Be an Ethical Entrepreneur, Marketer, and Business Builder

This 1 thing would have made the $70k minimum wage successful

The Gravity Payments announcement that the CEO, Dan Price, was taking a $930,000 pay cut to pay his team a minimum wage of $70,000 has recently caught headlines again because it doesn’t seem to be working.

It would be easy to point out the obvious problem with this approach, the same one Walmart is experiencing when they raised their minimum wage, that when you pay people for just showing up, you violate the social contract that employers and employees have that more talented, hard-working employees should earn more.

In other words, when people don’t earn a raise, (i.e. it’s just given to you as a minimum) it upsets those who have earned a similar raise or a very close amount.

However, that’s not the biggest problem with the Gravity Payments minimum wage.

The biggest problem, as-is generally the case, was Price’s ego.

If Mr. Price’s primary motivation was improving the way of life for his team members and he was happy to redistribute his wealth to do so, that would truly be a noble and generous act.

To ensure it’s success he only had to do 1 thing:

NOT TELL ANYONE

That’s it.

Had Price met with each person individually on his staff who was making less than $70k/year and told them, “Hey, I think you deserve an increase in pay and we can’t afford to do it all at once but over the next few years, we’re going to work hard to bump you up to $70,000/year,” it would have likely been an extremely successful adjustment.

  • The longer term employees would not have felt unfairly treated because other, less-effective team members were now making as much as them.
  • The people who received the raises would have actually worked harder (particularly if he gave them specific, actionable feedback as to WHY they received the raise).
  • The public, political pundits and the press would have not ever known about it to debate it and his customers wouldn’t have left because of his perceived socialist experiment.

Price, unfortunately decided to take a different approach.

He setup a video camera, held a company-wide meeting, recorded himself announcing the minimum wage to his team and then shared that video with the media heralding himself as a generous and benevolent leader.

His actions fall under a simple concept I try to live by, “If you have to tell people you’re smart, funny or nice, you’re not.”

In other words, because he had to prove to the world that he is such a great guy and an example to be modeled by CEO’s everywhere, his plan backfired.

If he was a looking only to improve the lives of his team and never told anyone that he took a $930,000/year pay cut to help them, he would have been a great leader because his concern would have been solely for others.

So the question is, if it was that simple to execute properly, and it was, why didn’t he do that?

Since I don’t know Price, my insights about him come mostly from his actions however these 4 explanations are more of a reflection on shortcomings all successful entrepreneurs will struggle with at some point in our growth.

  1. Ego – “Pride comes before the fall”, are words that ring true for all of us and who wouldn’t want to become the national face of such a hot topic?
  2. Greed – Let’s face it, when you stage something like this along with video recording the meeting and interviews on national TV, you are trying to get free exposure to your business. There’s nothing at all wrong with free publicity. Unless you do it at the expense of your team while claiming it’s for their benefit. My guess is Price took a calculated risk to temporarily reduce his pay and then increase his income again (through a salary increase, dividends, a stock sale or sale of the entire business) as a result of increased sales coming from the low-cost PR.
  3. Political Agenda – Being a 31 year old with a 7-figure salary tends to inflate your self-worth so potentially he thought he could be the first person to prove socialism works. Or maybe he just thought of it as charity since he was donating his own salary and profits. (And by me mentioning this am I hypocritically pushing my political agenda? Sorry, it’s hard not to do.)
  4. Lack of leadership – As Simon Sinek reminds us, great leaders eat last. It doesn’t work the same way when you do something good so you can get personal media attention to show everyone how great you are.

This may look like I’m picking on Price…

Ok, I am.

But, unfortunately, this would be an instance of the pot calling the kettle black as I’m surely guilty of ego-driven mistakes in business.

However, when a situation this unique and popular comes to the forefront due to national media attention, it gives us the opportunity to learn.

And that’s my goal. To articulate both the good intentions and poor execution of this strategy, and separate the 2.

Dan Price appears to be a sincere, hard-working, intelligent and successful guy and his mistakes in executing a $70,000 minimum wage don’t change that.

Hopefully, this will help him, and other business leaders, consider that you CAN achieve seemingly impossible things (like a $70k minimum wage) when you become a servant leader and put the needs of your team ahead of your own ego.

Dan, if you read this, I truly appreciate your good intentions and hope my advice can help you execute better servant leadership going forward since that appears to be your goal.

To humble, servant leadership, Bryan

5 and 6 year olds taught me everything I need to know about great leadership…

Sorry for being a bit slow on the blogs lately. My 10-day, 2800 mile, cross-country motorcycle ride kinda had me preoccupied. Then of course coaching football to 13 5-6 year old boys has also cut into my 80 hour work weeks. 🙂  As a matter of fact, if you EVER think you’re a great leader, volunteer to teach 13 kindergarten and first grade boys how to play flag football… Teaching a handful of these kids in a classroom certainly must have its challenges, however football has it’s own nuances that the classroom does not. For instance its a physical sport and everyone knows a boy’s favorite thing to do is wrestle, tackle, push, and tease so having them go from that to learning something new is never a smooth transition. Additionally, each kid is learning something different and all at the same time. One is learning to be a quarterback another to be a running back another a wide receiver another a center. It’s actually more like the team in a business than in a classroom. Most importantly – You just gotta get all of them running in the same direction.

