Employee Retention of Ford Motor Company : Ford Motor Company (NYSE: F) is an American multinational automaker based in Dearborn, Michigan, a suburb of Detroit. The automaker was founded by Henry Ford and incorporated on June 16, 1903. In addition to the Ford and Lincoln brands, Ford also owns a small stake in Mazda in Japan and Aston Martin in the UK. Ford's former UK subsidiaries Jaguar and Land Rover were sold to Tata Motors of India in March 2008. In 2010 Ford sold Volvo to Geely Automobile.[2] Ford discontinued the Mercury brand at the end of 2010.
Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines. Henry Ford's methods came to be known around the world as Fordism by 1914.
Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010.[3] At the end of 2010, Ford was the fifth largest automaker in Europe.[4] Ford is the eighth-ranked overall American-based company in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion.[5] In 2008, Ford produced 5.532 million automobiles[6] and employed about 213,000 employees at around 90 plants and facilities worldwide. During the automotive crisis, Ford's worldwide unit volume dropped to 4.817 million in 2009. In 2010, Ford earned a net profit of $6.6 billion and reduced its debt from $33.6 billion to $14.5 billion lowering interest payments by $1 billion following its 2009 net profit of $2.7 billion.[7][8] Starting in 2007, Ford received more initial quality survey awards from J. D. Power and Associates than any other automaker. Five of Ford's vehicles ranked at the top of their categories[9] and fourteen vehicles ranked in the top three.
Employee retention is a serious concern for the modern organization. In the past, employers had no need to focus on retention; workers competed for scarce employment resources. Now that the labor market is tight, employers are the competitors, and the competition is fierce. Key personnel are actively pursued by corporate headhunters, which has resulted in high employee turnover in some sectors. Savvy employers respond to the problem of employee retention by creating corporate cultures where employees are valued and empowered.
Employers are devising strategies to retain employees because of the high cost of losing them. Companies lose an average of $1 million for every 10 professional and managerial employees who leave (Fitz-Enz, 1997, p. 1). This estimate is based on an analysis of potential customer retention costs, marketing and sales spending to attract new customers, and employee-based costs. Customer retention costs must be factored in because customers who become irritated with the annoyance of dealing with inexperienced front-line personnel simply take their business elsewhere: "It takes a new sales person two to three years to reach the same level of sales as the worker's predecessor"
Ford was born the first of six children July 30, 1863 to prosperous farmers in Dearborn, Michigan. Not liking his farming life and his studies in school, Ford set off at the young age of sixteen to the nearby town of Detroit to work three years as a machinist’s apprentice. After his experience he went back to his home in Dearborn working only part time for Westinghouse Engine Company and spending his spare time working in a small machine shop that he put together on the family’s land.
Ford’s marriage to Clara Bryant in 1888 required him to get a better paying job. In 1891 he started as an engineer for Edison Illuminating Company and was promptly promoted to Chief Engineer. The job required Ford to be on call 24 hours a day. In his on-call time he began to experiment with internal combustion engines and created the Quadricycle, the first "horseless carriage", powered by gasoline and riding on four bicycle wheels. This invention led to the founding of Ford Motor Company.
Ford Motor Company provides employees with a flexible and extensive benefit package that includes generous vacation and comprehensive insurance. The insurance benefit alone includes health care, medical, dental, prescriptions, disability and life. Paid time off varies year to year, but can be up to 15 holidays a year and as much as 25 days vacation after 20 years with the company. Salaried employees are automatically enrolled in the employee retirement plan on date of hire, but options are personal and employees make their own investment choices. The company also has programs for vehicle purchases, tuition assistance and a dependent scholarship program, among others.
