Business Structure

One influence from the Industrial Revolution that continues to hold importance is the formation of the modern business structure. As production became centralized and the companies that owned them grew, business owners increasingly found that their management structures were not diversified enough to handle all the myriad activities that had to be performed by the company daily and on a large scale.  

There were several different movements in the revolutionizing of business structure, though all existed with the goal of doing what had increasingly been done among workers in factories – separation of labor – except that the “product” of the managerial hierarchy was organization and decision-making. Increasingly, the early system of a company owner who made blanket decisions, assisted by a clerk who managed finances and another who managed production, evolved into a complex system of managers and clerks for each aspect of the business. 

A prime example of this tendency was the railroad industry. For the first time in history, a single business venue stretched on literally for miles, while communication, by telegraph for example, between its outposts – stations – made it possible for it to be a cohesive whole. There had to be an operator at each station to deal daily with varying inputs, such as railroad conditions, passengers and freight, and delays at other stations. Likewise, many different types of transactions needed to be enacted, such as the exchange of money and the delivery and storage of goods, as well as inspections and repairs. It was impossible for a single manager to make all these decisions, and for a few clerks to keep track of them, in branches separated by large distances. Thus, management was subdivided into regions as well as functions, with functional groups reporting to senior managers who would then report to the company owner.  

Over time, these structures became more advanced. They also adopted other means of further organizing a company's structure. For example, the American railroad owner Albert Fink introduced control through statistics, an accounting system that divided a railroad's operating costs into groups according to their variability. Frank and Lilllian Gilbreth used the study of timed, repeated motion to separate the tasks of workers into individual, easily timed motions. Both of these changes allowed business owners to more accurately calculate the amount of work done, the amount produced, the expenses incurred, and the profits gained. The introduction of public relations and advertising as individual aspects of a company's operations were also a major change, signifying the heightened interaction of business with public society and ushering in the “Age of Advertising”. 

These concepts laid the groundwork for the modern business structure. The management structure, while it has remained largely the same, continues to change and adjust. Increasingly, a firm's success depends on its image in society, causing an explosion of the marketing, design, and advertising industries,  barely existant in the mid-nineteenth century. Also, more complex methods of accounting exist, using analysis-based methods to precisely calculate profits and costs in the present and future for any given firm. However, the roots of today's monolithic business structures lie in the industrial period.  

Sources 

“The Industrial Revolution (1700 - Present)”. 2 December 2005 < http://www.neo-tech.com/businessmen/part6.html > 

“Management History.” Dallas County Community College . 2 December 2005 . < http://ollie.dcccd.edu/mgmt1374/book_contents/1overview/management_history/mgmt_history.htm >.