Milton Hershey and an Organization’s Commitment to its Members

by Tom Galvin

Greetings, and I hope this finds you well. This is a special post related to Episode 41, where we are discussing Gareth Morgan’s book Images of Organization, originally published in 1986.

Near the end of Episode 41, we discussed the themes of member commitment to the organization and an organization’s commitment to its individual members. This arose in the context of our continuing discussions of the gig economy and its impact on our understandings of organization. The ‘gig economy’ was the subject of several previous episodes (such as Episode 18 on algorithmic management and Episode 36 on human capital) and was the primary focus of our first symposium, presented in three parts as Episode 40 including a keynote address and panels on defining and researching the gig economy and related phenomena. Without revisiting those discussions, suffice to say that our dialogue raised lots of questions and concerns about the gig economy.

Speaking for myself, one of the reasons why I question the ‘gig economy’ is because I am very familiar with organizations whose central character and values are the precise opposite. I am talking about organizations, or their leaders, who have vested interests in high organizational commitment to its members. A story I evoked was that of Milton Hershey, the founder of both the Hershey Chocolate Factory and the small town that grew from it, then located in a rather remote spot east of Harrisburg, Pennsylvania – about a half-hour drive from where I live.

Commitment – Two Ways

I’ll get to the story in just a moment, but first let me talk more about the idea of commitment. When the word commitment is used in organization studies, it is typically assumed that one is addressing member commitment to the organization. There have been many studies on the subject – I like to use the framework described by Meyer & Allen (1991) that presents it as a combination of three factors. The first is affective attachment, or how much the member likes being in the organization. One might hear, “I enjoy coming to work!” or “I feel great when I know that a customer has left satisfied.”

The second factor is a sense of obligation or duty to the organization. One might hear this expressed as “What I am doing is important” or “I have been entrusted with this responsibility; I will not let them down.” Them can be one’s bosses or customers, or perhaps if one is in the public sector, them is the public or the state.

And then the third factor is the cost-benefit analysis of staying in the organization versus leaving.[1] Member commitment in this regard stems from a lack of better alternatives or an unwillingness to pursue them. An example of what one might hear in this form of commitment include, “The grass is NOT greener on the other side of the fence.”

There appears to much less written about commitment in the converse direction – of the organization’s commitment to the individual member. The literature present this form of commitment as organizational inducements. March and Simon (1958)[2] and Katz (1964)[3] said that organizations garner member commitment by providing inducements for them to stay. Along with rewards or incentives, organizations provide environments that members may find likeable and enjoyable, or that encourages desired behaviors.[4]

Now, let me ask a question. Is higher commitment either way necessarily better? My read of the literature suggests that many authors associate member commitment to the organization as a favorable quality. But what about the other way? Is more organizational commitment to the member better? Are the terms more and less even useful to describe such commitment?

Milton Hershey and High Organizational Commitment to the Individual

Let’s now look at the story of Milton Hershey. He founded the Hershey Chocolate Company in 1905 after developing a formula for milk chocolate that was both high-quality and capable of being mass produced. That the Company is now a well-recognized international brand speaks volumes about his success. But this story is more about Milton Hershey the philanthropist, not the businessman.

Hershey wanted to do more than simply build a factory. He also wanted to form a model community to ensure that the needs of the workers and their families were provided for. For this very reason, he chose a remote location for this factory rather than an established city or town. Outside his chosen factory site, he founded the town of Hershey, Pennsylvania and included parks, schools, recreational facilities, churches, and other public amenities. He would thereafter commission for the construction of amusement rides in the park, which would eventually become Hersheypark, today one of the most popular amusement parks in the eastern U.S. Milton Hershey was also a big supporter of education – founding the Hershey Industrial School in 1909 for orphaned boys (and later girls). This school is now the Milton Hershey School and still serves needy children today.

The Depression did not deter Milton Hershey. To keep his workers active, he initiated a building boom and built new offices and a hotel.[5] And then later came Hersheypark Arena, which would be home to a second-tier professional ice hockey team, and Hersheypark Stadium, an outdoor sports and concert venue. The workers and families got freebies and discounts to hosted events.

