The Unconquerable Nut
Every year corporate CEOs spend literally billions of dollars on human resource consultants and airport bookstore management books trying to capture what I shall call the Unconquerable Nut. The Unconquerable Nut is that space in every working day made up of all the inefficiency, slackness, boredom, pilfering, resistance, poor morale, day dreaming, prayer, hangovers, anger, laziness, joking around, gossiping, and fear. In the American Corporation, the Unconquerable Nut is viewed like the mercury in the body of the mighty salmon. Every single one partakes of the toxin to a greater of lesser degree, but since every one has at least some of it, no one can taste the poison any more.
Most of the working day of any line manager is spent attacking the Nut. One thing about the Nut is that the smaller it gets, the harder it gets. This is a physical law. One can sometimes change the size of the Nut, at least for a while, but no one can ever kill it. I have worked in, observed, or read about hundreds of companies and there is only a single case that I know of where someone even came close to conquering the Unconquerable Nut.
And it all started with a dozen missing boxes of frozen chickens.
This is the true story about some chicken rustlers. I did not experience these events first hand. Rather, I saw and heard it all from an old high school friend of mine who I shall call Pete. Pete and I happened to be attending the same great Chicago proletarian university in Chicago; the one circled by expressways. It was in the early 1970’s. I was going to college to acquire wisdom. Pete was going to college to escape his mother’s nagging and dire warnings. Pete was a strapping six foot tall bronzed jock whose real heart lay in the long interstate bike trips he used to like to take alone, wearing his signature cut down three finger shorts that titillated my mother so much. His needs were few and he also happened to be very lazy. So it didn’t take him very long to cast a cold eye on his education and fail to see the point.
He moved out of his mother’s apartment and got a job at a meat wholesaler in Haymarket, down the street from where the famous statue of the massacred policeman used to be. He started as a dock worker, but even with his low level of personal interest in the company he somehow stood out and he was soon made into a sort of supervisor. This added about 10 percent to his pay while taking away about 10 percent of the manual work he had to do. He had enough to live on and he was happy.
I stumbled upon his secret life as a chicken rustler when I started noticing a disturbing improvement in his standard of living. His rugged bent up Schwinn started to sprout custom Japanese made handbrakes whose shoes alone would have bought him a couple of sets of new tires in the recent past. His wheels and tires themselves became thinner and lighter and were made from strange alloys not often found in the Midwest. A tipping point came when I went by his apartment and saw a brand new Radio Shack stereo system so top of the line that it even had one of those little boxes on top of it with the flashing lights that told you that the stereo was even playing those sounds which could not be heard by the human ear.
“Okay, Pete, you hypocrite. You’re dealing drugs.” I said.
Pete was well known for his hatred of controlled substances and he swore to god that he wasn’t dealing drugs. He explained that he had just been saving up his money. But I had known him since he was still playing with GI Joes and I had never noticed him save up a single penny. So I pressed him until he coughed up the truth.
“I’m a chicken rustler,” he said.
The company that he worked for was in the business of buying semi-trailer lots of frozen meats that they would then break down into smaller lots and sell “wholesale” to local stores and restaurants. One could get almost any kind of meat from them, including raccoons purchased for the West Side trade, which Pete told me came with their paws un-skinned so that the customer would know that he wasn’t buying a frozen dog. But the highest volume meat they sold was chicken; millions of dollars worth a year.
The company was a very busy and bustling place. It had an open front like most of the other places in Haymarket and between the walk in customers and the clerks and drivers tripping over them trying to get out the place was rather chaotic.
Like any chaotic operation with low paid help, the Unconquerable Nut here was rather large. One thing that was common was petty pilfering. Almost everyone did it and it was impossible to police. Even if management had hired a crew of cheaply paid security guards, it would have been no time at all before the guards themselves got into the action. So like everything else in the Unconquerable Nut, the pilfering was bundled in with the laziness and inefficiency and added to the wholesale price of the meat. Since all of the other concerns on the street had an identical Nut, the Nut itself did not give anyone a competitive disadvantage.
But one thing that can upset the flow of operations is if the Nut should suddenly get much larger for some reason. A larger Nut will then cut into management’s expected tolerable returns forcing the management to take notice.
And this is what happened here. Some worker who was not bright enough to respect the accepted dimensions of the Unconquerable Nut had moved beyond the acceptable pilfering of a case or two of chickens in the trunk of his car for the occasional barbecue into the organized stealing of ten or fifteen cases a day. And worse, he was getting away with it.
Senior Management found themselves forced to put down their newspapers and coffee and start walking around in the cutting rooms, the sales floor, the freezers and coolers, the dock, and even the dispatcher’s office. The ensuing collapse of morale only made the Nut larger and in the meantime no one could figure out how the chickens were leaving the premises.
