You’re gonna like the way this company’s run, I guarantee it.

In 1973, George Zimmerman started a little clothing company with a $7,000 investment.  Today that little company is a large national clothing chain.  You may have heard of it, it’s called The Men’s Warehouse.  George Zimmerman is the bearded gentleman who appears at so many of their commercials; where he can be heard uttering his famous line “I guarantee it.”  Listening to George talk about the way he tried to build The Men’s Warehouse, one gets the sense that he did it the “right” way.

One of the methods he talks about is servant leadership.  Servant leadership is the idea that a manager’s employees are his most valued customers.  This means that a manager’s real job is to provide those who work for him with the best service he can.  This includes training them to do the job well and acting as a mentor for them in things related, and not related, to work.  George took pride in getting to know many of his employees personally.  Referring to this close mentoring relationship as “touch”.  He hopes that by mentoring his employees with such an emphasis on personal connection, that same personal connection will manifest itself in their interactions with customers.

The Men’s Warehouse also has a very interesting way of dealing with the competition inherently created by commission-based pay.  In many retail stores where salespeople get paid based on commission, there is a lot of incentive to have the most sales.  Oftentimes, this leads to clerks stealing each other’s sales.  The Men’s Warehouse keeps an eye on the sales of each of its clerks and fashion consultants.  If any of them seem to be an outlier with a high quantity of low price sales, management assumes that person is stealing sales and trying to rapidly move from customer to customer.  If these people fail to change this behavior they are released.  An example was made of an employee named Jim.  Jim had the highest sales figures at the store he worked at, moving over a half million dollars of product a year.  However, his managers told corporate that he stole sales and was not a “team player”.  Jim was released and the store’s total sales went up, validating the “team sales” idea and showing employees that no one was more valuable than the system.  This was probably my favorite part of the article; one of the major problems we’ve talked about in this class is the problem of commission.  The Men’s Warehouse is the first company we’ve studied that managed to keep commission competition under control without eliminating it altogether.

Another difference between The Men’s Warehouse and traditional management thought is that the Men’s Warehouse encourages close personal relationships throughout different levels of the corporate hierarchy.  They put such a high value on it that the company will pay for dinners at the homes of regional and district managers for them and their employees.  Similarly they will pay for golf outings between different level managers.  It is cool to see a company that is not afraid of employees growing to close to managers.  Instead of worrying that they will grow too comfortable, they seem to hope that these friendships will inspire people to do their best work.  Personally, I think this is a neat idea and would like to read more articles about companies that treat inter-organizational relationships this way.

The Men’s Warehouse ended up being the epitome of every case study we have read in this class.  They are a company that beat out the competition by doing things the right way.  They put their customers before their stockholders and their employees before everyone.  They realize by concentrating on the people in their organization, the money will take care of itself.  Of all the companies we’ve observed, this is the one who’s practices seem the most admirable.  They care about employees, have solved the problem of commission, consider the needs of customers over shareholders, and have lapped the industry in the process.  This is the epitome of successful leadership.

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Robin’s Choice

This case details the choices faced by Robin Astrigo of Astrigo Holding Company, as he tries to cut costs.  It is an interesting article and gives insightful looks into all of the way that a manager could go about trying to cut payroll costs in a time of economic recession.  There are many different options laid out to him by his executive board.  I had never considered all of the different ways that managers might choose to lay off employees.  I had only ever considered that there would be the decision whether or not to have layoffs.  Once it was decided that layoffs would happen, I assumed that most companies already had a plan in place on how to do it.

The first method presented was “first in, first out”.  Under this program older employees would be let go.  This would be good because it would “trim dead wood” but it would be bad because of the pension plans Astrigo would have to pay.  Also, like many other possible layoff methods, it uses broad targeting and lays off people at random.  The next method was “rank and yank”.  Under this system employees were to be judged on the basis of the previous years performance reviews, after which the lowest scoring ten percent would be let go.  This system does have merit in that it is not just random firing, however after talking at such great lengths in this course about how unreliable performance evaluations are, this does not seem like a solid method either.  The third strategy was to fire all of the newest people.  This would eliminate the problem of paying pensions and severance packages, but would also eliminate the best young talent from the company.  Furthermore, is Astrigo got the reputation for firing younger employees, they could be severely hampered when competing for the top business school graduates.  It was also suggested that Astrigo should start selling off assets.  This plan would be very short sighted.  Firstly, it would do nothing to increase investor confidence (which is really why the stock price dropped so much in the first place).  Secondly, those assets might be hurting the bottom line during the current recession, but it is very possible they could turn into steady sources of revenue when the economy picks back up.  Selling them now may hurt Astrigo’s ability to hire back employees later when the market turns.  The final course of action presented to Robin was to have employees take a 50% pay cut and then finance all they were short on from a cash fund that Astrigo has sitting in the bank for liquidity purposes.

