RESPONSIBILITIES OF MANAGEMENT

HL Deb 25 October 1960 vol 225 cc1001-85

3.4 p.m.

LORD SHACKLETON rose to call attention to the responsibilities of management in industry and commence: and to move for Papers. The noble Lord said: My Lords, I am very conscious that this Motion is an extremely wide one and that there is a danger that we may develop too diffused a discussion which could embrace the whole field of industry, but it seemed to me, when I discussed it with some of my friends, that there is such a wealth of experience in this House in the field of management that it was desirable to leave the Motion as wide as possible and to hope that later on we might proceed—as I think we are very well fitted to do in this House—to discuss the more precise and more specific aspects of this very important subject. I say that I think we are particularly well qualified because of the experience of noble Lords like the noble Lord, Lord Baillieu, who played such an important part in setting up the British Institute of Management, Lord Courtown (I, like many other managers in business, have for the last few years been picking his brains on how to run affairs) and others who can bring a dispassionate view to this subject. It is one that I hope on the whole we can discuss—and again we are qualified to do this here—without getting too involved in Party politics, which in any case is something of a painful subject to some of my noble friends on this side at the moment.

It might be useful if I were to attempt a definition of management, and it is worth looking at the original derivation.

The words "management" and "manager" were in the first place mainly applied to the management of the horse; and when we consider the qualities that are necessary in the management of the horse I think we shall find many of the qualities that we look for in a manager. The rider or the manager must require some science—indeed there is an increase of science in riding and in horse management. He certainly requires character, he must have aptitude and he must have sympathy. And the penalty of failure of the rider is not so very different from the penalty of failure of the manager. Those of your Lordships who, like myself, have on occasion proceeded over a fence without the accompanying horse will realise that baulking of that kind is likely to happen in industry, and the manager who puts in a new machine only to find that he has an unofficial strike on his hands is in the position of being, as I was once in a point-to-point, kicked in mid-air.

This, I think, helps to narrow the subject, because I am not concerned so much with the broad sweep of industry or indeed with finance. Much of the power that originally rested in ownership has now moved to management. One of the best descriptions that we have of management was given by the late Lord Verulam, whose passing we all regret so much and who made a notable contribution in this field. This definition was published not long ago. I am afraid it is a long one, but it has the advantage of covering the subject: Management"— good management— as a concept means making The maximum effective use of resources in men, money, materials, machines and methods. Management in practice can be divided into two clearly defined functions. One of these is the technical function which arises from the vast and increasing specialisation of skills and techniques; the other"— and it is this with which I am most concerned to-day— springs from the first arid has been given urgency and importance by its rapid development. It is the art of direction, co-ordination and control at every level; it consists of managing the experts in all skills as well as the possessors of none.

My Lords, in an earlier age it was sometimes fashionable—and indeed we are still given to it now—to try to identify the seats of power in society and in the community; indeed, much of our history, like that of other nations, has been concerned with those struggles for power or struggles against its use in a way that might be harmful. And when we look at the power that is exercised in our community (I am talking about direct exercise of power) to-day we see the power of the Government; we see the power of the parent; we may see the power of the Church, the power of finance, which to some extent is considerably diminished, and finally the power of management; and management's influence may possibly extend more widely almost than any of those and may come to have a greater effect, not only in the progress and happiness that comes from rising living standards but also in the pattern of life which it sets in society.

It is obvious that if management is bad, or perhaps I should say is inadequate—because I want, if possible, to avoid using terms with moral connotations—and if in fact it fails to do the job, then not only is our wealth and our prosperity affected, but frustrations, unhappinesses and dissatisfactions cut deeply through the community. Those of your Lordships who have been concerned in industry or, indeed, have been concerned in any organisation, whether it be in a regiment or a ship, will know of the power that the manager or the commanding officer has in regard to the happiness of the people under his charge.

It is a most striking thing that management as a subject is scarcely taken seriously. Although some may disagree with that statement, when we look at the facts we realise that there is little coordinated body of thought. As Colin Cook has said, there is no philosophy of management. There is very little research done in management; and in fact most managers become managers, not as a result of training of a formal kind, except perhaps in their particular technology, but as the result of an apprenticeship. They learn from journeymen managers, and they do not undergo the formal disciplines which go to shape training in other fields. There is, in fact, no precise body of knowledge. There is a great deal of theory; there are a large number of so-called principles which are applied. But I doubt whether we have got very much further—though that is some advance—than at last learning some of the things we ought not to do in management. It will be in regard to some of the things that we ought to avoid in this age that I shall want to make some remarks this afternoon.

It will be as well if we realise that in a debate of this kind it is extremely difficult to generalise for the whole of British industry and commerce. Much of what I have to say is bound to be related to my own experience in large-scale industry, and to the rather lesser experience that I have had in small firms. We must always remember that much of British industry consists of small firms, and that it is often difficult for the small firm to undertake what the large firm can do; the small-scale management has special problems which need special consideration. Furthermore, we have to realise that management is affected and, indeed, controlled by the framework within which it operates—a framework of general, economic and social climate. Here, of course, the action, or the lack of action, of the Government will have a great bearing. It is therefore difficult to make comparisons with other countries.

Our industrialists may go to Russia and come back with great admiration for advances which have been achieved, though they would not be possible under our present system of government and our present system of economic organisation. To that extent it may not always be fair to blame managers for their inability to do what is not possible in the type of society that we favour here. But there is one thing on which we can agree: we have to consider management to-day against a totally different economic background from that which appeared to the classical economists in the past to be regulated. Our view of the market has been greatly modified. It has always to a large extent been a delusive one—the classic self-regulated economy which was finally destroyed by Keynes. I think it would not be unfair to say that we are all Keynesians now, and some of us may be Galbraithians as well.

But the future of industry will not be determined solely by capital formation, or even solely by improved technology. The manager is the person who is concerned with applying this technology, and although I am anxious to avoid making any broad condemnation, I think it is true to say that, talking to scientists and many industrialists, one finds a feeling that British management, which at one time led the world and still makes the most remarkable advances and achievements, sometimes with a great deal less resources than are available to others, may be lagging at least in regard to its attitude to technical innovation; that it is perhaps falling behind in this competitive race which affects our living standards and those of other countries.

As I say, we have a body of practice which sometimes is elevated to the title of a principle and which affects all our social and industrial affairs. One of our problems—this is a problem which I want to mention because it will lead up to some of the suggestions I want to make at the end—is how to break through the inertia, the resistance to change that every social organisation automatically develops. It is quite certain that there is one thing that people dislike—namely, having change imposed from above or, indeed, from below. It is inherent in the nature of any organisational system to resist external changes imposed on its organism. It will tend to go on functioning in the way with which it is familiar. That is a matter of conditioning. It is a field where little work has been done by social psychologists and others. It is not only a problem of getting ideas in at the top; it is much more a problem of transmitting them to lower levels.

May I quote some experiences that I have had over the last few years in trying to introduce certain changes into a very complicated field of personnel work and documentation? We found, when we were analysing and costing out the very extensive paper work we were doing, much of which appeared to serve a useful purpose, that when one member of my firm went sick for more than three days it gave rise to no fewer than 21 pieces of paper. This clearly appears nonsense. But when one comes to try to abolish those 21 pieces of paper and to persuade intelligent and reasonably cooperative people that they can give up some of their bits of paper, one finds that they will fight to the death, because in some way their security will be affected by the change in their environ ment. The development of a simpler system imposes an obligation not only to think out the system but to find ways of selling it. Systems have a way of not working when a manager or anyone else is not in sympathy, when he does not feel anxious to co-operate. It is not just conscious sabotage; it springs from our own natures, arid it is one of the difficulties into which a good deal more research must be undertaken in industry.

This brings me to the whole question of labour and industrial relations. I am glad that my noble friend Lord Citrine will be speaking later, because of his great experience on both sides of industry. For that reason I shall not myself deal in much detail with the part of the trade unions in this matter. Generally speaking, I think your Lordships will agree that good labour relations depend in the first instance on the management. Industrial management gets the labour relations that it deserves, and when there is a history of incompetent, unsympathetic or basically unintelligent management, there is liable to be greater labour trouble. I am not just referring to particular issues on some big wage-demand question, but to the cases of friction which give rise to some of these most trying unofficial strikes. It is interesting to note the striking difference between one firm and another, and between one industry and another, in avoiding or precipitating this sort of trouble.

There is surely room here for a good deal of improvement. Much of management will pay lip service to ideas of managing with consent or consultation rather than by the wielding of authority, but when it comes to the point the individual, unless very well trained and conditioned, is often resentful of any threat to what he believes to be his authority. There is plenty of experience in industry of how these things can be handled, how managers can be trained and good relations established. I do not wish to refer to particular industries, but we all know those where there has been a story of good relations and those which have a history of bad relations which ought to be put right.

It is necessary, therefore, to "get across" to managers the need for them to recognise wholeheartedly their responsibility for explaining policies and that it is very often a failure on their part rather than the obtuseness and awkwardness of those they manage that is to blame. This means spending a good deal of time, money and thought. It means that managers sometimes have to stop doing the things that are in front of them—it is always much easier to do what is there, especially if you understand it—and to sit back and think of some of the more uncomfortable things. In other words, they need to use their brains and to have time to do so. There must be a preparedness to spend money on internal journalism. It is surprising how many firms spend money on public relations and external journalism and yet do not realise that the most important industrial relations lie in the good opinion their workers may have of them. There is a great deal of loyalty in industry. In fact it is sometimes surprising how much is shown, in a bad cause, to individual firms.

One of the difficulties is that management is apt to be too busy and does not have time to open its mind to new techniques. Unfortunately there is a rather rigid approach to organisation in industry—almost a two-dimensional approach. Tidy patterns of organisation are created which fit existing set-ups, and beautiful lines are drawn which show the chain of command and the line of the staff system; but very often the effect of those is to prevent the intrusion of new ideas—what Peter Drucker talks of when he speaks of innovation. It is resistant to the idea of mutation. We did not evolve on a two-dimensional basis—biology, natural selection and evolution have never been as flat as that—and we require more flexibility and less tidy thinking in regard to the organisation of industry. It will make it much easier then to import new ideas and above all to import science and the sciences and the thinking that goes with those.

Unfortunately, much of management is bedevilled, as sometimes we are as politicians or people concerned in public affairs, by some of these words which have come to have a special meaning, like decentralisation and centralisation—false analogies which are really irrelevant to the competent administrator, who is not concerned with whether decentralisation or centralisation is a good thing but with setting up the best management system for the particular circumstances. The manager who is defeated by a situation in which his administration is going out of hand falls back on Parkinson's Law, which, on the whole, I regard, amusing as it was, as one of the larger obstacles to thinking. How often it is quoted in boardrooms as a substitute for facing the real problem—finding out how their industry and their firm should be organised.

We are apt to make excessive use of efficiency tests which are only partially valid. Budgetary control, which is essential in all large-scale business, is none the less a dangerous instrument. The danger of the test of the profit and loss account as a judgment of efficiency is very apparent to anyone who is looking at the difference between sections of a firm where a strong-minded manager has, in the short run, bucked the budgetary-control system. At this point managers and industry have to make sure that they do not impose a kind of dead hand of bureaucracy, of the kind that Government is so often accused, by setting up a highly organised budgetary control and other forms of control system. Of course, the same problem exists in private as in nationalised industries and gives rise to the same kind of conflicts. One of the striking things is that these conflicts are often similar whatever may be the ownership of the business, and therefore I want to emphasise that management to-day may very well be much more important than ownership.

I do not wish to talk too long. I had hoped to set the scene for some of the contributions which some of your Lordships can make with much greater knowledge than myself, but I should like to pull together some of the remarks I have made. I have said that too much of management is to-day resistant to technical innovation. That may not always be their fault. It may be something to do with the climate of opinion, this unwillingness of management to be mobile in our particular community, which is a special social problem. It finds it difficult to adjust itself to the needs for research. Therefore I would say that the most important responsibility that rests on management is recognition of the need to improve itself. To-day there is a greater danger in the advance of technology and of management failing to foresee the administrative consequences of technical advance. Management must foresee them; and as a general criticism I would say that that is one of its weakest points. It is weaker in this sense than the Government and the Services, particularly in foreseeing the consequence of a particular technological action.

Management fails to plan the consequences of its own operational positions and lags along desperately, sewing on a patch here and there, while trained executives, operators and production people produce a situation which by then it is too late to organise in a rational way. Of course there are large numbers of exceptions in industry where this is not true and where, in fact, the whole thing proceeds organically as a whole. But our greatest need is for management to use the new tools and techniques that are available. It is no longer just a matter of simple hunch decision, and it is going to be extremely difficult to make use of some of the now techniques available.

There is the need for understanding things like linear programming, quantitative analysis and operational research, all of which will become part and parcel of management in the future; and it is a fact that many people are not even aware—or are perhaps only dimly aware—of the existence of these instruments in their industry. A particular example is the introduction of the computer, which will throw up a vast and completely new field and which, while it is not successful at the moment, in taking decisions will provide information of a kind that has not been available before; and it will be information of a different kind. It will not be detailed information on a particular product but will lead to a broader picture, and it will be necessary for management to understand the statistical consequences of this information if, in fact, we are to advance to that ideal which is management by exception rather than by continual direction of every activity.

This brings me to my last point and I hope that others of your Lordships will perhaps deal with it in more detail: the question of management training. At the present moment too much training in management is for conformism. It is training in the light of what might be called the conventional wisdom, and the procedures that are adopted are not designed to bring about these changes and this innovation which is necessary. I would not suggest for a moment that we can teach a manager just like that. Our first requirement—and this is true of all aspects of our life, whether in our industrial society or in anything else— is better educated people. In the first instance that is what we have to look for, though that is not to say that there is not room for the application of academic disciplines, which have served us well in other fields but which, so surprisingly, are absent in the field of management. Therefore there is an obligation on industry and on the Government to foster those institutions that are trying to do something about it; in particular, bodies like the British Institute of Management, the Institute of Personnel Management and others.

I would just refer briefly to the British Institute of Management, perhaps the most notable of them all. The Institute has had a somewhat chequered career. There have been many criticisms of it, and it has certainly had many difficulties, operating in a very diffuse field. None the less, it has made an important contribution and, whether we like it or whether we do not, it is the best we have and I think it is a good deal better than it might be. It is doing the job of stimulating industry, and certainly of stimulating the Government, in regard to management education.

Recently we had the advantage of a recommendation in the Conservative Party Manifesto for the setting up of an advanced school of business administration more or less on the Harvard model. I personally am not very much in favour of it. I do not think that, on examination, it will appeal to the Government. At any rate, the Government have not done anything about it. But they have recently had a Working Party report which makes certain proposals for the extension of management education of a kind that has been going on ever since the Urwick Report a few years ago, and I hope that some real steam will be put behind this particular development.

This Working Party, which reported in a Ministry of Education circular, Number 1/60 of March 28, 1960, recommended the setting up of a United Kingdom Advisory Council on Education for Management. The Government accepted that recommendation, and I believe that they have appointed the first chairman. I shall be very interested to hear from the noble Lord, Lord Mills, who knows as much about management as anyone else in this House, what steps the Government are going to take to stimulate further action in this direction. Much of the responsibility in all this must rest on industry itself, and I hope that we shall stimulate industry to give a lead, and particularly those firms that are not participating in this work. Too much of it has been done by a few firms —firms like Imperial Chemical Industries, Shell and others, which one will find always in strength supporting conferences and training schemes; and we have to get across to industry as a whole that they must support these developments.

There is a need for something more. There is a need for management research; there is a need for turning this loose field into something in which we have some rather more precise knowledge and some rather more flexible thinking. There is already in this country some research going on at certain universities. In the School of Engineering at Cambridge there are some interesting developments, and at Edinburgh University, under Professor Hunt, some research is being undertaken. I should have said that this is perhaps one of the most important steps that can be taken. It will not solve the problem, but hitherto we have merely played around with it, and we have not faced the logical consequence of it.

