Hart Schaffner Marx: Neurodiversity at a Classic American Suit Maker
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9B18C048 HART SCHAFFNER MARX: NEURODIVERSITY AT A CLASSIC AMERICAN SUIT MAKER Professor Robert D. Austin wrote this case solely to provide material for class discussion. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Copyright © 2018, Ivey Business School Foundation Version: 2018-11-30 In 2017, Doug Williams, chief executive officer (CEO) and owner of the W. Diamond Group Corporation/Hart Schaffner Marx (HSM), listened with interest as David Geslak, president and founder of Autism Workforce (AW), reported on new developments in the rollout of HSM’s autism employment program. They were meeting in Williams’s office, in the Des Plaines, Illinois, building that housed the HSM factory. The 130-year-old classic American suit maker—the only company still making suits and sports coats in America—had sought out AW’s expertise in autism-ready work design. Working together, HSM and AW had been able to activate the talents of seven autistic1 people in different positions across four departments at HSM. Williams was pleased with the progress and wondered how far they could reasonably take this work. In recent years, other companies, such as SAP SE and Microsoft Corporation (Microsoft), had also developed autism employment programs, but their programs differed from HSM’s. Candidates for technology company programs were often academically successful university graduates who possessed Use outside these parameters is a copyright violation. advanced abilities to manage autism-related difficulties by themselves. Some observers, while earnestly congratulating these companies on what they had accomplished, expressed concern that their programs focused on only a small subset of autistic people. There was a much larger population of autistic people 2 who might be employed. 1 Some people who have been diagnosed with autism prefer to be called “autistic people” while others prefer be called “people with autism.” Both labels can be justified by reasonable arguments. As a result of extensive consultation with others, including many people on the autism spectrum, this case consistently uses the term autistic people. No offence is intended to anyone who might use a different term. In discussing a case such as this one, we should strive to be sensitive, but we should also assume that discussion participants are well-intentioned; thus, we should not take offence to accidentally, awkwardly phrased expressions. The United Nations and others remind us also that our efforts to be protective of a presumed vulnerable population should not evolve into a condescending or, worse, disenfranchising stance. The autistic people described in this case are adults with ability and right to make their own decisions (e.g., to consent to participate and be identified in this case). Although we may be well-intentioned in doing so, it would be a violation of human rights to presume to make decisions for such adults, or to act as if they were incapable of making decisions on their own behalf. 2 As of April 26, 2018, the U.S. Centers for Disease Control and Prevention estimated the incidence of autism in the general population to be 1 in 59. According to many estimates, as many as 70 per cent of this population was unemployed or underemployed, and a roughly similar number lived below the poverty line. “Autism Spectrum Disorder (ASD),” Centers for Disease Control and Prevention, accessed October 8, 2018, www.cdc.gov/ncbddd/autism/data.html. Authorized for use only by Hind Aljohani in EMPLOYMENT LAW, ETHICS & HUMAN RESOURCES MANAGEMENT at Shenandoah University from Jan 10, 2019 to May 15, 2019. Page 2 9B18C048 The HSM program “dipped more deeply” into the autism spectrum, developing and deploying methods to make employment accessible to a much wider group of autistic people. Some candidates for the HSM program were more affected by autism’s difficulties. The people HSM hired would need more support to be able to do their jobs well and independently. Also, the factory environment at HSM was noisy and complex compared with white-collar settings. In effect, HSM and AW had taken on a tougher challenge. To create a successful program, they would need to break new ground. “The spectrum is broad,” said Williams. “There are employable individuals, really, for any role in the company. The goal is to hire the best person for the job, and if that person turns out to be autistic, they’re the person who is going to do it. This is not a charity program; this is an opportunity program.” A BRIEF HISTORY OF HART SCHAFFNER MARX In 1887, two immigrant brothers, Harry and Max Hart, opened a men’s clothing store, Harry Hart and Brother, in