HENRY FORD - A GREAT INNOVATOR
<<Previous
continued from : FORD'S EMPLOYEE-FRIENDLY PRACTICES
Ford soon realized that employee morale was low. In January 1914, he announced a
significant increase in employee wages and a decrease in labor hours. One of the
Detroit newspaper published Ford's announcement, "The Ford Motor Company, the
greatest and most successful automobile manufacturing company in the world,
will, on January 12, inaugurate the greatest revolution in the matter of rewards
for its workers ever known to the industrial world. At one stroke it will reduce
the hours of labor from nine to eight, and add to every man's pay a share of the
profits of the house. The smallest amount to be received by a man 22 years old
and upwards will be $5 per day."[1] While the industry paid a standard wage rate of
$2.50, Ford paid $5 to attract more employees and prevent those already on the
payroll from leaving the company. This produced the desired high stability in
the workforce and a decline in operating costs. Ford said of his move, "The
payment of five dollars a day for an eight-hour day was one of the finest
cost-cutting moves we ever made."[2]
|
Ford also introduced a 'five-day work week,'
giving employees a break on Saturdays. All these measures raised worker
productivity. The company's profits soared from $30 million in 1914 to $60
million in 1916. Of Ford's innovative thinking, it was said, "A genius
machinist, Ford, in essence, was different for the simple reason that he
never tried to be the same as anyone else. He willed success; hence the
company prospered under his charismatic spell."[3]Ford was a person of great
humility and had strong bonds with his employees. In fiscal 1929, Ford lost
$68 million due to the depression[4]. But Ford did not reduce employee wages
till the autumn of 1932, when he finally rolled back the minimum wage to $4
per day. As recovery began in 1935, Ford raised wages again to $6 per day.. |
|
THE CRITICISM
Ford was held in high esteem for his invaluable
contributions to the automobile and aviation (Refer Exhibit II) industry
worldwide, but he also faced criticism on a few grounds. Some said that the
segregation of the assembly process into 'thoughtless recurring tasks' made Ford
workers into robots. The critics felt that the assembly line made workers'
mechanical skill redundant. The workers no longer needed specialized technical
skills and were only required to do standardized unskilled work. Ford rebutted
these allegations and said, "I have heard it said, in fact, I believe it's quite
a current thought, that we have taken skill out of work. We have not. We have
put a higher skill into planning, management, and tool building, and the results
of that skill are enjoyed by the man who is not skilled."[5]
When Ford raised the wages of workers to $5 a day, some analysts, businessmen
and company shareholders criticized him saying that he was a crazy man who was
determined to ruin the company. They considered Ford's way of reducing the high
labor turnover rate to be very foolish. To this, Ford said, "Well, you know when
you pay men well you can talk to them."[6]
[1]As
quoted in the article, "What Titans Can Teach Us," by Richard Tedlow, Harvard
Business Review, December 2001.
[2] As quoted in the article, "Henry Ford and the Model
T," posted on www.wiley.com.
[3] As quoted in the article, "Ford at 100: A Century
of Audacious Tinkering," by Douglas Brinkley, Detroit Free Press, June 12, 2003.
[4] During 1929-1940, US witnessed great depression
which began with the greatest stock market panic in history on October. 24,
1929. The business conditions were very poor throughout the late 1920s and mid
1930s.
[5] As quoted in the article, "Henry Ford and the Model
T," posted on www.wiley.com.
[6] As quoted in the article, "Henry Ford and the Model
T," posted on www.wiley.com.
More>>Page3
|
More Classifications...