Pehr Gyllenhammer

Reworking the Workplace

VTR Date: November 16, 1986

Guest: Gyllenhammer, Pehr


VTR: 11/16/86

HEFFNER: I’m Richard Heffner, you host on THE OPEN MIND. Once, some of us feared that Americans were overly concerned with our GNP, our Gross National Product…The total of what we as a people produce, not how we distribute it. But those may have been the halcyon, good old days, compared to our present all-consuming, though perhaps not sufficiently productive, involvement with buy-outs and spin-offs, with mergers and acquisitions seemingly designed only to finance other mergers and acquisitions, with all kinds of financial manipulation and wizardry…all based on money making money, instead of labor and capital and machines and management all making goods that make money and increase our national standard of living.

Well, the fast buck – making the fast fortune, in fact, may have become the most telling economic symbol of our times. But I’ve invited to THE OPEN MIND today a different kind of entrepreneur – an enormously successful one, to be sure, but an industrial leader whose practical and enormously effective thoughts and deeds concerning producing, not manipulating, a better, richer future, are based upon inventiveness, self-discipline, humaneness, and a profound understanding of and abiding respect for the dignity of work and for the people whose work produces more for all of us to share.

Pehr Gyllenhammar was Chairman, and is Chairman now, and CEO of Volvo in Sweden. A giant among European industrialists, Mr. Gyllenhammar has learned the lessons Japan has for us all. And if an intimate knowledge of our own working place, as well as membership on various American boards of directors, could bestow citizenship, he would be an American, too.

Indeed, I would like to think that Mr. Gyllenhammar’s respect for work and for political democracy places him squarely in the best, though perhaps now somewhat less honored American business tradition. He and Volvo, the giant enterprise he leads, have been enormously successful in their belief that if industry does good, it can do well. But I want first to ask Mr. Gyllenhammar how we can even begin to think about the niceties of work, of People at Work, to use the title of one of his books, when in so much of the western world work isn’t even available for large numbers of people. Mr. Gyllenhammar, how can we address ourselves to Dignity at Work, which is the book that was written dedicated to you, and to your own book, People at Work? How can we be concerned for the ways in which we treat people who work at producing the goods around us if there aren’t even enough jobs to go around?

GYLLENHAMMAR: Well, it’s terrible that there are not enough jobs available. On the other hand, if we don’t treat the people at the workplace well, how can we ever offer anything to those who are out of work? One doesn’t exclude the other. And I think that the better we produce and the better we put people to work, the more dignified the manner is in which you manage and in which they feel they contribute, the better our growth will be and the more chances we will provide for people to get a job who are now out of a job.

HEFFNER: Has that been demonstrated by your own experience in Sweden?

GYLLENHAMMAR: What has been demonstrated is that growth still provides jobs. And growth about a certain level will provide more jobs.

HEFFNER: and the workplace itself?

GYLLENHAMMAR: And the workplace itself – there is no doubt in my mind, and I think it can be demonstrated, that the better the workplace is, as perceived by those who do the work, the more efficient it becomes – the higher the productivity is and the better the growth.

HEFFNER: Have we in this country adopted that point of view to the degree that you have in Sweden?

GYLLENHAMMAR: It’s such a wide country and one can see all sorts of things in the United States. I’ve seen the best. I’m not sure I’ve seen the worst, but I’ve seen a wide spread of excellent production, good management, good people. And I’ve seen places that I find poorly managed, but everything is there.

HEFFNER: Is there something about Sweden…its own economy, its own society…that enables you, perhaps, to be more successful at directing Volvo in this way, that would be the case with another company here? Would you, indeed, be able to function the same way in this country as you do in Sweden?

GYLLENHAMMAR: I think so. It has often been said, particularly when something is strange and new to you, that it works there and it doesn’t work here. And that is…in management, what’s very often the case, one blames one’s own culture for one’s inability to adjust or adapt to something new or adopt new measures…I think it’s pretty universal. For example, when you look at how executives are treated in the Western societies, how we care for them, how we send them to programs, how we give them incentives and bonuses and stock option schemes – why do we do that? Because we obviously assume and believe that as a consequence of this encouragement and this care they will grow and will do a better job. When you get below a certain line you don’t do anything but hire and fire. Now they are all people, they all respond to the same type of encouragement or motivation or the interest you take and how they achieve.

HEFFNER: Well, it was said by Mr. Lincoln that the good Lord must have loved poor people because he made so many of them. But if you use that same thinking and said let us use the same approaches – educational, concern for the dignity of executive work – with people who are not executives, could we afford to do so?

