A Homegrown HR Philosophy

Excerpt from モGood to Great to Gone: The 60 Year Rise and Fall of Circuit Cityヤ by Alan Wurtzel (Diversion Books; October 9, 2012).

By Alan Wurtzel

In 1949, Samuel S. Wurtzel opened the first Wards Company retail store in Richmond, VA. By 1959, Wards Company operated four television and home appliance stores in Richmond. Wards Company officially changed its name to Circuit City and became listed on the New York Stock Exchange in 1984.

Human Resource Policies

From the first day he opened the doors, Sam Wurtzel understood that management means getting results through the efforts of other people and that if he wanted to get the best from others he had to treat them with respect and provide an opportunity for them to advance. He believed that most people are inherently honest, willing to work, and want to be successful. All he had to do was give them the training and the opportunity to move ahead.

George Martin, the first man he hired (to help him carry TVs into customers’ homes), stayed and grew with the company for more than 40 years. In his spare time, George learned to be a “tube jockey.” In the early days, before transistors, TV sets had lots of vacuum tubes, and many repairs were made by replacing defective tubes. George gradually learned to read schematics and to repair TVs by changing condensers and resistors in addition to tubes. Sam encouraged George by letting him observe experienced service technicians and by sending him to school. He then went on to train and supervise service technicians. George was his poster child for growing with the company.

Sam also believed that “the primary need a man has in his vocation is to be creative. Creativity in business can take several forms. You can be creative by being imaginative. You can be creative by being analytical, finding the things that need to be done, to be changed, to be improved.”  You also could be creative by understanding what customers or suppliers really wanted and figuring out how to get them to a win-win solution.

In addition, Sam understood that employees, being human, would make mistakes, and that mistakes should be treated as learning opportunities. He once told an interviewer, “When an executive starts to build up his own ego by bawling out someone under him, he is not helping that person or himself because he is inhibiting future decisions by that subordinate, who will be afraid he will make another mistake and get another bawling out.”  So “one of the basic philosophies here is that if something goes wrong, the person who supervises must start off with the premise that the fault is his own. Something has gone wrong here. It’s my fault because I either didn’t provide adequate staff or enough income or adequate authority to do the job.”

What began as instinctive principles gradually developed into a full-blown human resources philosophy. Many of Sam’s principles predate the publication of Douglas McGregor’s groundbreaking book, “The Human Side of Enterprise,” which now serves as the basis for modern management theory.  Once he read that book, however, the disparate elements of his homegrown personnel philosophy fell into a coherent pattern.

Theory X and Theory Y

A professor at MIT’s Sloan School of Management, McGregor identified two theories of human nature and of work. Theory X assumes employees are inherently lazy and seek to avoid work. As a result, workers need to be closely supervised and controlled to ensure that the work gets accomplished. McGregor’s model for such organizations was the military.

Theory Y assumes that most people enjoy mental and physical activities and want to be creative and succeed at work. Theory Y managers believe that given the right conditions, most employees will seek out and accept responsibility and exercise self-control in accomplishing objectives to which they and the company are committed. The job of a Theory Y manager, therefore, is to create an environment in which subordinates understand the company’s objectives, share in the decision-making, and welcome the opportunity to do a good job.

When Sam first read “The Human Side of Enterprise,” he was so excited that he called McGregor’s office and asked for an appointment. When it became apparent he was not going to get one on the phone, he flew to Boston and called McGregor’s secretary, again asking to see the professor. When he once more was told that McGregor was not available, Sam said, “I am staying at the XYZ hotel and will wait here as long as I need to in order to get an appointment.”

In a few minutes, the secretary called back and arranged for him to meet McGregor the next day. At that meeting, Sam asked where he could hire a person with McGregor’s Theory Y philosophy to be his vice president of personnel. McGregor told him there were no such people available, and added, “You need to build your own.”

So Sam returned to Richmond and, shortly thereafter, hired a young man he knew socially. Larry Yoffy had inherited a small chain of failing Ben Franklin five-and-ten stores that he ultimately closed. He was smart, thoughtful, a good listener, and had the nonjudgmental temperament required to be a good vice president of personnel. Together, he and Sam began to develop, articulate, and implement the basic human resource policies that enabled Wards to grow.

There is no doubt in my mind that this was the key to the company’s success. Like almost every retailer, Wards had no patents or trade secrets of any consequence. The TVs and refrigerators it sold were the same brands and models offered in a dozen or more stores in any city in which it operated. Therefore, Wards could succeed only if it bought the products better, advertised them better; sold them better; and delivered, serviced, and accounted for them better than the competition.

This meant it needed highly motivated and better-trained people to carry out all these functions. Sam used to say, “To be successful, you need to do a hundred things right, but to fail you need only do one thing badly.” He recognized early on that if Wards were to become a big company it needed a set of personnel polices to ensure it attracted and retained the right people with the right attitudes and the right training and experience in every position. To communicate these values, Sam developed a set of rubrics he continually taught and followed.

Excerpt from “Good to Great to Gone: The 60 Year Rise and Fall of Circuit City” by Alan Wurtzel (Diversion Books; October 9, 2012). For more information, visit www.alanwurtzel.com

Former CEO of Circuit City Stores Alan Wurtzel led Circuit City to be one of the nation’s largest retailers of consumer electronics and appliances. The son of company founder Samuel Wurtzel, Alan Wurtzel joined the company in 1966 as vice president of Legal Affairs, served as CEO from 1972 to 1986, acted as chairman of the board from 1984 to 1994 and vice chairman of the board from 1994 to 2001. Circuit City was profiled as one of 11 companies in Jim Collins’ bestselling book, Good to Great. Now retired, Wurtzel devotes much of his time to higher education and K-12 educational reform.

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