Saint, Fool, or Genius?
March 1, 1997 -
Aaron Feuerstein is an unusual kind of businessman. Contrary to what many in his profession would have done, he decided to act in the interest of his employeesalthough it cost him 15 million dollars.
When his textile plant in Lawrence, Massachusetts burned to the ground at Christmas time 1995, the 70-year old Feuerstein could have pocketed the insurance money and retired in comfort. But this would have been a disaster for his more than 1,000 employees. Instead, he took the unprecedented step of keeping all his employees on the payroll while the mill was being rebuilt, which took several months.
Feuerstein could have relocated to lower wage states in the South, but he decided to build a new mill on the same spot as the old one, thus insuring continued well-paying jobs for his existing unionized workforce. Quite a few other textile plants had previously moved away from Massachusetts to lower their wage costs.
But Feuerstein's management style was different. Rather than looking for low wages, he made quality the priority concern. He knew that the way to quality production is through skilled and motivated employees. And motivated his employees surely were when he decided to take the risk of keeping them on the payroll while the plant was being rebuilt.
Was Feuerstein a sentimental do-gooder, or simply an old fool who had lost sight of reality? The fact is that his actions were based on concern for his employees' well-being, but also, as it turned out, keeping his employees on the payroll was a far-sighted and sound business decision.
The apparent concern for his employees caught the attention not only of the local community but of the entire country. President Bill Clinton invited him to the White House. He was hailed as an exemplary and humane employer in the print and broadcast media. That helped advertise his products widely, resulting in increased sales and profits.
Realistic and tough minded
While some would have questioned Feuerstein's grasp on reality, he is in fact a realistic and tough-minded businessman who recognizes that at times companies must downsize. In an interview with Thomas Teal for an article in Fortune (November 11, 1996), Feuerstein said that technological advance and good industrial engineering may well reduce the workforce. But he also believes that a company should aim at growth to give new jobs to employees who are replaced by technology and to cut unnecessary jobs "without crushing the spirit of the workforce." He explained that if you are only after cutting costs, if you "just have a scheme to cut peoplethat sort of thing is resented by labor, and you're never forgiven."
The Maiden Mills brand name is now a sign of outstanding quality. The company has excelled in research and superior production and quality control methods. The result is that the company has managed to produce specialized textile products such as Polarfleece and Polartec that have found a ready market.
A combination of excellent labour relations and production techniques have resulted in a steady increase in sales and profits. Employee and customer loyalty have made this company a remarkable success story, demonstrating again that imaginative and humane management policies are a sound foundation for a healthy and growing business.
What could have been a severe shock, if not a tragedy, for hundreds of employees in an industry that has experienced wrenching changes and cutbacks, instead became a stepping stone to further solidifying a strong and prospering business. As Teal concluded:"This isn't the work of a saint or a fool, it's the considered and historically successful policy of a genial manufacturing genius who might serve as a model for every man and woman in business."