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National Biographic NATIONAL BIOGRAPHIC PUBLISHED BY AMERICAN INSTITUTE OF MANAGEMENT AND DISTRIBUTED FOR SCHOOL USE BY EDUCATIONAL DIVISION OF WHO S WHO IN AMERICA A BIOGRAPH JOHN MILTON HANCOCK Once upon a time, when the United Nations was still at Hancock, then a complete neophyte in active management, Lake Success, someone pointed out to Andre Gromyko the amaz- acted with the assurance and incisiveness that later were to be- ing vigor of Bernard Baruch for a man of his ageo Gromyko, in- come his trade-mark. Arriving at Jewel Tea, his first remedial dulging in one of his rare jokes, looked over toward Baruch's al- step was to cut the number of wagon routes in half, retaining only ternate and said: "How about John Hancock over there -- he sign- those operating units which showed a profit. His next move was ed your Declaration of Independence, and he's still going strongl" to reduce inventories to realize badly-needed cash, (so badly- needed that prior to Hancock'scorning employees would race each Today, six years later, Gromyko's words echo meaning- other to the bank on pay-day before Jewel's money ran out.) fully for seventy-year old John Milton Hancock who, after a life- time of management, directorial responsibility and government To help out the company's cash position, Hancock pressed service, is, indeed, "still going strong." claims for--and won--a goodly sum from the Army for damages done during war-time leasing of a Jewel Tea plant. The com- A partner in the investment banking firm of Lehman Broth- ers and chairman of the board of Lever Brothers, Hancock current- ly serves as a director on the boards of fourteen manufacturing and distributing companies. He has sat on as many as twenty- two boards at one time, qualifying as a serious rival to the only other professional director in the field, Sidney Weinberg of Gold- man-Sachs, whose total has been thirty-one. Never a dummy director, Hancock has taken his board-room duties seriously and has brought with him his prestige, judgment and a wealth of knowledge born out of past practical experience. JEWEL'S JEWEL Although in recent years Hancock has chosen not to be- come involved in direct management, this was not always so. He began his career under a veritable baptism of fire at the Jewel Tea Company of Chicago where he went as vice president in 1919 and was made president in 1922. Straight from the Navy, where as a Commander in the Supply Corps he had been in charge of Navy purchasing during World War 1, he was confronted with his first business assign- ment -- one that would have been tough for even a veteran busi- nessman. In 1919, Jewel Tea was a mobile grocery business which • i retailed coffee, tea and dry groceries to the housewife by door- to-door wagons. This business like many others was caught in the problems re suiting from World War 1. Commodity prices sky- pany's lawyers were about to settle for $250, 000. Hancock pro- rocketed. Then, as now, there was consumer resistance to rising tested, collected a bale of evidence, and eventually made good prices. Operating expenses rose. More and more capital was on claims for $880, 000. He then instituted the Navy accounting needed to carry inventories at their inflated levels. system and personally signed salary checks. With increased ef- Lehman Brothers and Goldman- Sachs had previously under- ficiency in operation and with lower commodity costs following written an issue of preferred stock. Because of Herbert Lehman's the 1920 break in prices, Jewel Tea was enabled to reduce its resulting interest in the long-term success of Jewel Tea, he sug- prices and win greater consumer volume. gested John Hancock as an executive because of his respect for Perhaps most important of all, Hancock changed the at- Hancock's ability, gained when Lehman was with the War Indus- mosphere at Jewel Tea. Faced with uncooperative and uncoor- tries Board. dinated personnel, he managed to make everyone feel a part of Vol. I, No. 6 January 1954 National Biographic the company and they began to perform as though they had a stake ing a variety of businesses, turned out to be ideally suited to his in it. By 1924 he made the "stake" tangible by instituting one manifold abilities. As one Chicago colleague said: "Hancock of the early profit-sharing plans for all executives and supervi- has a chain lightning mind. He can take a problem, tear it limb sory employees (except himself), and a joint pension fund, re- from limb, completely, exhaustively and with deadly accuracy." ferred to as the Jewel Plan, embracing 85 percent of all employ- This, combined with an unusual power of persuasion and judg- ees. ment, gave him a three-barreled method of attack. Because the business