GYLLENHAMMAR: It’s not a money matter, it’s a matter of…of how you approach people. For example, just taking a plant tour – if you do it regularly – you realize how few people do it at all. And the fact that you are seen, the fact that you are seen to care, that you take an interest, is motivating per se – it encourages people. There are so many small things you can do that if you only consider them and think about them, it’s not a matter of cost, it’s a matter of style.

HEFFNER: And yet, when I read People at Work, one of your books, it seemed to me that…and you can stop me if I’m wrong…it seemed to me that the care and the concern that you…well, I was going to use the word ‘lavished’, but that’s not the right word…that you devoted to your employees, must have been extremely costly. Now, you may say, ‘Yes, it was costly, but it paid itself back in terms of efficiency, productivity and the wealth of the company’. And that’s what I wonder about. Did it? Does it? Does it work?

GYLLENHAMMAR: Absolutely. We have had quite healthy growth throughout recessions. And also in good times we have even a faster growth in profits. And I relate it very much to how we do things – not only the things we do, but how we do them. One should distinguish between how one approaches people and what investments one does. For example, we’ve invested in new technology to change the workplace so that it is better suited, we think, to people – that they control the workplace, they control the technology; they’re not the slaves of the technology. That, in the first phase, seems to be more costly when you invest, but when you measure productivity and performance over time it has paid several times over.

HEFFNER: That kind of participatory democracy seems so foreign to so many of us in terms of what has to happen in the workplace. I gather you feel it simply is what is appropriate.

GYLLENHAMMAR: I think so. And we don’t always succeed. If we ask our people if they are happy, if they are pleased, if things cannot do better. Fortunately, many of them say that it can be done much better – there is a lot to be desired. But still, I think the effort is really what counts…and the results. And we have the effort. We are not always successful with our people, but the results have been good.

HEFFNER: You have so much of a connection with American industry. As I mentioned to start with, you sit on so many boards here – both of profit making groups and non-profit groups. Is it your perception that we could, in the major automotive industrial giants, adopt and adapt the procedures that you have outlined in People at Work?

GYLLENHAMMAR: I’ve seen it.

HEFFNER: And does it work?

GYLLENHAMMAR: Yes, it does work. It definitely does work. But it is very contrary to the philosophy where you take drastic action whenever you have a decline in profits and just fire people, and then rehire them when times are good. I believe very strongly that if you are facing a decline, you have to do something. But to do something may not necessarily be that you fire everybody and then rehire them. I think something happens in people when they are fired that you can hardly ever repair. Some of the loyalty that they think they show you as a corporation or as a manager is destroyed and I do not think that you will ever get it back. The disruption costs a lot of productivity. The continuity creates the productivity and the quality. It is to do something a little bit better every day. And then to feel that you have the trust and the confidence of the management to continue. Once that is disrupted I think that it breaks inside you and it will never be completely healed.

HEFFNER: But that is our American pattern, isn’t it?

GYLLENHAMMAR: Part of the American pattern is this practice of firing and then rehiring. And I don’t believe in it long term.

HEFFNER: Is that because you have a…in American terms…a rather idiosyncratic point of view about the obligation of the business person? Or because you grew up in a different society? Because in People at Work you raise a question here. You ask, “What is the purpose of business”? You go on, “Very few people today hold to the traditional view that the sole justification for business endeavor is to gain profits for the shareholders”. And later on you italicize, “I believe the purpose of private enterprise is to serve the public”. But how frequently do you think you could hear that in this country, meant in the same way that you mean it?

GYLLENHAMMAR: I’ve heard it. I’ve heard it said.

HEFFNER: The second part was…meant in the same way as you mean it.

GYLLENHAMMAR: I’m not certain. I think there is less of it in the United States.


GYLLENHAMMAR: I don’t know. But I think the focus has so much been in financial and economic terms And in spite of the best research on people, in my opinion, coming out of the United States, I don’t think it has always been used. I think the economists and financial people have prevailed in developing the models for business.

HEFFNER: And yet you say…and certainly Volvo is living proof of that…that it is not only financially possible, it is profitable to be concerned with the human beings who work in your workplace.

GYLLENHAMMAR: Absolutely. I don’t have a different contract, I think, with my peers than anyone else in business. I am there to provide the shareholders with good, long term profitability, healthy growth. And if I can’t, they will disassociate me from the business, no doubt. But it’s the means of achieving it that may be slightly different.

HEFFNER: Well, you say, ‘…slightly different’. But in terms of…well, I think of Dignity at Work, the book dedicated to you, and of your own book, People at Work. It’s not a ‘slight’ difference. What you express here is your concern for the people at work in the company you both…you all participate in. Your concerns are quite startling to an American and you say you don’t know why, what makes for the difference. Let me ask you a different question, and that is, as familiar as you are with your own patterns…the patterns of Europe, the patterns of Japan and ours…do you feel that we will prevail in this country…that we can prevail, given a kind of carelessness for the people at work?

