Revenues Doubled
We all remember the Great Recession of 2008.
It was the worst economic crisis since the Great Depression. Citicorp laid off 73,000 people, Bank of America 35,000, and General Motors 34,000. Companies of all sizes shuttered, and in January 2009, Fortune 500 companies laid off another 163,662 people.
Barry-Wehmiller, however, laid off ZERO. That’s right. Zero.
And it wasn’t because they’re in a business that performs well in economic downturns. Nope. They experienced what most global manufacturing, engineering and consulting companies experienced: Paused orders, canceled orders, and business units without work. They were in the same crisis as everyone else in the world.
Yet, revenues doubled.
Yep. Doubled. Barry-Wehmiller doubled its revenues from 2008 to 2009 and had a record year in 2010. Share gain continued at its rate of 14%, which has been the norm every year for about 25 years. Even Berkshire-Hathaway floats at around 10% annually.
How can that be, you might ask?
Let me take you back a few years for a little historical perspective. Beginning in the late 90s, Bob Chapman, CEO of Barry-Wehmiller, and co-author of Everybody Matters, experienced a few epiphanies.
One was,
while at his granddaughter’s graduation, Bob said, “As I was watching my granddaughter walk across the stage, I got tears in my eyes. Not joyful tears but tears of concern and worry. I was thinking that she was about to enter the world of the corporate machine. And it’s as if her parents, me and my wife were turning this precious and beautiful adult child over to the care of the business world, entrusting them with her. It was then that I had a moment of clarity because I knew how most companies treat their people. In general, life in the corporate machine is not a caring environment, nor is it conducive to living a balanced, happy life.”
A look at corporate cultures.
Most companies tend to treat their employees like chess pieces on a chessboard, moving them around, manipulating them, and removing them from the game on a whim, making work the most stressful part of an average day - and in our lives. All so that the CEOs and shareholders can be successful and make a lot of money.
Up until the 1980s, it was rare for companies to use layoffs as a way to balance the books. “Today,” Bob Chapman says, “it’s like a reflex for companies, much like tapping your knee and seeing your leg kick up.” When companies experience calamity, the immediate response is to cut the workforce to preserve financial performance, raise investor confidence, and boost the share price.
Simon Sinek, author and speaker, has an interesting way of articulating this practice:
“In the military, they give medals to those who are willing to sacrifice themselves so that others may gain.
In business, we give bonuses to those that are willing to sacrifice others so that they may gain.”
Bob says, “While getting my MBA,
I was taught to use employees as functions and objects for MY success. It was all about ME and MY success. What strategies should I implement and how should I manage and manipulate functions (people) so that I could be successful as a leader? It was all about ME. Not WE. They didn’t teach leadership. They taught management: How to manage objects and functions.”
The results of this model of leadership:
“Businesses today suffer from leadership malpractice.” -- Bob Chapman
“There’s got to be a better way,” Bob said.
Bob’s epiphanies centered around the fact that employees are someone’s child. Someone’s granddaughter or grandson. Someone’s sibling or mom or dad.
Companies make huge profits and take pride in giving money to charities to help society, such as The United Way. Yet, while they’re doing so-called good in society, they’re, in essence, bringing harm to the people under their own roof. The, it’s just business mentality, is a bad rationalization for treating people like objects.
Businesses today negatively affect and bring harm to millions of people, and sometimes destroy the lives of hundreds of thousands who work for them. They treat them like objects for their success and play them like chess pieces on a board game. They’ll, without hesitation, lay people off or fire them on a whim without much consideration.
Bob says, “The greatest charity we can give back to society is to be truly human leaders who treat the people under our leadership with profound respect and care and not as objects for our success and wealth. In other words, we need to see ourselves as stewards of the lives we have been given an opportunity to lead and influence.”
Bob realized businesses can be stewards of people’s lives and take responsibility to be a positive influence in their lives, creating cultures where people feel cared for and cared about. All resulting in a healthy and profitable bottom line.
He says, “Most businesses use people to build products and make money; we use our products to build people. We are building an organization and culture in which people can discover their gifts, grow and thrive.”
“Businesses can be a major force for good if we simply care.”
“We are in the people business. Our economic model is products and services.” Bob Chapman
Beginning of a new culture.
As this new leadership style was formulating in Bob’s mind, he began looking in the mirror and examining how he led his company. What kind of leadership had he been providing? How do the thousands of employees feel about the company, their jobs, and the leadership? And the biggest question he asked was, “Do employees feel cared for and trusted? Are we treating them like someone’s son or daughter?” He soon realized that he and his team had a lot of work to do.
Bob’s new leadership model.
Beginning in the early 2000s, Bob led the way in developing a new People-centric model his company calls, Truly Human Leadership. A team was assembled to develop a program that eventually became The Guiding Principles of Leadership. It’s based on this basic principle: Our success is measured by the impact the company has on the lives of people. And, the belief that if you take care of your people, they will take care of the business.
For six-plus years, Bob and his team preached and touted this new Everybody Matters philosophy. As you can imagine, it was a tough sell at times. Employees were so used to being treated like functions and objects by management, that much of what was said was taken with a grain of salt. “Yeah, yea, we’ve all heard this before,” they would say.
The new culture was put to the test.
