,
Chapter 2
The production crisis, productivity,
and the rise of the management
question, 1941–4
In 1941–2, Britain was rocked not just by military reverses abroad but also by a production crisis at home, as deliveries of armaments and munitions consistently failed to reach what were considered reasonable targets. The Government sought to cope with this latter situation in the first instance through a range of organisational and legislative measures, geared to maximising resources in the required sectors. At the same time, there was a growing official concern with the question of productivity. It was recognised that, once the economy was fully mobilised for war production, further growth in outputs would be possible only by the rationalisation and streamlining of manufacturing processes. This chapter examines the logic that dictated a productivity focus, and then looks at how the Government responded to the challenge of stimulating intensive growth in the period to the end of 1943. A final section summarises a debate that emerged fully over the following year, concerning the future of industrial management. It asks why discussion of this variable increasingly came to dominate the whole productivity question.
During the early years of the war, those at work in Britain's factories were encouraged to believe that they were playing a crucial role in ensuring the nation's survival. As Douglas Jay expressed it on the BBC, behind ‘the Battles of France, and Britain, and Greece, and Iraq’, the sudden and short-lived military flare-ups, was The Battle for Production … going on all the time, by day and night’. Without victory here, the situation would indeed be bleak.1
Yet it was also increasingly clear that in this home front engagement things were not going well. In January 1941, 62 per cent answered with a negative when Gallup asked, ‘Do you think all is being done that can be done to increase war production in this country?'2 In July, The Economist bluntly concluded that war output was ‘chronically insufficient’. A few weeks later, it returned to this theme, arguing that ‘Notwithstanding the remarkable results which have been achieved in the face of many difficulties, production… is not as high as it might be. Every test reveals deficiencies which can be remedied.'3
By the beginning of 1942, The Times, too, was becoming anxious, with a widely reported leader backing ‘competent judges’ who assessed Britain's output of arms as 40 per cent below the amount possible. It could not be denied, the paper declared, that ‘the ever broadening stream [of war production]… flows less strongly and widens less quickly than it could and should do’.4
Over the following months, this theme both dominated press discussion and acquired a sharp polemical tone, as Mass Observation succinctly reported:
All is not well in our war-production at present. Something is seriously wrong somewhere. Different people point the accusing finger at different wrong points and potential strong points. The amount of pointing, especially in all types of printed matter, adds up to a veritable forest of inked fingers.5
Some targets for blame seemed essentially to be dictated by political prejudice. Diehards of the Right were obsessed with the supposed defects of the labour force: there was widespread ‘deliberate slacking, deliberate idleness and shameless agitations for higher wages’, at the very time when the ‘flower of our land’ had been ‘mown down at two shillings a day in Crete and elsewhere through lack of arms’.6 For the Left, Capital was the obstructive vested interest. ‘All too frequently’, one investigative journalist contended, ‘the needs of total war and the interests of influential sections of the community do not coincide.'7
On the other hand, there was also a strong strand of technical criticism, which took existing patterns of ownership and control as largely given, but suggested that within them much better results could be achieved. One problem, for this lobby, was the Government's organisation of procurement. All too often, specifications were changed needlessly or orders not matched to the actual capacities of firms.8 Yet improving this situation alone would not, it was asserted, solve the problem. Another obstruction to efficiency lay, all too often, within the firm, in out-dated attitudes and practices. The Select Committee on National Expenditure was particularly vocal in making this point, arguing in one much reported enquiry, for example, that: ‘Management is one of the most important factors affecting output. The evidence shows that idling is frequently due to bad management or want of supervision.’ The Economist concurred here, believing that the course of events in 1941–2 had ‘proved’ that good management was ‘the scarcest of all factors of production’.9
The Government's eventual reaction to this welter of criticism centred, in the first instance, on organisational and administrative measures, with a new Ministry of Production, created in February 1942, being perhaps the key innovation.10 Nevertheless, members of the Cabinet recognised that, as some of their critics were arguing, this type of action alone would not be enough. The administration's first responsibility, certainly, was to fashion a system which could mobilise resources for war production as fully and as efficiently as possible. Mistakes had been made over this in the early years of the hostilities, which were now being rectified by the various reforms enacted. Yet once this process was completed, and Britain's manufacturing industry was on a total war footing, it would still be necessary to keep on increasing output if the strategic plans of the military were to be fulfilled. Extra capacity could hardly be brought in from abroad. Nor could further resources be switched from home consumption, as civilians were already judged to have made enormous sacrifices.11 The only hope, therefore, as Ministers gradually recognised, lay in improving productivity: more would have to be obtained from each unit employed. Cripps, the new Minister of Aircraft Production, and perhaps the keenest Cabinet advocate of industrial efficiency, described the logic behind this conclusion during a broadcast at Christmas 1942:
We have now reached the time when the inflow of fresh labour to our aircraft industry will gradually dry up and yet we must continue to expand our production so as to expedite our victory. How are we to do it? Not by longer hours; that only leads to exhaustion and inefficiency…. No, we must improve our methods and cut out all waste of labour — and, let me say, of materials too.12
The task must increasingly be, in The Economist's paraphrase of official thinking, ‘to extract the last ounce from the resources already harnessed in the war factories’.13 Accordingly, Ministers of production departments began to spend more and more time attempting to ensure that this was done.
