Part 1

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THE KNACK OF MANAGING

by

LEWIS K. URQUHART and HERBERT WATSON

Published by Factory Management And Maintenance 330 West 42nd Street New York City, N. Y.

330 West 42nd Street New York City, N. Y.

I

Analysis

Someone once said--probably it was Mr. Schwab--that given the right organization it was no harder to manage the U. S. Steel Corporation than to operate a peanut stand.

And Mr. Schwab ought to know, although no life-sized portrait of him all dressed up like a peanut vendor has ever been brought to our attention.

However that may be, his statement is interesting--especially interesting because his appraisal of the job of managing very nearly approaches ours. In "The Knack of Managing," you see, much of the emphasis will be on the fact that the fundamental PRINCIPLES OF MANAGEMENT apply to every business alike. And if we may start out with the premise that managing Mr. Schwab's Bethlehem Steel Company is not such a far cry from operating a pretzel plant or a furniture factory, our battle is already half won.

THE PRINCIPLES OF MANAGEMENT vary not at all, however different may be the MECHANICS OF APPLICATION.

How often the editor, how often the equipment salesman, listens to that time-worn tale of woe: "My business is different. So-and-so can do that sort of thing. But I make gadgets--and your conveyors, your air conditioners or whatever it is you write about or sell, won't do me a bit of good."

_Of course_ his business is different--different in its individual characteristics, its financial, sales, production, labor problems. But they are only the CLOTHES the business wears. They may differ from the clothes of another enterprise as widely as the frilly importation from the Rue de la Paix differs from the sleazy issue of the East Side sweat shop. But underneath the clothes the artist knows there is the human body--and a study of anatomy is necessary before he can paint the picture. Beneath the "clothes" of the business are the principles of management--The ANATOMY OF MANAGEMENT--the framework upon which the completed structure is built.

Doesn't it all boil down to something like the Colonel's lady and Judy O'Grady? One, presumably, wore a brief peignoir with a Paris label; the other, a substantial bungalow apron from a department store basement. But weren't they "sisters under the skin"?

Stripped of all the furbelows--the details of operation, of tools, of materials--the objectives of our steel master, our peanut vendor, our pretzel maker, our furniture manufacturer, are one and the same thing. Their every-day job, in short, is to _get something well done with maximum dispatch and at minimum expense_.

That's management's job. It goes for every type of enterprise; whether it involves the use of a million dollars' capital, or only ten cents' carfare--or a few minutes of a man's time. The "clothes" matter not at all. Beneath them the fundamental steps in managing are identical. The basic KNACK OF MANAGING is the same.

Consider one of the simplest forms of business enterprise--the delivery of a message. The errand boy--if he's worth his salt and is really _managing_ his job--does in principle exactly what the general manager of the glass plant, the automobile factory, the textile mill, does when he comes face to face with _his_ problems. _In principle_, mind you.

FIRST--this is the errand boy managing his job--he settles in his mind exactly where he has to go. Not just over to Federal Street--but to 63 Federal. In a word, he ANALYZES THE BUSINESS or the job to be done. ANALYSIS, then, is the first step.

SECOND--he figures out the shortest, most economical way to go there. In other words, he PLANS THE DOING OF THE JOB for the least expenditure. PLANNING is the second step.

THIRD--shall he walk or shall he ride? Shall he do the work himself? Or shall he hire someone else to do it for him? His third step, you see, is ORGANIZATION. He organizes the handling of his work. The "right organization," said Mr. Schwab----

FOURTH--he must get service. There are other errand boys. There are elevator men, office boys to meet and get along with if he is to execute his errand with the greatest dispatch. Now, you see, he's HANDLING THE HELP. The manager of the piano plant, the agent of the cotton mill, would call that phase of his job INDUSTRIAL RELATIONS.

FIFTH--All the time he's planning, going and doing, he never loses sight of the final object of his errand. He never forgets he has a message, perhaps a bunch of securities, to deliver. He keeps his eye on the parcel he's carrying. He gets a receipt before he lets go of it. In other words, he SUPERVISES AND CARES for his business. The manager of the shoe shop, of the furniture factory, never forgets the final objective. After all, it's PROFIT.

+---------------------------+ | Analyzing the Job | +---------------------------+ /\ / \ / \ / \ +--------------+ +---------------+ | Planning the | | Organizing | | Operations | | the Work | +--------------+ +---------------+ \ / \ / \ / \/ +-------------------------+ | Handling the Help | +-------------------------+ | | +-----------------------------+ | Supervising and Conserving | | the Business | +-----------------------------+

Now look at the chart. It pictures THE ANATOMY OF MANAGEMENT. The Chinese say a picture is worth ten thousand words. And it would take a heap of writing to tell the story more completely, more simply than this picture.

