A cooperative management style can create friction if the players are incompatible
Two years ago Allan Magid, vice-president in charge of purchasing at I. Magid Inc. was at the Guang Zhou Trade Fair in southwestern China, looking for someone who could supply laundry detergent for his Canadian retail clients. But while waiting to speak to the company representative, he bumped into a woman who was marketing hand-soap bars.
The price was right and he closed a deal to import the soap, which would be packaged under Magid's Maxam private label. That chance encounter paid off big time. Last year the company sold more than 4 million bars to independent retailers, dollar stores and pharmacies.
It's all in a day's work for the veteran buyer who along with his brothers Mike and Jeff, is co-owner of I. Magid Inc. The company is an independent wholesaler which distributes more than a thousand items ranging from canned fish to tea bags, under the Club Supreme, Maxam, Lady Sarah and Beaver brands.
"Our job is to find good deals on products that will re-sell quickly. To me it makes no difference whether it's hand soap or laundry soap," Magid said. "We are basically traders. It's an industry has existed for hundreds of years,"
Wholesale distribution is a highly competitive, low-margin business. Retail consolidation has given the chains huge buying power and is squeezing out the independents who have traditionally formed I. Magid's core market.
Nevertheless, the Laval-based business has seen continued success by adapting to new markets and capitalizing on opportunities such as the soap bar deal. As a result, revenues rose approximately ten per cent last year to about $45 million.
It's a pretty impressive performance for the three brothers, who took over the business during the early 1980s while just in their early twenties, due to the unexpected health difficulties experienced by their father Israel, the company's founder.
Unlike many successions which can be spoiled by petty jealousies and differing work ethics, the Magids are flourishing. Much of the reason they say, is their consensual management style. Although their respective responsibilities are well defined, the three brothers meet regularly on Mondays to coordinate activities, and Tuesdays to formulate purchasing strategy.
Allan, Mike and Jeff Magid are roughly the same age, (45, 44 and 41), and have similar education, business knowledge and experience. As result they have considerable confidence in each other's abilities.
Mike Magid is the company's president. He handles operations, administrative and financial matters. Jeff Magid manages the sales staff, and Allan Magid searches out the deals. But according to Mike Magid, the titles aren't taken too seriously.
"We realize that we are in this together and any decision we make can affect the others," Magid said. "So we try to stay in touch constantly, which is easy since we are still a small company."
Jeff Magid agreed. "If Allan comes across an interesting product, he calls me to see if my clients will buy it," Magid said. "Because no matter how good the quality is, or little we paid, if we can't re-sell the item, it's not a good deal."
According to Allan Magid, most conflicts are easily resolved.
"My mother had three children, so we could run our businesses better," joked Magid. "That way all arguments can be settled by vote - two out of three wins."
While many business executives talk loudly about teamwork, when you look a little closer, most follow the old pyramid management structure similar to the one used by the Roman army two millennia ago.
There's no room for a debating society in modern corporations, especially in today's competitive world, in which decisions need to be made fast. Companies like I Magid, which rely to a large degree on consensus are rare.
But according to one university professor, in many industries the old command and control management structure is take a back seat to newer more open styles of management. That's especially true in knowledge-based companies, in which power is held by highly skilled, specialized workers.
"The important thing about leadership styles is that there is no best one," said Martin Martens a professor at Concordia University's John Molson School of Business. "The type of leadership required in a particular organization depends on several factors including the type of industry, the geographic areas in which a company operates and the kind of people that work there."
For example companies that operate in many geographic areas will often decentralize by delegating significant decision making power to local operating units Martin said.
But at I. Magid, consensus remains the watchword. According to Mike Magid the brothers were well prepared to work together. "We always played together when we were kids, especially sports which taught us a lot about teamwork," Magid said.
The elder Magid contributed a lot to his kids' management training. Despite the fact that poor health left him unable to work full-time, Israel Magid still came to work one or two hours a day, to give his boys a sounding board, a contribution that sorely missed since he passed away last year.
But according to Allan Magid although the brother's teamwork management style works well, the three had no choice to work well together to confront the tough business environment facing distributors.
"We were always tight and close knit," Magid said. "But we also knew that we had to get along, otherwise none of us was going to (inherit the business)."
Photo caption: Mike, Allan and Jeffrey Magid run their business as a team, a strategy that can create strong disagreements if the players are not compatible.
o I. Magid is an independent wholesales distributor that markets more than 1,000 products to pharmacies, dollar stores, mass merchants and independent retailers.
o The company's purchasing agents travel around the world searching for low margin grocery, confectionery, health and beauty products that can be and resold to local retailers.
o Allan, Mike and Jeff Magid took over I. Magid during the early 1980s while they were still in their early 20s, due to a sudden deterioration in father's health.
o The brothers attribute their ability to work together to a clear definition of their respective areas of responsibility and to the fact they coordinate their actions regularly.
|© 2002 Peter Diekmeyer Communications Inc.|