During the mid to late 1990s, Ford sold large numbers of vehicles, in a booming American economy with soaring stock market and low fuel prices. With the dawn of the new century, legacy healthcare costs, higher fuel prices, and a faltering economy led to falling market shares, declining sales, and sliding profit margins. Most of the corporate profits came from financing consumer automobile loans through Ford Motor Credit Company.[12]
By 2005, corporate bond rating agencies had downgraded the bonds of both Ford and GM to junk status,[13] citing high U.S. health care costs for an aging workforce, soaring gasoline prices, eroding market share, and dependence on declining SUV sales for revenues. Profit margins decreased on large vehicles due to increased "incentives" (in the form of rebates or low interest financing) to offset declining demand.[14]
In the face of demand for higher fuel efficiency and falling sales of minivans, Ford moved to introduce a range of new vehicles, including "Crossover SUVs" built on unibody car platforms, rather than more body-on-frame chassis. In developing the hybrid electric powertrain technologies for the Ford Escape Hybrid SUV, Ford licensed similar Toyota hybrid technologies[15] to avoid patent infringements.[16] Ford announced that it will team up with electricity supply company Southern California Edison (SCE) to examine the future of plug-in hybrids in terms of how home and vehicle energy systems will work with the electrical grid. Under the multi-million-dollar, multi-year project, Ford will convert a demonstration fleet of Ford Escape Hybrids into plug-in hybrids, and SCE will evaluate how the vehicles might interact with the home and the utility's electrical grid. Some of the vehicles will be evaluated "in typical customer settings," according to Ford.[17][18]
In December 2006, the company raised its borrowing capacity to about $25 billion, placing substantially all corporate assets as collateral to secure the line of credit.[19] Chairman Bill Ford has stated that "bankruptcy is not an option".[20] In order to control its skyrocketing labor costs (the most expensive in the world), the company and the United Auto Workers, representing approximately 46,000 hourly workers in North America, agreed to a historic contract settlement in November 2007 giving the company a substantial break in terms of its ongoing retiree health care costs and other economic issues. The agreement includes the establishment of a company-funded, independently run Voluntary Employee Beneficiary Association (VEBA) trust to shift the burden of retiree health care from the company's books, thereby improving its balance sheet. This arrangement took effect on January 1, 2010. As a sign of its currently strong cash position, Ford contributed its entire current liability (estimated at approximately US$5.5 Billion as of December 31, 2009) to the VEBA in cash, and also pre-paid US$500 Million of its future liabilities to the fund. The agreement also gives hourly workers the job security they were seeking by having the company commit to substantial investments in most of its factories.
The automaker reported the largest annual loss in company history in 2006 of $12.7 billion,[21] and estimated that it would not return to profitability until 2009.[22] However, Ford surprised Wall Street in the second quarter of 2007 by posting a $750 million profit. Despite the gains, the company finished the year with a $2.7 billion loss, largely attributed to finance restructuring at Volvo.[23]
On June 2, 2008, Ford sold its Jaguar and Land Rover operations to Tata Motors for $2.3 billion.[24][25]
In January 2008, Ford launched a website listing the ten Built Ford Tough rules as well as a series of webisodes that parodied the TV show COPS.
During November 2008, Ford, together with Chrysler and General Motors, sought financial aid at Congressional hearings in Washington D.C. in the face of worsening conditions caused by the automotive industry crisis. The three companies presented action plans for the sustainability of the industry.[26] The Detroit based automakers were unsuccessful at obtaining assistance through Congressional legislation. GM and Chrysler later received assistance through the Executive Branch from the T.A.R.P. funding provisions.[27] On December 19, the cost of credit default swaps to insure the debt of Ford was 68 percent the sum insured for five years in addition to annual payments of 5 percent. That means it costs $6.8 million paid upfront to insure $10 million in debt, in addition to payments of $500,000 per year.[28] In January 2009, Ford announced a $14.6 billion loss in the preceding year, making 2008 its worst year in history. Still, the company claimed to have sufficient liquidity to fund its business plans and thus, did not ask for government aid. Through April 2009, Ford's strategy of debt for equity exchanges, erased $9.9 B in liabilities (28% of its total), in order to leverage its cash position.[29] These actions yielded Ford a $2.7 billion profit in fiscal year 2009, the company's first full-year profit in four years.
