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Maritz Inc.

Maritz Inc.

1375 North Highway Drive
Fenton, Missouri
U.S.A.
Telephone: (636) 827-4000
Fax: (636) 827-5505
Web site: http://www.maritz.com

Private Company
Incorporated:
1894 as E. Maritz Jewelry Manufacturing Company
Employees: 6,500
Sales: $2.20 billion (2000)
NAIC: 541611 Administrative Management and General Management Consulting Services

Maritz Inc. represents a group of companies that provide marketing research, travel, and performance improvement services to corporate clients. The companys performance improvement division designs and implements employee incentives programs that help corporate clients improve employee satisfaction and productivity. The companys market research arm conducts custom-designed research studies that provide corporate clients with information concerning profitability and market share. The companys travel services division handles travel and related services for corporate clients. Maritz Inc. operates globally through a host of subsidiaries and through approximately 240 offices in Europe and North America.

Beginnings As a Jewelry Wholesaler

Maritz Inc. exited the 20th century as an entirely different type of company than the one that entered the 20th century. It was a transformation driven by necessity and hastened by crisis, a change in direction that Edward Maritz could not have foreseen when he founded the E. Maritz Jewelry Manufacturing Company in 1894. Maritz was 31 years old when he began distributing jewelry and engraved watches. As a wholesaler, he served jewelers in the metropolitan areas surrounding Kansas City and St. Louis, a territory that expanded to include the southern and western United States by 1900. Over the course of the next 20 years, Maritz established himself as one of the countrys leading wholesale jewelers, a reputation that was galvanized in 1921 when he became a major importer of Swiss watch movements. Maritz sold the Swiss-movement watches to retailers under his own trade names, Merit, Record, and Cymrex. The 1920s also saw Maritz add general lines of silverware and diamond jewelry to his product selection, as his wholesale catalogs reached a customer base that stretched from coast to coast.

The years of robust growth and expansion ended in 1929, a year that spelled disaster for the nation and tragedy for the Maritz family. Edward Maritz died in 1929, passing away on the eve of the Great Depression. The economic strife quickly destroyed the legacy of success Maritz had built during 35 years of business, leaving his son, James A. Maritz, with the unenviable task of trying to perpetuate a family business that had been stripped of its customers. As jewelry retailers shuttered their stores, wholesalers collapsed as well, but James Maritz refused to yield. He found a new market for his fathers jewelry and watches and, by so doing, created a new business that would develop into a multibillion-dollar dynasty for generations of Maritz family members.

To keep his fathers business financially afloat, Maritz approached business executives, the individuals who managed large national corporations. He offered to sell the companies watches and jewelry at wholesale prices, which the companies could give to employees as service awards. The new spin on an old family business worked. Maritz found a receptive audience and the basis for a new type of company. The watches and jewelry could be used not only as service awardsgiven to employees at retirement or after 20 years of service, for instancebut also as bonuses to salespeople, a particularly difficult profession during the decade-long economic turmoil. The companys first major success in its new guise came as such, as part of a nationwide sales incentive campaign launched by a St. Louis hat manufacturer in 1930. The hat manufacturers salespeople were presented with the first Maritz Prize Book, a catalogue containing the items available for reaching particular sales goals. The results confirmed success, with sales exceeding the hat manufacturers expectations and establishing Maritz as a pioneer in the field of sales incentives.

The decision to cater to corporate customers rather than jewelry retailers more than saved the Maritz family business from near-certain doom: it created a business capable of recording financial growth during the economically devastating 1930s. After World War II, the company, operating as Maritz Sales Builders, was firmly and exclusively devoted to the incentives business. The company moved into a new headquarters facility in 1950 and began building a network of outposts geared toward serving its corporate clientele. Annual sales reached $5 million as several Maritz Sales Builder sales offices were opened across the country during the mid-1950s. An important acquisition was completed during this time as well, steering the company into what would later become one of its core businesses. A small travel agency in Detroit was purchased, enabling the company to offer group travel as part of its incentives program. The Detroit travel agency became the foundation of Maritz Travel Company, one of the three pillars that would support Maritz Inc. at the centurys end.

Full Range of Corporate Services: 1960s

As the company entered the 1960s, it began to realize the range of opportunities that were available in the industry it had helped to create. An in-house creative department was established in 1959, giving the company the capability to produce its own prize book, media, and awards. In 1961, the company adopted the name Maritz Inc. and began developing plans for a new headquarters office in St. Louis County, Missouri, a home the company would occupy into the 21st century. The companys foray into coordinating travel proved to be a boon to business, securing the Maritz name in the record books of the travel industry. Over a four-day period in October 1964, the company helped bring more than 6,000 dealers from 50 countries to the Worlds Fair in New York City, a U.S. record at the time for a single travel agency in a single week. Aside from making the company a historical footnote, the development of Maritz Travel Company showed the gains that could be made by diversifying. Energized by such evidence, the companys executives decided in the 1960s to pursue growth through acquisition, a strategy that would accelerate expansion and flesh out its motivation services.

