Freedom, Inc_ - Brian M. Carney [104]
“We were losing money in Spain,” Raiman explained. “And one day a Canadian—who was a controller and had worked before in a command-and-control American company—came to see me and said, ‘Do you want to stop losing money? I will identify all the gaps in the expense reports, I will verify all of them, and you’ll see how the money will appear.’”
Raiman replied, “It won’t work; this way won’t work.” The man said, if Raiman wouldn’t support him, he would quit. So, Raiman told us, “I let him leave.” Raiman did not believe that GSI’s Spanish business could be fixed by minutely examining every expense report. On the contrary, he believed it would alienate and anger GSI’s people there, who would feel besieged and persecuted by the financial secret police and start making up the numbers “to beat the system.”
Raiman was not alone in disdaining KGB-style financial controls. Nor does this attitude necessarily imply leniency toward abusers when they are exposed. Quite the reverse, in fact. Most of our liberating leaders, including Zobrist and Harry Quadracci, knew how to pull the trigger on the freedom abusers because they knew that everyone else in the company was aware of the abuse and was waiting to see what the CEO would do about it. Most—except Raiman. A person who worked with him in GSI recounted that Raiman loved and trusted employees so much and was so saddened by the news that some abused their freedom—such as cheating on expense accounts—that nobody wanted to bring him such news. So, unwillingly, Raiman made himself incapable of acting against these abusers. This, understandably, demoralized the majority in many places who played according to the company’s “rules of the game.”
But Raiman aside, you might ask whether such a trusting approach is even possible in a post-Sarbanes-Oxley world, with new layers of federal bureaucracy demanding more and more precision on the part of internal company controllers. Richard Arter, the head of investor relations at Sun Hydraulics, put it this way: “Our position on that is that we need to pass the test. We don’t necessarily need to get an A.”7 In other words, it is possible to comply even with onerous financial reporting laws and still treat your people with trust.
Indeed, it may well be easier that way—as Jacques Raiman suggests, a punitive financial reporting system is more likely to lead to “smoothing” and other fudges than one that is less oppressive. “As an economist,” Raiman told us, “I learned in my youth that there is a trade-off between effectiveness and fairness.”8 He continued: “But what one learns in a company is that fairness is the basis of performance and not vice versa. For me, a fair manager is one who values you for what you do. From the moment that running a company is compatible with moral principles one learned in childhood, it becomes un bonheur.”9
Raiman’s last statement echoed one of Zobrist’s remarks, that his daily tours of the shop floor to listen and converse with operators were his quest for bonheur, for happiness or joy. But it was his reflection on the relationship between fairness and performance that intrigued us. Indeed, Raiman used two different meanings of fairness: economic and moral. While talking about the trade-off, he refers to the economic unfairness of the competition that—since Adam Smith—has been viewed as the basis of a country’s economic performance. But when he talks about fairness as a basis for the company’s performance, he refers to moral fairness, to the way a company and managers treat people.