So here is a quick summary of the lessons my 5 and 6 year old players have taught me about effective leadership already (all of which apply to adults):

  1. Everyone has preconceived notions. I have one player who has older brothers and has obviously watched football on TV. He’s really fast and so a running back would be perfect for him. However this is flag football so running straight up the middle, like they do on TV, isn’t generally the best way to avoid getting your flags pulled.
  2. Work with what they can do and what they like. I have another player who is particularly rambunctious. Always goofing off, tackling other players, not listening, throwing grass etc. So I gave him a single objective on defense. Pull the player with the ball’s flag. He’s one of the 2 smallest players on the team and yet he pulled more flags than almost everyone else combined. He absolutely loved it and obviously I encouraged him every time. He got so good at it that he once pulled the flag of the running back before the quarterback had time to hand him the ball. The referee wasn’t real sure what to do and I couldn’t help but laugh.  So when I asked him what his favorite part about football was guess what he said? “Pulling flags!”
  3. Let them understand why its better for them to do something. The fearless player who runs up the middle does it because that’s what the pro’s do. So how do I get him to run around the other team to the outside instead? Well I can tell him to do so, or teach him why its in his best interest to do so. “OK running backs, what’s your goal?” “Score a touchdown!” “Great, so in which direction do we run?” “That way!” “Straight up the middle” “Yes!” “If you run up the middle do you think they’ll get your flags?” “Uh, yeah” “So since your so fast you think they could get your flags if you ran around them?” At this point you should have seen the excitement on his face. It was like the whole world was open to him and now he could score limitless touchdowns (those looks alone make coaching worth it).
  4. Give them structure. If you don’t have specific drills, specific breaks, specific plays, huddles, team meetings, key phrases (like “freeze!”), and some ground rules it’s chaos. Honestly my team is chaos. I’m still trying to figure out this structure thing. I like to think I’m better at it in business but now I’m not so sure… And that structure doubly applies to the dads who are helping out. They’re even more lost without specific instructions.
  5. Provide encouragement but don’t be too nice. As mentioned in #2 above you have to encourage, however if you don’t also discourage certain behaviors you have a riot on your hands. That’s my problem. I’m too nice (which makes me think I have the same problem in business). The kids need specific guidelines as to what’s acceptable (like your business needs Points of Culture) and when they’re out of line they need to have some sort of punishment (sitting next to coach and not participating is always a good one).
  6. Never assume everyone understands because you’re so great at explaining things. This results in kids running in the wrong direction. It has the same effect on your business, which is why procedures, position descriptions, scripts, incentive-based pay, Points of Culture and other VERY specific documents are necessary.
  7. Reward success. Kind, compassionate mothers everywhere are going to chastise me for this one, but if a child (or adult) drops the pass, fumbles the football, misses the tackle etc. you don’t give him a sticker. He’s not stupid. He knows he didn’t succeed so why would you confuse him by rewarding him? Now when he does well, you (as the highly respected coach) better be the first one to congratulate him!
  8. Do what you say you will. If you tell a team member you’re going to stop practice if they keep misbehaving, then stop practice. Threats without consequence carry no weight. Even a 5 year old figures that out real quick.
  9. Ignore the ignorable. My mom taught me this one. When a group of boys are sitting in the middle of a field they are going to throw grass on each other. It can’t be stopped. It’s an impossible force of nature that cannot be overcome. So ignore it. Often times there are things in our business that require the same selective ignorance… Not everything warrants our attention.
  10. You don’t know everything. Since I’m a nice guy, and not a brilliant coach, we took turns handing the ball off to different players to run. One by one each player got a chance. Another of the littlest guys I was a bit concerned about… I really wasn’t sure what he could contribute to the team and what I could encourage him to do. So when it was his turn to run he took off and ran for a touch down. His next rotation around he ran in for the extra point. In practice today we didn’t have any goal lines so he ran all the way down the field and back to me (the line of scrimmage) with no one catching him. I don’t think anyone has ever pulled his flag! Looks are deceiving. The shortest legs are not necessarily the slowest. Man am I glad I gave him a chance and, more importantly, so is he!

In First, Break All the Rules: What the World’s Greatest Managers Do Differently, Buckingham points out that you always do better by having people who are good at something keep getting better than having someone who is not so good improve. You build up his strengths and ignore his weaknesses. You don’t spend time trying to overcome his weaknesses. Granted, as small children they have a lot of growing and learning to do so what may be a weakness now could certainly become a strength later. However for adults, that’s almost NEVER the case. Adults love doing what they do best, will be proud of themselves when they do it, and will continually work to get better at it because of that pride. They’ll do even better with some encouragement and continual education from their leader.

Wait a sec – that sounds exactly like my 5-6 year olds. Let them play the position they love – some prefer running, others throwing, others catching, and others getting flags – encourage them when they do it well and they will make themselves better. And if you’re a decent coach and can help them learn what they need to do to become even better, then they’ll be immeasurably more excited with their new found knowledge. The team at your business works the same way. That’s why we have team meetings, regular reviews, benchmarks, reports on performance, commissions, bonuses, processes and procedures, scripts and a Team Leader (which I tell everyone is most synonymous with “coach”). My job as a coach (and team leader) is to help everyone do their jobs to the best of their abilities.

What’s your goal as a leader (coach) in your business?

To your success, Bryan

P.S. You know what’s most amazing? These kids taught me all of this in only 4 practices and 1 game so, so much for that MBA. 😀

The toughest thing in business??? Working for me? :-)

It’s funny. The question I get asked possibly the most often when I talk about buying great businesses to build and sell is “How do you find them???” Interestingly, that’s probably the easiest part. A few weeks ago I bought a motorcycle and the guy I bought it from had some contacts with business owners. So we start talking business since he’s also a young entrepreneur. I tell him a bit about my business philosophies and he takes off. Less than 6 hours later as I take a brief break from riding my new motorcycle he calls me –

“Hey, were you serious about buying more businesses?”

“Yeah, of course, what do you have?”

“My uncle is selling his and he’s standing next to me. You want to talk to him right now.” As I’m sitting on the side of the road straddling my motorcycle I think for about a split second.

“Yeah sure, put him on.”

So hopefully this week I’ll be evaluating that business. More and more have popped up. Almost every week someone calls, emails, or tells me about another business for sale. They’re all over the place. All you have to do is start asking and telling people what you’re looking for. It really is that simple.

Alright since the Buying part of Buy, Build, Sell is easy and, as of yet, I can’t give you any real world experiences with Selling, what’s the toughest thing? Building the business takes a lot of time and work however for the most part if you follow some basic formulas (all of which can be found in the books by Brad Sugars, Marcus Buckingham, and Michael Masterson) the building part can really be broken down in to small, manageable chunks. Things like developing systems, scripts, a niche, a Unique Selling Propostion, improved marketing, Points of Culture, incentive-based pay, cross-marketing, back-end sales etc. etc. etc. are all pieces to the Ethical Business Building puzzle that are relatively easy – they just take time. If you disagree, ask yourself if you’ve truly made the commitment to work “on” your business every single day instead of just “in” it.

