July 26, 2006

Excerpts: What Happy Companies Know by Dan Baker, Cathy Greenberg, Collins Hemingway

By: 800-CEO-READ @ 2:40 PM – Filed under: Management & Workplace Culture

Humility has gotten a bad reputation. Some portray it as being weak and indecisive. Truth be told, being humble takes strength and self-knowledge. Read on as Dan, Cathy, and Collins introduce humility as one of the key traits of happy companies. ---- What it Takes to Be HAPIE: First, Humility Some executives shy from the word humility like a horse from a snake. A few may find the word offensive. They relate it to the notion of forced submission (humiliation) rather than voluntary modesty. Or they assume that humility means that they must wear sackcloth and ashes rather than enjoy the perquisites of their success. In fact, humility of character is not an embarrassment but a gift. Far from implying a lack of ability, confidence, ego, or will, humility is a manner of expressing those capacities in a way that engages others. Humble leaders operate from conviction, either from moral values that cause them to act beyond themselves or from a deep belief in the companys mission. In fact, some such leaders may be cold, anemic, or arrogant until they connect to their mission, and then their entire behavior becomes energized and their focus intense. Humble leaders know they have gifts. They just keep them in perspective, as they also do their lifestyle. Humble leaders enjoy the pleasures of life; in fact, they appreciate them rather than take them for granted. Humble leaders have powerful egos, meaning appropriate self-esteem as opposed to an overinflated self-opinion. They are demanding, but driving their demands is a capacity for caring and a desire to help others excel, rather than a desire for personal domination. History comes alive with such examples. Jesus challenged religious orthodoxy by associating with the rabble and teaching universal love. Muhammad rejected ethnic and class distinctions and sought better treatment for slaves, orphans, women, and the poor. Martin Luther challenged the excesses and indulgences of the religious establishment. Gandhi used civil disobedience to oust the British from India. Mother Teresa scolded world leaders face to face to do more for the deprived. These were people with a profound sense of self-worth, and their actions changed the lives of hundreds of millions of people. World War II provides a more macho example of humbling your way to victory. Americas finest general in the European campaign was George Patton, who manifested superior battle strategy, unyielding resolve, and ineptitude in matters personal and political that resulted in his sitting out D-Day as a decoy. Later unleashed, he led the Allies across Europe, including the rescue of the trapped American army at the Battle of the Bulge. Nonetheless, in the largest and bloodiest war in human history, Omar Bradley and Dwight Eisenhower, the relationship guys, won out over the classic alpha male. Roosevelt knew that they were the only men who had the trust to keep the unwieldy and often cranky alliance together. A similar point about hubris could be made regarding Douglas MacArthur, who won the war in the Pacific with limited means, oversaw the reconstruction of Japan, and led U.N. forces to early and brilliant victories in Korea until his ego overran his considerable abilities. It is telling that in Eisenhowers presidential campaigns the tagline was not I fear the general (as it would have been for Patton or MacArthur), but I like Ike. These various leaders demonstrate that true humility is a form of courage. It requires people to subsume their personal needs and pretensions into causes beyond themselves. Humble leaders are those leaders willing to give away power. They recognize that more overall good occurs if they spread power through the organization or community than if they hoard power for themselves. Charlie Horn, founder and chairman of ScriptSave, which offers programs that reduce the cost of prescriptions for companies and individuals, puts it best when he says he has a deep-seated belief that ScriptSave not be limited by the limitations of Charlie Horn. This belief carries over to current company CEO, Lori Bryant, and all members of the executive leadership team. That is why humble includes most of the people at the top of Fortunes list of wealthiest Americans. Warren Buffett, the investment guru, and the Walton clan of Wal-Mart carry the best of Americas heartland virtues. Sam Walton lived well, but not ostentatiously, because he saw more value in using corporate wealth to build stores or give customers better prices than by living a big showy lifestyle. He had nothing but contempt for overpaid CEOs who are really just looting from the top and arent watching out for anybody but themselves, because every dollar spent foolishly comes right out of our customers pockets. Bill Gates lives a bigger and showier lifestyle than Walton did, but like Walton, he achieved his wealth by focusing on the company, tying his future to Microsofts stock performance. He once wrote a memo telling employees not to spend money just because the company had it, and he flew coach until the volume of Microsoft employee travel caused the travel agency to automatically upgrade him. When his schedule necessitated a private jet, he paid personally rather than out of company funds. No stranger to magazine covers, he is astute enough to parlay his fame into meeting people he admires, such as South Africas Nelson Mandela. Far from being threatened by talent, Gates has spent many years wooing the industrys best and brightest to join his firm. Warm and fuzzy Microsoft is not, but no one can accuse the leadership of not being open to new people and to new ideas that stretch the firm and its abilities. Finally, a practical reason exists for CEOs to be more humble. Research by leadership consultant Marshall Goldsmith shows that business leaders have a high and largely unjustified regard for their abilities. His studies show that 85 percent of all business leaders rate themselves as being in the top 20 percenteven the leaders of failing companies! Goldsmiths explanation is that, as they move up through an organization, leaders superstitiously associate all their traits with their success, when in fact they are successful despite some of those traits. They become delusional, unable to hear any feedback that is not consistent with their own self-image. Perhaps this inflated sense of self helps explain the salary inflation of CEOs. In 1980, the CEOs earned 42 times the salary of the average production worker. In 1990, the ratio increased to 100 to 1. Now, the ratio at 367 top U.S. corporations is 431 times, and the spread continues to grow, according to the Institute for Policy Studies. Many studies show no relationship between CEO pay and company performance. Financial writer Michael Brush compiled a list of the five most egregious examples. The CEOs at Ciena, Sanmina-SCI, Sun Microsystems, Bristol-Myers Squibb, and Albertsons received compensation of tens of millions of dollars per year for four years while company stock values declined calamitously93, 78, 76, 48, and 39 percent over four years, respectively. With some of these companies, the delusional shell is so thick that the board of directors evidently cannot see through it, never mind the CEO. Humilityan openness to the way others perceive usis a major step in cracking the delusional shell and pointing corporate leaders and boards toward the shareholders the company is supposed to be in business for.