The most sought-after labor-relations adviser in the U.S. today is Joe Scanlon, 56, onetime prizefighter, open-hearth tender, steel company cost accountant, union local president and now a lecturer in industrial relations at Massachusetts Institute of Technology. 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. His selling device: the Scanlon Plan, designed to 1) cut the worker in on the adventure, the decisions and the profits of increased production, and 2) help management tap the ingenuity of employees as a means of improving production.
Scanlon's way is actually less a formal plan than an approach, with three constant ingredients. First, the union and management in the plant fix a productivity "norm," and the working force is promised a bonus out of the savings the workers can effect by producing at a lower cost per unit. Unlike many other incentive plans, the Scanlon Plan is noncompetitive, does not throw the plant wage structure out of balance, and unites the men on a common goal instead of pitting them against each other. The second ingredient is a system of production councils in which union and management attack production costs. But the most important ingredient of all is Joe Scanlon himself, who learned about production from the bottom up.
Company to Union. The son of Irish immigrants, Joe Scanlon finished a hitch in the Navy in the early '20s and went to work as a cost accountant in a small Ohio steel company, since absorbed by giant Republic Steel. Later he quit to tend an open hearth, became a volunteer union organizer when the C.I.O. Steelworkers' Organizing Committee was formed in 1936. Scanlon believed that workers could help improve production if they had an incentive to do so.
In 1938 there was an incentive. Scanlon was president of his Steelworkers' local when management told him that if the plant could not do better, it would be shut down. Scanlon took the company executives to the C.I.O. steel headquarters in Pittsburgh and there worked out a union-management productivity plan. It not only rescued the plant but put it on a profitable basis. For example, one suggestion by the union production committee cost $8,000 in new equipment but saved the plant $150,000 in one year. Impressed, Phil Murray's Steelworkers put Scanlon to work in the head office to doctor other sick companies.
The Prototype. In 1945 Scanlon for the first time took the bits and pieces of what he had tried out in dozens of companies and put them together at the Adamson Co. of East Palestine, Ohio, a small maker of welded steel tanks. Complained Owner Cecil Adamson: "I give the union everything it asks for. But still the shop isn't working well. Let's get together and work out something so that you'll get something and I'll get something." Joe went into the plant, checked the books, and determined a "normal" labor cost per unit. He then set up a system for a 50-50 split of the savings the workers made by producing at less than normal cost.