Of course, consciousness of the productivity issue in relation to the war effort had always been present to some extent since the rearmament programme of the late 1930s, and a number of schemes to promote efficiency were already in existence. Thus, the Ministry of Labour had long encouraged the appointment of personnel officers in munitions factories, and had in fact made grants available so that suitable candidates could receive the required training in this field at various universities.14 The same Ministry's welfare schemes — providing doctors and canteens at the works — were also designed, ultimately, to make labour more efficient.15
However, from mid-1942, the drive for productivity was very much transformed, in both scale and content. The watchword of efficiency now became accepted as of great importance in most production departments. At the same time, there was a growing awareness that the greatest gains would be made only if the scope of official initiative were broadened. Training schemes, such as those already established, were clearly important. But there was also a need for more direct intervention, to ensure, for example, that individual firms’ production processes were as well organised as was possible. All of this added up to a significant departure in government-industry relations.
One indication of the changed atmosphere was the progress that was made with establishing Joint Production Committees (JPCs).16 The idea of expanding local consultative machinery to advise on matters relating to production had been extensively discussed during 1941, with attitudes ranging from the enthusiastic (Communist shop stewards) to the downright hostile (many employers). Bevin was sympathetic, but the Government as a whole remained cautious, anxious to maintain consensus in the face of boardroom antipathy and trade union leadership unease. By the end of the following year, however, the situation had been almost entirely transformed. In February 1942 the Ministry of Supply approved the setting-up of JPCs in the Royal Ordnance Factories. The following month an agreement between the Engineering Employers’ Federation and the unions provided for the creation of JPCs in engineering establishments with over 150 workers. Subsequently, similar arrangements were concluded in shipbuilding and iron and steel, so that by December 1942 there were over 2,000 JPCs in existence, covering plants employing some two million workers. In each case, the motivations of the different parties involved were, of course, often different: some union activists saw the JPCs as a way of increasing industrial democracy, while some employers were more impressed by their potential for containing and disarming discontent. Yet what excited the Government, and ultimately proved decisive, was the contribution that the local committees might make to improving productivity. Cripps was the most enthusiastic proponent of JPCs in the Cabinet, but his observation that ‘in a happy factory where there is good co-operation there is also efficient production'17 was broadly shared by the majority of his Ministerial colleagues.
However, if the JPCs represented the most visible side of the new official concern, equally important innovations were occurring in less publicised areas, as various Whitehall departments sought to galvanise private industry into more efficient methods. The new Ministry of Production, for example, was from the first very much concerned with promoting best practice and by the end of 1943 had constructed a network of committees, panels and agencies to achieve this end. One initiative involved the creation of an expert advisory service in each region, which could be consulted by client firms and was qualified to offer information on, amongst other things, ‘production layout and method, casting, designing, planning, rate-fixing, machine loading, office organisation, inspection and general administrative and financial problems’.18 Another scheme, the Mutual Aid by Technical Experts or MATE facility, was aimed at getting efficient firms to share their knowledge as widely as possible. Panels of experts were recruited from the larger companies and then used, like a fire-brigade, to help smaller employers in difficulty.19 At the same time, the Ministry also reserved the right to make its own investigations where it felt that this would be helpful. A special Industrial Panel, consisting of employers and trade unionists alongside the civil servants, was created for this purpose.20
Meanwhile, productivity consciousness was also transforming more mundane aspects of the Ministry's operations. Typical here were a number of innovations on standardisation, such as a case involving welding equipment of 1943:
the Directorate of Industrial Electrical Equipment of the Machine Tool Control found that one of the principal obstacles to the rapid expansion of welding — a conspicuous saver of labour — in shipbuilding and repairing and in tank production was the lack of standardisation of welding plant, components, plugs, sockets, etc. In co-operation with the Admiralty and the BSI [British Standards Institute] the Directorate worked out British Standard 1071:1943, which covers the complete range of multi-operator A.C. welding equipment from the incoming supply of current to the electrode holder. As no user can obtain new welding equipment without a purchase certificate from the Control, and as a certificate will normally be issued only for the purchase of standard equipment, the result will be that modern high-speed high-voltage welding will quickly become universal in all work for which it is appropriate.21
Alongside the Ministry of Production, the Ministry of Aircraft Production (MAP) was also very active over the productivity issue, particularly after Cripps had taken over control of its operations at the end of November 1942. Especially noteworthy here were the contributions made by the Production Efficiency Board (PEB) and the Technical Costs Branch (TCB).
The PEB was created by Cripps in the month of his appointment and consisted essentially of four key figures — Sir C. Bruce-Gardner (the Chairman of the Society of British Aircraft Constructors), F.E. Chappell (an Amalgamated Union of Engineering Workers [AEU] official), A.G. Shaw (one of the country's leading experts in personnel management and motion study) and Sir J. Buchanan (a secretary from within the Ministry) — plus back-up staff.22 The Minister's idea was that the PEB should deal with production efficiency in both its capital and labour aspects. It would serve as ‘a small, highly qualified advisory body to carry out investigations in the field, as distinct from the usual administrative work of the headquarters and regional staff of the Ministry'23 and would report direct to the top.
In fact, the PEB came quite quickly to be regarded as an outstanding success. One substantial achievement was the fillip it gave to personnel management, through, for example, specially sponsored courses at universities. At the same time, the PEB fulfilled its brief to carry out various detailed investigations of its own, which led to improvements in areas such as methods of machining and salvage of scrapped work. Finally, there was also a strong effort made to popularise motion study. Shaw had worked for Metropolitan-Vickers, a pioneer in this area, and she and Cripps persuaded that organisation to lend teaching staff and premises in order to train nominees from various other aircraft factories. The result was a number of courses from 1943 onwards which did much to popularise this relatively new form of work study.