Try hanging the "clothes" of your machine shop, your woodworking plant, your paper mill, on it. THEY FIT, don't they?

True, the chart is drawn from one of the most primitive tasks of management--the simple delivery of a message. But suppose the boy doesn't deliver the message himself, but has an assistant. Won't it be necessary to go through exactly the same motions? Suppose, instead of one message, there are _fifty_. Fifty assistants will be necessary. Will the job of managing vary a jot--or even a tittle?

Now substitute fifty _boxes_ for fifty _messages_. The boxes have to be shipped. The same processes of thought, the same principles of management, apply.

If, instead of fifty boxes to be _shipped_, fifty machines are to be _manufactured_--or if instead of fifty machines it's fifty thousand, and a thousand men and a million dollars of capital are to be employed, every one of the five principles shown on the chart will be used. And every essential point in the management of the _business_ could be covered by those five fundamentals.

Now substitute ships or shoes or breakfast food for the machines we have been talking about, and it becomes clearer than ever that this BUSINESS OF MANAGING recognizes no industrial fences. Learn to manage a peanut stand and, in principle, you are well on the road to knowing how to handle the affairs of the U. S. Steel Corporation.

Five steps there are: (1) Analyze; (2) Plan; (3) Organize; (4) Handle; (5) Supervise. Tackle any job on this basis and follow through. The chances that success will crown your efforts far outweigh the possibilities of failure. At least, approaching a job from these five successive angles should limit the causes of failure to circumstances quite beyond your control.

* * * * *

FIVE PRINCIPLES OF MANAGEMENT, then. Their skillful application to a business or to a job is the KNACK OF MANAGING.

To do a real bang-up job of managing, whether carrying a message or directing a million-dollar business, the first step is: _Don't make a single move until you've found out exactly what needs to be done._

But our first Do turned out to be a Don't. So let's restate it. _Find out exactly what has to be done before you make a single move._

You've heard that before? And it doesn't mean a thing?

Neither did it mean a thing to a bright young man who was taken on as production manager in a shoe factory. The shoes were good. Prices were right. Business was booming. The factory was full of orders.

But somehow or other shoes weren't getting shipped on time--or anything like on time. Three to four weeks late came to be the customary thing. And customers were, needless to say, kicking like steers.

So the bright young man was taken on to get things ironed out.

He pitched in with vim and vigor.

The first morning's mail brought a dozen complaints of slow deliveries. People were practically barefoot out in Kansas and Ohio. They were waiting for those shoes.

"Ha!" said the new production manager, "_Nous verrons._" Which means, even in English, "Now, for what we are about to see, make us truly thankful." And he went away from there to see why those orders weren't out the door.

He was out to prove something. And Providence--Rhode Island--had supplied him with enough ammunition to shoot a manufacturing organization full of holes.

Each order was traced. One was in the shipping room.

"What's holding this up?" he asked the shipping clerk.

"Haven't had time to ship it. And we got other shoes that have been waiting longer than those. It's a feast or a famine down here. Some days we just can't get 'em out."

"You're working short-handed. Get a couple more packers. You've got to get those shoes out. The customers are hollering like hell. Get 'em out!"

He found another order up in the cutting room. But why report the conversation? It varied only in the number of cusswords used. It was always the old story.

"Can't be done."

"Put more people on then. Will two be enough? Or had we better make it three?"

All down the line it went. More people. Costs went up. And did orders get out? Oh, yes, some did. But they got out at the expense of others. There was more congestion than ever. Complaints increased.

Then the big boss called him in--and down--pointed out the increasing costs and asked how come. So the new production manager went back over his trail demanding retrenchment.

"Put 'em on" was changed to "take 'em off."

The big boss tells the rest of the story.

"He had simply jumped in without finding out what it was he had to do. Maybe it was my fault for giving him too much rope.

"Anyway, he hanged himself--or rather we had to fire him. Then we took on a quiet lad who had served his apprenticeship with a large electrical supply house.

"He didn't know a twelve-iron sole from a three-quarter foxing. But he knew plenty about managing, as it turned out.

"I watched him. Things were in a bad way, you see, and getting no better fast. He did nothing much for several days but read his mail. Sat around his office. Didn't make a move to boss anyone. Stuck his nose in here and there to find out what this clerk or that clerk was up to.

"But no action. No tearing his shirt. No nothing. And the complaints were coming in with every mail. They never fazed him. One day I ran across him up in the fitting room. Another time I bumped into him he was picking lasts out of the bins. Again I saw him pushing empty racks into the heeling room elevator.

