Managers

Personality and Performance

Kenn Rogers

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351507332
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

What makes people go into business? What makes some businessmen--and some businesses--outstandingly successful, while others, with opportunities just as good, fail? These questions are often asked, and have often been studied from the point of view of economics or of organizational theory. This book is one of the first scientific studies to probe these questions in depth, in terms both of the individual business manager's character, personality, and drives, and of the group psychology of his milieu.

Starting with a descriptive survey of an important and homogeneous European industry, it traces a clear pattern of success and failure among the firms operating in it. Then, using as a basis the transcript of more than 600 interviews with executives of the firms concerned, it seeks the reasons for each firm's position.

The results are startling: in both the successful and the unsuccessful companies remarkably consistent personality patterns emerge. The study demonstrates that individuals seek to fulfill themselves in their daily work. It shows that in the successful companies there is a basic harmony between the actual job done and its symbolic value for the individual, while in the less successful companies there is strain and tension of a particularly disharmonious kind. The executives' conscious purposes are often at odds with their unconscious needs.

Rogers does not seek to minimize the importance of objective external factors. But his study of top management suggests reasons why an environment that spells success for some firms spells disaster in others. This is a fascinating and important book, which will be read with profit both by businessmen and by social scientists.

V Universal

The History of Universal Household Product Division

Universal, as has been pointed out earlier, is a division of a firm in this household product industry which has moved from among the group of non-leaders to that of the leaders, and this in a relatively short period of time. Among the non-leaders described, managements remained unchanged in personnel and also appeared homogeneous among themselves in character and attitudes at least as far as they are related to business. At Universal there had been a recent change of top-level management. It became apparent that the present and previous management teams differed widely not only in their performances but also in their attitudes towards business. Since reference to this condition comes out throughout the material presented here, it will be useful to give an account of the history of this change in development.

Originally Universal made only industrial products and none for household use. In the 1920s one of its divisions started to make a limited number of household products, but its new off-shoot operated only on a modest scale. Its first year’s total turnover was approximately equivalent to $40,000. As the years went by production in size and number of products and brands increased without, however, reaching a volume warranting organization into a separate division. Later, a separate sales but not manufacturing organization was set up.

From the pre-war history of Universal’s household product division two facts of significance stand out. The first is that the class of trade was not particularly directed towards the higher socio-economic brackets. Yet in retrospect this Is seen as an halcyon era. Among the elder members of the present-day sales force there is a persisting fantasy relating to the division’s pre-war type of business. When discussing this period, phrases such as ‘the best homes’, ‘the finest people’, with obvious reference to socio-economic groups recur again and again. Clearly, this is a direct reversal of the facts, indicating at the very least that some of these men with pre-war experience in the division feel door-to-door selling to be an undignified activity.

Second, the beginning of the split between the household product and the industrial sides of this industry can be seen in the off-hand way in which the parent division treated its new subsidiary. It is clear that the production engineers of the industrial side wanted to have as little as possible to do with household products.

Immediately after the second world war a new chairman took over at Universal. During the war the capital products part of Universal had Invariably suffered. It was decided to concentrate and rebuild and modernize this part of the business as a first priority. This decision, not unnatural in itself, was closely in line with national policy at the time. But shortage of key men and materials in the early post-war years delayed the completion of the task.

Several years later the chairman went to America. There he noted among other things the degree to which the household product business was advanced and on his return decided to pay greater attention to this part of the firm. The sub-division was made Into a separate group with its own production facilities and its own small quantity of finance. The Industrial engineers welcomed this decision. In the words of one of them it ‘got household products out of our hair’. It also gave the industrial side itself a chance to obtain greater independence.

The chairman, then, looked for someone who could successfully run this newly organized division. He explained (in an interview) that:

‘[household products] are not engineering in the sense that heavy plant or [industrial] devices are, but present problems in design, styling and marketing which are peculiar to themselves . . . people who make [capital goods] are apt to carry the thinking prevailing there into other applications such as [household products]…. Engineers have the wrong mind for this. They look down their noses on [household products]. To them it is all bits and pieces. You can’t marry this kind of thinking and engineering thinking.’

He looked for someone who could ‘run the household product business, who could make a better show of it’. A short-list was arrived at. He then asked some of his closer colleagues on the Board if they knew of someone on the outside whom they could bring in for that purpose. One of the Universal’s directors suggested calling in a real outsider, i.e. a non-engineering man – C. B. Alexander.