The TCB had originally been part of the Admiralty, being transferred to MAP and then greatly expanded at the beginning of the war.24 By 1943 a considerable number of specialists were involved: ‘rate-fixers, planning engineers, time and motion study experts … as well as 100 cost accountants and clerks’.25 The unit's central function was to measure costs accurately in order to fix suitable contract prices, but this inevitably led to a concern with efficiency. In fact, rather as with the PEB, the TCB soon began to be called in whenever MAP or other Ministries sensed that firms were performing below an acceptable standard, in order to recommend realistic solutions. One of the principal officers involved described how the TCB operated as follows:
The firms chosen for investigation are visited by trained rate-fixers who study the processes in the factory and spot the particular weaknesses in the system. These may be due to factors beyond the control of individual workers, such as faulty operational lay-out or uneven supply of materials, or they may be due to a poor level of output on the part of the workers, sometimes caused by bad rate-fixing. … In this way it is possible for the investigator to demonstrate not only to the management of a factory but to the Production Committee as well, the exact cause of the high labour cost of the work in question, and to obtain their agreement to the measures necessary to reduce this cost.26
How big, therefore, had the Government's machinery for improving industrial productivity become by the end of 1943? This is not an easy question to answer for a number of reasons. There is, firstly, the question of definition, of deciding which civil servants and advisers were acting primarily to an efficiency brief. The Ministry of Labour's 800 Labour Supply Inspectors were initially concerned solely with forwarding dilution’ but, as the war progressed, some spent more and more time on the wider aspects of labour utilisation, which clearly contributed to the drive for productivity. Unfortunately it is impossible to evaluate in any more detail what this may have contributed to the overall equation.27 At the same time, it is clear that the key agencies which were charged with pursuing productivity were sometimes actually weaker than they formally appeared. One continual problem for all of the institutions involved was how to recruit sufficient qualified staff. Industry itself had been an important source in the early years of the war but, by 1943, this option no longer existed. The end-product was that some parts of the Government apparatus often struggled to cope. It was noted of the TCB in early 1944, for example, that: ‘Its studies tend to be retrospective (i.e. made after contracts have actually been placed) and are now heavily in arrears. This is due to lack of staff.'28
Nor, finally, can Government estimates of the forces being deployed do very much to clarify the issues at stake here. The following reply to an enquiry about the scale of MAP's activities on productivity is typical in its vagueness:
I am afraid that we cannot give you even a guess at the full cost of the steps taken … to improve efficiency of firms …[.]… the costs of the specialist services represent only a fraction of the total. For what the figures are worth, you may like to know that PEB salaries … amount to £9,000 per annum. … The Technical Costs Branch costs in salaries about £240,000 per annum.29
Nevertheless, accepting these various qualifications, it is clear that, by late 1943, the Government-created apparatus to improve efficiency had reached quite impressive proportions. Thus, the JPC network was largely flourishing, as the figures in Table 2.1 illustrate. Moreover, the situation within Ministries had been substantially transformed. Departments reacted to the productivity drive with varying degrees of enthusiasm, but all accepted the goal of promoting efficiency, and some had shown themselves prepared to pursue it with some persistence. Nowhere was the new spirit more in evidence than at MAP. Indeed, as one civil servant noted, ‘the activities of most branches’ of this Ministry were aimed ‘in greater or less degree … at improving industrial efficiency’.30 Some idea of the scale of what was involved here can be gained from the fact that the PEB alone had advised nearly 300 factories by the end of its first year of full operation.31
Reviewing the progress that was made obviously gave advocates of the productivity drive considerable pleasure, but it also provoked several questions. By late 1943, it was clear that Britain would be on the winning side of the war, whether victory came sooner or later. What lessons could be drawn from the productivity policy being pursued, especially in terms of the future, post-war relationship between Government and industry?
In attempting to answer this question, civil servants recognised, first of all, that the record proved that government intervention could make a positive difference. Some experiments, of course, had failed. Thus, the Munitions Management and Labour Efficiency Committee, set up in late 1942 to ‘put into effect measures for increasing the productive efficiency of the munitions industry’, seemed to have been almost
Table 2.1 Joint Production Committees at establishments in engineering and allied industries, 1942–4
| Date covered | Totalno. of JPCs |
Totalno. of JPCs in firms with 150+ workers |
Total no. of workers |
| Dec. 1942 | 2,644 | 2,037 | 1,914,000 |
| Dec. 1943 | 4,427 | 2,843 | 2,676,000 |
| June 1944 | 4,567 | 2,959 | 2,666,000 |
Source: BT 171/210 ‘Origin of Joint Production Committees’, p. 3, enclosed with Note by G. Calder, 13/5/1946.
wholly ineffective, a consequence both of its unwieldy constitution and of its lack of influence in supply departments.32 However, against this, many other initiatives could be justifiably regarded as considerable successes.