"Apparently I had picked another lemon. Looked like the best thing he did was sit around and tap his teeth with a pencil.

"He fooled me, though. One afternoon he dropped into my office with a map. He'd drawn it between taps. It was a good map with dotted lines to show just exactly what happened to an order--any order--every order. That map showed when it went into the works, where it went from there. And so on until it went out the shipping room door. That's what he'd been up to the day I saw him picking out lasts. And I tell you I never had any idea how many things could happen to an order. I never realized how shoes halted and stumbled and staggered around that factory of ours.

"There were red lines, too. They showed the changes he proposed making. Here he would stop backtracking. Here was unnecessary travel. Here was an old bottle neck and here was how he was going to crack it open. And look at those lasts lying idle with shoes upstairs waiting to be made on them!

"That wasn't half. It was actually taking four days to get orders through the office routine. He showed me how certain necessary records that took time to make could be made after the shoes were in work. Other short cuts would wipe whole days off our schedules.

"There was nothing to it--when you saw it in red ink. In fact there's nothing half so convincing as red ink. There's been none on our books for the past five years--and during that time the shoe business has been no bed of roses.

"What he proposed was simple as pie--if only someone had stopped to think. We'd simply got into bad habits. We were handling the work the same way we'd handled it back in the days when grandfather started the business. And this fellow had been smart enough to wait and wonder why. Not wonder why either. _He went and found out how come._

"In thirty days we were back on earth. We were getting shoes out on time--many many days sooner than we'd even been able to before. And all because a smart young man, who didn't know a thing about shoes but a whole lot about managing, sat and tapped his teeth and drew a few pictures.--All because he had been in no hurry to act until he had found out just what had to be done."

* * * * *

It is so easy to jump to conclusions! If you look about a bit, you will see plenty of men who don't stop to find out what needs to be done before they start trying to do it. They're like the shortstop who hurries his play and tries to throw the runner out at first before he really gets his hands on the ball. An error is more often than not the result.

MANAGING, such men will tell you, is putting "pep" and "punch" into your work. Pep and punch were once good words. But their good qualities have been so often extolled that most of us have lost sight of the fact that all the "drive" in the world is so much wasted energy when it isn't directed along the right lines. And when it isn't so directed, it comes pretty close to being the lowest form of human endeavor. Witness the "go-getter" who really doesn't know what it's all about, but often succeeds in covering up a world of defects under a cloak of ill-directed energy.

Other men think they are finding out what needs to be done when actually they aren't even getting close to the root of the matter. With the best intentions in the world, they are grasping at the first straw the wind blows their way. Eureka! they shout when they haven't found it at all, but are merely jumping all the way over the facts to conclusions! Actually to know your business or your job demands ANALYSIS.

You have a right to duck. It's another of those words that work overtime and have suffered as a result. A certain type of superficial business executive has done analysis no good. To him the impressiveness of the word suffices--to the complete exclusion of the simplicity of the act itself. And so analysis to you and _you_ and YOU has come to mean involved, complex research--running around a lot in circles and getting exactly nowhere. Analysis has become for you an A1 example of the phrase-maker's art.

REAL ANALYSIS of any problem in business can, however, be simple--in fact, _it can be nothing else but simple_.

Analysis, says Noah Webster, is "a resolution of anything, whether an object of the senses or the intellect, into constituent parts or elements; an examination of component parts, separately or in their relation to the whole."

Whooee! all that when he might have said "TAKING TO PIECES." For analysis is literally that--taking a thing to pieces to see what makes the wheels go round. Not, however, with the destructive intent of the small boy who strews his watch all over the floor, but with the avowed purpose of getting right down to the sort of brass tacks which make it possible to see the composition of the whole clearly and plainly.

Analysis which befogs the issue is not analysis at all. It's--in the vernacular--a lot of "hooey."

But the RIGHT KIND OF ANALYSIS "breaks down" the problem into its component parts--without losing sight of each part's relation to the whole. There may be only two parts to a job of managing. The messenger who analyzes his business correctly will find exactly two: where to go and what to do after he gets there--the simplest kind of problem and the simplest type of business analysis. But if the analysis consisted of twenty pieces instead of two, it would be no harder; it would only be longer.

The production manager in the shoe factory analyzed his job correctly when he mapped out the route of an order. All he did was take the manufacturing process to pieces so that he could put the pieces together again to form a more efficient whole.

So whether there are two or twenty or two hundred pieces, the act of ANALYZING--of TAKING TO PIECES--differs only in the amount of territory it covers. Naturally it will be a somewhat more lengthy process to analyze the job of managing a steel mill than to separate a peanut stand and its operation into a few component parts. But the approach is always the same.