During the 1970s, Maritz Inc. hit its stride, recording impressive growth that made the company an international enterprise. In 1973, another core business was added to the companys fold with the acquisition of a small research firm. The acquisition signaled the companys entry into the market research business, a venture that formed the foundation for Maritz Marketing Research Company. Maritz Inc. also opened a travel office in Hawaii in 1973, ushering in an era of geographic expansion. Two years later, the company established Maritz U.K., its first overseas operation. Maritz Travel Company followed suit, establishing subsidiaries in England and Spain, which were complemented by field offices in Jamaica, Nassau, Switzerland, and Italy. By 1982, the company had added two more international subsidiaries, Maritz Deutschland GmbH and Maritz France S.A., which were grouped with Maritz U.K. to form Maritz European Operations.

By the end of the 1980s, steady expansion and the occasional strategic diversification had created one of the largest privately owned companies in the country. In 1989, Maritz Inc.s revenues eclipsed $1 billion for the first time, with profits reaching $38.5 million. It was a record year for the company, with the bulk of its financial might coming from its two major divisions, corporate travel and motivation programs. These two divisions, which shared the spotlight with the companys other primary division, market research, suffered from poor performance as Maritz Inc. entered the 1990s. Consequently, the entire organization faltered, leaving company officials to pine for a return to 1989s record-setting financial results.

Difficulty in the 1990s.

At the time of the companys early 1990s malaise, the third generation of the Maritz family was in control, led by William Maritz. Total profits began a three-year plunge after 1989, falling to $11.4 million by 1992, a decline the company attributed to the recessive economic conditions and the lingering effects of the Persian Gulf War, according to a July 20, 1992 St. Louis Business Journal article.

Despite the disappointing results, the company ranked as the national leader in the incentives industry, far ahead of its closest rivals, Carlson Cos. and Business Incentives. Further, its Maritz Marketing Research division was performing remarkably well, enjoying a record year in 1992 that produced $64 million in revenue, making it the sixth largest research operation in the country. By 1992, there were signs that the company was beginning to arrest its financial slide, as the recessive economic conditions lessened in intensity. In the fall of 1992, Maritz Inc. signed an agreement with Ford Motor Co. to help the car manufacturer boost productivity and cut costs, a deal believed to be worth $100 million over a three-year period.

Company Perspectives:

Our mission is to help our clients improve their performance in critical areas such as sales, marketing, quality, customer satisfaction, and cost reduction by influencing the behavior of our clients customers, employees, and channel partners. Emphasizing excellence and value, we will create, develop, and implement the best possible action plans for our clients through a unique combination of our worldwide resources that includes marketing services, employee involvement processes, and travel services. We will offer these services worldwide through our operating companies and their associates, either separately or in combination.

The companys wilting profitability regained its vitality by 1993, but before the telling financial results could be tabulated another form of strife beset the organization. In mid-1993, a feud erupted within the Maritz family, pitting William Maritz against his sister, Jean Maritz Hobler, who owned 20 percent of the family business. The trouble began when Jean Maritz Hobler informed her brother that the Hobler side of the family wanted to sell its interest in the company, which triggered a debate over the value of the Hoblers holding. William Maritz cited a 1986 buy-sell agreement that valued the 20 percent stake at $39.4 million, a figure Jean Maritz Hobler deemed too low. She hired a financial advisory firm for a different appraisal. The financial advisory firm set the value at $81 million, creating a $41 million gulf that separated brother and sister. This is war, William Maritz told the St. Louis Business Journal in a July 26, 1993 interview. If we give in to their demands, he added, it would dilute the value of the 320 management stockholders who also worked to build this company.

The family battle took place in the company boardroom. Jean Maritz Hobler used her votes to banish two board members and replaced them with individuals sympathetic to her cause. She relinquished her seat on the board and handed it to her son, Peter Hobler. William Maritz responded by increasing the number of Maritz Inc. directors from seven to nine members and appointed his sons to the new seats. Jean Maritz Hoblers husband, Wells Hobler, a former Maritz Inc. employee, was declared a retiree not in good standing, making him ineligible for the perquisites customarily granted to retirees in good standing. The heated exchange endured for roughly a year, eventually ending in compromise in June 1994 when the company announced it would buy back the Hobler familys shares for a reported $60 million over the ensuing five years. William Maritz offered his perspective on the rift in the companys 1994 annual report (although privately held, Maritz Inc. made a practice of publishing annual reports). Privately held companies periodically must go through wrenching readjustments among family owners, he wrote. Maritz Inc. has done this, and now begins its second 100 years with a clear picture of its potential, its goals and its ownership.

