A Call To Action

Jim Pinto is betting his company on a humanistic approach to commerce that makes Action Instruments everybody's business.

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Viewed merely from the balance sheet, there is nothing remarkable about Action Instruments Inc. The 11-year-old, San Diego electronics company, which last year turned a modest, $530,000 pretax profit on sales of $15 million, has never produced a major innovation, gone public, or attracted much more than local interest. Even Action's venture capitalist describes the company's best-selling product as "boring" and mired within a slow-growth, "pigpen" market.

But, more important than any consider ation of the bottom line, Action Instruments has produced the rarest of commodities -- a business enterprise founded upon profoundly humanistic principles. "We are building capitalism with a heart," explains Jim Pinto, president of the company which manufactures electronic measurement and control devices. "Our competitors don't have people on their balance sheet. Ours does, and they're at the very heart of our growth."

Long before Theory Z, Transcendental Meditation, and myriad other humanistic management theories permeated the business world, Jim Pinto was implementing his own particular capitalist vision at Action. Since founding the company in 1972, India-born Pinto has built an enterprise in which the distinction between employees and owners is blurred almost beyond recognition. Even now, as he takes a risky move into the burgeoning industrial computer field (see sidebar, page 96), he has no intention of deviating from the central tenets of his nonhierarchical, share-the-wealth philosophy.

"The future of this company is to eliminate the differences between workers, managers, and owners by making them all capitalists," Pinto says, sitting below a photo of a bemused Albert Einstein. "If you own a piece, if you feel a part of this, you do everything to increase productivity. The whole ethos is based on the idea that love is a better motivator than compulsion. We don't have 'yes sahib, no sahib' relationships around here."

At the center of Action's ethos is an almost messianic faith in the power of worker ownership. Almost from the inception of the company, Pinto has assiduously encouraged his employees to invest as much as 10% of their gross income in the purchase of Action stock. Today, almost half of the company's 285 employees are shareholders, controlling some 20% of the company, with its independent field representatives owning an additional 8%.

For most of these worker-owners, the share in the company remains fairly insignificant, but for some managers and long-time employees, Action Instruments's stock already appears to have been an excellent investment. Since 1978, the artificially set in-house price for Action stock has soared from $1.50 to $5.75, allowing even some of the assembly-line workers to garner over $10,000 worth of the company. This price was recently validated when a group of British venture capitalists, seeking to underwrite the company's European operations, invested $1 million at $9 a share.

But even Pinto, who now owns slightly less than half the company's stock, realizes that "share the wealth" is little more than a slogan, unless the company goes public. To accomplish this goal, he has fixed Action on a high-growth, new product-oriented track. "Going public is the goal that keeps us moving. It's the way to make the ownership ethos pay off," explains Steve Peltier, the company's 28-year-old chief financial officer. "It makes it everybody's business to get all excited about new, sexy products like the industrial computer."

Ownership, however, constitutes only one element of Action's quest to foster worker enthusiasm and involvement. Action employees are expected to take an active interest in their investment. An "info center," for instance, supplies all workers with the sort of detailed information usually accorded only top managers at most companies, including weekly statements about profits, shipments, bookings, even the cause of key bottlenecks.

This attitude of responsibility for the company is further engrained through extensive training sessions. Two series of four-hour, four-week seminars focus on such basic attitudes as trying to be "2% better" than other companies ("2% is practical and realistic," says Pinto), not putting off work until tomorrow, and dedication to the company's long-range growth strategy. Equally important, the sessions, taught by company personnel director Cathy Jett and attended by 9 out of 10 employees, stress such basic communications and human relations skills as trust openness respect and interdependence.

Among other principles stressed at Action's in-house seminars is the "barrier," a strict screening process for potential employees. All candidates, for example, are grilled about their sentiments toward teamwork and cooperative ownership. Since they would be supervising other people's work, prospective managers are tested for dedication as well as sentiments. Unlike assembly workers at the company, for instance, managers traditionally have been required to take a substantial pay cut. Some top officials, including the executive vice-president and the chief financial officer, took positions at Action at salaries as much as $20,000 below their previous rates. "How else would we really know they want to be here," asks Pinto, whose $65,000 a year is the company's highest salary. "We don't want to make it easy for people to join. We want people who can look over the barriers -- a pay cut, for instance -- and say, 'Hey, this is a good place to work.' We want people who are dedicated to what we're doing. We are not interested in mercenaries."

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