Comment on the JPCs, for example, had been on the whole quite positive. An AEU enquiry of 1943 noted that the smooth running of the consultative machinery was not universal, but ended with a generally very favourable conclusion: ‘the committees have fully justified their existence and have proved themselves a factor of incalculable value in the war effort.'33 Business journal was also enthusiastic about what had been achieved. A survey during the winter of 1942–3 led it to conclude that the JPCs were a ‘success’ and had ‘come to stay’. In June 1943 a more detailed investigation into employer attitudes towards the committees was equally positive. Business now found that, though some owners of medium-sized firms continued to regard JPCs with suspicion, the vast majority of both big and small employers were a good deal more favourable. Moreover, it was generally felt that JPCs were valuable in the pursuit of productivity: when asked by the journal whether their own committee had ‘contributed towards increasing efficiency and production’, no less than 70 per cent of the employers questioned had answered in the affirmative.34
More direct kinds of intervention also seemed to have yielded important results. MAP staff kept close track of those who had attended motion study training courses and generally found that they had produced significant innovations on return to their respective factories. The increases in output per employer that resulted were variable, according to the type of job and the efficiency of previous methods, but there was usually considerable progress:
The average increase in output of the jobs studied … was 140 per cent, the lowest figure being 30 per cent and the highest 800 per cent. This latter result was rather exceptional, though there were two jobs … which were about this figure.35
TCB staff, too, could point to a range of successful investigations, in which cost data had been used to break price cartels or as leverage in improving the performance of less efficient units.36
On top of this, it was impossible to ignore some less tangible benefits that had flowed from the overall policy. An example was the situation with personnel officers. Relatively few companies employed such staff in the 1930s, but during the war numbers increased substantially, encouraged (as has been noted) by the joint efforts of various Ministries. By 1943, indeed, it was estimated that there were around 5,700 personnel officers working in factories with 250 or more employees -probably a fourfold increase on pre-war days. Yet the change involved here was more than just a question of numbers. There had also been appreciable improvements in the whole way in which the profession saw itself and was seen by others. As one authority put it in 1944:
In spite of the fact that industry as a whole failed to grasp and apply these essential principles [of personnel management] in the early days of the war, there has since been a notable development both in the quality of personnel management and in the extent to which it is practised…. The experience of the last five years has shown that industry will emerge from the present war with a greater appreciation of the value of personnel work, and a higher level of technical application than ever before.37
However, if officials could be reasonably pleased with the progress that had resulted from some of the productivity initiatives, they had to recognise, as well, that there was little room for complacency. Close contact with industry had revealed a scale of inefficient practice amongst manufacturers that the civil servants found deeply shocking. Thus, many firms were found to have little idea about a rudimentary question such as how long it took for raw materials to move through their plants.38 Even more seriously, few could produce even near accurate costings data. The scale of this problem was revealed during an investigation of 3,000 Ministry of Supply contractors in 1943–4. This concluded, amongst other things, that:
(a) Comparatively few firms have efficient costing systems;
…
(d) Many small firms have no system at all;
(e) There is an apathy towards costs by British manufacturers;
(f) American controlled companies have costing systems far in advance of most British manufacturers, appear to be more cost-minded and use the information available to a greater extent.39
Clearly, as officials recognised, in analysing these kinds of finding some allowance had to be made for mitigating circumstances. Many firms had been asked to expand very fast in the early part of the war, using whatever resources, methods and locations were most easily to hand, and this had hardly encouraged streamlined working. Many contractors, too, remained short of key personnel because of the call-up, so that it was hardly surprising if, for example, accounting practices were somewhat deficient. However, accepting all of this, the civil servants concluded, did not explain away the problem. Day-to-day contact with industry and special enquiry alike revealed not just sub-optimal working but many instances where industrial efficiency could only be described as actually below what it was ‘reasonable to expect’.40 To officials, therefore, the conclusion had to be that employers themselves were often partly culpable: they were either oblivious to some productivity issues or too conservative to adopt any but very simple ameliorative measures.41
In the light of this, civil servants in production departments were increasingly persuaded that government initiatives on productivity could not end with the war. Britain's economic position would obviously be precarious in the early years of peace, with efficient manufacturing the condition of survival. Some employers might be able to meet this challenge unaided, but it appeared from wartime experience that many would simply have to be pressured into adaptation.
However, accepting this broad conclusion, there was still the question of what precisely should be done in practice. Officials recognised that their current successes were being obtained in a peculiarly favourable environment, where departments enjoyed both enhanced legal capabilities and the considerable leverage which went with their positions as sole purchasers. Yet this situation, it was generally assumed, would be hardly likely to outlive the war; indeed the pressure for a relaxation of controls, the moment that peace was declared, seemed to be growing with each new Allied victory. What needed to be decided, therefore, was how policy should be modified to cope with the likely, very different parameters of a peace-time society. What could the government do to encourage productivity growth once its special powers had disappeared?42
A variety of civil servants commented on this question, but discussion was most animated in the Board of Trade, the department at the heart of more general industrial reconstruction matters. Here some officials favoured solving the productivity question within the context of a much wider package of macroeconomic measures.43 Others, however, argued that, though such an approach might no doubt yield benefits, overall success would not be achieved unless there were parallel interventions at a micro level, particularly over what was seen as the key question of management. The case put forward by this latter group and the policy initiatives that followed form the subject of the rest of this chapter.