I think that the two solutions that make the most sense are the “first in, first out” policy, and the final policy where every employee takes a pay cut.  The only real reason that the former appeals to me is because it may cut bloated salaries.  This would be good, and it would also clear room for the new talent coming up through the ranks.  However, severance packages and pensions would be expensive for these people.  Also, the company would be eliminating all of their most experienced employees, and the wealth of knowledge that goes with them.  The other strategy, where everyone takes a pay cut, is probably the best solution.  First of all, it would show the employees that Astrigo is a firm that really values their workers.  Also, it is actually not bad to use cash during a recession.  During economic downturns, the interest rate is often lowered.  Because of this, the cash sitting in the bank is not growing at the rate it would in a normal economic climate.  Also, Robin is saving the money for acquiring an important asset, what asset is more important than the workers?  As long as Astrigo can keep from having a lot of short term liabilities, it would probably be smart for them to use some cash.  Other options that were not brought up were financing their deficit through either debt or the issuing of stock.  Although it is possible that taking on more debt in a recession is a bad idea (although interest rates are low).  All in all it is smart for Astrigo to go with the pay cut idea.  It may not be the perfect solution, but none of these are.  It is important for the employees and the shareholders to see everyone making sacrifices together, this is the only solution where that can happen.

Do The Right Thing

The articles about the military were very interesting.  In both of these cases, a commanding officer is put in a position where they must make a decision between their mission and their conscience.  In the case of Lt. Withers, it seems as though everyone seems to agree that he did the right thing by helping out Peewee and Salomon.  Even though they weren’t supposed to take and holocaust refugees with them, he followed he did what he knew was right and ended up having a big impact on both of those kids.  Sanders knew that if he was caught he wouldn’t get the GI Bill and wouldn’t be able to go back to school, but he disobeyed orders anyway because he thought it was the right thing to do.  This same basic situation was seen in the second article, where Colonel Dowdy had the choice of taking his men through dangerous territory or going around it and getting to the objective later than he otherwise might.  Dowdy does not technically disobey orders but he does go against what his commanding officers seemed to want him to do.  In both of these cases, the men on the ground made decisions based on what the saw.  Also, both times they did so against the wishes of their more far-off superiors.

This disconnect between leadership and subordinate is explored in Covey’s article on leadership.  Covey believes that relationships shoudl be more horizontal than vertical.  That is to say that relationships within companies should not be so much about bosses and authority.  Leaders should not look down on subordinates because of their lower position, but instead they should treat them as equals who just happen to work a lower position in the company.  Leaders that take this approach are better for two reasons.  Firstly, they are more likely to listen to the advice of their subordinates.  Secondly, their employees will likely be more comfortable bringing suggestions to management’s attention and will put forth their suggestions with more frequency.

In the cases of  both Sanders and Dowdy, it seems that these types of beliefs would have been beneficial.  If the higher military brass would have allowed the men on the ground to make decisions based on the intelligence that they had and that central command did not), neither of these things would have been an issue.

That being said, I will say that Sanders’ choice, although it was more directly disobedient, was not as bad as Dowdy’s.  With Sanders, the only person that stood to be hurt from his choice was him.  With Dowdy, the entire invasion could have been compromised.  It wasn’t compromised because he got there on time and the resistance was not as severe as we thought; but we did not know that at the time.  Dowdy tried to save the lives of his men and civilians, which is admirable.  But he could have cost the lives of even more if his batallion had really been needed in the taking of Baghdad.  Both of these men took risks, risks that perhaps they should not have had to take.  But Dowdy did take a bigger risk than Sanders.

But that is not the main point of this post.  The point is that people are more important that money or objectives, and also that the people who are in the action should have a say, or at least some input, into the decisions that are finally made by they superiors.  I certainly wish I had this kind of input at my job.  I’m sure you do too.  Well, don’t you?