Within every person is an innate desire to go beyond making a living to make a difference. We should all seek meaning and purpose in what we do but can a career also be a calling? Can we do well and also do good? Do nice people always come last? Are most rich and successful people crooked in some way? Can an organization’s culture go beyond the posters espousing mission, vision and values; to instead be the living behaviors of the leaders, cascading down throughout the entire enterprise? I’ll answer all these questions with two contrasting case studies that will blow your mind.
If within our lifetime, the average lifespan of a class of people in society had dropped from 80 years to 18 years, we would think there was something seriously wrong... yet this is exactly what has happened in the USA. In 1955 the average lifespan of Fortune 500 corporations was 80 years, nearly 60 years later the average life is just 18 years! Professor Richard Foster from Yale University estimates that by 2020 more than three-quarters of the S&P 500 will be companies that we haven’t heard of yet.
Here are some other interesting facts: Average tenure of employees is dropping dramatically and only 7 of the top 500 public companies in America have average tenure of more than 10 years! When you consider that it costs between $15,000 and $25,000 per employee every time there is churn, it’s a massive issue. But not at Google and Amazon; right? Google’s average tenure is just 1 year and Amazon is not much better at 1.1 years.
Today in the workplace we face the rise of narcissism – from Gen-Y (all about me) to Millenials (instant everything). Millenials are 30% of workforce and 81% think they should set their own schedule and almost one-third would leave their job if they got a better offer. ‘Loyalty’ and ‘values’ seem to be ill-defined commodities for many.
So what’s needed? What should organizations do to overcome this problem? Every organization needs fully engaged employees and they should have documented vision, mission and values to set the tone.
But statements up on the wall are not enough. I’m reminded of the manager who catches his employee wandering into work late again for the third time in a single week and collars him as they stand in the office foyer. He says to the employee: “Is it ignorance or apathy that’s the reason for you turning up for work late almost every day?” The response was laconic: “I don’t know; and I don’t care.”
I help companies create these leadership documents and I often see that the concepts are poorly understood. Here’s my take on what they should mean:
- Vision for our aspirational place in the world and markets within which we operate.
- Mission for the difference we want to make in the lives of others – our purpose and cause.
- Values for how we operate – the behaviors we expect from everyone in our team.
A recent client I worked with had these as their values in an employment contract: Zest for people, inspirational customer experience, thirst for knowledge. I’m not sure what you think about these but let me tell you a true story of a company that changed the world. Their four values were chiseled into marble in the main lobby of HQ: Communication, Excellence, Respect, Integrity.
This company impacted the lives of almost everyone in the USA and many others around the globe – yet they didn’t manufacture technology and they weren’t a media company. The chairman was Ken Lay and his company’s vision was “To be the world’s leading company; achieved by the relentless pursuit of shareholder value through free markets and innovation.” The company was hailed as a ‘leader of the new economy’. On their way to this lofty goal they became the 7th largest corporation in America with a market capitalization of $70 billion.
It took the company 16 years to grow from $10 billion in assets to $65 billion but it took just 24 days for them to go bankrupt. It was the largest ever corporate collapse globally... the corporation was Enron and they were on a quest to become the dominant ‘new economy energy company’. We’re going to contrast two corporate cultures and the positive case study is breathtakingly counter-intuitive; but let’s consider Enron first.
Enron was unbelievable. Pure fraud at many levels and they also applied an obscure and dubious accounting practice called ‘marked to market.’ The concept was to book future hypothetical revenues based on ideas they had with unproven contracts to recognize it in their books as profit and, believe it or not, cash-flow without the actual money being generated!
For one contract with Blockbuster Video, they signed a 20-year agreement to introduce on-demand entertainment to various U.S. cities by year-end. After several pilot projects, Enron recognized estimated profits of more than $110 million from the deal, even though analysts questioned the technical viability and market demand of the service. When the network failed to work, Blockbuster withdrew from the contract but Enron continued to recognize future profits even though the deal resulted in a loss.
Enron ended-up buying the electricity assets from The State of California, and then created a futures trading exchange that they manipulated to make hundreds of millions of dollars by ordering power stations to go off-line for ‘unscheduled maintenance’ to deliberately create black-outs and panic. The Governor of California lost the next election and Arnold Schwarzenegger came to power (note that ‘Arnie’ was not complicit with Enron’s activities).
Here are some of the staggering facts:
- $1 billion ($1,000,000,000) was pulled out by executives using insider trading and just as it went bankrupt, top executives were paid bonuses totaling $55 million and also cashed-in $116 million in stock options.
- 20,000 Enron employees lost their jobs and medical insurance.
- $2 billion in pension / superannuation funds instantly disappeared.
- The biggest accounting firm in the world, Arthur Anderson (also America’s oldest) was put out of business and 29,000 people also lost their jobs. Shareholders sued for $20 billion.
So what was Enron’s leadership model and who did they look for inspiration and guidance? The CEO, Jeff Skilling, reported to Ken Lay and he was a big fan of Richard Dawkins’, The Selfish Gene. They subscribed to evolutionary greed and competition – survival of the smartest. The words chiseled into marble in the main lobby (Communication, Excellence, Respect, Integrity) were meaningless and mere marketing spin. Whether you’ve seen the movie Wolf of Wall Street or watched the movie Margin Call, they both show the real life consequences of failing to be anchored to the right values.
Culture in any organization boils down to just one thing…. the behavior of the leaders. Culture is how we treat each other, it’s how be behave and it’s what we do. Leadership is not a position, it’s who we are. How we behave matters and we’ve seen the devastating consequences of poor values from leaders in business, sport (Lance Armstrong), politics and even churches. Make no mistake, when people in positions of power lose their moral authority, it’s over for them even if they remain in their role for awhile – it’s just a matter of time before the fall.
