Here is an excerpt from a classic article written by Walter Kiechel III for Harvard Business Review (2012) and the HBR Blog Network. To read the complete article, check out the wealth of free resources, obtain subscription information, and receive HBR email alerts, please click here.

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If you want to pinpoint a place and time that the first glints of the Management Century appeared on the horizon, you could do worse than Chicago, May 1886. There, to the recently formed American Society of Mechanical Engineers, Henry R. Towne, a cofounder of the Yale Lock Manufacturing Company, delivered an address titled “The Engineer as an Economist.”

Towne argued that there were good engineers and good businessmen, but seldom were they one and the same. He went on to assert that “the management of works has become a matter of such great and far-reaching importance as perhaps to justify its classification also as one of the modern arts.”

Towne’s speech heralded a new reality in at least three respects. Call the first consciousness raising: Management was to be viewed as a set of practices that could be studied and improved. It was to be rooted in economics, which to this crowd meant achieving maximum efficiency with the resources provided. And the members of the audience were engineers. In the decades to come, such masters of the material universe, from Frederick Winslow Taylor to Michael Porter, Tom Peters, and Michael Hammer, would have a disproportionate effect on management’s history.

Towne was catching a wave. During the century that followed, management as we know it would come into being and shape the world in which we work. Three eras punctuate the period from the 1880s until today. In the first, the years until World War II, aspirations to scientific exactitude gave wings to the ambitions of a new, self-proclaimed managerial elite. The second, from the late 1940s until about 1980, was managerialism’s era of good feelings, its apogee of self-confidence and widespread public support. The third and ongoing era has been marked by a kind of retreat—into specialization, servitude to market forces, and declining moral ambitions. But it has also been an era of global triumph, measured by agreement on certain key ideas, steadily improving productivity, the worldwide march of the MBA degree, and a general elevation of expectations about how workers should be treated.

Americans and a few other Anglophones dominated management’s early history, in the sense that their ideas on the subject gained the greatest currency. There were exceptions: In 1908 Henri Fayol, an engineer who had run one of France’s largest mining companies, enumerated a list of management principles, which included a hierarchical chain of command, a separation of functions, and an emphasis on planning and budgeting. Still, his 1916 magnum opus,Administration Industrielle et Générale, took decades to be translated and to have much effect beyond France. Although globalization promises more-diverse sources of thinking on management, most of our story so far takes place in the United States. (See the sidebar “Saving Ourselves from Global Provincialism.”)

The Age of “Scientific Management”

In the last two decades of the 19th century, the U.S. was shifting—uneasily—from a loosely connected world of small towns, small businesses, and agriculture to an industrialized network of cities, factories, and large companies linked by rail. A rising middle class was professionalizing—early incarnations of the American Medical Association and the American Bar Association date from this era—and mounting a progressive push against corrupt political bosses and the finance capitalists, who were busy consolidating industries such as oil and steel in the best robber-baron style.

Progressives claimed special wisdom rooted in science and captured in processes. Frederick Taylor, who wrote that “the best management is a true science, resting upon clearly defined laws, rules, and principles,” clearly counted himself in their camp (fans such as Louis Brandeis and Ida Tarbell agreed). His stated goal was the “maximum prosperity for the employer, coupled with the maximum prosperity for each employee,” through “a far more equal division of the responsibility between the management and the workmen.” Translation (lest the reader overestimate Taylor’s respect for workers’ potential contributions): The laborer should work according to a process analyzed and designed by management for optimum efficiency, “the one best way,” allowing him to do as much as humanly possible within a specific time period.

The publication, in 1911, of Taylor’s Principles of Scientific Management — originally a paper presented to that same American Society of Mechanical Engineers — set off a century-long quest for the right balance between the “things of production” and the “humanity of production,” as the Englishman Oliver Sheldon put it in 1923. Or, as some would have it, between the “numbers people” and the “people people.” It’s the key tension that has defined management thinking.

The cartoon version of management history depicts the human relations movement, begun in the 1920s and 1930s, as a reaction to Taylor’s relentless, reductive emphasis on the quantifiable. A better view regards the two as complementary. As evidence, consider the research of Elton Mayo and the other men behind the pathbreaking Hawthorne studies. Their work shares Taylor’s overarching ambition to improve productivity and cooperation with management through the application of science, though in this case the science was psychology and, to a lesser extent, sociology.

The studies, which were mostly conducted at Western Electric’s Hawthorne plant in Cicero, Illinois, began in 1924 and ran through 1932; eventually they involved other factories and other companies. The analysis was largely done at Harvard Business School, including outposts such as its Fatigue Lab. (If tired workers were the problem, how to design operations to lessen exhaustion but still achieve maximum output?) The Hawthorne studies were easily the most important social science research ever done on industry. The project is worth unpacking a bit, if only to dispel the popular myth about what was learned. (“They turned the lights up, productivity improved. They turned the lights down, same thing. Any sign of attention from management was enough to improve productivity.”) Essentially the studies progressed through a succession of hypotheses, dismantling each one. Neither changes in physical conditions (better illumination), nor in work schedules (more rest breaks), nor even in incentive systems could fully explain why productivity steadily improved among a set of young women—always labeled “the girls”—assembling parts in a test room.

The Principles of Scientific Management (1911) set off a century-long quest to balance “the things of production” and “the humanity of production.”

After years of experiments it began to dawn on Mayo, an Australian psychologist who had joined the HBS faculty, that at least two factors were driving the results. First, the women had forged themselves into a group, and group dynamics—members encouraging one another—were proving a strong determinant of output. Second, “the girls” had been consulted by the researchers at every step of the way: The intention of the experiment had been explained to them, and their suggestions had been solicited. From such heady stuff were distilled the basic insights of the human relations school—that workers were not mere automatons to be measured and goosed with a stopwatch; that it was probably helpful to inquire after what they knew and felt; and that a group had substantial control over how much it was prepared to produce.

Those insights sound humane, and they were. Still, the aim of the experiments was always to discover how psychology could be used to raise productivity, resist unionization, and increase workers’ cooperation with management. Behind the effort of Taylor and the so-called “Harvard Circle” was an elitism, a class arrogance, almost incomprehensible by today’s standards. Dean Wallace B. Donham, who founded HBR, ardently believed that an educated managerial cadre—a “new managing class”—was the answer to the nation’s problems: to the Depression, to inept government, to social upheaval. He and others on the banks of the Charles looked down on the typical worker as a lesser being, one to be manipulated in service of higher purposes (or as Taylor said of the type of man best suited to load pig iron, “so stupid and so phlegmatic that he more nearly resembles in his mental make-up the ox”).

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I envy those who have not as yet read this brilliant work.

Here is a direct link to the complete article.

Walter Kiechel III is the former Editorial Director of Harvard Business Publishing, former Managing Editor at Fortune magazine, and author of The Lords of Strategy: The Secret Intellectual History of the New Corporate World. He is based in New York City.

To read my review of that book, please click here.

Here is a direct link to my interview of Walter.