Under New Management

Humility and Purpose Are a Growth Industry in Leadership

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David Bunker


In a world where everything from razor blades to music is sold as a service, customer-centric business is having a moment. Today, every company depends on service delivery. That’s one reason why there’s a spotlight shining brightly on the management theory of “servant leadership.” 

Retail companies from The Ritz-Carlton hotel chain to Nordstrom offer some of the best examples. The individual legends of these two firms go back decades, built on equipping and empowering workers to handle just about any customer request. Proponents say this philosophy will transform the American workplace during its generational change.

“The younger generation in the workforce is going to force this shift more rapidly because they are looking for purpose, they are looking for the why,” says Patricia Falotico, a former IBM executive and CEO of the Greenleaf Center for Servant Leadership. 

This approach may seem novel to managers who weren’t around in the 1970s, when the credo of servant leadership first gained attention. Through the years, however, servant leadership has taken several names and been rediscovered by new generations of executives. Iterations include “Leading from below,” “Humble leadership” and “Purpose-led.”

Servant leadership appeals beyond the interests of those workers who share a mission with the firm. It can also extend to employee ownership and participation at a strategic level when lines of communication are opened from the frontlines to the C-suite. 

The idea of servant leadership is often demonstrated by taking the corporate organizational chart and flipping it into an inverted pyramid. Frontline employees who serve customers are at the top of the pyramid and leaders from the executive team at the bottom. The company’s CEO is at the base, supporting everyone else.

EMPLOYEE ENGAGEMENT

Management at Ritz-Carlton hotels has been recognized as among the best in servant leadership. The company attributes its success to empowering and engaging its workforce. It has one of the lowest employee turnover rates in all of hospitality at 18%, compared to 158% industrywide for frontline workers, 136% for supervisors and 129% for managers. 

The company correlates employee engagement to customer engagement. They hire only one out of every twenty applicants and screen all employees. Not surprisingly, employee engagement leads to greater customer engagement. This equates to higher profits. 

One Ritz-Carlton customer told Gallup Business Journal a number of years ago how she arrived with a headache after long flight delays. Asked how her day had been, she replied that she was wiped out. The front desk agent offered to draw a bath for her or arrange for a massage, but these suggestions were too overwhelming. She just wanted to rest or sleep. So, he brought her a scented candle. That small effort created a lasting and emotional connection. 

The hotel credits its employee engagement metric for creating and sustaining staff members who are tuned in to the customer experience and can come up with a meaningful response in the moment.

All Ritz-Carlton employees are permitted to spend as much as $2,000 to improve the experience of any guest. Its employees go through a two-day orientation and training program. They are certified after 21 days and have to be recertified annually. The company is ranked by Training magazine as having the best employee training program in the US.

Great service often means a personal response. Customers appreciate exceptional service, and often that means going beyond brand representation to being unique or caring. 

DISMANTLING COMMAND-AND-CONTROL

A 1970 essay by Robert Greenleaf is credited with examining the preconceptions surrounding leadership, particularly the personality-driven leader who is assumed to have inherent skills or the idea that power-driven executives lead best. 

Following World War II, many companies employed a military model in which strong leaders ordered subordinates and dictated terms. Since then, some people have mistaken humble leadership as a weakness. When outcomes matter more than process, who gives an order is less important than the right task being executed correctly.

Prof. Robert Liden, who teaches management at the University of Illinois at Chicago, studies the history of leadership. He’s found connections in transformational leadership that have spurred organizational change. He says the concept of servant leaders promotes personal growth and the development of individuals. Examples come from around the world, regardless of variables such as age, national culture, industry or gender.

“Servant leadership is rising in terms of implementation in organizations and in research by academics,” he says. He adds that this leadership style has been shown to improve “teamwork, team performance, firm performance, trust in management and the size of applicant pools.”

CHANGING THE COMPANY, CHANGING THE VIEWPOINT

TDIndustries, a Texas-based equipment service company, has made Fortune magazine’s “100 Best Places to Work For” every year over the past two decades that the list has been published. 

TDIndustries founder Jack Lowe once read and distributed copies of Greenleaf ’s writings to colleagues and managers. Since 1972, the practices have been “woven into every part of our organization,” says Hattie Peterson, a company senior vice president. 