And no matter how good you may be with the woods, how the approach does affect the final score!

* * * * *

Consider for the moment that you have a house built of blocks and want to take it to pieces. A quick and easy way of separating it into its component parts would be a swift kick aimed down around the foundations.

A quick method. But comes nothing. There are all your blocks lying on the floor, but so far as knowing what they're all about, you're worse off than ever you were before you kicked your house down.

The other way of taking your house of blocks to pieces is to start with the roof and WORK BACKWARDS. The very thought, then, of "taking to pieces" suggests the correct way to undertake the analysis of a business or of a job.

And a study of the methods of successful managers will convince the doubtingest Thomas that starting at the top and working down to the cellar is the method they follow in the analysis of any business problem they have to tackle.

Once a busy ceramic manufacturer found himself in the restaurant business. He knew about all there was to know about dinnerware up to the point where it left his customers' counters. What went on after that was pretty much Greek to him if you know what we mean.

And then he became a restaurateur. All because his brother-in-law got into him for several thousand dollars and then couldn't quite seem to make the darned thing pay a profit.

Brother-in-law knew the game. Oh, yes. He had worked for a number of years as assistant manager in a similar enterprise. With his "knowledge of the business," he should have made a success of this cafeteria of his.

He knew how to handle the help, how to buy, how to run the kitchen, and so on. The operating details were as an open book to him. Judged from every outward appearance, the cafeteria was up to standard. It should have climbed out of the red in short order.

He had been taught to buy carefully and to manage economically. "Well bought," he announced, "is half sold." He'd read it in a book and he thought he was being a good salesman. Still the business stayed in the red.

Our ceramic friend was faced with kissing his investment goodbye--and probably with making a job in the pottery for a good restaurant man--with throwing good money after bad, or with getting into the cafeteria business.

He figured this business ought to pay. Somewhere, he knew, his brother-in-law had gone wrong. Just where, he believed he could find out.

So he took over the business. Brother-in-law stayed on, leaving the new owner free to observe.

And he did nothing but observe for a solid week.

Each night he made a list of the points in managing which had come up in the course of the day's work.

In a week's time he had an accurate list of all the actual jobs of managing, as all bills except for gas and light and rent were paid and a profit and loss statement was taken each week.

Then he arranged the list in order of natural importance.

It began with marketing and checking bills with deliveries, and ended with counting the money and depositing it in the bank.

"Hold on," he thought, "this isn't such a long way from running a pottery. What am I in this business for?"

"Because," he answered, "I want to leave as much of that money in the bank as possible, and mark it down as profit."

So right away he started to draw pictures. The chart on this page is the result after he had worked it over and polished it up.

+---------------------------------------+ | +-----------+ | | | Making | +--------+ | | |the Service| | Keeping| | | | Pleasing | /| Down |\| | +-----------+ / |Expenses| \ | / \ / +--------+ |\ +-----------+ | / +----------+ | \ |Building up| | +---------+ | Fixing | +--------+ | +-------+ | and | | | Getting | | Prices |__|Guarding|_|_| Net | |Maintaining|_|_| More | | to Be | |Against | | | Cash | | the | | |Customers| | Fair and | | Waste | | |Profits| | Run-Down | | | In | |Attractive| +--------+ | +-------+ | Cafeteria | | +---------+ +----------+ | / +-----------+ | \ / \ +---------+ |/ | \ / \| Buying | / | +----------+ |Supplies |/| | | Making | |Carefully| | | |the Foods | +---------+ | | |Attractive| | | +----------+ | +---------------------------------------+

Note how it works backward from his final objective--"Net Profits."

"Now," questioned his _alter ego_, "how do I determine how much of that money stays in the bank as profit, and how much has to be checked out right away for expenses?"

And from his handy list of managerial functions it was plain that it depended on three things--buying right, selling with as little waste as possible, and keeping expenses down.

"Now we're getting somewhere," he said to himself. "Those things lead me right into my next job--which is to fix prices fairly. For what's the use of buying right, handling supplies carefully and keeping expenses right down to the bone unless my selling prices cover costs, yield a profit, and still look reasonable to the public?"

Yes, and the most attractive prices, backed up by careful buying and all the rest, wouldn't keep the dollars clinking merrily over the counter unless the food was so good and the service so excellent that customers bought liberally and came back for more.

By this time, you'll note, on taking another peek at the chart, he had worked right back to his "Number 1" job--getting more customers in.

Thus, by ANALYSIS, he found out definitely what had to be done--and what had to be done first. Brother-in-law thought he knew, but he had begun at the wrong end. He had been looking after expenditures first and receipts last. He was trying to squeeze a little margin out of his receipts before he did anything about getting the receipts.