"See, in a privately held company, you have a lot more flexibility. Then your challenge is to accept the fact that you're going to make a lot of mistakes. You need to recognize and reward people without trying to front-end load it too much. The one thing I know through experience -- the one absolute thing I know -- is that people don't know why they come to work until they don't have to come to work. There's a very large number of people who are eagles, who do brilliant work, but who just fold up on you once their financial needs are met. They lose their edge. And it's a tightrope, because you have an obligation to reward those people for excellence, but some of them are going to go soft as a result. So you just have to keep training the new young ones behind them."
Recognizing and rewarding excellence, searching for eagles, paying with equity -- it was all part of the corporate culture Perot began to create long before the phrase entered the business lexicon. He hired people like himself, then gave them the best of what he'd been given. Outsiders often commented on EDS's military trappings -- the fences and guards; the abundance of flags; the clean-shaven men in white shirts, dark suits, shined shoes, and army haircuts, all walking around in gung-ho double-time. Some people described the atmosphere as "militaristic," but they missed the point. Many EDS employees came straight out of the service. They were thoroughly comfortable in military surroundings and often unsure how to dress in the civilian world. The dress code solved the problem nicely.
Inside EDS, moreover, the spirit was more democratic than militaristic. Rather than an army with a formal chain of command, the team operated like a loose band of guerrillas, with Perot as the leader. They honored the man in the field, encouraged him to make his own decisions, regardless of his title or his position in the hierarchy. Results were all that mattered, and compensation was geared strictly to performance. There were no class distinctions, no private parking spaces or executive dining rooms. There were no memos, either: if you had something to tell Perot, he wanted to hear it face-to-face. "I can't talk to a memo," he says. "I want a live, breathing human being in here saying, 'Look, I think you ought to do this, and here's why.' "
The system bred a kind of unity and loyalty that is rare in any organization. "I never doubted that -- if I needed any resource that Ross or the company had -- it would be there," recalls EDS veteran Gary Wright, now with Perot Systems. "And I never doubted that I had the same responsibility to everyone I worked with."
The model for loyalty came from the top. Once, in the early days, Perot disappeared from the office unexpectedly and went visiting, calling on the wives of each of his colleagues, thanking them one by one for putting up with the late hours, and giving each 100 shares of stock as a token of gratitude -- a token now worth about $165,000. But Perot gave more than money. If a family member were severely ill, he would be there, arranging personal planes, locating specialists, or finding a way to pay the bills insurance didn't cover. And he would do it for any team member, not just the executives.
But loyalty was never allowed to interfere with duty. Perot loved to see young men stand up, particularly if they were fighting for a customer. He still keeps a sign on his door: "Every Good and Excellent Thing Stands Moment by Moment on the Razor's Edge of Danger and Must Be Fought for." The reason, he says, is to remind visitors that they must be willing to fight even him for their ideas. "You might come in when I don't feel good, when I'm tired or distracted or whatever. But your idea is on the razor's edge of danger." Perot expected people to look straight into his piercing blue eyes and take him on head-to-head, if the good of the company was involved.
Those who fought, and those who performed, received enormous financial rewards, but not in the form of salaries, which were modest. Instead, excellent work was recognized with ad hoc bonuses and bestowals of stock. There was no uniform salary administration, no regular compensation review; discussing salary with a peer was grounds for dismissal.
Again, Perot served as the model. He set his own salary at $68,000 in 1965 and never gave himself a raise. Nevertheless, when he took the company public at $16.50 a share in 1968, he was said to claim a personal net worth of more than $350 million. By March 1970, with the stock trading at $162, the value of Perot's EDS holdings had grown tenfold. Not that the money seemed to matter much to him. He still ate in the company cafeteria, waiting in line like everyone else. He was as likely to shop K mart as Neiman-Marcus. And, in May, when EDS stock dropped back to $29 per share, he dismissed his losses as "Mickey Mouse."
"Ross is Ross," his employees would tell you. "He'll never change." What mattered to him was seeing EDS grow, training others to spread the code.
Perot says he never had a problem delegating responsibility and authority. "My experience is that people who are really, really bright find it very difficult to delegate, because they literally could do the job better themselves. For them, it's kind of unnatural to delegate and do all the things you have to do to go to a big organization. But for people like me, who are average, it's different. Oh, I've got an ego and all that, but I know I need help. So I go and get the very best people. Then you've got to motivate 'em, create a good environment, and so on."
He made no bones about what he meant by "the very best people," either. "I'm looking for people who love to win," he told potential employees. "If I run out of those, I want people who hate to lose."
Like everything else at EDS, hiring was driven down the ranks as the company grew. There was no personnel department; decisions were made in the field. Prospects would be brought in for a team interview by their potential peers, and looked at three ways: 1) would you want to work with him as an equal on a project? 2) what if he were your team leader? 3) what if you were his team leader? Ability to accept the culture was more important than technical skill or experience. And the code of loyalty was enforced: recruits who required technical training had to sign an employment contract, promising not to leave EDS to work for a competitor, and to pay back the approximately $9,000 invested in their training if they should quit or wash out.