The Board of Trade first began to examine the management question during the summer and autumn of 1943, as a response to growing government interest in a wide range of reconstruction problems.44 Officials believed that, within firms, good management was the key to general efficiency. They observed, as well, that standards of management varied considerably: while some bigger companies had done much to introduce modern practices, the situation as regards ‘the majority of small firms’, in particular, remained deeply unsatisfactory. This meant, as one adviser put it, that the potential impact of any advance here would be considerable: ‘there is more scope for improvement at this level than is generally realized’.45 What appeared most necessary, officials concluded, was a government-backed body which could promote best practice and thus raise overall standards.46
To test the water on this proposal, the Board's Internal Reconstruction division decided that they should raise it with the Steering Committee on Post-War Employment, a high level body of senior officials which had been created by the Cabinet Committee on Reconstruction Priorities to adjudicate on a whole range of post-war economic policy questions.47 After some deliberation, the Steering Committee agreed that the Board had made a good enough case to warrant it making further investigations.48 The problem for officials was now to see how their ideas could be translated into practical recommendations.
In developing their strategy, the civil servants recognised that no real progress would be likely without the active support of industry. A new official body could not, in other words, just be foisted on manufacturers, but must be created with their consent.49 In the light of this, the Board decided that its first move should be to consult in confidence with a variety of figures who were known to hold progressive views on the management question. How would they react to the idea of a ‘Business Advice Bureau’, set up and financed by the Government, which would involve itself not only in propaganda but also in research, and even in activities such as vetting the growing number of industrial consultants?50
The information uncovered by these enquiries was both encouraging and daunting. Those questioned agreed that management standards were often rather poor, particularly in smaller firms.51 Moreover, it was generally accepted that Westminster should do something about this; that, as B.S. Rowntree put it, ‘there was room for Government assistance in the development of scientific management in industry’.52 The investigators even found a reasonable degree of support for their specific recommendations. L.J. Cadbury was not particularly keen on the Business Advice Bureau (he wanted resources to be used on teaching management, especially in the provincial universities) but several other respondents emphasised the need for some central co-ordinating body.53
Against this, however, the Board had its attention drawn to a whole range of practical difficulties which stood in the way of any kind of intervention. It was clear, for example, that the trade unions would be somewhat suspicious of what was being proposed. A Ministry of Labour official noted that the term ‘scientific management’ would, at any rate, have to be avoided in discussions with the unions since it was ‘associated with the worst faults of the industrial consultant’.54 Moreover, the Board's business advisers warned that their own views were probably untypical, and that many employers might actually be hostile to the measures proposed. In part, this stemmed from the widespread belief that the less the Government had to do with industry the better.55 But it was also reported that many employers held more specific reservations about the whole idea of improving the management function. Management, in this view, was an art and not a science, and so research and education were hardly appropriate. The end product was a general indifference to the whole question of amelioration, as the prominent industrial consultant L. Urwick reported:
My own experience is that it is extraordinarily difficult to persuade even comparatively enlightened business people that scientific management is just as important to them as engineering or chemical or physical research. They always tend to regard it as a fad which they pursue in an amateurish sort of way and along cheap lines.56
In the light of all of this, the Board decided to widen its enquiry to encompass existing management organisations. If one could be found that was sufficiently influential, it might be boosted with government help into a new nucleus, thus avoiding the problems of a full-bodied intervention. Did any have the right potential?
The prospects here looked unpropitious. Most of the ten or so functional associations (the Institute of Production Engineers, the Institute of Labour Management, etc.) were very small (with between one and three thousand members) and so were impecunious and had limited impact.57 Moreover, petty rivalry seemed to be endemic: as a Board informant put it, ‘Each association was interested in its own particular branch of management and tended to be jealous lest other associations should encroach on its field.'58 Finally, it was apparent that taken together, these organisations had most contact with big business, and much less with medium and small-sized firms.
Better prospects for the Board seemed to lie with three quasi-umbrella institutions: the Institute of Industrial Administration (IIA), Management Research Groups (MRG) and the British Management Council (BMC). However, on investigation it was clear that there were problems here too. The IIA appeared to be the most vigorous of the management organisations, having grown from 550 members in three branches at the beginning of the war to 1,400 members in 14 branches by 1943.59 The aim of this body was to raise standards, principally by providing a well-developed system of examinations for its members to progress through, and this certainly had something in common with the spirit of the Board's own thinking. On the other hand, it could not be denied that the IIA was still rather small, with an income of only around £3,500 per annum. At the same time, the composition of its membership provoked unease. There was a sprinkling of directors in the organisation, which the Board liked, but not all that many functional managers of the highest grade, which it did not. Additionally, members tended to be drawn from a relatively narrow range of sectors — ‘the munitions industries in the wider sense’ — and, once again, the bigger firms. The Board could only conclude, therefore, that the IIA, though it was certainly a worthwhile organisation, would not be suitable in any wider role.
The MRG were a collection of 119 firms in eight sub-sections which ran regular meetings and some research on questions of mutual interest.60 What made this aggregation attractive was its high level of activity and the fact that counted among its members were a number of notably progressive companies. Board officials were told, further, that the Federation of British Industries (FBI) looked on the MRG with great favour and often referred management queries to them. On the other hand, there were obvious problems with Group 1, the most prominent of the sections, and the one containing the biggest firms.61 It was known that many Group 1 members had very good track records on management innovation and research, but close investigation revealed that few wanted this knowledge made public, a factor that dramatically diminished the usefulness of the organisation in any new project.62 On top of this, the Group 1 Secretary, who had much influence through the MRG, proved at best uncompromising when approached by the Board. As one official recorded, dealing with him could be both complicated and vexing:
The trouble is that he is inarticulate and exceedingly odd in his manner. Yet he has acquired a great and detailed knowledge of management affairs through his long association with … Group 1 firms. He is slightly mad, I think, but there is possibly a germ of sense in his madness.63
It appeared unlikely, therefore, that the MRG would fit easily into any government scheme.
