Of Job Security, Personal Dignity, and Efficiency Wages: ASCSA Trustee Fred Crawford and his Corporate PhilosophyPosted: March 2, 2015
Recently on the financial page of The New Yorker (February 9, 2015) staff writer James Surowiecki published “A Fair Day’s Wage,” an article about the decision by Aetna, one of the largest U.S. companies, to increase its lowest wage from twelve to sixteen dollars an hour and offer an improved package of medical coverage. In an era plagued by high unemployment and few raises for the majority of the nation’s workforce, Mark Bertolini, the idiosyncratic C.E.O. of Aetna, made the bold decision to increase the lowest salaries at his company by 33%. “It is not fair for employees of a Fortune 50 company to be struggling to make ends meet” said Bertolini. In addition to a near-to-death personal experience, Bertolini claims that reading Thomas Piketty’s influential Capital in the Twenty-First Century (which he also gave to all of his top-executives) made him realize how income inequality had increased significantly since 2000. Surowiecki, moreover, reminds readers that the benefits of US economic growth in the post-war era prior to 2000 had generally been shared broadly, and that “US companies were responsible not only to their shareholders but also to their workers.” Recent studies have, in fact, shown that companies that invest in workers’ training, reward them with “efficiency wages,” and care about their mental well-being also end up flourishing through the efforts of dedicated employees. “It’s hard for people to be fully engaged with customers when they’re worrying about how to put food on the table,” Bertolini told Surowiecki. (For a more recent interview with Bertolini in The New York Times, see David Gelles, “At Aetna, a C.E.O.’s Management by Mantra,” Feb. 27, 2015).
For some time now, I have been collecting information about Frederick Crawford, intending to dedicate a post to this charismatic businessman, a man who also served as President of the Board of Trustees of the American School of Classical Studies at Athens (ASCSA) during his retirement. While my initial intention was to write an essay about the triumvirate of trustees at the helm of the American School in the 1960s (Ward Canaday, Fred Crawford, and John McCloy), in the course of my research I realized that the personal achievements of each of these men deserved a separate story.
Ward Canaday, the Toledo-based chairman and president of Willys-Overland Motors, is the best known of three because of his dedication to the Agora Excavations (it is safe to say that without his determination the reconstruction of the Stoa of Attalos would not have taken place). His daughter, Doreen Canaday Spitzer, followed in her father’s footsteps in dedicating herself as well as part of the Canaday fortune to the welfare of two major educational institutions: Bryn Mawr College and the ASCSA. It was Ward Canaday who persuaded Fred Crawford, the retired C.E.O of TRW (Thompson Products which merged with Ramo Wooldridge in the 1950s), to join the board of trustees of the ASCSA in 1957, “and Fred delighted in this connection from that time on” (ASCSA Newsletter 35, Spring 1995, p. 15). Crawford became President of the Trustees in 1963, Chairman in 1971, and Chairman Emeritus in 1975.
The third man in the triumvirate was John Jay McCloy, esteemed lawyer and diplomat, and long-time secretary/treasurer of the board. It was because of McCloy’s strong connection with the Ford Foundation that the latter was persuaded to make its first major contribution to an archaeological project. In Ancient Marbles to American Shores Steve Dyson described a million dollar gift from the Ford Foundation to the Agora Excavations as “the largest single grant in American archaeology” (p. 259). However, neither McCloy’s connection with the Ford Foundation nor his contribution to this major grant was remembered in the brief obituary that appeared in the ASCSA Newsletter soon after his death (Spring 1989 p. 15). McCloy served as U.S. High Commissioner in postwar Germany and as an adviser to presidents from Franklin D. Roosevelt to Ronald Reagan, and his connections with the Ford Foundation and the CIA occupy more than one-third of Volker R. Berghahn’s America and the Intellectual Cold Wars in Europe (2001). This fascinating figure certainly deserves a separate essay in this blog.
How many students and other members of the ASCSA, while enjoying their afternoon tea and evening ouzo at Loring Hall, have wondered who that Crawford fellow was whose commemorative plaque decorates the fireplace in the “saloni”? As school archivist for more than 20 years, I have more than once questioned the lasting value of such memorials, but some explanation is provided by Paul Ricoeur who defines them as part of the larger process of “reversible forgetting.” With these plaques and other commemorative devices, we battle our fear of forgetting everything with the idea of the unforgettable. “We welcome as a small happiness the return of a sliver of the past, wrestled away, as we say, from oblivion” (Memory, History, Forgetting, trans. by K. Blamey and D. Pellauer, Chicago 2006, p. 417). I like this idea because it is the thrill of the discovery and the “small happiness” that comes with it that has been the driving force behind From the Archivist’s Notebook.
While Fred Crawford’s work as a trustee of the American School garnered just a few remarks about his thoughtful leadership in the second volume of the School’s official history, his life and career warranted separate chapters in at least two books on the history of U.S. technology and business. The first is a monograph by historian Davis Dyer entitled TWR: Pioneering Technology and Innovation since 1900 (Harvard Business Review Press, 1998); the second, Modern Manors: Welfare Capitalism Since the New Deal, by Sanford M. Jacoby (Princeton University Press, 1997). Building on three case studies (Eastman Kodak, Sears, and TRW), Jacoby reminds us of an almost forgotten notion today–welfare capitalism.
