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SOUTHERN CALIFORNIA Job Market : PART THREE: WORKING PEOPLE, IN THEIR OWN WORDS : ELI BROAD : Chief Executive

May 17, 1987|Michele Lingre

Eli Broad, 53, is chairman and chief executive of Kaufman & Broad Inc., a home building and insurance company that he co-founded in 1957. In 1986, the Los Angeles company reported revenue of $1.1 billion. The following was taken from an interview with Broad by Michele Lingre, a Van Nuys free-lance writer.

I think the role of chief executive has changed in the last 10 years. Corporations have had to become better citizens. The public is less tolerant of problems that businesses create in our society.

People in America have learned that you don't need a bigger stamp to write to the chief executive than you do to a salesman. So I have a feeling of how much discontent there is. You cannot produce 5,000 houses and have a million policyholders and not have someone unhappy out there. It's a question of how minimal the number is and what you do to correct it.

I'm a workaholic, but I've become an eclectic one. I spend a good deal of time recruiting and looking for acquisitions. We want to see security analysts often. We talk about our company in the best light we can, so we're missionaries, evangelists, in a way. We do not only want the investment community, which has thousands of options of where to put its capital, we want to be in a position, when we need capital, to get it efficiently.

I'll say something else about chief executives: We drive ourselves harder than we should. I mean my wife always says: "Why do you say yes to doing one more thing?" We're compulsive. It's the old story: If you want something done, get a very busy person to do it. We have to shift gears often from a business problem, to a political, an art, a family problem. In a way, we're a little crazy. I think there might be less than 1% of the population that would have the ability to be involved in so many things. Those chief executives who have a clean desk and end up having time to play golf several times a week, that's a thing of the past. We all have to work harder.

I came from a middle-income family in Michigan, so it started when I got out of school, a desire to succeed economically. But being fortunate and successful early, clearly money became secondary to a sense of accomplishment, all the way from going public to being the first company in our industry listed on the American Stock Exchange, broadening the scope of the company, keeping score of what our sales are and so on. Those are the things that are driving. Then, I've got a big ego. So you do look for recognition. I spent five years of my life helping create the Museum of Contemporary Art.

No one person, obviously, runs a company. There are key executives whose counsel I seek, although the buck stops at my desk. I've got to set the tone, that quality is important, sometimes more than short-term profitability.

A house is a difficult product to produce. You're building it on land that God did not make perfect, and you've got people working that you cannot watch every minute of the day. In this day and age, I worry about someone doing something stupid, violating the law, being involved in some scandal. So you worry about whether you have enough control. In terms of job sites, you worry about safety. There are going to be accidents in any business our size, and every time you hear about it, you cringe. You wonder what could have been done about it.

If you have plants that are not making money and you allow them to continue, you would probably bleed the enterprise, the healthy parts. In the case of our mobile home manufacturing plants, the market dried up. The question is, how long can you lose money? Then you've got the moral problem of what you do with all the people who have been loyal to you. It's one of the most unpleasant things a chief executive has to do. But you have to look at it like a field commander in war. If you have to do some things to save the rest of your people, you do it. Fortunately, it was not a large problem. I don't know the precise number (of people laid off in 1985-86); let's say several hundred. It wasn't in the thousands or anything like that. At the same time, we've created many more jobs in our other activities.

I've been at this since founding the company. You spend 30 years of your life building something. If you have your name on the door as I do, you want people to perceive it as quality and that we're doing the right thing. So you worry about reputation. You worry about what's going to happen in the next deep recession and are we really prepared for it financially.

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