How To Grow Without Getting Big

 

"In Germany," confirms Reinlaender, "I had to get five signatures to spend 50,000 marks [U.S. $25,000]. Here, I'm fully responsible for Cam-Slide."

In many respects, Magna's managers do run their shops, as Stefan Boekamp says, like private businesses. Each general manager decides what contracts to bid on, which ones to accept, and how to get the product out the door. "Nobody comes in here to tell me how to do my job," says Peter Voss, manager of Dortec, another division. "I would throw them out." Managers even compete for contracts. Boekamp and Reinlaender, who run similarly equipped factories with similar product lines, find themselves bidding against each other frequently. (Though plants can submit competitive bids on a job, only one bid from Magna goes out to a customer.)

The fact remains, however, that Magna is not 100 individual businesses; it's a single company with some clearly defined strategic priorities and a distinct corporate identity. Fred Gingl enforces the one, Frank Stronach the other. Though both men prefer to manage by what Stronach calls "persuasion, ingenuity, and incentives" rather than by command, neither the strategy nor the corporate philosophy is up for grabs. The company is structured accordingly.

The first layer of oversight is what Magna calls "group" offices -- eight in all, each with between 10 and 20 plants. Part of the groups' function is coordination: they maintain sales offices in Detroit and act as clearinghouses for quotes. But they also have the formidable task of arbitrating plant managers' claims on company capital. If a manager wants to replace a machine, he borrows money from the group. If he wants to build a new plant, he approaches the group with his proposal.

Where the basic product decisions are concerned, though, the groups are still very much accountable to the man who creates them and who appoints their top managers: Fred Gingl. "For the last six or eight years," says Gingl, "every decision about where a factory goes, how big it is, who the manager is, and what products they will make came through my office somehow." In effect, the groups are conduits for Gingl's priorities. For example, he wants Magna to start developing modular seating systems, which it would then sell to the auto manufacturers as fully assembled units. Integram Group, formed last August to coordinate all seat-related divisions, is charged with dispensing the company's capital in this area. Plant managers whose proposals fit in with the overall strategy will benefit accordingly.

Magna's corporate philosophy, developed and propagated mainly by Stronach, imposes an entirely different set of constraints on the company's managers. Magna sets a minimum wage -- currently $8 (Canadian) an hour -- for unskilled production workers and provides all of its employees with an extensive list of benefits, from fully paid health and dental care to the free use of a 95-acre park situated in woodlands north of Toronto. A Corporate Constitution, published in the annual report (and incorporated in Magna's organizational bylaws), binds management to distribute 10% of each year's pretax profits to employee accounts, mostly in the form of company stock, thus ensuring that each worker has at least a small equity interest. Posters on the walls of every plant explain the connection between the plant and Magna; announce Magna's commitment to fair treatment, safety, and job security; and encourage any workers with grievances to contact human-relations officers (anonymously, if they wish) at the group or corporate level.

All these measures reflect an atmosphere in which the workers' interests are taken seriously. Fred Gingl, called one day by a factory worker who feared he was about to be let go, met with the man at five that afternoon. "No complaint that reaches this office will be left longer than a day," he says. Jim Gray's job as a human-relations officer for the CMT Group is, in effect, to make sure complaints don't get to Stronach's or Gingl's level. He reports spending 60% of his time handling individual problems and disputes. He has no power other than persuasion, but the company's culture lends him a good deal of authority.In one case, a manager was preparing to fire an employee for repeated fighting and sexual harassment -- an open-and-shut case, Gray acknowledges. The manager nevertheless felt compelled to check with Gray before dismissing the man.

Inevitably, Stronach and his plant managers don't always see eye-to-eye. Last year, he decided that Magna's factories should abolish time clocks -- a decision, he admits, that the company had a "hell of a time" convincing its more traditional managers to carry out. But there's no question who's in charge. In July, for example, Magna opened the first of what Stronach says will be a series of state-of-the-art day-care centers for its workers' children. This one, housed in a new building within walking distance of Cam-Slide, was established by headquarters and given to the CMT Group. Suppose CMT didn't want it? "Mr. Stronach would step in," says center director Wendy Campbell, no uncertainty in her voice.

Sometime in 1987, Stronach promises, Magna will promulgate an employee charter of rights, which will be enforced by an advisory board of prominent citizens and a hired staff of ombudsmenlike human-relations workers. The board's offices will be located outside Magna and its activities financed by an independent trust fund.

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