Management at University – a taster.

ford assembly line model tManagement At University – what is it?

While it is possible to study many course subjects before you get to university, this isn’t always the case for a subject like management. The closest you can get is probably A-Level Business Studies but even this is very different and lacks the academic rigour with which you will study management at most universities.

So here’s an example of an article that’s been in the news recently and caught my eye because of the importance of this topic in management. By the way – don’t be put off if this topic isn’t you cup of tea. The diversity of topics you can study in a management degree is amazing and this is just one particular topic you might study. It’s very different to other management topics such as long tail (marketing), double entry (accounting), culture and so on.

Here’s the article: Amazon workers face ‘increased risk of mental illness’ (BBC News)

Factory conditions at Ford and links to Amazon

Most management students will be familiar with the work of Henry Ford (started Ford Motor Co. in 1903) and his pioneering work on assembly line manufacturing. Before Ford started making cars, most cars were produced as a unit – i.e. a team of workers works on each car. However, at Ford’s early plants, each worker would do the same task over and over again – so instead of completing various tasks to build 5 cars a day, a single worker would 100 car doors to 100 cars in his day. This allowed Ford to reduce the price of the famous Model T from $850 in 1909, to $450 in 1915 and then to $260 in the 1920s.

This was great news for consumers and helped proper the motor car into mass adoption. But it had an adverse effect. Ford’s employee turnover was very high – that is to say that new employees had to constantly be hired not only to increase production but also to maintain production and replace the employees that were leaving. Once it got too much to bear, they simply left. New workers were costly to recruit and train. To try and reduce employee turnover, Ford began to pay workers $5 for the day. The $5 wage was also conditional upon the worker living an ‘American life’ but that’s a tangent. If you’re interested, Tim Worstall tells a good story on Forbes.

Side note: it can be argued that Ford’s assembly line operations were an embodiment of Frederick Taylor’s ‘Principles of Scientific Management’. Taylor is often referred to as the father of modern management and is credited with discovering the theory behind performance related pay (i.e. bonuses and result-based remuneration).

So, back to the Amazon article. Do you see the parallels?

Based on the article, it seems that working conditions in an Amazon warehouse are similar to those on the Model T assembly line in the 1900s. Workers are guided around the warehouse by a machine that tells them what to pick up. If they make a mistake, the machine beeps. On top of this, they are being timed – possibly to record their performance (Amazon taking note of Taylor’s principles) – and there’s also the 11 miles that workers end up walking on the night shift.

Like Ford, Amazon can be credited with vastly reducing the prices paid by customers. One of the reasons they can do this is because of highly efficient and optimised operations – such as the warehouse in the article. And again, like Ford, Amazon is likely to have high levels of employee churn because of the tedious and repetitive nature of the tasks they perform on the job.

Instead of going into deeper discussion, I will leave you with some possible questions and further reading recommendations.

Interview Questions:

  • What can Amazon learn from Ford to increase worker happiness and reduce churn rate?
  • Are Amazon’s warehouse operations described in the article good for society overall?
  • To achieve operational efficiency, must organisations have a large army of workers that act as parts of a machine (i.e. with little autonomy and scope for human error)?

Further reading:

  1. The Technocratic Hamburger by Theodore Levitt – describing McDonald’s as a factory
  2. Labor and Mass Production – U. Mich article on Ford
  3. Taylor’s Principles of Scientific Management

05/12/2013 Update – Added link to Technocratic Hamburger.