My Lords, there is one other responsibility that rests on management, and also on the Government: that is, to ensure that some of the ideas on management technique and development are taken abroad into the British Commonwealth. Recently at the Twelfth Congress, I believe, of C.I.O.S., the International Committee for Scientific Management, at Melbourne, the British made an important contribution. This is done by the British Institute of Management and other bodies without support from the Government. Those who travel abroad know (I have recently heard it in Hong Kong, and others have heard it in Africa) that we are leaving this field far too much to Americans. This is a British responsibility, not only in the interests of other countries but in the interests of ourselves. This is one of the channels by which we might teach the ideas that we are developing, rather than leave the vacuum to be filled by others. I am sorry that my noble friend Lord Casey is not here, because I know that he intended to speak on this matter.

In conclusion, I would say only this. Production, of course, is not all. As the economists would say, the marginal utility of the product will diminish, and in fact it may already be doing so. Managers have to remember that budgetary control systems, production figures and sales graphs are not the whole story. And management must also avoid becoming a purely materialistic creed. Management is certainly concerned with production, and it is certainly concerned with administration. But the object, in the long run, is not simply production and administration; we must remember that in the last resort what management does deeply affects the happiness of everyone. My Lords, I beg to move for Papers.

3.36 p.m.

THE PAYMASTER GENERAL (LORD MILLS)

My Lords, it is perhaps not inappropriate that, being a member of the Government, I should speak in this important debate on the responsibilities of management in industry and commerce—a debate which has been introduced, if I may say so, so ably by the noble Lord, Lord Shackleton, and not only ably but helpfully. I have not often had the privilege of listening to a speech from the Benches opposite with every word of which I have agreed, but I can honestly say that I have done on this occasion.

I myself for many years bore a share of this responsibility to which the noble Lord has referred, being engaged in a business producing in this country and in many other countries and doing an international trade. I was also concerned with the problems of management at top level through the Industrial Management Research Association, of which I was at one time chairman, and on the shop floor through the Institute of Industrial Supervisors, whose formation I did something towards and of which body I was the first President. In consequence, as the noble Lord was good enough to say.

perhaps I am not without some general experience of this subject, although I hope that I can speak with due humility, both on account of my own shortcomings and in the presence of many noble Lords who have done so much to take advantage of the skills inherent in our race to build great businesses and to carry the fame of British industry throughout the world. The steady growth of our living standards which I have witnessed in my lifetime is necessarily based on the progress made by industry and commerce.

It is a national characteristic, I suppose, to belittle our own achievements in comparison with the efforts and results elsewhere, so it may not be out of place if I try to draw a picture of our developments in the science of management arid describe what has been done, more particularly in recent years, to equip men to shoulder the responsibilities of management. Since the beginning of the present century there have been significant changes in the specification to which management in industry and commerce is required to conform.

If people are to succeed in working together for a common purpose, it is the responsibility and function of management to settle the purpose and to state exactly what the purpose is, and to restate it, whenever it may be necessary, to keep the aim alive and bright in the minds of all concerned. It is also the responsibility of management to see that all matters of policy are resolved and planned to serve the purpose, the objective of the business. Policy should not he confined to the board-room: it should be passed down the line. Only in this way will interest be created and maintained throughout the organisation and the material upon which policies are built come up the line from those who have the interests of the organisation at heart.

The settlement of policies and their revision in the light of experience influences the specialised and detailed planning for research and production, for sales and for service. Planning, in turn, indicates the kind and extent of the equipment required and points the way to the nature of the personnel which must be used—their qualifications, their selection and their training. Thus, everybody in an industrial community is closely bound up with policy and planning, and the more the individuals can know of the reasons underlying the various courses of action which a business decides to adopt, the healthier will the organisation be. The arrangements which should exist in a business for joint consultation provide a ready means for instruction and understanding of these subjects. This is a much worthier and more paying use of this joint machinery than the discussion of petty grievances.

Another function of management, as the noble Lord, Lord Shackleton, emphasised, is that of co-ordination, not autocratic control. There must be someone who sees the picture as a whole, who can co-ordinate policies and functions, and who can take the plan and see that nothing is missing—materials, manpower, machinery, methods and money. This is indeed a great responsibility, upon which the success or failure of a business can depend. Co-ordination of effort amongst all those who can contribute should be present at all levels. It is sometimes missing at the highest level. There is a great temptation to play a lone hand. Specialisation, which is so much in evidence to-day, demands a high degree of co-ordination if everything is going to fit into its proper position, and it is for management to see that this takes place. The manager is really a group leader. It is for him to see that all in the group are co-operating to a common end. It is for him to reconcile divergent points of view, not by compromise, but by patient investigation and integration. This problem of co-ordination is really the dominating factor in an organisation. If it is practised at all levels, there is a ready acceptance of that authority which is necessary to ensure the smooth functioning of the whole.

This brings me to the question of leadership. It is the responsibility of management to develop a true sense of leadership and teamwork throughout the business: the manager to have his people working with him rather than for him. Leadership does not require a sense of power, or the need to display it. It rather means the ability to organise the capabilities of a group, and to inspire confidence in and enthusiasm for the tasks upon which the individuals are concerned. If these qualities can be brought out, the problem of discipline is largely solved, and solved in the best possible way. Management should be on the alert to see that real leadership, the kind that begets enthusiasm and faith, is present in all sections of the business—on the manufacturing, sales, service and accounting sides; in fact, in all departments and functions of the business.

I think the noble Lord, Lord Shackleton, was right in stressing the importance of management keeping abreast of scientific and technological research. In what we might term the "science-based industries"—chemicals, electronics, et cetera—this is, of course, a precondition of existence, never mind success. Rut keeping abreast of technological developments is important not only for these industries; there are few firms now that are untouched by these changes, and which cannot profit from them.

I should like to mention here a speech I made as far back as 1949, not in any controversial or political sense but just to show that many of us were concerned with these problems at that time. This is what I said: Never was there such a time in the history of our industrial community when management was not only on its trial but when some of the jury have already made up their minds because it has become an article of political doctrine to condemn private enterprise, which in effect is to condemn management as we know it to-day". That was said to try to get my brother managers to realise that we had a duty to the nation; and that is the essence of the remarks made by the noble Lord, Lord Shackleton.

LORD PAKENHAM

My Lords, may I interrupt the noble Lord for a moment? I hope I shall not be disturbing an atmosphere of complete harmony if I ask now whether good management is not in fact just as necessary in nationalised businesses?

LORD MILLS

I have no hesitation whatever in agreeing fully with the noble Lord, and I shall be saying just a word about what the managements of the nationalised industries are doing in a moment or two.

Management cannot divorce itself from the economic trends and requirements of the country as a whole. Management is concerned with Government, and Government with management. It has to be fully enlightened on the nation's need for more production and more exports if we are to be in a position to buy the food and raw materials we need to maintain this large industrial nation. Training for all these responsibilities has become essential and is being progressively pursued in the industrial and commercial world. Fundamentally, of course, management should know its business, the men in it, and the public it serves. But whereas this used to be considered good enough, there is to-day a steadily increasing number of firms who realise that the proper training of their managerial potential at many different levels is an essential of good management itself. Many of them have developed internal schemes, and included among the many are the nationalised industries. The effects of these internal schemes are already making themselves felt, and those who conduct external courses tell us that they are now able to raise their sights because men and women are coming to them better informed and better equipped.

Where does industry look to for help in dealing with this problem? As the noble Lord, Lord Shackleton, has said, there are many organisations which are concerned with raising standards in various specialised aspects of management. To take a few, there is a specialist organisation which looks into the problems of personnel management; another deals with office management; another with cost and works accountancy; and another with the problems of the foreman.

In addition to these, and with a more general function, there is the British Institute of Management, referred to by the noble Lord, Lord Shackleton. This Institute, which as many of your Lordships will know has just completed its very successful 15th National Conference at Harrogate, was set up after the war on the recommendation of a distinguished Committee headed by the noble Lord, Lord Baillieu. In the past it has received some financial aid from the Government, though I am glad to say it is now self-supporting. Despite this financial aid it has always, quite rightly, maintained its independent and non-political character, and it represents a co-operative effort on the part of all those concerned with industry to raise the standards of management in British industry.

The Institute offers a very wide range of services. It has a comprehensive information service covering general management questions, such as organisation, planning and control, as well as the management aspects of more specialised activities like marketing, education and training. The Institute also has a full programme of conferences, courses, seminars and lectures on a wide variety of problems of current and general interest. I believe the British Institute of Management would do well to seize the opportunity of helping in an appropriate way those who are running training schemes both in the technical colleges and inside firms. Indeed, the development of internal training schemes should be of great assistance to the British Institute of Management and give it added purpose and fresh vigour. It will increasingly know what industry's needs and wants are and what existing institutions can or might provide, and should build important bridges between the parties mainly concerned.

The new Diploma Scheme which the Ministry of Education recently announced, and in which the colleges of advanced technology will play an important part., is a great step forward. It is a development which I am sure is on the right lines—this was referred to by the noble Lord, Lord Shackleton, also—and the course will be one of those to be kept under review by the Advisory Council on Education for Management which the Minister of Education, together with the Secretary of State for Scotland and the Minister of Education for Northern Ireland, plans to set up. The Chairman has already been announced: he is Mr. J. W. Platt. It will be a widely representative Council, able to give authoritative advice and able to serve as a focal point for the technical colleges and other bodies concerned with providing management education.

Another most important development undertaken recently was the setting up of a centre for inter-firm comparisons. The information used in these comparison exercises is naturally kept confidential, so that no individual firm participating in them can be identified. But the results of the comparisons enable managers to look at the operating performances and financial results of their own businesses against a background of the performances of other firms in the same industry or trade. There are great advantages in this method of highlighting weak points. A careful use of inter-firm comparisons can have a direct influence on improving standards of work, even in the best firms. This centre for inter-firm comparisons was set up by the Institute in connection with the British Productivity Council, another national and non-political body whose work on the techniques for achieving higher productivity will be well known to your Lordships. There are now over 100 local productivity associations and committees, all of which are active in the educational and propagandist work of the Council. With the help of its voluntary workers in the field, the Council has made a notable and constructive impact on industrial thinking in this country. It has been particularly successful in helping management, and workers, in the smaller and medium-sized firms to appreciate the methods which are open to them to improve their efficiency. The work of all these organisations is now firmly grounded, and I am sure that their value must be increasingly recognised and supported within industry.

In the last few years, there has been considerable stirring in the universities in the field of industrial development and management studies. The list of those who do nothing is a much shorter one than the list of those who are active. In addition to the many universities who are taking a prominent part in this work, there are the developments in the Advanced Colleges of Technology, with Manchester, Birmingham and Glasgow really oustanding. There is a considerable coverage in the university field. For example, there are immediate postgraduate courses prior to a man's initial industrial employment; there are specialised courses in some aspects of management for those with a little experience, and there are courses like the Oxford Business Summer School for those with a little greater experience.

Fortunately, in the last five years useful experiments have been made at a number of the different levels of industrial and management experience. The time has now been reached when, in the light of the experience gained, we can select suitable methods of the different levels of practical experience. To the extent that we are able to do this, we shall ensure a balanced national programme and will also make economical use of our resources.

Although we must look to the university for a good deal more progress and development, it is unlikely, given the British educational and industrial background, that we shall go in for quantity in management studies at the undergraduate, or immediate post-graduate level. Perhaps the most urgent needs at the present time are suitable facilities for developing teachers and research workers in these subjects. Perhaps even more important is the need for a high standard of critical judgment in guiding research and in evaluating its results. These are typical rôles which universities are well equipped to perform. Progress can be made quite rapidly in this very important part of the whole development with relatively small expense and with relatively few people. What is needed is a definition of the academic standards required for research and advanced teaching in a field which is comparatively new to the British university scene and which cuts across the frontiers of existing academic departments and faculties. It is believed that the universities themselves, in many different ways, are giving thought and attention to these matters.

Then industry has the advantage of institutions such as Henley and Ashridge, and other staff colleges. If your Lordships would permit me, I should like to cite Henley as an example because I was privileged to send many executives there. It was intended to be a mixture of private industry and commerce, banking, civil service, local government and nationalised industries; and those are whom it serves. Since its inception, 2,400 men and women have passed through the College, including 225 from overseas countries. The contribution of this British experiment in its own particular field, which lays emphasis on the relationships between the different kinds of management in contemporary society, has been recognised overseas. A number of other countries have set up parallel organisations, borrowing staff from Henley for the purpose. A Member of your Lordships' House, the noble Lord, Lord Heyworth, is at the head of the governing body.

I have gone into some considerable detail in describing the facilities already available or shortly to become available for learning what management responsibilities amount to in our modern industrial economy. It is of the utmost importance that the knowledge and use of these facilities should be widespread. It is not just our leading businesses, where, I have no hesitation in saying, standards already bear comparison with any in the world, that need to support these developments. It is the smaller and medium-sized businesses that need to become increasingly aware of them.

In his opening remarks, the noble Lord, Lord Shackleton, stressed some of the particular management responsibilities. He spoke of labour relations, of the need for management—particularly the higher management—to open its mind more freely to new techniques and of the need for the acceptance of scientific and technical advice at the higher levels. I think there is a steadily growing appreciation not only of the need for this advice, but also of the need to use scientists in management.

Perhaps at this point, although there is much more that could be said on this absorbing question of the responsibilities of management, I should make way for others who, I know, are anxious to contribute to this debate. There is a great fund of knowledge of this subject among Members of this House, based on active and personal experience, and I look forward to what will be said by speakers in all parts of the House. Of course, the problems of management in industry can be solved only by management in industry, not by the Government. But no Government can ignore these problems, or refrain from doing what they can to establish a favourable climate for their solution. These problems are of crucial concern to the nation, and we recognise that.

4.10 p.m.

LORD BAILLIEU

My Lords, I welcome the initiative of the noble Lord who opened this debate. I am sure that everyone in this House whatever his individual views may be on the problems on management facing us, would agree that management of industry and commerce is most important; that we must do everything we can to raise its efficiency and improve its standards; and that, as in all human activities, there is always scope for advance. In my view, however, we must look beyond and behind, the Motion which we are discussing if we are to see management within the context of the central problem confronting this country. We may not know it—or we may know it, yet refuse to recognise it—but, in my view, the stark fact is that to-day we are confronting another Battle of Britain—a battle for Britain —and that our position as the centre of a great trading area and as the heart and core of the British Commonwealth will depend on the result. It is with this conviction in mind that I venture to offer to your Lordships some inescapable facts of life as I see them.

First, I would say that as a nation we are dependent upon the food and raw materials we import to sustain our industry and to feed and clothe our people; secondly, that we must pay for these imports by exports of services and manufactured goods; thirdly, that we can do this only if our cost price levels enable us to sell our goods at a profit in a very competitive world; and fourthly, that if we fail to do this we shall at once be faced with mounting problems of unemployment, and grave social and economic difficulties. In sum, our very standard of living, the social and cultural amenities that we enjoy, our great health and education services, our whole way of life, are dependent upon the efficiency and productivity of British industry.

At this stage I would ask noble Lords to hear in mind certain further facts which affect, as I see it, the framework within which industry must operate. The first fact is that the economic, social and political factors which play such a large part in the life of our nation cannot be separated. Down the years they have continued to operate insistently and together on the position of commerce and industry. However, the growing tendency to use the machinery of Government as an instrument of economic and social policy is likely, in my view, to increase during the next decade. Various methods, of course, may be used: on the one hand, the fully integrated and centrally planned economy; and on the other, a policy of indirect guidance, influencing industrial management through taxation and monetary policy, with varying patterns between the two. Whatever the method employed, most Governments in economically advanced countries are now committed to a policy of maintaining a high and stable level of employment, and all are or should be committed to maintaining orderly economic growth and to the stimulation and diversification of their own and their neighbours' economies. This country must surely benefit if it is recognised and accepted that the public and private sectors of the economy constitute a living partnership, one that is to the prosperity of each and to the vigorous development of the economy as a whole. In my view, it is this situation that will create the great opportunities of the second half of this century.

