A Critical Discourse On Diversity Management At Ford Motor Company A Business Case For Cross-Culture Human Resource Management
A Critical Discourse on Diversity Management at Ford Motor Company
A business case for cross-culture human resource management
Ford Motor Company is the world’s second largest manufacturer of cars and trucks with products sold in more than 200 markets (2002 Corporate Citizenship Report, 2003). The company employs nearly 400,000 people worldwide, and has grown to offer consumers eight of the world’s most recognizable automotive brands (2002 Corporate Citizenship Report, 2003).
At Ford Motor Company, the notion of working with African-Americans, rather than just employing them, is steeped in the company's rich heritage and based on the philosophy that an empowered work force is a productive one (Black Enterprise, 2000).
As far back as 1913, Henry Ford recognized the virtue of a trained and educated work force--regardless of race. As African-Americans migrated to the North in search of meaningful work, Henry Ford tapped into this powerful new labor force and hired African-Americans to work in his automotive assembly plants. Ford not only hired African-Americans, he also ensured that they received the same pay as their white counterparts. "Equal Pay for Equal Work" was a radical notion for the times (Black Enterprise, 2000).
Historical Overview of Ford Motor Company
Henry Ford built his first car, the Quadricycle Runabout, over a hundred years ago in the summer of 1896 (Greenwood and Wren, 1998). It had a four-horsepower engine and could reach speeds of up to 20 miles per hour, an astonishing feat for the late 19th century (Greenwood and Wren, 1998). He sold that car for $200 to finance his second car, which was completed in early 1898. On June 16, 1903, he incorporated Ford Motor Company, which was capitalized for $100,000 with twelve stockholders. The company produced 1,708 cars that first year. Today, Ford Motor Company is a US$160 billion corporation with some 350,000 employees in 200 countries around the world (Ford, 2003). In 1999, just over one hundred years after Henry Ford built the Runabout, Ford Motor Company manufactured 7.2 million vehicles worldwide (Ford, 2003).
Ford Motor Company's founding father Henry Ford will be remembered as one of US first businessmen who provided a level playing field. His radical philosophy: Don't just employ people, but work with them and empower them, regardless of the color of their skin (Ebony, 2001). He fostered integration, fair hiring practices, equal work for equal pay, and diversity in the workplace during some of the most turbulent times in American History.
As early as 1913, Ford Motor Company took initiatives to diversify its workplace when Henry Ford promised $5 a day for all of his workers when most Blacks were earning less than $5 a week. When new workers arrived from the South and reported to work at the Ford Rouge plant in Michigan, they also stepped into the once-elusive working middle class (Ebony, 2001).
Research Aims and Methods
This project sought to investigate the cross-cultural management policies by Ford Motor Company and how it extends to its workforce and its choice of suppliers. It accomplished four aims: (1) determined and illustrated the methods and specific approaches employed by Ford Motor Company in managing diversity in its workplace; (2) discussed the source of such policies and how it affected the profitability and growth of Ford; (3) Analyzed and evaluated the improvements that can be done by Ford based on the existing literature in its diversity management program and; (4) made recommendation on Ford and on future researches.
The methodology employed in the research primarily was an in-depth investigation and content analysis of Ford documents, articles, books and articles that dealt with diversity management at Ford Motor Company. Moreover, an interview was also conducted on two Ford Motor personnel to provide a background and an overview of what I should be looking for in the literature and in understanding Ford’s policies.
2.1 Diversity and cross-culture HRM
According to the Society of Human Resource Management's (SHRM) 1998 survey on diversity programs, nine out of 10 respondents from Fortune 500 organizations are actively recruiting women, African-Americans and Hispanics. They're also taking steps to bring more Asians, Native Americans and people. Moreover, in their 1998 study in Alexandria, Virginia, three out of four Fortune 500 companies have formal diversity programs in place, over half of which (58%) have staff members dedicated to these issues (cited in Caudron, 1998).
Companies like Ford, however, are concentrating on targeted efforts through specific communities. "To reach diverse communities, we're doing things like targeting universities with a higher percentage of women and minority groups, as well as getting involved with disability groups and local communities," says Surinder Sharma, European diversity director at Ford (cited in Sappal, 2002). She adds that by making these links, Ford is expanding the pool that they can fish in for their future talent.