To hire him for the job represented a quite unorthodox decision. A number of people who have been all their lives in the industry cannot recall a case in the last forty-three years in which a complete outsider was entrusted with a leading managerial position in the industry. A short time later, in 1956, Mr. Alexander was appointed.

The New Top-Management Team

(a) The New Policy

Alexander took the job on condition that he was allowed to make a study of the situation for a three-to-four-month period, and then make recommendations to be accepted by Universal In principle. These would become the broad policy on which he would run the division. Among his first acts was to bring in a colleague who had worked with him for more than a decade – M. F. Joseph. This first appointment was a key one. Together they prepared the basic plan covering the division’s objectives, the organization required, the resources financial and otherwise that would be needed, and the bringing In of new staff. It was specified in this plan that these new men should come from outside the industry. Essentially Alexander’s survey was the application of modern methods of marketing to the specific conditions of the division.

This was an entirely new approach in this section of the industry. It is widely agreed within the company that his predecessor was a heavy-engineering man. Characteristically, he had made his headquarters at the factory in the provinces and not in the capital of the country, the place for marketing and sales. His motto is quoted as ‘let them [the customers] buy and then we will make the stuff’.

Planning, at this time, appeared in some ways erratic. During a conversation with a group of his former subordinates, the following remark was made:

‘Maybe he understood us better; maybe we knew him better. Maybe today things don’t always go as we would like them. But we know where we are going, what we produce and in what quantities. It is so much easier by having a plan and a directive than just fretting in uncertainty.’

The factory was organized to produce small batches of a very wide range of products. The product B model (see Table 1) was based on a design that had not greatly changed for more than twenty years and was, in fact, American in origin. According to long-service employees the level of production was decided intuitively and the sales force was employed to sell what the factory produced.

Pre-war, the division had manufactured about 30 per cent of the product B output in the country. But in post-war years its share of the market had sadly declined. In 1948 17 per cent of all of product B found in the country’s homes was of Universal make. In 1956 this figure had come down to 8 per cent, and sales for that year were expected to be no more than 5 per cent of the industry’s total.

In the course of the material presented here it will become important to study the personality of Alexander. In view of this, I shall let him speak for himself at some length on the various points raised. This is to indicate not only the content but also his approach to business planning. The Alexander appraisal of the situation based itself on the premise that : ‘the market is likely to continue its long-term growth … the general indications are that the market will grow strongly, and for some time….’

The immediate objective it put forward was: ‘to arrest the fall (in the division’s business) and then begin building towards achieving a major and profitable share of the [household products] market for Universal’

The means of achieving this was to be through concentra-tion of effort. At the time, although the division made about two hundred different brands of twenty-odd different types of household product, these varied widely in marketing importance. Taking the country’s total market of the twenty-odd product groups manufactured by Universal, the nine smallest represented merely 5 per cent of the total household products market. However, 70 per cent of national production in these categories was accounted for by the three largest – products B, C, and H (see Table 1). It was, therefore, decided to abandon minor product groups and make a maximum effort in the major product groups. The aim was:

‘to achieve in certain major fields a position sufficiently dominant to give Universal a measure of control over the market. In all other fields where Universal’s business seemed likely to be minor or unprofitable, the objective would be to operate only if there were strong and special advantages in doing so…. In the absence of special reasons Universal would forgo these in order to concentrate its resources on the more important objectives.’

Within the major product groups the decision was taken to give main priority to product B, because: ‘It is the largest field; we have considerable experience in it; we probably have both trade and consumer goodwill in it; it seems likely to be profitable.’

Since the basic objective was to ‘achieve a much larger share of a competitive market’, this implied ‘persuading a very large number of people (who then were not of this mind) that they should buy certain Universal products.’ This in turn implied ‘spending heavily on advertising and sales promotion directed at the consumer’. ‘Such major spending could of course be undertaken on judgement alone.’ But this is a hazardous and uncertain course which can lead to marketing failure and financial loss. The wisdom of such a decision was linked to two basic factors – quality and cost.’ The questions were raised:

1. ‘Is Universal’s product sufficiently outstanding to deserve continuing consumer choice after the company would revert to a normal advertising expenditure ? ‘
2. ‘Is cost sufficiently low (in relation to competition and the market) to yield an adequate margin for advertising and profit, so that the company can recover the heavy Investment in a reasonable time ?’

