My father had always felt a direct connection with the working man, because with his humble roots he had known hard times, hard work, and unemployment. As a result, he tried to blur the distinction between white-collar and blue-collar workers. Not only did he provide secure jobs and good pay for the people in our plants, but the fact that for many years IBM’s pensions were based solely on length of service, not salary or position, stood my father in good stead. During the period in the 1930s and 1940s when there was a lot of labor unrest in America, organizers were hitting pretty hard at the lush retirement plans some companies offered their executives. I don’t think his primary motive was to keep the unions out, but that was one effect.
While the factories had always been more closely associated with Dad than with me, I looked for a way to extend Dad’s philosophy even further. In 1957 Jack Bricker, the personnel director, came back to me with a radical proposal: that we abolish the hourly wage and shift all of our employees onto salaries. This would eliminate the last difference between factory and office work and put all of our people on an equal status. It was a daring plan, affecting about twenty thousand of our sixty thousand U.S. employees, and Bricker had the details so well worked out that all I had to do was approve it.
In January 1958, I announced this change in a nationwide telephone broadcast to the factories. Although the shift to salaries came off well, a number of our managers predicted that many workers would take advantage of the policy and skip work whenever they felt like it. The joke went around that on the first day of hunting season no one would show up for work at our Rochester, Minnesota, plant. As far as I know, we were the first major industrial company to put its whole population on salary. It was a small contribution to U.S. labor history, due solely to Jack Bricker, and I was very proud of it. A few months later, at a meeting in Washington, Walter Reuther, the great United Auto Workers leader, couldn’t resist needling me. “What are you trying to do?” he said. “Make us look bad?”
I considered taking even more radical steps to increase IBM’s commitment to its employees. When I talked to my wife at night, I would speak of various ways of sharing our success more broadly. Those at the top were doing fantastically well on stock options—despite the fact that Williams and I stopped taking options in 1958, after Williams said, “We don’t want to look like pigs.” While IBM’s workers were making good money, they couldn’t look forward to the rich capital gains that executives with options had. In my own case, for example, I had stock options worth about five times my salary, or close to $2 million. From that investment I knew that I was going to make tens of millions of dollars if IBM kept doing as well as it always had. I asked myself, “How much more am I worth to IBM than that guy down at the bottom of the pay scale? Twice as much? Sure. Ten times as much? Maybe. Twenty times as much? Probably not.” I became more and more puzzled at the idea of rewarding executives at a rate wholly different from the people down the line.
So I began to think about ways of sharing the fruits of IBM’s success. My first idea was to distribute the company profits right down to the office boy. When I mentioned this to Williams, he was horrified. “That would put us out of business!” he said. He showed how, if we reckoned what our stock options would likely be worth and averaged them out over our careers, they probably tripled our annual pay. “If we turned around and tripled the whole payroll,” he said, “we’d be giving away the entire profit. Nothing would be left for the shareholders.” That made me think even harder.
I began asking myself whether our present form of capitalism is the best way to support American democracy in the long term. It didn’t seem that way to me. I thought that the model corporation of the future should be largely owned by the people who work for it, not by banks or mutual funds or shareholders who might have inherited the stock from their parents and done nothing to earn it. Entrepreneurs and capitalists would always have a key place—if you risk your money by putting it behind Henry Ford you certainly ought to be able to enjoy the fruits of your investment. But there is enormous strength in proprietorship—people develop strong attachments to the things they own, especially if they can influence whether those things succeed or fail—and it seemed imprudent to let the ownership of a business rest with people and institutions that are not directly involved. Remedying this situation would have to be an evolutionary process, but as I imagined it, gradually, over two or three generations, a business would, by law, shift into the hands of employees.
Though I never found a practical way to achieve it on a meaningful scale, I began looking for ways to increase employee ownership of IBM. In 1958 we established a stock purchase plan, whereby any employee could allot up to ten percent of his salary and acquire IBM shares at 85 percent of their market value. This was a step beyond what my father had been willing to do. Even though he encouraged employees to buy the stock, he stopped short of setting up a formal program because he didn’t want those who couldn’t afford losses to take undue risks. He never forgot his own close scrape with creditors when the bottom dropped out of the stock, in the 1930s.
If everybody in IBM had started buying stock when the purchase plan started, and held onto it, the company would belong to the employees by now, and there would be IBM millionaires by the thousand. But that is not how it worked out. Instead, many people bought the stock, but very few stayed with it. Most people would get a 25 percent increase in their investment and sell out. We also found that the plan hurt morale whenever the stock value declined. I did everything I could to encourage them to hold on, short of personally touting the stock—every year, for example, we published figures showing how wealthy people became by owning IBM over a long period. But people never used the plan to the extent I envisioned.
