Reference no: EM132826310

Ben & Jerry's Ice Cream

Ben Cohen and Jerry Greenfield of Ben & Jerry's ice cream present anything but the picture of typical business executives. Both owners are chubby and sport scruffy beards and wild hair; both wear T-shirts and flannel rather than a shirt and tie. The two friends enrolled in a correspondence course in ice cream making. The result was an ice cream store and then a company that rapidly overtook the market share of the superpremium corner of the ice cream industry.

When their company was young, Ben and Jerry were successful at shaping their company's culture. Besides the company being characterized by its funkiness-a trait also seen in the crazy flavors and combinations of mix-ins the company produced-it was also considered family by its employees. The company was based in a small Vermont town to attract people who valued local color and close relationships. Initially, their production was a small operation. When big orders came in, employees pulled together to complete the job the way a close-knit family works together in a crisis. Employees did whatever they could to help out, whether it was in their job descriptions or not. When successes came, employees celebrated together. They also conferred together about key company decisions.

The two founders played a specific role in shaping other aspects of the company's culture. Neither of them began marketing ice cream to get rich; rather, the business was an adventure. In spite of the company's size, Jerry was determined to keep the same spirit of fun. He made himself a joy manager of sorts, evangelizing joy at company meetings. Ben, on the other hand, was concerned with the company's moral soul. Under Ben's direction, the company's marketing-including product packaging-became a way to educate the public about social causes. As such, they partnered with ingredient vendors, with social activism in mind. For instance, they bought their brownies from a bakery run by homeless people. In 1985, Ben oversaw the creation of Ben & Jerry's Foundation, an organization that funds community-oriented projects. Later, the company organized 1% for Peace, a group designed to help redirect 1% of the national defense budget to peace-promoting endeavors. The firm championed many other causes-from the protection of family farms to global warming.

They also managed the company internally with an eye to social change. Among other things, Ben instituted the 5-to-1 compensation rule that mandated that top executives couldn't make more than five times what the company's lowest-earning employee made. As the company grew in revenues and numbers of people, it became more corporate and less familial. Not everyone was involved in every decision. Job descriptions held firm. A lot more planning took place.

To aid in the firm's development, Ben and Jerry brought on other senior-level executives who were skilled at growing companies. Their tutelage brought the company even more success. But these new employees valued economic gain, and their basic assumptions about the company often conflicted with the idea of corporate responsibility. A mission statement, drafted at this point in the company's development, clarified the values of the organization. This document described the company's focus as three interrelated parts: a product mission, a social mission, and an economic mission.i Ben had to concede to give equal weight to each of the three missions. It was also a concession for the new senior executives who believed profit and growth were the lifeblood of any company.

As the company expanded, the 5-to-1 policy came under fire. Initially, the owners and executives believed this policy helped them find professionals who were socially motivated. Because of this rule, many of the senior executives had taken an economic step down to work for the company. Most of them were willing to do it because they agreed with the company's culture. As time passed, however, senior executives believed the policy made it impossible to hire other qualified business executives.

Ultimately, Ben & Jerry's 5-to-1 policy was sacrificed. By 1990, the policy had been modified to 7-to-1. When Unilever acquired Ben & Jerry's in 2000, it discontinued the practice of reporting on the ratio altogether, a response to the increased complexities involved in compensation and salaries across the company. The death of the 5-to-1 policy didn't diminish the organization's social activist constituency, however. The company's social mission is alive and well. The company donates at least $1.1 million annually to worthy causes, and this corporate philanthropy is largely prompted by employees.

While the assumptions underlying the 5-to-1 policy proved dysfunctional, the assumptions underlying the larger social mission weren't. For one, the corporate responsibility bottom line really did affect the economic bottom line for the better. The social causes touted in the product packaging and in marketing pieces, on the website and in publicity events became a unique voice in the food industry. The company's social activism resonated enough with the larger world culture to give it a competitive edge. In fact, studies showed that ice cream consumers are willing to pay a little more for products that encourage social responsibility.ii Although the company had to rethink how and where it acted on its social mission, it successfully maintained its two-part bottom line.

Ben & Jerry's is an example of a company that has had to modify certain aspects of its corporate culture to fit changes in the competitive marketplace. The key to success is to ensure that the aspects of culture that provide a competitive edge are reinforced while those that hamper an organization's adaptability are modified.

Framing

1. The culture at Ben & Jerry's was shaped by the:

a. senior executives.

b. employees.

c. founders.

d. public.

Labeling

2. A fundamental strength of the culture at Ben & Jerry's was:

a. hiring qualified employees.

b. maximizing profits.

c. developing new ice cream flavors.

d. educating the public about social causes.

Summarizing

3. As the company grew a clash developed between:

a. diversifying the product line and remaining focused on ice cream.

b. the product, social, and economic missions and the desire for profit and growth.

c. overseeing the Ben & Jerry's Foundation and hiring qualified executives.

d. globalizing Ben & Jerry's ice cream and serving only domestic markets.

Synthesizing

4. After Ben & Jerry's discontinued the 5-to-1 compensation rule, which of the following actions would be effective in maintaining the company's culture?

a. Employees will receive higher salaries.

b. The company will no longer donate to charitable causes.

c. The compensation policies will become more complex.

d. The Ben & Jerry's website will become a voice for social activism.

Concluding

5. A change in culture took place when Ben & Jerry's was acquired by Unilever to:

a. fit changes in the competitive marketplace.

b. discourage employees from engaging in social causes.

c. remove social marketing from Ben & Jerry's packaging.

d. pay top executives based on the 7-to-1 compensation rule.