A Review of Rockefeller Jr.'s Executive Management Style
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Date Published: September 24, 2024
Date Modified: September 26, 2024 |
“My observation and experience teach me that misunderstanding is at the bottom of every labor trouble. An absolutely square, frank talk in which the points of view are uncovered—in which each grasps the thought process of the other—permits a mutual understanding. When both sides play fair, the differences soon solve themselves. …
"Sometimes the employer forgets that the employee is human and sometimes the employee forgets that his employer is human.”
"Sometimes the employer forgets that the employee is human and sometimes the employee forgets that his employer is human.”
John D. Rockefeller, Jr., 1916
Samuel Crowther captured the above quote of John D. Rockefeller, Jr. and also wrote the following about the chief executive's leadership style in System: The Magazine of Business, August 1916:
“A very few minutes’ conversation will banish the notion that Mr. Rockefeller is merely the son of his father.
“He is thoroughly a personality—a personality of extraordinary magnetism. I can easily see why the miners out in Colorado like him. For he is frank, keen, entirely human, and without a trace of what the English call “side”—insolence, arrogance or pretentiousness. Most of the troubles between capital and labor, between the man of money and the man of muscle, between the larger employer and his employees—express the relationship as you like, disappear when the man who pays and the man who earns realize that they are both human beings with interests and desires more or less the same.”
“He is thoroughly a personality—a personality of extraordinary magnetism. I can easily see why the miners out in Colorado like him. For he is frank, keen, entirely human, and without a trace of what the English call “side”—insolence, arrogance or pretentiousness. Most of the troubles between capital and labor, between the man of money and the man of muscle, between the larger employer and his employees—express the relationship as you like, disappear when the man who pays and the man who earns realize that they are both human beings with interests and desires more or less the same.”
In His Own Words, an Introduction to John D. Rockefeller Jr.’s Management Style
Why Labor Problems Were Increasing and the Solutions
- Obtain Firsthand Information Before Addressing Problems
- Implement a Square-Deal for Society, Shareholders and Employees
- Institute an “Open Door Policy” for Problem Resolution
- Any Plan Still Requires Square Dealings Between Employer and Employee
Why Labor Problems Were Increasing and the Solutions
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Mr. Rockefeller explained his reasoning behind his activities after the Ludlow incident that involved his holdings in the Colorado Fuel and Iron Company, He was one of the company's directors:
“In the days when employment was largely a personal matter, labor troubles did not exist, for then the proprietor and the worker were always in touch with each other. But the modern large organizations tend to draw a line between capital on the one side and labor on the other and to stimulate the theory that if capital gets more, labor gets less. “Hence there are those who hold that if labor’s wages are increased or its working conditions improved, capital suffers; and again, on the other hand, men hold that labor is the producer of all wealth and is entitled to the entire product. [See Footnote #1] “Some of the men in Colorado were firm in the belief that all which capital now has was originally stolen from labor. And they acted accordingly. “But it is one of the noteworthy facts of industrial history that the most successful enterprises have been those which were so well organized that waste was eliminated; then the laborers [employees] were not only paid high wages, but the public [society] enjoyed declining prices, and the owners [shareholders] realized large profits. [see Henry Ford pays $5.00 a day for an eight-hour-day]. |
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“Capital cannot exist without labor and labor cannot rise above a primitive state without capital. The two are necessary partners and, in being partners, each must have a fair share of the profits. It is equally unreasonable to imagine that capital will exist solely to support labor [what this editor defines as labor-first and -foremost] or to imagine that labor will exist only to support capital [what this editor defines as shareholder-first and -foremost].
“They must divide profits. What is a fair division? Probably no division can ever be absolutely just; and if one were just today, changed conditions might make it unjust tomorrow. But certainly, some satisfactory compromise can always be arrived at—unless selfishness and short-sightedness animate one or both of the parties [shouldn’t finding and maintaining this balance be considered one of the chief executive officer’s main priorities].
“The absence of personal contact between the owners and the wage earners prevents compromises from being reached on the subject of wages and it also puts on the shoulders of the owners the numerous injustices and discriminations of the petty bosses. The foremen and the other men in subordinate authority generally rise from the ranks and they often become swollen with their new power; they discharge men without reason, and they do many other acts which antagonize the laborer.