Hershey, by the way, is not the only business leader of this sort. A few decades earlier, John Cadbury (like Hershey, also from a Quaker family) established both a chocolate factory and model community near Birmingham in the United Kingdom. They likewise built parks and recreation facilities out of their concern for the health and welfare of their workers.[6]

Measuring Organizational Commitment to the Member

Now, which company would you want to work in? A ‘gig economy’ outfit in which the organization does little more than assign work and leave you in the lurch? Or, Hershey or Cadbury, who would provide you with stability, an ideal place to live, and a lifelong stream of perks?

Here’s the rub. The question is heavily biased according to an assumption that higher organizational commitment to the member is better. I admit to harboring such a bias. I am the son of an industrial worker turned factory owner whose business invests in its people to an extent that others within the same industry might not. Also, as a retired military officer, I am keenly aware to the extent that all-volunteer militaries stay ready and capable to fight because of the systematic way that military leaders ensure full organizational commitment to the morale, welfare, and readiness of the troops. Every Soldier’s life is valued.

Now, I could have asked may question in a different way. Which company would you want to work in? A chocolate factory where nearly every facet of your life is prescribed and you would do the same thing for many years with limited hopes of advancement? Or a ‘gig economy’ where you get to set the rules, work at your own pace, be independent?

Perhaps this means that terms like more or less might not be the only ways to measure organizational commitment to the member. The types of inducements and alignment with expectations of the members would seem to be important as well. But there’s no getting around quantity, is there? Organizations that invest in the welfare and growth of its members--such as fostering educational opportunities, maternal and paternal leave, or providing for an adequate pension—would seem to be better postured to sustain member commitment over those that do not. If one believes that organizations have a moral obligation to invest directly in the welfare of its members, one may be more likely to lionize Milton Hershey. And indeed, the legacy of this great man is very strong.

But there are also uncomfortable questions about the costs of greater inducements and the risk they pose to an organization’s competitive advantage. What if a company must reduce such inducements or risk bankruptcy? Would members perceive that as worse than if the inducements were simply low in the first place?

Conclusion

Organizational commitment to members therefore seems to be a rather complex topic suitable for additional research and exploration. Economics, morality, ethics, leadership, complexity – I mentioned these factors and I suspect there are other streams worth considering such as culture and identity. Perhaps the research questions could pursue an understanding of suitable, feasible, or acceptable levels and types of commitment to members, and conditions that drive changes to that commitment.

With that knowledge, maybe we can find ways to encourage leaders to follow Milton Hershey’s example more closely. Who knows?  

Notes

Angle, H. L. and Perry, J. L. (1991). An empirical assessment of organizational commitment and organizational effectiveness, Administrative Science Quarterly, 26, 1-14.

Biography.com (2017, April 27). Milton Hershey (1857-1945). Available at: https://www.biography.com/people/milton-hershey-9337133 (accessed February 21, 2018).

Bournville Village Council (2015, September 26). History of Bournville. Available at: http://bournvillevillagecouncil.org.uk/menu-pages/history-of-bournville.html (accessed February 23, 2018).

Katz, D. (1964). The motivational basis of organizational behavior, Systems Research and Behavioral Science, 9(2), 131-146.

March, J. G. and Simon, H. A. (1958). Organizations, 2nd ed. New York: Wiley.

Meyer, J. P. and Allen, N. (1991). “A three-component conceptualization of organizational commitment,” Human Resource Management Review, 1(1), 61-89.

 

[1] Meyer, J. P. and Allen, N. (1991). “A Three-Component Conceptualization of Organizational Commitment,” Human Resource Management Review 1(1), 61-89.

[2] March, J. G. and Simon, H. A. (1958). Organizations, 2nd ed. New York: Wiley.

[3] Katz, D. (1964). “The Motivational Basis of Organizational Behavior,” Systems Research and Behavioral Science 9(2), 131-146.

[4] Angle, H. L. and Perry, J. L. (1991). “An Empirical Assessment of Organizational Commitment and Organizational Effectiveness,” Administrative Science Quarterly 26, 1-14.

[5] https://www.biography.com/people/milton-hershey-9337133

[6] http://bournvillevillagecouncil.org.uk/menu-pages/history-of-bournville.html

I thank Pedro Monteiro for his helpful feedback on an earlier version of this post.