Frederick Coolidge Crawford (1891-1994) grew up in Massachusetts and studied engineering at Harvard University before he was hired in 1916 as a factory worker (an assistant in the scrap department) in Steel Projects (later re-named Thompson products, after its president, Charlie Thompson). Starting at the company’s entry level was a valuable experience for Crawford. He mingled with workers of different nationalities and religions, and learned the value of money. His first salary was $900 per year, most likely a low sum for a young Harvard graduate. But his boss warned him: “That’s all you’re worth to the company! You would have to have $20,000 invested in the bank to earn $900. So don’t discredit yourself; you’re worth $20,000 –not to us, but to yourself” (D. Dyer, “A Voice of Experience: An Interview with TRW’s Frederick C. Crawford,” Harvard Business Review, November 1991).
From a scrap boy, Fred worked his way up in Thompson Products, from sales engineer (1919), to plant manager (1922), director (1925), vice president and general manager (1925), and finally, president (in 1933, after Thompson’s death). Thompson Products began life as a company making parts for the automobile industry, mostly valves, and by the 1930’s had expanded into the aviation industry. Charlie Thompson clearly understood the benefits of good publicity for a business. Immediately after Charles Lindbergh’s transatlantic flight in 1927, Thompson invested heavily in advertisements that reminded people that the “Spirit of St. Louis” had been powered by Thompson valves (Jacoby 1997, p. 146).
Crawford inherited a company not only with a reliable name but also with a strong ethos, the so-called “Thompson spirit.” At a time when national unions were becoming stronger and stronger in America, with state support, Thompson first and Crawford later mobilized other forces to create solidarity within their company. Thompson Products was one of the first U.S. companies to introduce group bonuses and seniority privileges (Jacoby 1997, pp. 145-157). Among my favorites, employees of any rank who reached twenty-five years’ service would be called to the office to receive a check for 25% of their annual salary—as I am approaching twenty-five years of service, I find this a prudent policy! Thompson Products also matched union wage increases and, as a result, the company had a very low percentage of job turnover. Aetna boss Bertolini sounded a similar note in his New Yorker interview. “If you pay people better, they are more likely to stay, which saves money.” (Unfortunately, in a country like Greece where real unemployment is now above 30%, many employees no longer have that option).
Crawford was proud of walking the shop-floor every day, which gave him the opportunity to “talk straight” with his workers, settle disputes on the spot, and be personable to them. Crawford was also a “spellbinding speaker” (Jacoby 1997, p. 178). His superb business instinct, as well as his determination to keep national unions out of Thompson Products, inspired Crawford to create one of the first corporate personnel departments. In addition to solving work-related issues, this department also made sure that Thompson Products offered social recreational opportunities to his employees. While Aetna is now offering free yoga and meditation classes to its staff (some 13,000 have participated so far), Thompson Products was organizing a variety of recreational activities through the company’s clubs (balls and picnics, bowling, golf, hiking, etc). And the similarities between Bertolini’s and Crawford’s approaches do not stop here. As Bertolini’s recent changes appear to have been heavily influenced by Thomas Piketty’s social and economic theory, Crawford’s likewise was influenced by the theories of psychologist and organizational theorist John Elton Mayo (1880-1949) who was a professor of industrial research at Harvard Business School from 1926. Crawford relied heavily on behavioral consultants who helped Thompson Products by conducting surveys and making suggestions on how to improve the work environment.
Fred Crawford’s treatment of employees was grounded on three fundamental principles. “I believe that employees have three major concerns, in this order. First, they care about job security. Their second concern isn’t money—this is where most companies fail. Their number two concern is a feeling that they are important, a feeling that this whole operation won’t run without them. And third, they want more money… We acted on this philosophy all through my time at TRW” said Fred Crawford at his 100th birthday in 1991 to Davis Dyer, who interviewed him for the Harvard Business Review. No wonder why TWR employees rejected enrollment in national unions and favored the company’s union instead.
Given this subject I was intrigued to hear the new Greek finance minister, Yannis Varoufakis, mention workers’ dignity in a recent speech with a very non-Crawford take on employee concerns, however. Varoufakis dismissed job security and money as the pillars upon which dignity can be built. “What [Greek] folks want is dignity, not money or jobs” (my translation). Journalist Antonis Papayannidis rightly characterized Varoufakis’s comment as improper. “Surely, many folks don’t want more money, as long as they have enough to live on! Surely, people don’t want to work if they have enough money to live on! And surely, people want dignity –as long they have money to live, and/or they can find jobs…” wrote Papayannidis (my translation). I could not agree more. (see http://www.protagon.gr/?i=protagon.el.politiki&id=39774)
From Fred Crawford to Mark Bertolini (and Yannis Varoufakis), times and language have changed, but not the concerns of people (whether employers or employees). It does not really matter what you call it: welfare capitalism, social market economy, or the Nordic model. For Crawford successful management “was getting above-average effort from people over the long run.” Job security, personal dignity, and efficiency wages were and will remain the ingredients for a successful employer/employee relationship, which our ASCSA performance reviews describe as performing “above and beyond normal expectations.”