Fact No. 2 to which I would allude, and to which some reference was made by the noble Lord, Lord Shackleton, is that in applied technology the progress made in the last 100 years is more than the progress achieved during the whole period of civilisation, and that in the past 20 years it has been more than that achieved in the last 100 years. I can see nothing to lead me to conclude that that rate is not more likely to accelerate than to decelerate in the period ahead. The manager, therefore, as I see it, must constantly bear in mind the increasing tempo in the rate of change throughout the whole field of industry, with the manifold and persistent repercussions which this will involve in his own particular industry. The time lag of ideas must be adjusted to meet this continual shortening in the time span of change, and fortune will favour those who are quick to understand, and swift to apply, the lessons involved by this process. It is my belief that in the years immediately ahead we are certain to see among our competitors great progress in the application of new knowledge to the needs of industry. The real test for this country, and for others, will be the speed with which we are successful in applying the new knowledge to the scientific and technical fields.

There is a further most important fact, and that is the changing rôle of management. Since the beginning of this century great changes have taken place in our way of life and thought which have had a profound effect on the dynamics of enterprise. A business is no longer purely a private concern: it is a social institution as well as a profit-making enterprise. How, I ask, is this development affecting the rôle of the manager? There was a time when his position was clear. He was not confused as to either objectives or methods. The manager's function was to bring together and properly coordinate the elements involved in the production and distribution of goods and services. He was vested with the power to command, and by keeping the cost of all elements at a minimum and employing labour to give maximum productivity he was able to increase profits. Now, however, the manager finds that his rôle has been considerably altered. He is under pressure from many quarters, and is having to deal with new forces and with changed motivation in people. He is no longer in absolute control of the situation and is less able to use his power and authority to get the job done.

On the one hand, the manager's authority is being challenged by the growing power of the unions and by the specific restrictions imposed by the labour contract; on the other hand, he is faced with an ever-increasing number of Governmental codes, regulations and limitations. Also, because business is so highly integrated and dependent upon a network of companies and industries, his effective co-ordination and elements in production is, to a considerable extent at least, in the hands of many suppliers, distributors and sub-contractors. Lastly—and this is most important—in this present stage of almost instantaneous mass communication he is increasingly dependent on the growing power of public opinion. During the next decade the manager will be faced with the problem of reconciling the proper conduct of his business with the mounting external pressures from various sources. Success for him will depend on his ability to explain and persuade, and thereby secure the active co-operation of all concerned.

There is a final point, to which allusion has already been made by the two noble Lords who have spoken. The management scene to-day is very different from that which existed at the end of World War II, whether in this country, in the U.S.A., or in European countries. While the rôle of the manager has changed, so have his background, his education and his understanding. There has been a significant development in education and training for management over the whole field, and it comprises a very wide and varied field: in the universities, where, commerce and business is recognised at faculty status with appropriate degrees; in the technical colleges; in the institutes of management; in the curricula of accountancy bodies; in the specialised summer schools at various universities dealing with the middle range of management; in the higher administrative staff colleges, such as Harvard or Henley or Néstles, at Lausanne and, I might add, the Australian Administrative Staff College at Mount Eliza, in Victoria, and in the detailed development at company level of general and specialised training in the appropriate technical and administrative problems of their industries.

Noble Lords will be interested to know that about 400 companies now conduct their own training programmes, and of these about 50 have their own residential training centres. We can also note with satisfaction that the Ministry of Education and the British Institute of Management have jointly formulated proposals for the establishment of a National Advisory Council for Management Education, to which reference has been made. This envisages a much higher standard of achievement in the colleges, and we may welcome the recent appointment of a chairman which has just been announced. I believe that throughout the whole field there is a growing understanding that management responsibility will increase with the years; that the art and practice of management must be a continuous process, and that management, in co-operation with labour, must seek the answer to many questions that jointly confront them. Not the least of these responsibilities are those which seek to preserve in industry the pride of craftsmanship, the sense of independence, of dedication and of a proper discipline in the operation of industry, upon which our ability to survive as an independent nation, as the heart and core of the Commonwealth, will be found to depend.

From what I have said, your Lordships will conclude that, in my view, important and responsible as the management of industry and commerce is, it is only part of the overall economy. We must look to the whole if our future prosperity and well-being is to be assured. There are other elements: the policies of the Government of the day and the efficiency of its administrative machine; the trade unions and their members; the agricultural industry; the great professions, learned and technical, and, of course, the general public. Unless these are playing their part, unless these are pulling together on the same end of the rope, then friction and loss will be certain to arise. We may well fail to achieve the progress we must do in a highly competitive world, and we may find ourselves faced with a slow and certain decline in our relative position as a great trading and maritime nation, with all the frictions and grave consequences that this would entail for all of us who earn our bread and live in this land.

So, my Lords, my plea is that, in considering the Motion, we should see it in the broader perspective of the context in which commerce and industry are forced to operate, and should weigh fairly and objectively where responsibility for the general weal of our country lies. Behind this Motion is not only the question of management in industry and in commerce, but the management of industry and of commerce in the overall economy. It is idle, in my view, to think that we can achieve the results we must to ensure progress and survival if we limit ourselves simply to the problems of management in industry and commerce. It is management over the whole field of government and the national economy to which we must direct our attention. Only thus, I believe, can we make the maximum impact upon the most p[...]ssing domestic problems which confront us. There is certainly no room for complacency if we measure our relative place with that of our main competitors.

I recall that the noble Viscount, Lord Hailsham, in a courageous and forthright speech some little time ago, sounded a bell of warning to his fellow-countrymen that our material advantage was dwindling away. I wonder how far those who talk so glibly, and often act so irresponsibly, know the salient facts which starkly reveal the nature of the problem facing us. I will not weary your Lordships with a detailed analysis of the figures. I am saying that, if you look at our comparative position, you will see clearly the nature of the challenge facing us. If over a period of years you compare the rate of increase of our national income with that of a number of other countries; if you compare the relative rise in production and productivity; if you look at the share of incomes spent on new equipment; if you measure the relative increases in retail prices; if you study the figures, you will see that, though our exports have risen substantially, we have not kept pace generally with the growth of world trade and that our proportion has fallen steadily over the years. In none of these cases can you find any room for complacency. Now this is no ground for pessimism, much less despondency. It is a call to arms—a challenge which must, and can, be met by Britain and her people.

May I say a final word? I believe that training for management can help greatly, and that is why, down the years, I have done what I could, in the company field and on the broader institutional front, to further positive education and training to that end. But my experience and my view, for what they are worth, are that, when all is said and done, it is people that really count. We all know the good manager when we see him in action. Apart from his technical qualifications, we find in him a special quality, a natural critical faculty we sometimes call "hunch". This springs from long experience—it may even be born in a man—but the carrying of all responsibility at all levels down the years certainly helps its natural development. It is reflected in those qualities of mind and character we recognise and admire in the best managers.

My Lords, it is such men who are the natural leaders; it is they who create the inner harmony, that sense of common purpose, that feeling of belonging which is at once the touchstone of efficiency and of industrial peace; and it is this which provides the key to increasing production and productivity that is the constant challenge to our time and generation. The facts of our international position, as I have broadly indicated, constitute a challenge to us all—to Government, to industry as a whole and to the public. It is no use at this time resorting to exhortations, or passing the buck to others. We are all in this together, and we shall succeed or fail by the unity and strength of our joint effort.

I would conclude, therefore, by asking the Government to review again and again, and continuously, what they can do in the fields of taxation and fiscal policy to bring direct aid and encouragement to industry and commerce. After all, the special hallmark of the genius of this race and people has been their qualities of initiative, of adaptation and flexibility in the great crises of our history. I suggest that Government policy should be constantly seeking ways and means of harnessing those splendid attributes to our common purpose. Then management in industry, indeed, both sides, industry as a whole, must continue to seek greater production, improved productivity, better cost price relationship, better discipline and attention to the job, a realisation that high and stable employment rests upon the acceptance and discharge of definite responsibilities by all ranks in industry, and also upon the exercise of a proper and timely restraint. And the wider public themselves must learn to reconcile their desire for "pie in the sky" to-day with the overwhelming need for building a stronger more prosperous and nobler Britain to-morrow and to accept all measures and sacrifices necessary to that end.

4.34 p.m.

THE EARL OF COURTOWN

My Lords, I should first perhaps declare an interest, in that for many years I have been an employee of a large concern and I am a member of a number of management associations in various degrees of responsibility. I should add, however, that the views I give are purely my own and not those of any of the concerns with which I am connected.

There is no doubt to-day about the importance of the standard of management in this country. It was encouraging to hear from the noble Lord, Lord Baillieu, that there are now 400 companies which are interested in management training. But that is a small proportion of the whole, and in far too many companies, in far too many businesses, young men and women learn about management the hard way by working up from the bottom, without any guidance or formal training. I think this arises largely from a lack of understanding of what the nature of management decisions is. Too many people think that you can learn management only on the shop floor. There is no doubt that you must learn it on the job, but, on the other hand, management decisions depend on recognising the factors which affect the situation and then weighing them in the light of circumstances. I believe that we can do a lot in training our young men to recognise these factors; and although we can only to a limited extent train them formally to weigh those factors, I think we can help them very much in so doing.

One of the difficulties about weighing those factors is that so many are based on factors which are imponderable by scientific means. On the other hand, there is a growing recognition in industry to-day of the use of scientific method and of mathematics in the making of management and commercial decisions. Conversely, there are those who wave the flag of mathematics in such a way that it gives the impression that it is the answer for everything. Along with the mathematical method goes the flare, the "hunch" to which Lord Baillieu referred. I have myself been concerned with many situations where mathematics have been applied to management and commercial decisions with great benefit, but I have also been concerned with circumstances where "hunch", or what one can possibly call nous—that is to say the addition of native intelligence to experience—can equally contribute. Quite recently I have been concerned with a series of investigations which shows that nous employed at quite a low level in business can add to the formulae produced by the mathematicians.

But in all these fields there is much more to be learned. We are still in an elementary stage in the use of these techniques. The use of these techniques, however, is being advanced by the coming of computers, to which the noble Lord, Lord Shackleton, made reference. The computers have suffered, and the use of computers has suffered, from their description as an electronic brain. They are not a brain; they are not brainy. The computer is a completely obedient moron—nothing more—but a moron which will calculate, record and memorise at fantastically high speeds. As a result it enables one to make much more use of mathematics in management and commercial decisions than one could previously, because it enables one to do calculations which previously would have taken too long or would have been altogether too laborious to carry out. Through simulation, too, the computer can show what the effects of alternative decisions would have been on past history. It can tell you what would have been the effects of other decisions, had you made them, and through that you can move to making better decisions in the future.

The computer has suffered, too, from superficial reference in its other data-processing fields. One has heard speeches or read papers to the effect that it was going to replace hundreds of clerks. I think there are very few applications in this country where computers have in fact made large savings, a large reduction in the number of clerks. On the other hand, there are applications of computers in this country which have made possible calculations and systems and information which previously were not available owing to the immense amount of clerical work involved in producing them.

One of our national problems is the tremendous growth in the number of clerical workers in this country. I do not think computers themselves will make a great contribution to the reduction of the numbers of these workers or even to the reduction of the rate at which they expand, at any rate over the next few years. But I think that much of this expansion arises from a lack of realisation of the degree of elaboration which one should achieve in one's business. So many managers of a small business when it expands do not know what they ought to do about it. If they do not elaborate at all, decisions tend not to be made which ought to be made, and the manager himself forms a bottleneck. On the other hand, too often if they elaborate they elaborate too much, and the elaboration that they introduce in a concern may stifle initiative and destroy the genius on which the enterprise was based.

What one must do in a large concern—whether it be a nationalised industry or a business, even a medium-sized, growing business—is to try to get the advantages of the large concern without losing the advantages of the small concern, because there is no doubt that in many fields of management the small concern has great advantages over the large. It seems to me that on the factory floor to-day there is a much greater realisation of the need for change; that the attitude towards change has much improved. If one's cost of production rises or someone else produces the same product at a lower price, one soon finds out about it and has to do something about it. One has to change one's methods.

On the other hand, I believe that in the field of organisation and administration there is much more resistance to change. It is not so easy to relate cause and effect, and people are inclined to hang on to an elaborate organisation and administration when they could simplify it very considerably. Expensive administration adds just as much to one's cost as does inefficient production, and I think it is up to all of us to see that we employ the right people, properly trained to look at our administrative methods and see that they are organised in the best possible way.

It is no good looking at the methods alone; one must look at the organisation too. So often one finds people complaining about the amount of paper which flies about their concern—in fact, we had an illustration of that from the noble Lord, Lord Shackleton, this afternoon. The basic reason for that amount of paper is not necessarily the method; it is more often that the organisation is wrong, that the company is not properly co-ordinated, that people are not working properly together and that everybody thinks that everybody else has to be informed if anything happens. But if the company is properly organised, if there is a proper organisation for administration, a situation develops by which people know what is going on elsewhere and they need to be informed only if something is out of the ordinary.

One particular point I should like to make is in connection with selling overseas. From time to time we see in the papers and we hear speeches about the unwillingness of British companies to operate overseas; that people go abroad but that our selling effort overseas is not what it ought to be. There is no doubt in my mind that a large proportion of the British companies which do not sell overseas do not do so, not because they are unwilling to sell, not because they cannot appoint the agents, not because they are not prepared to go abroad themselves and sell and not because they cannot find someone to speak the language, but because the administrative and clerical effort of selling overseas is so ponderous. Many large companies have made a great study of this and have improved matters. In the main, their experience is available to all.

But there are other fields in which a good deal can be done. For instance, the bills of lading of British shipping lines are frightening in their complexity and variation. They are quite unsuitable for modern methods of reproduction in offices. I am glad to hear that a committee is now sitting on this subject. It is this sort of thing, this sort of complexity of administration in clerical work, which affects very considerably the ability of the smaller company to sell overseas. If it is to be successful, management in industry and commerce must, to my mind, study the basic factors which I mentioned previously, weigh them and apply them to their own individual circumstances.

Various references have been made this afternoon to principles of management. I am doubtful whether there are any real principles of management. But there are, to my mind, factors which occur again and again, and there is a great deal to be learned about those factors and how they should be weighed in different circumstances. I have mentioned already the amount of paper with which so often one gets burdened. People are continually complaining about the stranglehold of paper. There is a great deal to be done, as I have mentioned, in the study of organisation and method; but beyond this I believe that there are various ways in which we can relieve our senior management in a direction which is not being properly followed to-day. In particular, I think that we can learn from the Services in this respect. The Services have operational staff officers—I am distinguishing now between the operational staff officer and the specialist staff officer—of whose duties I expect most noble Lords are well aware.

In industry the operational staff officer is almost unknown.

I believe that sound management in industry and commerce could relieve itself greatly of the burdens of paper by the proper training of staff officers. I am certain that they would stop many papers reaching their chief's desk and would ensure that he read only what he needed to read. Equally, the staff officer would act as an extension of the authority of his chief, as does an operational staff officer in the Services. To carry this out he has to be properly trained, as indeed these people are in the Services. Equally, people with whom they would have connection would have to be trained to understand what are the particular responsibilities of the staff officers. In many companies they have tried personal assistants. Many have them to-day. But, as a rule, they are not properly understood, nor is their position properly understood; and there is no formal training for them. As a result, they tend to become unpopular, and to be regarded rather as an aide-de-camp in the Army.

LORD PAKENHAM

My Lords, would not the noble Earl agree that, by and large, the Services, including the Service Departments, are much more wasteful of manpower than is civilian business?

THE EARL OF COURTOWN

My Lords, the question put to me by the noble Lord, Lord Pakenham, is an extremely difficult one to answer shortly, because I am at the moment concerned with various reviews of the administration of one of the Service Departments. I think that in some ways they are more wasteful but, on the other hand, I would say that there are certain ways in which we can learn from the Services. I spent six years in the Army during the war, and I have been connected with the Army for many years in peace time. I have learnt a great deal about management and organisation from my experience in the Services, and I believe that this particular point of the training and use of staff officers is something which the Services have but which industry rarely has.

If there are these faults of management, what ought to be done about them? I think it is a pity that few really successful members of top management have sat down and thought about their job and put on paper, for the benefit of the country as a whole, what factors affected their decisions in the past and how they have watched those factors. I do not think you can blame them, because they are busy men and, when they retire, they wish to relax. But, in looking back over the field of management and management thought, it is perhaps significant that the name among top management which springs most clearly to mind and is still most quoted, is Henri Fayol, who died thirty-five years ago. It is a stimulant, I hope, to very experienced managers, such as the noble Lord, Lord Mills, and the noble Lord, Lord Baillieu, that, when ultimately they retire from the work which they do so well to-day, they will put pen to paper and give us and others the benefit of their great experience.