As a result of the analysis of these two questions it was decided:

‘not to recommend the expenditure of large sums in an early attack on the market with Universal’s existing products … [the immediate] objective should be to consolidate [the] existing share of the market rather than attempt a hasty expansion.’

However, for future expansion a marketing policy was recommended according to which:

1. ‘We must develop and improve our product until it has a clear preference over both known and predictable competition. The work of product development, and the assessment of consumer preference, must be based on reliable research as well as on our judgement,
2. ‘We must reduce both our design cost and our manufacturing cost until we are certain that we are at no cost disadvantage relative to competition. Minor cost premiums may be acceptable for major advantages in consumer appeal.’

As to investment spending it was recommended that:

‘Once we have developed a product which is proved to be superior to competition, at a satisfactory low cost, then we can with confidence spend heavily on advertising, sales promotion, and selling effort, knowing that we will build and hold the business.

‘The greater the amount of this investment spending, the more readily we can hope to attain a given share of a market. However, the investment must be balanced against the predictable return.’

On organization the following principles were laid down:

‘All our organization thinking needs to be focused on the single aim of increasingly winning a favourable decision from the consumer. This in turn depends on two most critical factors.

(i) Product Quality, and (ii) Effective Marketing.’

A structure ‘believed to be the right one for obtaining the objectives’ was sketched out. This structure separated the Sales Department and the Marketing Department. The responsibility of the former was ‘with their buyers – the trade’, of the latter ‘for achieving the ultimate favourable decision from the consumer’.

Product-planning was described in great detail as designed to create ‘an outstanding product which deserves to be purchased’, and to achieve ‘an actual purchase by the consumer’.

As to personnel, ‘have an organization of better-than-average calibre’ was recommended. Conditions of employment were suggested relating to the various customary features. But this policy suggestion included ‘above all, warm and enthusiastic leadership’.

The morale of the personnel at Universal had been shaken by several major reorganizations and other disturbances in the two years before Alexander came to the company. It was, therefore, decided to ‘minimize further unsettling actions for the present’. This was done in the full realization that there were:

‘Some positions in the organization held by people of limited ability … competitive success will depend on having really outstanding people in all key positions, but the necessary changes and adjustments should not be done too hastily.’

It was also recognized that: ‘the cost of building a first-class organization is likely to rise faster than its fruits – so we face a period of investment-in-people.’

This plan was approved in its entirety by the Chairman and accepted by the board of Universal. Of Alexander’s position henceforth, one of his colleagues has remarked:

‘From that date on he had no interference from anyone as far as expenditure or employment or product development policy [were concerned]. He was in fact chief executive of the division, and this merely on the guarantee that he would remove a lost position and produce a healthy profit position.’

(b) The Changes Start

For the first six months very few changes were made in the actual organization of the division. The period was mainly devoted to collecting information. In Joseph’s words, it appeared that ‘the industry was badly off so far as statistics were concerned’. The first task, therefore, was really to find out :

‘whether the recommendation was really true. We made a lot of assumptions about volume, acceptance of products and so … the first period of time was employed with detailed market research both statistically and in the field.’

There were, of course, also other things to do.

‘For the first six months it was mainly a question of economy, because the business was badly in the red … of studying the market, and of trying to assess what sort of personnel were necessary in the whole field.’

Alexander’s attitude towards the problem of company structure is best illustrated by the organization chart which he introduced at an early stage. Most organization charts are shaped like a family tree with the chairman and managing director at the top and the various successive levels of management and organization below them. Moreover, in the usual type of chart departments depend on other departmerits, so that the outer branches of the tree, as it were, are remote from each other and from the board. Alexander’s chart places the managing director and his staff in the centre, with four departments – Marketing, Design, Manufacturing, and Sales – radiating out from the centre. In addition there is a symbol of how he intended to orientate the group thinking. The consumer is represented in the dominating position a...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Acknowledgements
• I What this book is about
• II The research opportunity
• III Significant features of the household product market
• VI The non-leader companies
• V Universal
• VI The case of the Davidson Company
• VII Successful and non-leader companies — a comparison of attitudes
• VIII Final Implications of this study
• IX What has happened since
• Appendix A Research techniques
• Appendix B Results of projective tests
• Appendix C Sketches
• Bibliography
• Index