Higher Education and Business Standards

by Willard E. Hotchkiss

After weeks of deadlock the strain of a distressing situation, losses from the interruption of business, regard for public opinion and the opinion of friends, combined with their own desire to do the right thing, induced the employers, probably against their best judgment, to recede from their position. An agreement was made providing for increased wages, standardization of piece-work, a preferential shop, and appointment by the firm of a person to hear grievances and to coöperate with a representative of the union in securing redress.

The union in this case was fortunate in being represented by a high-minded man who was a real statesman. The firm selected a trained economist as labor expert, and he soon had an employment department in operation. Together these men and their colleagues have kept peace in the concern and have developed and expanded the machinery for settling disputes into a model of industrial-relations organization.

Some four years after the strike the business head of the firm testified in a public hearing that he should scarcely know how to conduct his business without the organization which now obtains for dealing collectively with labor. He also in the same hearing expressed the view that a large employer is a trustee of the public, responsible for the measure of public welfare in which his business results; and this man, remember, is not a reformer or even a radical, but just a successful business man.

In this bit of labor history there were, no doubt, many fortunate but uncontrollable factors which, otherwise combined, would have brought a less happy result. But two things stand out: first, the laborers listened to wise counsel—they were well led; and second, the employers, when they consented to make an agreement, gave the plan adopted their genuine support. Combining good citizenship with business sense they were able to understand the new social influences that make the formulas of 1880 a poor gauge of efficiency factors in 1910. They are now enjoying the benefits of their willingness to learn.

The effect of social forces is seen under different circumstances and from an entirely different angle in the present halting policy of American railroads.[² ] Here, in addition to other social elements in the question, is the fact of definite government control. This circumstance has accustomed railway managers to look at both the internal and the public factors in their success. A number of years ago, before Mr. Justice Brandeis became a member of the Supreme Court, he pointed out, as many others have since done, that the railroads were looking too much to the government factor, and too little to the economy and effectiveness of their own internal administration. Even though we concede this point, it is still clear that the highest efficiency of our railroads must wait upon a clarification of policy with respect to the great social fact affecting railway operation—the fact of government control. We may not approve the precise manner in which the railroads respond to this fact, but obviously they cannot be efficient and ignore it.

Examples, ranging all the way from accepted and enforceable legal restrictions to the interplay of the most subtle group sentiments, could be multiplied at will to bring out the presence of the social factor in efficiency standards. Were it not that internal business policies, on the one hand, and public policy toward business, on the other, are so frequently vitiated by failure to reckon with the probable reactions which a particular measure will call forth, I should not retard the discussion to emphasize a point so obvious. But though the presence of social factors is obvious, how to measure them is not obvious. General principles that bear on a specific case are hard to locate and difficult to apply. Even the broad lines of social and business policy are not always clear, and the probable trend of future policy is still less clear.

Just what are the principles that are being worked put in order to determine the forms and the limitations under which business energy shall be expended, and how do they differ from those followed a generation ago? Take the other side of the efficiency ratio: toward what results are we trying to have business energy directed? Again, what are the instruments with which society is enforcing its purpose? How effective are they, how effective are they likely to become? Finally, what bearing will this social effectiveness or lack of effectiveness have on standards of business efficiency for the generation about to begin its work?

Even though we cannot answer these questions to-day, we have, to-day, the task of educating the generation that must answer them. More than this, the education we provide for the generation about to begin its work will determine, in no small measure, the kind of answers the future will give. It is, therefore, of great importance that in our ideals and our policies for educating future business men we should try to anticipate the social environment in which these men will do their work.

We are in the habit of speaking of the present as a time of transition—the end of the old and the beginning of the new. In a very real sense every period is a period of transition. Society is always in motion, but that motion at times is accelerated and at other times retarded. Clearly we are living now in a period of acceleration—a period which must be interpreted not so much in terms of where we are, as of whence we came and whither we are going. This means that we cannot hope to prepare an educational chart for the future without understanding the past.

In our study of business we are always emphasizing the "long-time point of view," and we fall back upon this convenient phrase to harmonize many discrepancies between our so-called scientific principles and present facts. On the whole, we are well justified in assuming these long-time harmonies, but it will not do to overlook the fact that many important and legitimate enterprises have to justify themselves from a short-time viewpoint. Of more importance still is the fact that in this country enterprises of the latter sort have predominated in the past. This circumstance has a very marked bearing on the nature of our task, when we try to approach business from the standpoint of education.