Finally, I should like to refer to the universities. The noble Lord, Lord Mills, said that almost all of them were now interested in this field of management and were doing something towards it. There is no doubt that in this country the universities have done much less in this field than has been clone, for instance, in the United States. I believe that the universities have a particular skill of their own. Their skill in the analysis and weighing of abstract fundamentals would be extremely useful to all those who think about management. I should like to see the universities get together in some way with top managers and people who have the experience of the noble Lord, Lord Baillieu, to distil these fundamentals and assess them for the benefit of the country as a whole.

4.50 p.m.

LORD FORBES

My Lords, I hope your Lordships will forgive me, a complete outsider, for taking part in this very important debate. I have not had great experience in industry, but I have been extremely fortunate in seeing a considerable amount of industry in Scotland. If working hours are not to be increased, production time can be increased only by full-time working. That means, above all, a reduction in the amount of time lost through unofficial strikes. I am very grateful to the noble Lord, Lord Shackleton, for introducing this Motion, because undoubtedly those entrusted with management, as well as the workers, have a great responsibility for the time lost through strikes. Although, on the whole, management throughout Scotland is good —indeed, very good in some cases —naturally there are some notable exceptions; and however good it may be, I feel confident that there is still room for improvement. What is there, then, that management can do to reduce to a minimum the time lost through strikes? I should like to give a few suggestions.

First, I believe that an essential to-day is that workers must be kept in the picture, and must know what is going on in the firm. Not only must workers have an interest in their work, but they will also want to know how the firm is doing; whether more or less is being produced compared with the previous month; how exports are doing; whether more or fewer days are being lost through sickness; who won the firm's garden competition, and a host of other things. No man can work well unless his morale is high. To-day living conditions, working conditions, pay and many other things are, I am glad to say, vastly improved. But before we can get maximum effort, morale must be really high also; and before we get really high morale, management and workers alike must he fully in the picture. At no time did this become more apparent than during the last war. In the early stages, subordinates in the Services were given little idea of the overall picture. In fact they knew nothing, except possibly what was going on in their immediate vicinity. Later, this changed, and every man knew not only the local situation but the longer-term objectives. As a result, morale went up to a very high level. Exactly the same applies in industry to-day.

All should realise that there is a vast difference in industry to-day compared with pre-war industry. People are better educated, and although many workers do not have to think so much about the finish of the article, but rather which knob or button they have to press, the worker's mind is always active. He wants something to think about while he is pressing his buttons, having his tea-break or sitting in his house. Surely he should be kept fully in the picture as to how the firm is doing. I believe that here closed-circuit television, already in use by some firms, could play an enormous part. It would provide that very necessary flow of information from the management to the shop floor.

Secondly, I should like to suggest that if morale among the workers is to be high, we must try to ensure that, wherever possible, workers are not treated like pawns to be moved at will from one firm or industry to another. We cannot expect the best from any worker who is used as a "floater" merely to fill the gap where required, and in any industry. The worker must grow up with the firm and be, so to speak, a member of the family. Managers must organise their business so that, as far as possible, a level labour force can be maintained. Surely that is one of the reasons why our agricultural industry remains (and I would say happily) so free of strikes. Maintenance of a level labour force might lead to a certain amount of diversification within firms; and surely this is not a bad insurance policy as things are to-day. It is up to management to see that the longer a man stays in the firm, the greater his security of employment within that firm becomes.

Another point. I would suggest that with the change in industry where knobs and dials have replaced handcraft, and where everything moves so much faster, industry, like the jet fighter plane, must have young pilots at the helm. I suggest that if management is to keep up with the present pace, with firms trying to keep one step ahead of their competitors, there must be more accent on youth at the top.

My last point concerns trade union meetings. Many noble Lords will know that a number of decisions taken at these meetings do not represent the majority views of the members of the union but represent the views of the few who do not only attend the meetings but sit there till the end, often late at night, when the final decisions are taken. It would be in the interests not only of management and workers, but also of the country as a whole, if these meetings were fully attended, so that the decisions taken represent the views of the few who the members instead of, as so often now, a minority view.

LORD STONHAM

My Lords, will the noble Lord allow me to interrupt? At least the decisions taken represent the view of the majority of those present; and I am quite sure he will agree there is no evidence whatever that that view does not also represent the view of the majority of members of the union, whether or not they are present.

LORD FORBES

My Lords, I entirely agree with the noble Lord. I am merely trying to point out that at these meetings there is usually a very poor attendance and the views expressed are in many cases probably not the views of the majority of the members. To achieve this I believe that employers should be prepared to give the unions time during working hours for these very important meetings.

LORD SHACKLETON

Hear, hear!

LORD FORBES

I would, however, add one proviso: that the unions must be prepared to see that the meetings are not only well attended but also properly conducted. The production time lost during these meetings, I feel, would be certainly far less damaging than the time which is being lost at present through unofficial strikes; and, what is more, everyone would benefit by a reduction in unofficial strikes. Management to-day has a very big responsibility. To measure up to this responsibility it must recognise to the full the changed conditions. Not only have machines advanced; so has the human who works them. To-day most industrial workers use tools each worth between £10,000 and £20,000. To-day the worker has brains and mental capacity, rather than muscle. Management, too, has a great responsibility to keep pace with the changed conditions. It is, my Lords, a great challenge. Management must —and I feel sure that it will —rise to the occasion.

5.0 p.m.

LORD SINCLAIR OF CLEEVE

My Lords, in his stimulating introduction to this wide subject the noble Lord, Lord Shackleton, referred to the need to improve as perhaps the most important of the responsibilities of management. My noble friend Lord Baillieu, in the course of his remarks, referred to the need to keep abreast of the rapidly increasing tempo of scientific and technological development. With both of these statements, and the thought underlying them, I agree; because we certainly cannot afford to be satisfied. But it seemed to me that one of the many merits of this Motion is the opportunity it gives us, so to speak, to take stock.

I will not attempt to follow the noble Lord, Lord Shackleton, into the refinements of his equestrian analogy by way of definition, but I should like to make the point that management is by no means an exact science, for there can be no scale that can measure relative efficiencies in management. Equally, I feel that it is not a profession. Some may say, as I think the noble Lord came near to saying, that it is perhaps more nearly an art which, in addition to qualities of experience and training and judgment, requires also character and leadership. But whatever it is, or whatever it may be, it certainly carries responsibilities, and I think it is perhaps useful to examine for a moment how it is, in fact, discharging those responsibilities. Perhaps that may seem a somewhat pedestrian approach, after some of the speeches to which we have been priviledged to listen this afternoon. On the other hand, the more charitably minded may perhaps reflect that there is sometimes some virtue in keeping one's feet on the ground. Apart from the interruptions of two world wars I have been concerned with management for nearly 40 years. In fact, before World War II was for a short time in industry, and not with wholly nostalgic feelings I recall that the hours then were from 6 a.m. to 6 p.m. from Monday to Friday, and from 6 a.m. to 1 p.m. on Saturday. But it is on management in industry that I should like to speak, and if your Lordships will allow me I will concentrate on two broad questions. The first: what are the basic responsibilities of management in industry, and how have they changed in character or degree over the last 40 years: and the second: is there a significant improvement in the way in which they are being discharged? That latter question is difficult, inasmuch as the field is enormously wide, and I will not attempt to do more than touch upon a few of what seem to me to be most important among the elements that make up the substance of management.

Speaking of the basic responsibilities, there is, of course, the primary and legal responsibility, responsibility to the stockholders. Legally, this is exercised normally through the board room; but it is not stretching things too much to say that management generally is operating with other people's money, and the responsibility here is not unlike that of the discharge of trusts. It may be said that in this responsibility ethics and self-interest normally coincide, but over the last 40 years the extent to which self-interest operates through personal holdings is very much less than it used to be. Speaking generally, and over the whole field of industry, the large individual shareholdings are becoming much fewer. Increasingly large holdings are holdings of pension funds, investment trusts and such-like. The average individual —that is to say, personal—holding in the larger industrial concerns is coming now to be a really extraordinarily low figure. Speaking generally, therefore, this responsibility, though in character unchanged, has widened because of the very considerably larger number of stockholders to whom management is answerable through the board.

Then there is the responsibility which marches closely with responsibility to the stockholders—namely, the responsibility to and for others employed in the undertaking. Unless the former responsibility is adequately and efficiently discharged, I think that the second must fail. Here it is difficult to generalise, for in the days before World War I there were undoubtedly many firms and family concerns which had great regard for their employees' welfare and where there was at least as much personal contact between management and men as is generally found to-day—and in some cases more. Since the units were smaller, the men who took the decisions personally knew more of the men who carried them out. Inevitably, as the size of the unit grows that becomes more difficult; and part, at least, of this most important human relationship has to be taken care of by personnel and welfare departments. Nevertheless, I think that, on the whole, management to-day regards this—and it is, after all, an elementary human obligation —more as a responsibility than it used to do. And most firms are careful to see that the importance of the human factor is effectively recognised by all grades of management.

Finally, there is responsibility to the public, not only the obvious responsibility to that section of the public directly concerned in purchasing the goods made or using the services provided and so forth, but also that more general responsibility which derives from the fact that each industrial and commercial undertaking is a unit in the whole economic structure on which this country's prosperity—indeed, its very life—depends. For it is by industry and trade that we, as a nation, must live. And in that connection the point I should like to make is that industry and commerce have a responsibility to maintain very close connection with Government.

What I have said about these basic responsibilities widening and becoming more widely recognised is perhaps a statement of the obvious. Yet I would suggest that over the last 40 years or so it has become much more obvious than it used to be; and one of the factors which have contributed to that, as I see it, very desirable result is undoubtedly the work that bodies such as the Federation of British Industries, the British Institute of Management and the industrial Welfare Society, and many others, have done. I think also, as has been emphasised this afternoon, that all they have done has combined to raise the standards of management and to widen the recognition of the responsibilities of management.

I also think it might be true to say in this connection that the development of the economic section of the Trades Union Council has contributed to—or, perhaps more correctly, is an expression of—the realisation of the responsibility of trade-union leadership in the wider field of the national economic effort. I am one of those who have consistently endeavoured to dispel the illusion, wherever it exists, that there are two sides in industry, for it is an illusion that disguises the fact that all employed in a firm, from the chairman to the office boy, the latest apprentice or latest factory hand, are members of the same team and are, though appearances are sometimes deceptive, in fact working on or for the same side. To parody Kipling: It ain't the individual Or the business as a whole It's the everlasting team work Of every blooming soul. There are three essentials, my Lords, as I see it: first, that the line of authority must run clear and uninterrupted throughout the organisation, and that there should be unquestioned discipline; second, that the door of promotion should be kept wide open; and, third, that there should be understanding —an appreciation of the general objectives of the undertaking, of how it works, and the relationship of one job to another. In regard to the second of these essentials—keeping the door of promotion open—I have no hesitation in saying that in my lifetime there has been a radical improvement. As to the first, I am not quite so sure. As to the third, I will say this: that in general management is much more disposed than it used to be to take the workers into its confidence and to give them an opportunity of understanding the aims and policy of the business, and, in simple language, "where the money goes".

Incidentally, the exercise of explaining these things to others certainly stimulates or sharpens the understanding of those in control, and who are trying to do the explaining. Yet it must be admitted that many of us who have tried this—and certainly this has been my own experience—find that it is not easy to capture and retain a real interest in the wider affairs of the company on the part of any large section of the employees, and sometimes not even of the factory, works or staff committees. But I am sure we have to go on trying. We have got to keep on with this, because it is most important. It was Nelson, I think, who once said that his ideal pattern was, Individual freedom within an understood framework of discipline and order. That seems to me not a bad pattern for any ship or any firm, the emphasis being on the word "understood".

I believe, furthermore, that a management's responsibility for promoting understanding extends beyond explaining the economics of their own business. It extends, indeed, to creating a wider and better appreciation of the whole country's economic position, which is the background against which the business must be seen. Many of the economic problems which have proved so intractable since the war, not least the problem of inflation, have arisen in part at least because of a lack of general understanding of the basic economic facts of life. There is, indeed, a two-way relationship here. On the one hand, developments in the national economy affect the fortunes of business at almost every point. On the other hand, decisions made by the individual business itself contribute in greater or lesser degree to the moulding of the national economy. In order to discharge the wider responsibility to the community of which I spoke earlier, management would do well to inform itself of the facts about the country's economic position, and the particular company's relation to it, and should do all it can to see that this information is widely understood by the people for whom it is responsible.

In this connection, my Lords, I believe that the Council on Prices, Productivity and Incomes, under the chairmanship of the noble Lord, Lord Cohen, made a notable contribution to a true appreciation of the facts, and I hope that the noble Lord, Lord Heyworth, and his colleagues, will continue the good work by their Reports from time to time. It seems to me desirable that those who exercise managerial responsibility in industry should themselves he well informed on these matters and should do everything they can to see that the facts of the situation, and their implications, are widely understood. It is of importance that we should have such a body as the Council to which I have referred to assemble the economic facts and to analyse them with complete impartiality.

I hope that, as time goes on, all sections of industry will be willing to place their experience and their opinions before this body. After all, an individual economist, a particular economic journal, or even a Government Department, may for one reason or another be wedded to some special line of economic policy, and their analysis of the current situation and views as to the desirable policy to deal with it may be correspondingly coloured. If management in industry and commerce is itself to appreciate and help, as I think it very usefully cart, to disseminate a true appreciation of the economic facts and background, Reports such as this Council can provide can be of inestimable value. Thus, my Lords, I put understanding as the first of the important elements.

Second, I would put the desirability of some part of the remuneration, at least, being related to results. I am here trying to pick out some of the important elements that make up the substance of management. I am not here speaking of ordinary piece-work, individual or group piece-work, or what is generally known as "payment by results"; nor am I talking of commission on sales. These things have to be settled according to the nature of the particular operation. They suit some jobs and not others. I am assuming that it is an elementary responsibility of management to see that the job, whatever it is—factory, office or junior management—is adequately and well rewarded.

Here, my Lords, may I be allowed to ride, just for a moment, a favourite hobbyhorse of mine? That is, to inveigh against the quite widespread misunderstanding, as I think it is, of the theory that increased productivity justifies increased wage rates. What increased productivity, as I understand it, may well justify is increased earnings. Earnings may appropriately be related to efficiency in particular jobs in particular circumstances, but wage rates, in these days of close inter-relationship between one industry and another, overstep the bounds of particular jobs in particular factories; and to some extent at least, I think, the misunderstanding of this theory results in an excessive rise in costs, which is something we cannot afford. The point I am trying to make about remuneration is that it is desirable, in my judgment, that as and when a business becomes highly profitable those engaged in it should have some benefit, over and above wage or salary, which reflects that prosperity. Personally, I have always felt that there are great difficulties in finding formulæ that will stand the test of time for direct profit-sharing, but a great many firms, in one way or another, have found ways of giving effect to this principle. There are certainly many more who do so now than there were 40 years ago, and I believe that to be a healthy development.

Next I come to retirement benefits. There is to-day, I believe, a very much wider recognition of the desirability—and I myself feel that it is very close to being a responsibility—of having some scheme, whether privately administered or effected through an insurance company, for retirement pensions over and above the State scheme, and for such a scheme to apply to all in the company's service. I further think that there is merit in such a scheme being contributory. The more encouragement there is to private industry and nationalised industry to operate schemes of that kind, the less need will there be for the State schemes to go beyond the minimum level. Here I cannot refrain from commenting on the great disservice to an extension of the self-help movement in this respect which results from the provision in the scheme approved by Parliament whereby employees whose earnings are less than £10 13s. per week pay more for the same benefits if the scheme to which they belong is contracted out. When any further revisions of the Government scheme are contemplated, I hope that this point will be looked at again. However, I fear that I am now verging on a discussion of points of detail, and am in danger of overtaxing your Lordships' patience—if, indeed, I have not already done so.