Ford introduced methods for large-scale manufacturing of cars and large-scale management of an industrial workforce using elaborately engineered manufacturing sequences typified by moving assembly lines. Henry Ford's methods came to be known around the world as Fordism by 1914.
Ford is the second largest automaker in the U.S. and the fifth-largest in the world based on annual vehicle sales in 2010.[3] At the end of 2010, Ford was the fifth largest automaker in Europe.[4] Ford is the eighth-ranked overall American-based company in the 2010 Fortune 500 list, based on global revenues in 2009 of $118.3 billion.[5] In 2008, Ford produced 5.532 million automobiles[6] and employed about 213,000 employees at around 90 plants and facilities worldwide. During the automotive crisis, Ford's worldwide unit volume dropped to 4.817 million in 2009. In 2010, Ford earned a net profit of $6.6 billion and reduced its debt from $33.6 billion to $14.5 billion lowering interest payments by $1 billion following its 2009 net profit of $2.7 billion.[7][8] Starting in 2007, Ford received more initial quality survey awards from J. D. Power and Associates than any other automaker. Five of Ford's vehicles ranked at the top of their categories[9] and fourteen vehicles ranked in the top three.
Employee retention is a serious concern for the modern organization. In the past, employers had no need to focus on retention; workers competed for scarce employment resources. Now that the labor market is tight, employers are the competitors, and the competition is fierce. Key personnel are actively pursued by corporate headhunters, which has resulted in high employee turnover in some sectors. Savvy employers respond to the problem of employee retention by creating corporate cultures where employees are valued and empowered.
Employers are devising strategies to retain employees because of the high cost of losing them. Companies lose an average of $1 million for every 10 professional and managerial employees who leave (Fitz-Enz, 1997, p. 1). This estimate is based on an analysis of potential customer retention costs, marketing and sales spending to attract new customers, and employee-based costs. Customer retention costs must be factored in because customers who become irritated with the annoyance of dealing with inexperienced front-line personnel simply take their business elsewhere: "It takes a new sales person two to three years to reach the same level of sales as the worker's predecessor"
Ford was born the first of six children July 30, 1863 to prosperous farmers in Dearborn, Michigan. Not liking his farming life and his studies in school, Ford set off at the young age of sixteen to the nearby town of Detroit to work three years as a machinist’s apprentice. After his experience he went back to his home in Dearborn working only part time for Westinghouse Engine Company and spending his spare time working in a small machine shop that he put together on the family’s land.
Ford’s marriage to Clara Bryant in 1888 required him to get a better paying job. In 1891 he started as an engineer for Edison Illuminating Company and was promptly promoted to Chief Engineer. The job required Ford to be on call 24 hours a day. In his on-call time he began to experiment with internal combustion engines and created the Quadricycle, the first "horseless carriage", powered by gasoline and riding on four bicycle wheels. This invention led to the founding of Ford Motor Company.
Ford Motor Company provides employees with a flexible and extensive benefit package that includes generous vacation and comprehensive insurance. The insurance benefit alone includes health care, medical, dental, prescriptions, disability and life. Paid time off varies year to year, but can be up to 15 holidays a year and as much as 25 days vacation after 20 years with the company. Salaried employees are automatically enrolled in the employee retirement plan on date of hire, but options are personal and employees make their own investment choices. The company also has programs for vehicle purchases, tuition assistance and a dependent scholarship program, among others.
