Tuesday, June 12, 2012

Name Your Price

According to Inventing America, by Pauline Maier, Merritt Roe Smith, Alexander Keyssar, and Daniel J. Kevles, Henry Ford solved the problem of how to manufacture an automobile cheaply enough for the normal American to purchase one by standardizing the steps involved in assembly.  He used principles from Frederick Winslow Taylor's book, The Principles of Scientific Management, to basically turn his employees into cogs in his machine...each employee doing the same low-skill action over and over; at a rate determined by the moving conveyor system.
"Not surprisingly, most industrial workers resisted such schemes.  One worker at the Ford Motor Company com­plained that 'when the whistle blows he starts to jerk and when the whistle blows again he stops jerking.'  At Ford and elsewhere, a common response to the brutal intensification of work was absenteeism and high quit rates: in 1913, Ford's daily absentee rate was 10 percent, while annual turnover ex­ceeded 350 percent.  To reduce turnover, which was costly to the company, Ford doubled the daily wages of his most val­ued employees, to five dollars a day.  This strategy was successful in stabilizing the labor force and reducing operating costs."

I'm not sure why, but this all reminds me of a story attributed to W.C. Fields.  It seems Mr. Fields was dining with a woman and asked, "Tell me madam, would you sleep with me for a million dollars?"  The woman blushed and said she thought she would.  "Ah then," W.C. responded, "would you sleep with me for five dollars?"  She found that offensive: "Why sir!  What kind of woman do you think I am?"  Said W.C., "Oh, I think we've established what kind of woman you are.  Now we are just haggling over price."


Truth is...it wouldn't hurt me, or anyone, to consider the firmness of our standards and the firmness of our price.


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