Industrial Management

Industrial Management, in business, term used to describe the techniques and expertise of efficient organization, planning, direction, and control of the operations of a business.

In the theory of industrial management, organization has two principal aspects. One relates to the establishment of so-called lines of responsibility, drawn usually in the form of an organization chart that designates the executives of the business, from the president to the department head, and specifies the functions for which they are responsible. This relates to modern theory of the firm. The other principal aspect relates to the development of a staff of qualified executives.

Planning in industrial management has three principal aspects. One is the establishment of broad basic policies with respect to production; sales; the purchase of equipment, materials, and supplies; and accounting. Into this range fall pricing policy, risk analysis, and other strategic disciplines. The second aspect relates to the implementation of these policies by departments. The third relates to the establishment of standards of work in all departments. Direction is concerned primarily with supervision and guidance by the executive in authority; in this connection a distinction is generally made between top management, which is essentially administrative in nature, and operative management, which is concerned with the direct execution of policy. Control involves the use of records and reports to compare performance with the established standards for work.

Industrial management as just defined dates from the latter part of the 19th century. A notable impetus to its evolution was provided by the American engineer Frederick Taylor, who developed techniques for analysing the operations involved in production and for setting standards for a day's work. The techniques originally devised by Taylor were adapted by industrialists to other phases of business, including the employment of qualified workers, and wage incentive programmes either to replace or to supplement the piecework system that had previously prevailed. Industrial management experts who succeeded Taylor applied his techniques to a wider range of business problems.

Modern industrial management and the organization theory related to it tend to address the social microclimate of firms more than the traditional economic factors: the behaviour of individuals within organizational structures is as important as those structures themselves. Thus, though performance-related pay and other such inducements are still regarded as key factors in achieving greater profits and market share, other means such as quality control and human resource management have been added to the traditional disciplines of Fordism. In labour relations, these are often aimed at breaking down traditional labour collectivism and involving the worker more closely with the company. However, competition between firms naturally means that all will adopt the best management techniques, negating their competitive utility, and no foolproof blueprint for industrial management has yet been devised to protect firms against their own errors.