Enron was a precursor to the 2008 GFC and in my opinion it wasn’t a financialcrisis, it was instead a values crisis resulting in financial carnage – it should have been called the GVC. You might think that these kinds of things don’t happen today… oh, yes they do. The human condition is an ever-present problem. We’re all wired for addictions, fear and greed, and to lie and cheat. It’s our commitment to the right values that insulates us from the worst of ourselves.
Enough negativity; you probably already know about Enron, so what’s the corollary and how can we positively lead? I want to tell you an amazing true story about a company that did something completely ‘out there’, the opposite of Enron. They ended-up being featured on the television program Undercover Boss and the episode garnered the highest rating of the year with 18 million people watching it.
The company is Herschend Family Entertainment (HFC) and Joel Manby is the CEO. He had much in common with Ken Lay from Enron. They both had very poor childhoods and were raised in religious Christian homes. Ken Lay’s father was in fact a Baptist Minister. Both saw education as the way to create better futures and both went to Harvard Business School. But they made very different choices concerning their values.
Joel had a brilliant career. He took over Saab in North American and did a spectacular turn-around. The reward was that they added South America and Asia-Pacific to his workload. He was in Australia on a trip well into his new expanded global role when he had a tough call with his wife. He was away for two-thirds of the year; their marriage was struggling, his kids hardly knew him, he was stressed and tired most of the time; and he didn’t like who he was becoming. He asked his boss if he could pull-back to just running North America… the answer was a resounding ‘no’.
He quit to join a technology start-up but then the dot.com bust came… he had 90 days to save the company and that meant firing a lot of people. He went through very difficult times; his work was defining him in ways he didn’t like and he wasn’t happy – professionally or personally.
It was then that he was asked to apply for the CEO role at Herschend Family Entertainment (HFE), the world’s largest private theme park operator with 10,000 employees in 26 locations.
Imagine being in a boardroom of a company with 10,000 employees and you ask the question of the chairman of the board: “How would you define the culture here?”
The answer from the founder’s of HFE, Jack and Peter Herschend, was difficult to fathom: “Love; and leadership by being a servant of others.”
Joel understood what was behind the words. He writes in his book, Love Works: “I wanted to work somewhere that rejected the false dichotomy between profit and people, or profit and principles. I wanted, in short, to be the same person all the time: at work, with my family, at my church, and when I was alone.”
He joined HFE and embraced their culture. He had been in the role for a few years when the GFC hit and here is an astounding fact. Although they had to retrench many staff, they received the highest ever employee satisfaction ratings during and after the down-sizing process! This is because junior, middle and senior managers all decided to defer capital programs to buy time, supervisors and managers alike also asked if they could take pay cuts to fund staffing levels. Even those who were ‘let go’ were given 3 months on full pay to find another job and had all of the company’s resources available to help them transition.
The culture of HFE is encapsulated by two principles: 1) Servant-based leadership, and 2) Love as defined by patience, kindness, trust, unselfishness, truthfulness, forgiveness, and dedication. It’s their paraphrase of I Corinthians 13:4-8 in The Bible. You may be thinking WTF and I agree… Wow, That’s Fantastic! But it’s delivered for them in amazingly positive ways, both with profit and people. Their staff have purpose in what they do and are truly engaged at every level.
Television is a cynical place and HFE took a big risk allowing Undercover Boss to make an episode with hundreds of hours of footage that was edited down to what the producers thought would pull the biggest ratings.
Joel says in his book, Love Works: “When your personal values match your work values, you stand the best chance of being content.” He’s been head-hunted many times but loves who he works with and the opportunity to live an authentic life.
HFE is not the first company to create this kind of culture. 250 years ago a company was started by an Irish man who wanted to help people having their lives ruined by potato-based spirits which were rotting stomachs and causing terrible alcoholism. His name was Arthur Guinness and his drink was brewed for high nutrition and relatively low alcohol content…. He showed you can make money and make a difference, that you can do well and do good, that you can even serve humanity being a factory worker brewing beer. 100 years ago Guinness was providing free medical and dental care for employees, they paid for funerals, helped employees with housing, gave huge sums away to charity… and free beer every day! Unlike modern companies who offer some of these perks to attract the best talent, they did it because it was how they could live their values.
Values are everything in leadership and for managing people and teams. Values-alignment is usually labelled as ‘cultural fit’ but HFE measure values together with performance. Great results are not rewarded unless accompanied with the right behaviours. Their managers must consistently live in accordance with the organization’s values. Personas and facades don't cut it at HFE. Only competent, authentic people can sustain leadership positions. Everyone’s performance appraisal process is based on the tool below (adapted from the matrix in Love Works, page 158).
HFE understand an important truth: We must be the person worthy of the success we seek. Our behavior matters in achieving results and that’s because people matter, both customers and staff.
The greatest risk to any business is not on the balance sheet, it’s the values within the people of power inside the organization and those who represent the brand. Do you really know what your values are? Do you know what you stand for? Are you and your team truly driven by your mission and purpose, personally and corporately?
Leadership is an inside job. We cannot achieve and possess wealth unless we do, and we can’t do unless we are. We need to be the person worthy of the success we seek, otherwise success will be temporary or a mere illusion. The opposite of love is not hate, it is fear. Are you brave enough to love your staff and customers?
If you valued this article, please hit the ‘like' and ‘share’ buttons below. This article was originally published in LinkedIn here where you can comment. Also follow the award winning LinkedIn blog here or visit Tony’s leadership blog at his keynote speaker website: www.TonyHughes.com.au.
Main Image Photo by Flickr: Chris van Dyck