We are aware of the cost of agency that comes with size. We know that the spontaneous order of the market is much more efficient than the central planning of a corporation. Therefore, we always try to emulate and replicate market-based mechanisms and incentives inside the company. This translates in a few organizational principles that we apply across all our ventures:
a) The profit and loss agents must be as low as possible in the organizational chart. For example, in pharmaceutical retail, each sales point is a business unit, and the manager is evaluated on the results of her pharmacy. While some processes and principles (pricing, physical lay-out and look of the stores and negotiation with providers) are centralized, all other decisions are left to the manager of the pharmacy, from the level of staffing and inventory, to local advertising, cash management, and HR processes, like recruiting, compensation and firing.
b) We believe that staff positions are essentially parasitic, it is the line that creates value for the client. We are very lean, and all the staff positions must be paid voluntary by the agents of the business units from their P&L. For example, in the entire group we have only three persons of human resources.
c) We trust but verify. We leave the business unit managers a lot of leeway, but at the same time we require timely and precise information. Each business unit has to close the books daily, sending to the center a complete P&L and balance sheet the following day. It is the responsible of the business unit (for example, each pharmacy manager) that is in charge of doing that, not accounting people.
d) We are meritocratic. Starting from lower-management positions, 20-30% of salary is variable, based on results and paid monthly. The same applies to career-development: some of the most senior positions, responsible of tens of millions dollars in yearly sales, are covered by high-school drop-outs. We do not care where or what people studied, we just look at their results in the company.