Question:
1. What describes his major contributions to the study of organisational behaviour?
2. Can it be argued that he portrays either a transformational or transactional style of leadership?
Henry Ford, born in 1863 with his innovative ideas in producing motor vehicles and excellent engineering works went on to become the hero of people in the industry. His primary goal was always to produce petrol propelled motor vehicle and in 1896 he developed his first self propelled vehicle which he called the quadricycle. After a lot of struggles and legal battles, he founded the Ford Motor Company in 1903 with only $28000. He dreamed of making efficient affordable cars and in 1908 produced the popular model T. Henry Ford changed the world with his revolutionary ideas and transformed the motor industry with his leadership. The main aim of this essay is to describe his major contributions to the study of Organizational behavior and discuss his leadership style.
Every manager or leader’s aim is to achieve a workplace that has a pleasant setting, consists of employees who want to work and have a sense of pride in being associated with the firm, team work, trust between each other and set high quality standards. In order for an organization to succeed this is the kind of work place behavior that has to be ensured. Henry Ford’s contribution in determining efficient organizational behavior is very significant.
Henry Ford introduced the technique of Mass production to increase productivity. Before the technique of mass production, craft production technique was used by automobile companies. In craft production even though there was skilled work force in designing, fitting and machine operating, an average of only thousand cars were produced per year. The production volume was very low and Ford believed that to increase the production volume machines that could perform some of the jobs as the skilled men could replace them. This led to the advent of the ‘assembly line’ technique of production which went on to be called Fordism (Andrzej, Huczynski and Buchanan, 2007).
Assembly line technique was made possible by the interchangeability of different parts and how simple it was to attach them to each other giving Ford advantage over the competition. Firstly, the assemblers performed their assembling activities at their assembly stands which were made more efficient by getting the parts delivered to the work stands so that the assemblers didn’t have to move which was again changed to each assembler doing one activity only by moving from vehicle to vehicle. The assembling time had reduced to 2.3 minutes from 514 minutes. To cut on the walking time between stands, in 1913, the assembly line was introduced which had a moving assembly line that brought the vehicle to each assembler thus reducing the time to just 1.19 minutes (Womack, Jones and Roos, 1990). This led to an increase in the production volume as well as minimizing of work force’s jobs and time. With this he changed an extremely long process of producing a car into something that was quick and sharp.
In the year 1914, Ford introduced the five dollar a day minimum wage in his company for the first time, doubling the pay of most of his workers and also reducing the workers time from nine hours per day to eight hours. According to Ford this was one of the best cost cutting moves they had ever made. It was not his charity to his workers and that he had paid the wage so that his business would be on a lasting foundation and any business working on low wage is always insecure. He was building for the future when he decided to pay five dollar a day for eight hour work. This dramatic increase in the wages influenced organizational behavior and motivated the workers to work harder to increase the profits. This also enabled Ford to attract the best labor and also retain them thus reducing turnover.
The assembly-line approach really did decrease the work load on the workers and increased their motivation. The technique introduced by Henry Ford to motivate workers and increase productivity is still the dominating technique in a large number of production plants. Henry Ford was one of the early pioneers in management who recognized the behavioral side of management. His focused on the best way to lead his work force and control them to increase their performance. His management principles comprised of Taylor’s principles and improvised on them to suit his own needs.
Ford set an example on how to value human capital. He employed hundreds of supervisors to watch his workers inside and outside the factory and imposed strict rules and codes on their behavior in order for them to qualify for the five dollar wage. He was highly autocratic and his demand for control sometimes made him behave in unethical and unacceptable ways and it also led to his superiorly talented workers quitting and joining his competitors. But, despite the absenteeism, turnover problems and employee dissatisfaction, Ford had policies in place that enabled skilled work force available to him all the time. The assembly line approach led to decrease in time required to produce one model T car and hence Ford could afford the increase in wages he had offered. It is also notable that Ford had huge profits due to high efficiency by applying these new management principles. This led to his competitors following the management principles too.
Another advantageous principle that Ford had diverse business decisions which always focused on the growth of equality among his employees. The wages he offered then was fair to everyone and he was against discrimination of any kind. He employed women, Africans, African Americans and physically challenged people. He brought this practice in long before any other businesses decided to do it. As a result, in 1916 Ford had workers from around sixty two countries working for him and also over nine hundred physically challenged individuals. He believed in setting standards for non-discrimination and to equalize opportunities for all in many ways (Ford, 1973).
“If there is any one secret of success, it lies in the ability to get the other person’s point of view and see things from that person’s angle, as well as your own.” – Henry Ford.
Henry Ford also had the ability to foresee company’s prospects and was emotionally intelligent. He maintained a loyal customer base by showing them he cared. It was his belief that saving clients’ money made them feel more valued and he took care of that. He was sensitive to his employees’ financial needs and work-life balance as well as the economic shifts. He introduced the positive wage system and changes in work shifts to reward hardworking employees and as an appreciation towards their good work. This system of working in shifts also enabled him to operate his company twenty four hours a day.
