Page 64 - Successful Onboarding

The State of the Art: Essentials of Strategic Onboarding • 53

At most United States companies during the 19th century, employees
were treated as contractors, paid simple wages, and hired and fired at will.
Orientation for a new hire was informal, with managers showing the new
employees around, explaining policies, giving them a sense of what to
expect in their job, and providing task instruction as required. For the most
part, labor was considered a simple factory cost, and it was usually viewed
as secondary to the cost of raw materials and equipment.
In response to strikes and other worker unrest, many companies at
the turn of the 20th century adopted the paternalistic practices of “welfare
capitalism.” These practices included providing medical care, pensions,
paid vacations, profit sharing, and employee representation. Manufac-
turers in rural areas often functioned as “company towns” with inexpen-
sive housing, schools, and even parks and churches. Managers found the
resulting gains in employee retention, morale, and efficiency well worth
the expense of these programs. With industries having expanded faster
than public infrastructure could keep up, and so many workers having left
supportive family structures to travel to factories, the practices also met
practical needs.
Welfare capitalism declined in the 1930s, partly because 1920s pros-
perity had gradually improved social infrastructure enough to make many
of its practices less necessary, but mostly because of the New Deal. The
Roosevelt administration saw the paternalistic practices of welfare capital-
ism as undermining the dignity of workers and preventing them from nego-
tiating freely. The administration suspected that many companies by the
1930s employed paternalistic practices to discourage workers from joining
unions; in fact, the administration called them “feudal and repugnant to
American principles.” Labor unions, unlike company-sponsored employee
representation plans, offered workers the promise of an independent voice
at the same level as management, providing far greater dignity. By protect-
ing unions and widening the scope of collective bargaining, New Deal leg-
islation sparked a rapid increase in pensions, health insurance, and paid
vacations. Unions bargained for pensions, insurance, and other benefits
that might be called paternalistic, but no way as much as company-owned
houses, churches, schools, playgrounds, and clinics.
In the tight labor markets of World War II, high income taxes for both
companies and individuals spurred many companies to expand benefit