William Cooper Procter (1862-1934) rose to the chairmanship of the Procter & Gamble Corporation and never sacrificed his ideals of humane business management. He devoted a great deal of attention to devising systems that would reward employees for both loyalty and efficiency. Procter was remembered for his "radical" labor practices, including the five-day workweek and an employee profit-sharing plan.
William Cooper Procter
Procter came into the family business as a production laborer and worked his way up through the ranks. In 1907, he was named president and chief executive of Procter & Gamble, following the tragic suicide of his father, William Alexander Procter. As William Cooper Procter rose through the company ranks, he developed close emotional ties and concerns for the lowliest of the workers. He strove throughout his lifetime to ease their burden. It was his belief that such a business ethic would maximize profits for all concerned. Procter felt that financial benefits would naturally accrue to a company when the work force shared in the profits.
Started At the Bottom
William Cooper Procter was born in Glendale, Ohio on August 25, 1862. He was the grandson of Procter & Gamble co-founder, William Procter, and was the only son of Procter & Gamble heirs, William Alexander and Charlotte Elizabeth (Jackson) Procter. He attended Princeton University before going to work at Procter & Gamble in 1883.
Despite his background and higher education, Procter started at the bottom of his family's business, as a production laborer. Despite his prestigious family ties, Procter mingled freely with his fellow workers. He sat on the factory floor and ate lunch from a paper sack, without pretense or pride. In time, he noted an overwhelming sense of despair among the employees of his grandfather's company, and was compelled to approach his family with concerns about the employees' grueling six-day work schedule (69 hours per week). At young Procter's suggestion, in 1885, the senior Procters agreed to roll back the work hours with no loss of pay to the workers, a radical innovation in labor policy, and one that set a precedent for American industry. Procter's goal was to foster loyalty among the workers and to create incentives for all, in order to improve efficiency and to maximize profits. He wrote in his business diary, "Any worthwhile change in the conduct of a business must first and last have the element of lessening the cost."
Despite the reduced work hours, union agitators at Procter & Gamble challenged management continually, for the loyalty of the factory workers. The employees staged walkouts on several occasions. This concerned Procter, who took it upon himself to devise a profit-sharing plan for the employees. Procter presented his profit-sharing plan to the company owners and, in April 1887, the company announced that every employee would receive a semi-annual dividend based on the ratio of personal wages earned to total company wages paid. The new and radical idea attracted attention from the press. Reporters visited the factory to interview Procter about his ideas. Industrial Relations reported that, "When William Cooper Procter suggested that it would benefit employer and employee alike to permit the employee to share in the company's profits, the family thought he had lost his senses. Such a thing was unheard of." Like the Procter family, the company workforce received news of the profit-sharing program with skepticism. They suspected Procter's motives, until he reminded them that, "The first job we have is to turn out quality merchandise that consumers will buy and keep on buying. If we produce it efficiently and economically, we will earn a profit, in which you will share."
Both the Procter and the Gamble families agreed that William Cooper Procter was the most promising candidate among the third generation of heirs to one day assume control of the company. In October 1887, they awarded him a five-percent partnership interest in Procter & Gamble. By 1889, he headed the entire Ivorydale factory in Cincinnati, Ohio. Procter prudently foresaw the need for additional plants, new equipment, and the development of new products, all of which required capital expenditures beyond the means of the company's resources. At Procter's suggestion, the company became a corporation and issued company stock valued at $4,500,000, in an effort to generate capital. At the first meeting of Procter & Gamble stockholders on July 17, 1890, Procter was named general manager.
Following the early retirement of Procter's uncle, Harley Thomas Procter, William Cooper Procter ran the corporation along with his father. One contemporary business publication dubbed the father-son team as the "architects of growth," because the Procters sought to bring more managers into the organization. They hired both from inside and outside the company and dispatched management recruiters to college campuses in search of the most qualified candidates.
