Higher Education and Business Standards

by Willard E. Hotchkiss

Business standards must be discussed from the standpoint of efficiency, but efficiency needs to be interpreted. We may as well admit at the start that the efficiency ideal is not entirely in good repute at this moment.[¹ ] If I may import an expression from England, we have been somewhat "fed up" with efficiency during the recent past and the ration has been rather too much for our digestion.

Away back in the eighties, before the dominance of business in American society had been questioned, efficiency, as the term was then understood, had a place among the elect; it was the intimate associate of business success. Then came the muck-raker, and with him came also anti-trust cases and insurance investigations. We turned our attention to labor outbreaks, to graft prosecutions, and to land steals. We talked about "malefactors of great wealth." We even became interested in Schedule K. And so, during the first decade of the new century a whole train of revelations, incidents, and phrases tempered our regard for business and brought many business practices under the ban of law and hostile sentiment. Efficiency was in bad company and suffered in reputation.

But efficiency was able to prove an alibi; we were told that the thing which posed as efficiency was not efficiency, but special privilege, and we were again persuaded of the great service a regenerate and socialized efficiency could render. Just at this point came the outbreak in Europe; efficiency was again caught in bad company, and we began to hear such phrases as the "moral breakdown of efficiency," "efficiency, a false ideal," and others of similar import. In an article bearing the title, "Moral Breakdown of Efficiency," published in the "Century" for June, 1915, it was maintained that pursuit of efficiency had led and was still leading civilization on a downward path.

In addition to the reputation of keeping bad company, efficiency has to bear the odium of many foolish and inefficient deeds performed by its self-appointed prophets. The quest for efficiency has called forth in business a new functionary known as the "efficiency expert." Many of these men have done a vast amount of valuable work, but many others have not. While the real expert has been raising the level of business organization, the others have been piling up a large wastage of poor work and lost confidence.

But these are side issues. The main fact stands out above them. We have been steadily adding to the burdens on industrial and commercial equipment; even more have we increased the stresses and the strains on human life. A devastating war is now suddenly taking up the slack, and the slow and painful task of making the world efficient must be hastened in order that society may bear the load. In these circumstances we need not apologize for making efficiency the main support of business standards. Nor need we assume, as does the author just cited, that the efficiency ideal in any way conflicts with the ideal of moral responsibility and service.

Of course, if we reflect, the abstract and impersonal thing which engineers define as the ratio between energy expended and result obtained has no moral quality in itself. Whatever of morality or lack of morality the word "efficiency" calls forth is given to it by the manner in which the terms of the ratio are defined. It is for society to make the definitions. Society may determine the forms and the limitations under which it will have business energy expended, and it may decide what are the social ends toward which it will have business effort contribute. Guided by wise social policy, efficiency and service go hand in hand.

Since business is subject to control by society, it follows that the efficiency factors in a particular business, in a whole industry, or in business generally, must adjust themselves to the decisions that society has made, and they must also take account of decisions that it may make in the future. And these decisions are not all recorded in the law or even in the vague thing we call public opinion. Laws and opinions of particular groups, group morality, individual morality, even inertia, and a long list of more subtle and often capricious reactions are channels through which social purpose finds expression.

It is worth our while to consider how these reactions may affect practical administration. No reflection is needed to see that in proportion as business men fail to take account of forces outside the business, in that proportion they are likely to miscalculate the results of business policies. Striking examples of such miscalculation are found in the experience of Mr. George M. Pullman back in the nineties, and of Mr. Patterson, of the National Cash Register Company, a decade later. Each of these men, with apparent good faith, undertook to surround his laborers with conditions of physical, mental, and moral uplift, and each undertook to do it as an act of paternal bounty. Each of them, as far as we can judge, expected appreciation, gratitude, and increased efficiency. But they failed to take account of the group consciousness of their laborers; they did not know what the laborers were thinking; and because the laborers were thinking something different from what the employers thought, policies intended to arouse gratitude aroused instead resentment and a strike.

But there are many things besides too much paternalism that may result in a strike. Another concern of international dimensions and one whose officers, I can vouch, are men of high character and public spirit, also found itself confronted with a strike in 1910. This was a highly organized business. For years its sales department had tried to seek out the highest grade of talent, and the result was a selling and distributing organization that was the model and the envy of competitors. But questions of employment seem to have gone by default, the general policy being confined to a sincere but vague good-will toward employees and acceptance of things as they were.

The issues of the strike were issues with which we are all familiar. On the workers' side, grievances and no workable machinery for redress; result: organization, concerted group action, force. On the other side, there was a personal readiness to hear grievances, coupled with insistence on the ancient right of the employer to conduct his own business in his own way, without interference from employees or the public.