The last, and the most important, of all the elements that I would mention as making for efficient management is the selection and training of the right men—and I do not mean only the selection of the best man for a senior job: I mean vetting for appointments at any grade. I will not go into the details of training, because so much has been said about that already, and to all that has been said about its importance I wholeheartedly subscribe. But no trouble is too great for this job of selecting the right men. In a large organisation, the top men themselves cannot see all candidates for employment, but they can ensure that their employment officers and personnel managers have the right standards, and really take trouble and keep in touch with the men, once they are in the business, and faithfully report. Great strides, I think, have been made in this in recent years. Schools and universities take the trouble to find out industry's needs, and industry generally, in its own interest, has established a close relationship with headmasters and appointment boards. The subsequent training and seconding of men to places such as the Administrative Staff College at Henley, already mentioned by my noble friend, Lord Baillieu, are important means of widening experience and fitting men for the responsibilities of management. I think that progress has been made in this field of selection for appointment.

So, my Lords, in these four respects—understanding, which is the basis of good team work; relating some part of remuneration to results; provision for retirement over and above State benefits; and last but not least, careful selection for training—I believe there has been improvement. And, linking those to the basic responsibilities to which I referred at the outset, I think it is fair to say that in general management in industry and commerce has a clearer understanding of its responsibilities than it had; that in general it is concerned to discharge those responsibilities faithfully; and that the best way to obtain further improvement (for we certainly cannot afford to be satisfied) is by example and by encouragement.

5.22 p.m.

LORD CITRINE

My Lords, the level on which this debate was initiated and on which it has been sustained has been most encouraging to me, one who has seen this problem from the standpoint of a workman, a trade union official, and, more latterly, as the chairman of a nationalised industry. Indeed, I would say that the speeches I have heard from those noble Lords who themselves are, or have been, prominent in the industrial sphere are such that I should find it most difficult to disagree with anything they said. Lord Mills commenced by telling us that there is practically nothing with which he could disagree in the speech of the noble Lord, Lord Shackleton, who introduced this Motion; and I should think that that would go for all of us on both sides of this House.

The Motion, as of course the mover rightly pointed out, is very wide in its terms: managerial responsibility in industry and commerce. Some thirty years ago it fell to my lot to address a summer school of the Trades Union Congress and to try to examine the nature of this apparatus which we call modern industry. I was rather staggered to find not merely an immensity of operation but a great complexity and diversity in what was carried on. There was an assumption for many years in the Trade Union Movement that industry was rigid and rather static; but I think time has shown that it possesses remarkable flexibility and adaptability and its form changes with the needs of the times.

I read in a return which I saw the other day that there were some 320,000 companies who were registered or are operating in this country. They are of all shapes and sizes, from the very small ones to the giants, all making a myriad of products and carrying on many different services. The twentieth century has been notable for the emergence of the giants. The process of amalgamation, and all that sort of thing, was of course going on and has been going on almost throughout the life of what we call modern industry. It is a process which has been taking place all over the world and must be regarded as a permanent feature of our economy and the economy of any country that is operating on the basis principally of private ownership.

This large-scale industry of the giants nowadays consists not only of privately owned and operated concerns but also of public corporations which Parliament, in its wisdom, has brought into being. These huge aggregations are carrying on their work in almost every branch of industry and commerce. Some of them count their assets in millions and their employees in thousands. Mergers and take-over bids are so much of a commonplace that we can scarcely pick up our newspapers—take, for example, this morning—without seeing some new evidence of this tendency to amalgamate and to intensify still further the large-scale organisations.

Now, while it may not be absolutely true, I think it is generally true that responsibility very largely accompanies size. One could also say that the problems of management in industry are very much concentrated around the large organisations, much more so than around the small ones. Some of these organisations exercise enormous influence on the national economy—and indeed, far beyond that. Son-le of them, as we have seen, approach the monopoly point. In recent years the community, through Parliament, has established methods to try to ensure that the power of these corporations is not improperly exploited against the general public interest.

Many people would say that the first responsibility of management is to the shareholders and that good and efficient managers are sought so that they, in turn can by their efficiency increase the profit of the company. I think that what has been said by noble Lords this afternoon, by Lord Mills and Lord Baillieu in particular, shows that there is much more in it than that. They attested to the responsibility which industry has to the consumers, to the public; and, if I may venture to say so, I think that the phrase which is so commonly and appropriately applied to nationalised industry of "public accountability" will more and more emerge as a factor when viewing the problems of private industry.

SEVERAL NOBLE LORDS

Hear, hear!

LORD CITRINE

The influence of large companies upon the national economy has been attested to here to-day by several noble Lords, and I think it is fully recognised. In the course of my trade union life I have met many who could rightfully claim the title of industrial statesmen. Much of their thinking, and indeed of their energies, was devoted to forwarding the national interests in some phase or another rather than being concentrated entirely upon the work of their own company. These are the people who decide policy. As a rule, managers are consulted before policy is determined, but I think that it can be said with truth that the training which is required for policy decision is not necessarily that required for managerial capacity.

I think we can rightly say, without trying to preach anything in the way of the class war, that in the last fifty years or so we have seen the rise of what we may call a managerial class—skilled administrators, men of great initiative and ingenuity, many of whom are completely divorced from any shareholding in the company by which they are employed. I think we can also say that in many of the larger concerns, instead of concentrating upon a narrow conception of their jobs, particularly upon its technical features as I think was the rule for many years, to-day they are much broader in outlook. It is up to us to try to cultivate this quality. And that can be best done by managerial training.

I hope that what I have said will not be misconstrued into the thought that I am paying no regard to the smaller concerns, because I am well aware of their capacity for survival in the face of intense competition without the benefit of large research organisations and with very little beyond the rule-of-thumb experience of their own personnel, including their managers. I am concentrating on the larger organisation because I believe that it is there that the problems which will concern the country mainly arise, certainly in the sphere of human relations, a subject which is becoming daily of greater and greater importance. These problems scarcely arise in the smaller organisation where there is intimate contact between the manager or employer, as the case may be, and workmen. I was interested to note that in manufacturing there are some 61,000 firms who employ ten persons or less. One fails to see how the same type of managerial problem, whether in human relations or any other aspect, can arise in these small concerns. There is no feeling on the part of a workman of the remoteness which he often feels in the large concern. This is becoming more steadily recognised and many minds are now trying to combat it.

I sometimes wonder why it is that managerial training has not been more widely used. The noble Lord, Lord Baillieu, spoke of some 50 firms who had residential training centres, but I think he put the matter a little out of perspective. I am not now speaking critically but I would put it in a different way. I quote from articles in The Times a statement by one who is familiar with this subject. One said: Out of some 11,000 public and 310,000 private companies in the United Kingdom, only 400 have some kind of management training. And later it said: Among some 500 of the largest companies there are quite a number who are doing nothing in the way of management education. Those quotations are from a series of articles on the problems of management recently run in The Times and subsequently published in pamphlet form.

I understand something of the apathy that brings this about. When I was a trade union official—and I am carefully looking along the Front Bench before me—I disregarded almost completely the advice we so constantly received from the so-called intellectual elements in the Labour movement. Most of us knew instinctively that they did not know what they were talking about. It may be that managers who have been brought up the hard way feel impatient when they are asked either to go themselves, or to send their staff, to be lectured by people who may not have had even an hour's experience of practical management. This is one of the difficulties with which we are faced in managerial training. I imagine that this is one of the reasons why so many large companies (I use the word "many" quite relatively, of course) set up their own training schemes, where those who address the courses are, actually employed in the industry itself and understand the problems with which they are dealing. But, of course, it is impossible for all undertakings to establish their own courses, and more and more people who wish to widen their knowledge take part in courses provided by the British Institute of Management and the Ministry of Education, or by the many technical colleges and universities who are engaging in management training in one form or another.

There is also another reason. I must say that when I speak of this subject I always run the risk of being misunderstood. I travelled widely in my trade union days and mixed with workpeople from many countries, and I have no hesitation whatever in saying that it was borne upon me many times that there is a greater reluctance on the part of British people to adopt new ideas than there is on the part of most residents of other countries.

There are many who believe that managers are born and not made. Well, I think that nobody would deny that there are certain qualities which it is essential for any successful manager to possess. The Urwick Committee, which has been referred to this afternoon and whose appointment represented one of the first steps to be taken by a Government of the day—incidentally by a Labour Government—towards meeting this problem, saw clearly that this objection would naturally come along. They said: We recognise that theoretical study alone cannot make a manager. His success will depend on his innate qualities, his acquired knowledge, his experience under competent guidance and, above all, on the degree to which he combines these elements into a balanced personality commanding the respect of those with whom he is associated. I would emphasise those last words, "commanding the respect of those with whom he is associated". The reason why I emphasise them is this: I think that management and leadership are inexorably intertwined qualities and without leadership in management it will never be possible to get the highest results from the people employed. Managers should be the natural leaders. They are in a position where they can exercise leadership. And I do not think I carry it too far by saying that work-people expect it. I know that when I was an electrician, if we ever came across a knotty problem and our foreman or the under-manager could not solve it, we did not think much of him.

Leadership is an elusive quality and many people search for it. It shows itself in many different spheres. A man who may be suited to exercise leadership in one sphere may not be able to exercise it quite so well in another. I recently read in a book by an eminent general that it would be safe to say that out of a section of ten men two would lead, seven would prefer to follow and one would much rather not be there at all. He, of course, was giving a rough average in talking about a military setup. But I ask myself whether this is not broadly true of civil life also. Do all men readily assimilate responsibility? Is that not one of the most difficult things to get? You find men who are completely well qualified technically, but they are very expert in passing responsibility on to somebody else. Haw can you get efficiency in industry, at all events in the proper sense, if people have not the type of mind that they can make up and take the risks involved in the decisions that have to be made.

I hope that management will look at the quality of leadership more and more when making appointments to managerial grades. Many do, of course. Selection boards have become the rule in large organisations, public and private. I am rather glad that it no longer depends on the view of a single man whether an applicant is or is not capable of fulfilling a responsible position. There are interviews of all kinds, deliberately based upon trying to draw out the qualities of the candidate so that he will reveal himself.

Everybody who has ever sat on a committee or a body interviewing applicants will know how difficult it is for an ordinary man with the prospect of a responsible post in front of him to behave quite naturally: even the outwardly calmest of them usually go through a period of great nervous strain when they are face to face with selection boards in such circumstances. I read in The Times the other day—and I quote The Times because I adopted this practice many years ago when I was a trade union official so that I could never be accused of any distorted or tendentious quotations (I know that is a matter of opinion): A conference attended here today"— that was at Chester— by northern industrialists representing about 50 firms to discuss the problem of selecting the right people for executive positions might have been entitled simply ' the deflation of management'. For the theme of several hours of concentrated discussion and example, including a demonstration of the selection of a man, was that few managements knew the sort of people they need to fill executive posts, or, indeed how to pick them. That is a distressing picture, and if I thought it was typical I should be most depressed, but I am sure that qualifications of applicants for managerial posts will be much more carefully scrutinised in the future than they have been in the past; and if I dare say it in a whisper, that kind of scrutiny might even be applied to directorships. I hope that will not cause the sort of depression that the weather has been forcing upon us lately in this country. I believe that management can be taught, and my belief is based upon experience. But a natural aptitude must be present. The ability to handle people, about which I think the noble Lord, Lord Mills, spoke, is to my mind becoming more important even than technical qualifications. Nobody would doubt the need for that type of qualification, but side by side with it is the necessity of understanding people in order to get the best out of them.

I was encouraged the other day to read in the publication Targets a reference from the Institution of Works Managers which said: The professional manager must he able to exemplify the leadership inherent in his responsibilities, but he must do so in a manner which encourages mutual trust and an atmosphere of goodwill. Later on they say: Firms which recognise that their managers have a responsibility downwards as well as upwards not only enjoy a high degree of efficiency but normally achieve this with the willing co-operation of workers with confidence in their management. Coming from that quarter, a school of people who must have many disappointments in the course of their normal work, that, I think, is a practical tribute to the need for the handling of people in a sympathetic and understanding manner.

I was glad to bear words almost identical to some I had written down myself (I cannot remember which noble Lord used them but I think it was the noble Lord, Lord Mills) when referring to autocracy in industry. I have on my note, "No place for feudalism". What I mean by that is this. Even during my comparatively short life—and it becomes shorter the older one gets—I have seen a complete change in the attitude of mind in regard to the rights of work-people and their representatives, the trade unions. Can industrial autocracy go side by side with political democracy? I know how different the problems are, but at the same time one must have its effect upon the other. I do not believe that autocracy and democracy, whether in industry or anywhere else, can peacefully co-exist.

I attach great hope, as do many others, to the commendable efforts being made now to solve this problem, to widen the scope of management, and to extend the number of courses and the opportunities available to people. In the electrical supply industry naturally we try to apply the type of advice that has been given to us by those qualified to give it. We have functional and general courses in management. We have, running over a period now of some years, summer schools, four a year, where managers meet not only one another but each section of the industry, because we believe that that kind of intermingling is good and it enables people to understand each other's outlook and the type of the problems they encounter. It should always be remembered that in the nationalised industries—and I am not trying to boost them—the employee's status is legally recognised in a different way from private industry. The employees are enfranchised, and they have the right, conferred by Statute, to engage in discussions which are of mutual interest to the boards, or whatever they may be (this applies to all nationalised industries, so far as I know), and the employees themselves, including the efficiency of the industry. I hope that that principle will be voluntarily much more widely followed in private industry.

These things cannot be carried on unless there is a determined effort from the top. Experience has shown me, at all events, that managements, given the right type of lead, will follow without much trouble. I can say with truth that in trying to carry out the principles and purposes of the Statute, I have never discerned, in any organisation with which I was connected, anything in the form of organised opposition. I have seen misunderstanding and hesitation, but nothing more; and they have given way to a greater understanding when matters have been fully explained. It is impossible to do that without a system. There are some 500 local committees in the electricity supply industry regularly engaged in this great process that we call joint consultation. I think there is no difference of principle there at all, because on a previous occasion in, I think it was, the Conservative Industrial Charter, the Lord Chancellor was able to tell me —I think he told the House—that he himself was one of the authors of that part of the Charter which provided for joint consultative committees.

My Lords, I wish to conclude on this note. No matter how firmly a board of directors may have an enlightened policy in their minds, they have to take great precautions that that policy is not inadvertently distorted in the process of coming down through the chain of command. That is a most serious thing. It is not done wilfully, but very often by lack of proper communications, by the absence of conference, and that kind of thing. When the policy is ultimately to be implemented at the factory level it is different from the one which was in the minds of the directors when it was formulated. That matter should be kept carefully in mind.

Connected with that there is the question of impersonal organisation. Dare I tell your Lordships a small story? At one of the very early informal meetings in the Central Electricity Authority, we tried to avoid minutes and all that sort of thing. It was informal consultation with the higher executives. At our second meeting I had a report put before me which gave the names of those present, and it read something like this: "Present: The Chairman, Deputy-Chairman 'A'"—that meant Deputy-Chairman Administration; "Deputy-Chairman 'O'" (you notice that they are exclamations) which was Deputy-Chairman Operations, and so it went down to Secretary, Chief Commercial Officer, Chief Engineer and so on. Not a name—just titles. I said: "Who is Deputy-Chairman 'A'?" There was a hush, because, being rather new to them, they did not quite know whether I was having an aberration, or whether I was continuing my normal aberrations. Then I heard a whisper somewhere, "Sir Henry Self." I said, "Oh! He has a name then." Now I should not be surprised if every one of these other people had a name too.

There is a moral behind that story. If you want to deal with people you must try to personalise your management. You cannot do it, as it were, on the basis of titles. I have spoken probably longer than I should have done, and I have had almost completely to remodel what I was going to say because of the speeches made earlier. But I want to add this. The wise words which have fallen from noble Lords, if put into practice in industry to-day, will, to my mind, give great encouragement to thousands of people employed in industry, and will help our country to that higher standard of prosperity which every one of us desires to see.

5.56 p.m.

LORD FERRIER

My Lords, I should like to join with other noble Lords who have spoken in expressing gratitude to the noble Lord, Lord Shackleton, for introducing this very important subject. Especially is it important, as the noble Lord, Lord Baillieu, said, when we can feel that we may be on the edge of a depression, certainly a recession in trade, when everything will depend upon our ability to produce—and our ability to produce depends so largely upon the quality and effectiveness of our management. It is difficult not to be repetitive and I labour, as did the noble Lord, Lord Citrine, under the disadvantage of having to remodel my speech in view of my agreement with a large amount of what has been said already in this debate and which, of course, it is unnecessary to repeat.