Now in the heart of any distribution operation there sits a (relatively) well paid dispatcher. A really good dispatcher is like having an ancient gunnery sergeant in a Marine platoon. He knows his people better than they know themselves. And his people work as well and smoothly as he wants them to, not for the good of the company but because he wants them to and they know they’d better. In a big distribution operation, only a fool messes with the dispatcher.
But some fool seemed to be messing with him now. And all of this management heat was pissing on his parade in a big way. Plus, he was very indignant that something big was going on in the company that he didn’t know about.
The dispatcher went by the nickname of Popeye, because he devoted all of his spare time working on his pecs and biceps and only his pecs and biceps and he had massive arm muscles that started at his shoulders and seemed to go down all the way to his wrists. This deluxe equipment was attached to a short body with spindly legs. Popeye was well trusted by management, in part because he was an excellent dispatcher and in part because they were sure that he never pilfered any chickens since he was more or less locked in the dispatch office all day. And they were right. When Popeye needed a couple of boxes of chickens he would get Pete to pilfer them for him. Thus a bond grew between the two men. But even though Popeye was in the inner circle, the management still put in a pimply faced son-in-law of the owner in the office with him as a subtle hint that they expected Popeye to solve the mystery.
Once Popeye put his mind to it he solved it easily. He was bemused to discover that the culprit was Leroy the clean up boy. Leroy was esteemed by the senior management because they thought that he was mildly retarded and could both be paid less and also contribute to their reputation as a company that cared about the handicapped.
Any company that deals with large volumes of meat is going to have tons of indescribably disgusting garbage, and no one knew this better than Leroy. He would come in the morning and pull the empty dumpsters in from the alley. He would then line the bottom of one with cardboard and put in ten or fifteen cases of frozen chickens and insulate these with more paper and cardboard. Then he would layer some rotten meat cuttings and other trash on the top of this so that no one would want to get close to it. Before he left for the day, he would wheel the dumpster out into the alley along with the others and then come back at midnight and collect his stash.
So Popeye had his man. And to underscore to senior management that it was he, Popeye, who had made the discovery, he quickly plotted a dramatic unmasking. He would sit in a darkened car with the owner and a couple of the dock workers so they could hit Leroy with the high beams and enjoy the look on his face as he saw the light.
Most men would have stopped here, with a little management victory and a pat on the back and a quick return to the natural order of things. But Popeye was not like most men. He smelled an opportunity here. So he kept his mouth shut for another week while he thought about it.
Leroy’s big mistake in Popeye’s mind, cunning though Leroy was, was to steal so much that he had noticeably increased the size of the Unconquerable Nut. Popeye of course would never have used a scientific term like Unconquerable Nut, but he did know that there was a great deal of waste and inefficiency that was tolerated, not just in his company but in every company he had ever worked for. How could Leroy have avoided his mistake? He would have to only steal enough that it would still keep him within the boundaries of the Nut. But Leroy was not in a position to know what those boundaries were. Popeye, on the other hand, was. So if he were to start an operation like Leroy’s, how would he do it?
Pete told me later that Popeye first thought about what he would have to work with if he could just gain control of the pre-Leroy pilfering. Maybe 30 boxes of chickens were going out the back door a week before Leroy kicked it up to something closer to 100 and set off the alarms. Popeye estimated that probably 50 boxes could actually go out without being missed. He had no doubt that he himself could stop the petty pilfering altogether. He knew who was doing it and a couple of high profile busts, especially in the current environment, would scare the hell out of everyone else. Also, if he was the one who stopped the stealing himself, he would gain more trust with the management. If he got control of the 30 boxes that were going out on average now and kicked it up 20 more, he would have a stockroom of 50 boxes a week to play with.
But could he expand on this? He thought about where there might be more systematic waste. He knew that the shop tossed out an additional hundred cases or so of meat a month due to “spoilage”. A big operation like his company should have easily turned over all of its stock quickly. But he knew that the stockroom workers were overworked and also rather careless and lazy. So they didn’t necessarily pull out the old stock in the freezers to the front before they put the new shipments in. Meat would unnecessarily go out of code. If he were to recruit a good stock room worker to eliminate this spoilage (while still reporting the same level of spoilage) he would have another 25 cases a week under his control.
But was that enough for all of the work involved? Would the up side be offset by the headaches of having to find a way to sell these 75 cases? Would the costs plus the inherent risks outweigh the gains?
Popeye met with his pal Pete (whom he had decided to take into his confidence) and Pete came up with an interesting solution.