Diversity Training: Integrating the Workforce
Diversity training remains the primary method used to facilitate behavior change (Combs, 2002). However, existing diversity training is perceived to have failed, calling for a new diversity leadership focus to improve diversity performance. This paper proposes application of the research supporting the self-efficacy construct to build diversity self-efficacy and bridge the gap between diversity training and diversity performance.
Research suggests that situations reflecting serious overt and subtle discrimination continue to exist in the work environment. Grossman (2000) suggests that in spite of organizational efforts to manage diversity very little has changed in the experiences of culture, ethnicity, race, and gender groups.
Organizational leadership has opted, most frequently, to use diversity training to bring about a positive diversity climate. Diversity training infuses the organization with information and seeks to change the behaviors of employees related to diversity. In many cases the perception is that diversity training has not met expectations as a mechanism for alleviating the work environment of discrimination and prejudice (Caudron, 1999). As a change strategy, diversity training has been labeled ineffective (Flynn, 1998; McKee & Schor, 1999) Many suggest that such training does very little to promote a positive diversity climate. And, at best, diversity training programs, as currently constructed, result in only short-term suspension of discriminatory behaviors and often create more trouble than they resolve (Hemphill & Haines, 1997).
In the 15 years since the publication of Workforce 2000 (Johnston & Packer, 1987), diversity has emerged as an increasingly important issue in management circles. Diversity, workforce diversity, and managing diversity are now frequently used terms in and about business, and managers have been presented with a plethora of materials in the popular press on how to handle a diverse work force (Ferris, Frink, & Galang, 1994). The persistent messages about the need to address the phenomenon of a changing workforce and consumer base have motivated managers and organizations either to create internal diversity training programs or to hire consultants to sensitize employees to differences in race, gender, culture, religion, age, sexual orientation and abilities (Harter and Kirby, 2003). While 75 percent of Fortune 500 companies have already instituted diversity training programs, at least another eight percent are in the planning stage, and small companies are also beginning to plan diversity programs (Diversity training, 1999).
Diversity for Profitability
Prior to the emergence of this notion of diversity management in the 1990s, issues of workforce composition were usually addressed through one of two approaches: affirmative action or valuing differences (Thomas, 1994). While affirmative action refers to requirements, often legally mandated, to change organizational demographics and remedy past situations where minorities and women were passed over for jobs and promotions, the approach of "valuing differences" is intended to be ethically and morally driven and encourages organizational members to appreciate differences. But as Wheeler (1995) notes regarding these approaches, "one of the primary problems . . . [was] that they were not clearly connected to business objectives" (p. 9).
A primary business objective is being profitable, and managers must explain and justify business performance and decisions in light of this objective (Toulmin, Rieke, & Janik, 1984). Subsequently, a movement has emerged to make a business case for addressing the increasing diversity of both the workforce and the consumer base, and this approach is reflected in the popular literature surrounding diversity initiatives. Carnevale and Stone (1994), proponents for addressing diversity based on a business rationale, begin their article by saying, "Welcoming diversity is directly connected to the bottom line" (p. 24). As further evidence of such an orientation, a report entitled "The 'bottom line' organization benefits of diversity training: What's in it for us?"), outlines the importance of managing diversity for profitability (Wheeler, 1995).
Ford Cross-Cultural Human Resource Management: Managing Diversity
Ford launched its global diversity initiative in 1994 to improve diversity and work life throughout the company (Caudron, 1998). The company's effort is led by CEO Alex Trotman, who also chairs Ford's Executive Council on Diversity. Of its 157,000 U.S. employees, 12.8% of Officials and managers are minorities. African Americans represent 8.7% of all top management posts and 17.3% of the workforce overall (Caudron, 1998). These percentages have changed very little in the four years since the initiative began because change in a corporation the size of Ford takes time.
Ford says that accountability is the key to making change happen. To this end, senior executive bonuses are tied to diversity management, along with traditional performance measures. The company is managing diversity in a number of ways (Caudron, 1998; www.ford.com):
· By establishing aggressive goals for hiring professional women and minorities.
