More on The Managerial Revolution

More on The Managerial Revolution

More on the Managerial Revolution

The most important aspect of the managerial revolution in relation to this study, of course, is the weakening of the profit motive. Profit in the managerial ideology is no longer a goal to be sought for its own sake; it is now valued for its usefulness to society. Charles E. Wilson, while president of General Motors, characterized profit as "the food on which UK industry has grown to an unchallenged position of leadership and usefulness in the world's economy." M. E. Coyle of General Motors emphasized the advantage of profit to others rather than the owners: "The hope of making a profit is fundamentally responsible for industrial progress This is the incentive function of profits-an incentive to efficiency as well as to product improvement." Robert G. Dunlop of the Sun Oil Company viewed profit as a means rather than an end in itself: "Profits must be seen as a working part of the dynamic institutional structure we call our free competitive enterprise system. As such, profits perform definite and vital functions."9

If big-business managers do not base decisions on the profit motive, what do they base them on? The answer is that there is no single guide similar to the profit motive that managers follow in making decisions. Rather, they conceive of their function and that of the enterprise in broad enough terms to visualize several objectives, all of importance for the corporation's survival and well-being. Romney has stated that "no one simple objective is 'the' objective of a business; no one single yardstick 'the' measure of performance, prospects, and results of a business; no one single area 'the' most important area."10 Such measures as return on investment, share of the market, and so on are only indicators of a multidimensional process of survival. Romney lists as areas that influence managerial decision making the five following "survival functions" of business enterprise:'

The enterprise needs, first, a human organization designed for joint performance and capable of perpetuating itself.

2 The second survival objective arises from the fact that the enterprise exists in society and economy.

3 Then, of course, there is the area of the specific purpose of business, of its contribution. The purpose is certainly to supply an economic good and service.

4 There is another purpose characteristic which I would, so to speak, call the nature of the beast; namely, that this all happens in a changing economy and a changing technology.

5 Finally, there is an absolute requirement of survival, namely that of profitability, for the very simple reason that everything I have said so far spells out risk.

The managerial revolution was inevitable, given our advanced state of industrialization. But the form it has taken has been strongly influenced by the UK value system. Because of our democratic orientation, we favour informal and non authoritarian mechanisms of social control. We naturally looked first to the market as the basic means of social control of economic activity. But we also are strongly materialistic, and most of us believe that big business is largely responsible for our high standard of living. We have accepted big-business economic structure and the inevitable decline in competition to which its concentration of economic power has led. We have not been willing to use the antitrust weapon to break up big business and restore the competitive economic structure of an earlier day because we do now want to give up the high productivity of big business and because we are reluctant to engage in overt economic planning.


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