Paul Holmes 01 Jul 2017 // 3:43PM GMT
ASPEN—Bob Chapman’s business education was relatively conventional: an MBA from the University of Michigan, followed by a stint at what was then Price-Waterhouse. None of it prepared him for the mantle of leadership he assumed at Barry-Wehmiller—a 90-year-old bottle washing business with $20 million in revenue and a troubled financial position—in 1975, following the death of his father from a sudden heart attack.
“I was a very traditional businessman with a very traditional education,” Chapman told a packed room at the Aspen Ideas Festival last week. He traces the roots of the management approach he learned to the industrial revolution. “The model of business that emerged was never about human dignity; it was about wealth accumulation,” he said. “Business schools studied successful companies, and they defined success monetarily.”
In management classes, he said, the implicit message was that “management is the manipulation of people for my success. People are defined a line on a balance sheet, or by their functions: that’s a receptionist, that’s an engineer. And success is defined as the accumulation of money, power and position, not by living lives of meaning and purpose. I was never taught that my job was to inspire people, never taught to care about the people whose lives are entrusted to us as managers.”
But at the same time that he was struggling to turn Barry-Wehmiller around, he was also raising—with his wife Cynthia—six children, a task he took so seriously that he attended parenting classes. “I was trying to be a responsible steward to those kids,” he said. “And what I found was, what I learned in business school about management was wrong, and what I learned about parenting, about stewardship, was extremely powerful.”
Describing the journey that led him to develop a focus on leadership, rather than management, he described “three revelations that converted me from a traditional businessman.”
The first revelation came when Barry-Wehmiller acquired a $55 million company that manufactured the machines that make the bags that pack potato chips. It was during March Madness—America’s annual college basketball tournament—and Chapman was visiting the plant for the first time, observing workers discuss basketball with great enthusiasm. “But the closer it got to 8 o’clock, you could just see all the fun go out of their bodies,” he recalled. “and I began to ask myself, ‘why can’t work be fun.’”
He started to change the culture of the company, coming up with games employees could play to make work more fun, and noticed a profound change: “When people had fun, they performed better.”
The second revelation came when Chapman and his wife were in church, listening to an inspirational sermon from their Episcopalian preacher. “It occurred to me that he only has use for one hour each week. We have people in our care for 40 hours a week. And I realized, we could be 40 times as powerful if we simply understood the impact we could make on the lives of people we have in our care for those 40 hours.”
In the years since, this is something he has given more thought to, and his conclusions are profound.
“Organizations in this country are the direct cause of the healthcare crisis. The biggest cause of chronic illness in this country is stress, and the biggest cause of stress is work.” He cites research from the Mayo Clinic showing that a person’s immediate supervisor at work has more impact on health than the same individual’s primary care physician. “How many people in leadership people think about that? I was never taught that. I was never made aware of that.”
The third revelation came in Aspen, when Chapman and his wife were attending the wedding of a friend’s daughter. They watched the father walking his daughter down the aisle, and they say how proud he was. “I sat there and I realized all 12,000 of our people are someone’s precious child. Everyone is someone’s precious child, and you should treat them accordingly.”
The transformative effect of turning these revelations into practice at Barry-Wehmiller was profound. But the true test of Chapman’s principles did not come until 2008, when the economic crisis struck. Chapman knew he had to act when he received a call from a major customer canceling a massive order.
“Before we came up with these guiding principles, I would have done just what everybody else did,” he said. “I would have laid off a third of our people. But I went back to guiding principles, and I came up with the idea: what if everybody took a month off without pay so nobody had to lose their job.”
Simon Sinek, the author of Start with Why: How Great Leaders Inspire Everyone to Take Action and Leaders Eat Last: Why Some Teams Pull Together and Others Don’t has been an advocate of Chapman’s approach, and told the same story in separate session last week on “Leadership through Inspiration.”
“He said, ‘it is better we should all suffer a little than a few of us suffer a lot.’ What happens in well-led organizations is that when leadership demonstrates care for us as human beings, we start caring about each other more. So what happened at Barry-Wehmiller is that some offered to take five week of unpaid vacation so that others would only take three. People who could afford to take the hit sacrificed for people who couldn’t.”
Chapman himself marvels at the results: “We took one-twelfth of their salary away from them and their morale went up dramatically. They knew they were cared for and they knew their friends would not be hurt.”
The company also suspended its matching contributions to employees 401k retirement plans—as did many of its peers. But what made Barry-Wehmiller different was that in 2009 and 2010, as the business started to improve, it gave them back the contributions they had lost over the next three quarters.
Chapman has a simple explanation for that decision: “Who you are your worst of times is who you are.”
Today, Sinek says, the “productivity and intensity of this organization is unbelievable.” Barry-Wehmiller is now a $2.8 billion company, with 11,000 team members around the world. Its compounded growth rate since 1987, when Chapman began to implement this new approach, has been 18% and its share price has gone up 14% a year on average.