The leadership model is not just a management style. It helped the company weather an economic storm that competitors did not survive, says Peterson. 

“In the 1980s, the Texas banking industry nearly collapsed, and the financial crisis caused nine of the 10 largest banks to fail. Five of the six largest mechanical contractors in Texas were forced to shut down their businesses,” says Peterson, via an email interview with ThinkSet. “To avoid closing their doors, TDIndustries’ leaders knew they would have to take drastic measures.”

The most promising option was to terminate the company’s pension plan, which was overfunded by $1 million, and use the funds to keep the business afloat. The move was a leap of faith for employees and required a vote that approved it by an overwhelming margin. Today, the company offers 300 training courses to its staff and requires 32 hours of training for every partner—unusual in a construction industry known for worker turnover. 

In other mission-driven companies, improved team structure, better recruitment and referrals are among the fuels for growth, say supporters. Another difference is opportunities for workers to advance on the skills and career ladder. This is an especially crucial move in the face of automation and remote work.

A PricewaterhouseCoopers report entitled Workforce of the Future: The competing forces shaping 2030 urges business leaders to emphasize people skills and lifelong learning.

“Organizations can’t protect jobs that are made redundant by technology—but they do have a responsibility to their people. Protect people, not jobs. Nurture agility, adaptability and re-skilling,” it said.

CEOs of US-based companies with global impact are also recognizing the need to embrace some of these leadership tenets and stake out positions on issues affecting their customer’s community or interests outside the company. Recent examples include tweets by Apple CEO Tim Cook supporting protection for children of US immigrants known as “Dreamers,” and a public stand by Salesforce CEO Marc Benioff supporting rights of gay, lesbian and transgender citizens.

Thinking beyond the boardroom or the workplace is how Howard Schultz, executive chairman of Starbucks Corp., describes this style of leadership. In a speech to the London Business Forum, he explained that culture and profits were not enough, that to be a success in today’s world, “the company (has to) stand for something in addition to making money.” 

“In the 1980s, the Texas banking industry nearly collapsed, 

and the financial crisis caused nine of the 10 largest banks to fail. Five of the six largest mechanical contractors in Texas were forced to shut down their businesses,” says Peterson, via an email interview with ThinkSet. “To avoid closing their doors, TDIndustries’ leaders knew they would have to take drastic measures.”

The most promising option was to terminate the company’s pension plan, which was overfunded by $1 million, and use the funds to keep the business afloat. The move was a leap of faith for employees and required a vote that approved it by an overwhelming margin. Today, the company offers 300 training courses to its staff and requires 32 hours of training for every partner—unusual in a construction industry known for worker turnover. 

In other mission-driven companies, improved team structure, better recruitment and referrals are among the fuels for growth, say supporters. Another difference is opportunities for workers to advance on the skills and career ladder. This is an especially crucial move in the face of automation and remote work.

A PricewaterhouseCoopers report entitled Workforce of the Future: The competing forces shaping 2030 urges business leaders to emphasize people skills and lifelong learning.

“Organizations can’t protect jobs that are made redundant by technology—but they do have a responsibility to their people. Protect people, not jobs. Nurture agility, adaptability and re-skilling,” it said.

CEOs of US-based companies with global impact are also recognizing the need to embrace some of these leadership tenets and stake out positions on issues affecting their customer’s community or interests outside the company. Recent examples include tweets by Apple CEO Tim Cook supporting protection for children of US immigrants known as “Dreamers,” and a public stand by Salesforce CEO Marc Benioff supporting rights of gay, lesbian and transgender citizens.

Thinking beyond the boardroom or the workplace is how Howard Schultz, executive chairman of Starbucks Corp., describes this style of leadership. In a speech to the London Business Forum, he explained that culture and profits were not enough, that to be a success in today’s world, “the company (has to) stand for something in addition to making money.” 


David Bunker is a Northern California-based journalist who has written for Comstock's Magazine and Entrepreneur.com. He is a contributing editor to Tahoe Quarterly.

 
Through the years, servant leadership has taken on several names and been rediscovered by new generations of executives.
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