The drivers that drove the big frozen chicken trucks up from Dixie were all contractors. The trailers always arrived locked and the truckers did not have the key, because with contractors it was well known that the roads could become very bumpy and things could easily fall out of the truck. A staff member at Popeye’s company (in this case, it happened to usually be Pete) would unlock the trailer and then weigh some randomly selected cases to check for “shrinkage”. The average weight of these cases would then be multiplied by the total number of cases in the truck to calculate the net weight of the shipment, which was the net weight that the company had to pay the chicken factory for. Pete explained that this random checking was not all that accurate. For one thing, he always rounded the ounces down to the nearest pound, since it made his calculations easier. For another thing, there was usually a one to four percent spread between the stated weight of the meat in the truck and the actual weight that Pete calculated after he did his test. Pete had never seen the chicken factories contest the weight that he calculated.
So what if they systematically increased the shrinkage calculation to an average of one percent of each shipment? They could make it fall within the one to four percent window by, say, inflating the shrinkage when the actual shrinkage was low, and maybe not inflating it at all when the actual shrinkage weight was high. This would in effect transfer one percent of the entire month’s chicken shipment to Popeye’s control with no one noticing. Of course, Pete would have to keep a very meticulous inventory to make sure that they didn’t make the same mistake that Leroy had made. But Popeye’s stockpile, if he were to add in the 75 cases he had already identified, would now grow to something like 600 cases a week. Even if they sold these cases at 10 dollars a piece (a very low price) the operation would net over $300 thousand tax free 1970’s dollars a year.
Believing that he had solved his working capital problem, Popeye now turned his attention to his human capital. There was no way that he and Pete were going to load up their car trunks with 600 cases of frozen chickens a week, even if they could find a way to get them out of the warehouse in the first place. But he could dispatch them out with the regular orders if he could find reliable drivers. He felt that he would need three and they would have to become part of the chicken rustler gang, since it would be very dangerous in the long run to send the chickens out on a one off basis with the other drivers randomly. He would get each driver to deliver about 200 cases a week, an amount that would not be noticed by anyone. To show that he was fair, he would split the proceeds of each shipment into thirds, with the driver, Pete, and himself each getting one share. What could be more fair than that? Of course, if the driver were to dig a little, they might notice that Pete and Popeye were getting a third of all of the income from the operation while each driver was only getting one-ninth. So he would have to make sure that he found drivers who could drive well but not dig well.
Having worked out all of his capital problems, Popeye now had to work out the distribution issue. He would focus his distribution on the West Side ghetto to those little barred window stores where all the stock clerks wore side arms. He knew that places like this were always looking for a discount. The safest route would be to sell only to already established customers, But he had to do so in a way where his discounted sales didn’t cut into the company’s established volume with these people. If his mother company’s sales were to go down because of his shadow company’s activities, the Unconquerable Nut would in effect grow larger (because it would be a larger percentage of the whole) and it might be noticed. So the customers would have to be limited in the amount of Popeye’s chickens that they were allowed to have so they didn’t reduce the size of their regular order.
Popeye saw that there were now only two details to be taken care of before Opening Day. First, like all entrepreneurs, Popeye had no idea how successful he would be at attracting customers out of the gate. He needed a “cushion” of stock; of frozen chickens that he could draw on in the first week. This he would get by suggesting to the owner that he personally do a meticulous inventory of all the stock the morning after they busted Leroy. This inventory would “find” that Leroy had stolen 200 more cases than originally thought.
The second detail concerned whether Popeye could do anything to increase the overall efficiency of the mother company’s operation to give him more slack within the Nut. If the overall productivity of the mother company grew, it would make the Nut look smaller in proportion and give Popeye more wiggle room with which to deal with contingencies that might arise. So for the drivers, the stock clerks and the dock workers, Popeye would institute a rather draconian regimen of self-policing. Nobody knows the Unconquerable Nut like those inside of it. Popeye knew all of their tricks for avoiding total efficiency and he (along with Pete and his three drivers) could stop or counteract a great deal of this. The only place he himself could not control was the meat cutting room. Here, he arranged for the second in command to bust the manager of the room for pilfering the week that Popeye sprung the trap that started his quiet little machine. The fee that the second in command had to pay him for this promotion was to use all means to make sure that the cuts of meat were as large and as heavy as possible in order to increase the total income from them. In other words, no more wastage of any sort. Productivity had to increase here too.
The week that Popeye sprang the trap and opened for business was one of joy for the senior managers. How they laughed and laughed when the high beams of the owner’s Lincoln caught Leroy red handed at the dumpster. They were laughing so hard, they almost couldn’t find the strength to get out of the car and beat the crap out of him. In the same week, the head meat cutter, a driver, and two dock workers were also caught stealing and were summarily fired. Popeye and Pete’s subsequent down-to-the-bare-metal inventory took an entire weekend, during which they developed a new case rotation system that eliminated all spoilage (a development they kept to themselves).