Now, if your goal is to own more than one business or to be able to step away from your current business to experience other adventures in your life, you need a Great Manager – excuse me, I mean Team Leader, for each business. Its been told to me by several millionaires (I’ve met so many I can’t recall which) that wealthy people rarely invest in a great idea or product – they invest in the people behind the idea or product.

The book, In Search of Excellence: Lessons from America’s Best-Run Companies (Collins Business Essentials) repeatedly points out how “excellent” companies like Hewlett-Packard, Texas Instruments, and 3M have learned through years of trial and error that great ideas die. Texas Instruments did a study that found out that EVERY product that management thought was a great idea that died on the vine had one thing in common – they all had team leaders who were appointed by management. Whereas all the great (i.e. profitable) ideas were started and followed through by teams of people who were led by at least one person who either came up with the idea or who had a great passion for it and approached management with it. At 3M their entire business model is designed around the concept of making your idea work against all odds. There are all kinds of stories and tales of Presidents and Vice Presidents of 3M divisions who were told 2 or 3 or more times that their idea wouldn’t work, but they kept persisting – often working after hours and on weekends – to make their idea successful.

So why is all of that important to Building your business? Well, if you can’t find someone who believes as strongly in your business as you, then how can it ever reach its full potential without you? Granted, if your exit strategy is simply to sell the business and go onto another then you won’t need that great Team Leader since that’ll be you. Keep in mind, that each area of your business – Service, Sales, Operations – needs someone to effectively lead. In my business I certainly can’t be the one to do all of that and so I stick to Operations and leave the Sales and Service up to other Team Leaders. Actually at the moment, I’m working to recruit a great Service Leader.

My bigger goal is to ultimately own lots of businesses. Possibly 2 or 3 or 8 at once. To do that, I need great Team Leaders. This blog is my opening for recruitment.

If you want to learn from and with me on how to Buy, Build, and Sell businesses and you’re willing to relocate to somewhere in New Mexico or Colorado here is your opportunity. 🙂

To work with me, the most important things are strong moral ethics (reference my Points of Culture), passion, communication skills, and intelligence. If you have those, experience, education, connections, age etc. etc. etc. become secondary.

If you do possess those qualities, I promise you’ll have the opportunity to work in an exciting, ever-changing atmosphere where we’re always learning something new (reference the Team Building portion of my What would someone pay to learn from you blog). You will be challenged and be held responsible for your performance. If you perform well, you will be paid exceedingly well (reference my blog on Never Paying an Hourly Wage).

Consider this for a moment. Right now I have plenty of business buying opportunities and few Team Leaders available to run them. I am acutely aware of that and will NOT buy another business without first having a Team Leader in place. In your current job does your boss, manager, owner or anyone appreciate, trust, and have the willingness to invest in you that much???

Another potential benefit of working as one of my Team Leaders is the opportunity to buy the business that you lead. What better, quicker, low-risk way to enter the world of owning your own business? Just thinking about working with some new Team Leaders gets me pumped. Developing my team members into being the best at what they do is probably the most exciting part of my job! If that also excites you then send me an email at bryan@ethicalbusinessbuilder.com.

To your success with me 😉 , Bryan

Leadership – What would someone pay to learn from you???

In my experience meeting hundreds of business owners, 2 stand out as extremely unique. In a sentence, Bob Reiss and Steve Dickerson are probably the only 2 businessmen I’ve encountered who I would carry their briefcases around for a year for free. I would just download as much information and as many lessons from them as I possibly could. It occurred to me that I when I’m leading people, I want them to feel the same way about me. What can I do so well and so fluently that someone would actually pay me to learn it???

Well it better be whatever I’m doing to lead my team. Think about it for a second. Consider you’re hiring someone new. They’re young, inexperienced and considering whether to enter the job market or go to school full time for business. You’re the team leader for your business, right? Would that person learn more from you or from her professors at business school? Will they learn more from the other business owner down the street? Why can you teach them more? What about your service leader and office leader? Do they all have something to offer each of their teammates?

Let’s face it, if you aren’t so talented at what you do that you can teach a class on it and people would pay to learn from you, then you probably need to start investing more time in yourself. James Rhome used to say “Always invest more time in yourself than in your business.” Doesn’t that make sense?

Here’s another way of looking at it. If you’re team has so much faith in you that they would pay to learn from you, imagine how enthusiastic they’re gonna be when you thank them for their hard work every time you hand out their paycheck.

In case you haven’t noticed from my blogs, I’m a bit neurotic. I can’t stand not doing something to the best of my ability. So if I’m going to create the best marketing or sales system for my business, you better believe I’m going to read dozens of books, blogs, articles and ask my colleagues about those topics. However, as much as I love to learn, I’ve learned that it’s much more fun to teach others. If you want to see your teammates light up and get actively engaged in growing your business, start teaching them new things. Start helping them shape their ideas into effective parts of your business. Start showing them how their contributions are making a difference by measuring the results. And most important of all, reward them for what they’re doing. My next blog will be about why I will never pay a full-time person an hourly wage which is related directly to what we’re talking about now.

I previously mentioned that no one wants to suck at their job. Quite to the contrary, everyone loves to go home to their wife, husband, mom or best friend and tell them how they had this great idea that helped improve the business. In my business, if I’m working with someone who has been on the team less than 6 months or more than 20 years, it amazes me how hungry they are to both learn and be challenged. We all want to brag about how much fun our job is because our team leader gives us so much “freedom.” The interesting thing about “freedom” is that if everyone is part of a team, they start to worry less about doing it “their” way and instead appreciate what’s best for the team. However that only works if you walk the walk. 😉 When I implement a new policy, incentive, marketing program, etc. we discuss it at the team meeting, get some input and run with the idea. Everyone seems to feel apart of the team instead of me just dictating this is how it should be. Keep in mind, that if everyone on the team respects my talent for marketing or leadership so much that they would pay me to learn it, then maybe what I suggest in the meetings carries a bit more weight… Maybe not… lol Time will tell. 🙂

If you need incentive to keep yourself on your toes and always learning and teaching your team, implement a Team Building portion of every team meeting. That’s the point where you educate your team on some of the great ways to communicate with customers, improve themselves, and be an effective part of the team. In our last team meeting I introduced Neuro Linguistic Programming (NLP) and it was so much fun! One of these days I’ll summarize my NLP lesson into a blog or 2 for you to help build your team.