I will try to pick out some of the points which I believe have not so far been mentioned. With the noble Lord, Lord Citrine, I feel that the level of debate has been maintained at a very high standard, and if I am a little mischievous in something I am going to say I shall at least give noble Lords something to disagree about, and the noble Earl who is to reply something to reply to, because it is clear that there is so great a measure of agreement amongst us on this important matter. Commerce and industry have been my chief interests in life, and I suspect that the noble Lord who introduced this Motion feels, as I do, that to excel in management is the greatest excellence in a working life. So let me agree with almost every word that he said in his speech at the beginning of the debate. I say "almost", because, for one thing, I feel—and I hope he is wrong in his view—that management to-day is taken seriously, and is being taken seriously, to a greater extent even than it was a year ago, in almost every organisation, great and small.

We have heard this afternoon of a number of large undertakings who are spending large sums in management training; and that, of course, is first rate. But I am always inclined to think of the small man, the little company, where those facilities cannot be provided within the scope of its undertaking. Indeed, as the noble Lord, Lord Citrine, pointed out early in his speech, there are many companies with so few people that they cannot spare them to go on training courses. Indeed, one of the troubles is that management, as such, can hardly be taught—and there has been a general measure of agreement on that. But, of course, managers and potential managers can be taught to think about management. As the noble Lord, Lord Sinclair of Cleve said, we might regard this debate for some of us—certainly it is for me—as a course. It at least gives us an opportunity to take stock. In my view, these training courses are, as Lord Baillieu described them, training for management rather than training in management, because management, the rough-and-tumble of management, is like war: the only real training is in the field under fire.

My Lords, so far as some of the other points that have not been brought out are concerned, I should like to try a short definition of management. I would say that managing is getting other people to do things. Of course, that is an oversimplification, but it applies to Lord Shackleton's application of the horse. It is an over-simplification, but I have not heard as much as I expected to hear today on this question of the power to delegate. The noble Lord, Lord Citrine, touched on it, and it seems to me a very important quality in a manager; that is, the power to delegate, which means the power to choose the right man to serve him, and often that means the right man to follow him. Despite many modern techniques in selection of individuals, again the rough-and-tumble of life on the shop floor, in the counting house, out on the road, is the place where, in my view, the manager learns to pick the right man.

One passing expression of view —I think again the noble Lord, Lord Citrine touched upon: it is my experience that the highly expert technician is not by any means necessarily a good manager or good material to make a manager; often indeed rather the reverse. I think we are all agreed that everybody cannot be trained to manage and to that extent managers are born; it almost amounts to an art. The expansion in our industry—and expanding it is despite, shall we say, a slowing up at the moment—postulates an expansion in the number of managers. But there is another factor and it is this: as technical advancement in processes continues so the ratio between the salary earner and the wage earner increases, and as that increases it means that a higher percentage of our personnel employed in industry are salary earning, or shall we say management type. This means that we must calculate upon increased numbers of managers, and therefore it follows that the growth of the number of managers, exceeding the simple growth of industry, makes it all the more important to-day that management should be trained. The noble Lord, Lord Citrine, mentioned the importance of leadership, and others have done so, and referred to integrity. I saw a very nice description the other day describing the important factors in a manager's make-up and that is that it is more important what he does than what he says.

All potential managers do not necessarily have to have the urge to manage, for more reasons than one; there is the faint heart, there is the intellectually lazy man, because after all management is a 24-hour job. The dedicated manager devotes his mind, all of it, to his job all his waking hours; that is my experience. It follows that if the numbers of our managers are to be increased in this way that I have described, and if the potential managers do not all have the urge to manage, then it is more important than ever that proper incentives should be applied to bring these men forward, to induce sufficient numbers of them to accept the labour, the rigours, the responsibilities and the risks which go with management. What are those potential incentives? They are twofold. I should say. The most important of all is fulfilment, the man's own sense of something accomplished, something done. But the financial incentive is of paramount importance as well. This question of fulfilment has been and is being rapidly overcome refer to the stigma which in my memory applied to the man who took up business; I am talking of the managerial level. That is disappearing. But still I have got the feeling that more could be done to build up the importance of management in industry as being really the prime factor in the production on which our country must exist. As far as financial incentives are concerned they, to my mind, are still insufficient to provide full compensation for the acceptance of management responsibilities. In my view, this is especially so in Scotland, and I feel that the drift south, as we call it up there, together with the drift overseas for many years, has been and is due to the comparatively low level of reward paid in Scotland to management.

That is by the way, and it brings me back to this question of reward and taxation which was touched on by the noble Lord, Lord Sinclair of Cleeve, as the matter to which I want to turn next. Taxation is far too high at the high levels. That is my view, and I think there are many who agree with it. I was glad, as many must have been, to see that the Chancellor of the Exchequer has hinted that the £2,000 upper limit for the freedom from surtax is likely to be raised. So it should be. But how much is it going to be raised? I feel that this is a factor. £2,000 a year is not a high figure when applied to the rewards payable to-day at middle management levels. Is this going to be raised sufficiently to make it a real comparison with the figure that it was in 1919 when the £2,000 was the figure from which super-tax applied in those days? In any case, so long as penal taxation at these higher levels persists it is inevitable that our old friend the expense account is deployed. I take the view that we must remember in terms of industry that with taxation at the level that we are facing to-day it is the duty of executives to make full use of expense accounts. That is what that taxation provision is there for. How otherwise in a world of keenly competitive trade can the business of this nation properly compete? Gone are the days when the chairman out of his own pocket used to be able to tour and entertain and travel, and gladly did so, without having to make use of the facilities provided by the tax arrangements for expense accounts. Please believe that I am not seeking to excuse the fiddler; no, nothing of the sort. But I do make the point that expense accounts are there to be used and there are cases within my knowledge where in competition with other firms overseas a more proper use of expense accounts for travelling and for entertainment might gain more business for the workers on the floor. But let the public and the revenue authorities accept that. I feel that they should, and that commerce and industry demand a substantial level of expenditure on travel, accommodation and entertaining if we are to compete in the world as it is to-day.

It is fair to say that the revenue authorities are being much more reasonable to-day than they were on the matter of expenses—particularly travelling expenses. But there are criticisms. I heard of one the other day. It concerned a man who had recently—again this is the question of a change from what was the amount last year to what it is this year—to spend an enormous amount of time overseas trying to get a big contract. He found himself up against the tax authorities, who suggested that because of his long stay overseas he had been saved expense in this country, and they accordingly sought a reassessment of his income. To my mind, that is a sorry reward for somebody who, leaving his family behind, had in fact to go abroad to try to get business for the shop. The overseas worker, and the person who sells overseas, should not have to look over his shoulder when he is competing with some of our opposite numbers from the Continent.

While on the subject of salesmanship and selling overseas—this is not strictly relevant—there is a point in terms of management, and having myself served so many years overseas I wish to make it. My point is that it is only by having been overseas, if only for a journey, that managers can understand what their sales departments have to face in trying to get export business. One has only to see the recent correspondence in The Times to appreciate the great difficulties which the person in a small way of business has to face in dealing with overseas export business, with all the complexities which are to-day involved.

I regret that this is a diversion, but it has this bearing on the question of management. For this very reason our exporters and export personnel require special consideration from the Revenue. I believe that it is the intention, certainly the hope, of the Government, possibly to be able to provide this. After all, with our coal situation no longer what it was, we must remember that men, brains and ideas are our principal natural resources, and if to live we have to export, we must export our brains and the product of our brains.

The noble Lord, Lord Forbes, made mention of the question of promotion—is promotion fast enough? I should like to turn to that. As we get older are we inclined not to face the fact that young so-and-so has turned into middle-aged so-and-so? We must always be on the alert that top management is conscious of its responsibility to advance, and to train for advancement, its subordinates. This is not only relevant to expansion, but also in relation to the increased proportion of management to labour.

On the subject of training I feel that another experience of mine makes a contribution to this debate. It is a fact which I think is undisputed, that British industry overseas—shall we say in India?—is often highly efficient, and even more efficient than is equivalent industry in this country at management level. One reason has been that in the tropics one is too old for service at the age of 50, which means that there is scope for promotion, and the younger men come forward in a way which is not so readily available to them here.

I turn here to another angle from the revenue point of view. Again I refer to the small man. Retirement, which is adequately dealt with in the large undertaking, is very difficult to face for the small man who is ageing. I should like the noble Earl who is to reply to give us his views, if he feels he can, on the limit which now applies to the level of payment free from tax in the pension of the self-employed. The limit is £1,125 a year, or 15 per cent. of the assessee's earnings. Why is this limit so applied? Can it not be raised? Again I refer to this as an incentive which should contribute to the promotion of younger men. I would repeat that I have been trying to give the noble Earl who is to reply something to reply about, because obviously there is such a large measure of agreement amongst us all to-day.

The note on which I should like to end is that it seems, as the noble Lord, Lord Baillieu, said, that the greatest need for industry is the utmost flexibility to keep pace with the development of industry, and with the speed of its development, technical and otherwise, to-day. It is ideas, ideas and new ideas with which industry and managers must keep pace, it is for industry to be forward thinking, to be alive to the availability for training for management. It should train in management itself, and should train all levels of management to train their subordinates accordingly. On the side of Government, I feel that the Government should do all in their power to create the right climate for this somewhat delicate machine, the manager, to function.

6.19 p.m.

LORD MELCHETT

My Lords, I think the whole House will be extremely grateful to the noble Lord, Lord Shackleton, for initiating this debate this afternoon, and also, if he will allow me to say so, for the quite exceptionally interesting speech which he made when he introduced his Motion. The debate has ranged very wide, and I should like for just a few minutes to draw attention to one or two specific points concerning the personnel side of management's responsibility in industry, and not follow some noble Lords into the intricate questions of management training and other interesting subjects which have been discussed this afternoon. It is late in the debate and, like other noble Lords who have just been speaking, I have rather set aside the speech I had intended to make, because the ground has been so extremely well covered by people of much greater experience and much more able speakers than I am myself. In fact, when I came to the House this afternoon and saw the truly formidable list of speakers I felt like the last man in the section referred to by the noble Lord, Lord Citrine; and I should prefer not to be here at all.

The noble Lord, Lord Baillieu, said that in considering all these matters that have been discussed by your Lordships this afternoon it was of the utmost importance to view them against the general background of the modern society in which we live; and in the present day and age, when Central Government takes a far greater responsibility for the welfare of all citizens, and particularly for their employment, and for the general rate at which the economy is operated, it seems to me that there is a very major new factor which has to be absorbed by management in considering personnel problems. It is perfectly clear that in conditions of full employment the interests of employees in any enterprise have to be given a higher degree of priority in considering any management decision. Many of the factors which enabled managements in the past to give greater consideration to customers, shareholders or other interested parties have now disappeared. In the past, many large organisations used to treat their payroll employees as disposable and in much the same category as raw materials, fuel supplies or stocks of goods. If there was some fluctuation in their business they were quite prepared to dispose of their employees and to cut back their inventory of people in much the same way as they cut back their inventory of goods and other materials.

I believe it is generally recognised that, under present conditions and in the general pattern of society which have mentioned, this is no longer possible, because if one disperses one's people it is often extremely difficult, if not impossible, to get them back when they are required again. Equally, if in difficult times or times of slackness an employer does not look after his people and keep them properly informed, and generally treat them as a permanent part of his business structure, he cannot expect them to co-operate with him when it conies to difficult questions of introducing new work methods or new machinery, or generally re-shaping the pattern in industry.

This new state of affairs has been accepted by a large number of managements. But there are still large industries in this country which are quite prepared, at very short notice, to declare redundant large numbers of their work-people, or stand them off at extremely short notice. In my view, this is a practice which should not be allowed to continue. The fact that certain industries fluctuate more severely than others must, of course, be recognised. Nevertheless, if long-term planning really takes account of the permanent or semipermanent nature of managements' commitments to their people and employees, then I believe that some of these violent movements in employment can be avoided. It is largely a matter of the attitude of mind of managements towards their people as to whether they consider them part of the permanent structure of their business or something in which there can be very big movements at short notice. If redundance is unavoidable—and, of course, in the changing pattern of world trade and with other economic factors it may well be so—feel that adequate notice should always be given to people, and that they should, if necessary, be paid some form of resettlement allowance. I do not want to dwell further on that matter.

A further general point which has come out of the debate this afternoon flows from this general theme; that is, the extreme need for modern industry to have expert personnel management departments and to treat the whole of their personnel and labour problems as part of the planning of their organisations. No doubt this is true. But I think it is worth emphasising that the mere employment of a department or of people (even trained people) to deal with these difficult and intricate matters is not in itself sufficient. There must be a policy laid down by the people right at the top. There must be a philosophy absolutely inculcated into industrial organisations so that the personnel and the human factors are thought about in the same terms as investment programmes, development of markets and all the other major factors which have to be considered by managements in planning ahead and making long-term plans. In my short experience, although there are notable exceptions, on the whole the standard in industry in this country from this point of view is still rather low.

LORD FERRIER

My Lords, I find it very difficult to hear the noble Lord because of echoes from the Front Bench opposite.

LORD MELCHETT

My Lords, I am sorry; I will speak a little louder. There is an absolute need for a positive policy to be set at the very top, and this is not a matter which can be dealt with by the ad hoc addition of some new sections of business. We must have the pace set by the people who have the ultimate responsibility for planning all the other factors, for long-term development of new plants and expansion of existing enterprises.

Following from this, there is a point which is possibly not sufficiently understood, although it was mentioned by one noble Lord this afternoon—the question of communication. I think the difficulty of this has been found even in organisations which have extremely sophisticated personnel management and labour departments, and all these things which have been mentioned and advocated. If an employer has not really good communications, then the best ideas in the world and the most enlightened policies may not get through to the shop stewards or to the people right on the factory floor who really need to know of them. But it is an extremely difficult thing to arrange. Equally, the policies may be inadequately explained, or even misunderstood; and this, in some cases, can be just as damaging as if the message had never been sent. I believe that this question of organising a communication system, particularly in bigger companies, is something which needs a great deal of thought and possibly could be among subjects for further research by the management experts and some of these research organisations of which we have been speaking.

Finally, I should like to say just one word about trade unions, which have been touched on only once or twice this afternoon. It is perfectly clear that an equal responsibility lies with organised labour and trade unions if the kind of industrial partnership many of us wish to see is going to work smoothly. I would recommend those who are in the least sceptical about the goodwill of the unions in relation to co-operation with the management side to read carefully the small paragraph on unofficial strikes which appeared in the Trades Union Congress Report published last month, which I thought was a very brave and far-reaching decision for the Trades Union Congress to take. It shows, I should have thought, an extraordinary measure of responsibility. I think it received a certain amount of publicity at the time, but it is something which should really be re-read and thought about most carefully.

There is one other aspect of the trade union movement about which I should like to make a suggestion. It is this. Industry is constantly being pressed to make better use of trained personnel, of scientists, of university graduates and people skilled in particular professions, and many sections of industry have been recently severely criticised for not doing so. It appears to me that the trade union movement have been rather slow themselves in recruiting university graduates and trained personnel of this type into their organisations, and it may be that the pay is not attractive in competition with industry and other walks of life that people could go into. But if the unions are going to have men of equal calibre and the same breadth of training and experience, I have a feeling that it will be difficult for them to find them exclusively by promotion on a block vote system within their own organisations.

LORD PAKENHAM

My Lords, the noble Lord is making an extraordinarily interesting speech, and I am not sure whether he is aware that Mr. Woodcock got a first-class Degree at Oxford in Modern Greats.

LORD MELCHETT

My Lords, I was aware of that, though I thank the noble Lord for his intervention. I think, however, that the point may still be valid. There are a certain number of people recruited all the time. They seem, from my limited experience, to remain in research departments and rather in the back rooms, and the opportunities for them to get right to the top and really to leadership is a little limited. I should have thought that this suggestion, made in the most friendly way, is something which the unions might think about for the future, because it is going to need leaders of great stature and broad experience on both sides if the future which we are all looking for is going to materialise.

