R&L: You have holdings in both large and small business enterprises. Does the executive of a large, multi-million dollar enterprise face any particular challenges to ethical business practice that an executive in a smaller business enterprise does not?
Huizenga: Not really. It is just as tough in a small company as it is in a large company. Sometimes it is even tougher. The executive of a small company must often face moral challenges more directly, because he or she has more direct contact with customers, suppliers, and employees than an executive in a large corporation who may have a management team to deliberate with. The consequences of his or her choices often affect the business more significantly because of the size of the issue relative to the size of the company.
R&L: Have there ever been times when your faith has caused you to make a decision that cost your company either short-term or long-term profits that might have otherwise been realized?
Huizenga: At one of my businesses years ago, we received a truckload of raw materials that was invoiced improperly as $4.26 when the actual cost was $42,600. I advised my controller to issue a payment correction and submit the full payment. At that time the company was experiencing severe financial distress, prompting the controller to delay the execution of my directive. Being such a large discrepancy, he expected that we would receive a corrected invoice in two or three weeks at the latest, an interval that would temporarily enhance our cash flow during a particularly tight time. I consented to the plan on the condition that we book the entire payable, which was done. Strangely, the mill never discovered their mistake. After some time I dismissed the controller for unrelated reasons and promptly remedied the earlier error. The mill was astonished when our check for over $40,000 arrived accompanied by a year-old invoice marked up with our corrections.
R&L: What gains or losses ensued for the company as a result of this decision?
Huizenga: At the time, making a payment we could have otherwise avoided took us from a difficult cash position to an impossible one. Now, however, the company’s recovery has been so successful that it has helped to finance the acquisition of a number of other companies. The story of the honest invoice still remains a part of our corporate folklore and serves as a reminder to all employees of the standard of conduct we expect from ourselves.
R&L: What are the responsibilities of the Christian businessman in a free market society?
Huizenga: Our responsibility is akin to the stewardship that was entrusted to Adam by the Creator. Every individual has been given similar responsibility no matter who he or she is. All human beings are called to be moral in society, and in looking at the writings of great thinkers like C.S. Lewis, it becomes apparent that we have been created with an innate understanding of what morality is. We are born with an internal compass to determine right from wrong. A Christian, though, is called to an even higher standard than a non-Christian because we have the benefit of the knowledge found in God’s special revelation commonly known as the Bible. Christ himself, by his teachings and through example, has offered a plethora of precepts that have direct transferability to today’s business environment. Christians are called to not just be moral, but to respond in a way that puts others first. In order to have a free market that functions properly, honesty must be present. A free market depends on trust and transparency.
R&L: How do your moral commitments inform or conflict with your management style in terms of maximizing the profitability of your businesses?
Huizenga: In terms of my management style, I believe in letting your “walk” carry the message. If you have to trumpet your faith, it may be an indication that your actions lack conviction. I believe we are called to exemplify Christ’s lifestyle. He came not just to die for us. He could have lived a lot shorter life had his purpose in coming to earth been just to atone for our sins. He came also to exemplify how we are to live in society. The Bible contains plenty of examples and parables about wealth, gain and loss, and how we are to interact regardless of our position in society. Profitability itself is not called into question, but we must be careful not to place our value solely in earthly profitability. If we place our value only in things of this world, regardless of whether we are wealthy or not, we will suffer the consequences. On the other hand, if our focus is on eternal things (non-material aspects), we are actually encouraged to pursue heavenly gain as a lifelong goal. So it should not be surprising then that a Christian businessperson’s faith can coincide comfortably with the concept of profitability.
R&L: How do your moral commitments affect your corporate management policies with respect to employees?
Huizenga: Every person, I believe, has a role in this world to exercise judgment. All of us have to rely on the wisdom God gives us in order to exercise our judgment properly. At Huizenga Manufacturing Group and National Heritage Academies we treat others with respect, and we encourage all of our employees at all levels and positions within the company to respond with that same standard of respect. We also emphasize fairness, honesty, and transparency in our business, no matter how difficult practicing these virtues can be. Sometimes it may seem easier to bend the truth to avoid conflict, but it only cultivates a problem in that relationship. If a person is not performing his or her job, intervention is often the best way to deal with an issue. That intervention might include helping a person understand that he or she has let down fellow employees or the entire company and that the situation must be remedied. If the employee is incapable of the required performance after a genuine effort is made to help that person achieve success, it is usually better to take action to let that person go sooner rather than later. As cruel as it may sound to terminate an employee, many times it is a relief for that employee to be able to go on with the rest of his or her life and find the vocation in society that best fits his or her abilities.
