The origins of employee representation plans, whereby employees are allowed to present grievances and discuss problems with their employer, go back to 1898, when William Filene devised one for the workers of his Boston department store. Initiated there informally, the arrangement was formalized in 1903 with a written constitution. Under the Filene plan, every employee at the store was also a member of an association that could initiate rules and regulations concerning employee activities. These rules could be annulled by management, but could also be reinstated by a two-thirds vote of the employees.
The Rockefeller Plan was a refinement of this type of program, oriented specifically to the mine workers of Colorado. Biographer Chernow describes it as “a middling success,” however, for CF&I endured four more strikes before the United Mine Workers of America won recognition from the company in 1933.
But according to Stephen J. Scheinberg, author of a doctoral thesis entitled “The Development of Corporation Labor Policy,” “Despite its shortcomings, the Rockefeller Plan was a step forward in American labor relations. A previously autocratic company extended a measure of representation to its workers.” According to Scheinberg, when most other American firms sought to “make the transition from industrial absolutism to some form of labor representation,” they used the Rockefeller Plan as a model.
At the time of the CF&I Industrial Representation Plan,World War I had begun, and this spurred the labor representation movement. As Scheinberg noted, “The need for steady wartime production led to government action in the labor-management field.” In April 1918, President Woodrow Wilson established the National War Labor Board (NWLB), which was composed of five representatives of labor, five from management, and two cochairmen: Frank P.Walsh, who previously had headed the Commission on Industrial Relations, and ex-president William Howard Taft.
The NWLB made a commitment to the principle of collective bargaining and recognized employee representation. In some instances, it established works councils or employee representation schemes in which councils elected representatives who negotiated work conditions. In 1922, more than 600,000 workers were covered by employee representation plans.
“Taft, Walsh, and the labor members of the board,” wrote Scheinberg, “regarded employee representation as a step forward from the completely non-union shop. It was not all that labor wanted, but it did mark a change in employer attitudes.” After the enactment of the National Industrial Recovery Act (NIRA) in 1933, the number of these plans increased, even as membership in trade unions grew.
To critics who argued that employee representation plans were no more than “company unions” established to prevent workers from joining independent trade unions, King had a reasoned reply: “The Industrial Representation Plan,” he wrote, “…instead of being in any way antagonistic to trade-unionism, should prove itself the strongest ally of trade-unionism in its efforts to maintain and advance standards.”
According to King, the plan he championed at CF&I “does not say that the Trade-Union is not a necessary thing or a good thing. It says in so many words that, so far as a Trade-Union may be regarded by workingmen as a necessary or a good thing, they are at perfect liberty to take full advantage of it: but it goes farther than this and says that for the maintenance of their industrial rights workingmen should not be dependent on voluntary organizations which they themselves must support, out of the rewards of their services to industry, but that they have the right to look to the State as representing society as a whole to see that they are secured in their rights: it is based on the idea that standards in industry should be maintained irrespective of the existence or non-existence of unions and the voluntary sacrifices which membership in unions of necessity exacts from labor; these standards it seeks to have maintained through the agency of the State, of which every man is a member.”
In an article entitled “Labor and Capital-Partners,” published in the January 1916 issue of The Atlantic Monthly, Rockefeller concluded: “This plan is not a panacea; it is necessarily far from perfect, and yet I believe it to be a step in the right direction. Carefully as it has been worked out, experience will undoubtedly develop ways of improving it….
“The problem of the equitable division of the fruits of industry will be always with us. The nature of the problem changes and will continue to change with the development of transportation, of invention, and the organization of commerce. The ultimate test of the rightness of any particular method of division must be the extent to which it stimulates initiative, encourages the further production of wealth, and promotes the spiritual development of men. The Colorado plan is of possible value in that State, and may prove useful elsewhere, because it seeks to serve continually as a means of adjusting the daily difficulties incident to the industrial relationship. It brings men and managers together, it facilitates the study of their common problems, and it should promote an understanding of their mutual interests.Assuming, as we must, the fundamental fairness of men’s purposes, we have here possibly a medium through which the always changing conditions of industry may be from time to time more closely adapted to the needs, the desires, and the aspirations of men.”
Clarence J. Hicks, who was entrusted with labor relations at CF&I upon the institution of the Rockefeller Plan there and who led the introduction and implementation of a similar plan at Standard Oil of New Jersey in 1917, “believed that representation was more democratic than trade unionism,” wrote Scheinberg. “Nor was his argument wholly unreal.His plan included Negroes, women, and laboratory workers, and such groups were not included in the A.F.L. structure in 1918 or for many years thereafter.”
The executives of the many leading American firms that adopted such plans in the post-World War I years did so not only to avoid labor troubles, but also to deter the spread of bolshevism. Giving employees a say in their work life, they reasoned, might prevent the social and political turmoil that was uprooting Russia’s government and society during the early 20th century. But it did even more: It helped spur the development of the field of industrial relations.
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