That is my last point and I will not delay your Lordships any further. I hope that when the noble Earl, Lord Dundee, replies he may be able to tell us what the Government's view is on this problem of redundancy, because it seems to be one of the unsatisfactory aspects of personnel relations in our industrial life at the moment which needs thought and some form of solution.

6.35 p.m.

LORD ROCHESTER

My Lords, I, too, should like to thank the noble Lord, Lord Shackleton, for introducing this debate and to follow the noble Lord, Lord Melchett, in speaking for just a few minutes about people, and this because I happen to have some first-hand and up-to-date experience in the management of people in large-scale industry and particularly of negotiating with trade union representatives. Recently I have found myself up against some of the harsher realities of life in this sphere, and from this I have drawn certain conclusions which I venture to put before your Lordships.

One is that in the last resort management must accept responsibility for all that happens in the sphere of industrial relations, including particularly anything that goes wrong. There are, of course, always convenient scapegoats to hand on which the blame can be laid. There is the Government, for a start; there is the size and complexity of modern industrial organisations which leads to difficulties in communication, which has already been mentioned; there is the apathy, sometimes, I think, of trade unionists which opens the way for Communist militancy and intrigue, and so on. But it is still the responsibility of managers, disarmed as they are nowadays by the Welfare State, by full employment and by wider education, somehow to continue leading in such a way that ordinary men and women will follow. And, stripped as they are of the old weapons of poverty and fear and ignorance, managers must to-day rely for success on their own resources: the authority that comes from knowing their job, the capacity to inform and persuade and, not least, their reputation for integrity. My Lords, it is this need for management constantly to adapt itself to the changing facts of life that I take leave to stress, and it do so humbly, as one who has learned in the hard school of experience.

To-day, I think the first essential is to see quite clearly where industrial power resides. It lies largely, whether we like it or not, with trade unions, and increasingly, as Mr. George Woodcock, the T.U.C. Secretary, has pointed out, it is exercised not from the centre but in localities. It seems to me to follow from this that management must consult with trade unions, not simply the people at the top but also the people who chiefly wield the power and in the places where they wield it, and this means first and foremost the shop stewards on the factory floor. It will be argued that these are often just the people who are most irresponsible in their use of power. That I do not deny. But I think it is also true that, in general, management gets the shop stewards it deserves. Surely it is only as management shows that it regards these people as being of some importance, and that it is prepared to do business with them, that we can hope to get more responsible people to take on the job. It is as true in industry as anywhere else that a decision made after discussion with the people affected is likely to prove more acceptable than it is if it is taken without prior consultation with them; and in my experience the manager who takes refuge in the exercise of his so-called prerogative in fact shows weakness. He certainly causes more trouble than one who dares to take the harder, but in the long run more rewarding, path of seeking wherever possible to carry his men with him.

We hear a great deal to-day about unofficial strikes—reference has been made to them this afternoon by the noble Lord, Lord Forbes, and others—and there is no doubt that there has been an increase in the extent to which agreements reached nationally are violated in the localities. But surely this is attributable to the same shift in power away from the centre, and in my view it calls into question how far wage settlements that are negotiated centrally should continue to be applied uniformly throughout the country when the factor which ultimately settles the matter, supply and demand, varies so widely from place to place.

My Lords, that was really all I wanted to say. This debate is about the responsibilities of management, and as a representative of management in the field of industrial relations accept those responsibilities. But the problem to which I have referred is the concern, I suggest, of industry as a whole. It is for management to take the lead in trying to solve it; but in doing so it will certainly need all the help it can get from its great partner, the trade union. And I have no doubt that that help will be forthcoming.

6.40 p.m.

LORD PAKENHAM

My Lords, a great many things have been said this afternoon which were wise in themselves, and which, coming from the noble Lords in question, will be followed with the greatest attention outside the House. Your Lordships will not have to wait very long before hearing the noble Earl, Lord Dundee, for I shall not attempt to sum up the debate from this side in any formal way, but rather will offer a few thoughts—some of them, perhaps, a shade more provocative than those that have been offered during most of the afternoon. I am very glad to follow the noble Lord who has just sat down, partly for his own sake and partly for the sake of his father, who was always so kind to so many of us in this House; and also to be among the few—the very few, I regret to say—present to hear the noble Lord, Lord Melchett, because certainly his speech will be studied for a long time to come with very much admiration. He seemed to be saying some very penetrating things, which may even break a few bones in quarters where bones ought to be broken. I am not sure of all the implications, but at any rate he seemed to be saying something which was very important, and we on this side of the House certainly appreciate that very much.

I hesitated to speak—indeed, I might have hesitated longer, had I known that the noble Lord, Lord Citrine, was going to pass so severe a stricture on the intellectuals on our Front Bench; but he has left before I have been able to reply to him, so I will allow him to assume that he has got away with it. I speak for one or two reasons: partly out of esteem for the noble Lord, Lord Shackleton, and all his doings in this House, and partly because I have so great an interest from outside in what his firm, his partnership, are trying to do. I was once, for three years, the Minister responsible for a nationalised industry, and I have been chairman for five years of a private enterprise bank, but if anyone asked me: "Do you think that even a rather glorified form of nationalisation has the best answer?" I would answer "No." And I would add: "Nor does any form of private enterprise on a large scale yet known to me."

I do not know how far the noble Lord, Lord Shackleton, and his colleagues are succeeding in what they are trying to do, but at any rate they are trying something which, so far as I know, has not been tried on that scale anywhere else in this country, although the great firm with which the name of the noble Lord, Lord Melchett, will always be associated is most bold and enterprising in so many ways. When I have looked at some vast number of men and women pouring out of a factory or an office, it has often seemed to me not to matter very much whether in fact they were employed by a large private concern or by a nationalised concern; from their point of view, they were so far removed from the top that it did not matter all that much. I believe that Lord Shackleton and his colleagues in John Lewis's are attempting something which we all ought to study with the greatest sympathy.

I feel that this subject of management is one (and it has proved to be one) which is most fruitfully debated in this House; and I agree with, I suppose, the great majority of the points that have been made by the various speakers this afternoon, beginning with the noble Lord, Lord Shackleton, whose speech was generally admired. Yet I still feel, even after all these learned addresses, a kind of vagueness of the mind as to what management is supposed to consist of. We seemed to flit, not unnaturally, from the running of very large concerns to some function not far removed from that of a foreman. We have perhaps found it a little difficult to decide which part of that field we are seeking to cover.

How far can management be regarded as a science, for example? In Sir Frederic Hooper's Penguin called Management Survey, in which I have steeped myself, but which I do not think has been alluded to this afternoon, there is a chapter of 44 pages called "Scientific Management", and there is another chapter of 15 pages called "Management as an Art". The noble Earl, Lord Courtown, and other speakers, including the noble Lord, Lord Baillieu—I was very sorry indeed to miss the speech by the noble Lord, Lord Sinclair of Cleeve, but certainly the two speakers that I have mentioned—referred to the intuition or "hunch" which is so necessary in management, and I think that none of us would describe management as a science in the sense of a natural science. So far as it is a science at all, it is comparable with a social science such as economics, and I always feel that those topics would be better described as social studies. We confuse ourselves when we refer to them as sciences. But, just as we can all agree that economics, with all its limitations, is worth learning, so I should hope we can agree that a manager is more likely to be a good manager if he is versed in scientific management than if he is not.

We are also agreed in feeling that we in this country have not given enough attention to scientific management. The noble Lord, Lord Ferrier, said that there had been a great improvement in that respect; that even in the last year there had been a large improvement. That was very interesting; but I do not know whether he would disagree with what I think has been the general view of speakers: that, whether or not, in this respect, things are better than they were, they are still nothing like good enough. That seems to be the general sentiment; and certainly it is mine—the noble Lord nods his assent to that. I think that perhaps it is therefore worth pausing for a moment—and I am going to speak in very general terms, and not for long—to ask ourselves why we in this country have not given more attention to management as a systematic study, whether you call it scientific or what you will.

One reason has already been touched upon, I think, by various speakers, and touched upon by me: that is, that we do not in fact regard it as a serious subject. It is true that Sir Frederic Hooper and a few other people have written books about management, but if you compare the number of books on management by well-known writers and the number of books on most other subjects—certainly the number of books on economics or sociology—there is no comparison at all. It has been a subject neglected by writers; and, for whatever reason, we have up to now found difficulty in discovering anything that could be called a body of principles in management. There was some disagreement as to whether there were any principles in management. I think the noble Lord, Lord Shackleton, was a little doubtful about that, and the noble Earl, Lord Courtown, felt quite sure that there were not principles in management.

THE EARL OF COURTOWN

I said that I thought there were common factors in management which appeared again and again and which have to be weighed separately, but that I would not go so far as to call them principles.

LORD PAKENHAM

I agree with the noble Earl. That being so, I think it partly explains why it has not been studied systematically, because it is rather difficult to teach a subject if it does not contain a body of principles. We had some controversy, in passing, as to whether it can or cannot be taught. The noble Lord, Lord Shackleton, rather implied that it could not be taught, but one of the noble Lords said that it could. I think that its uncertain status, one might say, has prevented its being studied systematically, as is desirable from the point of view of our national effort.

LORD SHACKLETON

Would my noble friend allow me to interrupt? I think he must have misunderstood both the noble Earl, Lord Courtown, and myself. I think that what we said was that in the past many things were called principles which were not worthy of that precise term. We certainly did not suggest that it was not capable of being taught, but merely that a great deal more research was necessary to establish a philosophy in the body of thinking on which precise and principled teaching could be delivered. Further, when my noble friend says that there are not many books on management, I can tell him that there are far too many books on management. The only thing is that there are even more books on the management of horses.

LORD PAKENHAM

I am afraid that I do not agree with my noble friend on his last point. I have read Sir Frederic Hooper's hook, and I have looked at his bibliography; and if any noble Lord compares the number of books on management with the number of books on other subjects of study, he will find that the number of books on management is quite small. As to the earlier part of my noble friend's intervention, I will accept it. I do not think that what he has said in fact differs from what I am trying to say, which is that the status of management, whatever it may be in the future, is still so uncertain that it is not surprising that up to now it has not been taught very widely or thoroughly.

I believe that there are two other reasons (I am simply offering these opinions to your Lordships: they have no authority beyond opinions, which amounts to very little) why in this country as a nation we have not given this subject the study which we in this House, as do many other parts of the country, feel it deserves. The first reason is the fact that in this country we have never brought our best brains to bear in business of any kind. I think that very few people will claim that those who have been recognised as the ablest boys at school have taken that test. Certainly the ablest boys in the universities have not gone in for business in this country unless they had some extraordinary family advantage or became scientists attached to business. That is a fact, and I think that in that respect we have compared, at any rate for the purposes of this debate, unfavourably with the other leading nations.

Most of us are old enough now to have seen a number of our contemporaries shine at school and university, but how many have gone into business? I should have thought that out of the ablest 100 in our generation we should be lucky if we found four or five who had gone into a business career. That is my opinion; and, of course, if anyone disagrees, let him offer his opinion in another context. But in this country we have valued success in other walks of life, notably success in the professions, much more highly than success in business. Success in public life, yes; but there is also the Bar, medicine, or any of the professions.

LORD FERRIER

My Lords, may I ask the noble Lord whether this does not depend on what he means by "ablest"?

LORD PAKENHAM

In a way it is very hard to prove that those who went into business were the ablest if they were not the ablest when they were tested against their contemporaries; and if they have gone into a profession which has been boycotted by their contemporaries, it is difficult at the end of life to prove that they were successful. But perhaps that is not what the noble Lord had in mind.

LORD FERRIER

All I had in mind was that not everybody went to a university.

LORD PAKENHAM

That is true. But on the whole, nowadays one would say that those who have the highest I.Q.s make their way to university, and I can only submit the proposition that in this country the ablest people have been less inclined to go in for business than is perhaps the case in most of the other leading industrial nations. It is a matter of opinion, but I shall not be easily shaken in my view. I am not saying that it is for the best or the worst, but that it is one reason why we have not given too much intellectual attention to business management.

LORD FERRIER

The noble Lord referred to it a number of years ago, "when we were young", I think he said.

LORD PAKENHAM

Well, we are still both compos mentis and we must try to bring our memories to bear on this topic. However, I have submitted one reason why this great subject has been neglected from an intellectual point of view, and I will come to another finding on that in a moment.

Now let us take the first point, that business on the whole does not receive the esteem which perhaps it ought to receive from the point of view of national well-being. May I quote here Sir Frederic Hooper—and may I say that one has only to look at Sir Frederic Hooper's face on the back of this Penguin to see that he is a successful businessman. Any noble Lord can read the book for himself and become fortified in his opinion. Sir Frederic, as we all know, has made a great success of business, as well as of Government service. He wrote this book in 1948, but has published it again in a Penguin without any comment, so I think we may take it as his up-to-date opinion. Sir Frederic says: It is scarcely too much to say that in Britain we have, over the space of a generation, been steadily approaching the point at which the status of business as a career rates low in public esteem, until nowadays those who engage in business, particularly as employers in private enterprise, seem expected almost to apologise for their existence and activities, as if there was something slightly underhand and verging on the anti-social about them. That is the view of a gentleman who has elected, I think very properly elected, to preach to us about management, and I offer it to your Lordships' House not as my opinion but as the view of a great authority on management. He thinks that things have been getting worse. One or two noble Lords have implied that in this respect things were getting a bit better, but Sir Frederic takes another view.

My Lords, if I seem to be criticising Sir Frederic I hope you will realise that at the same time I am advertising his book. I think that somewhere in his book he points out that he likes to keep charge of his own advertising. He says that he delegates a great deal of time towards looking after the advertising, and I think he will be very grateful for this advertisement. Sir Frederic finds various reasons for this denigration of business, but he does not find that the most damaging of the criticisms come from what one might call Left-Wing quarters. He says in passing that the attitude of the Labour Party has not been helpful, but he finds a more fundamental reason. Sir Frederic also does not find that one of the main reasons is due to the old snobbish basis. There is a certain amount of snobbery still about business. I know of one great golf club, as great as any golf club could be, in which I believe it is impossible to become a member if you are engaged in trade. I think that they interpret "trade" rather narrowly, but its real identity is observed nominally and there is still a certain amount of snobbery about trade in this country.

My Lords, Sir Frederic considers—and this is interesting, coming from him—that the main attack on this esteem has now become intellectual and cultural, and he says that the roots of this are, if anything, more strongly set in schools and universities than they were in the old days of the upper classes who saw business as no fit career for a gentleman. That statement is interesting, coming from Sir Frederic Hooper: that this sort of feudalistic approach to business as being an inferior occupation has given way to something more deadly. Noble Lords in business who have encountered this conduct in the course of their successful career have lived it down; but it is worth noting that this is the view of someone like Sir Frederic Hooper. Whether he has slightly exaggerated his point or not, I would heartily agree with him—I think most noble Lords would—that somehow we must increase the prestige of business as an occupation.

Speaking as someone who works there, I think that the City has a kind of glamour; it is a rather sinister glamour in certain eyes, but it has a kind of glamour in British thought that I do not think industry has. A life in industry has been valued in the eyes of too many wives as a life in a rather unattractive industrial town, and I imagine that everyone will agree that it would be easier to get people to go into business if the businessman could be guaranteed that a good portion of his life would be spent within the reaches of London These are simple facts which have held back many of our ablest people from going into business at all.

My Lords, I would go further and make a second point as a refinement to the first. In so far as business is associated with what is romantic and attrac- tive, it is associated with money-making on a large scale and the top places round the board room table. I know that the noble Lord, Lord Melchett, is associated with the great House of Samuel, and some of us have read in the Observer about the wonderful achievements of the founder of the firm of Samuel.

LORD MELCHETT

So that the noble Lord gets his advertising quite right, may I tell him that it was the Sunday Times?

LORD PAKENHAM

I am sorry; I was speaking about the non-conformist ministers! I was reading about these great ideals in each case, but I got the wrong paper's description of this particular category and I am grateful for the correction.

My Lords, we now associate romance with large-scale business. Some of us are asked to associate it with great names, like that of Mr. Clore or other very familiar names in the world of moneymaking. If we want to go in for old-established business, we associate it with high positions in merchant banking. But whatever else we associate it with, we do not associate it with these rather unknown figures who do so much of the donkey work in business. We associate it with the glamour men who appear before the public.