Chicago. The Harts’ brother-in-law, Marcus Marx, and a cousin, Joseph Schaffner, soon joined the business, which was renamed Hart Schaffner & Marx. Thinking there was more potential in the suit-making side of the business than retail, they shifted focus. A contract to make clothing for the U.S. military moved them toward off-the-rack, ready-to-wear clothing. By 1897, the company was selling off-the-rack suits through many retailers. They advertised nationally, using well-known illustrators to create brand-related materials, establishing themselves as a premium brand. Tailoring suits of all sizes and shapes, they offered them at cheaper prices than custom-made suits, and achieved mass-market volumes. Their innovations included zippered trousers and tropical-weight wool suits. The company incorporated in 1911. When World War I broke out, the company made uniforms for the military. Beginning in 1926, the company expanded by acquiring Wallachs, a New York-based clothing chain, then Chicago-based Al Baskin Co. The company produced military uniforms for World War II, and after the war, HSM acquired more manufacturers, retailers, and brands, including Society Brand, Hickey Freeman, Jaymar-Ruby, Kleinhans, and M. Wile & Co. The industry concentration HSM achieved eventually drew attention from antitrust regulators, resulting in a consent decree, in 1973, which Use outside these parameters is a copyright violation. effectively barred HSM from further acquisitions (without court approval) for 10 years. After 10 years, HSM resumed its acquisitions: the U.S. licensee of Pierre Cardin, retailer Bishop, and discount suit retailer Kuppenheimer. The company also expanded into women’s clothing by acquiring Country Miss. It then restructured; Hartmarx Corporation (Hartmarx) was established as a holding company, parent to the subsidiaries. Acquisitions continued through the 1980s, with Briar Neckwear Inc.; manufacturers H. Oritsky Inc. and the Bitwell Company; and retailers Anton’s (Detroit), Boyd’s (St. Louis), and Raleigh’s (Washington D.C.). As the company entered the 1990s, however, it began to lose money. To regain focus, Hartmarx sold off retail operations, as well as two tailored clothing factories, while acquiring manufacturing capacity and a few additional brands. Competitors moved manufacturing offshore, creating new cost pressures in the industry. To adjust its costs, Hartmarx closed domestic factories and moved some production to China, Mexico, and Costa Rica, eventually stabilizing its financial situation. During the campaign for the 2008 presidential election, then-senator and president-to-be Barak Obama, who was from Chicago, made a point of wearing HSM suits, which generated favourable publicity for the Authorized for use only by Hind Aljohani in EMPLOYMENT LAW, ETHICS & HUMAN RESOURCES MANAGEMENT at Shenandoah University from Jan 10, 2019 to May 15, 2019. Page 3 9B18C048 company. Despite this promotion, growing international competition combined with the financial crisis of 2008 forced the U.S. company and its subsidiaries into bankruptcy. In August 2009, Hartmarx assets were acquired by S. Kumars Nationwide Limited (SKNL), a publicly traded company based in India. HMX Group, a new holding company was established, with Hart Schaffner & Marx as its flagship brand and more focused operations. Williams was hired to run the new company. Plans called for an additional influx of capital from SKNL in 2012. When 2012 arrived, however, SKNL was not in a position to inject capital into HMX, and this precipitated another bankruptcy. Nevertheless, Williams, who had, by this time, been in the CEO for about three years, saw value in the company and believed that a turnaround could still be executed. He brought to bear the resources of his family, and his relationships with sources of financing. By year-end, the company had been reborn as the W. Diamond Corporation, owned by Williams and his family. HSM’s Competitive Challenges A key skill in the HSM business was the ability to operate a sewing machine, but the Chicago area had an ongoing shortage of people skilled in sewing. It was not a job that could be done by just anyone. When the company trained people from scratch, at a cost approximately $5,0003 per person, only one in three ultimately possessed the dexterity necessary to meet the quality requirements. As the last men’s suit maker committed to manufacturing in the United States, HSM operated under constant price pressure, which constrained how much it could raise salaries. Because the suburbs near the HSM factory were affluent, most of the factory workers commuted long distances to work from the southern suburbs; in addition to the commute time, the expense of commuting cut into workers’ wages.