CONCLUSIONS FROM A SURVEY OF OVER FIVE HUNDRED EMPLOYES' BENEFIT ASSOCIATIONS

BY W. L. CHANDLER,

Dodge Manufacturing Company, Mishawaka, Indiana.

The employes' benefit association is the result of evolution and has apparently come about through a desire on the part of the men to coöperate for their mutual benefit. Capital has but recently awakened to the value of these organizations in steadying the force and in reducing some of the unmeasured leaks of business.

No method has as yet been accepted as showing clearly the cost of absenteeism, or the loss of both quality and quantity of production due to workmen being harassed by debt incurred through sickness, or to dragging themselves around in an effort to fight off disease without proper medical attention. The presence of such losses is obvious on most casual consideration of the subject. Consequently, the only problems are those of measuring the amount of loss and of devising methods of loss reduction. We may utilize the employes' benefit association for the mutual relief of employe and employer from such conditions. This has proven one very effective means of reducing some of these newly recognized leaks.

Some employers for many years have been coöperating with associations among their employes. However, it is only in the last few years that capital can claim to have frankly acknowledged the value to the employer of these associations. Recently various stock insurance companies have been sitting up and taking notice of the possibilities for them in this new era which is developing. In addition to increased activity of the companies regularly writing sick and accident business, some of the larger companies are now offering group insurance through employers in such forms that premiums are paid to the insurance companies monthly by the employers. The entire cost is absorbed by some corporations in connection with their welfare work while others collect from the employes through the pay envelopes for part or all of the premiums. Some of this group insurance embraces life insurance only. As a stabilizer of labor, life insurance does not seem to me to embody enough of the

great essentials which attract the men. Any gratuity receives a welcome, but the money spent by an employer for life insurance premiums might be used in other ways to greater advantage to both employer and employe. Group health and accident insurance is something which can more readily be visualized by the average man and as a stabilizer produces more favorable results than group life insurance.

The greater the frequency with which a man feels the benefits derived from a gratuity or an investment, the more he will appreciate it. In an average working force of one thousand men, seven will die each year. In such a force then the group life insurance plan will demonstrate its value to the employes less than once a month and then very few employes hear about the payment of the benefits. In such a force of one thousand men someone is always either hurt or sick and frequent contact of the individual employe with the disability benefits is secured either through his being a beneficiary himself, or because he is serving on sick visiting committees or in other ways sees benefits going far to relieve his friends in times of need.

Employes' benefit associations usually operate without much overhead expense. There is some expense of operation but the employer usually pays it. He does not always realize it, but he pays it just the same. In some few cases the secretary circulates among the members collecting dues at regular intervals. It is probably safe to conclude that this is always on company time, resulting in relatively heavy cost to the employer. However, in most cases dues of the members are collected through the paymaster as an accommodation to the organization. This plan is far more effective for the association and costs the employer less than the former method.

Having almost no overhead expense, the association can handle business practically at cost and in many cases, through having outside income, for less than cost.

An employer, who is aware of the value to him of having all employes become members of their benefit association, may contribute toward the cost of maintaining the association and thus foster the organization operated by the men themselves, but his interest should not lead him beyond the point of coöperation. The members should know that they are operating their own association.

An employer's dollar spent in this way will go much farther than when part of it must be diverted from payment of losses to cover the overhead of a stock company. Stock companies have a wonderful field of usefulness but they are by force of circumstances unable to compete with the employes' benefit associations.

No form of insurance will sell itself. In associations operated by employes without the coöperation of the employers the percentage of members to total number of employes varies from two per cent upward, the average being about thirty per cent. In cases where the employers coöperated in jointly managing the associations the average was over sixty per cent, and where the employers managed the associations alone the average was over seventy-five per cent. This points to one very important moral, and embraces one of the essential features of organizing such an association. In addition to that, it shows very forcefully the need for reorganizing a great many of the associations now in existence. Consequently, I believe those features which are essential for organizing will be equally essential when reorganizing an association.

