"The real connector between the family and the company are The Five Principles of how we do business. It’s the glue that holds us together.”
“From one generation to the next, it was always about how we did business rather than what we do as a business, and The Five Principles came out of that legacy.”
Businesses often display their principles and values on their website and in their marketing materials. Some even carve them onto the walls of their offices. But do they live by their principles in everything they do? Those looking from the outside at most businesses would probably need some convincing. One company that might convince them is the family-owned business Mars. A diversified, global business in pet care, confectionery and food, Mars operates according to five principles that are deeply embedded in the company’s culture.
The Five Principles are: quality, responsibility, mutuality, efficiency and freedom. “There’s not a conversation I have with our associates and leaders, other corporations, government officials, or when I speak in public that doesn’t weave in The Five Principles,” says Victoria Mars. Mars, the former chairman and current director of the Virginia-based company and a member of the fourth generation of the family owners, stresses the importance of nurturing these principles. “Repeat, repeat, repeat; demonstrate, demonstrate, demonstrate The Five Principles all the time. It’s so critical you don’t forget about these five principles.”
Mars is one of the biggest privately-owned businesses in the world, and it employs more than 100,000 people in 80 countries. The company’s five principles, which are visibly present in each of its hundreds of sites, unite Mars associates across geographies, languages, cultures and generations.
The company’s approach makes a good example of what it means to have values clarified, codified and communicated. The principles are not only written down, but are brought to life in detail on the company’s website. In it, each value is given practical relevance and application for employees, suppliers and other stakeholders.
For instance, much is made of the way in which Mars is a decentralised organisation in which employees – which it calls associates – are given the “freedom to act with full responsibility for doing their assigned jobs.” In the workplace, “divisive privileges” are to be avoided, and an egalitarian spirit is encouraged.
Under the principle of mutuality, the company holds that its business relationships should be measured by the degree to which they create mutual benefits for the company and its stakeholders. Success is achieved if quality and value are given to customers, suppliers, distributors and others. “Gains that ignore this will be short-lived” is the powerful warning in this section.
The fifth principle, freedom, takes as its starting point the “deliberate choice” that Mars is a privately held company. Free from what Mars calls the “restrictions” of having to incur debt to grow – as many publicly listed companies do – the company has more control over its affairs. It has the freedom to re-invest a substantial portion of its profits each year. “As long as Mars remains free, our well-being can always come before any other financial priority,” the company states in its description of this fifth guiding principle.
Victoria Mars says it’s unlikely the company would have been as successful building its business without The Five Principles. “From one generation to the next, it was always about how we did business rather than what we do as a business, and The Five Principles came out of that legacy,” she says.
The values embedded in the principles come from Mars’ grandfather, Forrest Mars, Sr., whose father, Frank, founded Mars as a confectionery company – a precursor of today’s Mars company – in the US state of Washington in 1911.
“My grandfather was a great believer in how you do business,” says Mars. “Around 15 years ago, we found a letter written by him in 1947 that talked about this idea of mutuality with your associates, your community and all your business dealings as the very objective for the company’s existence. This has shaped the family’s values and principles, and was further expanded when my father, my uncle and my aunt codified The Five Principles in the early 1980s. They have been updated a few times, but what hasn’t changed is the principles themselves. What evolves more constantly is the relevance of how one lives them in the current times.
"As a child, I grew up with these principles as part of how we lived as a family. They weren’t hanging on a wall, posted on the kitchen fridge. But they guided our family and me on how we interacted with people. I thought this was just the norm.”
For the Mars family, having these principles helps the family steer what it believes is the right course for the business – and the principles are not open to challenge, as Mars explains. “You can get managers that can come along who might say we need to change aspects of the principles, but the family will say: ‘You don’t understand; these are our principles, our values. You don’t have the right to change them.’ We own these principles and values. The business doesn’t own them; we own them. The real connector between the family and the company are The Five Principles of how we do business. It’s the glue that holds us together.”
What these principles can mean in practice has recently been demonstrated in the launch of the company’s ‘Sustainable in a Generation’ plan. This comprehensive programme was launched in 2017 and has three pillars that the company is working to create through its operations: ‘healthy planet’, focused on climate change, land and water stewardship and waste management; ‘thriving people’, focused on, among other things, increasing incomes and unlocking opportunities for smallholder farmers in the company’s supply chain, including disadvantaged women; and ‘nourishing wellbeing’, focused on health issues among people and – naturally – their pets, too.
Another practical expression of the company’s principles is highlighted by their use in helping to recruit the right talent, says Mars. “Our principles and values will attract the associates we are looking for to work in our business and will keep the ones we have working for us. They will encourage consumers to buy our products and affect how communities we work in feel about us being part of their communities, and how governments feel about us working in their country.”
Mars also believes a broader definition of the purpose of business is vital to engage the next generation. “Business is more than earning a return. It is about the impact you have on the world, and that is absolutely important to the next generation,” she says.
“As the fourth generation of our family, my siblings, cousins and I are asking ourselves how we are going to keep our children, grandchildren, and great-grandchildren connected to the business when they aren’t going to be as closely linked as we are,” Mars notes. “We’ve got to find another way to connect them. It’s easy to end up with just words on a wall; you have to keep training, telling stories and demonstrating how you behave and show how to live by these principles.”
Global Family Business and EMEA Entrepreneurial and Private Business Leader, Partner, PwC Germany
Tel: +49 201 438 1812
Dr. Peter Bartels
Global Entrepreneurial & Private Business Leader, Partner, PwC Germany
Tel: +49 40 6378-2170