My Life and Work by Henry Ford (free novel 24 .TXT) 📕

it will serve to make storekeepers and distributors and manufacturers and workers in other lines more prosperous and their prosperity will be reflected in our sales. Country-wide high wages spell country-wide prosperity, provided, however, the higher wages are paid for higher production. Paying high wages and lowering production is starting down the incline toward dull business.

 

It took us some time to get our bearings on wages, and it was not until we had gone thoroughly into production on “Model T,” that it was possible to figure out what wages ought to be. Before then we had had some profit sharing. We had at the end of each year, for some years past, divided a percentage of our earnings with the employees. For instance, as long ago as 1909 we distributed eighty thousand dollars on the basis of years of service. A one-year man received 5 per cent. of his year’s wages; a two-year man, 7-1/2 per cent., and a three-year man, 10 per cent. The objection to that plan was that it had no direct connection with the day’s work. A man did not get his share until long after his work was done and then it came to him almost in the way of a present. It is always unfortunate to have wages tinged with charity.

 

And then, too, the wages were not scientifically adjusted to the jobs.

The man in job “A” might get one rate and the man in job “B” a higher rate, while as a matter of fact job “A” might require more skill or exertion than job “B.” A great deal of inequity creeps into wage rates unless both the employer and the employee know that the rate paid has been arrived at by something better than a guess. Therefore, starting about 1913 we had time studies made of all the thousands of operations in the shops. By a time study it is possible theoretically to determine what a man’s output should be. Then, making large allowances, it is further possible to get at a satisfactory standard output for a day, and, taking into consideration the skill, to arrive at a rate which will express with fair accuracy the amount of skill and exertion that goes into a job—and how much is to be expected from the man in the job in return for the wage. Without scientific study the employer does not know why he is paying a wage and the worker does not know why he is getting it. On the time figures all of the jobs in our factory were standardized and rates set.

 

We do not have piece work. Some of the men are paid by the day and some are paid by the hour, but in practically every case there is a required standard output below which a man is not expected to fall. Were it otherwise, neither the workman nor ourselves would know whether or not wages were being earned. There must be a fixed day’s work before a real wage can be paid. Watchmen are paid for presence. Workmen are paid for work.

 

Having these facts in hand we announced and put into operation in January, 1914, a kind of profit-sharing plan in which the minimum wage for any class of work and under certain conditions was five dollars a day. At the same time we reduced the working day to eight hours—it had been nine—and the week to forty-eight hours. This was entirely a voluntary act. All of our wage rates have been voluntary. It was to our way of thinking an act of social justice, and in the last analysis we did it for our own satisfaction of mind. There is a pleasure in feeling that you have made others happy—that you have lessened in some degree the burdens of your fellow-men—that you have provided a margin out of which may be had pleasure and saving. Good-will is one of the few really important assets of life. A determined man can win almost anything that he goes after, but unless, in his getting, he gains good will he has not profited much.

 

There was, however, no charity in any way involved. That was not generally understood. Many employers thought we were just making the announcement because we were prosperous and wanted advertising and they condemned us because we were upsetting standards—violating the custom of paying a man the smallest amount he would take. There is nothing to such standards and customs. They have to be wiped out. Some day they will be. Otherwise, we cannot abolish poverty. We made the change not merely because we wanted to pay higher wages and thought we could pay them. We wanted to pay these wages so that the business would be on a lasting foundation. We were not distributing anything—we were building for the future. A low wage business is always insecure.

 

Probably few industrial announcements have created a more world-wide comment than did this one, and hardly any one got the facts quite right.

Workmen quite generally believed that they were going to get five dollars a day, regardless of what work they did.

 

The facts were somewhat different from the general impression. The plan was to distribute profits, but instead of waiting until the profits had been earned—to approximate them in advance and to add them, under certain conditions, to the wages of those persons who had been in the employ of the company for six months or more. It was classified participation among three classes of employees: (1) Married men living with and taking good care of their families.

 

(2) Single men over twenty-two years of age who are of proved thrifty habits.

 

(3) Young men under twenty-two years of age, and women who are the sole support of some next of kin.

