Transforming an Idea into an Industry
Like all great enterprises, ADP began with an idea. One day, 21 year-old Henry Taub visited a company where a key employee had taken ill. The payroll wasn't done, and the workers weren't paid on time. Where others saw a problem, Henry saw opportunity, and launched Automatic Payrolls, Inc, a manual payroll processing service.
Automatic Payrolls initial equipment was unpretentious, yet state-of-the-art for its day. It included an Underwood bookkeeping machine, a few Friden calculators to handle numerical extensions, and an Addressograph to print checks. Several years later, the company would invest in comptometers, a next generation bookkeeping machine.
Comptometers, the next generation of bookkeeping machines
By 1952, Henry and Joe were two of Paterson's busiest entrepreneurs. One day a salesman from the Prudential Insurance Company, which also had offices in the hotel, dropped by. That salesman, who attempted to sell Henry and Joe insurance, was Frank Lautenberg.
Frank and the Taub brothers became good friends. They shared a kinship. All had grown up in Paterson. Over time, Frank learned about payroll processing from Henry and Joe.
My first selling job was to sell Henry on the fact that I could go out and sell his service.
In the early years, every sale actually required two sales: before anyone would buy the service, they first had to buy the concept. Bookkeepers and business owners found it hard to imagine how payroll could suddenly take up less of their time. Many were also reluctant to let an outside company have access to their payroll files.
Eventually, more and more businesses in northern New Jersey and New York City tried the service. A number became strong referral sources, and Automatic Payrolls continued to grow at an accelerated rate.
The concept of outsourcing was still foreign to most businesses back then. We had to stick it out, add clients as we could, and hopefully reach a point where our reputation would begin to work for us in the marketplace.
Before Henry Taub, the idea of outsourcing business services, a common practice in today's world, did not exist.
By 1956, the company had grown to serve more than 200 clients, and needed a larger headquarters. They found one at a former supermarket building located on Route 46 in Clifton, the town next door to Paterson.
That year, Henry started a second business called Automatic Tabulating. It generated additional revenue from doing a wide range of calculations for area clients.
In addition to serving clients, Automatic Tabulating also handled computation of bowling scores for most of the local leagues.
By 1957, the growing amount of processing required a new way to deliver services: automation. The plan was to convert all operations from manual bookkeeping machines to automated punch card accounting, a forerunner of the mainframe computer.
At the time, this type of conversion was incredibly forward thinking, cutting edge, and untested. The process was the first of many innovative technology decisions by the firm, and Automatic Payrolls came out of the experience with knowledge that would prepare it for its next challenge: conversion to mainframe computers.
I really think we bet the company when we made the move from a manual to an automated environment.
In 1958, Henry, Joe and Frank made a key decision with a far-reaching effect on the business. With the coming of the computer age, they decided to merge their two businesses, Automatic Payrolls and Automatic Tabulating, into a single company.
But that company needed a different name, one that would reflect how data was processed. No one at the time could have imagined the long-term impact of the new name that was selected to usher the business into the next decade.
A synonym for "computing," it would become the generic term that described the process by which data was collected, sorted and distributed by computerized businesses everywhere: Automatic Data Processing.