Harmony in Labour Relations. II: American Management Facing the Issue

Irish Jesuit Province

Harmony in Labour Relations. II: American Management Facing the IssueAuthor(s): Daniel LyonsSource: The Irish Monthly, Vol. 77, No. 910 (Apr., 1949), pp. 171-177Published by: Irish Jesuit ProvinceStable URL: http://www.jstor.org/stable/20515974 .

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HARMONY IN LABOUR RELATIONS II.?AMERICAN MANAGEMENT FACING THE ISSUE

By DANIEL LYONS, SJ.

This article describes the various plans which are being tested

in America to improve relations between masters and

workers. The men who initiated these plans seem to have

been actuated mainly by material motives?the contented

worker is the productive worker. We in this country profess a belief in the principles of social justice. Open your New

Testament and read Luke 16, 8.

STRIKES are a luxury. So is chronic labour unrest. There are

no strikes in Russia, just as there are no strikes in Mountjoy. But in a free society labour problems are not so easily settled.

In many American firms, however, industrial harmony has reigned for a generation. What is the formula?

Polls taken by impartial observers reveal that workers consider

these five features the most important to them in their jobs: (1) a

definite knowledge of what is expected of them in their work; (2) fair

and understanding supervision; (3) assurance that their job will be

permanent as long as they do their work satisfactorily; (4) confidence

that they will be advanced, if they are qualified, when better jobs open up; (5) assurance that they will be paid as much as conditions

permit. Mr. J. D. Zellerbach, president of the Zellerbach Corporation,

declares that good labour relations cannot be written into a union

contract, nor can they be created by legislation, under a system of

free enterprise. He points out that most of the efforts in the past to curb labour abuses by legislation have proved to be destructive

rather than constructive, have led to persecutions rather than to

progress. Human nature, he declares, is the keystone by which

the whole structure of labour harmony must stand or fall. He

insists that labour is people?human beings?and that they cannot

be considered impersonally, "like so many lumps of coal".

Mr. Zellerbach, who is vice-chairman of the governing body of the

International Labour Organization, considers the wage issue less

important than understanding, fair treatment, security, and hope of

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IRISH MONTHLY

promotion. He condemns a show of force at the bargaining table, whether by labour or management, for he is convinced tha.t good labour relations can never be established with a gun on the counter.

He asserts that the general impression of excessive corporate profits stems from the belief of many businessmen that it is unwise to let

employees become familiar with the financial status of the company. This policy, he feels, breeds distrust, which is deadly to good labour

relations.

Mr. Zellerbach cites the folly of those executives who hire industrial relations experts and then leave the entire problem in their hands. No

aspect of modern industry is more important to the head of a firm than industrial relations. Corporation presidents never hire treasurers or production managers and then expect them to handle ail of the financial or production problems. Neither should they expect to

dodge the problem of employee relations. In fact top management should devote more time and effort to labour problems than to

financing, production, or sales, as the labour field is a newer and less

well patterned phase of modern business.

Mr. Charles Luckman, the president of Lever Brothers, treats of labour relations on what he terms a

" hard-boiled basis ". He

approaches the question squarely from the standpoint of the human

equation. Employers, he insists, must be sure that their employees are not giving grudgingly of their efforts, for if they do they will give stintingly. He declares that wages usually appear to be at the heart of

industrial warfare, but that they are often merely a surface excuse

for less tangible factors. Mr. Luckman considers a worker who has to worry about retiring

on little or no pension only half a worker. He maintains that any

corporation which can set aside funds for the retirement of its obsolete

buildings and equipment can likewise provide for the equally inevitable retirement of its personnel. He believes that ill or injured employees should be able to recuperate in the knowledge that while they are at

home or in hospital their pay will continue and provision will be made for medical expenses. Since the average worker is a family man, he will have a much greater sense of security if there is company paid life insurance to help provide for his dependants.

Management must realize that labour unions are here to stay, insists Mr. Luckman, and that it will have to get along with them if

society is to prosper. Though management can fight unions and



LABOUR RELATIONS

legislate against them, this is not being positive. The employer wiD

do much better if he penetrates through to the abuses, fears, pre

judices, solidarity, and longing for security that brought unions into

being. Mr. Luckman believes that the best approach to industrial

harmony is to study those programmes which have proved most

successful. He is convinced from his own experience that insurance

programmes are not expensive, and that even the guaranteed annual

wage is not impractical.

