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20 MANAGING KNOWLEDGE WORK AND INNOVATION

After leaving Midvale, and carving out a career as an independent consul-
tant, Taylor carried out some of his first systematic studies around 1898 at the
Bethlehem Steel Corporation in the United States, with impressive increases
in productivity. His most famous study (a story that he rewrote several times,
each time with more impressive results) was of a Dutch pig iron handler called
Schmidt. At the start of his studies, 75 men were loading an average of 12.5
tons per man per day. Schmidt followed Taylor’s simple but detailed instructions
regarding when to load the pig iron and walk and when to sit and rest, with
no interaction with other workers. By following these instructions specifically,
Schmidt increased his output to 47.5 tons per day. He was able to maintain this
output for three years of studies and received a 60 per cent increase in wages
compared to his peers (Taylor, 1911).
Following the impressive results at the Bethlehem Corporation, other firms
were keen to apply Scientific Management principles. However, the improvements
in productivity were accompanied by widespread hostile reactions from workers
because the work was inherently boring and left workers little or no latitude to
apply their knowledge and skills. In addition, in many firms management chose
to introduce the principles rather selectively to reduce the number of workers
required and, because the skills required were now simpler, cut rather than
increase wages. This often led to strikes such that the Federation of Labor came to
vehemently oppose Scientific Management. In 1911 a House of Representatives
Committee was set up to investigate Taylor’s methods, concluding that Scientific
Management did provide useful techniques for the management and organization
of work. However, because of continued hostility and significant concerns about
the potential for industrial unrest in arms factories in wartime, congress banned
the adoption of the approach in the defense industry.
Despite this knock–back, Henry Ford applied and further developed Scientific
Management principles for the production of cars. At the turn of the century,
highly skilled craftsmen had been employed to build cars using handcrafted parts
manufactured on general-purpose machines. However, with the introduction of
Scientific Management and rationalization at the Ford automotive plant, single-
purpose machines were introduced on which anyone could be easily trained to
produce standardized parts. The knowledge and many of the skills required to
build a car had in effect been embodied in the machine. However, workers still
controlled the speed of production. It was not until Ford developed the concept
of the assembly line, still used today – where the car moved past the men, instead
of men moving past the car – that Ford was able to achieve what he considered
to be total control of the production process.
Importantly, Taylor and Ford both had very instrumental views of human
nature, believing that workers were purely rational, economic beings motivated
solely by monetary incentives. They therefore believed that management–labour
relations could actually be improved because workers would have the oppor-
tunity to earn more (but not too much more) money in return for gains in
efficiency. However, these beliefs were fundamentally mistaken and as worker
fatigue and boredom set in, absenteeism rose significantly and the quality of

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