Increased Benefits to Workers
As Procter assumed greater power in the company, he continually addressed concerns over the employees' welfare. Although Procter and his father were known to help those employees in need, Procter was aware that the employees remained limited in their ability to set aside a portion of their wages toward retirement. He attempted to restructure the profit-sharing plan in such a way that every employee who contributed conscientiously toward maximizing profits would receive twice the normal profit-sharing dividend, while those with marginal enthusiasm would receive a standard share of profits. Ambivalent employees would receive only one-half of the standard share of profits, and disinterested workers would not share in the profits at all. Procter's plan, which was founded on a subjective appraisal at the discretion of company supervisors, failed to create the intended result because it lacked objectivity.
Undeterred, Procter went on to implement a revolutionary new stock-purchase plan for the employees, whereby workers could purchase one share of stock over a two-year period, with a $10 down payment. That plan failed to generate interest, because the workers feared the speculative risks of stock purchase. In 1896, Procter responded to the reticent employees with a precedent-setting policy-he guaranteed his employees against any loss, up to $1000, on any investment they made in the company through the stock purchase plan. In an announcement to the employees about the revised stock plan, Procter & Gamble issued a statement that, "[T]he plan forms a practical means of bringing the employer and employee nearer together, by inducing the employees to become part owners in the business. The plan furnishes you with an absolutely safe investment … and through your efforts you may increase both the dividends and the value of the stock you buy." In 1903, Procter further refined his plan by coordinating the profit-sharing plan with the Procter & Gamble stock purchase plan. For every dollar an employee might save, Procter & Gamble agreed to contribute four dollars towards the purchase of company stock. Procter & Gamble further guaranteed to buy back any employee stock at a minimum of the original purchase price, regardless of market value. Procter's combined profit-sharing/stock purchase incentives were well received by employees.
In 1917, workers at one Procter & Gamble plant organized a strike to demand a reduction of hours from a ten-hour workday to eight hours, with no cut in pay. Procter acquiesced to the strikers and established the Conference Plan in order to avert future strikes. He explained to a reporter, "The Plan is, I believe, the first move of its kind in business history. … We worked out the idea of having the employees elect by secret ballot a conference committee to meet monthly with management in order to bring to our attention matters that seemed to need correction. … The chief problem of big business today is to shape its policies so that each worker … will feel he is a vital part of his company with a personal responsibility for its success and a chance to share in that success."
A few years later the complex and inconsistent product demands of the wholesale grocery industry threatened to create a bottleneck in the Procter & Gamble workforce. Procter resolved the confusion by initiating direct commerce with the retail grocery industry. As a result of ceasing to do business with the wholesale grocers in 1923, Procter & Gamble was able to guarantee with confidence to its employees a minimum of 48 weeks of work each year.
"A Life of Noble Simplicity"
Procter was a man of seemingly extraordinary energy; he spoke quickly and demanded attention. In 1930, an aging Procter-nearly 70 years old and suffering from arthritis, backache, asthma, and other ailments-assumed the newly-created position of chairman of Procter & Gamble. Four years later, in the spring of 1934, his health worsened and he was confined to bed. His wife stayed at his bedside for days. He died on May 2, 1934 at the age of 71 and was buried in the Spring Grove Cemetery in Cincinnati, Ohio. Employees and former employees financed the creation of a life-sized marble statue to honor William Cooper Procter. It stands near the Ivorydale plant and bears the inscription, "He lived a life of noble simplicity, believing in God and the inherent worthiness of his fellow men." An editorial in the Cincinnati Enquirerread, "[T]he whole nation pays homage to his memory because his restless intellect and driving energy brought about, in our industrial fabric, startling innovations which set the pace for a growing nation."
Further Reading on William Cooper Procter
Schisgall, Oscar, Eyes on Tomorrow: The Evolution of Procter &Gamble, J. G. Ferguson, 1981.
Advertising Age, August 20, 1987.