A company with a corporate constitution which guarantees rights for employees, investors, and management? A company that believes corporations should be more humane, decent, and socially responsible? A company whose system, dubbed "fair enterprise" insists employees have a moral right to share in the profits of the success their efforts have helped to generate?
There is such a company. It is Magna International, one of the fastest growing, most successful auto parts manufacturers in the world. Its corporate philosophy and structure is the brainchild of founderentrepreneur Frank Stronach.
The company's annual 30% growth in size
and profitability is a tribute to the economic insight of its founder.
Stronach's ability to see where free enterprise was failing and devise
a system to correct itputs him in a unique category of "philosopher
businessman" whose pragmatism resulted not only in the creation of a successful
company, but may also have generated an economic role model for other western
economies and companies. Stronach came to Canada in 1954, and after a few
years of making a living as a dishwasher and laborer, tapped his training
as a tool-and-diemaker and opened a one-man workshop in 1957. By the end
of his first year he had 10 employees; at the end of two years, 20.
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1. Frank Stronach, Chairman of the Board. 2. Magna International Inc. Corporate Headquarters, Markham, Ontario. |
By 1970 his company had annual sales of nearly $5 million, had merged with Magna, and began concentrating solely on auto parts. By the end of 1986 sales were over the $1 billion mark. Stronach emphasizes that the Magna structure is "organic", a structure that perpetuates itself successfully once a certain size has been achieved. He continually refers to it as a "corporate culture" rather than an organization structure, and explains that the corporate constitution is a means to ensure an employee "economic charter of rights".
Indeed, he says "individual freedom without economic freedom has relatively little meaning. If a person is unemployed and hungry, individual freedom doesn't mean very much". Today, Magna is a company with five major groups based on products, plant locations, and automotive systems applications. Each operates as a corporation within a corporation with its own finance, marketing, research and labour relations managers.
Each is encouraged to be totally self-sufficient, and in the "final phase" of Magna's corporate culture, says Stronach, calling on his organic analogy, "just as when a cell reaches maturity it has to splitso each of our own divisions will soon become separate public companies with their own shares and legal framework". The difference between these and ordinary companies is that, by the corporate constitution, each must be productive and fair... and that's the real story of Magna everyone shares the responsibility, everyone shares the success.