Quality Control From Mars
Forget the Japanese. Forget the Germans. The best lessons on
management come from Mars.
No, not the planet. But the multibillion-dollar, world-class company
known as Mars Inc., a leader in candy, pet food, rice and other
products. A secretive, closely held company like no other in the U.S.,
Mars is as successful as it is unconventional. As someone who worked
as an executive there, I can speak from experience. Being hired into
Mars from a conventional, publicly held company is akin to an earthling
trying to survive on the red planet. You can survive only by letting
go of most of the beliefs and assumptions learned in a normal business
The first visible symbols of this alien culture are the absence of
assigned paring spaces, private offices or even partitions between
desks. Time clocks are at the door and everybody punches in, including
senior executives and the billionaire owners. Punch in on time and get
a 10% punctuality bonus.
Walk into any Mars subsidiary world-wide and see the same office
layout of concentric circles, with the president and his (or her) staff
at the center and their direct subordinates at the next circle, their
subordinates at the next, and so on. Operating in close proximity to
each other in the fish bowl at the center, the senior staffers are
totally visible and accessible.
When something important happens in the business, watch the president
call the senior staff to his desk. At the conclusion of the impromptu
meeting, observe the staffers going back to their desks to call their
departments together for their own impromptu meetings. Like an army of
ants going hither and fro, the office is soon a buzz of sound and
activity. Communications are fast and open. Memos aren't written and
electronic mail goes unused.
Since Mars offices are always connected to a plant, it's an easy walk
over to the factory, where the most wondrous sights await you.
Everyone is in white uniforms and bump hats-- managers and workers
alike. The plant is spotless and shiny, the high-speed lines are
marvels of efficiency, and the high-paid, non-union employees are loyal
On any particular day, one of the Mars brothers who own the business
is likely to show up at a subsidiary. He flies in from his Virginia
office, where a headquarters staff of less than 50 a far-flung,
25,000-employee enterprise. Wearing scuffed cowboy boots and a
wrinkled shirt, he parks a midsized rental car in the far end of the
employee lot and walks toward the office. Unlike most chief
executives, he does not head straight for the subsidiary president to
review the quarterly results. Instead, he grabs a white smock and bump
hat and heads for the factory. You will hear him screaming if he finds
unclean or unsafe conditions. And woe to the plant vice president if
less-than-perfect product is coming off the line.
Quality is an unrelenting obsession at Mars. One example of that
obsession is a fear of "incremental degradation," a term used by Mars
to describe what can happen by using cheaper ingredients. Rather than
replace a high-priced ingredient with a cheaper one, even if taste
tests show that the consumer would not notice a difference, Mars will
forgo the extra profits instead of risking an incremental degradation
of the quality of its products.
The latest in statistical process/quality control charting may not be
seen on the walls, but observe in the factories the constant product
inspection and tasting-- even the tasting of pet food. Watch a whole
production run of candy bars be thrown out because of barely noticeable
nicks in the chocolate coating. Better yet, follow a Mars salesman on
a supermarket visit. Watch the individual discard a whole display of
product because it is getting too close to the date on the freshness
code. Look for someone with quality in his title and come up
empty-handed. Look for people concerned about quality and come up with
the entire work force.
Closer inspection of Mars's operation reveals huge market shares,
obscene profits and such high productivity that the business operates
with 30% fewer employees than its closest competitor. With results
like these, you'd think that Mars must have the best merit and
incentive programs in America. But the conventional wisdom does not
hold true in the world of Mars. All Mars employees are on a
step-increase system, getting the same annual adjustment as everyone
Employees at Mars have something more motivating than phony merit and
incentive systems: a high degree of job security and pay that is
pegged at the 90th percentile of the compensation offered by other
premier companies in the world. Moreover, by operating with only six
levels and paying all vice presidents approximately the same salary
regardless of the function they head, Mars finds it easy to transfer
people from business unit to business unit and function to function.
Someone heading up human resources today in a billion-dollar domestic
business may be heading up manufacturing tomorrow in a
half-billion-dollar domestic European business. It is a rare general
manager who has not done a tour of duty in manufacturing or marketing
in at least two business units. As a result, key managers know the
business so well that a consistent organizational culture and operating
style can be maintained world-wide with few formal rules and
Financial and business measurements are few but powerful. The most
powerful is ROTA (return on total assets), which, in a unique equation,
takes into account inventory turns and asset utilization. This
measurement, combined with valuing equipment at replacement cost
instead of book value, gives managers an incentive to replace equipment
with the latest technology. At a Mars pet food plant I once visited in
Germany, a perfectly good can-filling machine was replaced by a
state-of-the-art machine, even though the additional capacity wasn't
needed at the time.
Is there a dark side to Mars? Yes. Just as the planet is a harsh
environment, the company can be a stressful place, particularly for
higher-level managers who must deal with the impulsive nature of the
owners. I remember the finance vice president in a subsidiary who
decided to buy some nice wooden desks. One of the owners came by one
day and began to fume when he saw them. "Would you ever buy a more
expensive desk than your boss has?" he asked me, as he sat down just
waiting for the VP to walk in. When the VP arrived, the shouting
If it had been anybody other than an owner, it would have been
devastating. But because the culture of the organization is so
effective, there's an aura about the people who own the company. These
occasional outbursts become ingrained in the mythology of the company
and serve to reinforce the corporate philosophy.
Companies like Mars can force us to face the possibility that we are
wrong about what a true quality culture looks like, about how business
should be measured, about how people should be paid, about the role of
senior management, and about the development of management talent.
Instead of looking overseas for solutions to our problems of
competitiveness, maybe we should look to another planet for the
answers. The Mars Voyager is waiting for you on the launch pad.
The Wall Street Journal, Vol. CXXVI No. 18, Monday 27-Jan-92
"Manager's Journal" by Craig J. Cantoni
Mr. Cantoni is vice president of human resources and logistics at
J.M. Huber, a $1 billion family-held company in Edison, N.J.