Early Theories of Production

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Theory of production, i.e. invariable knowledge and models to assist the fabrication of more than one product, has probably existed since times immemorial, but in the beginning people did not deem it worthwhile to write it down. Only scattered mentions of such theoretical knowledge can be found in documents that have survived from antiquity. Most of these relate to only one type of products - buildings - but its study is interesting enough because building is a large project and the best available expertise has usually been consulted when planning its arrangements.

Without going into detail it is possible to discern a few general trends of development in the organization and theory of production from antiquity until present:

Earliest Arrangements of Production

Roomalainen arkkitehti

229. If a builder build a house for some one, and does not construct it properly, and the house which he built fall in and kill its owner, then that builder shall be put to death.

233. If a builder build a house for some one, even though he has not yet completed it; if then the walls seem toppling, the builder must make the walls solid from his own means. (From Hammurabi's Code of Laws, translated by L. W. King.)

(Text of this paragraph exists only in Finnish)

Munkit arkkitehteina

Scientific Management

Beginning in the Renaissance, the occupations involved in the design and fabrication of products were gradually split into more and more specialized professions. Finally it became clear that a similar evolution on the principle of the division of work was going on everywhere in industry.

One of its first advocates was Scottish economist Adam Smith. In the book The Wealth of Nations (1776) he pointed out how specialization tends to develop skill, dexterity, and innovations. Moreover, it saves the time lost in changing from one kind of work to another. To this list of blessings English mathematician Charles Babbage (in the book On the Economy of Machinery and Manufacturers, 1832) added that dividing the task into short operations allows paying lower wages for the easier tasks.

In 1913, Henry Ford put the work division theory in practice and introduced an assembly line in his car factory, thus reducing the time to assemble a car from 12 hours and 28 minutes to one hour and 33 minutes.

According to the theory of scientific management each supervisor and manager is expected to have a total view on the process of fabrication, define its objectives and steer daily work so that the targets are met.

Most of the objectives are usually economic, such as productivity and profitability, see Optimizing Production. When production is looked from economic point of view, it can be presented, for example, as the diagram below.

Manufacture as process

The model depicts two principal processes of a productive enterprise. In the top half, the material operations (green arrows) start from the box of the workers, continue into production and to the customers on the right. The lower part shows the financial procedures (yellow).

Methods of economic management include budgeting the incomes and expenditures of production, setting objectives for the productivity of the most important operations; follow-up, measurement and reporting of all of these; and comparing the reported statistics to the agreed objectives.

Productivity Standards are instruments for setting targets. They define the productivity of normal good pace of work, measured as work hours per manufactured unit, under various circumstances. The statistics to base the standard on can either be obtained from the factory's wage payment files, or a researcher may collect them with the help of time study (or "work measurement") with stop-watch or similar methods. The statistics may also be collected in co-operation by several or all the industries in a given branch of manufacturing in a country. The underlying theory was first developed in 1881 by Frederick W. Taylor, chief engineer in the Midvale Steel Company where he had started three years earlier as an ordinary laborer.

Around 1910, Frank B. Gilbreth and Lillian M. Gilbreth amplified Taylor's time measurement methodology with motion study i.e. by recording on motion picture film the exact work routines used by workers. The researchers then continued with work methods design, trying to find ideal methods of doing the work. The combination of time study and motion study is often called Motion and Time Studies or Methods Time Measurement (MTM).

Management by objectives is an arrangement where each employee agrees with his or her superior on the objectives for the next period's work in advance. Though most objectives are economic, the supervisor has also good possibilities for expressing which other aspects in the activity are important from the company's point of view, and the employee gets more freedom in planning how the work is done. This arrangement persuades both parties to contemplate the purpose of the work and the means that are most effective to fulfil the agreed goals.

Management by objectives became very popular at the end of 20 century. Its weak point is that it is too easy to overlook quality of the products and other such goals of production that cannot easily be measured, which means that these goals should receive the special attention of any researcher that assists in developing a system of management by objectives.

