Reset Button

Lessons from Bruce: Part Two

(My fifth book will be hitting store shelves in March and this series of notes draws on some of the key business insights in that text. Six Tires, No Plan is the biography of Bruce Halle, who founded a commodity business (Discount Tire Company) in a saturated market and ended up 96^th on the Forbes 400 list. The lessons Halle learned on the way to the top offer important insights—and questions—for the rest of us.)

Capital equipment is a valuable asset for any corporation. If a forklift can’t navigate a narrow aisle, the plant manager doesn’t toss it in the trash. Instead, the equipment is used in a space where it fits better.

Human capital, on the other hand, is not always so fortunate. While corporations refer to employees as human capital, these assets are seen frequently as short-term—and disposable.

Discount Tire founder Bruce Halle takes a different slant on employee value, most notably when a manager is promoted beyond his current capabilities. Like the plant manager who sends the forklift down the wrong aisle, Halle sees ineffective allocations of employees as a failure of management, not of the worker.

While many companies will adopt an informal up-or-out policy, Discount Tire employs the reset button to correct for errors in promotion. While the system isn’t implemented in every case, the goal is to salvage careers and retain the “asset value” of human capital.

Commonly, the reset button might be applied when a successful store manager is promoted to an assistant regional vice president role—but founders outside the store environment. Less common, but equally insightful, are assignments at new ventures that fail to deliver returns. Taking a risk on a new venture should not be the same as putting one’s career on the line, in Halle’s mind. If the manager delivers a credible effort and the venture fails, it’s seldom the end of the employee’s tenure at the company.

The reset button encourages intelligent risk-taking when it comes to ventures and career advancement at Discount Tire. It doesn’t always work out, of course, but the existence of second chances makes people more willing to take a risk.

When we consider the term human capital in a financial sense, recognizing the value of investments in training, institutional knowledge and marketplace relationships, we think differently about depreciating that asset.