At 6.30am sharp, John Mars, 56, pulls his 1989 Jeep station wagon into the small, empty parking lot at 6885 Elm Street in suburban McLean, Virginia. He parks near the rear of the unadorned, unmarked two-storey brick building.
He unlocks the basement door, flicks on the lights and takes the stairs to the second floor. The time clock reads 6.40. He pulls out his time card, marked J.F. Mars, and does what few CEOs in America would dream of doing: he punches in.
There are no private offices. In a large open room on the second floor, Mars makes his way through a sea of black-metal desks and plastic chairs varying in color from orange to beige. Four glass-enclosed conference rooms provide the only privacy. This is the nerve centre of a multinational, multi-billion-dollar empire: but it looks like a back office.
John Mars and his elder brother, Forrest junior, share the role of chief executive, dividing responsibilities along lines of interest. They sit in a back corner of the huge room with their sister Jacqueline, who serves as corporate vice-president. They split one secretary between them.
It is not the kind of life you might imagine for a family whose net worth is, according to Fortune magazine, $US12.5 billion (about $21 billion). But then there is much about the Mars family that is unimaginable.
With worldwide sales of more than $US12 billion annually, Mars is bigger than such corporate giants as McDonald’s and Kellogg. With products including M&Ms, Snickers, Milky Way, Twix, Bounty and Starburst Fruit Chews, Mars controls a quarter of the United States lolly market. M&Ms alone generate more revenue than Reeboks.
Yet Mars is much more than lollies. It makes ice cream, pretzels, Uncle Ben’s parboiled rice and scores of other products around the world. With brand names such as Whiskas, Sheba, Expert and Pedigree, Mars sells almost as much pet food as it does lollies and ice cream.
But, while the Mars universe of products is among the world’s best known, the company is scarcely known at all. Since its founding in 1922, the privately held company has operated inside a fortress of silence. Requests for information about the business have routinely gone unanswered. Family members have shunned the press.
This impenetrable shroud has bred a host of popular myths about Mars and its owners. But a picture emerges of a company that defies many axioms held sacred by corporate America:
- Status at Mars is a dirty word. No one has an office, everyone does their own photocopies, and everyone handles their own telephone calls. Those who travel fly economy class.
- Bureaucracy is anathema. Writing memos is against corporate policy and everyone, including the family, works on a first-name basis.
- Pay cheques are tied directly to the company’s performance.
- Nearly every cent earned is ploughed back into the business. John, Forrest junior and Jackie receive only nominal dividends.
- Mars is almost debt free. The company financed its expansion into a global conglomerate, using its own cash: virtually unheard of in today’s leveraged business world.
- Cleanliness is an obsession. On any given day, the company boasts, the level of bacteria on a Mars factory floor is less than that in the average household sink.
- Quality is a compulsion. Millions of M&Ms are rejected for sale every day because their “M s” missed the mark or their shells did not glow like headlights.
For Americans, the idea that a multi-billion-dollar conglomerate operates successfully without executive trappings is hard to swallow. Mars operates this way because of Forrest senior’s unyielding quest for perfection. He developed “The Five Principles of Mars”, a bible of corporate rectitude. These lofty themes: Quality, Responsibility, Mutuality, Efficiency and Freedom; are stated in a handsomely printed 24-page brochure that can be found on desks and tables in every factory.
These principles form the basis of the organisation’s culture and have held strong through the organisation’s life.
Quality at Mars means taking care of tiny details that consumers would probably never notice. Though the pressure to compromise on quality has increased, neither John nor Forest junior has lowered the company’s standards. The brothers greatest fear, associates say, is “incremental degradation”, a term used to describe what can happen if you start using cheaper ingredients.
Principle number two is responsibility. “We are responsible to our associates, for without them there would be no Mars”, said Forest junior in one speech. “In fact, my brother and I believe we work for our associates, not the other way around.”
Whoever works for whom, the rewards are impressive. Salaries are pegged at the 90th percentile of the compensation offered by the world’s premier companies. Moreover, Mars operates with only six pay levels. By paying all vice-presidents about the same salary regardless of their function, Mars finds it easy to transfer people from business unit to business unit and from function to function.
