Bill Ford inherited the mantle created by his great-grandfather Henry. His ability to protect and promote this precious legacy has been tested to the enth degree. He tells Scott McCulloch how he salvaged an ailing firm and why he values the workforce
Bill Ford doesn't see the carmaker that bears his surname as a family business but as a public company that retains the best attributes of a family business. As CEO of the world's second biggest carmaker, Ford says he's working for his children, his grandchildren, and the children of his employees.
He is inspired but not shackled by his heritage. He is proud of his stock-holding employees whom he regards as family. "It makes sense to ask them to think and act like owners. They are owners and they are part of our family."
Ranked eighth on Fortune's Global 500 list, the world's second-largest carmaker is unique in its status as a family business and carmaker – the Ford family control 40% of the voting power in the company through Class B shares. Shrugging off jibes from critics who say the family is "too influential" in the business Ford insists their influence is appropriate and advantageous. "People who know about the family involvement in our company have a higher opinion of us," he asserts.
So who is William Clay Ford Jr and what does he think about family businesses? Some say he was the only man who could have turned around Ford Motor Co when Ford took over as CEO in 2001. He knew who he was. He suspected he had a responsibility to the company since he was a young boy, driving down local roads seeing his surname etched on hospitals, museums and libraries.
In the months after Ford took over as CEO, few outside the carmaker believed he could succeed. Ford has been chairman of the company since 1999 and had shared control of the company with then-CEO Jac Nasser since July 2001. But he was seen as too young and inexperienced to handle both jobs. When he took the CEO job after the board ousted Nasser, the company had just posted a $692 million loss for the third quarter, a spectacular plunge from the $994 million in profit a year earlier.
By 2002, the new CEO had pulled together a turnaround plan that called for cutting 12,000 hourly workers and 5,000 salaried jobs, shutting plants, mothballing low-profit models, and shedding non-core businesses. Wall Street was sceptical, but the carmaker has beaten analysts' expectations 14 quarters in a row since Bill Ford became CEO.
It's been no picnic. The carmaker's dented environmental image took a blow in 2004 when Greenpeace besieged the carmaker's Norwegian headquarters demanding it abandon plans to scrap hundreds of electric cars. A year later and Ford Motor is keen to accelerate the introduction of hybrid petrol-electric vehicles over the next three years as the car giant seeks to differentiate itself in fiercely competitive automotive market.
Meanwhile, Ford talks of "exploring visions" for the 21st century and of creating "sustainable transportation" for future generations. Families in Business asked how his "extended family"– some 325,000 employees – fit into that vision.
FIB Ford made a loss of $6.4 billion in 2000 and 2001. These figures reportedly led you to seize control of the company. Media reports have since described your management style as "hands on" – an aspect that helped you turn the company around as well as win plaudits from the industry. Have you lived up to your surname in managing Ford Motor Co?
BF "Henry Ford was one of the towering figures of the 20th century. So comparing yourself to him is pretty intimidating, not to mention immodest. I really don't see my heritage as something I have to live up to. I see it as an inspiration. I am trying to build on what my great-grandfather created and carry on his vision into the 21st century."
FIB Last year Ford announced a management shake-up. The company's young executive talent came to the fore – Mark Fields, Greg Smith and Mark Schultz all received promotions. When the reorganisation was announced, you said that you had no plans to leave your post. Yet the demands of the job are high. In 1995 you quit working for Ford but retained your seat on the board of directors. How long do you intend to stay on as CEO?
BF "In 1995 I was named chairman of the finance committee of the board of directors. Together with my board seat that gave me an opportunity to have a significant voice in the company. Resigning as an employee allowed me to concentrate on my board responsibilities. I'm here for the long term. I'm working for my children and grandchildren, as well as the children and grandchildren of our employees and shareholders."
FIB "What is the most important goal you hope to achieve?
BF My great grandfather's vision was to provide affordable transport for the world. I want to explore that vision for the 21st century and provide transport that is affordable in every sense of the word – socially and environmentally, as well as economically. In other words, sustainable transportation. I look at that not just as an obligation that we have to meet but also as an incredible business opportunity. I want to pass along a strong business and a better world, and I think that that's the best way to do it."
FIB In January 2004, as chairman of Ford Motor Co you stood before your global leadership team and posed a question: "How could Ford capitalise, if at all, on its reputation as a family company run by someone named Ford?" The question was motivated by a corporate reputation survey undertaken by the Daniel Yankelovich Group. What is your answer to that question?
BF "The research shows that most people believe that a company with family involvement is more concerned about consumers and the community. The challenge is to live up to those expectations. A company with family-based values works hard to earn the trust of its customers, shareholders, employees and business partners, and maintain a culture in which they feel valued and treated fairly. Doing that improves bottom line results. Family behaviours are a solid foundation for building a winning culture and a high performance team. This doesn't mean you don't make tough decisions if necessary. But when you do, you try to be fair and compassionate, and do the most good for the most people."
FIB In 2004, the Detroit News speculated on whether Ford could "cash in on its family image". One of the questions motivated by a corporate reputation survey carried out by the Daniel Yankelovich Group asked: Should the carmaker launch a broad marketing campaign that emphasises the Ford family's century-long stewardship at the company and would that translate into more sales and fatter profits? How do you respond to this?