Timing of production

The goal in time scheduling of manufacture is to integrate all the tasks in the chain of production so that no unnecessary waiting occurs and each task is given enough time but no more. Methods of scheduling include the standards of productivity and task programming techniques such as Gantt and PERT diagrams, like the diagram below, and the critical path method.

PERT diagram

Explicit scheduling is indispensable especially in the case that the product consists of several parts that have to be made in different places. Besides, in many fields of production the company gets an advantage over competitors if it can deliver the product quickly. This goal can sometimes be achieved by concurrent engineering, i.e. overlapping some phases of the production, as in the Gantt diagram below.

Overlapping tasks

Setting targets for timing is a powerful technique of management because it is easy to define exact timing targets and follow them up. Targets thus often are attained successfully, but there is the usual risk of management by objectives - forgetting those goals that cannot be measured.

Another trap to be avoided in programming is that in the initial enthusiasm of a project the objective for timing can become too tight, which can then spoil the possibilities for doing high-quality work. Especially the design phase of products often necessitates a period - the length of which may be impossible to foretell - of subconscious maturing of the proposal, and if it is not allowed an optimal design proposal is perhaps never found.

Psychology of Work

Neither one of the two above mentioned targets of scientific management - economy and speed of production - belongs necessarily to the highest aspirations of a modern employee. What the employees then really expect of their work, has been the object of some recent studies.

Motivation Maintenance

One of the first studies was initiated sometime around 1943 in the IBM Corporation. As a conclusion the president of the company proposed that the monotonous tasks of fabrication be enriched by making them more varied and thus more interesting. The new policy was soon to be called job enlargement.
At first, the performed changes were not spectacular. At the IBM, they entailed only enhancing the machine operator's job by such extra responsibilities as machine set-up, tools sharpening and inspection of the product.

The results of the IBM experiment were reported as:

  1. Better product quality. The reason apparently was the greater responsibility taken by the individual operator for the quality of his work.
  2. Less idle time as it was simpler for the operators to do all the work themselves than it was to call the set-up man or inspector to do their part.
  3. The new arrangement introduced variety, interest, pride, and responsibility to the work and thus improved the contentment of the workers.

Since then, job enlargement principles have been carried out in a multitude of industries. One of the best known examples was the new Volvo factory at Kalmar, Sweden, in the 1970s.

Up to the 1980s, the development of the organizational principles of the factory or the office relied heavily on the inventiveness of the management. Now, in many enterprises, there are permanent employer-employee committees for the job of conceiving and evaluating development projects of production methods. A researcher is often appointed as the secretary of such a committee. Such arrangements help finding the areas where changes are needed, and they also simplify carrying out the reforms.

Another process of development started from an investigation in the Hawthorne (Nevada) works of the Western Electric Company, in 1927. The goal was to study the effect of varying the intensity of illumination on the production of the workers. The results, however, showed that whether the lighting was made brighter or dimmer, the production increased. This led to a series of carefully designed studies during a period of five years, in which other questions, like the lengths of the working day and of the rest periods, were also studied. Some test persons were moved to a separate test room next to their earlier workplace, the huge assembly hall. Several experiments were discussed with the workers, and their co-operation was sought.

The results of these studies were quite opposite to the researchers' original assumptions. The output of the work increased at every step along the way. The supervision could be cut down. Work contentment increased, sick absences decreased to one third, other absences even more. The workers' health was maintained or improved.

The workers had no clear idea as to why they now produced more, but as shown in the replies to questionnaires, "there is the feeling that better output is in some way related to the distinctly pleasanter, freer, and happier working conditions" (from the research report, quoted by Barnes, p.573).

In other words, the illumination, the length of the rest periods and the length of the working day were of minor importance to the workers, compared with the motivation they received from being the centre of the researchers' attention. They had the feeling that they were important to the enterprise. This type of reaction to an experimental design has since been known as "Hawthorne effect".