The notion of responsibility blends into principle number three, mutuality, which means “everybody wins”.
Principle number four, efficiency, is, in everyone’s opinion, the key to the company’s success. The company’s drive for efficiency has bred one of the most effective workforces in business. Mars operates with 30% fewer employees than its closest competitor, but it produces more lollies per employee than any other company in the industry. Developing super-efficient factories is not difficult for Mars. The result of constant reinvestment is best seen inside the plants, which are state of the art from top to bottom.
The fourth principle extends to the use of human resources as well. The flat management structure and open offices encourage direct communication.
The fifth principle is freedom, and is probably the one closest to the brothers hearts.
In the pamphlet, it is explained in this way: “We need freedom to shape our future: we need profit to remain free.” What it really means in practice, however, is privacy, in absolutely every facet of the business.
Forest senior had strong views on how the business should be run, and Forest junior and John are of the same mould. David Brown, Forest senior’s long-time financial officer, remembers one thing clearly: fear. He describes dealings with Forest as amicable “as long as you had a strong duck’s back; if you could take a certain amount of tantrums”.
Forrest senior paid his managers well for running the business according to his vision and his strictures. However, in return he demanded, and received, complete devotion.
Today, the Mars family’s values, precepts and eccentricities permeate every aspect of the business. These characteristics are the company’s greatest strength, and they underpin a strong unchanging corporate culture.
However, they may also be its greatest weakness.
How would you describe the culture at Mars? How is it that this culture “may also be its greatest weakness”?
Reprinted with permission from Effective Management, based on J.G. Brenner’s “Why Mars still Snickers all the way to its piggy bank”, The Age, April 18, 1992.
Proposed solution #1
Sharon McGann is a director of the training consultancy
A Passion for Results Pty Ltd, which provides workshops for individuals and groups to explore how to achieve better results together.
Business people talk about culture according to the predominant function in the organisation: managers talk about having a sales, service, marketing, or technology culture. According to this way of viewing culture, we could talk to Mars management about its culture devoted to production excellence.
Colins and Chippendale, Australian researchers, have identified a number of cultures based on common value sets. Two common sets are the Family/Social and the Collaborative culture.
In the family/social culture, the business is “family” and employees show respect for authority and are obedient; in return they receive care and security.
In the collaborative culture, the members create the organisation and it is a place where employees are motivated to integrate their personal skills to collaborate in projects.
There are fundamental value differences between these two cultures: the former values control, duty and workmanship as means to achieving security, belonging and self-worth. The latter values freedom, personal authority and knowledge as means to achieving dignity, equality and self-actualisation.
Going by the “five principles” and the comments of David Brown that Forrest senior demanded “complete devotion” and in return paid his staff well, it is evident that Mars has a family/social culture.
Where to from here?
The message for Mars is not that its culture is wrong but rather that the principles are so well accepted that they are extremely difficult to discuss. Therein lies danger. Another danger in wanting to change corporate culture is that it is like wanting to change your personality. When a corporate culture is based on the values of the founders, it is impossible to change that culture without changing the company unrecognisably. For Mars to change its culture, it would have to change its founders; obviously an impossibility.
Nonetheless, given that there has been a hand-over from Forrest senior to the next generation, it’s a good time to review underlying values.
Strength and weakness
In relation to the question of whether Mars culture may also be its greatest weakness, let’s look at what “strength” means. Usually it is a measure of the cohesiveness of the members of the organisation and their mutual beliefs. Mars certainly displays a strong culture, with the five principles existing as a document that can be “found on desks and tables in every factory”.
Management needs to discuss the “undiscussables”: to question whether the principles and practices they hold dear are appropriate for the present and the future.
Firstly, there is the quality principle. To question their striving for the highest quality would probably be classed as madness, but is nonetheless necessary. The questions to ask are whether clients notice quality and whether they are prepared to pay for it. Mars has set an extremely high standard, which gives consumers great confidence in its products. But is it able to request a premium for this quality?
Secondly, responsibility is also a solid value but, reading between the lines, it seems that most of the responsibility is one way: from management to staff. Is this encouraging an unhealthy dependency on the decisions of managers?