BF "The research clearly shows that the people who know about the continuing family involvement in our company have a higher opinion of us. It also shows that people who have a higher opinion of your company are more likely to buy your products and invest in your stock. So it's definitely to our advantage to let people know about our family heritage. But I think it's just as important to establish the family-based culture and behaviours I talked about. That really is the best way for us to take advantage of our family heritage. It will help us differentiate ourselves and take our performance to the next level."
FIB Car industry commentators have suggested that you are involving yourself with a "cultural change" at Ford Motor Co, one in which you hope to return the company to the days when its employees felt like and were regarded as members of an extended family? Is there any truth to this?
BF "I've challenged the senior leaders of our company to establish a true family culture inside Ford. We have it here to a large degree already. Our employees are proud and loyal, and, in many cases, their own families have worked here for several generations. I consider our employees to be part of our extended family, and most of them feel the same way. I want to build on those family feelings and cultivate a workplace that attracts and retains the best people and allows them to work to their full potential."
FIB It has been reported that your style of management is to ask employees to think and act as if Ford was their company and its money was theirs. Do you see Ford as a family business?
BF "I see us as a public company with a modern management team that retains many of the positive aspects of a family business. That's pretty rare for a company our size, and it's something we can use to our advantage. We have a high percentage of stock ownership among our employees, so it makes sense to ask them to think and act like owners. They are owners and they are part of our family."
FIB The outpouring surrounding Ford's recent centennial celebration suggested that Ford Motor Co and its founding family still resonate with the public. You, as a member of the Ford family, are both the face of Ford Motor and the Ford family. Where else in corporate America is that possible? Not at General Motors nor DaimlerChrysler. Do you believe that a 'Ford' leading Ford Motor Co is always going to be advantageous for the company?
BF "I think if you are a good leader, it will always be an advantage to the company if you are a Ford, for all the reasons I've discussed. If you aren't a good leader, then it doesn't matter what your name is, you aren't going to help the company."
FIB Class B shares give the Ford family 40% of the voting power in the carmaker. Compared with most other carmakers this is extraordinary. Can you outline how you perceive this to be advantageous for the long-term health of the company?
BF "The family ownership in the company is a definite advantage. It gives us a long-term perspective and the ability to withstand short-term pressures and do what's right over time. It also helps keep us from being distracted by hostile takeovers and unwanted suitors with short-term interest. The combination of public company and family involvement, on this large scale, is what makes us unique."
FIB The public reaction to recent US television ads in which you talked about the company and what it means to you were successful. It had been reported that you were less than thrilled about doing such ads. Is this true?
BF "I think my background gives me a little different perspective than most CEOs. I'm not really motivated by fame or fortune, so doing TV ads is not something I would normally seek out on my own. But I'll do whatever it takes to help the company. Our marketing team believed the ads would help us get through a difficult period, so I was happy to do them. They turned out to be successful, so I'm glad I did."
FIB Ford Motor is more than 100 years old. What does the company today have in common with the company of your great-grandfather's day?
BF "The technology has changed, but we're still the same basic business: providing personal mobility to as many people as possible. In my great-grandfather's day that meant making automobiles economically affordable. In the 21st century, it means making them economicallly, socially and environmentally affordable. That will enable us to bring the freedom and prosperity of personal mobility into developing markets, and continue to provide it in established markets. The other thing we still have in common with the company 100 years ago is that our success depends on the skills, knowledge and dedication of our people. That will never change."
FIB The composition of boards of directors is a hot topic these days, particularly in the wake of the scandals at Enron and Parmalat. For large companies, having a healthy measure of independent directors on boards, say 70%, is seen as sensible. It helps assure investors that the company is being operated more for shareholders than for the managers. Ford has fewer independent directors than any other publicly traded companies, according to a report on governance from Moody's Investor Service. While investors may be concerned that the Ford family is "too influential in the company's decision-making," the ratings company said "the high calibre board balances out any such concerns." What are your thoughts?
BF "First of all, I agree that we have a high calibre board. I think our most important obligation to our shareholders is to find individuals that can make a real contribution to our board and our shareholders, regardless of what category they fit into. Having said that we've been working to add more independent directors to our board, with excellent results. When my father [retired] from the board in May, close to 75% of our board [became] independent, meaning they are not members of the family or current or former company employees, and otherwise qualify under NYSE rules and our own corporate governance principles. I think that's a good percentage, especially considering the level of talent and expertise on our board."
FIB Last, what do you make of the media speculation that the Ford family can be "too influential" in the company's decision-making? Is this unfair?
BF "The Ford family is a major shareholder in the company, so it is appropriate that we have some influence. Not only that, I think it's an advantage to have the family involvement that we do, for all the reasons I outlined earlier. Our interests are fully aligned with the other shareholders. We are always going to be advocates for the long-term success of the company for the benefit of all shareholders. No one wants that more than we do. With family involvement, a professional management team, and an independent board of directors, I think we have the best combination to look after the interests of our shareholders."