The Golden Rule in Business
It's surprising this isn't more widely used
“Therefore all things whatsoever ye would that men should do to you, do ye even so to them: for this is the law and the prophets.” — Matthew 7:12
Two weeks ago, we were visited by The Ghost of Employers Present, in which we saw the spirit of the unredeemed Ebeneezer Scrooge resurrected in time for the Christmas season.
Today’s entry is a very different one — and example of a true values-driven leader who honored Christmas in his heart every day of the year.
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Arthur Nash was born in 1870 in Indiana and seemed to be destined for a life in religion. His parents were strict Seventh-Day Adventists and they sent him to religious school.
He joined a seminary in Battle Creek, Michigan where he became an ordained minister.
But it was not to be; Nash would eventually abandon the church and his ambitions.
He was kind and devoted, but his falling out wasn’t over the religion itself, but rather to its interpretation by hard-hearted leaders. It was a blessing though, as Nash turned out to be a much better businessman than a minister.
So good, in fact, that he would eventually lead the largest producer of direct-to-consumer clothing in America.
Made to Measure
Arthur Nash joined a group of Chicago clothing salesmen in 1900 and thrived. In 1909, he moved his family to Columbus, Ohio, where he began manufacturing clothing to sell directly to consumers. But a flood wiped him out and he had to start over at age 46 in Cincinnati in 1916.
Nash established A. Nash Company with an office, a cutting room, and a business model in which he took customer measurements and cut the material; he contracted an Austrian man to do the suit-making.
During World War I, Nash reexamined his beliefs while his two sons were overseas in the war. Long considering himself an atheist, he reread the Gospels.
In doing so, he realized the main message of the religion he long abandoned was a universal truth for everyone — the Golden Rule: treat others as you would want them to treat you.
And that became the driving force behind everything in his life.
Don’t Sweat It
Soon, the Austrian man wished to return to Europe and offered to sell his business to Nash. Nash took him up on it, but discovered that he bought a sweatshop.
That certainly didn’t fit with the Golden Rule, so he decided to raise the wages of the employees. His son objected, noting that the business lost $4,000 the previous year; wage increases would bankrupt them. But Nash was resolute in his beliefs.
He shared his vision of the Golden Rule with them:
“First, I want you to know that Brotherhood is a reality with me. You are all my brothers and sisters, children of the same great Father that I am, and entitled to all the justice and fair treatment that I want for myself. And so long as we run this shop [which to Nash meant three or four months longer] God being my helper, I am going to treat you as my brothers and sisters, and the Golden Rule is going to be our only governing law. Which means, that whatever I would like to have you do to me, were I in your place, I am going to do to you.”
He raised the wages of button-sewers from $4 to $12 a week and of pressers from $18 to $27 a week. Then he turned his attention to liquidating the machinery and excess fabric, preparing to go out of business and return to Indiana to run a farm.
However, two months later, while he was hoping to help out a friend in financial need, Nash turned to his bookkeeper to give him guidance on what he might afford. He was astounded to discover that the factory he acquired tripled in business from the previous year.
How was this possible?
After Nash gave his Golden Rule speech, the Italian presser turned to his colleagues and said,
“Whatever this Golden Rule thing is I don’t know, but what Mr. Nash told us was that all he wanted us to do was to work just as we would want him to work if we were up in the office paying wages, and he was back here doing the work. Now I know, if I was the boss and would come in and talk to the workers as he did, and raise wages like he has, I'd want every one to work like hell!”
They did just that, and the following year, their business tripled again.
When Nash proposed a profit-sharing plan with employees, they objected to distributing the funds based on wages; rather, they suggested sharing the profits based on time worked.
Too Good to Be True?
The success of A. Nash Company sounds too good to be true — at least it did to the editors of Success magazine. They sent investigative reporter Ruth White Colton, who posed as a widow by the name of “Hattie Clark” and was hired by Nash.
“Mr. Nash started this business with the conviction that until right human relationship was established between employer and employed, between producer and consumer, no progress could ever be made out of the morass of industrial and social conditions in which our own country, and indeed, the whole human family has been struggling.”
As cynical as anyone might be, she thought she would blow the lid off of this fairy tale of a company. She didn’t realize just how wrong she was.
For two weeks, Hattie Clark was a worker on the factory floor, documenting what she witnessed — including a significant all-hands meeting.
Six months before she arrived, Colton discovered that the Nash Company cashier was held up and robbed of the company payroll. John Sydell was convicted of the crime and sentenced to prison, leaving his family without a primary wage-earner.
Concern for Sydell’s wife and four young children prompted a discussion between Nash and his employees on how they might be of service to the family. Colton was present at the factory meeting when they voted to put Mrs. Sydell on the company payroll at $20 per week, provided she agreed to use the money to make a good home for her children.
Colton also wrote of Nash’s focus on what we now call work-life balance. He objected to overtime, having already established an eight-hour work day and 40-hour week.
In particular, he wanted to “reduce still further the hours of the women workers who have the additional burdens of the home to carry.” Nash would eventually introduce the 35-hour workweek for women and instead of reducing the wage scale, he established a minimum wage of 50 cents an hour.
Nash had lowered prices, raised wages repeatedly, reduced both the workday and the workweek, and stabilized employment. And yet the money kept coming in.
By 1924, he held stock in his company with dividends that would soon make him a millionaire. So he posed this question publicly: “Who had produced this wealth, [and] in consequence to whom did it belong?”
It’s a valid question today, as we see the divide between CEO and worker pay at an all-time high.
Nash decided that he would distribute his share of a dividend ($1.2 million in 1924, or $21.5 million today), to his employees. And he would transfer control of the company to them in five years.
Nash believed his employees were entitled to these profits because their labors had made the money; he felt, in fact, that he would be “the arch fiend of the ages” were he to claim the spoils of victory himself.
He would never see that transfer occur; Arthur Nash died of a massive heart attack in 1927. His heirs sold the company stock to investors in September 1929 — one month before the stock market crash.
In my conversation with Tom Peters, around the 27:00 mark, he mentions a column by David Brooks in which Brooks writes about two sets of virtues: résumé virtues and eulogy virtues.
The résumé virtues are your accomplishments and skills; eulogy virtues describe who you are as a person.
And as much as we can sum up the business success of Arthur Nash, what’s more impressive is Nash the man. The way he treated people, inspired people, helped grow people.
It’s summed up best by Joseph Fort Newton, minister and friend of Nash, who said he was
“Lovable in his manliness, altogether admirable in his domestic relations, loyal in his friendships, prophetic in his citizenship, gentle in strength, wise and winsome in counsel, exquisite in sympathy, rich in insight, broad and tolerant in understanding, a true man.”
If I’m remembered as half of those things, I’ll consider myself richly blessed.
I have the privilege and honor to wish you the very best this holiday season.
Thanks, and I’ll see you on the internet.
Two more things:
If you’d like to read Arthur Nash’s autobiography, The Golden Rule in Business, it’s available from used bookstores.
And David Brooks’s latest book How to Know a Person is out. Get it.