During the mid to late 1990s, Ford sold large numbers of vehicles, in a booming American economy with soaring stock market and low fuel prices. With the dawn of the new century, legacy healthcare costs, higher fuel prices, and a faltering economy led to falling market shares, declining sales, and sliding profit margins. Most of the corporate profits came from financing consumer automobile loans through Ford Motor Credit Company.[12]
By 2005, corporate bond rating agencies had downgraded the bonds of both Ford and GM to junk status,[13] citing high U.S. health care costs for an aging workforce, soaring gasoline prices, eroding market share, and dependence on declining SUV sales for revenues. Profit margins decreased on large vehicles due to increased "incentives" (in the form of rebates or low interest financing) to offset declining demand.[14]
In the face of demand for higher fuel efficiency and falling sales of minivans, Ford moved to introduce a range of new vehicles, including "Crossover SUVs" built on unibody car platforms, rather than more body-on-frame chassis. In developing the hybrid electric powertrain technologies for the Ford Escape Hybrid SUV, Ford licensed similar Toyota hybrid technologies[15] to avoid patent infringements.[16] Ford announced that it will team up with electricity supply company Southern California Edison (SCE) to examine the future of plug-in hybrids in terms of how home and vehicle energy systems will work with the electrical grid. Under the multi-million-dollar, multi-year project, Ford will convert a demonstration fleet of Ford Escape Hybrids into plug-in hybrids, and SCE will evaluate how the vehicles might interact with the home and the utility's electrical grid. Some of the vehicles will be evaluated "in typical customer settings," according to Ford.[17][18]
In December 2006, the company raised its borrowing capacity to about $25 billion, placing substantially all corporate assets as collateral to secure the line of credit.[19] Chairman Bill Ford has stated that "bankruptcy is not an option".[20] In order to control its skyrocketing labor costs (the most expensive in the world), the company and the United Auto Workers, representing approximately 46,000 hourly workers in North America, agreed to a historic contract settlement in November 2007 giving the company a substantial break in terms of its ongoing retiree health care costs and other economic issues. The agreement includes the establishment of a company-funded, independently run Voluntary Employee Beneficiary Association (VEBA) trust to shift the burden of retiree health care from the company's books, thereby improving its balance sheet. This arrangement took effect on January 1, 2010. As a sign of its currently strong cash position, Ford contributed its entire current liability (estimated at approximately US$5.5 Billion as of December 31, 2009) to the VEBA in cash, and also pre-paid US$500 Million of its future liabilities to the fund. The agreement also gives hourly workers the job security they were seeking by having the company commit to substantial investments in most of its factories.
The automaker reported the largest annual loss in company history in 2006 of $12.7 billion,[21] and estimated that it would not return to profitability until 2009.[22] However, Ford surprised Wall Street in the second quarter of 2007 by posting a $750 million profit. Despite the gains, the company finished the year with a $2.7 billion loss, largely attributed to finance restructuring at Volvo.[23]
On June 2, 2008, Ford sold its Jaguar and Land Rover operations to Tata Motors for $2.3 billion.[24][25]
In January 2008, Ford launched a website listing the ten Built Ford Tough rules as well as a series of webisodes that parodied the TV show COPS.
During November 2008, Ford, together with Chrysler and General Motors, sought financial aid at Congressional hearings in Washington D.C. in the face of worsening conditions caused by the automotive industry crisis. The three companies presented action plans for the sustainability of the industry.[26] The Detroit based automakers were unsuccessful at obtaining assistance through Congressional legislation. GM and Chrysler later received assistance through the Executive Branch from the T.A.R.P. funding provisions.[27] On December 19, the cost of credit default swaps to insure the debt of Ford was 68 percent the sum insured for five years in addition to annual payments of 5 percent. That means it costs $6.8 million paid upfront to insure $10 million in debt, in addition to payments of $500,000 per year.[28] In January 2009, Ford announced a $14.6 billion loss in the preceding year, making 2008 its worst year in history. Still, the company claimed to have sufficient liquidity to fund its business plans and thus, did not ask for government aid. Through April 2009, Ford's strategy of debt for equity exchanges, erased $9.9 B in liabilities (28% of its total), in order to leverage its cash position.[29] These actions yielded Ford a $2.7 billion profit in fiscal year 2009, the company's first full-year profit in four years.
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