“As regards the industrial disturbances in Colorado, their many distressing features gave me the deepest concern. I frankly confess that I felt there was something fundamentally wrong in a condition of affairs which made possible the loss of human lives, engendered hatred and bitterness, and brought suffering and privation upon hundreds of human beings.
“I determined, therefore, that in so far as it lay within my power, I would seek some means of avoiding the possibility of similar conflicts arising elsewhere or in the same industry in the future.”
“They must divide profits. What is a fair division? Probably no division can ever be absolutely just; and if one were just today, changed conditions might make it unjust tomorrow. But certainly, some satisfactory compromise can always be arrived at—unless selfishness and short-sightedness animate one or both of the parties [shouldn’t finding and maintaining this balance be considered one of the chief executive officer’s main priorities].
“The absence of personal contact between the owners and the wage earners prevents compromises from being reached on the subject of wages and it also puts on the shoulders of the owners the numerous injustices and discriminations of the petty bosses. The foremen and the other men in subordinate authority generally rise from the ranks and they often become swollen with their new power; they discharge men without reason, and they do many other acts which antagonize the laborer.
“As regards the industrial disturbances in Colorado, their many distressing features gave me the deepest concern. I frankly confess that I felt there was something fundamentally wrong in a condition of affairs which made possible the loss of human lives, engendered hatred and bitterness, and brought suffering and privation upon hundreds of human beings.
“I determined, therefore, that in so far as it lay within my power, I would seek some means of avoiding the possibility of similar conflicts arising elsewhere or in the same industry in the future.”
- Obtain Firsthand Information Before Addressing Problems
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“Following that strike, a plan was formulated by which future misunderstandings might be prevented. The mere settlement of a temporary difference is nothing—the parties must get upon a permanent basis of relationship.
“I felt that it would help me to gain a better idea of the laboring man’s position and also help him to gain a better idea of the employer’s position if I went out to the mines. I spent several weeks among the men at the camps and in the mines. “I visited the men and their families; I went down into the mines; I went everywhere and tried to see everything. I came upon many men unexpectedly; to them I introduced myself; others were introduced to me. We talked over all our relations with the utmost frankness, and I gained a very fair knowledge of their point of view. I found them uniformly open-minded once they discovered that I really wanted their opinions; they were perfectly willing to come halfway to any reasonable proposal submitted to them. “For instance, I found that they imagined the Rockefellers had been drawing immense profits from their interests in Colorado; no end of people had told them so. I explained the exact situation to them. I showed them that, during the fourteen years in which we had been connected with the Colorado Fuel and Iron Company, it had never paid one cent in dividends upon the common stock. |
“At one of our meetings I gave a practical illustration of the finances of the company. I put a number of coins on a table. I swept off a portion which represented their wages—for the first claim upon the company is the payroll. Then I took away more coins to represent the salaries of the officers and then the remaining coins to represent the fees of the directors. There were no coins left for the stockholders. And then I asked: ‘Men, is it fair, in this corporation where we are all partners, that three of the partners should get all the earnings, be they large or small—and the fourth nothing?’
“After the illustration one of the men made a speech for higher wages. I asked him, ‘Is it square for you to want more wages when one of the partners gets nothing?’ He admitted that it did not look like a square deal; I heard no more about increasing the wages.
“The only trouble with those men was that they had not known the facts; once they were sure that they were not being cheated, they were reasonable. They recognized that if labor insisted upon getting all, capital must withdraw.
“The men saw that the owners were only after a square deal all around. The machinery for securing this square deal is contained in an industrial constitution and a trade agreement which were submitted to a referendum of all the employees and adopted by a vote of 2404 to 442.
“These instruments are comprehensive and a copy of each is in the hands of every employee.”
“After the illustration one of the men made a speech for higher wages. I asked him, ‘Is it square for you to want more wages when one of the partners gets nothing?’ He admitted that it did not look like a square deal; I heard no more about increasing the wages.
“The only trouble with those men was that they had not known the facts; once they were sure that they were not being cheated, they were reasonable. They recognized that if labor insisted upon getting all, capital must withdraw.