Then in 2008, the crisis hit!
The world economy shook and shuttered and millions of people lost their jobs while others lost their businesses.
In the past, when Barry-Wehmiller encountered financial problems, the company would conduct layoffs with little hesitation, just like the other companies.
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But now — things were different.
Leadership had been creating a culture of people-first. “If we responded as we had in the past, it would seriously damage and potentially destroy the wonderful caring culture we were building,” Bob said. “It would render our assertion ‘We measure success by the way we touch the lives of people’ hollow and meaningless.”
Bob was also clear, and more concerned, about the fact that beyond the impact of the culture, layoffs would seriously affect the lives of many families, and in some cases, entire communities, because Barry-Wehmiller was the largest employer in some of the small towns in the Midwest. People would not only lose their homes but much worse.
It was quite a dilemma for Bob as CEO. But he and his team had a new vision and moral compass they didn’t have before.
He said, “I asked myself, ‘What would a caring family do when faced with such a crisis?’” The answer came, “All the family members would absorb some pain so that no member had to experience dramatic loss. Everybody would pitch in with a sense of shared sacrifice and shared destiny.”
A plan was created and presented to all divisions and business units. Well received by employees, they ended up implementing a furlough where everyone took a month off without pay, and the 401 (k) match would be temporarily suspended, as well as some other smaller things. They also suspended executive bonuses and Bob cut his salary from $875,000 to $10,500.
Due to the fact that this new culture had been percolating for a number of years, the executive team had clarity about how to respond, thus making the global implementation quick and smooth.
“Overall, we implemented almost $20 million in cost-saving initiatives and protected everybody’s livelihood,” Bob stated
Bob talks about how the reaction from employees was astounding. Far better than they had anticipated.
Morale rose dramatically!
Employees had been walking on eggshells, as the recession was in full swing. Their friends and family had already lost their jobs, as had millions around the world. So once they got the news of a furlough plan, employees were extremely relieved.
They realized that the company did indeed care about them. They no longer had to worry about their jobs, resulting in a load off their shoulders, and an increase in morale.
In a strange kind of way, employees began witnessing a miracle.
Leadership was reacting differently to crises, and actually making sacrifices along with them. They were walking their talk. As a result, people banded together as a cohesive unit and did what most humans do in times of crisis. Compassion, care and sacrifice took hold company-wide, much like neighbors and communities do for each other after natural disasters, like tornadoes, hurricanes and earthquakes.
Sacrifice became contagious.
As you can imagine, not all team members were in the same boat financially. Some had spouses still working while others didn’t. Some had more mouths to feed than others.
But it was amazing: People stepped up and demonstrated a sense of generosity, kindness and selflessness that might not have been there prior. And they did it expecting nothing in return. Team members offered their furlough time to others who were more strapped financially. Bob says, “Members would say, ‘I can afford to take six weeks with no pay if somebody can only afford two. I’ll take their weeks.’”
Judge not when times are good.
“Who we are in the worst of times is not always who we are in the best of times. Our values, beliefs, and culture don’t really get tested when times are good,” Bob says.
Simon Sinek, author and speaker says,
“You cannot judge the quality of a company by the good times, just as you cannot judge the quality of the crew when the seas are calm. We judge the quality of a crew when the seas are rough. The numbers will never come to your aid. Ever. People will. If you feel that everyone is disposable, guess what? They think the same about you. It’s reciprocal.”
Results:
“Our business rebounded after only nine months,” Bob said. “Well ahead of the broader economic recovery. In fact, our fiscal 2010 was a record year in earnings!”
As a result, the company didn’t just re-implement the 401 (k) match again, they overpaid it until they had fully restored what employees had given up during the furlough.
Wow!
The results of this new paradigm in leadership, this people-first model, are extremely positive. It’s not a theory thought up by an academic who never tested it in the real world. No. It’s been tested in the field where it matters most. And I’m sure, will continue to evolve.
Final analysis
Contrary to what has been practiced and taught at the finest MBA schools, people who work for you — your employees — if treated like functions and objects will respond in kind. Treat them like someone’s son, daughter, mother or father, in other words — like fellow human beings — which is caring, they will respond in kind. And may surprise the heck out of you!
Bob Chapman talks a lot about how consultants, professors from Ivy League schools, and authors visit Barry-Wehmiller to see if this amazing culture he talks about is real. He allows them to go wherever they want to and talk to whoever they want to. So, these third parties will walk around the manufacturing plants, offices and such, and talk to whoever they feel inspired to speak with.
The results have always been the same: Employees break out in tears, share amazing personal stories and talk about how they love their jobs.
Everyone goes back to Bob and says, “Wow!”
Bottom line: CEOs are beholden to the Board of Directors, who are looking out for the shareholders. And these leaders and board members are only operating on what they learned in business school. One of Bob Chapman’s missions is to educate universities and MBA students on the validity of, and power of caring for people, rather than seeing them as objects and functions to be managed and manipulated.
I have been enamored with all of the Truly Human Leadership content and podcasts, Everybody Matters book, and Conscious Leadership book. I encourage you to check it out.
Lead on, my friends! And remember, the power is in the people.
Further reading and listening:
Everybody Matters, written by Bob Chapman and Raj Sisodia
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