Did this mean the average guy on the factory line was stupid? I don’t think so. I figured their reluctance to stay with the stock was mainly due to economic circumstances. Most likely a man was selling out because he’d rather have the mortgage on his house reduced than keep his money at risk in the stock. If you looked at the median IBM salary, although it was above the national average, it didn’t leave much latitude for fiddling around with investment risks. We decided we could do the best for our employees by developing benefits such as major medical coverage, scholarships and college-tuition loans, and matching grants for charities and schools. I wanted IBM to be recognized as one of the most generous employers in America.
During the late 1950s I had a very popular family. Life came to Greenwich and did a photo essay about us. A little while later Sports Illustrated put us on the cover. “Skiing Family: The Tom Watsons” it said, and the picture showed Olive and me and four of our kids fooling around in a snowy Vermont scene. If People magazine had existed, I suppose we might have been in that as well. We seemed to have everything: my success, Olive’s beauty, and by this time six bright, energetic kids. However, life behind the scenes wasn’t always so ideal. We had the usual stresses and strains that anyone in a large family could understand. But the main problem was my temper.
If my disposition had been easier, I might have had a brilliant career as a father, because I did a lot of imaginative things for my children. My great shortcoming, unfortunately, was that I did not understand how to change pace when I left the office. That is the toughest thing for any manager to learn. All day long I faced a parade of people asking for decisions—whether to worry about a competitor’s new product, how to resolve an ambiguity in IBM’s personnel policy, what to do about a manager paralyzed with grief over the loss of a spouse. Through all of it would be the telephone ringing—more people with more problems. The decisions themselves were never that hard to make; what was hard was the cumulative effect of being the man on the spot day after day after day. Try as I might, it was never possible to delegate enough.
By the time I got home, there would be nothing left of me. I’d walk in and find the usual disorder of a large household—one of the kids had shot a BB gun at a passing car, or two of them were fighting, or somebod
y had bad grades. These things would strike me as crises that needed to be resolved right away, and yet I had no energy to bring to bear. I’d feel a desperate wish for somebody else to step in and make the decisions so I didn’t have to. That’s when I’d blow up. The kids would scatter like quail and Olive would catch the brunt of my frustration. In fact she was a wonderful mother, patient and sympathetic. I suppose I wanted her to be as strict a disciplinarian as my own mother had been with me, even though this was foreign to Olive’s nature. It took me years to grasp the fundamental difference between running a company and heading a family. IBM was like driving a car: when I came to a corner, I could steer around it very nicely, and off the car would go down a new road. I hit bumps here and there, but generally the car went where I wanted. With my family, this wasn’t the case. The family was more like a car with two steering wheels, or multiple steering wheels, and only one of them belonged to me. I kept trying to exercise more control than I had.
When I saw I could not bend my wife and children to my will, I’d feel totally thwarted and boxed in. Those were the blackest moments of my adult life. An argument with Olive and the kids would sometimes make me so morose that the only thing I could do was hole up. I’d lock myself in my dressing room and Olive would stand on the other side of the door and try to get me to come out. Finally she’d reach the end of her rope. She’d call my brother and say, “Can’t you come cheer Tom up?” Dick would come down from New Canaan. He always knew how to make my responsibilities seem lighter and draw me back into the world.
My hot temper also backfired when I did community work. For several years I was president of the board of trustees at the Greenwich Country Day School, where we sent our children. I worked hard at this job, and I think that the people who served with me would have said, “Watson is a man under enormous pressure, but he is creative and never misses a meeting.” My downfall came one summer when the local newspaper carried a police report that one of our teachers had solicited a vagrant for a homosexual encounter. The community was in an uproar, and the headmaster, who should have handled the matter, had just left for vacation with his wife. When someone tracked him down by phone, he suggested that the matter be turned over to the assistant headmaster. Instead, I did what I would have done at IBM. I organized a task force of influential board members, investigated the incident, and discharged the teacher with a sum of money from the board to help pay for psychiatric treatment. That should have been the end of it. But I was so angry with the headmaster for not having dealt with the problem himself that when he got back, I bawled him out. He really blew his top. It dawned on me too late that I shouldn’t alienate the man: he was a capable administrator and more essential than I to the running of the school. Our dispute spilled over to the board, which rejected my effort to make amends by donating money for one of the headmaster’s pet projects. Finally I resigned as president, but not before almost coming to blows in the middle of a meeting with a fellow board member, a prominent banker. He accused me of being self-serving, and I grabbed his arm, whirled him around to face me, and was ready to hit him when I heard somebody in the background say, “Don’t be a damn fool.” That outburst damaged my reputation to such a degree that I was never invited to join another Greenwich board.
My temper tantrums at home usually didn’t last very long, and my father had taught me never to let the sun set on a family argument. As I cooled off I’d see the error of my ways and come back to put my arms around Olive and apologize for my inexcusable behavior. When my highhandedness and volatile temper caused hard feelings in our house, it was her patience and understanding that actually kept the family together. She had an ability to love in a perfectly natural and deep way, and she often showed me more kindness than I deserved.
