The Meaningfulness of the Adair Contract

An address to the Managers and their spouses of the Adair Home Corporation at their Annual Meeting by Dan Leahy, Vice President and General Manager on October 5, 2001

The contract, or covenant, is the basis of civil society and is the currency of self-government. Self-government provides for liberty. Where individuals do not govern their affairs, the state will impose laws at the expense of liberty.

Our greatest challenges as a civilization are not personal, they are social. Personal preferences are meaningless if community, justice, and liberty are not provided for. Our desire and ability to deal righteously and effectively with our fellow man is community and the contract makes this possible.

Since the 1860s, the contract in America has been increasingly devalued.

• Increasingly relativistic morals debase the collective conscience of the citizenry.
• The litigation industry has expanded unchecked.
• The trend is toward super-constitutional legislation.
• Weak management increasingly sets aside contractual discipline for short-term profits.

What this means is that once a person or a people has experienced liberty, they can be expected to gravitate toward their own comfort and preferences. This is the myth of the "rugged American individual." We are only free to be individuals when we have provided for such liberties. The American Civil War was not about slavery; it was about the rights of states to govern themselves as provided for in the Constitution. People in the North lacked a certain wealth; people in the South were wealthy. The North wanted what the South had and, if they could not have it, nobody could. Our courts now operate this way: justice is not their primary goal. Rather, they seek to take from one who has to give to one who has not - regardless of merit or the truth. Our Congress regularly sets aside our social contract - the Constitution of the United States - and makes many laws that attempt to make things right; but in doing so we lose our liberty. Finally, we ourselves (managers of industry) make decisions that seek the easy way, expedient choices for the sake of comfort and short term monetary gain. So how is it supposed to be?

Contract discipline demonstrates regard and gratitude toward the communities Adair serves. It also promotes and defends liberty in those communities. It allows Adair managers to be easy on people, but resolute on issues.

How exactly does it promote liberty? The Contract makes us and others accountable: say what you will do, do what you said you would do, and then demonstrate that you did what you said you would do. Among other things, this is the condition under which people feel safe, secure, and able to trust one another. People will talk to one another: they will agree and disagree. And, because they believe they are safe all the while, they will work out their circumstances for their mutual benefit. Chiefly, because they have the time and grace to do so. But, they also have a map - which is the Contract.

The Adair Contract (as it exists in all of it's components) is Adair's method and business model. They are the same.

• An understanding of contracts and an appreciation of self-government is required.
• Policy and procedure cannot replace goodwill, good faith.
• Risk is minimized, but still a necessary condition.
• Success with the Contract cannot be taught, but it can be learned.

When a person joins an Adair Company, they are told to commit the Contract to memory. This is for two reasons. First, it is the business method. It is proprietary, but it is also public. How else can we be accountable? Second, they must believe that we will honor the Contract and that we will insist that others do also. In a time when a person can buy a suit of clothes from Nordstrom's department store, wear it to a party, then return it for a full refund (no questions asked). We actually must teach people (adults) what it means to be trustworthy. You see, this is where we have arrived. This is the task at hand: we must teach it at work, at home, in our courts, in the highest places of government. And, now we must teach it even to our enemies - those who have long squandered their liberties and now seek to deprive others of theirs - even of life itself.

So, determine that you will understand. Practice good faith and good will. Understand that life brings risks that we are obligated to assume. Become a student of the Contract. Managers, this is how you advance in your roles, and advancement is required.

The Adair Contract is the only assurance of satisfaction for our customers. Management discretion is useful only for restoring individuals to their responsibilities or protecting the innocent from the irresponsible actions of others.

The customer is always right? No, of course not. But, if we buy into this way of thinking, we would be adopting the practice of giving people what they want, but are not entitled to. Economy requires that we account for value - if we give one person more than they have bargained for, then we must take something away from someone else. At the very least, we would be charging more for our products and services than we need to. At the most, we could no longer claim we were serving our customers in any meaningful way. So, in this age of "customer service," what is the role of the manager who does not have the latitude to please people? The answer again is in the Contract. The Adair Contract is sufficient for its intended purpose - it is competent. The role of the manager is to utilize it as it was intended and to create value in this process. Finally, the manager also directs others to the merits of the Contract and adds their personal assurance that Adair has always fulfilled its obligations and always will. Let's also say that the Adair manager is the first citizen in their community. If people cannot be pleased, they must always be served.

What separates the very good from the truly superior is not how well they do something, but what it is they choose to do. There is a dimension of human endeavor that relies almost entirely upon good judgment. In this plane, performance - that is how fast and accurately something is done - is assumed. What matters most is the "what." Leaders understand that some things in life are profoundly more important than other things. They correctly choose which conversations to have and which ones to decline, which opportunities to pursue and which to let pass. They are not only in the correct lines of business, but they know which specific area of the business to work on. They understand precisely how the "what" that they do creates value in concrete, plainspoken terms.

The Adair Contract is a deliberate effort with a specific outcome. The Company has determined that its stated mission and proven methods will prevail.

The research, trial, and error have been accomplished. The investment of time and effort is secure and the return on these investments is assured. Good judgment has prevailed, so far. But, an assurance is not a guarantee. Uncommon success requires uncommon commitment and even uncommon ability. It certainly requires uncommon desire. In a memorable conversation with a past manager who had lost the struggle with his responsibilities, he said, "I know this will work, I can see it." My only response to him could be "That is not at issue. The question is 'Will you do it?'"

Understanding and utilizing the Adair Contract is the employee's number one job. It is the most important thing. It makes each person - employee and customer - better than they really are.

"Better than they really are" might seem to take away credit from the individual. But, they get much credit for recognizing a true opportunity: the opportunity to serve and to prosper in every meaningful way.