“The men saw that the owners were only after a square deal all around. The machinery for securing this square deal is contained in an industrial constitution and a trade agreement which were submitted to a referendum of all the employees and adopted by a vote of 2404 to 442.
“These instruments are comprehensive and a copy of each is in the hands of every employee.”
- Implement a Square-Deal for Society, Shareholders and Employees
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“The agreement, which extends to 1918, covers the rent of dwellings, the rates for light and water, the prices of powder and domestic coal, the fencing of employees’ homes, the removal of garbage, the providing of bath and club houses, the stipulation of an eight hour day for all employees working underground and in coke ovens; a nine hour day for outside labor, the semi-monthly payment of wages, and an agreement not to change hours or wages without thirty days’ notice and that there should be no increase in wages for any cause during the period of the agreement unless a general increase in wages should be made in a competitive district, in which case a proportional increase would be given.
“The basis of employer-employee relationships, the methods for adjusting differences and for keeping both employer and employee happy are contained in the industrial constitution. This is a real constitution which establishes a real democracy between the owners and the workers of the company. It is the best way we have been able to find to bring all parties on to common ground. “The constitution stipulates that there shall be a strict observance by both the management and the men of the federal and the state laws respecting mining and labor and that the scale of wages and the rules in regard to the working conditions shall be posted in a conspicuous place at or near every mine. No employee may be discharged without notice except for such offenses as are posted at each mine. For such offenses as are not posted, the offending employee must receive a warning in writing that a repetition of the offense will bring about his discharge. |
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“Among the fundamental rights guaranteed to the men is that there shall be no discrimination on account of membership or non-membership in any society, fraternity or union. They have the right to hold meetings on company property, and to make their purchases wherever they choose and to employ checkweighmen. These portions are what might be called the ‘Bill of Rights’ of the constitution.
“The wage earners at each camp elect representatives annually on the basis of one representative for each one hundred and fifty wage earners with a minimum representation of two delegates. These men are recognized by the company as the authorized representatives of their constituents and they can negotiate with the officers as to terms of employment, on working and living conditions, and the general adjustment of differences. A meeting of all of the representatives with the general officers of the company must be held at least once a year to consider questions of general importance.
“The camps of the company are divided into districts and each district, through its camp representatives, meets at least three times a year with the president of the company to go over all matters of mutual interest and concern. These district conferences appoint a number of committees on industrial relations of six members each, three members being appointed by the representatives and three by the president. The committee on industrial cooperation and conciliation considers all matters pertaining to the prevention and settlement of industrial disputes, terms and conditions of employment, maintenance of order and discipline, and the policy of the company. There are committees on safety and accidents, on sanitation, on health and housing and on recreation and education.
“In other words, the representatives of the company and the representatives of the men are formed into small committees covering small geographical areas, so that every local need or complaint may find a ready means for adjustment.”
“The wage earners at each camp elect representatives annually on the basis of one representative for each one hundred and fifty wage earners with a minimum representation of two delegates. These men are recognized by the company as the authorized representatives of their constituents and they can negotiate with the officers as to terms of employment, on working and living conditions, and the general adjustment of differences. A meeting of all of the representatives with the general officers of the company must be held at least once a year to consider questions of general importance.
“The camps of the company are divided into districts and each district, through its camp representatives, meets at least three times a year with the president of the company to go over all matters of mutual interest and concern. These district conferences appoint a number of committees on industrial relations of six members each, three members being appointed by the representatives and three by the president. The committee on industrial cooperation and conciliation considers all matters pertaining to the prevention and settlement of industrial disputes, terms and conditions of employment, maintenance of order and discipline, and the policy of the company. There are committees on safety and accidents, on sanitation, on health and housing and on recreation and education.
“In other words, the representatives of the company and the representatives of the men are formed into small committees covering small geographical areas, so that every local need or complaint may find a ready means for adjustment.”
- Institute an “Open Door Policy” for Problem Resolution
“In addition to and supplementing the representation portion of the plan, an officer known as the president’s industrial representative is added to give an easy means for any employee to appeal directly to the president of the company. This officer goes at once to any camp on the request of the representatives, but he also, without request, makes as many visits as possible. Every day he turns in to the president a report of that day’s work.