Like all parents, Olive and I were trying to improve on the way in which we’d been raised. I thought my father had never taken enough time for his private life. He was always Mr. IBM, and when he wasn’t working, he was somewhere else in the public arena, advancing his own reputation and the company’s. I never wanted IBM to monopolize my time the way it monopolized his, and I was young and vigorous enough to do the sort of active things with my kids that Dad never did with me. I saved almost all my weekends to take them skiing or camping or sailing, and I did everything I could to give them a sense of fun and adventure.
Olive had only one brother growing up, and always imagined how nice having a large family must be. In the late 1930s she’d been able to observe one big clan closely: the Kennedys. Although Joseph Kennedy was ambassador to England then, the family was still not widely known. Just by chance Olive became friends with Jack and two of his sisters in school, and she began spending time during the summers at their Hyannis Port house. Sunday dinner in our own house was modeled to an extent after theirs. Olive would organize the meal by naming a subject for discussion—it could be anything from horses to the country of Japan—but there was one subject, and you had to do research if you expected to hold your own. In the Kennedy household, the topics had always been serious—politics, current affairs, international news. The ambassador presided, and something he did at one such meal made a lasting impression on my wife. The conversation that day was about a public figure and young Teddy—who was then only about five—raised his hand and said, “And he has curly hair!” All of his siblings began to laugh at him but Mr. Kennedy roared, “Be still!” Then he looked down the table to Teddy and said, “You are a very observant young man.” He had a way of giving confidence to all his children, and that is what Olive wanted to provide to ours.
Our house in Greenwich had fifteen rooms spilling over with kids, pets, and friends. It was decorated with dozens of odd things I’d picked up all over the world, such as a hat collection from Asia and Latin America and a miniature paupau outrigger from the Pacific. Behind the house there was a rolling lawn and some big trees where I strung up a big war-surplus cargo net for the kids to climb on. We had a tiny Messerschmitt car for play rides, and somewhere I’d gotten hold of a sailing dinghy that collapsed into a couple of suitcases. We used it for voyages on nearby rivers and across the little lake at the edge of our property.
The year our family appeared in Life magazine, my son was thirteen, just starting at boarding school. He was a sturdy, serious fellow and his sisters often complained that he was trying to lord it over them; he and I liked camping together and spent many hours on rifle practice in the garden. Jeannette was eleven, a little dreamy sometimes and very taken with Elvis Presley, but already a wonderful storyteller with a merry sense of humor that reminded me of my mother’s. Olive was two years younger than Jeannette, but much more assertive and extroverted. While all the other kids called me Dad, Olive liked to call me Tom just to get a rise out of me. Cindy, who was seven, patterned herself after Olive and was absolutely fearless, and Susan, four, was a sweet little girl attached to her dolls. Finally there was Helen, our one-year-old. She was a beautiful child but I didn’t have much sense of her yet—I was never any good at playing with babies.
We concentrated on sports the whole family could do. We built a tennis court with the idea that everybody could learn together. We all had bikes, and on weekends we’d go on family rides, sometimes to the embarrassment of our teenagers. The center of our winter activity was our ski lodge in Vermont. Olive and I had been going to Vermont to ski ever since the blind date on which we met, and when IBM hit the billion-dollar mark, we built a house there. From the standpoint of family finances this decision seemed as momentous and risky as any I made at work. Skiing was still fairly uncommon then. There was only one other ski house near where we built our lodge, about six miles outside Stowe at the foot of Mount Mansfield. The chair lift on that mountain was the first in New England; it ran the chairs up single file and on busy weekends you were lucky if you waited only forty-five minutes to take your turn. The house itself had great vaulted ceilings and a wall of glass looking out on the snowy woods. It slept twenty people, with two bedrooms for couples and dormitories for
boys and girls. We filled the place with souvenirs from our Alpine and Scandinavian trips, and on the floor we had carpeting that could be rolled back to bare linoleum for dancing. Near the fireplace hung an ordinary-looking painting of a snowy mountainside that symbolized what Vermont meant to me. The painting had hung originally in the banquet hall of the IBM country club at Endicott, where Dad held endless testimonial dinners. It always reminded me of a particular bend in one of the ski trails at Stowe. I’d get through those Endicott dinners by fixing my eyes on it and thinking, “In two more days I’ll be there.”
We’d make the seven-hour drive to Stowe almost every weekend. Some of our family’s happiest times were in that house—I still recall pulling into the driveway with a station wagon full of lovely little kids clamoring to get out and show their friends where to sleep. The lodge was an exciting place for unsuspecting guests because we were constantly playing jokes on each other—rubber snakes hidden in the bedclothes, cups of water balanced on top of doors. Olive and I made the kids bring their homework, but most often they’d drop their book bags near the front door on the way in and not touch them again until the weekend was over. That was partly my fault—I kept them so active that they didn’t have time to read. I’d roust the kids out each morning at seven o’clock by turning on the dormitory lights and playing yodeling music full blast. We’d feed them, then turn them loose on the slopes, and no one was allowed back into the house until the lift closed around four.
Father, Son & Co. Page 36
