Micromanaging From The Grave

The father of scientific management, Frederick W. Taylor, forever changed the way people work by developing a series of time and motion studies that laid the groundwork for mass production. Taylor exercised precision and control in his own life, too--and beyond it. Today, 80 years after his death, Taylor is managing to exert control in a rather unusual way.

Taylor named his alma mater, the Stevens Institute of Technology in Hoboken, N.J., in his will, and following the death of the last of his heirs, the college received about $10 million from the Taylor estate. The Stevens Institute last year began investing the bequest in common stocks, as Taylor had specified. He also laid out an elaborate set of instructions for how the endowment should be managed: Dividend income may be withdrawn in certain increments during specified time intervals, and there is a sliding scale stipulating how much dividend income must be reinvested for 180 years.

The payoff, should the college still exist 180 years hence and assuming a 5% annual real rate of return on the common stocks: an endowment of more than $8.6 billion.

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