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Bruce E. Kaufman, Managing the Human Factor: The Early Years of Human Resource Management in American Industry.

Bruce E. Kaufman, Managing the Human Factor: The Early Years of Human Resource Management in American Industry (Ithaca: Cornell University Press 2008)

THE FOCUS OF THIS book is the origin and development of human resource management (HRM) in the United States. It should be read in the context of current changes in labour management practices that some would argue are taking us back to a nineteenth-century approach to managing labour based on fear, the discipline of the market, and the suppression of labour voice and unions.

It tells the story of changing labour management practices between the 1870s and 1933. The last decades of the nineteenth century saw the emergence of large industrial establishments employing thousands of workers and requiring new approaches to management. Early on, one sees the emergence of line and staff organizations, and specialized departments dealing with finance, accounting, and sales. Yet, as Kaufman argues, the management of labour had barely changed by the end of the century. This was still done mainly by owners, department heads, and managers without the benefit of written policies, planning, or training. In the author's words, it was often "harsh, arbitrary and counterproductive." Kaufman asks how firms managed their workforce using such an informal, crude, and primitive system, and why some firms moved to a new, more specialized, and more professional HRM system while others persisted with the older methods.

Kaufman treads ground already covered by others including Daniel Nelson and Sanford Jacoby. Yet, there is much to appreciate in this volume. It is extremely well researched and provides an in-depth account of how employers developed strategies to manage their workers as the size of production units grew. It includes a comprehensive review of the literature and an extended discussion of several innovative examples of HRM. It offers useful reinterpretations of how HRM developed and why it was ultimately unable to achieve the goals of higher profits, more productivity, and union-free workplaces.

Prior to the emergence of modern HRM, many of the tasks associated with managing labour were contracted out to the invisible hand of the market, including setting wage rates, supplying labour, and disciplining labour through the threat of job loss. Whatever strategic labour policies existed were designed by top executives and implemented by operations and supervisory personnel at the point of production. By the 1920s, a few companies had moved to a fundamentally different system. The management of labour was centralized in a department charged with formulating labour strategy, recruiting workers, and developing systems to increase productivity. These departments were staffed by professionals trained in the techniques of managing labour. The "invisible hand" of the external labour market was supplanted by an internal labour market and the "visible hand" of HRM managers.

Kaufman traces the birth of HRM to the emergence of the "labour problem" in the 1870s, and in particular the Great Railway Strike of 1877. The book examines the ideas and the events that shaped thinking about how to manage labour, including industrial welfare work, scientific management, and industrial democracy movements. Kaufman defines two periods in HRM management practices. The first; lasting until World War I, is described as a "commodity" approach to HRM. It recognized that labour was unlike other inputs and needed to be motivated to maximize the conversion of time into effort. The "commodity approach" assumed this could be done by paying higher wages, supplemented by the "drive" system using foremen and gang bosses to "crack the whip." Kaufman contends that after World War I a new approach to managing labour emerged, spurred by criticisms that the "commodity" model was inefficient and led to inequities, and as a response to tight wartime labour markets that had reduced the effectiveness of "drive" methods. The new approach is described as the "human resource" or "goodwill" HRM model, whose objective was to increase efficiency by "winning" employees' cooperation.

Not far below the surface of much thinking on these changes was the role of unions. Few employers saw unions as anything other than something to be avoided at all costs. The "commodity" approach to HRM was associated with a "suppression" strategy for keeping unions out of workplaces that included hiring company police and company spies, victimizing union sympathizers, instituting yellow-dog contracts, and holding out against long strikes. With the advent of the "goodwill" approach, HUM managers turned to "substitution" strategies, still with the goal of keeping unions out. This involved stabilizing employment, creating internal job ladders, implementing a "humanistic" model of work motivation, and professionalizing the labour management function. What emerged were the "standard employment relationship," the "family wage," and the male breadwinner model. Kaufman interprets this as less of a revolution and more of an ongoing transformation from a model of HRM based on custom and experience, and a negligible regard for human life, to one rooted in "science and humanism."

Kaufman argues convincingly that the Great Depression caused the majority of employers to abandon even limited moves towards HRM and to revert to the informal, decentralized, commodity-driven approach to managing labour. Labour learned that the promises of security and humane treatment from employers adopting "goodwill" HRM strategies were hollow in the face of economic collapse and the absence of an independent voice for labour. He argues, following Nelson, that this set the stage for mass unionism and government employment regulations, the approach to managing labour that HRM had sought to avoid.

One issue that continues to plague histories of this period and the subject of managing labour is that in reality very little changed between 1870 and 1930 in most companies. While estimates vary, most agree that less than one in four workers worked in establishments that even partially adopted a "goodwill" HRM approach. Hence the larger question is: should we really be focusing on a small minority of companies that were clear outliers? Were the actions of this small group of companies at all central to either the events of the period, or the emergence of trade unions in the 1930s?

The companies that adopted "goodwill" HRM did so either because the financial benefits exceeded the financial costs or because it satisfied some ethical and social goals held by company executives, or other powerful stakeholders. Kaufman casts doubt on how widespread or important the first motive was, noting that if it really added to the bottom line one would have expected to see "goodwill" HRM practices more widely dispersed. This makes the second motive more critical in appreciating why these HRM systems were adopted. Distilled to its bare essentials, HRM was a fashionable management trend led by a small group of managers with a social conscience. This raises an interesting question regarding current trends in managing labour. Numerous commentators argue that the labour management systems developed in the 1950s and 1960s associated with the "standard employment relationship" are being replaced by new models that rely on sub-contracting work and short-term employment relationships. The new fashion is to re-commodify labour and to manage it using systems that, at best, look more like the "commodity" HRM approach of the pre-WWI era or, at worst, like the crude and arbitrary models relying on the "invisible" hand of external labour markets and union suppression rather than union substitution. Kaufman's study of an earlier period leads one to ask if current labour management trends are as rooted in "fashion" as was the case with HRM in the 1920s.


McMaster University
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Author:Lewchuk, Wayne
Publication:Labour/Le Travail
Article Type:Book review
Date:Mar 22, 2010
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