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The parallel between General Motors, in its relations with its operating divisions, and the free enterprise system itself, is made more clear when an understanding is had of the corporation's organization structure. There are central staff activities concerned with policy formulation, but the executives in charge of these have no administrative authority. There are numerous divisions, each having a fully self-contained organization, with a general manager responsible for all the usual functional activities such as engineering, purchasing, production, and sales, and including financial control. As an institution, having to account to its stockholders, General Motors must justify its corporate existence, and therefore there must be a sound measure of centralized control assuring proper coordination of activities and conformity with basic policies of broad import and of a kind that can be laid down in explicit terms.

The fact remains that throughout all the years under Mr. Sloan's leadership, and prior thereto when Mr. Pierre du Pont was the chief executive, the greatest of care has been taken to avoid the exercise of dictatorship from top management in any way that could undermine the sense of responsibility beneath, and thus discourage the development of conception and vision, and the exercise of individual initiative. Always it has been recognized that a sound course of action can be determined upon only in the light of that knowledge possessed by men dealing directly with a problem, and who in turn are guided by their understanding of and compliance with the purposes of superior authority. This represents the two-way-flow treatment, as pertaining to the higher level of executive personnel, and the organization principles which have been adhered to are attuned to the theories which I have attempted to outline.

I cannot stress too strongly our steadfast adherence to this policy, even to the point at times of suffering delay in gaining effective accomplishment of essential objectives. Experience has demonstrated that, even in spite of a possible temporary advantage of direct dictatorial action, it is better to allow men to make decisions under their own power.

I wish time made it possible for me to mention many illustrations of General Motors' experience in this matter of individual responsibility and individual initiative. But I have already talked too much about General Motors and I am not trying to advertise its wares, I have been asked to deal with the problems of conserving and developing industrial management as a national resource during and after the war, and I have said I am dealing with only one single phase of the subject; that phase having to do with the human equation. I should like to sum up what I have endeavored to set forth, just in connection with this single phase, by citing the following points:

1. We must recognize that industrial management is not and probably never will be perfect. As in all cases where we are dependent upon the results of collective human endeavor, there will be reflected the inherent faults and weakness of human nature.

2. Industrial management, in the course of serving the society upon which its own existence depends, has steadily and progressively broadened its conception of its own responsibilities.

3. Industrial management is in need of accepted rules of conduct, such as have have been advocated by the National Association of Manufacturers. Perhaps the most comprehensive statement of principles in this regard was set forth in the declaration adopted by the Congress of American Industry at its annual meeting in 1939 under the auspices of the National Association of Manufacturers.

4. Those in industry who have risen to high positions of responsibility must become more conscious of the causes and circumstances underlying their progress. It is so easy for us mortal beings to forget the helpful push that came from below. We must remember that those who are entitled to higher positions of trust and responsibility must reflect the kind of leadership which enjoys the sympathy and support of subordinates, and who, themselves, must be ready to give understanding support to qualified leadership.

5. No executive, or person entitled to leadership, can remain sufficient unto himself. Whatever his level may be, he must place dependence upon the more intimate understanding of problems possessed by those closer to the facts. He must endeavor at all times to develop the men under him to the peak of their capabilities, with the knowledge that the surest path to his own promotion is the process of developing subordinates to the point where they in turn can assume broader responsibilities.

6. Regardless of his position, the man on the ground is better able to gain an intimate feel of underlying facts bearing upon å given problem than the man 7. In the accustomed organization of industrial management, as it has to do with the manufacture of product, the factory foreman, as a part of management, represents perhaps the most essential link in serving the requirements of the two-way flow. This is because of the intimacy of his contact with the workers and with conditions involved in the work under his immediate supervision.

Here I am including the constructively minded factory worker as well as the foreman immediately above him.

further removed.

8. And so it is, in this matter of industrial management, that the most constructive attention to problems comes from complete understanding—the kind of understanding possessed by the man on the ground, passed along up the line, and carefully weighed on the scales of policy determination and administration.

