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Human Resource Managment for Ford Motor Company

Human Resource Management for Ford Motor Company

Henry Ford organized his company as a giant system for efficiently turning inputs into finished motor vehicles . His achievement was outstanding , in creating a technical system that produced millions of vehicles that could be afforded by the masses

Henry Ford was a farmer 's son from Michigan . In his late twenties he decided to become a mechanic rather than a farmer . In 1898 he set up the Ford Motor Company with eleven associates . The way Ford managed his car plants was strongly influenced by a

belief that he could bring salvation and liberation to the world through machinery . He believed that the industrial system was an extension of the logic of the human mind rational systems would lead to the best results

Unfortunately for Henry Ford , many of his assembly line workers did not share his enthusiasm for repetitive physical labour of the kind offered at his Detroit factory . Working for Ford not only meant repetition , it meant committing yourself to a system of harsh discipline while at work and to a lifestyle outside of the factory gate free from any malicious practice derogatory to good physical manhood and moral character . Ford was opposed to gambling , drinking alcohol , smoking and sex outside marriage . He set up a sociological department to monitor the behaviour of his employees

As the company became more successful , Ford became more and more exacting , insisting that the organization run according to the system he created . Today , he might be described as being a control freak . He appointed people to be his immediate subordinates who were authoritarian

At the height of the purges of management , the sociological department was abolished and replaced by the more ruthless service department . Ford controlled by fear . He believed that humanitarian and social considerations had no place in the work environment . Within his own organization Ford regarded any sign of humanitarianism with contempt There is altogether too much reliance on good feeling in their business organization

Mission , Values and Guiding Principles

Ford Motor Company is a world-wide leader in automotive and automotive-related products and services as well as in new industries such as aerospace , communications and financial services . Their mission is to improve continually their products and services to meet their customer 's needs , allowing them to prosper as a business and to provide a reasonable return for their stockholders , the owners of their business . Values , how they accomplish their mission is as important as the mission itself . Fundamental to success for the company are these basic values : People , their people are the source of their strength People provide their corporate intelligence and determine their reputation and vitality . Involvement and team work are their core human values . Products , Their products are the end of their efforts , and people should be the best in serving customers world-wide . As their products are viewed , so are they viewed ? Last is Profits , profits are the ultimate measure of how efficiency they provide customers with the best products for their needs . Profits are required to survive and grow

Guiding principles , Quality comes first to achieve customer satisfaction , the quality of their products and services must be their number one priority

Customers are the focus of everything they do . Their work must be done with their customers in mind , providing better products and services than their competition . Continuous improvement s essential to their success , they must strive for excellence in everything they do : in their products , in their safety and value and in their services , their human relations , their competitiveness and their profitability . Employee involvement is their way of life . They are team they must treat each other with trust and respect . The dealers and suppliers are their partners- the company must maintain mutually beneficial relationships with dealers , suppliers , and their business associates . Integrity is never compromised-the conduct of their company world-wide must be pursued in a manner that is socially responsible and commands respect for its integrity and for its positive contributions to society . Their doors are open to men and women alike without discrimination and without regard to ethic origin or personal beliefs (Starkey Mckinlay 1993

Operation in the Human Resource Department

The Ford Motor company 's transition from tough managerialism , a management philosophy based on the romising pursuit of tight control over all employees , to a strategy of willing participation and involvement

Guest argues that if the term human resource management (HRM ) is to have any social scientific value it should be defined in such a way as to differentiate it from traditional personnel management (Guest , 1987 503 . He then proposes that HRM constitutes one of Ford 's models of best personnel practice , that few UK organizations practice HRM , but that there might be a slow trend in that direction , as evidenced by the increasing adoption of HRM policies such as employee involvement . The definition of HRM is a set of policies designed to maximize organizational integration , employee commitment , flexibility and quality of work . The HRM model is characterized as being people-oriented with an emphasis on the maximization of individual talent and consultation with the workforce . For Guest , the only companies practicing this model completely in the UK are IBM and Hewlett-Packard . The three other major personnel models Guest describes are : first , the paternalist welfare model , characterized by careful selection , training and treatment of staff , with a strong customer focus , a prime example of which is Marks Spencer . Second , the Production model based on tough , consistent industrial relations practice , focusing on the maintenance of efficient continuity of production , exemplified by Ford Motor Company . Third , the professional model which emphasizes professionalism in four core activities : selection , training , pay and industrial relations . Firms such as ICI , Unilever and some of the major oil companies ' are cited examples of this model

