Not the least important factor to be bought is labor of every grade. The more successful business men are not found usu ally paying less than their competitors for the various grades of workers. Success is due rather to utilizing the services so as to make them more effective. The chief executive of a large business must have a knowledge of men, ability to judge of human nature, to select his subordinates, and to animate them with his own purposes and plans. Andrew Carnegie has said that an appropriate epitaph for himself would be, "He was a man who knew how to surround himself with men abler than he was himself." This seems too modest ; but in a sense it is not, because he claims for himself, and justly, the highest of all industrial qualities. A great administrator in politi cal or industrial affairs can dispense with everything else rather than with this, the supreme, quality of the great exec utive.
§ 9. Various policies to upbuild the personnel. Different policies for developing the personnel of an organization are followed in different enterprises. In some there is "inbreed ing," always promoting from those in the establishment; in others this policy is followed in the case of all minor places, but higher positions are filled by getting "new blood" from outside; in others, the best man is chosen wherever he may be found. There are advantages in each plan and correspond ing disadvantages. In general a small organization needs to look outside for new blood, and a large organization can more safely fill its higher positions from its own staff.
Favoritism in appointments very quickly causes the degen eration of the management of any organization. The inferi ority of public industry must be largely attributed to political favoritism, involving the spoils system with its usual accom paniment, insecurity of tenure. Every government, national, state, city, and county, has a good many business matters to attend to. In Germany, where the municipal governments have been such models of efficiency, the policy in engaging managerial ability is much like that of good corporate business in America. The mayor is a professional business manager, who prepares for the work as he would for medicine or for engineering. A city employs a mayor who has had experience and has shown success in the administration of a smaller city in any part of the empire. A beginning has been made in America in calling men from other states, to serve as munici pal experts or to be heads of some state enterprises, commis sions, and institutions (such as public school system, state university, prisons, philanthropies, etc.), and this use of the merit system is extending in the national service of health, forestry, irrigation, etc. This policy must develop if the pub lic service is to become efficient.
Private business is not immune to the disease of favoritism, which in some of the railroads and of the industrial corpora tions is a serious hindrance to efficient operation. It is said
that in some parts of the country getting even a minor position on a railroad depends upon having a "pull" with an official ; directors provide their poor relations jobs as brakemen and conductors. The efficiency of American railroads in general, however, is doubtless due in large part to the wide open market for talent in management. A good shop foreman or a good master mechanic in any part of the country may hope to get a better position either on that road or on another. And to make a success as a division-superintendent or as president on a small road is to become a possible candidate for a larger superintendency, or for a vice-presidency or for the presidency of one of the larger systems.
§ 10. Management of technical processes. The factors bought—equipment, materials and labor—are to be skilfully and economically combined to secure a product worth more than it cost. Indeed, the very buying of them in certain quantities and of certain qualities implies and requires a de cision more or less exact, as to how they will be used. For the performance of this task of combining the factors the management must have, somewhere in the personnel, adequate technical knowledge of methods, processes, and materials, and experience in the art of applying the knowledge. In small undertakings, the owner-manager must personally embody these qualities, but in more complex organizations the chief executive may do without all but the broadest knowledge and ability to judge of the results of different processes, and to compare different plans. The technical knowledge of details must be supplied by numerous specialists, working under his direction—engineers, draftsmen, pattern-makers, chemists, me chanics, efficiency-experts, cost-accountants, etc.
§ 11. Management of men. The management must, with whatever aid it can get, choose the general processes to be used, the kind of machinery, the order and arrangement of it, the kinds of material, etc., and the various technical proc esses, chemical and mechanical, by which these are to be manipulated. Not less important, the management must choose and direct the corps of workers. Workmen must be selected with a due degree of skill, but not of a grade of skill, and therefore of wage, higher than is needed for the task. In a small business a manager's tact in handling men is one of the most important qualities, and, as the organization grows, foremen with managing tact must be hired. In one, it is a genial manner that wins the affection of the men; a sense of humor and ability to turn a joke smooths many a difficulty and is said to have obviated many a strike. In another, a dignified but sympathetic attitude toward the men is equally effective.