Management Science is a bona fide academic discipline, cross-bred from Business, Economics, Sociology and Psychology, and not at all a cynical attempt to screw surplus value (money) out of industry by encouraging it to buy in unnecessary consultancy.
The purpose of Management Science is fivefold:
- 1. To maximise the Advantage of Management over lower-ranking employees
- 2. To tip the balance of Power in Management's favour
- 3. To maximise the ProfitAbility of the Enterprise
- 4. To maximise the financial returns of Management Consultants
- 5. To perpetuate the existence of and proliferate the gospel of Management Science
What Management Science does
Basically, it increases the Value produced per employee whether or not this increases total Profit, even if the company in the end employs fewer people, sells less product and generates less revenue. Management Consultants still pocket their fee either way.
Profit + Ability = ProfitAbility. It's that simple!
- The most fundamental law of Business is that Profit (P) is equal to the Value (V) generated by a worker (w), minus his/her salary (s), thus:
- The second rule of Business is that the basic Unit of Production is the employee. The only way to increase Profitability is to maximise the Value generated by the employee relative to his/her salary, thus:
- ProfitAbility (PA) is equal to the Value generated by the employee divided by his/her salary.
Management Science exam
Time allowed: 10 minutes
Exam Question: If employee A earns $40 per day to produce $100 in Value (profit = $60), and employee B earns $60 per day to produce $130 in Value (profit = $70), which employee, A or B, is the more profitable?
Answer: employee A. (employee B is being paid an extra $20 just to make an extra $10 dollars in profit for the company. No company in its right mind would increase its turnover by $30 just to let its employees walk away with two thirds of the increase!) The company gets to keep 60% of the Value generated by employee A, but only 53.8% of the Value generated by employee B. Therefore, employee A is more ProfitAble.
Management and Competitive Salaries
Your boss's pay rise is justified by the fact that there are other people who would be willing to do his job for more money. Your pay cut is justified by the fact that there are other people who would be willing to do your job for less money.