“Thus, no laborer has an excuse to harbor a grievance; they always have the opportunity to directly reach the president. David Griffith has acted as the president’s industrial representative with remarkable success. He has succeeded in settling almost every complaint because he has the confidence of all parties. The whole thought of the industrial plan is to make it impossible for any complaint—reasonable or unreasonable, to go unheard or fail to be disposed of promptly and fairly.
“Here are the numerous authorities to whom a complaint may be carried. Suppose a miner has a grievance. He may himself, or through one of the representatives, seek satisfaction from the foreman or miners’ superintendent. From them he may appeal to the president’s representative, and from him, successively, to the division superintendent, assistant manager, manager, general manager, and president.
“Thus, no laborer has an excuse to harbor a grievance; they always have the opportunity to directly reach the president. David Griffith has acted as the president’s industrial representative with remarkable success. He has succeeded in settling almost every complaint because he has the confidence of all parties. The whole thought of the industrial plan is to make it impossible for any complaint—reasonable or unreasonable, to go unheard or fail to be disposed of promptly and fairly.
“Here are the numerous authorities to whom a complaint may be carried. Suppose a miner has a grievance. He may himself, or through one of the representatives, seek satisfaction from the foreman or miners’ superintendent. From them he may appeal to the president’s representative, and from him, successively, to the division superintendent, assistant manager, manager, general manager, and president.
[Comment by this editor: This concept of a low-level employee raising an issue all the way to the corner office was one of the foundational concepts that ensured The Basic Beliefs were adhered to, implemented properly, and always open for discussion from a first-line manager up to the corner office and supported IBM's Corporate Constitution. The IBM corner office door was always swung wide up until it was gradually slammed shut by Louis V. Gerstner, Samuel J. Palmisano, and Virginia M. Rometty. ... An Open Door was only one of the ways the corner office ensured its policies were implemented properly.
Select image above to read about IBM's 20th Century Corporate Constitution founded on The Basic Beliefs].
Select image above to read about IBM's 20th Century Corporate Constitution founded on The Basic Beliefs].
- Any Plan Still Requires Square Dealings Between Employer and Employee
“The plan, in nine months of operation, has worked exceedingly well. The right-of-complaint has been freely exercised and the decisions, by whomsoever given, have been received as satisfactory. The representatives as elected by the workers are a splendid lot of men working legitimately for the best interests of their constituents and not at all inclined to frivolous complaints.
“The plan has been criticized as being dependent on both sides acting squarely. It is, but it also gives the best possible chance for all parties to act squarely and the least possible chance to act otherwise.
“Of course, if anyone decides to be unfair will any plan work?”
“The plan has been criticized as being dependent on both sides acting squarely. It is, but it also gives the best possible chance for all parties to act squarely and the least possible chance to act otherwise.
“Of course, if anyone decides to be unfair will any plan work?”
This Author’s Thoughts and Perceptions on John D. Rockefeller, Jr.
“We have in the country a new type of management, taking upon its shoulders the burden of industrial unrest, injustice and inefficiency; this school believes that it sees the road out, and that it is willing to give the best of itself in opening the road.”
“The employer of the new school [of management] disputes every point of the old creed.
“Wherever you find this new executive you find him enormously interested in human material."
New Ideals in Business, Ida M. Tarbell, 1916
Ida Tarbell wrote of the new breed of industrialist coming of age in the first quarter of the 20th Century. She wrote this of the new type with Rockefeller Jr. offered as a typical example as he was taking control of his father’s—Rockefeller Sr.’s, legacy. There is little doubt that there was no one more educated, informed and balanced in her perspective on capitalism and the industrialists of her day than this former muckraker. She, of anyone, could evaluate the two individuals—father and son, and distinguish that there were differences in their executive management styles and means of “growing a business.”
When John D. Rockefeller Jr. announced that he was going to visit Colorado at the height of the labor strikes, mayhem and tragedies that led up to the Ludlow “Massacre,” his friends sought to dissuade him by telling him, that if he went, he would be murdered.
