Posted by: A.R. Cherian | November 19, 2009

The Men’s Wearhouse: success in a declining industry

I just finished reading a Stanford Graduate School of Business case study entitled “The The Men’s Wearhouse: Success in a Declining Industry” by Jeffrey Pfeffer (Case: HR-5, July 1997-Rev’d 11/08/04).

The case study was a somewhat detailed description of some of the factors that the author and The Men’s Wearhouse CEO and managers thought were critical to their success. At the time this case was written, the men’s clothing industry was fiercely competitive with many companies exiting due to financial strains. However, The Men’s Wearhouse continued to grow. The case study tried to answer the question of what made this company so successful in a difficult competitive environment and what ensured that this high level of success would continue.

There were many factors to their growth and success in that time period as highlighted in the case study, but the key ones in my opinion and the ones they did differently than their competitors were the following:

  • Commitment to the employee
  • Commitment to servant leadership

Commitment to the employee

Founder and CEO George Zimmer saw the “untapped human potential” of his employees as the key asset rather than property, plant, and equipment.
Accroding to Zimmer, the company’s five stakeholder groups are (in order):

  1. Employees
  2. Customers
  3. Vendors
  4. Communities
  5. Shareholder

Zimmer states that the best way to maximize shareholder value is to put shareholders at the bottom of this hierarchy. He’s only interested in long-term shareholder growth as opposed to short-term, quick growth. He believes that (as we learned in class) that if you take care of your employees first, they will in turn take care of your customers, who will then in turn take care of your top-line growth.

I think this is a wise strategy for any company in any industry (as long as it is not only given lip-service but actually put in place in the form of systems). The Men’s Wearhouse took care of their employees by implementing management systems such as fair compensation and staffing, promotion and career development, good hiring and firing policies, performance appraisals, and good communication with employees at all levels.

This isn’t the first formal hierarchy that I’ve seen with the shareholders placed last in importance. Johnson and Johnson’s corporate creed also places the shareholder last because they too believe that if you take care of all the other stakeholder groups first, the value will trickle down to the shareholders. As stated in the case study, in contrast to The Men’s Wearhouse, most retailers don’t consider the employee first of all.

Commitment to Servant Leadership

The Men’s Wearhouse has been called a “high touch” organization. Training and mentorship (“touch”) are highly valued and emphasized in the company. In fact, Zimmer believes that mentoring their employees is the company’s key to success. At The Men’s Wearhouse you can even get fired if you are an exceptional producer and performer but weren’t doing a good job in mentoring others or weren’t a team player.

Servant Leadership in The Men’s Wearhouse case meant that you put your organization’s goal and success at the same level as your personal success. They wanted all managers to train lower level employees and mentor them personally. Even Zimmer and his executive managers would visit stores for personal training and mentoring.

The Men’s Wearhouse created a culture by putting in place a system where sales people (wardrobe consultants) weren’t out for their own personal sales growth, but always looked to see how they can improve others in their store so that all the employees in the store realized their maximum potential.

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