To your success, Bryan

Your company has a culture. Did you choose it?

Yosemite National ParkIn my last blog I mentioned that if you’re an Ethical Business Builder, but none of your employees are aware of that, who cares? It’s important that you make your whole team aware of the importance of ethics in business.

Obviously your actions are the most important part of being an ethical leader. If you have an “open-door policy” but you’re never around – or you claim that its important that you treat all people with respect, but your team members can hear you flipping out on your vendors on a regular basis as a means of “getting the best deal”, then it doesn’t matter what you write in your ethical policies. The only things important to your team members are the things that you do – not what you say. I’ve read in numerous articles and books that most businesses take on the traits of their founders. Microsoft is like Bill, Apple like Steve, Facebook like Mark, and Google is like its 2 founders…

ALL businesses have a culture. Some are high-energy and highly-competitive like Nordstrom’s and some are more laid-back like your typical start-work-at-noon-and-sit-on-your-bean-bag silicon valley software company. In both of those instances the companies “culture” was deliberately structured to be a certain way. The founders of those companies apparently determined (or it just happened by accident) that the most productive way to deal with their employees was to develop a culture to cater to the type of employee they wanted. This is important because not every person can excel in every environment and company culture. It’s well-known that Nordstrom’s employees either love it there or hate it. The ones who hate it rarely last more than 6 months. That’s the way management likes it. If you’re not going to thrive in the culture they’ve created, then they don’t want you. Does the culture that you’ve developed in your company attract the employees who will excel in your business?

The examples above, however, don’t talk at all about the ethical underpinnings of those cultures. Just like other aspects of culture, if you don’t express your culture, including the ethics that you expect, in writing and then demonstrate through your own actions that you believe in them 100%, then the culture will create itself. Generally that “self-created” culture will come partially from the founder and partially from whatever the other employees think is appropriate. My first encounter with a defined set of “Culture Statements” came from Brad Sugars in his book Instant Team Building and from his entrepreneur masters class. Actually, I can’t think of one other business book or article that has emphasized the importance of defined culture statements.

Culture statements are a series of statements that simply tell your employees and company stakeholders what values and culture your company employs. It’ll probably make more sense if you just read the 12 Points of Culture that I developed for a business I co-founded, cribME!.

12 Points of Culture

  • We treat our customers, colleagues, partners, vendors, and shareholders with respect. In unsettling situations we do our best to empathize with the other side and view the situation from their perspective.

  • We maintain integrity in all interactions. The end never justifies the means. Deliberate lying is never an option. If ever we make a mistake and accidentally make an inaccurate statement we will correct that statement as soon as reasonable.

  • We work diligently to make effective and open communication a high priority by avoiding gossip, harmful sarcasm, and verbal attacks. If we have a question or concern about someone, we strive to ask them directly instead of listening solely to those around them.

  • We are never satisfied with “good enough” and continually strive to improve ourselves, facilities, products, and services to best serve the company stakeholders.

  • The team leaders do their best to provide a healthy and productive environment for their team members to excel at their jobs every day.

  • We are positive toward each other, focusing on exceptional work and constructively critiquing when warranted. We are open to others positive suggestions for improvement.

  • We understand that everyperson we encounter has something to teach us and so will learn from everyone around us.

  • We appreciate that profit is the life-blood of every business and a profitable business benefits everyone in the organization as well as in the communities we serve. We work together to minimize unnecessary expenses and waste to ensure a lasting, profitable business.

  • We strive to be on time and meet deadlines. If we say we are going to do something by a certain time, we do it. If for some reason that is impossible, we communicate another solution as soon as we are aware that we will be late.

  • We recognize that the customer is not always right, however, whether he is or not, its our responsibility to make him feel that way.

  • We hold ourselves accountable for our own actions and responsibilities. We admit to making mistakes and continually learn from them. When we learn from mistakes, they are not failures.

  • We take calculated risks to improve our areas of responsibility. We try new and innovative solutions to daily problems. We quickly discard the solutions that do not work and continually improve those that do.

One of the benefits of developing culture statements for one business is how easily they can be amended to apply to almost any business. Statements I wrote for another business included a point of culture emphasizing the importance of safety. There aren’t a whole lot of dangerous situations in the software business so I didn’t feel that was necessary to emphasize for cribME!.

It’s important to make use of and review all of the points of culture, along with your vision and mission, BEFORE you hire someone. The potential hire needs to be aware of what makes your company unique and it gives you an opportunity to measure her reaction to your emphasis on ethics.

This blog is just barely touching the surface of the importance of dictating your culture to shaping your business. One of the primary findings in, Built to Last: Successful Habits of Visionary Companies, that contradicted the teachings of almost every MBA program on the planet, is that the businesses that survived and excelled over time were often the ones that were centered around a core business concept, not a great product.

We’ll get more in depth into the Vision and Mission in another blog, however, for now, start reviewing your business’ current culture and compare that with the culture you’d like it to have. In the next few months I’ll be working to define the culture of a few startups, as well as potentially revamp the culture of a business that’s been around for over 10 years. I look forward to recording the lessons learned from both of those processes.

To your success, Bryan

The difference between good and bad is in how it's communicated

As I’m thinking of lessons that are extremely important for all of the members of our teams to understand, communication jumps to mind. Behind ethics and more specifically “being honest with all people”, effective communication is probably the most important part of the culture of any organization.

In my experience visiting businesses I’ve seen plenty of examples of why great communication is so important to an organization. However, 3 great business leaders who I’ve had the pleasure of meeting and learning from taught me a few simple lessons that drive home the point a bit easier.

