FREE ESSAY ON AARON FEUERSTEIN

AARON FEUERSTEIN

In this paper I will discuss Aaron Feuerstein, the third-generation president and CEO of
Malden Mills Industries, Inc., who leads the Lawrence, Massachusetts business with his
father's and grandfather's values: kindness, justice and charity. He does this through
his charismatic leadership and vision, which binds his employees together into realizing
and achieving the same goal. I will show exactly what makes him a leader in the modern
business setting and explain why a leader's vision is important in defining a true
innovator, effective manager and charismatic leader.
Feuerstein and Malden Mills had a history of taking care of its employees. Workers'
salaries average $12.50 an hour compared with the textile industry's average of $9.50.
And in the 1950s, when other New England textile manufacturers fled to the South for
cheaper labor, Malden Mills stayed. Although Feuerstein's hands-on management style has
always been admired by his employees, what set him apart as a true leader was a near
disaster in the winter of 1996. While celebrating his 70th birthday, Feuerstein received
word that his 130 year old family owned textile company in Lawrence, Massachusetts was
burning to the ground. Three of its manufacturing factories that produce the popular
high-end outdoor apparel knits, Polartec? and Polarfleece?, were reduced to charred metal
and brick. While watching the fire, Feuerstein decided that he must come up with a plan
to not only save his company from financial ruin, but decide the fate of over 3,100
employees that would soon be without a job. He chose to rebuild the plant in Lawrence. He
also decided that if he was to continue providing a quality product to consumers, he
would have to take care of the skilled laborers who made the product. Feuerstein kept
more than 1,000 jobless employees at full pay and medical benefits for three months until
the factories were up and running again.
What kept Feuerstein's company at the top was his strong managing skills. A top
management position requires motivation to achieve, but this motivation may be directed
to achieving personal, rather than organization goals. Feuerstein believed the role to
top management should be to "manage" and the most important resource they must manage is
the people that work at all levels of an organization. Their role should not be to rule,
but to lead. Feuerstein also understood that employees form the foundation of any
organization, and that all of them have unique strengths that can help in achieving the
companies goals. In return, employees will feel useful and are placed in a position to
self-actualize or attain one's potential. When Feuerstein was asked what sets him apart
from other CEO's, he responded:
The fundamental difference is that I consider our workers an asset. Not an expense. I
have a responsibility to the worker, both blue-collar and white-collar, I have an equal
responsibility to the community. It would have been unconscionable to put 3000 people on
the streets and deliver a deathblow to the cities of Lawrence and Methuen. Maybe on paper
our company is worthless to Wall Street, but I can tell you it's worth more. We're doing
fine. 
Other CEOs feel I'm sort of a stupid guy who doesn't know what to do with his excess
money, he says. "The quality of Polartec is what I'm selling. By treating the people the
way I'd want them to treat me, they make that quality. When you do the right thing,
you'l1 probably end up more profitable than if you did wrong. 
Feuerstein did not throw his money away. It was a well reasoned and sound leadership
decision to invest millions in Malden Mills' most critical asset, its workers. The
contrast between this Feuerstein and the currently celebrated CEOs making 30, 60 or 100
million dollars a year by eliminating jobs and moving plants is simply astounding. How
much are you willing to wager that every company that closed a plant in recent years to
boost stock prices has a vision statement with words like …we value and respect our
employees as our most important asset? How many of the laid off employees do you suppose
believe that?
Perhaps the most important characteristic that transformational leaders possess is their
ability to create a vision that binds people to each other. Not only must they have this
vision, they also have to have a road map for attaining it. What is important is that
followers "buy into" that vision and that the leader has a plan to energize them to reach
it. 
Leaders who are totally committed to their vision and course of action often are called
charismatic. Charismatic leaders have an unshakable belief in their mission, are
supremely confident that they and their followers can succeed, and have the ability to
convey these certainties to their followers. Followers of charismatic leaders demonstrate
unquestioning loyalty and obedience. 
According to Management by Don Hellriegel, Susan E. Jackson, John W. Slocum, Jr.,
"leaders who are totally committed to their vision and course of action often are called
charismatic leaders." To a leader that has the conviction of his beliefs, words like
value and respect must be backed up with hard decisions and actions. The real test of
leadership is maintaining those convictions during change and upheaval. The first major
test of Feuerstein's convictions as a leader came during his bankruptcy in the early
80's. Many of us might conclude that a bankrupt textile mill in a 300 year old mill town
in 1981 was the end of the road. Not Aaron Feuerstein. He spent millions to develop a new
product and re-opened the mill in Massachusetts with all the high paid workers (by global
standards). His firm created Polartec? and Polarfleece?, revolutionary new products. He
actually came out of the bankruptcy stronger than when he came in.
