Autoworkers Say Yes to Lower their Paychecks -
Now that Takes Moxie!
General Motors goal: to
build a low-price, subcompact car in the United States and make a
The challenge: how do you
do that when the average G.M. worker in the U.S. earns $57/hour and
the average worker in Mexico earns $4/hour?
wages of the autoworker
In 1960 when wages
started to skyrocket, the average autoworker made 16% more than the
average American worker. By 2006, they made 74% more. As a result of
these out-of-control labor costs, G.M. spends on average $4,000 more
than Toyota to manufacture a car.
The welcomed pay
At the assembly plant in
Orion Township, MI, 1,550 workers agreed to significantly cut their
own pay by 60% to $28/hour. Why? To achieve that seemingly
unattainable goal of manufacturing a profitable and competitive
subcompact car in the U.S.
The battle cry
What impels reasonable,
rational people to say "yes!" to lower their own paycheck?
A battle cry. An arduous goal. A reason to show up every day excited
to accomplish something bigger. Leaders need to create battle cries
that their people embrace, devote themselves to, and want to show up
to drive forward. When that happens, people motivate themselves. And
it has nothing to do with money.
Zappos doesn't pay its
customer call center folks extra money, but its people motivate
themselves around the company's battle cry: "let's provide the
best customer service possible." JetBlue doesn't pay more than
other airlines, but its people are devoted to the battle cry: let's
bring humanity back to air travel." Similarly, MCI was founded
by a group of people who rallied others around a battle cry to
provide low cost phone service in the Midwest, a need that at the
time AT&T had ignored.
A battle cry rallies.
When people believe in it, connect with it, embrace it, devote to it,
align it to their own battle cry, they motivate themselves to drive
it forward. The motivation is intrinsic. When it's missing
internally, people look externally for something to make them show
up. That's where money and sometimes even mandates come in to play.
But extrinsic motivation will always fail to sustain.
The battle cry at
G.M.'s Orion plant
The leaders at G.M.
created a ground-breaking battle cry: let's build the fuel-efficient
car that people want, let's keep the price low to compete with
Mexico, let's keep jobs in the U.S., let's be profitable, let's beat
Toyota at this game, and let's be the first automaker to do it in the
U.S. (Ford, Chrysler, Fiat, Honda, and Toyota all manufacture their
subcompact cars outside of the U.S.)
The autoworkers rallied
and embraced this battle cry.
Did they just
agree in order to save their jobs?
Arguably the workers
agreed to the pay cut because their own jobs were at stake. But that
reality never previously stopped them from employing a union-led
power play to negotiate for more money and more benefits. Similarly,
when the viability of the hemorrhaging Boston Globe newspaper was on
the line, the threat of losing their jobs did not change the tune of
the union workers, which refused to make any concessions to save the
paper, forcing management to threaten the workers with closing the
paper altogether. No battle cry. No moxie.
The situation at G.M.'s
Orion plant is different. The people rallied around the battle cry
and have partnered with their leaders to accomplish something bigger
together, knowing that everyone will win in the end. That's moxie.
Henry Ford's wage
In 1914, Henry Ford
flabbergasted the business world when he doubled the pay of his
workers from $2.50/day to $5.00/day - that's $0.625/hour. In today's
inflation-adjusted dollars, that's equivalent to $109.22/day or
$13.65/hour. Ford dubbed it "wage motive" and it worked
magic. Instead of constant employee turnover, Ford attracted the best
engineers and mechanics to Detroit, thereby raising productivity and
lowering training costs.
entitlement from wage motive
In the short-term, Ford's
wage motive proved profitable, but over the years, wage motive
generated entitlement. When people are motivated with money, they
require more and more of it to stay motivated. The result? Higher and
higher wages. Wages have crept so high over the past 96 years that today's
$57/hour would equate in 1914 dollars to $2.61/hour (or $20.88/day).
That's almost over 4x Ford's double-the-rate move in 1914!
Ford forgot to
share the battle cry
Ford definitely had a
battle cry - "to build a car for the great multitude" - but
he didn't use it to rally people. Instead he used money to rally
them. He didn't get that people want to be part of something bigger.
He didn't give them credit for wanting to contribute and succeed. He
was convinced that money would motivate them. And it did, but only
Ford could have used a
lesson in moxie from the folks at the assembly plant in Orion
What is your
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