This left the BMC. Yet here, again, there were problems. The BMC had been formed after the Sixth International Management Conference, held in London during 1935, in order to help to prepare the British contribution to the Seventh Conference, scheduled for New York three years later.64 Subsequently, some useful work had been done, promoting education in management and attempting to reduce the overlap between the different management associations, especially in the regions. Activity had been suspended during the early years of the war, but it was now understood that Lord Leverhulme, always the key figure in the BMC, wanted some kind of relaunch. However, as with the other organisations, surface promise hid fundamental problems. Board enquiries revealed that the BMC had never been able to recruit many members from industry. There were doubts, too, about Lord Leverhulme, whom one leading BMC figure described as ‘not a suitable person to develop a live co-ordinating body’.65 Finally, potential difficulties seemed to surround the organisation's relationship with the FBI, which had apparently been far from uncomplicated. A Board official put the situation as follows:
I gathered the impression … that the Council was backed in the first place by the FBI (closely associated in this matter with Management Research Group No. 1) because there was a degree of national and international dignity attached to it, but that the interests which were prepared to back it for this purpose were not enthusiastic about the genuine promotion of the management movement — in fact, I suspect they were anxious to prevent it becoming too strong, but the war conveniently intervened.66
Reviewing its enquiries, therefore, the Board recognised that it was facing a rather uncomfortable dilemma. Information gathered on management standards suggested that these were often abysmally poor. In fact there was a widespread ignorance of modern methods, especially in small firms, typified by the fact that there were ‘scarcely any good British textbooks on industrial management’.67 On the other hand, it was not easy to see what could be done to improve things. Progressive manufacturers and experts agreed that there was probably a good case to be made for some kind of state-supported Business Advice Bureau. Yet much of the rest of industry was indifferent or hostile to this idea, and that included the most important representative body, the FBI. One way out of this difficulty might have been to use an existing management movement organisation as a core for the Board's initiative, but investigation of this possibility had provided little encouragement. Most management institutions were too small and introverted; as one civil servant put it, ‘there are many organisations but too little organisation … there is confusion (chaos might not be too strong) in a clamour of separate interests each striving for special recognition of its own subject or form of organisation.'68 In addition, the one or two that might have formed a new nucleus had, on closer inspection, enough unattractive features to render each of them unsuitable.
One way out of this quandary would have been to drop the whole idea of any government-backed initiative on management, but civil servants recognised that this was not really an option, given the future economic difficulties which the country faced. The only possibility, therefore, was to try to maximise support for the Board's general ideas and hope that the details of any necessary policy could be worked out as things went along. Specifically, as G.L. Watkinson, the Under Secretary who had co-ordinated much of the enquiry on management expressed it, the baton would now have to be handed to Board allies. ‘We have to get from outsiders’, he concluded, ‘a strongly backed request for action on these lines to which the Government can accede.'69
In the end, it was decided that the best way to achieve this would be through a high-powered independent committee, which could investigate the whole question of management in British industry and make recommendations to the President. Civil servants agreed that the best person to chair this body would be Sir Cecil Weir, a leading Business Member who had been very successful in the pre-war world of Scottish commerce.70 Other names floated included R. Rootes, B.S. Rowntree, G. Marchand (Chairman of the IIA) and A. Loughlin of the TUC.71 The suggestion of this latter figure provoked some controversy in the Board and, on reflection, it was agreed that her name should be withdrawn, since, though she was certainly well qualified to contribute, the employers’ associations would not be represented and it was ‘important to avoid a political tinge’.72 In further deliberations with the President, it was agreed that a safety-first policy would be best all round, and so the final committee line-up featured two further Business Members (B.H. Peter and G. Cunliffe) alongside the chairman Weir.73
The Weir Committee began work on 29 December 1943, with the following terms of reference:
(a) To consider whether it is necessary to set up a central body to be responsible for improving the standard of management generally and to link the work of existing organisations specialising on particular aspects of management and, if so, what assistance Government should give.
(b) To consider the function of such a central body and the difficulties of organisation which may be encountered in the course of its establishment.
(c) To consider what steps could be taken to make advice on management problems available to small firms.74
Its first priority was to assess the main protagonists and to gather information, and over the following two months it met with 43 individuals and representatives, ranging from management consultants to official deputations from bodies such as the FBI.75 These consultations covered essentially the same ground as the earlier Board enquiry and revealed a similar pattern of enthusiasm and doubt. Urwick once again backed an interventionist approach, arguing that ‘the time had come to persuade the existing associations to sacrifice part of their identity in a central body*. But he warned that the Government's relationship with the new organisation would have to be carefully arranged; it might be a good idea to provide premises at nominal rent, but Treasury control resulting from financial aid should be very remote’.76 Against this, a number of informants were markedly less enthusiastic. The highly rated Treasury O. & M. expert, I.J. Pitman, was not in favour of establishing a central body for management and argued that industry should sort out its own problems, using the accountancy profession in a new role.