All of which reinforces Chapman’s insistence that: “It’s not people over profit, it’s people in harmony with profit.”
Since the financial crisis, the story of Bob Chapman and Barry-Wehmiller has been told many times, and Chapman has turned into an evangelist, spreading his gospel of what he calls “trulyhumanleadership.”
“We have had a leadership crisis for a time and it’s getting steadily worse,” says Sinek. “It happens because we misunderstand what leadership is. Too many of the standard business philosophies we run out business by are left over from ideas of the 80s and 90s. The idea of shareholder supremacy—putting the organization before people, or numbers before people—is left over from the 80s and 90s. The idea of using mass layoffs to balance the books did not exist in the US prior to the 1980s.
“The organizations that understand prioritizing human beings over numbers are the ones that outperform and out-innovate.”
Chapman agrees. “It’s about people, purpose and performance,” he says. “Right now everything is about performance. But we believe it starts with a fundamental responsibility. Are you going to look back at the things, products, machines you sold or the lives you touched?"
He points to research showing that 88% of American workers believe the organizations they work for do not care about them as individuals, that three out of four workers are disengaged from the work they do. He cites a Gallup survey, which found that the number one source of happiness for people around the world is not wealth or health—it’s a good job, “the very thing we deny 88% of people. Is it any wonder we get the political situation we have?”
“The world is suffering from leadership malpractice,” Chapman says. “It’s not just business. It’s non-profits. It’s schools: our teachers are disengaged, the people who are teaching our kids are disengaged. A shift from management to leadership could be the most powerful force for good in the world, if people embrace the privilege of leadership.”
He tells stories from his own experience that demonstrate the power of his approach: the workers at a company in France—famous for its worker protection laws—who told him, “we’ve been waiting for you to buy this company for 30 years”; the employees who are nominated by their peers for “goodness” whose neighbors tell them, “I wish I worked for a company like that”; the workers in Green Bay, Wis., who told him that being asked what they thought about decisions at their plant sent them home happier and saved their marriages.
“When we send 88% of all people home not feeling good it affects the quality of their marriage and their children are subject to parents who treat each other the way they have been treated all day,” Chapman says. “We send people home broken and their children have not seen the kinds of marriages they can emulate in this world.”
He talks about the critical importance of listening as a leadership skill.
“Listening is a critical leadership skill and the most powerful act of caring,” Chapman says, discussing the creation of the leadership university he created within Barry-Wehmiller. “We has to teach people to listen. We teach empathetic listening. When you care for someone you go listen to them with empathy. We had people tell us it changed their lives, not just at work but in their relationships with spouses and children.”
Sinek, meanwhile, focuses on the courage it takes to adopt Chapman’s approach to management.
“What we see in politics is same thing as business,” says Sinek. “They prioritize the short term over the long term. What’s good for the organization has been prioritized over what’s good for the community at large. In politics, people prioritize reelection over doing something great.”
He cited a conversation in which he told a politician, “I know people in uniform who have risked their lives to do the right thing. You won’t even sacrifice your job to do the right thing.” Leaders in any realm, he said, need to ask themselves, “What am I willing to die for. What am I willing to lose for? What am I willing to be humiliated for?
“Leadership is not about rank, it’s about responsibility. Leaders are not leaders because they are in charge, they are leaders because they are the ones who are willing to go first, to take the risk. It’s about courage. And courage is not some deep internal fortitude. It’s an external thing.
“When you ask people in the military why they do things that are courageous, they all give the same answer: because they would have done it for me. When we believe someone has our backs, we are able to do extraordinary things, but without those relationships it is hard to muster courage. All of this goes back to relationships. When we foster those relationships, that’s what gives us the courage to do the things we have to do.
“In the military, we give medals to people who sacrifice themselves. In business, we give bonuses to people who sacrifice others.”
Sinek is convinced that Chapman’s way of doing business could and should be adopted by others. “The science is on our side,” he says. “We are social animals; we respond to the environment we are in. If leaders get the environment wrong, they get cynicism and self-interest and paranoia. We know this, but if we know this, why doesn’t everybody do it?
“The reason, I think, is that companies prefer intensity over consistency. They want to demonstrate x savings in x days and have that very easily measured, but it is hard to predict the time in which you will see the benefit from these strategies. People don’t know when they are going to see the fruits.”
But Chapman sees signs that others are listening. He and his wife have launched a non-profit organization to take this message beyond his own company and to teach empathetic leadership skills to others. Organizations from American Airlines under CEO Doug Parker to the NFL’s San Francisco 49ers have asked Chapman to share the secret of his success.
And Chapman says social psychologist, author, and Harvard Business School associate profession Amy Cuddy visited Barry-Wehmiller and told him, “I thought companies like this only existed in my head.” Now Chapman, Harvard, and management consultancy McKinsey are coming together in the hope of turning Chapman’s approach to leadership into a movement.
Are America’s corporations ready?
Photo credit: Aspen Institute