Behind my father, Steve Dickerson and Bob Reiss are probably the most influential businessmen I have met. Mr. Dickerson has an amazing knack for story-telling and an even more uncanny ability to solve problems. He was one of the people I interviewed and referenced in my very first blog and he’s the one who taught me that the difference between a positive and a negative action almost always lies in the way its communicated.

So lets consider this for a moment. You’re in charge of a manufacturing facility that employs a few thousand people (over 2,000). You’re notified 2 years ahead of time that the facility is going to be closed. When do you let your employees know? If you give them 1-2 months then they may just leave in spite. If you give them 4-6 months you’ll probably have most people leaving before you even shutdown and then you’ll have to start hiring people for just a few months. If you give them any more notice then for sure people will leave which makes your job a whole lot tougher. It’s not like you can prevent the plant closure, so its not your fault. Take a few minutes and think through what you could do in this situation to best help all of the company stakeholders. Obviously the way you handle this situation can certainly dictate what will happen to you after the end of those 2 years.

Mr. Dickerson looks at the world a whole lot differently than most people. I have never personally met someone so confident that he could overcome any obstacle and solve any problem. He elected to tell all of his team members right away. Now read this carefully because the way he communicated the plant closing is what turned this situation into a “positive.” Before he told the entire team, he called in upper management and let them know and informed them that they have 2 years to find jobs for everyone in the plant. That’s right, his management team including himself took the personal responsibility to find employment for everyone who was going to be laid off. So they did some research and found a new manufacturing plant was being built not too far away and some other businesses were expanding. The day the plant closed 2 years later, every single one of the “laid-off” employees were now employed somewhere else or had made appropriate plans for retirement.

So the first question that comes to mind is, why isn’t that story taught in every business ethics class in every school and MBA program in the country? Doing the right thing and COMMUNICATING effectively can turn even the most negative situations positive.

Now many of us may not be responsible for the livelihoods of thousands of people so that story may seem to be a bit beyond our capabilities. So let’s take a look at a lesson that Jamie Hresko taught me.

Mr. Hresko was the plant manager for the Pontiac G6 plant in MI. To get an idea of his capabilities, when he took over responsibility for that plant there were over 3,000 grievances outstanding from the union. Amazingly, as I understand it, that’s only slightly higher than the average for a GM facility. However, within 3 years, Mr. Hresko had managed to drop that number to around 30. The lowest of any union facility under GM’s ownership. One of his 5 keys to doing that was Communication and he told this story to illustrate.

He said one day the union rep came to him and said we need another water fountain out on the floor. Jaime considered for a split second that they cut the workers’ hours, the labor force, and their wages (if I recall correctly) and the grievances were still unrealistically low so the least he could do is give them a water fountain. He said “no problem we’ll get it ordered right away” and then asked someone on his staff to make sure they had their water fountain. Two weeks go by and still no water fountain so the rep comes back to Mr. Hresko and asks where the fountain is. Mr. Hresko tells him the truth, “you know what, I’m not sure. I asked someone to take care of that for me and we’re definitely getting it for you so can you give me a chance to find out what’s going on?” So he went and found out the fountain had been ordered, everything had been taken care of, and it would be installed the next day. Low and behold the fountain shows up the next day and all the union members thank Mr. Hresko and start saying “man that guy is good. We don’t have a water fountain for 2 weeks and soon as we mention it to him he takes care of us. If you want anything done around here you have to go to Mr. Hresko.” The reality of the situation was he did absolutely nothing. The person he had asked to take care of the fountain did exactly that. Except one thing. He failed to communicate with the union what was going on and how long it would take. That simple act of communication would have instilled more faith from the union in the rest of management, would have saved Mr. Hresko the time of researching what was going on, and would have prevented the union from getting upset because no one took care of the water fountain for 2 weeks.

Now in the interest of full disclosure, it has been over 3 years since I’ve heard either of these stories so they are paraphrased, however I’m certain my numbers are very close. Even if they were off a bit and Mr. Dickerson helped 3,000 or 1,800 people find new jobs – or if Mr. Hresko only reduced the grievances to 50 or 60 would the stories be any less compelling?

The point is, in every situation, be it a conversation with your sister, husband, colleague, boss, or team member, you should ALWAYS be looking for the most positive way to communicate. Often times being positive simply means calling people back when you say you will, or keeping people up-to-date on the progress of a project. Dale Carnegie in his classic, How to Win Friends & Influence People, suggests in instances where you must critique someone you start out with a positive statement about the person first, so as not to put them on the defensive.

Bob Reiss made a point of assuring his employees that ethics were a high priority. For example, he always kept a copy of the 10 commandments on his desk to reference when a situation with an employee warranted it. From several sources familiar with his companies I was told it was nearly impossible to get a job there. No one ever left. Once you had a job there you stayed for life because you loved working there so much. In one instance, an employee of Mr. Reiss’ approached him with a difficult situation that she was very concerned about sharing with him. Her boss had apparently done something inappropriate or unethical (I was never told what he did) and from experiences she’s had at previous jobs, going above the head of your boss was never a good idea. Mr. Reiss thanked her for bringing the situation to his attention and took care of the problem (I believe by getting rid of that manager). Had Mr. Reiss not been known as an owner with high ethical standards and who strongly valued honesty, there’s a good chance that lady would have never felt comfortable enough to approach him. So if you’re going to be an ethical business builder, make sure you communicate that with your team members. After all, if your team doesn’t know that, are you really an ethical business builder or leader?

The best way to communicate those ethics is through actions and a good way to hold yourself and your team accountable is by setting very specific guidelines for the “culture” you expect at your business. We’ll get more into the importance of defining your business’ culture in another blog.

To your success, Bryan

What 8 CEOs/Presidents have to say about Leadership and Ethics

The inspiration for this site was a research paper I wrote in December 2004 for Professor Redekop’s Senior Seminar “Business Ethics” class at Kettering University. I was going to break up the paper into 2 separate sections but decided it flows better as a single piece and you can easily jump to the bold headers in the sections that most interest you. I make no claims of perfect grammar or APA approved references. 🙂

All of the books that are referenced in the paper can be found at the bottom of the blog.

