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Steve
06-10-2009, 08:18 PM
I am reading a book on the business management expert Peter Drucker and I want to pass on some of the highlights from the book.

Prior to WWI the average wage of a skilled man ran as low as fifteen cents an hour. The general manager of Ford Motor Company, 'James Couzens' complained to Henry Ford that they had a serious labor problem. Employee turnover was so great, they needed to hire 60,000 employees in order to retain 10,000.

James was able to convince Henry that what they needed to do was raise the daily wage of an employee to $5 a day. This was two to three times what the standard was in their industry. He told Henry that they were indeed going to see the company's wage expenses increase by a factor of 3 however it would have a direct impact on the % of employee churn.

When this plan went into effect, James was proven right. The labor turnover problem they had been experiencing, ceased to be a problem and ultimately Ford was able to charge less to make their cars while making a great profit per car.

Isn't that fascinating?