The effective adoption of the various models depends on the appropriateness of particular practices to particular industrial settings . In many ways , Ford exemplifies the difficulties associated with a shit from what Guest labels a production paradigm towards HRM Ford 's management argue that Ford , as indeed are most major western companies , is in the throes of a long-term transition and displays features common to more than one of Guest 's ideal types . Guest also suggests the embracing HRM principles may significantly enhance a company 's image . A company seen to be in the forefront of the management of human resources may gain advantages in the market place (Guest 1988 :10 . First , it may attract sales through an image of social responsibility and quality . Ford , for instance , launched crucial new products between 1990 and 1992 with advertisements whose central image was employees participating in personal development

Ford Motor Company in the 1980s provided a powerful example of major changes in personnel practice . They chose to concentrate on Ford for two reasons (a ) because of its paradigmatic importance as progenitor of the traditional production approach and (b ) because of the magnitude of the chance it initiated during the 1980s which reflected a critical re-evaluation of the production approach and a significant move in the direction of HRM for strategic reasons

Ford is synonymous with the creation of a particular management style- Fordism based on hierarchical decision-making with strict functional specialization , tightly defined job design and specialized machinery to mass produce a standard product for mass markets (Starkey Mckinlay ,1989 . A conjunction of market and technological factors stimulated Ford 's continuing efforts to redesign jobs , its mode of organization and its prevailing culture . The organizational model for Ford 's rethinking of its approach to personnel management was , in part , Japanese-inspired The company 's close links with Mazda , in which it owns a 25 a percent stake , serves as a source of competitive bench-marking . This bench-marking formed the basis of its long-term strategy . The pre-existing Fordist system provided important elements of continuity

The attempt to reconcile Ford 's short and long term and long-term objectives has mean that the company is negotiating a major transition period on the one hand , striving to introduce aspects of Japan-like industrial organization in preparation for future strategic change whilst , on the other hand , maintaining established managerial practices and work organization patterns essential to current competitiveness (Starkey and Mckinly 1989 :94

Company strategy is embodied in the 1984 mission statement , Mission Values and Guiding principles . Ford 's mission is to be a worldwide leader in automotive and related products and services and in newer industries such as financial services . Its basic values are described as people , products and profits . The guiding principles form a code of conduct that encapsulates policy towards employees , customers , dealers and suppliers . These guiding principles include commitment to : quality in all aspects of the business customers continuous improvement ' EL team work at all levels specified levels of competitiveness and return on assets . Ford strategy is underpinned by its strategic vision of being a low-cost producer of the highest-quality products and services which provide the best customers value . All strategic issues such as quality improvement , customer satisfaction and cost reduction have one common denominator

They all depend on the capacities , competencies , and commitment of Ford Company 's people . Although market improvement has been made in changing Ford 's people corporate culture , the issue now and into the future , is how to create and sustain a right-sized , flexible work force with the capacities , competencies , and commitment that gives them a competitive edge in a turbulent , uncertain world marketplace (Johnson 1988 :196 . The marked improvements associated with these changes in the USA in the 1980s include major improvements in earnings , profitability , market share , productivity , product design , and quality and customer satisfaction . The company perceives itself as having gone through a major transformation in management style and , with the help of the UAW having generated a recognition by employees , unions and management alike that their common interests are bet served when there are agreed common goals and mutual benefits (Banas and Sauers 1988 . Employee involvement has been embraced as company policy , so managers are expected to act accordingly . The other side of the coin to EL is PM : skills that managers use to provide employees and fellow managers with opportunities to participate in key managerial decision-making process . A major goal of the change initiative therefore was managerial behavior . The company had accepted some assessment of their quality problems as primary rooted in management practices and not , as management had previously believed worker failure to conform to management dictates . A major aim was to tap into the competencies , capacities , and commitment of the workforce at all levels