B. C. Forbes asked and answered one of the questions that arose after Rockefeller’s visit to the Colorado mining towns:
When John D. Rockefeller Jr. announced that he was going to visit Colorado at the height of the labor strikes, mayhem and tragedies that led up to the Ludlow “Massacre,” his friends sought to dissuade him by telling him, that if he went, he would be murdered.
B. C. Forbes asked and answered one of the questions that arose after Rockefeller’s visit to the Colorado mining towns:
“What was it that enabled him to conquer the very roughest of the miners and the most infuriated of the miners’ wives? His money? … No, because the possession of so much money was one of his ‘worst crimes.’
“It was nothing but the young man’s unaffected, sympathetic, democratic personality that disarmed everyone wherever he went. When he slept in a miner’s hut, he needed no guards to watch over his safety. Had Mr. Rockefeller’s personality been obnoxious, upsetting, arrogant, [as his father’s] would he have had such an experience?"
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Probably one of the most telling insights into Mr. Rockefeller’s handling of the Ludlow tragedy is the evolution of Mrs. Mary (Mother) Jones’ opinion—who was present at the Ludlow “Massacre.”
She was perceived by the press as a “socialist” advocating for the miners’ movement and referred to as the local “Jeanne d’Arc of the Labor Movement.” In January 1915, she said the following after meeting with Rockefeller Jr. who was taking charge of his father’s empire and asked her to be with him when he investigated the conditions in the Colorado mines: |
“I think we sometimes misjudge people when we don’t know them. If we could be better acquainted with each other, we shouldn’t say such hard things. I talked straight to Mr. Rockefeller. … I believe Mr. Rockefeller wants to do what is right, and that is the first step toward doing it.”
On September 20, 1915, John D. Rockefeller, Jr. fulfilled his promise to Mother Jones and initiated a personal, on-site review of the labor conditions in Colorado at the Colorado Fuel and Iron Company. He took eight reporters that were with him the entire time. He did this although several miners through the support of the United Mine Workers Union threatened to have him arrested in regard to the Ludlow “Massacre.”
Mr. Rockefeller visited the scene of the Ludlow “battle,” and visited the homes of the miners at the Berwind and Tabasco mining camps. There he talked with the miners’ wives about the working and living conditions and listened to their suggestions for improving those living and working conditions at the sites. He asked the families about the homes they rented from the company, how much they paid in rent, and whether they thought their homes were worth the price being paid. He also visited the schools educating the miners’ children—some of which had already been improved with direct donations from the Rockefeller Foundation.
Mr. Rockefeller visited the scene of the Ludlow “battle,” and visited the homes of the miners at the Berwind and Tabasco mining camps. There he talked with the miners’ wives about the working and living conditions and listened to their suggestions for improving those living and working conditions at the sites. He asked the families about the homes they rented from the company, how much they paid in rent, and whether they thought their homes were worth the price being paid. He also visited the schools educating the miners’ children—some of which had already been improved with direct donations from the Rockefeller Foundation.
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A week later, on September 27, 1915, Mr. Rockefeller was still investigating, visiting and talking with the Colorado Fuel and Iron Company workers and their families. In a meeting on this day, he told the miners that he “thoroughly believed in unions” and “believed very strongly in collective bargaining." John D. Rockefeller, Jr. arrived home on October 12, 1915. He spent almost a month with the miners and their families.
He returned to the mines three years later in August of 1918 for two weeks and informed the press of the success of the project. Let’s close out this overview with a summary thought of Mother Jones. After all these interactions, these changes in the conditions surrounding the miners, and also very late in her life, she wired the following to Rockefeller Jr. after years of them both “working” the labor situation in Colorado: “Thank God we have some men in the world yet as good as you.”
Cheers,
- Peter E. |
Select image to read about John D. Rockefeller, Sr.
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Footnote #1: This story by Samuel Crowther was written in 1916 when socialism, communism and anarchy were being proposed as alternative governing models to America’s democracy and Germany’s fascism/militarism. World War I was at its peak and rationing and sacrifice were required on not just labor and shareholders but all four stakeholders in the business equation: customers, shareholders, employees and a democratic/capitalist supported society.