Fordism

“Fordism Is Dead”

BBLS 3 Group 2 Team 2

Definitions:

Fordism encompasses systems of mass production and consumption characteristics of highly developed economies in the 1940’s вЂ" 1960’s. At the time the emphasis turned towards specialisation, standardisation and control. Mass production rested on presumption that activities should be simplified and controlled from above.

Post Fordism was seen as a direct confrontation with principles of fordism. It involved the introduction of an increasingly skilled, highly motivated and extremely flexible workforce. The main aim was to engender flexibility and innovation through the decentralization of power.

Neo Fordism was originally subsumed under the more general concept of post fordism. It involves modification of fordist practices rather than direct confrontation. Changes with Neo fordism includes centralizing research and management functions in advanced industrialized nations, transference of production to lower cost countries, and use of flexible patterns of production and labour organizations in order to reduce costs.

Effects of a Changing Economy:

1. Globalisation

Need to be flexible with ability to reconfigure resources in order to take full advantage of potential benefits of globalization. There may be advantages to coordinating activities on a worldwide scale but shouldn’t ignore opportunities at a local level вЂ" aspects of standardization and flexibility need to be integrated. Increased globalization means increased complexity for a firm and thus the bureaucratic firms associated with Fordism need to be adapted to deal with complexity.

2. New Technologies

New technologies have facilitated greater interdependence between organizations. Options created by the internet and ICT have led to a whole new area of choice as to organization structures. Technology has enabled greater flexibility in production and also aided the development of mass production. Therefore technology has facilitated the expansion of Fordism practices in relation to production but also allowed firms move away from Fordism and the original organization structures.

3. Knowledge Based Environment

Value is increasingly being created through how information and knowledge flows & hence organizing to maximize efficiency of production is less relevant. Given that Fordism was based on premise of mass production combined with lower costs we can clearly see how the importance of Fordism is waning. Growth of low cost production economies has resulted in twin needs for organizations: to motivate individuals to contribute to organizational knowledge generation and to devise organizational arrangements to support organizational learning processes. The bureaucratic & rigid structure used in fordism period doesn’t actively encourage such needs & must be adapted.

4. Hyper-competition

Markets are being redefined as consumers develop new needs and wants. Industry boundaries are eroded and there is increased pressure on firms in the form of increased competition and demands from consumers. Organisations must be able to adapt and reconfigure spontaneously if they wish to survive.

5. Social Awareness

Organisations need to consider numerous categories including employees, customers, society and competitors. They can no longer simply focus on cost and neglect other issues, which was the case during the height of Fordism. Many companies have moved to lower cost countries as laws regarding employee relations are weak. Question remains, will these countries continue to allow organizations ignore their social obligations or will all firms have to give up their domineering fordist practices in the near future?

The Ford Company:

Old Culture:

Dominant fordist strategies were predicated upon product market stability and maximization of scale of economies through a highly integrated division of labour based on dedicated machinery, deskilling of labour and direct managerial control with finely defined tasks and centralized planning of work. Fordist principles gave rise to inflexibility, problems when demand changed, low trust, adversial relations and alienated/reserved workers. Conflicts between departments resulted in deadlocks and the greatest cost was waste of time.

Changes:

Competitiveness, empowerment and humanity deemed to be new important focuses in the company hence the firm established PMI (Participative Management Initiative) to simplify control systems & challenge lack of trust in the organization. There was a fundamental change in the role of finance which previously had the majority of control in the company.

Results:

A cooperative employee relations environment was established to improve capacity for strategic change. There was a general recognition by employees, unions and management that interests were best served by having agreed upon common goals and mutual benefits.

Growing conviction that employees wanted more out of work than extrinsic rewards and that they could achieve job satisfaction by directing their ingenuity to improving their work and overall work environment.

Case Studies:

Tesco:

Similar problems to that of Ford with both management and unions critisised for adversarial behaviour. Overhaul of Employee Relations was required to remain competitive due to increased competition. The company hoped to transform relations through new consultative forums and new in-house dispute resolution procedures. New initiatives included a National Steering Group which had the responsibility for union/company relationship, with a National Issues Group formed to combat likely problems encountered