At the annual audit accountants could point out that other firms in the same industry were producing goods of equal quality at a lower price or with a smaller amount of labour. … He suggested that the trade organisations should collect information of interest to efficiency which should be available in confidence to accountants.77
Several of the industrialists interviewed also expressed doubts, almost always on the grounds of their dislike of any extension of government intervention. A representative small businessman thus emphasised that he ‘did not agree with the idea that any central body which might be set up should control management, and saw great danger in this’. The answer, once again, was to leave industry to sort out the problem itself, on the basis that the ‘art of management’ was in any case ‘a highly practical thing’.78
More seriously for Weir, the peak associations also made it clear that they were not really interested in what the Board was suggesting. R.B. Dunwoody, representing the Association of British Chambers of Commerce, told the Committee that ‘he regarded the principle of government grants to be a dangerous one to establish, since so many organisations could claim to be of national importance’.79 The FBI was equally negative. One of its representatives stated that ‘his members felt that it had not yet been proved that there was a body of doctrine behind management as there was in technical subjects’. Sir Guy Locock, Director-General of the FBI, was more circumspect though in the end just as damning:
Sir Guy said that the opinion of industry was that some instruction [in management] was needed, though there was a strong feeling that management was a subject that could only partly be taught, and it was felt that exchange of information between firms would greatly help in the right direction.
He added a personal belief that encouragement must come through some central body, but noted that ‘the FBI were unable to give their views on this matter since it had not been fully considered’.80
Such attitudes were depressing and prompted Weir and the Board to do some stocktaking, to decide how best to proceed. A confidential memo revealed that ‘staunch supporters’ of the Board proposals were few and far between: the National Institute of Industrial Psychology, B.S. Rowntree, J. Ryan (an influential director of Metal Box who was active in MRG 1), L. Urwick, the IIA ‘possibly’ and the BMC ‘possibly’.81 The need was clearly to win over some of the doubters. It was therefore decided that Weir should hold a meeting of representatives of all of the interested associations in order ‘to get their general co-operation on the project’. This occasion could be stage-managed, with some exhortatory speeches and an intervention from a trusted ‘plant’ on the floor rallying those present behind a suitably worded resolution. It was agreed that an ideal statement of intent should read:
That this meeting would welcome the setting up of a central organisation, sponsored by the Government, to stimulate the development and adoption of good management practice in association with industry and with the existing organisations interested in management questions.82
The date fixed for this meeting was 9 February 1944, and invitations were issued accordingly. However, it was very soon obvious that things were not going to go as planned. Most of those invited to attend, including the TUC, responded positively, but this was not true of the employers’ organisations. A National Union of Manufacturers representative told Weir that he would be unable to come, ‘but would be interested to see a note of what had taken place’. The FBI, too, reacted negatively, with Locock informing Weir ‘that he would be most interested to hear the outcome of the meeting next week’ but that ‘Unfortunately none of his members would be able to be present as they had another engagement’.83
All of this was something of a blow, but worse was to follow at the meeting. Weir himself opened the proceedings with a speech outlining the need for what he now termed ‘the British Institute of Management’. He was followed by a number of generally positive contributors, including Lord Leverhulme, Marchand, Ryan, Urwick and Rowntree. Things seemed to be going well, and so Marchand and Ryan introduced the agreed resolution from the floor. However, this did not have the desired effect, because many of those present still felt uneasy about the degree of government intervention that seemed to be implicit in what was being proposed. One speaker suggested that the words ‘sponsored by’ be amended to read ‘associated with’, while another felt that the right formula here was ‘initiated and supported by’. After some debate, those present accepted this second amendment, passing a resolution that read:
this meeting would welcome the setting up of a central organisation, initiated and supported by Government, to stimulate the development and adoption of good management practice, in association with industry and with existing organisations interested in management questions.84
This outcome may have pleased some of the less progressive elements present, but it angered those who actually wanted to get the whole problem resolved. P. Lindsay, of Morgan Crucible, wrote to Weir complaining that the sole result of the meeting was a decision ‘to put old wine into a new bottle’. He added, ‘I presume the greater and much more vital question as to how industry is to be persuaded to partake of the wine, will be debated on another occasion.'85 Harry Ward, closely associated with MRG 1, was even more critical. He recorded that the whole proceedings had been carried out ‘in an air of naïveté’, with the real problem being neither formulated nor remotely resolved. He appended a list of specific complaints:
1 There was no real representation of industry. … No FBI representative was there…. The relation of the new body to these organisations was not even realised.
