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Issue 14

The Cluj IT History (VII): Ford and Șincai

Marius Mornea
Software Engineer and Mintaka Research founder
OTHERS

I have chosen two historical figures, in an attempt to offer a solution to one of the current challenges with Cluj IT: the big gap between the high demand and low offering of human resources.

Starting with Henry Ford, the man responsible for the invention of the assembly line, but also a few revolutionary HR policies for their time. Like any business owner, he first tried to boost productivity by improving the manufacturing process. In a relatively new industry (Ford started his company in 1906, 17 years after Karl Benz patented his engine), through the invention of the mobile assembly line and the concept of mass production, Ford optimized the manufacturing time of one automobile from 12 and a half hour to just one hour and 33 minutes.

Even though these innovations resulted in an increased yearly production capacity from 18.000 to over one million in just ten years, they came with a huge penalty on employee job satisfaction leading to record turnover rates. The relationship with his employees was strained further by the increasing automation that decreased the demand for workers. The constant increase in turnover, raised the hiring and training costs, introduced delays and soon depleted the workforce market.

The solution was simple, in 1914, Ford doubled the wages from 2.5$ to 5$ a day, reduced the working day to 8 hours, from 9, and introduced the concept of profit-sharing, that allowed employees to buy their own car in 4 months of work. Meanwhile he radically changed the hiring policies, focusing on talent acquisition, which he had no trouble attracting with the newly increased salaries. In a short time he had the best mechanics working for him. Even though the international public opinion, ranging from unions to European aristocracy, were shocked by this new approach, coining the term "Fordism" to describe the mass production strategy fueled by consumerism and wages way above industry average, the strategy paid off, turnover decreased, productivity reached record highs, and the manufacturing costs reached such low levels that it turned the car into a commodity that rendered own employees into an important market segment. Soon Ford was responsible for 50% of the USA automobile production, 40% in UK and out of the initial 200 competitors, only 17 survived Fords aggressive HR strategy.

This success model, based on optimizing efficiency and increasing loyalty through a generous compensation package, was held responsible for the emergence of a new American social class and for turning the auto industry from niche to commodity. However, the long term effects was the mass bankruptcy off all that failed to adopt the model and an ever increasing wealth gap between social layers, proving that the infusion of capital in the workforce works very well in the short term, but has limited efficiency in the long term. This is something we"ve also noticed in our local IT environment.

Gheorghe Șincai has chosen a different approach. One of the main figures of the Transylvanian School (Scolii Ardelene), was confronted with the recognition of Romanian people rights in Transylvania in the last decades of the 18th century. He was responsible for the cultural national emancipation and the establishment of the Romanian education system in Transylvania. In 1791 the Romanian bourgeoisie from Transylvania tried to capitalize on the last decade, in which they gained access to education, both high (Rome and Vienna), but also the establishment of local schools, mainly due to politics (see Ioan Bob and Inocentiu Micu-Klein"s efforts of trading their religious affiliation to Rome for people"s rights) or rebellions (see Horea, Cloșca and Crișan), and to obtain equal political rights with the other three ethnicities of Transylvania through the Supplex Libellus Valachorum petition.

Quoting Wikipedia: " isolated through the denial of their petition, to weak economically and politically to initiate a rebellion, the Romanian bourgeoisie concentrated on a cultural national emancipation movement. Many schools are being established (over 300 by Gheorghe Șincai), calendars, manuals, science books, and books intended to spread information to the masses are being printed." Thus, Șincai has chosen emancipation through mass education. He took something only afforded by the higher classes and formalized it into a mass accessible commodity through the creation of fundamental textbooks as: The Book of ABCs (Abecedarul), Grammar (Gramatica), Arithmetic (Aritmetica) and The Catechism (Catehismul). This Enlightenment influenced move will have a crucial effect in the building of a critical mass of Romanian intellectuals required for the National awakening of Romania through the 1848 Wallachian Revolution and the road ahead towards the independence of the Romanian people of Transylvania.

I prefer this approach, due to its long term positive effects over a large part of the population and I can"t stop admiring a handful of people who succeeded, despite the harshest conditions, in establishing over 300 schools and educating an entire nation. Cluj IT has both the resources and infinitely better conditions to involve itself in a change of quality in the public education sector, which could solve its HR problem in the long run.

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