Reduces to its essentials , El is the process by which employees are provided with the opportunities to contribute their minds , as well as their muscles , and their hearts , to the attaining of individual and company goals . Through a variety of techniques such as problem solving groups , new product launch teams , ad hoc quality and scrap involvement teams-opportunities have been created , for hourly employees to contribute their ideas , their analyses , and their solutions to job-related problems . Since 1979 , virtually every hourly employee either directly or indirectly , has been affected by this process . Today El is functioning in virtually all major Ford Motor facilities (Banas and Sauers 1989 :3

In the United States of America the crisis of the early 1980s were seen as rooted not just in problems of the business cycle and in the new competition but in lack of trust between management and labour , a lack of clear corporate values and sharply defined goals and in a turbulent history of adversarial labour management relations . In the United Kingdom the move towards an HRM culture was not stimulated by a crisis to that experienced a vital role in providing the finances which sustained the parent company through these troubled years . The contrasting fortunes of Ford U .S and its European division , particularly the cash-cow Ford UK , were factors shaping the trajectory of the change process in the two organizations . For almost 40 years Ford UK has been a wholly owned subsidiary of Ford Motor Company USA . From the formation of Ford in Europe in 1967 the US parent has exercised an increasing degree of strategic control , notably through budgetary controls , and although Ford UK retains operational responsibility , including pay bargaining performance is closely monitored against financial targets set in Detroit . Two major change initiatives have dominated Ford UK since 1979 The first , after Japan , sprang from a study trip to Japan by the company 's vice- president of manufacturing . After Japan represented the company 's acknowledgement of the threat posed by that country . Its limited success was due to management mistakes in the attempted implementation of some of the HRM initiatives proposed , most notably in the unilateral imposition of quality circles , and to union resistance The second change initiative centered on the HRM policies and practices emanating from the US parent under the EL /PM banner . El failed to win the formal agreement of blue-collar unions but was endorsed by the staff unions for a period

After Japan was the view that the roots of Japanese success could be traced to a management style that was diametrically opposed to the Fordist model . The essence of the Japanese approach was seen to lie in management by consent rather than by control , and in the mobilization of commitment rather than the elimination of worker discretion . The need for change was communicated to the workforce with the results of a competitive bench-marking exercise against Japanese productivity standards and strategic targets set in terms of return on investment market share , efficiency measure and reduction in head count . The cumulative effect of exposing shop-floor trade unionists to business information should not be underestimated . Initially , bench-marking was received skeptically by a UK workforce accustomed to being criticized for relatively poor productivity . However , over time bench-marking combined with continued nationalization slowly infused new realism into the lay leadership of Ford UK 's shop-floor unions (Darlington 1994 213-14 . The strategic goals of quality , customer satisfaction and cost competitiveness became part of the discourse of management-union negotiations . Elements of the Japanese system of JIT inventory management were introduced as well as a new quality philosophy of right first time , at the same time , the introduction of more rigorous cost control systems

Initially , Ford envisaged the introduction of quality circles as the first step in the rapid Japanization of the company , a process that was to include training the workforce in problem-solving and interpersonal skills to enhance teamwork , JIT and more stable relations on a long-term basis with suppliers who could meet the company 's exacting design and quality standards . The failure of the quality circle initiative was a watershed in the development of Ford UK 's approach to HRM . This chastening failure compelled Ford executives to recognize that a gradual processual approach to modifying a deeply adversial company culture was essential

The successor to the failed quality circle initiative was the adoption of the American process of El and Pm , an approach to management that has been incorporated into mainstream pay and working condition negotiations . Only the staff unions agreed to formal involvement in the El process , but the philosophy and practices underlying El have been diligently pursued by Ford management informally at the local level . For example , problem-solving work groups , similar to quality circles flourish in Ford UK facilities . For Ford management , the 1985 pay and working practices agreement was a breakthrough in the informal diffusion of employee involvement , versatility and flexibility , the acquisition of new skills and the elimination of inefficient demarcation lines in both craft and production work . The principles of the 1985 Agreement were reinforced and extended in 1998 when involvement and flexibility initiatives were defined as issues for plant- and national level negotiation

