THE SCANLON STORY by ThEME

Joseph Scanlon was a steel mill accountant who changed the history of labor and management. In the 1930s, he was working at an Ohio steel mill on the brink of bankruptcy as labor and management were unable to come to an agreement about wages and benefits. A former professional boxer known for his persuasiveness, Scanlon convinced the company president to attend a Steelworkers Union committee meeting, then proposed that workers and management agree to produce higher-quality steel more efficiently and find mutually acceptable ways to measure success. The savings would go to higher wages.

To survive, Scanlon said, management and the union would need to cooperate, and they’d need to trust each other.

This deceptively simple pact saved the plant and the workers’ jobs. Scanlon became a local union president, then went on to become research director for the National Steelworkers of America.

A Massachusetts machine tool company copied Scanlon’s approach, as did others. MIT invited Scanlon to teach at its campus, where he developed the “Scanlon Plan.” He argued that conflict between management and labor often arose because of the lack of transparency in companies. But, Scanlon pointed out, if given the chance to participate alongside management in problem-solving, workers become more involved in working toward the good of the company. Scanlon concluded that money alone was not a great enough motivator on its own; workers wanted to believe in their company and take part in making it better.

His teachings caught on. In 1955 Time magazine wrote, “Wearing an open-neck sport shirt and studding his shop lingo with four-letter words, Joe Scanlon looks and sounds like anything but what he is: a fervent evangelist for the mutual interests of labor and management, who knows how to sell the idea to both sides.”

Although the workers of that era were doing repetitive tasks, sometimes on complex, dangerous machines, Scanlon’s ideas continue to reverberate in today’s era of knowledge and service workers.

Management and workers still discuss the challenge as Joe Scanlon posed it:

1. How can employees make a difference?

2. Is the environment set up to help them work with each other on testing their ideas?

3. How are they appropriately recognized and compensated for high-quality work?