Criteria for Evaluating Whether to Trust and Have Confidence

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As I conduct postexit interviews, former employees increasingly mention

disappointment with senior leaders among their primary reasons for leaving.

As consumers of a potential employer’s work experience, job seekers

seem more interested in checking out the reputation of senior leaders before

accepting an offer. Because they have been sensitized by the spectacle

of corporate CEOs betraying the trust of their constituents on a large scale,

employees now view their leaders through different lenses. Here are three

criteria by which employees now judge senior leaders:

1. Servant Mentality vs. Selfish Greed. As we have seen in the survey

comments, there is a deep suspicion among employees that leaders

have mainly their own interests in mind as they go about their daily

business. Workers increasingly see business leaders as interested

mainly in maximizing their stock options and building their personal

wealth, not in pursuing what’s best for the long-term interests

of shareholders, customers, and employees.

As evidence supporting this belief, they cite the disproportionate

rise in executive compensation. In 2003, the ratio of average CEO

pay to average worker pay stood at 281 to 1. In 1983, the ratio had

been 42 to 1. During the 1990s, executive pay rose by 570 percent

while profits rose by 114 percent. If workers wages had risen since

1990 at the same rate as CEO pay, the average U.S. production

worker in 2002 would have earned $68,057 instead of $26,267.7

Yet, there are also plenty of leaders who see their calling to leadership

as one in which they will serve those they are called to lead.

They do all they can to serve the needs of employees so the employees,

in turn, will better serve the customer. Such leaders are interested

in building an organization that serves the business

community, makes lives better, and makes a profit—not in exploiting

others for personal gain. These ‘‘servant leaders’’ (see Robert

Greenleaf ’s classic book, Servant Leadership) are striking a chord that

resonates among today’s workers.

2. Shareholder Value vs. Employee Value. Employees have heard the

mantra about maximizing shareholder value for so long, and seen so

many corporate mission statements that speak almost exclusively

about it, their eyes have glossed over. When employees hear and

read this, they get the message that the CEOs only real responsibility

is to serve the interests of the shareholders. Who are these shareholders?

They are mostly anonymous mutual fund managers and day

traders who never get to know the company, its products or services,

employees, or customers. Shareholders interests are important

certainly, but employees know when they are being given comparative

short shrift.

Companies which, perversely, don’t put shareholders first, do better

for their shareholders than organizations that only put shareholders

first.

—Robert Waterman in The Frontiers of Excellence

Contrast this obsession with shareholders against a new attitude that is

emerging among a new breed of CEOs. One of these is Dick Kovacevich,

CEO and chairman of Wells-Fargo Bank. When Wells-Fargo acquired

Utah-based First Security in 2000, Kovacevich chose to fly to Utah and

meet directly with First Security employees rather than check in with Wall

Street analysts, as many bankers might have under the same circumstances

‘‘The way I see it,’’ explained Kovacevich, ‘‘when you take care of your

employees, they take care of your customers. And your shareholders wind

up winning anyway.’’8

In the business press, we read more and more reports of CEOs with

similar employee-first attitudes and approaches. Interestingly, most of their

companies seem to be building strong reputations for excellent customer

service provided by committed front-line employees.

3. Lean and Mean vs. Nice Workers Giving Great Service. With the recession

of 2001, ‘‘lean and mean’’ came back in style, as businesses

looked for new ways to cut costs. Companies cut to the bone, laying

off thousands of workers. Many of these downsizing companies

gave little thought to how they might redeploy or retrain these

workers before cutting them loose. Remaining workers felt lucky

to still have their jobs, but quickly realized they were doing the jobs

of two or three people. Before long, employees (and managers)

were starting to feel abused and burned out—not exactly the best

formula for putting them in the mood to provide world-class customer

service. As Sam Walton, the founder of Wal-Mart said years

ago, ‘‘It takes a week to two weeks for employees to start treating

customers the same way the employer is treating the employee.’’

Smart CEOs intuitively know what Sam Walton knew. One of those

CEOs is David Neeleman of Jet Blue Airways, the airline he founded in

1999 and which, by May 2004, he had led to twelve consecutive quarters

of profitability, with the highest percentage of seats filled of any other airline.

From the start, Neeleman has been committed to running lean, but

not mean. To conserve costs, Jet Blue’s reservations agents work from

home instead of working from an expensive call center. Yet, Neeleman

knows many of his 6,000 employees by name, asks about their personal

lives, pitches in to pass out snacks when he flies, and stays behind to help

clean the plane.

Neeleman is obsessed with reliability and customer service, but says the

real secret weapon is the employees, or ‘‘crew members,’’ as he calls them.

Whenever Neeleman and his senior executives consider making a major

change, they first ask, ‘‘how will this affect crew members’ morale?’’ If they

conclude it would hurt morale, they elect not to make the change, because

it would not be worth it—‘‘employees treat customers the way they are

treated themselves,’’ he says.

When a company survey revealed that one third of the crew members

were unhappy with the abrasiveness and favoritism of their supervisors,

Neeleman and his COO realized that they were promoting people without

teaching them how to manage. That’s when Neeleman decided to create a

five-day training program called ‘‘Principles of Leadership,’’ taught by senior

executives. One of the five key principles is ‘‘treat your people right.’’

Neeleman’s decision to make an up-front commitment to his employees

has been returned in kind. Says one of his pilots, ‘‘I would walk through

a burning building for him.’’9

How many ‘‘lean and mean’’ companies have created this kind of loy-

alty? Mean leaders make for mean employees who are often mean to customers.

It is a formula that is destined to fail in the long term.