Culture Club

Team spirit prevails at Rio Grande, long an incubator for innovative styles of management

In the jewelry trade, few companies boast the reach of Rio Grande, a manufacturer of findings, tools, packaging, supplies, and equipment based in Albuquerque, N.M. The company’s clients are scattered around the globe and include bench jewelers, small-scale designers working in emerging fields such as precious metal clay, and even major corporate players like Tiffany & Co. The breadth of Rio Grande’s customer base is not, however, the most extraordinary thing about the company. That distinction belongs to its intensely idiosyncratic culture. The 325-person-strong manufacturer lacks a corporate hierarchy, reflecting its owners’ devotion to progressive organizational principles such as “participative management,” in which employees belong to self-managing work teams and are expected to exercise joint accountability over their tasks. If that sounds like a bunch of new-age hoo-ha, consider how profoundly the Bell Group—which counts among its ranks numerous descendants of the late Saul Bell, the patriarch who founded Rio Grande in 1944, when he and his new bride, Olive, moved from St. Louis to New Mexico—is committed to its unique management vision: When JCK approached director Molly Bell about scheduling an interview for this column, she immediately asked if it could be a group session. Her brother Hugh Bell—president of the Bell Group since the 1960s—and business coach Mark Shipman gamely joined in. Together, the threesome talked about Rio Grande’s carefully articulated corporate vision, the benefits of a collaborative working environment, and how they stay on top of the fast-changing metals market.

Rio Grande’s manufacturing plant

I understand your current management philosophy dates back to the early 1980s, to the quality circle movement first popularized by the Japanese.
I went to a seminar in ­Denver, probably about 1981, on quality circles and I learned about the technique. [Ed. note: The concept encourages the formation of small groups of employees organized by management roles to solve specific problems within a company.] At the time, we were trying to implement a system to complete multiple parts of an order at the same time—parallel processing, it’s called. And we just could not get it implemented. We’d get an order in on Monday and we might get it out the door by Friday. We got in a room and started talking using this quality circle method, and we didn’t actually figure out what the impediments were, but the problem went away.

How did that philosophy evolve?
I went to a national ­convention for quality circles and saw a speaker there who was talking about self-directed work teams. He came and worked with us in 1984. We went from processing about 300 orders a day to processing about 900 orders a day. But it seemed like we were missing an underlying philosophy that supported [our management techniques].

The buzzword in those days was empowerment. So we had these self-directed work teams and they had this model of empowerment. To empower people, you need to give them authority, resources, a sense of what they’re trying to accomplish, and then accountability. But it just stopped at accountability, and that didn’t seem right. So we got to thinking about it: There’s enforced accountability and there’s self-accountability. If you’re raising a child, you give them a lot of structure and that’s enforced accountability, and you hope by the time they grow up, they are practicing self-accountability. What does this look like when you’re working in a group? We call it joint accountability. You’ll notice we’re talking about principles, so we developed a set that we all share. And this is what really holds us together. We want people making decisions that are relative to the situation they’re dealing with. We don’t want people saying, “This is our policy.” We want them saying what makes sense: “This is the right thing and this is the wrong thing.” And that’s the underlying philosophy that supports all of this.

How many people constitute a work team?
Basically, a functional area becomes a team. So accounts payable is a team. The receiving department is a team. And teams can be anywhere from two to our largest, [which] is maybe 11 or 12 folks. Ideally we like to keep teams around six to eight people; it’s just a good, manageable number. We have cross-functional teams, ad-hoc teams.

When people come from more traditional working environments with hierarchies and corporate structure, how do you transition them into this environment?
The first thing is we’re really diligent about our hiring process; we try very hard to make sure someone will thrive in this environment. Once we’ve made that decision, we invest heavily in mentoring, assimilating them, and helping them be successful. We give them buddies. We really invest as much in the culture here and the people as we do any other business strategy.

How do you continue to motivate and incentivize your employees?
We have what we call a partnership dividend; we take a certain percentage of our pretax profits and then we distribute it as a bonus to the employees, and they also have visibility to our income statement so they know whether we’re making money, how much money we’re making, at what costs. They can see how the partnership dividend is doing, and they get excited: “Well, it looks like it’s going to be a good partnership dividend this year.” And that’s a big motivator. They are actually seeing the numbers, how they come together. And they have a say in developing strategies that help to make us more successful within their scope of authority.

Mark:? We review the financial statement with the associates each month.

Molly: We also have a pretty generous benefits package valued very much by all of our associates. They’re an important part of our success, and that in and of itself motivates people.

Saul and Olive Bell, in 1940, with the first two of their nine children, Elizabeth Rose and James Mandel

How do you maintain a brand identity across all these aspects of your operation?
Every single person here really owns the brand. It’s the principles that create and nurture the brand and become the voice of the company. It’s not the marketing or the banner that runs across the website. But it’s how we relate to our customers, and how we work with our suppliers and all of the partners we have in the industry. I think that really becomes the thing that is Rio Grande.

What do you see as the biggest challenges for Rio Grande and the industry as we embark on the second half of 2011?
Everyone’s biggest challenge is the escalation of the price of precious metals. How to adapt to it? We change our prices every day, as everyone else in the industry does. We try to buy and sell the same amount of inventory every day. It’s a matching contest and it’s always going to be off a little, but it washes out. The idea is that you’re selling and buying at the current price, and therefore you can’t be hurt by fluctuations.

Can you recommend any leader­ship role models or books in particular?
?Last year, we invested a lot in Jim Collins’ Good to Great. We put together a class for the associates every couple years in which we do a full day of training for every associate in the building, spread over weeks, and we use Good to Great for the first part of that training. And the Leadership group is reading a book called The Speed of Trust that has proved very powerful. Working in the collaborative environment that we do, trust is critical to everything that we’re trying to accomplish. It really is the grease that keeps the company running. Going back three or four years ago, there was a book called Now, Discover Your Strengths that actually includes an online quiz to help people identify their personal strengths. We instituted it across a number of teams, but certainly in the Leadership group.

Molly: What’s become interwoven in our culture is interactional analysis. We’ve read a lot of those books and we teach that, and that helps us remain in a very positive place when we are communicating with each other. We’re less likely to communicate in ways that are less than constructive.

Do you think these principles of participative management would apply even to small family businesses?
A lot of associates have told me that they take this home with them. They use it in their immediate families, the associations and clubs they belong to. They say, “This is how we’re trying to live our life at home.”

Mark:?You can see the universality of those principles. Something we’re constantly using and thinking about is called whole-brain thinking. As humans, we pick one of four styles of thinking and we tend predominantly to think in one style or another. If I’m running the family business and what I say goes, the company is only going to get the benefit of my style of thinking. To have an open, collaborative environment, and everybody’s ideas and concerns are considered, you’ve got a much better chance of getting perspective. With whole-brain thinking, everybody’s talking together trying to solve a problem. And that really makes a difference.