The Hawthorne studies launched many new investigations on workers' needs and human relations. In 1943 Abraham Maslow presented a theory (A Theory of Human Motivation) of the hierarchy of human needs. He arranged the basic needs in a series according to how essential their fulfilment was. Maslow thought that after the most urgent need is satisfied, it will be forgotten and the next level of needs then becomes the motivator. Maslow's hierarchy is as follows:

  1. Need for survival: air, food, and shelter.
  2. Need for security.
  3. Social needs: group acceptance, friendship, and belonging.
  4. Egotistic needs: self-esteem, self-respect, self-confidence, and recognition by others.
  5. Self-fulfilment needs: realizing one's own potential, being creative.
Maslow's classification strongly influenced later research, but it soon proved to be too rudimentary. Similarly, the two theories proposed by Douglas McGregor (1960) on the two styles of motivating workers were found a bit overdone: Frederick Herzberg (The Motivation to Work 1959) arranged human motivation factors into two groups: "dissatisfiers", and "satisfiers". These are not simply opposites, but rather like sensations in the same way as pain and pleasure. His empirical studies revealed that the strongest satisfying factors, or motivators, all had to do directly with the person's particular job: Potentially negative factors in motivation are: The manager should see to it that these do not annoy the worker, but even when they are arranged ideally they alone cannot motivate the worker. That is why Herzberg did not call them "motivators" but maintenance factors or hygiene factors.

Motivation factors

On the basis of the theory by Herzberg et al., hundreds of surveys have been conducted at various work places. M. Scott Myers ("Who Are Your Motivated Workers?") interviewed 282 workers at a Texas Instruments plant, concluding that the classification proposed by Herzberg was valid there as well. On the right in the picture above, you will find the percentages of different motivations factors. It can be seen that some factors are almost exclusively positive, whereas others are negative, and some are both. It was also found that workers could to a certain extent be divided into two groups: those to whom it was more important to receive plenty of positive motivation, and others to whom avoiding negative motivation factors was more important (motivation seekers vs. maintenance seekers).

Research of motivation, or "human factors" of work has since continued until our day, and on the basis of its findings many improvements have been made in the conditions of work. Nevertheless, the satisfaction of employees has not generally increased. The reason perhaps is that the expectations of employees have ascended simultaneously.

Theory of autonomous groups

Many people have today great confidence on science, and when encountering a problem they often think that the best method is starting a project and hiring a competent researcher. However, there is still an alternative method, albeit ancient, where the existing team itself takes care of its working methods and updates them so that problems never spring up or, when they do, they are taken care of and removed. Such an autonomous team itself detects the sprouting problem, works out a remedy for it and modifies accordingly the working routines of the team. When the team belongs to a larger organization, great changes in its operation must first be accepted by the management and those other departments that are involved, of course.

Autonomy is no absolute state of affairs, on the contrary there are several grades of it:

  1. No autonomy: the administration can make all the decisions and it does not ask anybody any questions. For example, if somebody is both the director and the owner of a company, he is able to make the decisions without asking anybody's opinion.
  2. Representative democracy. Parliaments and elected town councils are examples of representative democracy. On the business side we have the shop steward system and the company joint committee system. In this type of participation we might use the above mentioned methods of development modified by the addition of a steering group which includes representatives from both parts.
  3. General open meetings with the employees, before important decisions are made by the management. However, there is no autonomy if the administration has already in advance decided on all the pivotal questions.
  4. Joint decisions. The classical example was the Greek city-state. Today this type of development is used in some small co-operatives. Modern networks technology could make it possible in larger organizations, too, even including the state and the local government.

The theory and practice of autonomous groups was first developed by Kurt Lewin (1890-1947). They are especially useful in the case that a permanent team of an organization has encountered so difficult problems in their daily work that the team or its leader cannot solve them. A suitable method in this case is Action Research, the theory of which is explained in the paragraph Action Research and Theory.


Beside the above-mentioned, there are a few other paradigms of theory that are today being applied to industrial production. These are discussed on another page, Theory of Production.

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August 3, 2007.
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