Scanlon, Joseph N. (Joseph Norbert), 1899-1956

Joseph N. Scanlon was born to Irish immigrants in Cleveland, Ohio in 1899. He served with the Navy in the early 1920s before being trained as an accountant. His experiences with industrial relations began when he worked as a cost accountant for a small Ohio steel company. Scanlon quit this position to tend an open hearth at the mill and in 1936 became a volunteer union organizer for the C.I.O. Steel Workers Organizing Committee (S.W.O.C.). By 1938 he was president of S.W.O.C. Local 169 in Ohio. While serving in this position, Scanlon managed to save the plant from closure by having plant management meet with the union at the union headquarters in Pittsburgh, Pa., to create a more efficient production plan based on workers' suggestions. Because of his success in saving this steel mill, United Steel Workers of America President Philip Murray hired Scanlon and in 1946 made him director of their department of research and engineering to aid other ailing companies. One year later he resigned his position in the USWA to become a lecturer at the Massachusetts Institute of Technology's Industrial Relations Department, a post he held until his death in 1956. During World War II Scanlon served on labor advisory committees for the War Production Board. In 1948 he was a member of Life's Round Table on the Pursuit of Happiness, and in the 1950s was a technical advisor to the Anglo-American Council on Productivity of the Mutual Security Agency.

Scanlon is best known for his origination of the so-called "Scanlon Plan". This plan was developed in 1945 as a combination of different methods he had used to help companies become more efficient and productive. The Scanlon Plan is a set of profit sharing arrangements based on a company's historic ratio of labor cost and sales value of production. A key attribute of the plan is that union workers and management work together to cut costs while still maintaining or improving production by utilizing suggestions made by the workers. The money saved through these suggestions is then put aside and distributed among the workers and management. This placed emphasis not on individual achievement, but rather on the production of the workers as a whole because all bonuses were based on overall profit, thus making co-workers more likely to push each other to work more proficiently. The Scanlon Plan was applied to various industrial companies throughout the country and, after Scanlon's death, was continued by his associates, Fred Lesieur and Carl Frost.

The first Scanlon plan was instituted by Joseph N. Scanlon (1897–1956) a steelworker, cost accountant, professional boxer, local union president, Acting Director of the Steelworkers Research Department, and Lecturer at the Massachusetts Institute of Technology (MIT). As the local union president of the steel mill in which he was employed, he witnessed the depressed economy of the 1930s. His co-workers wanted increased wages, his company had barely survived the depression. He was advised by the Steelworkers International to see if he could harness the energy and talents of the workers to save the company. Scanlon set up joint union/management committees to solve organizational problems. The committees became successful and Scanlon was soon asked to help other organizations in trouble. His success led him to become Acting Director of the Steelworker's Research Department. Scanlon became active in setting up many labor/management committees in support of War production for WWII.

Scanlon's work with joint union/management committees convinced him of the power of cooperation and he was an advocate of working with management in the Steelworkers. At the end of WWII the faction advocating a cooperative approach in labor/management was displaced by those advocating a return to traditional adversarial relations in the Steelworkers. Scanlon accepted an invitation by Douglas McGregor to become a Lecturer at MIT where he remained until his death.[1]

At MIT, Scanlon continued to develop his ideas about labor/management cooperation and organizational improvement. It was at MIT that the term "Scanlon Plan" was coined by accident. There were two conferences going on at MIT and signs were needed to guide attendees. Thus those headed to Scanlon's event were directed to the Scanlon Plan and the name stuck.

The original labor/management teams that Scanlon created did not include a bonus. Early on they were created to save distressed companies or to encourage war production. Scanlon believed that much distrust existed between labor and management because there was a lack of information sharing. He believed that, given information about the company and a chance to participate in helping solve problems, the average worker would contribute to the success of the company. Scanlon did not believe in what he called "the economic man theory." Piece work systems and ideas about human motivation at the time reduced the worker to something that was thought to be only motivated by money. Scanlon believed that people were motivated by many things besides money—a chance to make a difference, pride, fellowship, etc.[2] Eventually Scanlon included an organizational bonus system as part of the plan. Often these systems replaced piece work systems that were common at that time. Douglas McGregor would study Scanlon's clients to develop his Theory Y vs Theory X. Scanlon Plans were considered one of the best ways to develop Theory Y.[3]

Scanlon's work with the Admanson Company was featured in a Life Magazine article "Every man a Capitalist" by John Chamberlain, December 1946. His work with Lapointe was featured in a Fortune article "Enterprise for Everyman" by John Davenport, January 1950. Time Magazine wrote that Joe Scanlon was the most sought after consultant of his time in "Management: The Scanlon Plan, September 1955.

Two of Scanlon's colleagues carried on his work - Fred Lesieur who he had met at the Lapointe Tool Company and Dr. Carl F. Frost at MIT. Carl Frost would take the ideas west to Michigan State University which became a center for Scanlon thought and practice for many years. Frost would also create the Frost/Scanlon Principles of Identity, Participation, Equity and Competence.[4] Frost's clients would create the Scanlon Plan Association which today is the Scanlon Leadership Network, a nonprofit Network of Organizations with Scanlon Plans. Frost worked with Herman Miller, Donnelly, Motorola, and Beth Israel Hospital all who were in the top 50 Best Places to Work while they were practicing Scanlon methods.

Frederick G. Lesieur carried on the Scanlon Conferences at MIT until the 1980s. He consulted and implemented Scanlon Plans widely. Dana corporation was in the top 100 Best Places to work while they had their Lesieur Scanlon Plan.

Because the Scanlon plan was originated during the crisis of depression, it was initially presumed that it was for failing companies. However it later got instituted in Adamson Company to improve a healthy situation. Scanlon Plans have been successfully installed in Manufacturing, Retail, Health care, Financial Services and Telecommunications. There is no central registry of Scanlon Plans and the Scanlon Plan was not copyrighted or trademarked. Scanlon Plans were implemented in at least the following organizations: Adamson, Advanced Business Graphics, Atlantic Automotive, ARaymond, Atwood, American Tape, Beth Israel Hospital, Bradford, Bridgestone-Firestone, Briggs & Stratton, Canon, Dana, ELGA, Fairchild-Burns, Ferro, Harley Davidson,Herman Miller, Hitachi Magnetics, Hron Signs, ITT, Kysor-Cadillac, Lapointe, Landscape Forms, Limerick Veterinary Hospital, Lorin, Magna-Donnelly, Martin-Marietta, Meier, Michigan Bell, Motorola, National Manufacturing, Neelon Castings, Nicholas Plastics, Pacific Cast, Parker Pen, Pohlman, Quality Container, Raynor, S & L Plastics, Sara Lee, Sears, SGS Tool Company, Sligh, Spring, Thermatron, Thomson-Shore, TG Fluids, Trans-Matic, United Building Centers, US Vision, Watermark Credit Union, Wescast, Westling, Wolverine Worldwide, and Xaloy. Thus Scanlon plans have been utilized both as a means of saving firms from economic collapse as well as a mechanism for reducing labor and production costs and to provide increased worker participation in organization whose immediate economic situation is not bad. They have been installed in union and nonunion organizations, for profit and not for profits and large as well as small organizations.