R&L: The mission statement of National Heritage Academies is “challenging children to achieve their greatest potential.” How does operating charter schools based on free market principles, as opposed to the traditional model, help National Heritage Academies accomplish that mission statement?
Huizenga: I am a student of Milton Friedman’s view that free markets are needed if society is to prosper. When we began National Heritage, we were acutely aware of the lack of a free market within our system of public education here in the United States. We wanted to bring the benefits of competition to public education. Competition focuses any organization on its mission. If an organization does not have a viable mission, competition exposes it as defective rather quickly. Our mission statement of “challenging children to achieve their greatest potential” resulted from an understanding that parents ultimately make the decisions about their children’s education and that parents want their children to maximize the potential that God gave to them. So we set out to accomplish that mission, recognizing that it is competition that will keep us focused and help us succeed.
R&L: You are enthusiastic about competition as a positive element of progress. Do you ever experience competition as harmful to the common good?
Huizenga: Competition, generally, has a protocol. You treat competitors with the same respect that you would expect to receive when dealing in a competitive environment. In the arena in which we operate, we are finding that we often have enemies rather than competitors. Those enemies tend to operate without protocol. Their philosophy is to “take no prisoners.” So it tends to be a more difficult operating environment than a standard competitive manufacturing environment. I believe business competitors can and should have a relationship similar to the relationship between athletes. In sports, the athletes typically enjoy each other’s comradery. But they also compete tenaciously and after the starting pistol sounds, it is every person for himself or herself. In the process, each contestant seeks his or her personal best. Rather than cause harm to each other, they respect each other. That is the best form of competition, when we are really competing with ourselves and spurred on by others to achieve our own personal best.
R&L: What advantages or disadvantages does the for-profit structure of a charter school offer that a traditional, non-market sensitive public school does not?
Huizenga: Under the traditional model of public education, each principal and superintendent at the end of a school year tends to be focused on spending any budget surplus. This behavior results from an understanding that if a surplus appears at the end of the year, future funding may be diminished. The budgeting system of the traditional district schools actually creates an incentive to spend rather than conserve. In our charter schools, we incentivize based on the value an employee creates by cost reduction or quality enhancement. An example of how profit focuses value creation is manifested in our facilities. They are attractive, clean, and functional. They have everything needed to accomplish effective education in a child’s life. But they are not elaborate, because we acknowledge that only so many dollars are available for use in a child’s education regardless of whether that money is spent for capital or operating expenses. We consider capital and operating expenditures to be two halves of the same sphere, whereas, traditionally, a public school district looks at these expenditures as two separate spheres. For public school districts, one sphere is the capital millage needed to build the school building. The other is the state aid or the operating millage used to operate the school. There is an implied assumption that these two spheres are entirely separate. This conception is flawed. Even though a district may think they can count on always being able to pass two separate millages, both of these millages come out of the same taxpayers’ pocket. A district can only go to that well so many times, because taxpayers are only willing to afford a finite amount of money for the education of their children. No millage has been needed to finance our buildings, desks, and equipment. We have financed these expenditures entirely with our operating budget. This economy obviously benefits the taxpayer. We are proud of the fact that we have simultaneously raised the students’ academic standard and saved the taxpayers almost $150 million in privately financed facilities that, had they been district schools, would have cost that much in millage bonds.
R&L: Some propose that public funding inevitably causes a decline in emphasis on moral values in education. Do you concur?
Huizenga: I do not disagree that there has been a decline in the emphasis that public schools tend to place on virtue. I suspect that there is no easy answer to the question of why however. I doubt whether one can lay the blame purely on the issue of the funding source. Many of our nation’s elite private preparatory schools are actually just as void of virtue emphasis as public schools. Similarly many of the Ivy League schools, which are privately funded, began as religious schools. Unfortunately today any hint of virtue emphasis at these schools is avoided just as intensely as at public universities. Relativism seems to have labeled the celebration of virtue as some sort of cultural bias that needs to be eliminated if balance and objectivity are to guide the pursuit of knowledge.