LEARNING UNIT 1 CASE STUDY

Chapter 2 The History of Management

Case Assignment: International Steel Group

A day-shift supervisor at an International Steel Group plant in Steelton, Pennsylvania is informed that the companys collection of scrap-metal has just been sold. The metal is stored in a football-field-sized area, divided by parallel sets of railroad track, such that stacks of metal are no more than 15 feet from a track. Each stack contains 390 pieces of metal. Each piece of metal is about 3 feet long, 4 inches high, 4 inches wide, and weighs 92 pounds. The metal must be moved into railroad cars for shipping.

A few challenges present themselves here. First, the metal must be moved manually. There are no forklifts, and even if there were, there arent any people properly trained to operate them. Further, the piles of steel would be too heavy for wooden forklift pallets in the first place. The supervisor has six college students on staff for the summer, and due to a hiring freeze, no more can be acquired. Their work so far has been relatively light. Based on an old report from a similar project, workers could typically load about 30 pieces per hour during an 8-hour shift. At that rate, the current project would take six weeks to finish. The purchasing manager who sold the scrap needs it packed and shipped in two.

The supervisor must deal with two major difficulties. First, if the work crew is going to pick up the pace to get the job done, they will need some serious motivation. Even with sufficient motivation, however, physical fatigue is inevitable. Therefore, something must be done to make the labor more manageable.

This case is based on the pig iron experiments run by Frederick Taylor, the father of scientific management, in 1899. In a similar setup, through observing the loading process, Taylor determined that each laborer should actually be able to move about 115 bars of pig iron an hour in a 10-hour work daynearly four times as much! At the same time, he was able to do this in an age of labor unrest leaving his men happier and more content while working at this higher production rate.

Taylor strongly believed in offering his workers fair pay. He wrote, the manager must give some special incentive to his men, if he is to gain their initiative. Thus, Taylor began by offering his workers a 60% pay increase, if they could meet the 115 bar loading quotas. Given these incentives, some men could move even more and were paid accordingly.

Not all men could do this, however; physical limitations did not always allow it. In Taylors day, workers paid for 10 hours were expected to work 10 hours straight. Taylor realized that especially with physical labor, fatigue would be an issue, thus, Taylor introduced work breaks. When the cumulative fatigue of heavier days added up, the men were given off days, working for base pay at the lower rate. Through Taylors system, handling costs for pig iron dropped by almost half, while workers earned 30-60% more.

What Would You Do?

In the case assignment for Chapter 2, you learned that six college students had summer jobs working for a supervisor at International Steel Group in Steelton, Pennsylvania. Their task, over the next two weeks, was to load thousands of 92-pound pieces of metal onto nearby railroad cars for shipping. Unfortunately, since the metal pieces were stacked individually and not on pallets, it wouldnt be possible to use a forklift to load them. Likewise, because of a hiring freeze, the supervisor didnt have the option of hiring more workers. In other words, the only way to get the metal parts into the rail cars was for the college students to load them by hand. Previous experience with this task indicated that workers typically carried 30 to 31 metal parts per hour up the ramp into a rail car. At that pace, it would take the six college students six weeks to load all of the metal. Unfortunately, however, the purchasing manager who sold the metal had already agreed to have it all loaded and shipped within two weeks. Your job as a supervisor was to figure out how to solve this dilemma.

That general scenario is actually based on one of the most famous cases in the history of management, the pig iron experiments, which were conducted by Frederick W. Taylor, the father of scientific management, at Bethlehem Steel in Bethlehem, Pennsylvania, in 1899. Bethlehem Steel had 10,000 long tons (a long ton is 2,240 pounds) of pig iron on hand. Each pig was 32 inches long, approximately 4 inches high and 4 inches wide, and weighed, on average, about 92 pounds. After the price of a long ton of pig iron rose from $11 to $13.50 per ton, the company sold all 10,000 long tons of pig iron and used work crews to load it onto rail cars for shipping. And, like our college students in the opening case, the laborers at Bethlehem Steel had the job of carrying 92-pound pieces of pig iron up a steep plank and loading them onto a railroad car. Over the course of a 10-hour day, the average laborer could load about 12.5 tons, or 304 to 305 pieces, of pig iron per day; in other words, 30 to 31 pieces per hour. Based on a study analyzing the workers and how long it took them to complete each step involved in loading pig iron, Taylor and his associates, James Gillespie and Hartley Wolle, determined that the average laborer should be able to load 47.5 tons, or 1,156 pieces, of pig iron per day, or 115 to 116 pieces per hour over a 10-hour day. Nearly four times as much! Of course, the question was how to do it. Taylor wrote: It was our duty to see that the pig iron was loaded on to the cars at the rate of 47 tons per man per day, in place of 12.5 tons, at which rate the work was then being done. And it was further our duty to see that this work was done without bringing on a strike among the men, without any quarrel with the men, and to see that the men were happier and better contented when loading at the new rate of 47 tons than they were when loading at the old rate of 12.5 tons.

ANSWER THE FOLLOWING QUESTIONS:

1. So, without more workers (theres a hiring freeze) and without forklifts, it all has to be loaded by hand by these six workers in two weeks. But how do you do that? What would motivate them to work much, much harder than they have been all summer? After all, theyve gotten used to the leisurely pace and job assignments.

2. And while motivation might help, motivation will only get so much done. After all, short of illegal steroids, nothing is going to work once muscle fatigue kicks in from carrying those 92-pound parts up a ramp all day long. So, what can you change about the way the work is done to deal with the physical fatigue that cant be avoided from this kind of work?