THE TWO-WAY FLOW

A SCHEMATIC REPRESENTATION OF THE PRINCIPLE OF DECENTRALIZED OPERATIONS

AND RESPONSIBILITY IN INDUSTRIAL ORGANIZATION

THE EXAMPLE GIVEN DEPICTS THE APPLICATION OF THE PRINCIPLE

TO THE MANUFACTURE OF PRODUCTS IN CURRENT PRODUCTION.
AND THEREFORE REPRESENTS ONLY A FRACTIONAL PART OF EACH INDIVIDUAL'S FUNCTIONS

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9. Through the nintrammeled operation of the two-way-flow treatment, the conception and understanding of combined purpose is broadened and deepened, and every individual is assured of maximum opportunity to synchronize his exercise of responsibilities with over-all policy and purpose, in the formulation of which he has had a voice.

10. This two-way-flow treatment is of paramount importance from two standpoints: (a) In order that executive actions will derive from breadth of understanding, and (b) in order that management will be perpetuated and its ranks replenished by the younger generation of workers and executives rendered capable of assuming progressively higher responsibilities as their understanding of purpose and procedure is developed,

11. The workmen at the bench, the junior executives along the line, and all others engaged in the processes of industrial management will, under the twoway-flow treatment, come to fuller understanding of their individual responsibilities and the realization that within the framework of free competitive enterprise lies the maximum opportunity for all who gain experience and understanding and who demonstrate their ability to assume ever-increasing responsibilities.

12. Although management can take no direct action in the field of political events which may greatly affect industry's ability to operate efficiently, it can influence the public opinion on which political events depend, by examples of constructive service in the public interest, thus bringing the American people to a more solid acceptance of the vital importance of management's function in serving the material needs of society and conserving and developing the human resources necessary to perpetuate the system that has made America what it is.

If everyone engaged in industry will face realistically the facts with which he is surrounded, possessed of a high sense of social obligation, actuated by the commendable motive of enlightened self-interest, and with consciousness of the human equations involved, we need not worry about the future of American industry or the future of America. The plain, unassuming, but incontrovertible merit of management's performance will defeat any attempt at Government central planning. It will defeat any attempt to substitute for the free competitive enterprise system that hybrid form of State capitalism which would black out individual initiative and substitute political influence for proven experience and understanding. It will defeat any action that would deprive America of that inherent resource of industrial management which America needs so sorely today and which will be needed just as sorely for the tremendous task of reconstruction,

The CHAIRMAN. The Chair desires to call to the witness stand Mr. Richard Maize, secretary of mines, Department of Mines of Pennsylvania.

STATEMENT OF RICHARD MAIZE, SECRETARY OF MINES, DE

PARTMENT OF MINES OF PENNSYLVANIA, HARRISBURG, PA.

The CHAIRMAN. Mr. Maize, you may proceed with your statement, if you wish; we are glad to hear you at this time.

Mr. Maize. Insofar as Pennsylvania is concerned, the mine foremen, assistant mine foremen, and fire bosses are statutory officials, and are representatives of the Commonwealth. Their offices were created by the general assembly. Their qualifications are determined by competitive examinations, and they are certified by the State and charged with the legal duty of enforcing the provisions of the law imposed upon the operators and upon the workmen. In Pennsylvania and every other coal-producing State, to the best of my knowledge, these officials stand alone, representing the State that has created their office, and commanding obedience from both the operator of the mine and the workmen employed therein.

These State officials are not employees of the operator in the sense that other workmen are employed. True, they are engaged by the operator to perform certain statutory duties, not for the operator, but for the Commonwealth, and in consideration of the presence of these officials in a coal mine and the payment of their salary by the operator, the said operator is permitted to carry on the business of mining in Pennsylvania.

The courts have ruled that the mine foremen, assistant mine foremen, and fire bosses are agents of_the State (D'Jorko v. BerwindWhite Coal Mining Company, 231 Pa. 164, 169), invested with authority to see that the mines are legally operated, and that those under their care shall obey the laws of the State. It is the belief of the State that these officials should not be permitted to indulge in

any union activities which, in any respect, would hinder them in the performance of their statutory duties.

The National Labor Relations Board has ruled that only the mine foremen and night foremen are part of the management of a coal company, and as such are not permitted to organize under the terms of the National Labor Relations Act, thus permitting the assistant mine foremen and fire bosses to organize under the terms of the act, which, in view of the fact that all these officials are agents of the State and perform precisely the same statutory duties, amounts to an inconsistency.

The State has its proper functions and of course is in duty bound to perform them. Therefore, it has defined through statute just what duties the mine foreman, assistant mine foreman, and the fire boss shall perform in order that the workmen under their care be accorded the greatest benefits from a safety point of view (act of June 9, 1911, Public Law 756).