With ownership consolidated on William Maritzs side of the family, the company entered its second century of business hoping for a return to growing profits. When business had grown sluggish during the first years of the decade, the company remained optimistic, setting a goal of $2 billion in revenue and $58 million in earnings by 1997. As the company entered the mid-1990s, it appeared to be progressing toward its financial goals. In 1996, the company posted earnings of $25.2 million on revenue of $1.8 billion, marking the second consecutive year that profits had increased. The companys travel operations, which ranked as the fifth largest in the United States, had fully recovered from the downturn during the recession and served as the sole source of travel for 35 corporations. The incentives side of the family business was also performing admirably, thanks in large part to the companys persistent pursuit of innovation. Although the company had suffered from a typical weakness of family managementbecoming embroiled in a rift among family membersMaritz Inc. had avoided becoming complacent, a frequent flaw of companies in their third and fourth generation of family management. Some of the programs conducted by Maritz Performance Improvement were more than 35 years old, but the company continually added new technology and new features to its programs to keep them on the cutting edge of personnel development systems.

During the latter half of the 1990s, Maritz Inc. surged past its revenue goal amid organizational changes that reshaped the company for the 21st century. In 1997, after spending five years developing a telephone marketing and research operation, the company sold the division, called Maritz Teleservices, to Matrixx Marketing Inc. Although Teleservices only represented 2.5 percent of the companys $2 billion in revenue, the division accounted for more than one-third of its St. Louis-based staff. The following year, Steve Maritz was named chief executive officer, representing the fourth generation of Maritz family management.

As Maritz Inc. prepared for business in the 21st century, considerable attention and resources were being paid to developing Internet-related businesses. Between 1999 and 2000, the company established more than 400 web sites, enough for the company to seriously contemplate entering the web development business. The Internet represented an opportunity for incentives businesses to operate tracking, promotions, and reward redemption electronically, greatly strengthening the link between employees and their companys incentives program. Maritz Inc. seized such an opportunity. After an ambitious year of web site development the company formed an electronic commerce subsidiary, Heybridge, which began operating in April 2000. Through Heybridge, Maritz Inc. planned to expand beyond its customer base of large national corporations and reach small and mid-market companies. Maritz traditionally has not catered to these clients, the companys director of corporate administrations told the St. Louis Business Journal on July 31, 2000. The companys Internet strategy applied to each of its major, divisionstravel, employee incentives, and researchlending a modern look to a company approaching its 110th anniversary. As the company moved forward, its entrenched market position and decades of experience fueled confidence that the Maritz family dynasty would continue to thrive in the decades ahead.

Principal Subsidiaries

Maritz Performance Improvement Company; Heybridge; Maritz Marketing Research Inc.; Maritz Travel Company; eM-aritz Inc.

Principal Divisions

Performance Improvement; Marketing Research; Travel Services.

Key Dates:

1894:
Edward Maritz begins distributing watches and jewelry.
1929:
James Maritz enters the employee incentives business.
1950:
Exclusively committed to employee motivation programs, the company begins to expand.
1973:
Profits reach $38.5 million before beginning a three-year decline.
1989:
Revenues surpass $1 billion for first time.
1994:
Company resolves year-long valuation dispute between CEO William Maritz and his sister, Jean Maritz Hobler, over the latters 20 percent stake in the company.
2000:
Heybridge, an electronic-commerce subsidiary, is formed.

Principal Competitors

American Express Company; Carlson Wagonlit Travel; J.D. Power and Associates.

Further Reading

Bye, Connie, 150 Largest Privately Held Companies, St. Louis Business Journal, March 27, 2000, p. 29A.

Desloge, Rick, Maritzs Profit Hits $25.2 Million, St. Louis Business Journal, August 12, 1996, p. 1A.

, Maritz Declares War on Sister: Family $41 Million Apart on Buyout of Hoblers Stake, St. Louis Business Journal, July 26, 1993, p. 1.

, Maritz Notches $100 Million Deal with Ford, St. Louis Business Journal, September 14, 1992, p. 1.

, Persian Gulf War, Recession Pound Earnings at Maritz Inc., St. Louis Business Journal, July 20, 1992, p. 1.

Geer, Carolyn T., Prenuptial for Business Partners, Forbes, December 5, 1994, p. 166.

Lerner, Howard, Maritz, Landing Real Estate Investors Bet on Gambling, St. Louis Business Journal, March 14, 1994, p. 1A.

Jeffrey L. Covell

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