is also a wide range of choice in the distributing and com bining of labor, agents, and materials. A limited supply of agents can be used to secure a variety of goods, more or less desirable. There is a choice in ways and methods by which a thing may be done. There are many wrong ways, there is but one best way, at any stage of industrial progress. While
most work is done in customary ways and little independent judgment is required, yet in every kind of industry new prob lems constantly arise and call for the exercise of choice as to methods. Moral qualities are continually called for, such as control of impulse and the giving up of the comfort of the moment. The wisdom of our fathers is embodied in a multi tude of proverbs that suggest the wise course. Men must "make hay while the sun shines," and "plow deep while slug gards sleep." But virtue fails less often from lack of knowl edge than from lack of will. As men differ in judgment, character, and will-power, their products differ, even in the simplest circumstances. The ability to choose and to do wisely is an element in personal skill in every economic activ ity. This quality in the man is managing ability, and the action of directing economic activity is business management.
§ 2. Direction of simple and of interrelated groups. When men work in an associated group, the direction of effort becomes relatively more important. The first and simplest advantage of association is working in unison. Men unite their muscular efforts for a single task, and accomplish what is impossible to them working singly. There must, how ever, be a foreman to call out "heave ho," or to lead the song, or to set the stroke for the oarsmen. When many are work ing together, good judgment in the selection of time and way yields larger results and a mistake wastes more materials and agents than when each works for himself. If association is to yield its advantages, it must go further than working in unison at a single task; there must be division of labor, hence harmony of effort, hence agreement and direction within the industry. While the gain of well-directed association is large, the waste of ill-directed effort is greater when specializa tion has taken place, than with isolated workers. Most com munal societies have failed because of the lack of a good head. The few exceptional successes have been due to the presence of a man of superior ability, such as George Rapp of the Har monist Community, who, had he lived in this day, could have easily become the head of a great business corporation.