Introduction

Kettering/GMI has a long history of successful alumni. Kettering claims that 1 in 6 Kettering/GMI graduates are CEO’s or President’s and that Kettering sends a higher percentage of students to the University of Harvard’s MBA program than any other undergraduate school in the country. This essay analyzes the leadership and ethical underpinnings of several of these CEOs and corporate executives to get a better understanding of the skills employed by Kettering/GMI’s alumni to achieve such high levels of success.

Much of the research performed for this essay was centered on eight personal interviews with very successful leaders in corporate America who have graduated from GMI or the General Motors Institute. These individuals oversee hundreds of thousands of jobs and account for billions of dollars in sales around the world. They were presented with several questions on business ethics and leadership and their responses are compared with additional research to provide a more complete understanding of Kettering/GMI alumni. The questions are listed at the beginning of the sections where they will be addressed. They were purposely designed to be vague and broad-reaching. This vagueness was necessary to determine these leaders’ initial reactions and allow them to very subjectively state the items of most importance to them for each topic. The questions were also structured in a manner to allow for email interviews to be conducted where responses back and forth for clarification would not be necessary. The alumni’s answers to questions about leadership were extremely varied however all the questions dealing with ethics were met with similar responses. The reasons for the resounding successes of these individuals are excellent leadership qualities such as hard work, adroit communication skills, consistency, and the ability to command respect. A foundation based upon high ethical and moral standards is also essential to their success. Not surprisingly, this formula for success is also common for independently wealthy individuals in general, not simply within Kettering/GMI alumni.

Defining Leadership

Before embarking on an understanding of what makes a good leader, leadership must be defined. Bob Reiss, an entrepreneur and the first Bio-Medical Engineer, who sold his third privately owned company for $650 million, provides a definition that will be used in this essay to define leadership. He states, “Leadership is the ability to have a meaningful vision of what the future could be and concurrently being able to define a pathway to the fulfillment of that vision” (Reiss 2004). A leader should provide a very clear and vivid image for what an organization can accomplish and be a person everyone can rally around and understand (Coventry 2004). Unfortunately, this is one of the most elusive qualities found in corporate executives today and therefore is being adamantly pursued and even tested for when looking for people to fill executive positions (Coventry 2004). Baltasar Gracian, a 17th century Jesuit monk and philosopher, provides an even more eloquent definition of what he calls a “Natural Leader.”

Natural leadership. It is a secret force of superiority not to have to get by artful trickery but by an inborn power of rule. All submit to it without knowing why, recognizing the secret vigor of natural authority. Such magisterial spirits are kings by merit and lions by innate privilege. By the esteem that they inspire, they hold the hearts and minds of those around them. If their other qualities permit, such people are born to be the prime movers of the state. They perform more by a gesture than others by a long harangue. (Gracian 1653)

Gracian may attribute these unique traits of character to an “inborn power,” however it becomes quite apparent that, though leaders may possess certain natural abilities, they tend to follow a common formula. It is important to note, the alumni unanimously agree poor advice for leading was given by Machiavelli when stating, “It is essential, therefore, for a Prince who desires to maintain his position, to have learned how to be other than good, and to use or not to use his goodness as necessity requires” (Ciulla 2003: p 39). Therefore, the definition of leadership as described in this paper will focus on leading others in a healthy and moral manner.

Defining Business Ethics

Ethics can be interpreted and understood in a variety of ways and therefore needs clarification. Often when faced with the idea of business ethics, the classic John Mill interpretation of utilitarianism is brought to mind.

The creed which accepts as the foundation of morals, Utility, or the Greatest happiness Principle, holds that actions are right in proportion as they tend to promote happiness, wrong as the tend to produce the reverse of happiness. By happiness is intended pleasure, and the absence of pain; by unhappiness, pain and the privation of pleasure. (Ciulla 2003: p 143)

It is essential to note, in this definition Mill points out that unhappiness is not only pain, but “the privation of pleasure.” More succinctly, utilitarianism teaches one to take a course of action to promote the greater good of society and over one’s own personal benefits. Though this may be a great point often contemplated by corporate executives, it may be possible with this understanding to justify short-term behaviors to promote a greater good that would otherwise be unacceptable in the long-term. As Dr. James John, President of Kettering University for the past 14 years and the only person interviewed without a GMI/Kettering degree, points out, the utilitarian teaching leaves too much room for justification of poor actions for the greater good (John 2004). All of the respondents felt very strongly that one should only follow a course of action that would never violate their personal moral convictions.

Interestingly, the high moral principles of the alumni followed a distinct pattern. All three of the entrepreneurs interviewed, Mr. Barefoot, Mr. Reiss, and Mr. Schickler, felt very strongly that Judeo-Christian values were the necessary basis for moral actions. For instance, Mr. Reiss has always kept a copy of the Ten Commandments on his desk (Reiss 2004). John “Jack” Schickler, founder and CEO of Fleetcross, indicates that, “I’m firmly in the belief that [Christian] principles are the key to leading a balanced and wholesome existence while being surrounded by an array of unwholesome forces” (Schickler 2004). Don Barefoot who is currently the President of Covenant Partners Consultancy (Don Barefoot 2004), goes on to further explain this view of ethics,

Ethics need to be clearer and of a higher plane than just meeting the current prevailing legal standards of the land…these standards are too variable across the judicial/geographic landscape. Of course, you must also perform financially. But financial performance without trustworthy, sustainable practices is just fool’s gold. We are accountable before God, and His standards are clear for those who care to understand them (Barefoot 2004).

The other five alumni, who currently work in corporate America or academia, feel very strongly about adhering to the highest moral principles but they do not directly attribute this to Christian teachings. Religious views were never questioned during the interviews so it is difficult to determine if their ethical views were influenced by a particular religious persuasion or if the politically correct atmosphere of corporate America prevents these details from being relinquished. Steve Dickerson points out that he often tells people, “I have learned almost as much in Harvard’s MBA program as I did in Sunday school” (Dickerson 2004). Joe Spielman, who will be assuming the position of General Motors’ vice president and general manager of manufacturing for North America on January 1, 2005, offers several litmus tests for evaluating ethical decisions (GM to streamline… 2004). Before making a decision with ethical implications Mr. Spielman will consider what a lawyer trying to prosecute him could say about the situation, whether he would be proud to tell his father, assuming he was a minister of any faith, about his actions, and whether he can look at the man he’s shaving every morning and be happy with what he sees (Spielman 2004).