GYLLENHAMMAR: No, I think it has to change. And if I compare Europe and my own country with Japan, I think there again there is a difference. In our type of culture, a new management always tries to change everything and very often they get high marks for turning everything upside down. They say, ‘He didn’t leave any stone, you know, untouched and they’re really redoing the organization’. For a Japanese, I think that is a very strange statement. First of all, you denounce the previous management. Secondly, you think only in terms of your own monument – the monument you are going to build – and you are without history and you are without a future. So going into an airline, for example, you paint all the aircraft in a new color and you provide new uniforms and new seating arrangements. But it’s the same – the service is the same. The Japanese have such marvelous continuity that you hardly hear of the transition. It is uninteresting. What is interesting is that you provide a little bit more in a better fashion every day and if you do you will dominate the industry. We have our disruptions so many times that the Japanese competition must be quite pleased that we destroy and then try to rebuild over and over again.

HEFFNER: What do you see as the future in terms of that kind of competition between Japan, Europe and the United States?

GYLLENHAMMAR: Well, they are extremely meticulous, which I think is one of their great virtues in industrial terms and in service terms – absolutely meticulous, attention to detail, which we have lost. I think we have a lot of substance and I don’t think that substance will always prevail over being meticulous. I think you have to combine the two. I think it’s going to be so tough that you have to be both meticulous, attend to details, and provide substance.

HEFFNER: Do you think our political system lends itself to the continuity in economic management that you are looking for? Do you think that our attitudes toward tariffs, towards economic policy, generally will lend itself to fostering economic growth along the lines that you suggest?

GYLLENHAMMAR: I think it has to. And I think it has in the past. We have sort of lost our perspective on industry and perhaps one of the reasons is that it is only a minority that deals with industry. Twenty, thirty years ago, most Americans and most Europeans had a link with industry. Either you worked yourself in industry or you had relatives or family members who worked in industry. Today, everybody is occupied with something else. So I think we have lost…industry is not in focus any more, we’ve lost touch. We’ve lost the feeling of the industrial realty, and therefore the long term.

HEFFNER: What happens to a society in which that is the case? Obviously we’ve become a service nation. But what happens to our growth, what happens to a nation that has become quite well…

GYLLENHAMMAR: …I don’t think it will work. We flatter ourselves by saying that we are now belonging to a service society, but a great slice of the services are directly related to industry. If we took industry away, part of the service society would collapse because the value added comes to a very large part from industry itself.

HEFFNER: but Mr. Gyllenhammer, you say it won’t work. What happens then? It’s one thing to say it won’t work, to sit back and look at it, but what do you think will happen in this country?

GYLLENHAMMAR: Well, or in any country…

HEFFNER: …Alright, in the Western

GYLLENHAMMAR: …that can’t deal with it well. And Europe has many problems. I think there will be a decline. That is, a decline in the economy, a decline in the standard of living, unless we cannot face these problems and deal with them well.

HEFFNER: It’s hard to identify the problems as such.


HEFFNER: I mean, you can, and you do. But it’s hard for people who go to the ballot box, who go to the polling place, to identify what the problem is.


HEFFNER: And in Japan? Is that the wave of the future, as so many people say?

GYLLENHAMMAR: The services?

HEFFNER: No. In Japan – its approach to industry. Do you feel that they have a much better grip in terms of what you said?

GYLLENHAMMAR: Oh, absolutely! No doubt! The embarrassing part is that with their feudal tradition, we try to study how they do treat people better in the workplace to get higher quality and higher precision and higher productivity. That’s embarrassing. It is in our constitutions. In our proud constitutions, we talk about people’s integrity, and dignity, and right to development, and access and equal rights to what we’ve produced and what we contribute, and still we partly look to Japan to see how it should be done in practical terms. Yes, they know how to do it. They know how to do it in service as well. I was just reminded the other day, when I was in Tokyo, about one of the best hotels in the world – that the boss, when I met him some years back, he was seventy-nine. And if you compare that with our tradition, where we throw out forty-five year olds to get someone who is more fresh and has a new approach, who may be thirty-five or thirty-two, and give them a large bonus to change the face of the place. The good places have existed for a very long time.

HEFFNER: Of course, at my age I very much appreciate the point that you’re making. I wanted to ask you a couple of questions about…there is a chapter here where you talk about too much transportation. What do you mean…as a problem in our society…directing yourself, I think, to the United States as much as any other place?

GYLLENHAMMAR: Well, one problem, for example, with the automobile, is that…a tool that many aspire to have and that too many people don’t…can’t afford to buy…is constituting a major problem for us. And again, we do not have a proper perspective on how we use the things that we provide. We have a society that creates problems for itself with some of the marvelous tools that we create. And that is a bit sad. We have a very shortsighted, in a way, management of all the good things that we are able to provide.

