“The Company Men” and The Family Firm

From "The Company Men": Phil joins the queue, waiting for an interview. Copyright: 2010 Folger/Weinstein Co.

There’s a theory that family-run businesses have inherent limitations: If a modern company is to attain any measure of “scale and scope,” the theory says, control by owners has to give way to decision-making by a cadre of trained and experienced professional managers. “Personal” management by original entrepreneurs and their too-often-incompetent relations often results in stagnation: there’s a reluctance to take risks or expand into new areas.

These notions, surely oversimplified here, are associated with economists Adolf Berle and Gardiner Means and business historian Alfred D. Chandler. Economist John Kenneth Galbraith went so far as to say that in the modern corporation, even top professional managers surrender almost all authority…to the “technostructure,” or the planners, product developers, and merchandisers who must make real, daily decisions.[i]

Meanwhile, the idea persists that such profit-maximizing corporate bureaucracies are less humane than family firms.  Yes, in family-run outfits, key decisions may border on eccentricity, the vision may be limited, and technical expertise may be in short supply, but such organizations seem to be more caring towards a “family” of employees and other stakeholders.

The current movie The Company Men makes its own statement about these ideas.

Bobby (Ben Affleck), Phil (Chris Cooper), and Gene (Tommy Lee Jones) all work at corporate giant, GTX—and one after another, each gets laid off.  Under threat from a corporate raider, GTX has to take serious measures to get its stock price up, and that means wave after wave of firings.

Younger workers may be the first to get the ax, but soon, human resources targets those over 50 since they have higher salaries. They also have the hardest time finding a new position: Middle-manager Phil, gray-haired and pushing 60, is Company Men’s representative of this generation, and to its credit the movie pulls no punches about the age discrimination now rampant in the U.S.

The youthful Bobby is most optimistic about his job prospects, but soon is forced to take a low-paid construction job with his brother-in-law, Jack (Kevin Costner).  Residential construction is hardly a means to great wealth, and it becomes clear that Jack is putting in a lot of unpaid labor on a house-renovation project in order to meet his budget. He’s even losing money on the job. But he manages to put an extra $200 into Bobby’s paycheck. They don’t like each other much, but they are, after all, family.

So these are the two primary models of capitalist organization in the movie: The uncaring, almost dysfunctional corporation that seems to have lost its bearings if not its very reason for existing; and the marginal family firm that still has a heart but few earnings.

Near the movie’s end there appears yet another model of organization: the idealistic, even visionary entrepreneurial startup. Gene, who was in top management at GTX before getting his pink slip, has stock options worth millions. His belief in the possibility of making something you can see, not just numbers on a spreadsheet, prompts him to take a flyer on reviving a now-decrepit shipyard. Several of the laid-off GTX workers—Bobby included—throw their lot in with Gene.

Perhaps the movie is right in suggesting that this kind of enterprise is the one that embodies the ideals of recession-hammered Americans today. But it is significant that the movie ends before it becomes clear whether this startup will survive or fail.

Just as many unemployed folks have gone home to live with their parents, so it is that the tiny family firms often prove to be the last economic refuge.

[i] Adolf Berle and Gardiner C. Means, The Modern Corporation and Private Property (New York: Macmillan & Co., 1932); Alfred D. Chandler Jr., Scale and Scope: The Dynamics of Industrial Capitalism (Cambridge: Belknap Press, 1990); John Kenneth Galbraith, The New Industrial State (Princeton, N.J.: Princeton University Press edition, 2007).

Need Shelter? Just Google It…

At the Melbourne Apartments in Des Moines, a one-bedroom place rents for $565 per month.

Maybe Google should have its own Secretary of Housing & Urban Development. After all, somebody there seems very into giving shelter, not only to company employees but to other deserving folks as well.

Back in November, I wrote about Google’s expanding California real-estate holdings, which amounted to over 4 million square feet. The company had also just announced plans for a new corporate campus that would include housing for employees. Residences there could take up 10% of the new campus’s space, meaning perhaps 60 2,000-sq.-ft. dwellings, according to The Silicon Valley Mercury News. It seemed to represent the latest evolution of the company town.

Then today there appeared a report in The New York Times, telling how Google was investing in low-income housing in far-away Des Moines, Iowa.

This endeavor may simply represent a smart investment: The Times says the sale of federal low-income-housing tax credits allows investors to reduce their federal tax burden. “If you can buy $1 worth of tax credit for 59 cents, you are getting a [good] return on your investment,” the article notes. In addition to Google, other investors include Verizon and insurers Liberty Mutual and Allstate.

All the same, Google’s investments amount to $86 million poured into 480 apartments for low-income renters in the Midwest and California. That’s nothing to sneeze at.

Is Tucson To Blame For The Violence?

Martin Luther King speaking at a Memphis rally prior to his assassination in 1968.

“I wish he wouldn’t come,” she said. The Tucson resident worried that President Barack Obama’s appearance at a memoriam for those recently killed in her city would somehow reinforce the idea that Tucson was an environment that fostered such violence.

Her worry is understandable. I remember when, in the days following Martin Luther King’s 1968 assassination, my hometown of Memphis was assailed by Time magazine as an place that was somehow responsible for the killing. It was, after all, a “rotting River city,” in the magazine’s words.

Earlier, Dallas—and its laughably inept, cowboy-hat-clad police force–had been the object of finger-pointing in the aftermath of John F. Kennedy’s murder. In more recent times, Oklahoma City has seemed to blame for the wacko reactionary attitudes of Federal Building bomber Timothy McVeigh.

There is some validity in the sentiment–after all, environments are responsible to a degree for inhabitants’ actions. Moreover, Tucson does seem a bit off-center. Jared Loughner was far from the only gun nut present at the Safeway on January 8; federal judge John M. Roll, who was killed,  Representative Gabrielle Giffords, who was shot in the head, and one of the doctors who attended Giffords were all known to sometimes pack heat and to frequent shooting ranges.

Moreover, as The New York Times reports today, there are two gun shows scheduled in the Tucson area during the next two weeks.

But there’s also something wrong here: The rest of America is looking for someone else to blame for the violence that is, after all, epidemic across the land. Yes, gun sales soared in Tucson after the shootings there–but they also rose across the country, including in such “blue” states as New York.

Sometimes, events in the United States just seem to drive you to despair.