The fire was the second test, and again Feuerstein vowed to stay in business. These two
actions were the most powerful communications he could have made to his workers that he
had the courage of his convictions. He was willing to put his money, reputation and
business on the line to move the company forward in an ever changing business climate and
ever present risk. He does not believe it to be irrational to invest millions in your
employees, but today most workers see that the stockholder is the only stakeholder that
counts.
What distinguishes Aaron Feuerstein and other leaders like him is courage. Feuerstein has
the courage to stand by his convictions and take the appropriate actions. If Feuerstein
showed courage by committing his wealth and good name in rebuilding Malden Mills—he
only has done what leaders through the centuries have done. He lead the way, blazed the
trail, so that his followers could do the impossible. 'Before the fire, that plant
produced 130,000 yards a week', Feuerstein said. 'A few weeks after the fire, it was up
to 230,000 yards. Our people became very creative. They were willing to work 25 hours a
day.'
How many corporate CEOs in the downsize-crazed companies today could ask their employees
to double production in a few weeks given no changes in the current plant—much less
given temporary plants set up in old warehouses? How many of your employees would come
through for you if your company needed their help? They might work 25 hours a day for you
if they thought they were valued as important assets. If the communication has been that
employees are movable and expendable, they may abandoned ship for a more pleasant work
place given the extra demands.
Although the praise given Feuerstein is much deserved it not easy for anyone that is not
a multimillion dollar owner of their own company to relate. Feuerstein did have the
resources to pay out his employees for their three month lay off and medical benefits,
but I believe that he gained his wealth by treating his employees fairly and in return
his employees represented his company the way he liked.
Feuerstein criticizes those who downsize simply to contract out cheaper labor. There's a
downsizing that is necessary as a rules of technological improvement…," he says.
"But there's a downsizing that is a result of the CEO searching for cheaper labor
elsewhere that I don't feel is the right way to go in the long run." At one point during
an interview with Thomas Teal from Parade magazine, as he was warming to an attack on Al
Dunlap (the man who dismantled Scott Paper and fired a third of its work force), I
interrupted to suggest that maybe Scott Paper was overstaffed, and Feuerstein surprised
me: If one-third of the people in that company were wastefully employed, then Dunlap did
the right thing. And then the new patron saint of working Americans surprised me some
more. Legitimate downsizing as the result of technological advances or as a result of
good industrial engineering? Absolutely. I'm in favor of it. And we do it here all day
long ... We try to do it in such a way as to minimize human suffering, but the downsizing
must be done. Under the benevolent, angular exterior lurks a businessman—a
businessman who understands labor. The trick, he told me, is to keep growing fast enough
to give new jobs to the people technology displaces, to weed out unnecessary jobs without
crushing the spirit of the work force. If all you're after is cutting costs, if you just
have a scheme to cut people—that sort of thing is resented by labor, and you're
never forgiven. Feuerstein has a union shop, has long invested heavily in technology that
eliminates jobs, and has never had a strike —not exactly the hallmarks of a fool. 
It's here he has shown his real genius. Any snake oil salesman with a strong enough
stomach can make quick money, sometimes a lot of it, by slashing costs and milking
customers, employees, or a company's reputation. But clearly that's not the way to make a
lot of money for a long time. The way to do that is to create so much value that your
customers wouldn't dream of looking for another supplier. Indeed, the idea is to build a
value creation system of superior products, service, teamwork, productivity, and
cooperation with the buyer. Reduced to its essence, that means superior technology and
superior employees. Reduced still further, as Aaron Feuerstein can tell you, it means
superior employees. 
Feuerstein has laid off people for the reasons stated above, but all of these employees
have been given generous severance packages that included three months of paid medical
benefits as well as job training
Feuerstein admits that, as owner, he has a great advantage over leaders of public firms
because he answers only to himself. But I would like to think, he says, that the average
CEO - even though they're reporting to the public and the so-called shareholder - also
feels that there's a moral imperative that they must answer to as well. 
Bibliography
The Christian Science Monitor, 'Corporate Decency' Prevails at Malden Mills, Shelly
Donald Coolidge, March 28, 1996
Parade, by Michael Ryan, September 6, 1996, p.4-5
Life Magazine, Josh Simon, May 5, 1997
L. Larwood, C. M. Falke, M.P. Kriger, and P. Miesing. Structure and meaning of
organizational vision. Academy of Management Journal, 39, 1995, pp.740-769 
Management
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Fortune, Not a Fool, Not a Saint, Thomas Teal, November 11, 1996, p.201
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