Many businessmen would question Mr. Luckman's euphemistic attitude. To them it is anything but "hard-boiled". His reply is

that if a pension programme or other benefit scheme helps in the

slightest to prevent strikes it pays for itself many times over, and that

such programmes do prevent strikes by reducing tension to a point where the gap can be bridged by friendly negotiations.

Few employers in big business have made more sincere efforts

than Henry Ford II to improve their labour relations. His first

official act, less than ten minutes after he was made president of the

Ford Motor Company a few years ago, was to discharge Harry Bennett, the ex-pugilist his father had employed as personnel manager. Bennett's policy of intimidation and anti-unionism had

been notorious, and as Bennett walked out the door for the last time

an employee commented : " It's as though a heavy weight has been

lifted off every man's shoulders." >

Shortly after Ford took over, he announced : "

This is no longer a

one-man show. It's a team." His "

team "

has 130,000 more mem

bers on it than most teams, but to him each employee is a human

being, not just a part of the "

labour market ". Ford bases his labour

policies on the findings of Elmo Roper, who reported that his ten

years of polling revealed there are four things every worker wants :

(1) a sense of security; (2) an opportunity to advancement; (3) treat

ment proper to a human being; (4) a sense of human dignity which comes from feeling his work is useful to society.

Ford recently sent a questionnaire to one hundred thousand of his

employees, in connection with his programme for promoting industrial

harmony. One of the questions asked was : "

Are you made to feel

that you are a definite part of the company?a member of the Ford

team?" Another question read : "

Do you believe that you are given a fair opportunity to make suggestions and criticisms about company practices and officials?"

173



IRISH MONTHLY

In his first year at the helm, Henry Ford II reduced the grievance* of his workers by fifty per cent., and the spiral is still descending. He believes that the heart of his human relations problem is in

locating and training foremen, superintendents, department and divi

sion heads who can get along with those under them. Ford realizes

that the overseer for any individual is the one who represents the com

pany to that individual, and he will not tolerate any foreman or official

who cannot get along with subordinates.

Concerning the C.I.O. Union which represents his employees* Ford

feels that it should avoid the mistakes of big business by representing its members better, and that it should eliminate those conditions which tend to create bitterness. He hastily adds that he is not criticizing the

union to create more bitterness, but does so in the same spirit that

he criticizes his company. Ford heartily approved of the policy of

Philip Murray, national president of the d.O., when the latter

recently stated:

"We are conducting a campaign of education among our

members to develop an attitude of wholehearted co-operation between workers and employers. . . . We want no lingering

spirit of contentiousness to survive. We realize that mutual

interests are best served by working with and not against each

other."

Ford seeks physical dispersion of the plant, and of authority. He

is polite, tactful, ready to take advice, and manifests that patience which comes only from a sound understanding of labour problems, for he declares: "There aren't any easy answers."

Mr. Edmund Price, the president of Solar Aircraft Company, believes that labour unrest is not due to any labour leaders in parti cular, but to past employers and to an apathetic public. The one

thing an employee wants most, he finds, is not security, seniority

privileges, wage increases, or shorter hours, but recognition, to stand

apart from the crowd. Mr. Price's company was one of the first to

put in paid vacations for the hourly-paid worker; his firm has equal pay for women, and it has group health, life, accident and hospitaliza ci?n insurance, a large portion of which is paid by the company. He

maintains that such features as safety codes have important psycholo gical as well as physical value, for they help the employees to realize that the company is concerned about their welfare.

Mr. Price points out that the workers lost ownership of their tools

174



LABOUR RELATIONS

a century and a half ago, and that pension systems, legal and medical

services, incentive and profit-sharing plans tend to compensate for

this loss of ownership. He believes that short-sighted employers and

unscrupulous labour leaders will have to be replaced by a new

order in which the welfare of both capital and labour will be

subordinated to the common good. The duty of employers is clear, Mr. Price declares, and their first step must be recognition of the

worker as an individual. If management fails in this, he predicts the rapid rise of Communism, Socialism, or some other form of

totalitarian state. "

The time," he adds, "

is later than we think." Mr. H. W. Steinkraus, president of the Bridgeport Brass Company,

is another prominent employer who has achieved harmonious labour

relations. The first step in keeping workers contented consists in

knowing what they want in order to be content. This, he maintains, is threefold: (1) a worker wants a steady job at good pay, and some

assurance that he will keep his job; (2) he wants an opportunity to

advance; (3) he wants to feel that he is a part of the organization, not

merely a number on the payroll : he wants to have a picture of the

over-all aims and purposes of the company and to be shown how he can best perform his part.

