We know that Henry Ford forever changed the way cars are manufactured. He was observant, self-taught, and not only did he successfully apply the business strategies of other companies; he also knew how to capitalize on his mistakes.
He managed to boost productivity in the most organic way: by keeping his workers content. That is why he paid them more than others—to attract them to his enterprise—and why he gave them free time—to ensure they had time to consume goods.
An Incentive Strategy Without Distinctions Between Roles
In 1914, The New York Times published a striking announcement: Henry Ford, Chief of Ford Motor Company, was going to award 26,000 employees—from which about 10% who were excluded from the profit-sharing would be left out—$10 million of the profits from the 1914 business, through biweekly payments added to their payroll. Those $10 million were provisional and represented half of the profits expected by the end of the year.
The plan also included establishing a minimum wage of $5 per day: “Even the floor sweeper will earn that,” the notice read. It was twice what had been in place up to that moment.
The objective, the newspaper said, was for the factory to operate continuously rather than only 18 hours a day, employing several thousand more men through three eight-hour shifts instead of just two nine-hour shifts, as was the case at the time.
And it had the desired effect: the day after the announcement appeared, The New York Times echoed the craze: 10,000 employees showed up at Ford’s Detroit factory gates to secure a new job. On that day, the company was already paying another 15,000 employees for whom entering the factory was more challenging than ever. Everyone who had read it wanted to work on the Ford Model T assembly line.
“I think it is better for the nation, and much better for humanity, that 20,000 or 30,000 people be content and well-fed rather than a few become millionaires,” Ford himself told the journalist who came to cover the story.
It remained a hard job, with high turnover due to the repetitive nature of the tasks, but Ford achieved what he set out to do: to give his workers a financial incentive to work harder and produce more.
Images | Wikipedia, Gemini
