Asleep At The Wheel: Ford Motor Company’s Exclusion of the Older Worker

Power Point to accompany Opportunities and Challenges of Workplace Diversity by Kathryn A. Cañas and Harris Sondak

Prepared by Levi Baker, Kathryn A. Cañas, and Harris Sondak

“I will build a motorcar for the great multitude.”

-Henry Ford

Case Overview

• Ford Chief Executive Officer, Jacques Nasser• A History of Diversity at Ford• Nasser’s Diversity Crusade• Nasser’s Performance Management Process (PMP)• Older Workers Sue Ford for Discrimination• The Age Discrimination in Employment Act• Ford Settles Lawsuits and Moves On• Case Conclusions• Discussion Questions

Jacques Nasser

“He is a very polarizing figure . . . People have strong emotions about him one way or the other. He’s a compelling guy.”

- David E. Cole

Director of Automotive Studies University of Michigan

Jacques Nasser

• Accepted position as financial analyst at age 20 with Ford Australia.

• Worked in Ford Thailand, Venezuela, Argentina, and the Philippines.

• Held for 3 days as a political prisoner in 1985 at Argentina facilities.

• Returned to Ford Australia in 1990; increased productivity by 40%.

• Hired as Detroit’s head of operations in 1996; cuts costs by 3 billion.

• Declared Automobile Industries Man of the Year, 1999 and is named CEO.

Professional Achievements

A History of Diversity at Ford

• In 1913 Ford pays the then-high wage of 5 dollars a day attracting thousands of immigrants and African Americans; Ford credited with helping to create the black middle class. • By 1916, Ford employed people who represented 62 nationalities and more than 900 people with disabilities. • In 1919, Ford hired many veterans with disabilities returning from World War I, thus “making the automaker one of the first companies to hire people with disabilities and to adapt work environments to their specific needs.”

Nasser’s Diversity Campaign

“Greater inclusion of minorities is a priority for two reasons.

It’s the right thing to do. It’s also good business.” -Jacques Nasser

• 1999. Ford makes 30% of its new hires minorities and raises minority managers to 15%.

• 2000. Fortune magazine rates Ford the country’s 30th best company for minorities—no other automaker makes the top 50.

• 2001. Minorities and women constitute 47% of Ford’s total workforce; African Americans account for 19% and Latinos 3%.

Nasser’s Performance Management Process (PMP)

• Modeled after GE and Microsoft

• Used to rank Ford’s 18,000 managers

• Stated that managers’ bonuses hinged on diversity goals

Nasser’s Performance Management Process (PMP)

A

B

C

% Definition Actions

10Top performers

Potential for advancement

80Split into B1 and B2. B2 employees seen as less productive

B1 eligible for pay increases and

bonus. B2 received fewer benefits

10 Low performers

If no improvement after two years,

employee could be demoted or fired

Older Workers Sue

• The plaintiffs consisted entirely of white males.• The plaintiffs claimed “reverse discrimination” based on

race and sex but later dropped this claim to focus on age.

• The plaintiffs consisted of employees of both sexes and multiple ethnicities.

• The suit was given national recognition when it was supported by the AARP.

• The plaintiffs claimed that management was attempting to eliminate older salaried workers.

Two high-profile age discrimination lawsuits were brought againstFord by older workers as a result of Nasser’s PMP initiative.

Streeter vs. Ford Motor Company

Siegel vs. Ford Motor Company

Older Workers Sue

“We are in the middle of transforming one of the biggest companies in the world. You aren’t going to do that by pleasing everybody, by having some kind of consensus. We know we are going to upset some people. Maybe they shouldn’t be a part of Ford Motor Co.”

– David Murphy, Human Resources Vice-President

Key quotes by Ford top executives increased the perception that Ford was discriminating against older workers:

Older Workers Sue

“We are trapped in a mono-cultural environment that is dominated by old white males. We need to change. We need more employees who are more reflective of our consumer base.”

– Richard Parry-Jones, Product Development and Quality Vice-President

Key quotes by Ford top executives increased the perception that Ford was discriminating against older workers:

The Age Discrimination in Employment Act

It shall be unlawful for an employer:

1. to fail to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s age;

2. to limit, segregate, or classify its employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age; or

3. to reduce the wage rate of any employee in order to comply with this Act.

US Department of Labor

The main argument in the lawsuits against Ford was that they violated the Age Discrimination in Employment Act:

Ford Settles and Moves On

• Pays $10.5 million to settle the two suits

• Drops the PMP moniker

• Ranks employees as “top achievers,” “achievers,” and “improvement needed” instead of 10/80/10

Ford Settles and Moves On

• The Gay & Lesbian Alliance Against Defamation awarded Ford the “Fairness” award.

• DiversityInc’s June/July 2004 issue ranked Ford the number three company in the U.S. for diversity.

Recent Accomplishments

Conclusions

• Ford maintains that diversity is a “distinct advantage” and that diversity is one of their “top corporate priorities.”

• With such serious claims of diversity comes the responsibility of valuing the knowledge and experience of the older worker.

• The Ford case provides an example of top management attempting to promote corporate diversity but failing in the process by discriminating against older workers.

Discussion Questions

1. What mistakes did Jacques Nasser make in developing his plan to diversify Ford’s workforce?

2. How can Ford restore its good reputation for promoting diversity?

3. What were the problems with Ford’s PMP evaluation system?

4. What changes should be made in creating a new evaluation system?

Discussion Questions

5. How did Ford appear to violate the ADEA?

6. What should management do when promoting one dimension of diversity seems to require diminishing another?

7. How should businesses adapt to the aging of the US workforce?

8. How much does it matter that top management be as diverse as the workforce?