In 1931, Christmas at Baltimore’s McCormick & Company was the sad affair it had been for years. Notices were given of a layoff ‘until about February 1’ along with the ironic wish ‘Merry Christmas and a Happy New Year’!
In 1950 the employees of McCormick & Company’s Baltimore plant worked pell-mell right up to the day before Christmas, then left for home with a whoop and a holler. And no wonder: in their pockets was two weeks extra cash bonus and ahead of them a full-paid winter vacation until January 2. The bonus was an addition to three weeks extra already paid that year; the vacation was in addition to the regular summer vacation and seven paid holidays.
The contrast between these two situations is the degree of success achieved in less than 20 years by one man and one idea. The man is perceptive 55-year old Charles Perry McCormick, chairman and president of ‘the world’s largest spice and extract business.’ The idea is ‘multiple management’, an operating system designed to insure maximum worker participation and morale to say nothing of providing management with a seedbed of youthful and ambitious executive talent.
The story actually starts way back in 1889, when Charlie’s uncle, Willoughby McCormick started his spice business in a dingy room with two employees. ‘Uncle Will’ was a hard worker and a hard boss. Sales reached $3,500,000 in 1932 but employees were listless and dispirited. Labor turnover was an expensive 30% each year.
Nephew Charlie (The ‘Old Man’ had no children) started working at the plant in summer 1912, came on full time in 1919. He worked as stock boy, runner, and executive assistant in factory and office, and for over ten years as salesman and export sales executive. He also tried to sell Uncle Will some new management ideas but was fired seven times for his trouble (he was also rehired). Then came the Great Depression and big losses for McCormick. As was the tenor of the times, the Old Man slashed wages 25% and had another 10% axe in hand when he suddenly died on a business trip in 1932.
Since it did not seem to make much difference who headed the hard-pressed concern, the directors elected young Charlie. The practical prophet decided to use some of his ideas. He called a meeting of all employees and announced a 10% raise instead of a cut, and a work week shortened from 56 to 46 hours. He also told the workers they had to raise production and cut costs or the whole kit and caboodle might collapse. To help them along he told his astonished employees they would henceforth share in the profits of the company and take an active part in management.
The active part consisted of a junior board of directors and the beginnings of multiple management. The first board had 17 members (credit clerks, cost accountants, assistant department heads). Their assignment was to find ways and means to improve anything they thought needed it. In addition: ‘write your own constitution and by-laws, elect your own officers and govern yourself as you wish. The company books are open to you and ask all the questions you like.’
To keep things under control, Charlie said all suggestions must be unanimous and subject to approval of the senior board (the stockholder board elected annually).
The idea clicked. Within a few years the junior board had redesigned and modernized the company’s packages with a resultant sharp rise in sales; they devised new ways to test stenographers; they introduced faster and better billing; they suggested new product lines from pumpkin pie spice to the recently introduced fast-selling cinnamon sugar.
As a good spice man, Charlie likes to say ‘the proof of the pudding is in the eating’. On that basis the junior board has quite a record: of 5,000 suggestions made, over 99 % have been adopted by the senior board. Says Charlie: ‘I cannot estimate how much these suggestions have meant to this company in increased sales and profits but certainly the benefits far exceed the cost’. More important, the junior board has bolstered morale and given all ambitious young men a chance to be a company officer and director. The goal is attainable since no less than 13 of the present 17-man senior board were formerly junior or factory board members.
And let’s finish with one of Giblin’s own lines: ‘It is psychologically impossible for a human being to give us 100% of his brawn, unless he is also allowed to give us his ideas.’
Robyn Pearce CSP