He believed in holding an extremely skilled work force and keeping them united.
“Coming together is a beginning; keeping together is progress; working together is success.” – Henry Ford
According to Ford, a business that made only money was a poor business. He wanted his cars to be perfect and to make his customer’s happy with their cars. He achieved his aim since by 1929, half of the American population owned cars. Even though his idealistic way of dealing with things made him seemed dictatorial, his contribution to management was definitely significant and led the way to the development of organizational behavior.
Transactional style of leadership is that which works within a fixed set of goals and organizational boundaries. It is task and outcome based leadership and emphasizes performance evaluation and rewards. Whereas, the transformational style of leadership focuses more on the future. A transformational leader doesn’t operate within an established set of objectives. He/she is continuously looking to innovate, motivate and implement new ideas and keep his employees engaged with a futuristic vision. Transformational leaders lead by example.
It can be argued that Henry Ford was a transformational leader. Though he had dictatorial qualities and seemed to be control oriented which could portray him as being an autocratic leader, he had other qualities that can typify him as a transformational leader. He was adaptable, constantly innovating and implementing ideas that revolutionized the automobile industry and helped its development into what it is today. There are four major qualities that constitute a leader who follows transformational leadership: intellectual stimulation, idealized influence or credibility, individualized consideration and inspired motivation (Bass, 1990). It can be said that Henry Ford possessed all four of these characters.
Henry Ford had the highest intellectual stimulation. His transformational ideals included: minimizing wastage, maintaining minimum stock levels and assembly line conveyor belt introduction. One example of his idea to minimize wastage by damage was the ordering of steering wheels for the cars to be transported in wooden boxes since they arrived damaged otherwise and he later used the wood to build floors of his carriage. Henry Ford’s dream was to produce petrol propelled motor vehicles with high efficiency that are still affordable to people. And his credibility lies in the fact that he knew his craft and believed that he could make his dream come true and he did it.
Henry Ford was very opinionated and autocratic. But he did look after his employees and beyond. He even looked after their families by teaching their wives cooking and stuff. He was also very motivating by offering rewards for good work. And his infamous eight hour work period and minimum wage of five dollar a day served as an excellent motivating factor for his workers.
The one mistake that he committed was when the model T became famous he did not do forward planning and this proved disastrous because he had to shut down Ford motors for six months following the phasing out of the model T. But he learnt from his mistake and in just six months came up with a new model which was an instant success and soon was again in the competition race with rivals General Motors and Chrysler.
Henry Ford wanted to make cars affordable to everyone and create a world where everybody owned cars. His leadership was such that it followed his mission and vision and also made his followers follow the vision. He had tremendous self-belief. And he constantly preached to develop his workers’ self beliefs. He urged his workers to reach the edge of their creativity and come up with better ideas. He had a self belief that was infectious.
Henry Ford also exhibited certain transactional leadership qualities such as rigid rules and codes for his employees, his control over behavior of workers on and off work by hiring spies to monitor them and a lot of prejudices he exhibited greater transformational leadership qualities. At a time when nobody else could dream of affordable cars for everyone, he acted on it and led the entire world in the direction.
Henry Ford, the founder of Ford Motor Company did not only build one of the largest automobile manufacturing companies in the world today but also set in certain organizational and managerial principles that changed the world as a whole. From recognizing the value of labor to believing that innovation should lead to the production of better product at lower cost for the consumer, Ford was a pioneer in setting an example for what contributes good organizational behavior. He led by example and went on to prove that it is not necessary to be the first to market but it is necessary to be the best.
References
1. Andrzej, A., Huczynski., and Buchanan, D.A. (2007). Organizational Behavior. Harlow: Pearson.
2. Womack, J., Jones, D. and Roos, D. (1990).The machine that changed the world. New York: Rawson Associates.
3. Raff, D. and Summers, L. (1987). Did Henry Ford Pay Efficiency Wages?.Journal of Labor Economics, 5(S4), p.S57.
4. Mintzberg, H. (1978). Patterns in Strategy Formation.Management Science, 24(9), pp.934-948.
5. Ford, H. and Crowther, S. (1973).My life and work. New York: Arno Press.
6. Ketchen, D. and Giunipero, L. (2004). The intersection of strategic management and supply chain management.Industrial Marketing Management, 33(1), pp.51-56.
7. Schermerhorn, J., Osborn, R. and Hunt, J. (2000).Organizational behavior. New York: Wiley.
8. Gill, R., Levine, N. and Pitt, D. (1999). Leadership and Organizations for the New Millennium. Journal of Leadership & Organizational Studies, 5(4), pp.46-59.
9. Dosi, G., Faillo, M. and Marengo, L. (2008). Organizational Capabilities, Patterns of Knowledge Accumulation and Governance Structures in Business Firms: An Introduction.Organization Studies, 29(8-9), pp.1165-1185.
10. Bass, B. (1990). From transactional to transformational leadership: Learning to share the vision.Organizational Dynamics, 18(3), pp.19-31.
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