9 Lessons from Henry Ford's $5 Day Decision

Posted By Airah Lynn Balingit on August 2023

9 Lessons from Henry Ford's $5 Day Decision

Henry Ford was one of the most influential entrepreneurs and innovators of the 20th century. He revolutionized the automobile industry with his mass production methods and affordable cars. But he also made a bold and controversial decision that changed the lives of his workers and the society at large: he doubled their wages to $5 a day in 1914.

Why did he do that? And what can we learn from his decision today? Here are 9 lessons that I think are worth considering:

1. Pay your workers well. Ford believed that paying his workers well would increase their productivity, loyalty, and morale. He also wanted to reduce the high turnover rate and the costs of hiring and training new workers. He was right: his workers became more efficient, loyal, and satisfied. They also became his customers, as they could now afford to buy his cars.

2. Share your profits. Ford did not just pay his workers well, he also shared his profits with them. He introduced a profit-sharing plan that gave bonuses to workers who met certain standards of efficiency and quality. He also gave them dividends from his company's stock. He believed that sharing his profits would motivate his workers to work harder and smarter, and to feel more invested in the company's success.

3. Innovate constantly. Ford did not rest on his laurels after introducing the $5 day. He continued to innovate and improve his products and processes. He introduced new models of cars, such as the Model T and the Model A, that were more reliable, comfortable, and stylish. He also improved his assembly line, using conveyor belts, standardized parts, and interchangeable tools. He reduced the time it took to produce a car from 12 hours to 90 minutes.

4. Listen to your customers. Ford was famous for saying that he would give his customers any color they wanted, as long as it was black. But he also listened to their feedback and preferences. He realized that his customers wanted more variety and customization in their cars. He responded by offering different colors, styles, and features in his later models. He also lowered his prices to make his cars more accessible and competitive.

5. Challenge the status quo. Ford's $5 day decision was not popular with everyone. Many of his competitors, suppliers, and shareholders criticized him for being too generous and reckless. They thought he was wasting money and undermining the market. But Ford did not care about their opinions. He had a vision and a mission that went beyond profits. He wanted to create a better society for his workers and customers. He challenged the status quo and proved them wrong.

6. Be socially responsible. Ford's $5 day decision was not just a business move, it was also a social one. He wanted to improve the living standards of his workers and their families. He wanted to reduce poverty, crime, and inequality. He wanted to create a middle class that could enjoy the benefits of industrialization and consumerism. He also supported various causes and charities, such as education, health care, and peace.

7. Be a leader, not a boss. Ford did not just pay his workers well, he also treated them well. He respected them as human beings, not as machines or numbers. He gave them opportunities for learning, growth, and advancement. He encouraged them to voice their ideas, suggestions, and complaints. He also involved them in decision-making and problem-solving. He was a leader who inspired them, not a boss who commanded them.

8. Learn from your mistakes. Ford was not perfect. He made some mistakes and failures along the way. He faced some controversies and scandals in his personal and professional life. He also had some flaws and weaknesses in his character and leadership style. But he did not let these setbacks stop him or define him. He learned from his mistakes and tried to correct them or avoid them in the future.

9. Leave a legacy. Ford's $5 day decision had a lasting impact on the world. It transformed the automobile industry and the American economy. It created a new culture of consumerism and mobility. It influenced the labor movement and the welfare state. It shaped the history and society of the 20th century. Ford left a legacy that is still relevant and inspiring today.