We also need to question how open communication really is. The flat management structure and open offices are supposed to encourage communication, but it is unclear whether any real questioning of principles actually occurs.
Efficiency also needs to be questioned. Are employees merely expected to implement the identified efficiencies or are they expected to contribute to the identification process as well? Someone should be questioning the implications of this for the type of people Mars hires.
Finally, the principle of freedom seems to apply more to the owners than to stakeholders. If it has not been asked already, it is only a matter of time before employees and managers start to ask “What about me?” Employees, especially those of the collaborative persuasion, are motivated more by being able to contribute to a business than by money, yet ownership and decision-making seem tightly held at Mars.
There are two keys to continuing success: ensure that staff are allowed to question the status quo; and develop the flexibility of the Mars leadership to mould the culture to fit the environment, rather than maintaining the status quo unquestioningly. Mars, its owners and employees, can then look forward to a sweet future.
Proposed solution #2
Herbert Long is a management consultant to the private and public sectors, specialising in human resources, change management and organisational restructures.
Mars exhibits a unique culture among multinationals because the organisational structure was designed for the most efficient allocation and co-ordination of activities.
The positions, not the people, have the authority and responsibility for getting things done. The structure is emphasised as the most important and enduring characteristic of the organisation with well-defined relationships and clearly established lines of authority and communication.
Many would say that what has developed at Mars is not unlike the typical small family-owned business, where the influence of the owner/operator heavily dictates the organisational culture that develops.
People and the way they are managed are the critical elements in this case.
Hower and Lorsch have provided a useful analysis of this when comparing organic and mechanistic structures:
Mars is characterised by a culture that is heavily influenced by the way the family has developed its managerial style. If one reflects on the “Five Principles of Mars”, except for the issue of quality, they form a complex and complete web of interpersonal relationships which bind the parts of the organisation together.
Organic v. mechanistic structures
The maintenance of organisational principles that are clearly identified with the owners ensures adherence to corporate strategy. The flat structure, open communication and significant compensation levels (clearly benchmarked with their competitors) mean that the Mars family stays in control without the need for a bureaucratic hierarchy.
On the basis of this, the culture of Mars is one of openness, opportunity and reward, with the acknowledgment that the family is in control of the destiny of the organisation.
Of course, with this family control come characteristics that also stamp the organisation: in particular, privacy, obsession for quality, and embracing the corporate philosophy at any cost.
In reviewing the chart of organisational characteristics (left), it is clear that Mars has committed itself to allowing the individual to develop and succeed in a flexible and changing organic environment. There is opportunity to move inside the structure and to have one’s contribution to the mission of Mars acknowledged.
Culture as weakness
Despite the obvious success at Mars and the flat structure, there are clearly some areas that might concern managers who reflect on its long-term viability.
The story of Mars highlights the owner’s “unyielding quest for perfection”. The Mars family has established a culture that allows individual employees a significant amount of freedom. However, the advantages of this environment are countered by the top-level control the owners exert. They have established a set of rules by which all employees must play. Accept these, and the conditions of employment are excellent.
However, a number issues can be explored from a management perspective. These include:
- Succession planning. All owner/operators require a management succession plan for the long-term viability of the organisation.
- Objectives that are achievable. Can perfection always be achieved?
- Freethinkers need to be rewarded in more than monetary terms. The views of the non-owners need to be respected.
- Obligation to the community. Privacy is important, but what obligation does an organisation have to share its knowledge with outsiders?
- Change is constant. Can flexibility be maintained if the corporate culture is not allowed to change?
Are these weaknesses? The Marsfamily would say “no”. But, because they have created such a unique environment, their long-term ability to protect the organisation from the outside world should be challenged.
Mars has been a successful organisation. But what happens when the family loses control of the organisation?
Organisational Characteristics Index
Type of Organisation Organic Mechanistic Span of control Wide Narrow Number of levels of authority Few Many Time over which an employee can commit resources Long Short Degree of centralisation in decision making Low High Proportion of one unit interacting with other units High Low Quantity of formal rules Low High Specificity of job goals Low High Content of communications Advice Instructions Range of compensation Narrow Wide Range of skill levels Narrow Wide Knowledge-based authority High Low Position-based authority Low High