On Hedge Funds, Outside Investors, and Corporate Culture – (with a story about George Zimmer)


It’s tough to maintain a good, everyone-wants-to-be-a-part-of, corporate culture.

It’s tough to maintain this in the best of circumstances.

It may be practically impossible when the leader who built such a culture, who nurtured it over the long haul, is no longer around.

And, sometimes, “outside” investors can destroy what it took years to build.

george-zimmer-1-sized
George Zimmer

I thought of all this when I read a profile of the post-Men’s Wearhouse George Zimmer: Ousted Founder of Men’s Wearhouse Watches His Old Company Struggle. 

The short version: the board ousted George Zimmer, and the company is now struggling.

As I read the article, these paragraphs jumped out at me:

Mr. Zimmer, who lives in the Bay Area, says he feels bad for Men’s Wearhouse employees, but not for Eminence. “I don’t have a high regard for hedge funds,” he said. “Nothing personal — I’ve never met the Eminence people — but I love the idea they might lose a fortune. Hedge funds may force companies to be more efficient, but that’s not always the best thing for every stakeholder group, like employees. It’s curious we’ve allowed capitalism to become all about shareholders.”

While in New York recently, Mr. Zimmer said, he had his driver pull over when he spotted a Men’s Wearhouse store. After he used a restroom, he poked his head into the tailor shop. “As soon as the tailor saw me he embraced me and started sobbing,” Mr. Zimmer said. “I have a bond with tailors. It’s not because I’m a tailor myself but because they know I care about how they experience their jobs.”

This season is especially poignant for him. Of the 50 or so black-tie staff holiday parties thrown every year at Men’s Wearhouse stores around the country, he made a point of attending at least 15. When Mr. Zimmer ran the company, employees could rent a tuxedo for the evening free, but the perk no longer exists.

“I know they miss me at the holiday parties as much as I miss going to them,” he said.

The merger “is a tragedy for the employees,” he added. “They’ve lost the glamour of it all.”

You get the impression that George Zimmer genuinely cared for the people at Men’s Wearhouse. Who cares for them now, I wonder?

This tension – between maximizing profits and caring for your employees — is at the heart of the current hedge fund/outside investors era. And I think it’s pretty tough to build and nurture an appealing corporate culture in such an era.

——————–

(Read the article – it’s worth reading, and pondering).

 

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