was largely dependent on the sales- As a result, Hancock's next assignment was of a similar men and their performance, Hancock started regular salesmen's nature. In 1930, rumor had reached Lehman Brothers that all was meetings at which he, himself, gave a pep-talk with much of the not well with the Kroger Grocery chain, whose stock the firm had evangelical zeal of Patterson of the National Cash Register Com- sponsored. Without prior announcement, Hancock appeared in pany. By 1923 the meetings had become conventions and he Cincinnati at the Kroger Company offices, and asked the surprised hired the old Olympic Grand Opera House in Chicago. In a burst president if he could have a private session with the accountants. of confidence he invited his competitors who walked away from An analysis of the figures, and intensive investigation, led to the the "inspirational and instructive session" with a new respect conclusion that a change in top management was desirable. For for their rival. nine months Hancock stayed in Cincinnati. The internal organi- zation was changed both in form and in personnel, although the Shortly after Hancock had successfully instituted an incen- hard core of the staff were quickly made to recognize that their tive system for his driver-salesmen, Dan Tobin's Teamsters jobs were secure. New men were brought in to provide the nec- Union tried to organize the company. Hancock feared the un- essary leadership. When all was running smoothly, Hancock with- ion's wage proposal would destroy the incentive principle and drew completely from the day - to - day operating problems and contended that, more importantly, his wagoners were moresales- merely remained in his former position as a member of the Board men than teamsters. In Chicago, an outbreak of window smash- of Directors. Under the presidency of Joseph B. Hall, Kroger to- ing and stench bomb throwing followed. Men were beaten. Jewel day rates among companies which are extremely well managed . hired Burns detectives but finally was obliged to close down the Chicago, St. Louis and San Francisco branches. These bran- Out of his Kroger experience, comes one of Hancock 's ches have since been re-opened, and some parts of the company key beliefs about directorial responsibility: A board should back are now unionized. the management to the hilt. If it can't do that, it should change management. That is not to say that a board should not keep a Hancock's techniques bore fruit quickly. Common stock rein on company affairs when it delegates authority. Indeed, had sold at as low as $3.00 at the time of his advent. Five years there should be enough controls so that the board is in close touch later it was nearly sixty times higher. In his final annual report with what is going on. But in the end it is up to the management for the year 1924, Hancock made a statement (reported in The New to run the company. York Times under the heading; "Company In Good Shape") that the two-million dollar loss of 1919 had been transformed into a CORPORATE DOCTOR seven hundred and fifty thousand dollar profit. With this happy state of affairs, he left Jewel's active management and became Most of the boards on which Hancock has servedhave been chairman of the board of directors and permanent "god-father" to of companies for which Lehman Brothers was an underwriter of the company. Frank Lunding, who became president in later securities. But by 1940, his fine reputation as a director prompted years, said: "We always rely on Hancock's judgment especially a company not financed by Lehman Brothers to ask him to join for the fine feel of human reactions as well as for new merchan- its board. The management of the Kress chain of stores found dise ideas or plans for expansion." itself at odds. One of the officers of the company comments: "The situation was very delicate -- some of our officers had WIDE PERSPECTIVE gotten old, quarrelsome and selfish. We though Hancock -- rep- It was not surprising that when Hancock left Jewel Tea, resenting an outside, objective point-of-view, could arbitrate five years out of the Navy, he should be showered "with offers. some of the difficulties. And he did - - without offending anyone. The most spectacular came from Julius Rosenwald who offered He has a curious tactic of getting people to believe that if they're Hancock the presidency of Sears, Roebuck on his own terms. right, what they're fighting for will win out some day." (Aware of Hancock's characteristic modesty Rosenwald said he For years he encompassed a wide-range of problems for felt sure that Hancock's demands would be less than what he would Kress Company on management situations, finance, dividends, be prompted to offer).
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