 

A man was first to be paid his just wages—which were then on an average of about fifteen per cent. above the usual market wage. He was then eligible to a certain profit. His wages plus his profit were calculated to give a minimum daily income of five dollars. The profit sharing rate was divided on an hour basis and was credited to the hourly wage rate, so as to give those receiving the lowest hourly rate the largest proportion of profits. It was paid every two weeks with the wages. For example, a man who received thirty-four cents an hour had a profit rate of twenty-eight and one half cents an hour—which would give him a daily income of five dollars. A man receiving fifty-four cents an hour would have a profit rate of twenty-one cents an hour—which would give him a daily income of six dollars.

 

It was a sort of prosperity-sharing plan. But on conditions. The man and his home had to come up to certain standards of cleanliness and citizenship. Nothing paternal was intended!—a certain amount of paternalism did develop, and that is one reason why the whole plan and the social welfare department were readjusted. But in the beginning the idea was that there should be a very definite incentive to better living and that the very best incentive was a money premium on proper living. A man who is living aright will do his work aright. And then, too, we wanted to avoid the possibility of lowering the standard of work through an increased wage. It was demonstrated in war time that too quickly increasing a man’s pay sometimes increases only his cupidity and therefore decreases his earning power. If, in the beginning, we had simply put the increase in the pay envelopes, then very likely the work standards would have broken down. The pay of about half the men was doubled in the new plan; it might have been taken as “easy money.” The thought of easy money breaks down work.

There is a danger in too rapidly raising the pay of any man—whether he previously received one dollar or one hundred dollars a day. In fact, if the salary of a hundred-dollar-a-day man were increased overnight to three hundred dollars a day he would probably make a bigger fool of himself than the working man whose pay is increased from one dollar to three dollars an hour. The man with the larger amount of money has larger opportunity to make a fool of himself.

 

In this first plan the standards insisted upon were not petty—although sometimes they may have been administered in a petty fashion. We had about fifty investigators in the Social Department; the standard of common sense among them was very high indeed, but it is impossible to assemble fifty men equally endowed with common sense. They erred at times—one always hears about the errors. It was expected that in order to receive the bonus married men should live with and take proper care of their families. We had to break up the evil custom among many of the foreign workers of taking in boarders—of regarding their homes as something to make money out of rather than as a place to live in. Boys under eighteen received a bonus if they supported the next of kin.

Single men who lived wholesomely shared. The best evidence that the plan was essentially beneficial is the record. When the plan went into effect, 60 per cent. of the workers immediately qualified to share; at the end of six months 78 per cent. were sharing, and at the end of one year 87 per cent. Within a year and one half only a fraction of one per cent. failed to share.

 

The large wage had other results. In 1914, when the first plan went into effect, we had 14,000 employees and it had been necessary to hire at the rate of about 53,000 a year in order to keep a constant force of 14,000.

In 1915 we had to hire only 6,508 men and the majority of these new men were taken on because of the growth of the business. With the old turnover of labour and our present force we should have to hire at the rate of nearly 200,000 men a year—which would be pretty nearly an impossible proposition. Even with the minimum of instruction that is required to master almost any job in our place, we cannot take on a new staff each morning, or each week, or each month; for, although a man may qualify for acceptable work at an acceptable rate of speed within two or three days, he will be able to do more after a year’s experience than he did at the beginning. The matter of labour turnover has not since bothered us; it is rather hard to give exact figures because when we are not running to capacity, we rotate some of the men in order to distribute the work among greatest number. This makes it hard to distinguish between the voluntary and involuntary exits. To-day we keep no figures; we now think so little of our turnover that we do not bother to keep records. As far as we know the turnover is somewhere between 3

per cent. and 6 per cent. a month.

 

We have made changes in the system, but we have not deviated from this principle:

 

If you expect a man to give his time and energy, fix his wages so that he will have no financial worries. It pays. Our profits, after paying good wages and a bonus—which bonus used to run around ten millions a year before we changed the system—show that paying good wages is the most profitable way of doing business.

 

There were objections to the bonus-on-conduct method of paying wages. It tended toward paternalism. Paternalism has no place in industry. Welfare work that consists in prying into employees’ private concerns is out of date. Men need counsel and men need help, oftentimes special help; and all this ought to be rendered for