· By developing external mentoring programs that match minorities who aspire to senior management with top-level minority executives from other companies.
· By establishing employee resource groups to identify barriers, provide information and develop minority employees.
· By providing mandatory diversity awareness training for all salaried and hourly employees. Ford's entire global workforce will have completed this training by year-end.
· By sponsoring the Ford Academy of Manufacturing Science, a school-to-work program that helps young people acquire valuable work skills.
Ford Supplier Diversity
Ford's diversity effort also involves suppliers. The company is the first U.S. corporation to achieve minority purchases worth $2 billion, and its goal is to reach $2.5 billion by 2000 (www.ford.com). Ford also has a strong minority automobile dealer program, providing specialized training, consulting and financial support. Ford's 333 minority leaderships represent 44% of all U.S. minority dealers.
To evaluate its progress, Ford measures representation of women and people of color at all salary levels quarterly (Caudron, 1998). Ford senior executives also conduct face-to-face diversity focus groups worldwide. Ford's CEO is chair of its Executive Council on Diversity, which identifies and manages corporate diversity initiatives (www.ford.com). The council members report directly to the CEO and conduct yearly focus groups to hear employee concerns firsthand. Furthermore, all members of the council are held accountable for diversity through a performance measurement system. Moreover, other senior managers are involved in diversity as on-site representatives for universities that are key to its recruitment strategy. Ford believes the demographic makeup of its professional workforce should reflect the demographics in the market across all salary groups.
The Multi-Cultural Diversity Program of Ford
The most universal component of Multi-Cultural Diversity programs is diversity training (Klimley, 1997). This is where most companies start, since they recognize that negative attitudes are at the root of prejudice. Frequently, companies select outside consultants to start their training programs, later relying on their own inside trainers. Once these basics are in place, corporations turn to phase two of diversity--the complex task of developing metrics to measure result.
Even the communications area of Ford has specific measurements for diversity (Klimley, 1997). For instance, company publications must sent "clear messages" about diversity. And key executives are required to hold a certain number of employee meetings each year to discuss issues pertaining to diversity. Ford has already have highly developed diversity measurement systems (Klimley, 1997).
The broad definition of diversity used by most firms diffuses the racial issue. Ford Motor Co., for example, launched a corporate training initiative to raise employee awareness of discrimination relating to gender and age, in addition to race. The effort is designed to help employees understand the increasing diversity of American society, its impact on employee relationships and its effect on the company's customer base--all of which are important. Ford is creating an awareness of understanding diversity and their next step is to learn how to manage across differences (Caudron and Hayes, 1997).
Managing Diversity Processes
Diversity management, while based on cultural change, is a pragmatic business strategy that focuses on maximizing the productivity, creativity, and commitment of the workforce, while meeting the needs of diverse consumer groups (Black Enterprise, 2001). Affirmative action focuses on getting people into an organization rather than changing organizational culture. Affirmative action is grounded in moral and social responsibility to amend wrongs done in the past to those Americans who were not of the majority population. The main objectives of managing a multicultural workforce include awareness, education, and positive recognition of the differences among people in the workplace (Black Enterprise, 2001).
Borrowed from the meat-packing industry (Hounshell 1984), the assembly line at Ford facilitated both the division of labor and increased flow of product Pietrykowski, 1995). In addition, Ford, beginning in 1921 with construction of the Rouge, aggressively pursued a strategy of backward integration. According to Chandler (1990, 208), "Ford was the world's most integrated automobile company. To be sure of constant, tightly scheduled flows of materials through his huge plants . . . and thus to enhance the economies of scale Ford made massive investment in the production of steel and glass, parts and accessories. Therefore, as output declined, unit cost rose much more rapidly than did those of his competitors. Ford's integration was primarily within the plant." ot surprisingly, these signal features of mass production took their toll on workers. Enormous turnover rates in the Highland Park plant are well documented. In 1913 the average rate of turnover at Ford was 370 percent (Peterson 1987).
In 1999, Ford Motor Company purchased a record $3.3 billion in goods and services from minority-owned businesses, more than any other automaker in the U.S. and Ford Motor Company's minority dealers number more than 370, surpassing that of any other U.S. automaker (Black Enterprise, 2000).