One of the main goals of PM is changing managerial attitudes and dismantling the right `chimney ' structure designed to maximize control irrespective of the negative impact on information-processing or innovative capability . PM began a process of simplifying managerial control , devolving authority and breaking down the barriers between managerial groups erected-and zealously protected - to ensure functional specialization . The key goal of EI /PM was to achieve a major cultural change , to embed co-operation as a way of life rather than a specific finite burst of corporate restructuring . Ford UK executives regarded the withdrawal of the staff unions from the formal EI agreement with equanimity , satisfied that sufficient of the programme 's principles had been internalized to make further progress more a matter of evolution than formal accommodation . The successor to IE is the Employee Development and Assistance Programme (EDAP ) which introduced non-pay non-job-related benefits , principally funding for personal development through education . Through EDAP Ford has successfully opened up a second front in its ongoing `battle ' to win employee hearts and minds a battlefield , moreover , in which it sets the terms of engagement . EDAP has been a major success : first year figures were doubled in year two and reached 44 percent in 1991 : around 20 ,000 Ford UK employees had taken part in EDAP (TURU 1991

The current growth of interest in HRM reflects the past failings of the personnel function : `a persistent failure of personnel departments to innovate on personnel policy and therefore to contribute to the pursuit of competitive advantage . In many respects , HRM is the policy agenda of a profession - personnel management - in search of a new role and even a justification for its continued existence . At the very least , it presents us with a radical rethinking of the function . Legge (1989

System or Strategy Used For Hiring New Workers

Henry Ford 's celebrated Five-Dollar-a-Day program , introduced in 1914 contained an element of investment to deal with worker heterogeneity . In the early 1900s , most of Ford 's workers were recent arrivals to Detroit and many were new immigrants : in 1915 more than 50 languages were spoken at Ford 's Highland Park plant

Ford made two types of investments in employment relations to deal with worker heterogeneity . First , it is well known that he introduced an extreme division of labor in his mass production system . Such an arrangement reduced , if not eliminated , the necessity for workers to communicate with one another . Second , for introduced a system of inspection and certification to homogenize workers with respect to certain productivity attributes . Thus , according to Raff and summers (1987 , some 150 Ford Sociological Department inspectors visited the homes of all workers in to inculcate them with Ford values and to certify them for the Five-Dollar-a-Day program

Recruitment is the first important step in creating the right work force for successful training . Most hiring in Japan takes place in spring when students graduate from high schools and colleges . New hires arrive ready and malleable for employment-based training . Japanese employers stress academic achievement in their hiring decisions , in contrast to the U .S . situation where academic achievement rarely serve as a hiring criterion . In Japan schools , which are in the best position to judge students ' achievements , perform much of the screening through semiformal ' arrangements with specific employers . Many employers have established ongoing relationships with particular high schools to help recruit their graduates year after year . In hiring for production and clerical jobs , for example , employers , especially large ones , rely extensively on the recommendations from high schools . These recommendations are based mostly on academic achievements . In some cases , employers also administer their own tests , though this practice has become less common recently , given the shortage of high school graduates

In hiring workers , Ford had no use for experience and wanted machine-tool operators who have nothing to unlearn , who have no theories of correct surface speeds for metal finishing , and will simply do what they are told to do , over and over again , from bell-time to bell-time

In deskilling shop-floor work , Ford conformed to the more general trend in US industry at the time . By the 1920s craft control had been defeated , and in the process , in most of the major mass-production enterprises , shop-floor workers found themselves excluded from the organizational learning process that generated competitive advantage responding to , and reinforcing , the segment system of skill formation that emerged in dominant US industrial enterprises in the early twentieth century , a highly stratified educational system evolved that effectively separated out future managers from future workers even before they entered the workplace . Thus , a deep social gulf was created between managers as `insiders ' and workers as `outsiders ' in the employment relations of US industrial enterprises