While it is not to the credit of human nature, it requires no stretch of the imagination to foresee a leniency developing on the part of a mine official in favor of the worker with whom he becomes affiliated in union circles. Nothing can be said against the members of an organization who stimulate a spirit of making allowances and of yielding a point here and there for their mutual benefit, provided such action does not affect the health and safety of the persons he is required by law to protect.

Clearly, certain classes of workers have the right to organize in their crafts or industries. This is not debatable. But if the mine officials required by the laws of Pennsylvania are permitted to interiningle and become subject to the control of an organization of employees over whom they have police power and legal supervision, then, because of that naturally developed lenient spirit that certainly must follow, the purpose for which their office was created, namely, the protection of human life, will have been defeated, as the law does not permit of compromise.

The more clearly we discern the true character of the duties placed upon mine officials the more strongly are we convinced that the Congress of the United States should prohibit these officials from joining any organization that would have the tendency to interfere with their freedom of action, or that might cause them to falter in the performance of their statutory duties. Only by constant supernatural assistance could a mine official prosecute a brother union member in the courts of our State for a violation of law and at the same time remain within the good graces of the union of which he is a member. Yet this is what he would be expected to do in order to safely conduct the operation of the mine. Well, indeed, might he falter and adopt the easier course, namely, neglect to perform his statutory duties.

More than 70 years ago the General Assembly of Pennsylvania, in its wisdom, saw the need for officials such as mine foremen, assistant mine foremen, and fire bosses-officials who would represent the State and command obedience to its law. Laws were enacted for the sole purpose of providing for the health and safety of persons employed in and about our mines. The task that confronted these officials in the early years was a gigantic one. Success seemed hopelessly foredoomed, but finally through persistent perseverance on the part of these officials a man in a Pennsylvania coal mine today has five chances of returning safely to his home at the end of each shift to the one chance had by the workman prior to the adoption of official supervision. Here it would seem that justice to the workers in the mines of our country and their families demands that the commanding officials of those mines be left in supreme control of the safe operation of their mines, and that they should not be a tool in the hands of either the operator or the workman.

I, as secretary of mines of Pennsylvania, and many safety engineers in my State, sincerely believe that from whatever angle this situation be viewed, the mine foremen, assistant mine foremen, and fire bosses can best save human lives and prevent injury if they are permitted to prepresent authority, rather than be subject to it, and are left free and independent from union affiliation, that they might exercise fairness, and in all conclusions satisfy a sensitive conscience and use firmness in restraining both solicitation and clamor.

For example the titles mine foremen, assistant mine foremen, and fire bosses imply the duty to command and expect obedience if the lives and the health of those struggling in the coal mines of the Nation are to be preserved.

The Government of the United States is a supreme sovereignty. So likewise are the States. The rights of each have never in the history of the Nation been transgressed, excepting possibly in the matter of taxation. So why, gentlemen, should the Congress of the United States enter a field comprising so many possibilities for harm and evil, injury, and death? Why do anything that would tend to endanger the lives of the mine workers-men engaged in the most hazardous of all industries—who are in many instances the sole support of wives, mothers, and innocent children?

Mr. FENTON. Mr. Maize, I am sure we appreciate your statement. As far as I am concerned, I asked the question of Mr. Merritt, counsel for the anthracite industry, the other day, whether or not he would consider a mine foreman, an assistant mine foreman, and a fire boss as State officials and he answered in the negative, said he did not. I take it from your statement that you take the opposite view, and that, according to court decision, they are considered State officials; is that correct?

Mr. Maize. That is right, Your Honor.
Mr. FENTON. I think that is all.

The CHAIRMAN. That was the day I took the same position that he takes, I believe?

Mr. FENTON. That is right. Mr. DURHAM. How many of these employees are there in the State of Pennsylvania?

Mr. MAIZE. Approximately 3,500; maybe 4,000 now, since industries have taken on a spurt and are producing more coal.

Mr. DURHAM. Has any approach been made to organizing this group of people? Mr. MAIZE. There has been; yes, sir. Mr. DURHAM. Already? Mr. MAIZE. Yes, sir. The CHAIRMAN. Is there anything further, Mr. Maize?

Mr. MAIZE. May I make this further statement? The Congressman asked me why I took the stand that these men were State officials. He said that he was certified as a licensed doctor. I said the difference is that these men are certified by the State to enforce the law. He is certified by the State as a doctor or as a driver of an automobile, as

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