Julie Cravey
Professor Jacquelyn Veuleman
Management 1115 Leadership
18 September 2015 American Welfare Capitalism Pioneer As I researched literature on the subject of leadership, Henry Ford stands out as one of America’s notable leaders. Born to an Irish immigrant father and American mother of Belgian descent, Henry Ford turned his back on the lifestyle of a farmer and sought employment in Detroit in the machine shops when he was 16 years old. Ford’s leadership style could best be described as Transformational leadership. Our textbook states, “all transformational leaders are charismatic, however, not all charismatic leaders are transformational1.” Common characteristics of a transformational leader include having a clear vision of the future, the verbal skills needed to share their vision, the ability to project confidence to others in the ability to attain their vision, and the personalized leadership to set and achieve goals needed for the organization’s success. Henry Ford’s vision of a car for every American demonstrated his understanding that his company would be far more successful if every citizen were able to afford his vehicles, instead of only being available to the wealthy few. To this end, he introduced mass production in America via the moving assembly line, and offered higher wages for his employees. This practice of inexpensive production with high worker pay credited to Henry Ford is known as “Fordism”2. He understood that breaking down complex jobs into simpler steps allowed the unskilled worker to accomplish the task of the product being produced at a more efficient price. In order to maintain his workforce, Ford instituted a $5.00 an hour pay scale and was the first company to establish a workday of eight hours. This move caused many skilled and unskilled workers to flock to the Ford manufacturing plants, doubling the output of his factories and increasing production of his automobile. Not to mention, making Ford quite a wealthy man. While employees of the manufacturing plants greatly disliked the monotony of their jobs, the pay increase did allow Ford to amass talented individuals, unionization efforts were temporarily stymied, and the great American love affair with the automobile began. Ford’s innovations in cost lowering manufacturing and wage increases now made the automobile obtainable by his own workers. In addition, Ford introduced the dealer franchise system that also made the automobile available to the average person in many cities across the country. Henry Ford’s verbal skills were well known, as are his numerous quotes and sayings today. His capability to inspire his investors and workers with his vision led to Ford Motor Company’s ability to encourage worker loyalty to his company and the idea of an automobile affordable for the masses. Ford was a hard worker and he expected hard work from his employees. In his efforts to motivate his workers, Ford understood the practice of Welfare Capitalism would greatly increase his worker loyalty. He would offer a living wage and profit sharing to select employees with six-month employment with Ford Motor Company. However, in return for his own generosity, he also expected a certain standard of behavior from his employees eligible for these benefits. His “Sociological Department and English School” was established to manage his large and diverse workforce, and included a set of rules and codes of conduct expected of his employees in order to qualify for the $5.00 per day pay and profit sharing plan. The Sociological Department would conduct visits to the homes of employees to verify children’s school attendance, home cleanliness, and even spending and banking practices. But, they were also available to teach worker’s wives about basic care of their home and family. It is interesting to note that many of the methods employed by Ford’s Sociological Department would be considered illegal by today’s standards5. He was concerned about his workers and was one of the first manufacturers to attempt to address immigrant and migrant worker safety by teaching them communication skills through the learning of basic English3. In addition, with the migration of Blacks from the South to the North, Ford Motor Company was the largest employer of African Americans in Detroit. Albeit most were employed in a janitorial capacity, they were paid a living wage and offered social services along with inexpensive retail items and low interest loans to those living in the Inkster and Garden City communities3. Henry Ford had the confidence to convey and act upon his vision of mass produced automobiles suitable for everyone. He received backing from individuals to manufacture his automobile, but when they grew tired of his practice of continually attempting to improve upon his design, he sold his shares and established his own Ford Motor Company. After the success of the Ford Model T in America, Henry Ford opened manufacturing plants across the globe in countries having successful diplomatic relationships with the United States4. With his success came the attempt to branch into other areas of manufacturing, including the airplane industry, opening the Ford Airplane Company. This short-lived manufacturing attempt was in support of the United States during World War 1, and was abandoned during the Great Depression due to lack of sales. Henry Ford recognized the advantage of being the lone investor in his companies with the ability to make decisions trusting solely in his own ideas and intuition. While this was good in the respect that the speed of the decision making process was greatly increased, I have to wonder if the input of others could have kept Ford Motor Company abreast of the needs and desires of consumers in the automobile industry. Henry Ford trusted almost completely in his own intelligence and insight with the ability to bring others around to his ideas. Moreover, he had no problem firing individuals who did not agree with his way of thinking. However, Ford’s need to control did cause him to lose many talented workers to other automobile manufacturers.5 Henry Ford’s personalized leadership skills and management style was based on the Scientific Management technique of F.W. Taylor, the study of the relationships between workers and their tasks to increase efficiency. Henry Ford’s moving conveyer belt completely changed the manufacturing process in America and was responsible for the move to mass production by other manufacturers. This resulted in tremendous financial success for Ford, but also for tremendous worker stress. As jobs were streamlined, worker monotony increased and factory conditions and supervision were tight and restricting. The workers were expected to concentrate solely on their job, they were not allowed to leave their posts, and they were not allowed to talk to surrounding workers. To alleviate some of the stress coming with these constraints, workers learned to talk to one another through the sides of their mouths, known as the “Ford Lisp”. However, many were unable to adapt to the restrictions placed on them at these jobs and Ford’s employee turnover sometimes reached as high as 400% as workers left his company5. This was another one of the reasons for Ford’s salary increase and working hour’s decrease, the attempt to maintain his trained workers.
Henry Ford was the last automobile maker holdout against labor unions. He was adamantly against their attitude of restricting production to increase employment, which he considered a self-defeating philosophy; Ford Motor Company eventually signed an agreement with the UAW (United Auto Workers) union in April, 1941 with the most advantageous terms for his workers. While Henry Ford was an ardent pacifist, when America entered World War 1 he and his plants stood solidly behind the war effort. The United Kingdom plants produced tractors along with truck and airplane engines to support the allied countries involved. In conclusion, I believe Henry Ford was one of, if not the, most influential individuals and entrepreneurs of the 19th century. In my opinion, he was a brilliant entrepreneur and businessman. With the introduction of the moving conveyer belt, he totally revolutionized the manufacturing process and mass production in the United States. I believe that he contributed heavily to the rise of middle class America. He recognized that workers who were paid a living wage would be able purchase his products and other consumer goods, which would grow the American economy, and he was the first to practice Welfare Capitalism in America. I have thoroughly enjoyed researching Henry Ford, and I would like to share my favorite quotation which is “My best friend is the one who brings out the best in me.” Citations:
1Leadership, Vol. 2, MGMT 1115. Hughes 7e. WGTC. Page 595.
2https//en.wikipedia.org/wiki/Fordism
3http://www.thehenryford.org/research/englishSchool.aspxhttp://blog.thehenryford.org/2013/02/african-american-workers-at-ford-motor-company/
4www.leadership-with-you.com/henry-ford-leadership.html
5Principles of Management. MGMT 1100. WGTC, Business Education Department. Page 51.