Like good social democrats, the owners didn't choose a successor. They chose four. The company would be run by a committee of managers, none of whom would outrank the others. It was in many ways the logical culmination of Gun's own egalitarian style and the company's long-standing commitment to participatory management.
"It was a noble experiment," Gun Denhart notes. And it failed utterly.
When the management committee tried to tackle disparities in its own compensation, rapport quickly disintegrated. "It's not that we didn't get along or respect each other," says Roberts. "But when we were supposed to make decisions about how to pay ourselves -- everyone had different deals, and there were jealousies and resentment all the way around -- we got bogged down. We spent 10 times more energy and time than we should have on decisions like that. Because there was no leader. No tiebreaker. Nobody to make a hard decision."
A participatory paralysis set in. And relations all around deteriorated. The acrimony ran so high that an arbiter was called in to mediate a meeting between the managers and Gun. On only one point were they able to reach agreement: a committee was no way to run a company. The managers exhorted Gun to return to managing the day-to-day operations. The company had urgent problems: costs needed to be reined in, better terms needed to be extracted from vendors, a definite course needed to be set for the future. Gun's response was unequivocal: she said no. "I'm not good at those things, and I'm not interested in them anymore."
"It was a fearful moment," Roberts recalls. Amidst increasing competitive pressure and distracting internal disputes, the company was confronting the most challenging period of its history -- without a leader. And no matter how wholesome an employer it had been, it risked becoming a very unhealthy business before long.
To her credit, Gun read the warnings. After abdicating in that charged meeting, she became, as Roberts recalls, uncharacteristically businesslike. "She asked us to help design the job that a new president would step up to fill. And told us she'd get back to us in two weeks with her decision." When Gun asked the assembled group if anyone wanted to be considered for the job, only Roberts declared she did.
The reformatting of the management team began in earnest. After two weeks of deliberation and interviews with inside as well as outside candidates, Gun tapped Roberts to be president. "You have to either train someone for the job or train them for the company," Gun had reckoned.
By selecting Roberts rather than an outsider, the Denharts sought change but not without continuity. "We wanted someone who understood and could maintain the same values even as we changed," says Gun. Improving profitability was only as important as preserving the culture she and Tom had painstakingly created. Roberts, they hoped, could be a conservator as well as a change master. "Mary shared our principles, but she was willing to make the hard decisions that I wasn't," says Gun.
Roberts and Gun, now chairman, began importing talent. In a quest for "balance," they brought in seasoned executives -- chief financial officer Steve Eklund and marketing vice-president Marvin Cohen -- from mainstream corporate America. Drawn by the kinder, gentler culture of Hanna, they were nonetheless businesspeople trained to hunt down costs and enhance profits. They would focus on reviving growth and reducing expenses and make no apologies about it. Gail Johnson, the company's original employee and Gun's confidant and surrogate before Roberts's appointment, narrowed her responsibilities to operations, which she heads as vice-president. She remains the company's walking archive and, according to Roberts, is "the keeper of the company's soul." A symbol that the company would not overlook its homegrown talent, a young and savvy merchant -- Allison O'Connor -- was promoted to vice-president of merchandising. Vice-president of human resources Gretchen Fields took on the formidable task of curtailing the spiraling costs of employee benefits.
Installed just over a year ago, the company's reconstituted management team has yet to work miracles. The disappointing results of last year occurred on their watch. But change at Hanna Andersson is bound to come in small, incremental steps. And signs abound that this ideal employer is, indeed, getting real about business.
For the first time, serious, even fractious budget negotiations were undertaken this year. A scarcity of profits has meant "we have to make choices," Gun says. More rigorous planning and marketing also have begun. Innocent of long-term stratagems until this year, managers have recently devised a three-year business plan to grow the company to $65 million and nearly double its profit margins in that time.
Meanwhile, the founders have rewritten their own roles. Tom has returned to active duty as creative director. He still hopes to sail off into the sunset, but he'll do it less precipitously next time, making the transition over a period of years rather than weeks. Gun has focused her energies on long-range growth prospects such as international and retail expansions. "I'm doing what I'm good at and what excites me," she says. "I'm not going to beat myself up over what I'm not good at or force myself to do it. I've found people better suited to run the company on a daily basis, and I trust them to do what needs to be done."
Topping that to-do list is reeducating employees and weaning them of the sense of entitlement that years of prosperity have bred. Says Gail Johnson, "We have to remind people that we are not here simply to bestow benefits upon them." Opportunities to advance, once regarded as a right, are now harder won. For the first time, the company has required employees to contribute to the cost of their health insurance. It has also placed a cap on child-care reimbursements. The ceiling coincides with IRS rules -- and employees are unlikely to exceed it -- but the message has been sent: there is a limit.