It appears the most simplistic understanding of ethics in life as well as business was taught by Jesus when informing his disciples that, “You shall love your neighbor as yourself” (New American Standard Bible Matt 22:39). Mr. Reiss points out, in reference to another religious teaching, “whether one chooses to view [the Ten] commandments as divine revelation or a statement of ancient wisdom is irrelevant” (Reiss 2004). So it is in this context, of ancient wisdom, upon which this essay will construct a reference foundation for ethics and ethical decisions. In other words, if a decision is made counter to the above teaching of Jesus, it can be interpreted as an unethical choice. The reason for this is because of its broad-reaching applications and the inclination of those interviewed to view ethics in a manner that is very simplistic and definitive.

Traits of a Leader

The following leadership questions were presented to the interviewees: What characterizes leadership for you? In other words, what are the most important or crucial aspects/traits/habits of a good leader?

It is first, important to understand that leadership is a very elusive subject because of changing business climates, individual styles, and a leader’s necessity to always be learning from those both above and below him (Coventry 2004). With that in mind, it’s of little surprise that no two people provided the same answer. Steve Dickerson, a Vice President at Metaldyne, a manufacturing supplier for the automotive industry with annual sales of approximately $2 billion (Leuliette 2004), believes proper motivation, character, integrity, high ethical standards, hard work, respecting individuals, facilitating communication and commanding respect are all traits found in good leaders (Dickerson 2004). Bob Reiss indicates that, “Some very important traits for a person who aspires to a leadership position include humility, trustworthiness, honesty, constancy, discernment, dependability, problem identification and problem solving skills and hard work” (Reiss 2004). Bruce Coventry presented a bit different approach. For him, these traits can all be summed up in a person who can provide a very clear and vivid image for what the organization is trying to accomplish and then articulate that image well enough to have people follow him or her with enthusiasm (Coventry 2004). Mr. Barefoot is also a proponent of visionary leadership and believes leadership involves:

Defining ‘reality’ for your organization by integrating/promoting/reinforcing a vision for the enterprise; building unity, transparency and teamwork around the pursuit of that vision; ensuring company-wide adoption of sound core values which build trust and predictability in relationships; developing a highly competitive sustainable enterprise; being an effective steward of the potential/opportunity/resources that the Lord has provided you; diligence (i.e. vision without execution is ‘just talk’); setting up sound metrics, delegation/authority/accountability, and compensation methods (with ‘pay for performance’ elements built-in); and serving others by modeling what you promote and equipping them to succeed (i.e. enabling committed ordinary
folks to achieve extraordinary results as a team) (Barefoot 2004).

Dr. John leads Kettering University with a definite vision and believes firmly that a leader needs confidence. People are resistant to change and a leader will be met with adversity, detractors, and other negative influences. Therefore, the leader must always have a plan and enough confidence in himself and the plan to follow it through to the end (John 2004). Mr. Reiss tempers this need for confidence:

A big ego, or a sense of over-inflated self importance, are the most common defects in people who never make good and effective leaders because nobody wants to follow them. In a large company people will tolerate these kinds of people just to have a job but nobody willingly joins their team and proclaims these types of people as their leaders, boss maybe but not leader (Reiss 2004).

Millionaires attribute some similar factors to their financial success. Their top ten factors, in order of importance, are:

  1. being honest with all people
  2. being well disciplined
  3. getting along with people
  4. having a supportive spouse
  5. working harder than most people
  6. loving [their] career/business
  7. having strong leadership qualities
  8. having a very competitive spirit/personality
  9. being very well organized
  10. having an ability to sell [their] ideas/products and making wise investments (tied for tenth) (Stanley 2000)

At first glance it appears that not only is leadership very elusive, it’s unique to each individual. Certainly leaders carry out and express there leadership styles through their own personalities and personal strengths, however several factors seem to permeate all of the alumni’s definitions. These traits are high ethical standards, hard work, consistency, superb communication skills, the ability to define a goal, the skills to confidently inspire others to achieve a common goal and the ability to command respect. More importantly, it has to be a life-long process where you are continually learning from those all around you. Larry Burns, a General Motors’ executive who leads the GM Research and Development Center, located in Warren, Michigan, and oversees GM’s global research programs, indicates, you should also do your best to surround yourself with excellent leaders from whom you can learn. Particularly as you are beginning your career it is extremely important to put yourself in a position to learn from great leaders (Burns 2004). Amazingly, all of these traits and characteristics can be learned and not one respondent claimed superior intellect or an excellent college education was a necessary requirement for leadership. This is not to imply that it is not beneficial, but it appears to be of little real importance. Two of the greatest businessmen in present day corporate America, Michael Dell and Bill Gates are both college drop-outs. It is also interesting to note that there is no significant statistical correlation between SAT scores, class rank in college, or GPA in college and net worth for individuals between 45 and 64 years of age (Stanley 2000: 120).

Importance of Ethics

The ethical questions posed to the interviewees are as follows: What role, if any, does business ethics play in your organization or for you personally? Have you witnessed poor ethical behavior in competitors, or in your industry? Do you think that proper ethical behavior pays off for businesses? Are the short or long-term effects of ethical choices different?

Every person in business will be confronted with ethical choices. According to my interviewees, these choices should be met with a single solution. Always choose the ethical solution. The ethical solution will ALWAYS be more profitable personally, for the company, for the employees of the company, for the customers and for the community. Everyone interviewed has certainly viewed unethical actions in their workplace or industry and yet their reactions were much the same. Bruce Coventry and Steve Dickerson firmly indicated that, as an employee, if asked to perform an unethical act, you address the issue with your superiors in as adroit a manner as possible and let them understand your feelings. If still asked to carry-out the unethical action, there is no other recourse but to leave the job (Coventry 2004; Dickerson 2004). Mr. Schickler also agrees and goes on to explain the benefits of such actions:

It has been my experience that unethical business practices always catch up with the offender in a very unpleasant manner and usually from a least expected direction. Sometimes it might be years later. I can say that all of the experiences I can remember wherein I was initially harmed by unethical practices ended up as wonderful blessings and opportunities for my business. It takes a lot of faith to believe that those results will be forthcoming, but it happens to work out that way (Schickler 2004).