Sir Frederic Hooper distinguishes management from the framing of policy. This may seem a little semantic or dialectical, but on this point I would venture a criticism of some of the speeches this afternoon. I do not think that speakers were quite clear about whether they were talking about management in a sense that included policy-making or whether they were using the expression as Sir Frederic Hooper uses it, to cover that sort of management which starts immediately below the board. Sir Frederic argues that management and policy tend to react on one another all the time, and that a managing director will, in a sense, embody both ideas, 'because he will be the head of management and also a member of the board.

I feel that we ought each to go away clear in his own mind about whether we are talking about management and using that expression to cover the gamut of business leadership or whether we are confining it to something that begins below board level. I think it is primarily in that second sense that we have been using the word this afternoon. My noble friend Lord Shackleton did not draw that distinction. I think that when he talked of management he included the function of policy-making.

LORD SHACKLETON

My Lords, I do not think I shall try again. I spoke for five minutes on the subject. I would only say to my noble friend that probably the board on which he sits is very different from the boards of other companies, many of which are both executive and policy-making.

LORD PAKENHAM

My Lords, I am still not quite clear. I do not think that my noble friend drew the distinction drawn by Sir Frederic Hooper in his Penguin book. But I think there is a great danger in distinguishing management from policy-making, because it is just here that we tend to associate policy, making with the really responsible and honourable rôles in industry and tend to regard management as a second-class function. This is a real danger, and I seriously submit that it is part of the reason why we do not honour managers more than we do. If we take banking, perhaps the most glaring case of this, we find that the general managers and chief general managers do not sit on the boards—at any rate until they retire from full-time executive work. This is drawing a distinction in the clearest possible way. There is a real problem here which we should be well advised to consider. If we treat managers as people who do not sit on boards, the next step is to regard them as hewers of wood and drawers of water, people who do the bidding of their feudal lords. I think that there is much too much of that in British industry and commerce, although it is passing.

LORD FERRIER

My Lords, I hesitate to interrupt the noble Lord again, but as one who comes from Scotland, I feel that in Scotland it is the different approach towards commerce and trade that perhaps contributes to the flow Southwards.

LORD PAKENHAM

My Lords, I cannot quite follow the noble Lord's intervention. The noble Lord made the point earlier that Scots felt that they were not paid well enough. But, apart from that, do they feel that the Scottish system is inferior to the English and hence they come Southwards?

LORD FERRIER

My Lords, what I meant was that if there is less stigma in the Scottish approach to commerce and trade than there is in the South, together with the fact that wages are not so high in Scotland, that contributes to the flow Southwards.

LORD PAKENHAM

My Lords, I am sorry, but I still cannot follow the argument. I should have thought that if there were many keen young Scots businessmen and no stigma, then they would be more likely to stay there than come here. But I will work this out with the noble Lord later.

We have to ask ourselves seriously how we are going to bring it about that a higher proportion of the best brains in this country go in for business, which will mean that for a great part of their lives they will be engaged in something that is certainly business management, even if they finish up on the board. I feel that we shall never achieve that unless this distinction between the life of the manager and the life of the director is obliterated. So long as we have this distinction, the ablest people will go in for some career where such a distinction does not exist. If we take the example of the law, if solicitors not only worked for barristers but worked under barristers, and worked under them all their lives, I do not think we should get many able men entering the profession of solicitor. That is roughly the position as between managers and directors.

We must look at these things broadly and crudely, and each must offer his opinion. All agree that the manager has been neglected in this country, and I am offering one or two thoughts. I believe that there is a growing prestige attaching to the profession of manager, but I think it will be a long time before the rôle of management achieves the status which is required to attract an adequate number of our best brains. Before the war the universities were dealing with 50,000 undergraduates. Now it is 100,000 and as the noble Earl, Lord Dundee, and the noble Viscount, Lord Hailsham have remarked, the aim is now 175,000. So the day will come, ten years hence, perhaps sooner, when almost anyone of ability will go to a university. What will be the position of industry then? Are they going to make a fuller use of university men than they have made in the past? I know that there are great difficulties about using university men to the full, because the man who comes in earlier is inclined to resent their appearance on the scene. We have to attract university men into business, but we shall not do it simply by assuming that if we pay them enough they will go there. Industry must use them much more imaginatively than in the past. These broad questions cannot be disposed of in a few sentences. And I will end by saying how greatly I admired the opening speech of my noble friend Lard Shackleton and how deeply interested I was in the speeches that followed.

7.13 p.m.

THE MINISTER WITHOUT PORTFOLIO (THE EARL OF DUNDEE)

My Lords, having listened with the greatest of pleasure throughout the discussion, I should like to thank your Lordships for refraining from asking for any kind of specific information from the Government which might have been difficult for me to obtain and—what is even more remarkable—for not demanding that the Government should spend a great deal more money than they are now spending. The noble Lord, Lord Pakenham, began by declaring that he intended to be more provocative than anybody else had been. The only question he raised which seemed to me in the slightest degree provocative was whether industrial management is an art or a science. In my opinion it is both. The noble Lord tried to be provocative and I think he rather followed the prevailing fashion in his Party by provoking those behind him rather more than those in front.

LORD PAKENHAM

My Lords, perhaps it may be that those behind me were more alive than those in front.

THE EARL OF DUNDEE

My Lords, it may be that if industrial management is deteriorating, Party management is deteriorating too. Although the noble Lord failed to provoke any controversial sentiments in my mind, he made a delightfully effervescent speech. I think he was even more effervescent than he usually is, which is no doubt explained by the fact that he has just been reading this book by Sir Frederic Hooper, who is, I believe, the managing director of Schweppes.

I should like to thank noble Lords for the great wealth of experience they have brought to this discussion, and I think the most useful thing that I can do is to pursue for a few minutes one or two features of the subjects referred to by your Lordships which affect the work but are not the direct responsibility of those Government Departments concerned with this subject—that is to say, the Ministry of Labour, the Ministry of Education, the Board of Trade and the Department of Scientific and Industrial Research.

Your Lordships, think rightly, have not said anything at all about the compulsory or the statutory side of industrial management which it is the direct responsibility of the Government to enforce, such as the application of the Factory Acts, or the decisions of the Wages Boards—and we have discussed those matters a great deal in the last two years. Your Lordships have been principally interested in the improvement of management, which is not the direct responsibility of the Government but which the Government may promote by advice or by helping, financially or otherwise, industrial and social institutions which have that object—the British Productivity Council or the Institute of Management, for example—or by seeking to promote more emphasis on the teaching of industrial management in our technical colleges and our universities.

The noble Lord, Lord Shackleton, began by saying that good labour relations depend in the first instance ion management, and that 'management gets the labour relations it deserves. I thoroughly agree with that. Of course, if you emphasise the responsibilities of management, that is not to say that management carries the sole responsibility either at the national level or at the factory level. But whether it is a single unit or a firm, I would say that management must inevitably accept the major responsibility for creating the climate in good relations so that an efficient working force can develop; management must take the initiative in these matters. It is the manager's job to bring together all the elements of the productive process in the most effective way, and that depends on effective relations between himself and his employers; it is he who has the final responsibility for promoting such relations. Twenty years ago when management thought about these responsibilities they were probably thinking only of things like fair wages and the provision of reasonable amenities, but now an up-to-date manager is thinking of a great deal more than that. He is thinking at least as much of ways in which employees can be given a, sense of confidence and an opportunity to co-operate with management in ensuring the efficiency of the enterprise.

It is most important to realise that one of management's major responsibilities is to exercise foresight, to look ahead, to anticipate problems, to recognise the signs of the times, and to take whatever initiative the situation requires. Very few managements would feel that they could run their businesses successfully if those qualities were not applied to the commercial and financial aspects of the business, and the creation and maintenance of good relations over the years depend a good deal on the exercise of such qualities. Your Lordships will, I am sure, agree that many of the disputes and difficulties which arise in industrial life could probably be avoided by this kind of approach. I would suggest that the most important needs which must be met by good management are security, proper information and improved training. No one, I think, would suggest that a guarantee of complete security of employment is ever really possible, but it would make an important contribution to good relations if employees had confidence that management in each individual firm was doing all it could to provide continuity of employment; that production was being adequately and properly planned; and that in this planning the implications for the people concerned were being taken into account side by side with the account which is taken of production changes.

As for information, although a great deal has been said about it, it is impossible for its importance to be overstressed, and I am glad that so many of your Lordships have stressed it this afternoon. I understand, by the way, that it is being discussed to-morrow by the National Joint Advisory Council at their meeting. How many difficulties in industry arise from misunderstandings which could be avoided if real trouble were taken to disseminate necessary information throughout all ranks of those who are engaged in the factory! It is a question of information not only between employers and workers but between the top managers and the subordinate factory managers. The misunderstandings which arise because workers do not really know what is being done, or what is intended to be done, are so easily exploited by the Communist saboteurs, who are always ready to take advantage of any misunderstanding to cause a stoppage in order to reduce production and the national wealth and the prosperity of industry. This is, of course, one of the main objectives of the Communist Party.

It was the noble Earl, Lord Courtown, who said that industry could learn a lot from the Army and military methods. Certainly one thing which industry can learn is the importance of good information. Before any military action is undertaken, if the officers know their job, every officer and every man must be given information: first as to the objective of the action; second, as to where the enemy is; third, what is his own part in the action; and, finally, what is being done by the unit or man next to him. If everybody in the Army is not properly informed about those things, it does not matter how great the soldiers are or how good their weapons, they have not much chance of winning the battle. It is the same in industry: it is impossible to over-emphasise the importance of proper information.

LORD SILKIN

The noble Earl says that they should be informed as to who is the enemy. It is not always easy to see that.

THE EARL OF DUNDEE

I hope that that will also be done in the management of the Labour Party.

SEVERAL NOBLE LORDS

Oh!

THE EARL OF DUNDEE

On training, one of the most important responsibilities of management is not only to see that as many as possible of their own workers get the greatest amount of technical industrial training at the various courses which are available, but also to train other managers for succession. That is the aspect of training in which your Lordships have expressed most interest this afternoon—education in management itself. I think there is now widespread recognition that there are aspects of management which can be learnt in an educational environment as well as in the school of experience. Universities and technical colleges are now both experimenting with new courses which are designed for well-qualified men who are moving on to managerial responsibilities. I had the honour not long ago of reading what I am afraid was a particularly inadequate paper to an industrial management course at the University of St. Andrews, consisting, I think, mostly of people who knew far more about the subject than I did. I have no doubt that many of your Lordships have tried to help in similar ways.

If technical colleges are to provide the courses which industry needs, if they are to be well staffed with men and women of up-to-date and responsible experience of industrial techniques, that can be done only by the fullest partnership with industry. I do not think any of your Lordships has mentioned the Federation of British Industries' recent publication, a booklet called The Technical Colleges and their Government, which was published only a short time ago, explaining the different ways in which industry might co-operate. It points out that there is a place for top management on college governing bodies where the Ministry of Education encourage local education authorities to see that at least one-third of the members are engaged in industry and commerce. Most colleges now have advisory committees for the various subjects on which those with current experience of industrial problems are required. Most important of all, there is need for constant discussion between the staffs of the colleges and industrial training officers if the two parties are to keep in step and if the adolescent or the grown-up person who is being trained is to see his work in college and in the firm as clearly integrated activities leading to the same goal of the fully qualified man.

The particular question which the noble Lord, Lord Shackleton, asked about the recent Ministry of Education circular No. 1/60 was, I think, fully answered by my noble friend Lord Mills. Ever since the Urwick Report in 1947, the British Institute of Management have been jointly running a scheme for an Intermediate Certificate and a Diploma in Management Studies, with courses provided in the technical colleges. It has been a most valuable scheme, with some 700 students a year taking the certificate and about 300 a year getting the diploma. But now it is considered that the time has come for a change. Management studies should, in the main, be undertaken by men and women who are already in industry or business and who have already gained a first qualification as engineers, builders, accountants, salesmen et cetera and who are now moving over into the field of industrial or commercial management. It is for them that this new diploma is designed and courses leading to it will begin in September of next year.

Many of your Lordships have pointed out, very rightly, that management to-day faces an especially critical problem in keeping up with scientific and technological advance. Scientific change is faster than it has ever been before, offering new materials, new processes and new products, and the chances of tapping new markets. Our economy could not survive if our industries failed to exploit these opportunities, and achieving the right balance of effort on research and development should be one of management's major preoccupations. Market research and advertising also have their part to play in getting the right product to the right people at the right time. It is the correct balance that counts.

There was published last year by the Department of Scientific and Industrial Research evidence of the increasing expenditure, not by the Government or by universities, but by industry itself, on research. This booklet, Industrial Research and Development Expenditure, 1958, shows that manufacturing industry spent about £300 million on research and development in 1958, compared with about £190 million in 1955. That represents 4.2 per cent. of manufacturing industries' contribution to national production, compared with 3.1 per cent. in 1955, Of the £300 million, 95 per cent. was spent in industry's own establishments and about 5 per cent. on payments to outside bodies like universities and public and private research institutions. The share of defence contracts in this expenditure was, as might be expected, considerably less in 1958 than in 1955, and so expenditure on civil research and development is estimated at least to have doubled over the three years. That represents an increase in effort devoted mainly to capital purposes, and it is hoped that this will lead in due course to increased investment, higher productivity and greater power to compete in foreign markets.

I think it may be true, as many of your Lordships have suggested, that in our research progress we have not yet caught up with some other nations who are our competitors. That presents us with a challenge which we have got to meet if we are to survive. The noble Lord, Lord Baillieu, stressed this fact, and also the fact that there has been greater progress in the last 100 years than in the whole previous history of civilisation. Next he said that in the last 20 years there has been more progress than in both put together. I think that is very true, and I think there is nothing complacent in saying that and in pointing out that many people who went away from here 20 years ago would hardly recognise a great deal of British industry if they came back now. I repeat that there is nothing complacent in stating these facts or in expressing our confidence that, in the next 20 years, there will be in this country far greater progress in both the art and the science of industrial management, which is as important to our productivity and wealth as it is to the happiness of those who are engaged in industry.

7.28 p.m.

LORD SHACKLETON

My Lords, I am grateful to your Lordships for the many interesting and important speeches we have had to-day. The debate went rather as I expected. We went fairly wide, but not too wide. I will not follow the noble Lord into the subject of taxation or expense accounts. The debate brought out a number of subjects, such as the point made by the noble Lord, Lord Melchett, on communication, and many others which might be the subjects of other debates. All went well until my noble friend Lord Pakenham lured us into dancing on the point of a pin on the subject of what was management. He proceeded to draw a line between the board-room and management which split me in two, because, as the director of a large organisation, I also regard myself as a manager. In fact, I am paid as a manager, and most of us are in that position in industry. It may be different in the bank over which my noble friend presides with such distinction.

LORD PAKENHAM

My Lords, I am sorry to hold up the noble Lord, but in fact I was quoting Sir Frederic Hooper to that effect. I said what a pity it was that such a rigid line should be drawn.

LORD SHACKLETON

I am about to come to Sir Frederic Hooper. My noble friend read a book which Sir Frederic Hooper wrote in 1948. I spoke to Sir Frederic Hooper last night as he was coming out of our club and I was going in; I said, "I am about to have a debate in the House of Lords on management", and he said, "Tell them it is management that counts, not ownership". This may help to make the point clear. If not, I can only refer my noble friend to the earlier analogy on the management of the horse, which perhaps is a safer and easier one for us to understand. We cannot, of course, go too deeply into these refinements, but it leads to the point on which I asked the Government to do something: that was to stimulate more research in the universities. The noble Earl who replied missed one thing that I asked the Government for: I asked them for some money, so that when the British Institute of Management and others fulfil this very important national rôle of spreading British management know-how abroad it will come partly from Government funds and not, as now, wholly from the funds of industry as supplied to the British Institute of Management. I hope he will consider that point.

I must say, in conclusion, that it is a pleasure to find myself—and I do not think my noble friend Lord Citrine, as an old trade unionist, would be too shocked at finding himself also—largely in agreement with everything that the Government have said, and I think the measure of agreement and the forthright statements on industrial relations that have been made by Government spokesmen, as by other noble Lords, are of real value. I am therefore most grateful to the House, and ask leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.