This was the condition that confronted the Dodge Manufacturing Company's mutual relief association two or three years ago. The association was about to celebrate its twenty-fifth anniversary. The corporation had maintained the attitdue of allowing the employes absolutely a free rein. Some of our directors, felt very strongly on this subject. The result was that in attempting to allow the employes to exercise their own judgement without interference from the corporation, we were, in reality, depriving them of the counsel and benefits which they might receive from directors and officers. Efforts had been made for several years to urge the officers of the benefit association to campaign for new members, and quite a little stimulant was thus administered. The membership continued, however, with slight fluctuation, to include between thirty-five and fifty per cent of the employes. It seemed quite evident that something was lacking; that this proposition must be studied just as any other problem of product, equipment or labor. We set out to do that, making up a questionnaire which went to a number of corporations who we believed might be operating benefit associations. We made notations of the various problems that suggested themselves, and which we then set out to solve. It developed that we had seventy-two problems for the solution of which we must secure

data.

We found that the department of labor at Washington could give us a great volume of data from which we were enabled to compile percentages and other figures to aid in solving these problems. This, together with the information received in answer to our questionnaire, gave us considerably more data than we had anticipated when we started out.

Statistics themselves avail little in the brief consideration of so important a subject; suffice it to say that data were secured covering approximately six hundred benefit associations, and copies of the by-laws were received from seventy-eight. We digested them as best we could. For convenience in studying the various by-laws, we cut them up, and where necessary made digests of the individual provisions; so that, by means of a card file, we were able to gather into one group the various provisions for handling the numerous situations that arise, such as the duties of officers, amounts of benefits, and administration problems generally. From this card file we compiled a set of by-laws which were then submitted to the members of our own association, who were asked to appoint a committee to go over the matter thoroughly. This committee, representing the different departments in the plant, met on "company time" one afternoon a week for about three months, with the result that our present by-laws include what, to that committee, seemed to be the best features of the seventy-eight.

Thus, the corporation was of benefit to the association: first, in securing for it this volume of data that it might reorganize: second, we were able to show it that above all its plan must be attractive. The association is in the business of selling insurance; it must have a proposition which can be readily sold to the employes. We were able to show it some of the psychological features of the proposition, not through a definite study of psychology, but by bringing the members to see the effect of certain methods of procedure on prospective members. One point was kept forcibly in mind continuously: The entire plan of reorganization must be above suspicion. There must be nothing about it which would permit the suggestion, by those of perverted mind, that the corporation had any motive other than the best interests of the employes. All decisions were to be made by the employes. We took pains to place before them, however, all of the facts, both for and against each proposition on which they were to ballot, so that they were benefited by the experience

and judgment of those who had experience in insurance matters and sales promotion, and in addition, the facilities for securing information.

One point stands out forcibly: No matter how good the plan, it will not sell itself. It must have barbs on it; it must not work too smoothly. There must be things happening to keep alive the interest and enthusiasm of all the members. It is not sufficient to depend upon the secretary or any other one man to secure all of the members; all employes must be warmed up and kept warm so that a new man coming into the plant will immediately feel that influence and want to come in.

Instead of making outright donations to the treasury of such an association, it is far better to offer bonuses to the members for the accomplishment of certain definite results. Gratuities never develop the enthusiasm which follows sustained effort made to reach a certain goal and to earn a bonus or prize. Convert the campaign for members into a game wherein each member may become a salesman watching for an opportunity to get a new employe into the association. The effect of enthusiasm may be seen in the fact that the membership of the association in the plants of the Dodge Manufacturing Company doubled in the month following the adoption of the new by-laws.

A number of different stimulants were tried for the effect upon both members and prospective members, as evidenced by the percentage of employes in the organization. Our biggest stimulant so far has been that of dividends. We brought to the attention of the board of directors of the employes' benefit association the fact that their treasury was increasing very rapidly; that it was unfair to the members to retain this money when it was not needed by the association; that they could and should declare a dividend equivalent to two weeks' dues. There was considerable hesitation, however, for fear that the soundness of the organization might be jeopardized, but, upon thorough consideration, and at the recommendation of the officers of the corporation, they agreed that it looked perfectly safe. To save bookkeeping, this dividend was declared in cash. Each member received an envelope containing his dividend, and bearing a message sttaing that the organization was quite prosperous; hence the dividend. The amusing part of the experience was that the membership went up about fifty per cent in the next six months,