Until the last decade of the nineteenth century , a formal system of higher education was relatively unimportant for the development and utilization of productive resources , in part because US industry was only beginning to make the transition from the machine-based first industrial revolution , in which shop-floor experience remained important , to the science-based second industrial revolution , in which systematic formal education was a virtual necessity . From the late nineteenth century , however , the system of higher education became central to supplying technical and administrative personnel to the burgeoning bureaucracies of US industrial enterprises

Developing its system

During the period when Ford was developing its system of mass production , it encountered on a correspondingly massive scale the individualized resistance of workers who refused to consent to permanent subordination under the new system . By the time the first moving assembly lines were being created in the Highland Park plant , labor turnover was becoming an acute problem for Ford management . In 1913 the rate of quits at Ford was about 370 percent of the Further , according to company officials , during the same period it was not unusual for 10 percent of those currently holding jobs at Ford to be absent on a given day . The company was becoming aware that problems with its labor force were costing it money . hiring and training of new workers on such a massive scale entailed a significant seen as impairing the efficiency of production

Another aspect of the labor problem ' which Ford management perceived was restriction of output or soldiering by workers , a form of covert and informally organized resistance which directly challenged the basic presumption of Taylorism and Fordism : management control of the pace and intensity of work . Flow production and moving line assemble were reducing the scope for soldiering , but would not eliminate it

Ford management was also concerned about more organized forms of opposition and the potential influence among its workers of unions such as the Carriage , Wagon and Automobile Workers ' Union (CWAWU ) and radical groups such as the International Workers of the World (IWW . Although Detroit had been justly known as an open shop town since around 1902 and labor unions and radical organizations were not particularly strong in the automobile plants , the IWW had launched a well publicized campaign to organize Detroit auto workers , had agitated at Ford 's Highland Park plant , and led a strike-all the more frightening to employers because it was organized along industrial rather than craft lines

Ford 's problems of labor control were compounded by the large numbers of immigrants who comprised the new industrial workforce at Ford . In 1914 , 71 percent of Ford workers were foreign-born , representing at lest 22 different nationalities (some Ford publications claimed fifty or more ) among which eastern and southern Europeans predominated . Many of these immigrant workers were from a peasant background , and found entirely alien an industrial work culture such as that at Ford . Although the detailed division of labor and specialized machinery in the Ford shops minimized the requirements of skill and judgment and thereby made it possible for unskilled immigrants to become auto workers with minimal training , Ford managers were concerned about the effects which such a culturally heterogeneous workforce might have upon shop discipline and the steady output of their integrated productive system

Conclusion

Ford Motor Company attempted to secure workers ' consent to management control by shaping a collective vision in which it 's predominantly unskilled and immigrant workers could find a new identity , a vision of American in which workers and management were represented as a collection of self-interested individuals , voluntarily cooperating in a common enterprise , and a partnership for prosperity . As a result of this partnership , individual workers could succeed to the limits of their abilities and become property holders and even investors . Thus , the Ford policies implied , workers too would benefit from the American system of liberal capitalism and its protection of individual rights and private property . A central underlying theme in Ford 's policies toward its workers , then , was the establishment of a common American identity through integration into a culture of abstract individualism Works Cited

Banas ,

. and Sauers , R . Participative Management and Employee Involvement

Model and application . Ford Motor Company Dearborn , 1988

Banas ,

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Darlington , R . The Dynamic of Workplace Unionism : London , Mansell , 1994

Legge , K . Power , Innovation and Problem-solving in Personnel Management London

McGraw-Hill , 1978

Starkey , K . and Mckinlay , A . Strategy and the Human Resource : Oxford

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Starkey , K . and Mckinlay , A . beyond Fordism ? Strategic Choice and labour Relations in Ford UK . Industrial Relations Journal , 20 (2 , 93-100 1989

Turu : Employee Development and Assistance Programme . Oxford : Ruskin 1991

Turu , Employee into EDAP Participation and No-participation : 1993 . Zapanta- PAGE 1 - ...

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