The 'human factor' in business
How can you achieve efficient management so industry can prosper and ensure your business still has a soul and is seen as a trusted part of the community?
Did you know that KitKat used to have a blue wrapper, was first called Chocolate Crisp, or is Japan’s No. 1 selling chocolate bar? And did you know that KitKat was created by a founding member of the CIPD — Benjamin Seebohm Rowntree?
Rowntree & Co., the company set up in York by Rowntree’s industrialist father Joseph, was the real life equivalent of Willy Wonka’s famous fictional factory — a hothouse of confectionery innovation that created not just KitKat but also favourites like Fruit Pastilles, Black Magic and Smarties.
Yet what has become lesser known was that the factory was also a hub of new ideas in business management. The bottom line for Joseph and Seebohm was the recognition that workers who can’t feed their families will never contribute to business success. A minimum wage and decent standard of living were essential. For Joseph, this played out in the three philanthropic trusts he founded in his name with the aim of addressing the root causes of social evils. All the trusts still exist today (the Joseph Rowntree Foundation is the largest) and each is concerned in different ways with contemporary issues relating to social justice, including corporate responsibility.
Business with a soul
For Seebohm, his lifelong fascination was how to achieve efficient management so industry could prosper. During and after the First World War he had worked with Prime Minister Lloyd George on national industrial strategy and reconstruction. His book The Human Factor in Business (1921) was a study in the experimental practices being trialled in the factory, and it quickly became a classic in the development of early 20th century management theory.
‘The factory is not just a soulless organisation for turning out cocoa and chocolate. It is a place in which thousands of people are spending a very large proportion of their waking hours. Everyone can, if he or she wills, help to foster a spirit of friendliness and good fellowship, so that the hours spent in the factory are happy hours. Let us have efficiency and good organisation by all means. In your everyday work, remember always the kindly spirit.’
We shouldn’t however, be misled into thinking Seebohm as a mere idealist. His was a pragmatic attempt to get the most out of his workforce by creating an environment where men and women could thrive for the benefit of the company. For him, the pivot of success is that very human element by which efficient industry prospers.
Looking after the workforce
How did Seebohm implement his philosophy of management in the workplace? He oversaw the introduction of a works council, a shop steward, a suggestions scheme, a joint appeal committee for disciplinary matters, a pension scheme and the regular supply of management information to employees. There was a medical department and a day continuation school, canteens, a library, sports grounds, rose gardens and even hanging baskets in the corridors. There was an in-house doctor and dentist, a women’s welfare officer, and education by trained teachers on company time. To counter the tedium of repetitive work, Swedish-style gymnasium classes were added. After the war, a 44-hour, 5-day week was introduced and in the 1920s there were family allowances, unemployment pay, a profit-sharing scheme, and industrial psychologists to create tests for recruiting and training the right people for the right jobs.
Seebohm insisted that these innovations should not be viewed ‘as a philanthropic addendum to business’, but embedded for the long term. Even though they belonged to a different age of post-war reconstruction, his welfare provisions may yet provide a benchmark for discussing exactly what work is in the modern age, as we look at the implications of a universal basic income or assess the human cost of zero-hours and call-centres.
Business and community
Seebohm was concerned not only with the creation of the community within the industry but also with the place of the industry within the wider community.
‘Whatever may be the motives which induce any given individual to engage in industry, its true basic purpose must be the service of the community.’
For their part, the Rowntrees spent their profits on local facilities in York; public parks, libraries, swimming baths — and even less exciting infrastructure like street-lighting, drainage and pavements. That legacy lives on and is still treasured by the citizens of York today.
Business and trust
What about Seebohm’s take on building trust in an organisation? Asked by a group of US visitors on a tour around the factory in 1933, Rowntree was asked about his workforce: ‘Can you trust them?’
To this he answered: ‘Can they trust me? I have money and power. Since I have convinced them that they could trust me, they have never disappointed me.’
After his retirement, Seebohm continued to write and lecture and people flocked to hear him speak in the US, as they had done in Japan, where his views on enlightened capitalism still have a following within the business community. So next time you eat a KitKat, spare a thought for Seebohm’s work on ‘industrial betterment’ and his idea of the ‘human factor in business’. As he had put it, ‘industry is basically the servant of humanity and the businessman is engaged in human service’.