Overview of the Organization and the Issue to be Solved
The organization on focus is Ford Motor Company, an American motor vehicle manufacture and global player in the industry. Ford is a publicly traded company with its headquarters in Dearborn, Michigan and has been in operation for slightly over a century (Ford Motor Company, 2018). The company can be said to have pioneered the use of assembly lines in car manufacturing and an approach to human resource management approach where employees are treated like family. Currently, the company has over 200,000 employees spread across the world and revenues in excess of 150 billion dollars (Ford Motor Company, 2018). The primary product of the company is a motor vehicle, ranging from low-cost cars, luxury vehicles, to trucks and heavy motorize machinery.
Ford Motor Company is considering laying off up to 5% of its members of staff due to its ballooning wage bill and recurrent expenses (Thibodeau, 2017). Despite the many challenges in the international market including a possible trade war with China, Ford is still profitable but the profitability does not reflect its exponentially high revenues. The company is, therefore, struggling with how to extenuate its runaway recurrent expenses to increase the rate of net profits. However, seeking to lay off thousands of employees is a major challenge for Ford as it is contrary to its traditional organization's culture that embraces employees as part of the organizational family (Ford Motor Company, 2018). Solving the problem of a ballooning wage bill might, therefore, create a human resource crisis in the company.
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Corporate Culture Analysis
The corporate culture at Ford Motor Company is dominated and preoccupied with its internal stakeholders, more specifically its employees. The Ford vision statement is “ people working together as a lean, global enterprise for automotive leadership .” While its mission statement is “ One Team. One Plan. One Goal .” (Thompson, 2017). A focus on employees is clearly implied in both the vision and the mission statements. Most modern companies have increased focus on its human talent, but the focus is predicated on what the labor force can do for the company, as opposed to what the company can do for the labor force. Even when good labor relations form part of a company’s corporate social responsibility, it is still done strategically to motivate employees to work harder and smarter. At Ford, however, being good to employees unconditionally is part of its corporate culture. Indeed, the company’s founder is reputed for having reduced car prices and contemporaneously increased staff wages so that his workers could afford cars (Ford Motor Company, 2018). That attitude still informs Ford Corporate Culture and can be attributed to the current crisis. Spending too much on the employees may not be a problem as long as there is an understanding that the expenditure is an investment for which the company expects returns and not a mark of its generosity. It is thus due to the above that the company may have found itself having a poor revenue to profit ratio.
Areas of Weakness
Ford Motor Company’s weakness lies in the paradox created by its corporate culture. Focusing on people and a strategic plan of lean production may not be a practical strategic plan. The statement “ people working together as a lean….” (Thompson, 2017) at the beginning of the company’s vision thus epitomizes what could be the weakness with Ford. The term ‘lean’ as reflected in the vision statement must be referring to lean manufacturing as developed by one of Ford’s more successful competitor, Toyota Motor Company. Lean manufacturing entails developing production systems where there is no wastage of resources, including money, labor or raw materials (Kochan, Lansbury, & MacDuffie, 2018). To attain lean manufacturing, a high level of discipline must be adhered to among the labor force. The company must also limit any inordinate expenditure, even towards the workforce. Lean manufacturing must thus focus more on profits than it does on people. The Ford focus on people, more than profits is thus the problem.
Proposed Solutions
The first proposed solution is a review of the family approach to human resource management. Every modern company needs a family, but the family does not need to be made up of all employees. The concept of a corporate family is predicated in the Lockheed Martin's Advanced Development Programs famous as Lockheed Skunkworks under Kelly Johnson. The family, however, was a small group within the larger organization, not the entire workforce at Lockheed Martin. Apple Inc. has a similar family made up of innovators and specialized engineers. Ford needs to form such a family of the employees that are indispensable within the company such as innovators, specialized engineers, top management and the most successful marketers. Investing in the employees that the company relies on most makes strategic sense (Kochan, Lansbury & MacDuffie, 2018).
After selecting the specialized group above, the company should then develop a more rational and profit-oriented relationship with the rest of the workforce. Any member of staff that has not earned the right to be a part of the Ford family should be let go. All employees should be remunerated and rewarded based on industry standards for the levels that they operate. Any additional reward has to be earned (Netland, Schloetzer, & Ferdows, 2015). The hiring system must be based on merit and not any other consideration, such as being a second generation resident of Dearborn, a town that has the Ford headquarters as its primary focus. Making the changes above will eliminate or in the very least extenuate the company’s runaway recurrent expenditure and also give the company a larger return on the wage investment made. It is time for Ford Motor Company to focus more on its profits and shareholders than it focuses on pleasing its labor force.
References
Ford Motor Company. (2018). Ford Motor Company timeline. Retrieved from https://corporate.ford.com/history.html
Kochan, T. A., Lansbury, R. D., & MacDuffie, J. P. (Eds.). (2018). After lean production: Evolving employment practices in the world auto industry . Ithaca, New York: Cornell University Press
Netland, T. H., Schloetzer, J. D., & Ferdows, K. (2015). Implementing corporate lean programs: The effect of management control practices. Journal of Operations Management , 36 , 90-102
Thibodeau, I. (2017, May 16). Ford looks at reducing workforce to cut costs. Retrieved from https://www.detroitnews.com/story/business/autos/ford/2017/05/15/ford-considers-cost-cuts-reducing-workforce/101735754/
Thompson, A. (2017, February 05). Ford Motor Company's vision statement, mission statement. Retrieved from http://panmore.com/ford-motor-company-vision-statement-mission-statement
