Reading – Ford Management Principles

Many companies, both large and small, follow Henry Ford’s “business first, customer second” production model. It has been said that Ford was the first company to adopt such a philosophy, long before Henry Ford himself came into the picture. Ford’s assembly line policies followed principles of scientific management, which are similar to the ones espoused today by many leading industrial companies. The following paragraphs examine some of the Ford three principles of organization and management:

Efficiency: In order to maximize productivity, efficiency must be at the forefront of every management plan. Employees must be trained on how to do the work in a particular area so that work can be completed as efficiently as possible. Productivity must be promoted by improving processes and products, eliminating wastes, and reducing lines or shipping routes. Efficiency must be achieved by improving the education, development, technology, and tools available to employees so that work can be performed more quickly, using fewer resources and with greater accuracy and effectiveness.

Organization: The Ford Company followed a number of solid organizational principles. For example, all departments were organized in four general functions-marketing, building, service, and sales. Within each of these functions, departments were headed by their own functional group leaders. These leaders were then assisted by a variety of other groups, including general and supervisory staff.

Prior to World War II, however, the company’s management Principles were primarily oriented toward attaining the company’s goals. As a result, the company’s approach to business and its overall direction have changed somewhat from earlier periods. While achieving the company’s goals is still an important part of the company’s overall business strategy, profitability is usually the primary consideration.

In addition, while the Company’s basic goals have remained consistent throughout the organization, specific methods for accomplishing those goals vary across the Company. The Ford Motor Company has always focused on meeting its production goals and increasing customer loyalty. Other important Ford management principles have been related to the Company’s strategic planning, which involves establishing a long-term business plan, developing appropriate working capital needs, maintaining adequate inventory levels, and making strategic decisions about plant, manufacturing, and accounts receivable.

Key management principles include the following: customer orientation, innovation, and change. The Ford philosophy was born out of a desire to build a car that is enjoyable to drive. Employees, therefore, are encouraged to explore all manner of possible solutions to customer problems. Through innovation, the Company continues to gain a competitive advantage. Additionally, various management principles include financial planning, operational efficiency, and proper financing.

Financial planning provides information about the Company’s activities and provides an estimate of future cash requirements. It is essential for every enterprise, to project a current and future cash flow and manage that flow efficiently. Many management principles relate to the issue of profitability. Ford has long prided itself on the success of its Ford Motor Company and, accordingly, adheres to a set of financial policies and practices.

One of the most important components of Ford Motor Company’s management principles is to make sure that all employees are informed about Company policies and procedures, and take responsibility for their own work. As one of the founding fathers of the Ford Motor Company, Henry Ford took a great personal interest in his workers, and especially in those who worked in his plants. Ford made it a point to visit each of his plants on a weekly basis, giving direct instruction to his workers, and making sure that each of them received a raise or a bonus. Ford’s policies continue to this day to ensure that each employee is given a fair chance to develop himself and his skills to his greatest potential.