Diversity is a key contributing factor to Ford Motor Company's goal of global markets and corporate efficiency (Black Enterprise, 2000). And nowhere is this sound business model better illustrated than in the minority suppliers and dealers that Ford has empowered, and who in turn, have empowered Ford and the communities in which they live and work. It is the individual achievements and community involvement of these trailblazers that enable Ford to reach one of its most dynamic future markets.
Discussion and Evaluation
The problems arising from today's workforce diversity are caused not by the changing composition of the work force itself but by the inability of work organizations to truly integrate and use a heterogeneous work force at all levels of the organization (Cox, 1991). Granted, some corporations are including diversity goals in their strategic planning and are changing organization wide policies, but even those changes are focused mainly on internal processes of the organization. Organizations need to expand their notion of diversity to include not only the organization itself, but also the larger systems that constitute its environment (Mor Barak, 2000). Organizational policies and actions that are inclusive can benefit all system levels from the individual worker through the work organization to the wider community (Mor Barak, 2000).
Forecasts about the future predict an aging work force in which increasing numbers of women and members of racial and ethnic minority groups will participate (US Department of Labor, 1994). By 2020 white non-Hispanic people will represent 67 percent of the work force (down from the current 76 percent), Hispanic presence will be 14 percent (up from its current 9 percent), Asians will represent 6 percent (up from today's 4 percent), and African Americans' share of the work force will remain 11 percent (Judy & D'Amico, 1997). These work force demographic changes will mirror population demographic trends and will vary by region and state. The western states are rapidly becoming more diverse as Hispanic and Asian populations grow (Judy & D'Amico, 1997).
Better treatment of low-wage employees who are often frontline workers improves the Ford Motor Company’s customer relationships. In addition, value-based organizational practices are often attractive to customers. Companies gain a more loyal work force (given that it is treated well) that is committed to the organization and has lower turnover rates as a result (Kossek et al., 1997). With the expanding economy and the current and anticipated labor shortages, Ford Motor Company may need to expand their employee pools by taping into the potential resource of minorities more aggressively. A strong corporate commitment to hiring and retaining former welfare recipients that includes help with employment barriers can facilitate the difficult transition and increase the chances of long-term employment at Ford. In addition, opening up advancement opportunities for the minority population may increase their chances of obtaining higher-paying jobs with better benefits that will release them from the vicious cycle of low-paying jobs that do not leave much income above the job-related expenses such as child care and transportation.
The main obstacle for Ford is the limited corporate vision. This is not only Ford though, companies often focus only on the immediate needs and objectives of the company rather than considering the bigger picture that includes moral and ethical values as well as labor-force trends and the larger organizational environment. The other obstacles are stereotypes held by management and workers against welfare recipients and against people of color. The latter is based on a common misconception that the majority of welfare recipients are people of color when, in fact, the majority are white (Gottschalk, Mclanahan, & Sandfur, 1994).
This project presents a critical discourse for the inclusive workplace that can benefit individual employees and their families, work organizations, and local, national, and international communities. Although managing diversity is now well embedded in social work values and principles, one must remember that the workplace is a host environment that is often not open to social work intervention. To propose such innovative programs to businesses, Ford Motor Company need to be more aggressive in their diversity campaigns.
Ford is ahead of most companies in procuring minority supplier contracts, and is ahead of its competition in minority dealerships. Although Ford is more progressive than many large companies, there are opportunities for improvement. Ford should begin to view its diversity initiatives as a holistic business strategy that impacts not only its workforce, but its customers and stakeholders.
Furthermore, all diversity efforts and business plans should focus on employees, customers and stakeholders. For instance, the company should begin to segment its markets by race and gender. Ford should increase everyone's accountability, from its board of directors to front-line workers, to create a productive, equitable environment. Ford should strive to increase the share of women and people of color among its customers, and should influence suppliers and dealers to develop holistic diversity strategies.
Since workplace diversity can only be resolved through an integrative and sound management and corporate program, I suggest that future researches study the factors affecting the establishment of a culturally-sensitive policy in companies, the rationale behind these policies and the different approaches used by managers and management in implementing cross-cultural programs.
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