Mr. Steinkraus believes that all levels of management must under

stand the company's policies in order to interpret them to the work men. He also insists on the need for preserving the self-respect of

the employees through such good housekeeping practices as keeping the floors clean, making the yard tidy, maintaining efficient janitor service, and providing rooms where the employees can change their

clothes. All of these things are partial answers to the all-important

problem of helping the worker retain his dignity. Those employers who become interested in the problems of then

employees invariably discover that the seeds of discord lie in diffi

culties which they never before prevented because they did not know

that they existed. Such was the case, in 1916, with the Standard Oil

Company (also known as Esso, Socony, Sohio, etc.) when it was beset

with two crippling strikes. The company was amazed when it

received the following complaint from its employees: " We request humane treatment at the Bands of foremen and

superiors in place of the brutal kicking and punching we now

receive without provocation." Standard wisely decided that whatever caused such pent up feelings,

175



IRISH MONTHLY

something should be done to eradicate them. Though it had never

had a name for paying high wages, Standard evolved a formula that has prevented any serious strikes ever since. Furthermore, its

workers show contentment. Ninety-two per cent, of all Standard

employees who were in World War II returned to work for Standard, as contrasted with a national average throughout the United" States of 50 per cent. What is the secret?

The employee programme of Standard Oil consists of twelve main

points: (1) labour-management conferences; (2) machinery for prompt adjustment of grievances; (3) no discrimination in hiring, transferring, or firing; (4) real collective bargaining; (5) prevailing wages or better;

(6) substantial sickness, accident, and death benefits; (7) training schools for workers seeking advancement; (8) promotion according to

both ability and seniority; (9) a special savings plan, to Which the

company makes contributions; (10) a "coin your ideas" suggestion box; (11) advance notice of layoffs; (12) printing and distribution of

the main provisions of contracts signed with unions, as an assurance

to the employees that they will be kept. In pledging itself to a policy of non-discrimination in the matter of

hiring and laying off workers, Standard subscribes to the enlightened doctrine that management cannot do wholly as it pleases and expect to get away with it. Standard supplements its policy by posting a

list of reasons for which foremen may discharge employees, and it

refuses to keep officials who cannot get along with those under them.

It has also cushioned the shock of inflation by including a cost-of

living bonus which varies with the rise and fall of prices. It may be argued that Standard Oil is a semi-monopoly, and that

it is an expanding industry?two advantages that most employers do

not have. But Standard has solved its labour problems mainly by

devoting time and energy to their solution, in a spirit of co-operation and compromise?which no employer can afford not to do.

Another means whereby management can improve its relations with

its employees was discussed recently by Mr. Keith Powlison, writing in the Harvard Business Review. Mr. Powlison raises the question

whether or not management would have less strikes if it shared more

information with the employees. Convinced that it would have less, he points out that almost invariably the typical employee, when asked

what he thinks is a fair rate of profit to earn, mentions a figure that is

higher than the actual earnings of the company. 176



LABOUR RELATIONS

Mr. Powlison declares that management is usually careless and

indifferent about its reports. A company should first find out what

its employees desire to know. It is psychologically harmful for a

firm to tell its employees how good it has been to them. Suspicion is

aroused if the fiscal reports are not issued regularly, or if they sud

denly appear just before the termination of a contract.

Companies should endeavour to avoid technical terminology in

drawing up reports for their employees. If they are going to use such

terms as "

fixed expense variable per unit "

and "

variable expense fixed per unit", they might as well write the reports in Sanskrit. "

Earned surplus "

to an accountant represents the total profit in the

history of the company, but to the average employee it looks like the

profit piled up that year. Mr. Powlison insists that confidence is the

goal to be reached in issuing the reports, and that once this is attained, the reports can be simple and brief.

The psychological value of general reports for the employees should not be under-estimated. In Communist countries the workers refer to everything owned by the Government as

" our mill ",

" our

theatre ", "

our factory ". Actually, the workers under Communism are paid next to nothing, are reduced to the level of draught horses, and constitute mere pawns to totalitarianism in its worst possible form.

But under the capitalistic system as it exists to-day the large con

cerns, especially, should make more effort to let their workers feel

that they belong.

[The concluding article of this series will treat of the main employee programmes now being tried in the United States : (1) the guaranteed annual wage; (2) multiple management; (3) profit-sharing.]

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Harmony in Labour Relations. II: American Management Facing the Issue