Whereas Ricardo Semler (see blog about Semco) took over the company from his father and turned it into a "natural" company, American entrepreneur Chris Rufer came from a fairly different angle. As an MBA student at UCLA, he sets up The Morning Star Company as a one-man company in 1970. The company transports tomatoes from the fields to the factory during the summer holidays. Out of his enormous interest in improving efficiency, Chris Rufer closely monitors the operations of the tomato factories where he delivers the tomatoes. Gradually, he sees more and more room for improvement.
In 1982 Rufer sets up a new tomato processing company together with a few tomato growers from the area. There he introduces several efficiency improvements he has come up with in the course of the 12 previous years. These improvements are so innovative and impressive that the company will soon become the reference for tomato processors.
Eight years later, in 1990, Rufer establishes The Morning Star Packing Company (hereafter Morning Star). Since then, that company has grown into an integrated group and the largest tomato processor in the world today (with approximately 1 billion USD turnover, 600 permanent employees and a multiple of seasonal workers). Morning Star is an extraordinarily interesting model of successful self-management. Why?
Over the years, Chris Rufer has developed a clear opinion on the best way a company can work. He does not believe in supervision or control and thinks that you have to let people do their work. Right from the outset, he asks his employees - or the "colleagues" as he calls them - "what kind of company do we really want?". Immediately it appears that values such as freedom, personal responsibility and mutual respect are very important.
That is why Rufer and colleagues resolutely choose self-management as their starting point, a vision that, according to the entrepreneur, is imperative if organizations really want to be sustainable and commercially effective. At the basis of that vision are two principles:
1) Human beings should not use force or coercion against other human beings. Consequently, all interactions between people are voluntary;
2) People should honour the commitments they make to others.
The application of these principles is far-reaching. There are no bosses, no titles and everyone has equal rights. Morning Star has no structural, i.e. fixed, hierarchy but rather a natural, organic hierarchy based on competence or expertise. And of course it shifts throughout the organization according to the subject because the most competent person decides. Obviously, when in conflict with a colleague you can not fall back on a traditional hierarchy. No, you solve the problem among yourselves and if necessary, ask other colleagues to shine their light on it. If you still can’t find an amicable solution between colleagues, you will ultimately submit the conflict to Chris Rufer himself.
Rufer is convinced that employees must be offered freedom so they can give their best and develop themselves further. This benefits both themselves and the company. The personal freedom stimulates the innovative strength of both employees and company and is therefore the key to a company’s long-term relevance. That is why the entire organization is permeated by innovation. The results speak for themselves: Morning Star’s growth rate and margins are significantly higher than the industry’s average and the company pays its employees above the market average.
That does not mean that at Morning Star everyone does what he or she likes. Central is the mission of the company or in Rufer's words "The boss of the company is its mission statement". With the mission as starting point, employees conclude agreements with those colleagues with whom they will collaborate. These "Colleague Letters Of Understanding" (CLOU) determine the specific mission, role, responsibilities, performance measures and the way in which colleagues work together.
At the heart of a CLOU is therefore the personal commercial mission in which each employee determines how he or she will contribute to the success of Morning Star’s mission. Chris Rufer states that each colleague defines their own mission and does what is necessary to realize that mission (hence the high degree of autonomy).
Morning Star openly communicates about how the CLOUs work at Morning Star and what they mean for the company.
Self-management creates a climate of high integrity, trust, competence and harmony between employees. And in order to create that special climate, each employee commits to respecting seven so-called "Colleague Principles" (mission, individual goals and teamwork, personal responsibility and initiative, tolerance, direct communication and gaining agreement, caring and sharing, doing what is right).
In 2008, Rufer's passion for self-management led to the establishment of the Self-Management Institute that continues to research, improve and disseminate the application of self-management. That is necessary because a lot of misconceptions about this extremely successful approach continue to exist.
New employees, and especially those with previous work experience elsewhere, usually need some time to master the principles of self-management. But once they do, they are very enthusiastic about the approach. The company has no shortage of applicants and staff turnover is at a gratifyingly low level of less than 2%.
Next case: Nucor Steel – a 60-year old performance-based culture.