What Makes a Good Business Person?

My father made a comment the other day about someone being a “good business person.”

He’s a lifelong academic, and his comment made me wonder: What criteria do people use to define a good business person, particularly if they aren’t knee-deep in the business world themselves?

Having worked in both the private and public sectors throughout my career, I’ve run into my fair share of business people. And because I own a marketing company that helps companies grow, I’ve seen a lot of people succeed.

So if you were to ask me what makes a good business person, I would tell you the story of the General Motors Fremont Plant in 1980.

So what happened at the Fremont plant?

In 1980, the GM Fremont plant was one of the worst automotive plants the United States had ever seen. The quality of their products was abysmal, the employee morale horrible.

This excerpt from Faster, Better, Cheaper in the History of Manufacturing: From the Stone Age to Lean Manufacturing and Beyond by Christoph Roser gives you a sense of what it was like:

“Workers intentionally sabotaged many vehicles. For example, empty cola bottle caps were left in the doors with the sole purpose to annoy the customer through its clanking sound. Or worse, half-eaten tuna sandwiches were welded in. Screws on safety-critical parts were deliberately left loose…The employees wanted to hurt the company by hurting the customer.”

Even the United Auto Workers (UAW) recognized this workforce was the worst of the worst.

Why so bad? Take a look at the management for your answer.

“Even if the workers tried to produce quality products, the system worked against them. The most important rule in the Fremont plant was to never, ever stop the assembly line. Even in the case of accidents, the line did not stop. Hence, all problems were simply pushed downstream, resulting in miserable quality at the end of the line.”

There was continual finger-pointing between management and the workers. Strikes were rampant, conflicts were ever-present. Finally, in March of 1982, GM had enough. They closed the plant and 5,000 people lost their job with only three weeks’ notice.

The Japanese to the rescue

Two years later, the Fremont plant reopened.

The shuttered plant was reborn as part of a Toyota-GM venture known as New United Motor Manufacturing, Inc. (NUMMI). NUMMI was an experiment in applying the revered Toyota Production System to the American auto industry.

With Fremont, the NUMI management team, led by Toyota, didn’t start from scratch. The new hires were mostly all former employees of the old plant. The same machines, materials and manpower were all given a reset.

Holy recipe for disaster, right?

Only this time, Fremont became one of the best automotive plants in the United States. Here are some of the results:

• Quality exceeded that of any other GM or US automotive plant, and rivaled Toyota’s legendary plants.
• Productivity soared, with the same plant and personnel producing almost twice as many vehicles as before.
• Employee morale did a complete turnaround, with absenteeism reduced from 20% to 3%, and employee turnover dropping to less than 6%.

Amazing, right? Here’s how the Japanese did it, as again explained by Christopher Roser:

Respect. Toyota turned things around by changing the culture of the plant. “(It) treated its workers with respect, valued their input, and not only allowed but even encouraged them to make decisions related to their workplace.”

Focus on quality. The focus was on quality, so much so that “workers not only were allowed to stop the line, they even had to stop the line if there was a quality problem.”

Hiring quality people. Instead of hiring anyone who walked through the door, the management spent 35 hours with each new employee during the hiring process, instilling “a sense of importance into the potential employees.”

Other improvements included making work assignments more flexible, reducing waste and streamlining the manufacturing process, and using factory floor space more efficiently.

Did the good business practices rub off?

The turnaround was jaw-dropping at GM. Toyota had given them everything they needed to completely turn around their company. But did they learn from this experience? Did they become “good business people?”

Nope. Instead of implementing Toyota’s not-so-secret approach of “respect, common sense, and hard work to improve lots of little details,” they reverted back to the culture of finger-pointing and conflict that had caused their initial downward spiral. The result, as Roser notes, was this:

“In 2009, GM had the biggest bankruptcy in U.S. history, costing taxpayers $50 billion. Toyota, on the other hand, became the largest carmaker in the world and is highly profitable.”

Building your own set of “good business” criteria

Not every business is the same as Fremont. So what are the criteria of a good business person? I’d suggest you follow the lead of Rock LaManna, a business broker.

Rock was a great client of ours and we became good friends. I valued his passion and his love of his work, but what I enjoyed most were his tales from the trenches.

Rock would talk to me about his clients, from the multi-billion dollar businesses to the small, struggling mom and pop shops. Many of his clients had built their business from the ground up, while others were second-generation owners who had been handed the keys to the castle.

Rock’s job was to help these owners sell their respective companies. Before he entered into an engagement, however, he would do the following:

He would talk to the employees. If their morale was low, and they spoke of the management in disparaging terms, it was a red flag.

He would look at the company’s financial statements. Even multi-billion dollar companies can be headed in the wrong direction — their financials will tell the true story.

He would talk to their partners and suppliers. If the company didn’t conduct itself with integrity, honesty and fairness, he steered clear.

After that analysis, he would determine if the company was solid, the owner trustworthy, and the business worthy of being sold.

So how do you define a good business person?

In both cases, Fremont and Rock LaManna, I’ve shared examples of attributes of a successful company. Those attributes extend to business people themselves:

• Do they treat their employees with respect?
• Do they conduct themselves with integrity and earn respect from their partners, suppliers and customers?
• Do they focus on quality and continually try to improve?
• Did their actual financial statements back up their claims of success?

These are tough questions, and they take time to answer. But the price we pay by not digging a little deeper is steep.

Business people can have an immense impact on us all. Business success drives growth and opportunity. At the end of the day, it’s what puts food on the table. Think of a positively functioning Fremont.

But business failure can result in wasted money, broken economies and lost jobs. Think of Fremont closing down.

So reserve the title “good business person” for those who truly deserve it, and put your faith only in those who meet the criteria detailed here. The stakes are too high to do otherwise.