2 No mention of trade and employers’ associations was made …
3 The relation of the organisation to the Ministry of Labour, the Ministry most concerned, was not touched upon …
4 It was clear from Sir Cecil Weir's comments that he was not well briefed, and that he has no real appreciation of the job to be done.86
Weir himself saw the meeting as a partial setback, though in many ways an inevitable one. He had come to the conclusion that industry would only be converted to the measures proposed in the medium term. The first priority was therefore to win over the specialist management organisations; they had ‘done useful work … and naturally they should be given an opportunity of contributing to the work of any new central body’. If the meeting had achieved nothing else, it had at least allowed this process to begin. The aim now, which the Board agreed with, was to write a report which would be sufficiently persuasive to convince the Treasury that the British Institute of Management deserved to be supported — an essential precondition if any further progress was to be made.87
The Weir Report on Industrial Management was forwarded to the President, Hugh Dalton, on 23 February 1944. It began from the premise that management was a crucially important function which had all too often been inadequately developed. Indeed ‘some’ large firms and ‘many’ of their smaller competitors were inclined to be ‘self-satisfied’ about the quality of their management.88 This situation demanded both ‘carefully planned propaganda’ and ‘a growing volume of information and advice’ on modern management methods. Existing professional bodies had done good work in propagating ideas, but they were not up to what was now required, for a number of different reasons:
The professional character of many of these bodies limits the extent of their propaganda and precludes the participation of the firms not large enough to employ highly specialised managers. Small firms, even if they were willing to subscribe to a sufficient number of the twenty or so specialist bodies to cover the range of their operations, would rarely employ managers qualified for membership. Further, the ability of the organisations to undertake research … is severely limited by lack of funds.89
The answer was to set up a new body supported at least partly by Government finance which ‘would be the central stimulating force for raising the standards of management in the United Kingdom, and… the authoritative spokesman for British management at international conferences and discussions’. This, it was suggested, might be called the ‘British Institute of Management’ (BIM).90
Having justified this key proposal, Weir next went on to sketch out in detail what the new organisation might look like. The Committee felt that membership of the BIM should be open to everyone who could pay a modest fee, and not conditional on involvement in an existing functional association, as some of those bodies wanted.91 As regards finance, Weir unsurprisingly came down in favour of government assistance. The success of the whole venture would only be likely if there were some large-scale activity very quickly, which a newly created organisation could hardly be expected to fund. Consequently, the Committee recommended that the Treasury be asked to make grant-in-aid of £75,000 for each of the BIM's first five years, with the hope that subscription income would be increasing all the time as the organisation established itself.92
Finally, Weir moved on to look at the wider aspects of the BIM's relationship with the Government. The Committee recognised that some kind of supervision from Whitehall would be necessary, to make sure that public money was being spent properly and that the organisation was evolving on the right lines. But beyond this, it was stressed, ‘the Institute should be free to work out its own policy and programme’. A similar perspective informed Weir's recommendations on how the BIM should actually be run: the Minister responsible (probably the Lord President) would appoint the first 12-person governing Council, but in later years some of this body were to be provided by elections of the membership.93
In presenting this report, Weir did his best to convince Dalton that the management issue was now fully resolved. The specific recommendations in the document, he wrote, had been endorsed by ‘a unanimous resolution at a very representative meeting of Management and other organisations’. In addition, it appeared that large sections of Whitehall were equally in favour. As Weir observed:
We have discussed the matter with representatives of interested Government Departments, and while the officials whom we met made it clear that they would not commit their Ministers, it seems more than probable that our recommendations and the general lines of the report will be warmly supported.94
However, it was quite evident that many others of those who had been involved in the discussions did not share this view. Thus, opinion in departments of state remained quite divided, whatever Weir believed. The Board of Trade was, of course, behind the proposals, as were the Ministry of Labour and the Board of Education. But officials in the Ministry of Production made it clear that they were by no means necessarily sympathetic. A typical reaction came from N. Kipping, who felt that the BIM might easily be ‘yet another management organisation’, albeit ‘one perhaps of higher quality than the others’. The real answer, in this view, was for the Government to ‘stimulate the existing organisations to set up a Council themselves’.95
Outside Whitehall, too, doubt lingered on. The specialist management associations felt that their prestige was threatened, especially given Weir's insistence that membership of the BIM should be open to all and not just confined to accredited experts.96 Moreover, it was an open secret that the FBI's position remained essentially unfriendly. After the completion of the Weir report, Sir Guy Locock had thought it advisable to seek the views of Sir George Beharrell from the Dunlop Rubber Company, who was the FBI's acknowledged expert on management matters. Beharrell's reply urged caution: he supported the resolution passed at the February meeting but wanted more details before making a further recommendation. It was essential, he added, ‘to prevent the new Institute, if formed, from becoming the plaything of the so-called "efficiency experts'". Furthermore, interference from Whitehall or Westminster must be sharply curtailed:
I feel that the success of the proposal will depend on the limitation of Government interference….
If the Institute were to be run as a kind of Government Department I would not expect it to be very successful. It must be run by Industry and the sooner Industry could run it without Government help, the sooner would be its great success.97
Such advice was very similar to that provided by the MRG's Harry Ward, who had already urged FBI opposition to the Weir report on the basis that it was ‘wrongly conceived and based on errors of judgement’.98
All of this left the Board of Trade in a rather difficult position. Dalton was convinced by much of the Weir argument, and in fact wanted his department to be the link with the BIM if it were formed. On the other hand, he recognised that, given the opposition, if a strong enough case were not made out for the new initiative, then the crucial element of government support — finance from the Treasury — would not be forthcoming. To avoid this outcome, Dalton decided that the Board's next move must be the collection of further information on the poor level of British management, with the emphasis on concrete examples. Only when this task was completed would the whole question be put to the Cabinet.99
To conclude, how did the productivity question stand at the beginning of 1944? As this chapter has shown, interest in productivity had first been stimulated by the production crisis of 1941–2. This had generated ameliorative measures and at the same time changed attitudes. Most importantly, it had encouraged the belief, at least in Government circles, that the key variable in relation to productivity was management. Without better management, it was believed, all other possible reforms would fail. The end-product was the train of initiatives which led, as has been shown, to the Weir proposals.
In all of this, the key players had been, of course, a small group of Ministers and civil servants. However, it was becoming obvious that others held views on the subject — sometimes strong views — and that these would almost certainly have to be taken into account during the reconversion period. The following chapter looks at what happened in the final year of the war, as outside interests began to play a more prominent part in influencing events.