Larry Burns feels, “Things that are not consistent with high integrity should never be done. When an ethical issue arises, you must step up to it, deal with it and stop it or it will spread like a cancer” (Burns 2004). He goes on to reference the tragedy at Enron that seems so unbelievable. Enron was, “Lead by a group of people who walked a pretty fine line between what’s right and wrong and you must have ethics that don’t allow you to even get close to the line” (Burns 2004). Mr. Reiss indicates that, “Proper ethical behavior not only pays big dividends in the business world it is the only path to enduring success. Short term and long term success is, in the end, the same thing” (Reiss 2004).For those truly pursuing God’s standards for living and leadership, there can be no difference between how short-term and long-term decisions are considered with regard to making ‘right’ decisions” (Barefoot 2004).

Often when considering business ethics, stories of Enron, Global-Crossing, Tyco or Conrad Black come to mind. Fortunately these stories come to mind more likely because of the media’s sensational view of them, and not because they are the accepted norm in corporate America. Every person interviewed was very adamant about pursuing, teaching and setting an example of high ethical standards and moral conduct. This view on ethics is certainly not the exception with millionaires stating the MOST important factor of success is “being honest with all people,” with 90% of millionaire respondents considering it either important or very important (Stanley 2000: 43).

Addressing Machiavelli

Machiavelli has proposed a rather unethical view of leadership and the following question was presented to better understand the applications of his ideas. Do you agree with Machiavelli that sometimes leaders need to do “bad” things for the good of the company?

As seemingly elusive as leadership may seem, the lessons purported by Machiavelli are almost unequivocally met with the same response. “There is no justification for ever doing bad things, the end never justifies the means. PERIOD!” (Reiss 2004). This sentiment was echoed by everyone interviewed and, though it is certainly not unanimous throughout the corporate world, it appears to be the prevailing wisdom. Mr. Coventry and Mr. Burns point out that it depends on how you define “bad”, but if you are doing something that is morally or ethically wrong you HAVE to change that situation (Coventry 2004; Burns 2004). Dickerson also feels very strongly about this issue and points out that:

Leaders should always do good things in the best long-term interests of the company and its stakeholders (not just shareholders). Sometimes these necessary things, such as reduction in work force due to loss of business or canceling the Christmas party because there is no money, are not popular. As a manager you must take thousands of actions, some easy and some difficult. I believe it’s the way that you communicate and execute difficult things that makes them either “good” or “bad” (Dickerson 2004).

Mr. Spielman doesn’t adhere to Machiavelli’s teaching at all. For him leading through ethical behavior encompasses the very essence of his leadership. Bill Reno, a union official, illustrates Mr. Spielman’s motivations in the following manner:

If you have an issue or problem about work or your personal life and you lay it out straight to Joe he will do everything he can do to help you. Now if you come back, on the other hand, and you are playing games and telling half-truths or lying, Joe will tear your heart right out from your body (Spielman 2004).

Mr. Spielman knows that ethics in a corporation are transparent and even the look of impropriety such as going to a baseball game with a supplier is not acceptable. He will help his employees, provide resources, give advice, talk with them, support them and protect those valuable employees who may once in a while stumble and make a mistake.

All good leaders seem to be in agreement on this subject. Machiavelli has no practical applications in the real world. Moreover, adherence to Machiavelli’s teachings is foolish, unproductive and unprofitable and a good way to ensure a very short-lived, if any, success.

Live It!

Summarizing all the bits and wisdom of some of the top businessmen in the world is certainly not an easy task. Over 2 hours of phone or personal interviews, 23 pages of notes and collectively hundreds of years of experience cannot be taught in a short research paper or in a lengthy book. The alumni and, in particular, the only person interviewed employed by an institute of higher learning, Dr. John, emphasizes the necessity of life-long learning. Learn from all of those around you and learn from life experiences. Dr. John points out that GMI has had a long history of ethical leadership and Albert Sobey, the first president of the General Motors Institute, was a major proponent for ethical teaching (John 2004).

The reasons for the success of Kettering/GMI alumni are many. Their abilities to lead, inspire others, and their incessant, almost relentless, pursuit of high ethical standards in their lives and businesses are major contributors to their long-term and continued success. Probably more important, is the willingness of these individuals to give back to their communities and the numerous benefits one can reap from this style of servant leadership. Many of them are on Boards of Trustees, involved in church activities and other voluntary work. Obviously all of them have taken time out of their extremely busy schedules to provide some invaluable bits of wisdom to help students through this paper. Giving up their time speaks volumes about the character, work-ethic and dedication these individuals have to both their businesses and livelihoods, but also to their communities. Enduring success appears not to be the ability to make money, but the ability to enjoy one’s job while being a productive part of a community and living a balanced life with God, family, and friends. All of these individuals possess that balance and have made an indelible mark on me. I have every belief that they will not only continue to succeed, but that they will inspire others to do the same.

In conclusion, Bob Reiss, who has spent much of his business life studying leadership and the best ways to motivate a work force, offers sage advice that should be learned by everyone hoping to achieve success:

You are advised never to forgo your principles for a short term gain while promising yourself that over the long haul you would not in fact give in to unprincipled behavior. Once you act unethically you have begun the long slide to infamy. When you are desperate you must know that these temptations will rise to the surface. That is the time to vow that you would rather go down to short term defeat than violate your principles. When you violate them they are lost forever! (Reiss 2004).

 

Referenced Books
The Millionaire Mindby Thomas Stanley
Gracian’s Manual: A Truth-Telling Manual & the Art of Worldly Wisdom by Baltasar Gracian, translated by Martin Fischer
The Ethics of Leadership by Joanne B. Ciulla