Business boomed and the owners of the mother firm suddenly saw productivity and their profits go up. The three drivers became model workers and stimulated their peers to become almost model workers as well. Pete kept the dock workers and stock clerks in line and the company for the first time in its 100 year history a fully effective inventory system, even if the owners didn’t know it. The five chicken rustlers had no more sick or mental health days, since each driver was more or less doubling his salary and Popeye and Pete were each pulling in a cool hundred grand a year. Popeye installed a mistress in her own paid-for apartment a couple of blocks away from the warehouse. This apartment was furnished with the best furniture that Aronson’s (“Home of the Credit Connection”) could provide, all paid for in cash. Popeye also paid cash for two new cars. The first was for a brand new Lincoln Mark IV (this was 1975) that he would park two blocks away from work and then switch to the second car which was a 1960 Buick Bel Air that he would then drive to work and park in the lot. And Pete invested in some stereo equipment for the deaf, which I have already mentioned.
Despite the fact that my Catholic sensibilities were truly shocked at the diabolical beauty of this evil machine, I looked with further awe as the chicken rustler operation milked dry the possibilities of selling to the mother company’s current customers and started to develop their own customer base. Some of these new customers they would pull back into the mother company’s own book of business, thereby expanding sales for all. But some of the customers were exclusive to the chicken rustling operation. To make sure that these customers did not become even accidentally known to his own managers, Popeye started to store the stock for them in the freezers of his other established customers to whom he paid a fee. He thus turned some of his own customers into sub-contractors to deal with a storage problem.
Now one reason why the Unconquerable Nut is unconquerable is that it is the stage of worker’s resistance to the rules. Like any prosperous capitalist operation, Popeye’s would develop its own unique labor problems and it was one of these that brought the whole company crashing down. One of the drivers finally began to question the way the income was split. He felt that each of the five chicken rustlers should get one-fifth, that is, twenty percent of the whole. Popeye told him that the reason that the driver did not get that much, which incidentally would mean an 80 percent raise for the driver, was that each driver did not share in the work of the loads of the other drivers. The driver replied that while that might be true, each rustler shared in 100 percent of the risk. Word were exchanged. Threats were made. The driver convinced himself, perhaps from watching too much television, that if he went to the senior managers and busted the whole operation, they would treat him as State’s Evidence and give him a reward while firing everyone else. So he went directly to the owner’s office and told the whole story and was fired on the spot. A few minutes later, Popeye and Pete were fired and the other two drivers were fired when they reported in.
The only upshot to this was that Pete gave a mutual friend of ours who also happened to work at the place (Pete got him the job) but who was not involved in the scam in any way, his inventory and routing records, giving the friend a complete picture of the whole operation. This friend was able to take this information, unravel the scam, but keep in place some of the efficiencies, which increased the owner’s margin. His reward for this was to be promoted and the last I heard, after all of these years, he still works there.
What I have been trying to say with these essays about the used car lot and the chicken rustlers and such is this. While I have focused on the criminal possibilities of the Unconquerable Nut, the Nut in fact contains all that is good with us as well. The Nut is actually the human part of our working life. When we talk about the human world, we always say that it has to include both the good and the bad. In capitalism, the world outside of the nut is the world of efficiency. Efficiency is the real and, I believe, the only value in a capitalist enterprise. While the working definition of efficiency changes constantly, efficiency as a moral concept is so durable that it effectively makes capitalism a competing moral system to Christianity, which has its own durable concepts.
While there is no doubt that the used car guys were scum bags and the chicken rustlers were thieves, the reason they were all able to prosper in their day was that they were entirely successful given the formal moral order of capitalism. The used car guys provided a legal service to responsible adults in a regulated free market. The chicken rustlers increased the volume, efficiency and profitability of the mother company and were rewarded by a satisfied management.
The thing is, what separates our ethics from capitalist ethics is that the capitalist ones can be faked. Capitalism firms always reach into the Unconquerable Nut to try to get people to love their jobs, love their customers, love their bosses. Loving your job, your customers and your boss is a good, Christian thing. But the moral order of the company wants you to do it to raise your efficiency, decrease the size of the Nut, and then advertise to the customers how sincere everyone is.
If you are getting a knee jerk impression here that I hate capitalism, you would be wrong. I hate it when people deify capitalism and think that it is some kind of neutral economic system overlain with people who are either good people or bad people. Capitalism is about efficiency and efficiency is, to be clear, really about robots. The company that preaches its love of its workforce will nonetheless pull the plug the very second it needs to.
Finally, I will also admit that I think that faking it is not such a bad thing, necessarily. All of us would rather deal with a clerk who appears to like us and be interested in us (using their management approved customer service techniques) than one who acts pissed off with us because they are having a bad day. Any good rule is good enough if it simply creates compliance. But the dirty little secret of rules is that compliance is the best we can expect with them. A truly ethical life requires something more, something that cannot be faked.
Labor Day 4/4
Tags: Labor Day