HEFFNER: Well, certainly in this country there is an assumption that the automobile is a natural extension of the human body, that it is everyone’s birthright to have one or two automobiles. Are you suggesting that’s simply impossible?

GYLLENHAMMAR: No. It’s just that the problem has to be managed. Both how you solve the traffic problem and what restrictions you put on the use of the vehicles. And again, we are driven very much by short term solutions or we let problems develop that we could, with our perceptions, with our knowledge, with our investments, where we could see to it that the problems do not arise at the rate at which they do.

HEFFNER: Do you think that can be done without a national economic policy? Something that this country really has not had. Something I gather Sweden does have.

GYLLENHAMMAR: Both yes and no. I mean, some national economic policies have failed bitterly. And the more you centralize, I think, the economic policy…instead of having certain objectives and principles for your policies and for your country…the more you centralize it, the more things, I think, can go wrong. But there are certain things that in my opinion a nation state has to do and has to provide. One is values and ethics. And on policy, it has to provide some ideas on how your society is going to develop. In practical terms, infrastructure for example. I think that the great moves in American infrastructure were terminated when the big airports were being built. And before that, when the big motorways were being built. I don’t think we’ve done very much about it since. The last twenty, thirty years we haven’t built our nation states. That is also a matter of national policy – what infrastructure are you going to provide your citizens?

HEFFNER: That is done to a greater extent in Sweden, I gather.

GYLLENHAMMAR: No enough. In my opinion, again, there is…it is a blurred picture of some national moves in terms of how you build your nation, but a lot of it is regional and are done for short term political purposes, that are natural, but still not always good moves.

HEFFNER: Do you think that we can have both a meaningful and, in your terms, acceptable and necessary national economic policy, and a maintenance of our traditional involvement in laissez-faire, our traditional involvement in individualism? Can we have it all?

GYLLENHAMMAR: Why can’t we have it all? (chuckle) It sounds difficult but I think we could have a good combination. After all, that is what leadership and management is about – not to have it all, but to try to improve and do it better.

HEFFNER: where is it done better? Where is there that combination of the freedom that nourishes enterprise and of the central economic policy that reflects, as you suggest, the moral values of a society?

GYLLENHAMMAR: I think over time it is difficult to say that anyone has provided the solution. But I think we have good and bad times in government of many of our democracies and I think that at times we have very encouraging signs that there is a combination of these factors that we are discussing. But we have to be both impatient and patient. We have to make the effort, and I think there is so much that is to be treasured in our types of societies. I do not think that we will ever find the right combination, but fluctuating between different parties and different governments, we can strive for it. And I think that the risk of a decline, if we do not manage well, will hopefully push us. I’m an optimist.

HEFFNER: Is there more going on in Europe now that would indicate a recognition of the kinds of needs that you’ve described – a coming together of industry?

GYLLENHAMMAR: Yes, I think so. I think, first of all, the European Commission for the Common Market is, at this point, very dynamic because we had a scare in the late ‘70s that we were lagging behind both the United States and Japan and that we will be very poor and unattractive partners. So I think that the Commission, at this time, has pulled themselves together – far more dynamic, realized that if Europe doesn’t put its act together, we are lost. And also people in industry have taken an entirely new perspective at this. I assist in a group of industrialists who take an interest in what is happening in Europe as a whole – not only in our companies, but across the borders – to try to help a bit.

HEFFNER: Well, of course in the less than one minute that we have left, I need to turn to ask the question about the United States. Is that true here? Are we behind in that kind of coming together thinking through?

GYLLENHAMMAR: I think there’s more that could be done in the United States.

HEFFNER: And where can it be done? At what level? Under what auspices?

GYLLENHAMMAR: I think both government and business. I think, perhaps, there is too much lobbying and too little of constructive forward-looking discussions.

HEFFNER: Mr. Gyllenhammar, that’s a very interesting point that you make at the end – too much lobbying, not enough cohesiveness, perhaps togetherness. And I do want to thank you so much for joining me today on THE OPEN MIND.

And thanks, too, to you in the audience. I hope you’ll join us again next time. And if you care to share your thoughts about today’s program, or subject today, please do write to THE OPEN MIND, P.O. Box 7977, FDR Station, New York, NY 10150. For transcripts send $2.00 in check or money order. Meanwhile, as an old friend used to say, “Good night and good luck”.

Continuing production of this series has generously been made possible by grants from: The Rosalind P. Walter Foundation, The M. Weiner Foundation of New Jersey, The Mediators and Richard and Gloria Manney, The Richard Lounsbery Foundation; Mr. Lawrence A. Wien, Pfizer Inc., and The New York Times Company Foundation.