A Servant Leadership Success Story
RICO MARANTO
I met Ron Mittelstaedt, CEO and founder of Waste Connections, a number of years ago when I spoke to his CEO roundtable. Ron and I discovered we were kindred spirits in leadership philosophy. As a result, I got to do some work with Ron and his key managers as they progressed on their servant leadership journey. This essay, written by Rico Maranto, guardian of the culture and servant leadership evangelist for Waste Connections (I love that title), will show you how the influence of the top manager can make servant leadership come alive and create great human satisfaction and results. —KB
WASTE CONNECTIONS WAS founded in 1997 when founder and CEO Ron Mittelstaedt acquired a few solid waste companies in the Northwest. Within a few years, Waste Connections had become the fourth-largest solid waste company in the United States and a formidable player in the industry, significantly outperforming its competitors in the stock market.
Despite its apparent success, Waste Connections was losing good employees. Out of a staff of 3,000, between 1,200 and 1,400 employees were leaving the organization each year—a turnover rate of more than 40 percent. What’s more, 80 percent of those losses were voluntary. People were choosing to leave the company.
Mittelstaedt knew the company would not remain successful if it had to replace and retrain 40 percent of its staff every year. He was particularly concerned about the number of employees who were resigning—and he knew he needed to find a way to keep them.
To help management understand the reason for the high turnover, for a period of two years each person who left the company was asked to fill out an exit survey. More than two thousand survey respondents spelled out the problem: their leaders had failed them. Forty-five percent of those surveyed said they could not have a candid conversation with their manager. An equal number said they were not doing the work they had been hired to do.
Waste Connections’ executive leaders needed the managers to take a hard look at themselves. The managers needed to recognize they were the ones their people couldn’t talk to. They were the ones who hired people and gave them false expectations. If they wanted to increase employee retention, the leaders had to fix themselves.
Looking back, Mittelstaedt says, “We realized people expected more from the employee/employer relationship than simple management of day-to-day tasks. People needed to feel included, familial, cared for, and empowered. They wanted to know their voice mattered—that they were more than a number. We had to make a wholesale change. It was a matter of survival. The direction we were heading was not sustainable.”
During his search for a solution to this operational crisis, Mittelstaedt heard about a concept called servant leadership. He learned that it turns the traditional leadership pyramid upside down, placing leaders at the bottom so that they can serve the employees at the top. He learned it requires humility instead of ego. The servant leader’s role is to help others succeed—to serve, not be served. The servant leader seeks to understand what a win looks like for each employee and how to serve each person to help them get that win.
Mittelstaedt considered the premise that employees do not leave companies; they leave managers. He was told servant leadership could make better leaders, create a better place to work, and increase employee retention. But it seemed like soft leadership—so different from the traditional command and control, autocratic style prevalent in the waste management industry. What if employees took advantage of a servant leader’s selflessness? Could a company really achieve outstanding results if leaders simply cared about their people? Would servant leadership work?
Mittelstaedt was convinced it would. He introduced the concept to Waste Connections senior leaders, saying, “We have a typical top-down leadership pyramid. It may have worked for us at first, but it’s not working now. Times have changed. People have changed. Therefore, we must change. Let’s turn this mindset upside down!”
In support of the initiative was Waste Connections CFO, Worthing Jackman, who stated at the time, “I’ll have a higher degree of confidence in our ability to hit financial projections and commitments made by our managers if servant leadership gets embedded in our culture. We’ll actually be running the business, rather than the business running us.”
Mittelstaedt introduced servant leadership at the 2005 annual managers’ meeting. He discussed the employee turnover problem, explained the long-term impact of high turnover on the organization, shared the results of the employee exit surveys, and set the expectation of change. He then defined servant leadership and invited all of the managers to become servant leaders.
Ken Blanchard was the keynote speaker at that meeting. Ken explained how servant leadership was not soft leadership—yes, it was about relationships, but it was also about results—both results and relationships.
Waste Connections is a decentralized organization. Field leaders are expected to be true entrepreneurs and are empowered to run their sites as if they own them. They are held accountable for results (safety, turnover, financial, etc.), but not for their management methods. Because of the decentralized structure at Waste Connections, corporate leaders rarely tell field leaders what to do or how to do it.
In the spirit of decentralization, Mittelstaedt said to the managers, “We hope you will become servant leaders. We won’t make you do it, but we believe you’ll get better results if you do. And you will be judged by your performance.”
Mittelstaedt knew servant leadership would be a monumental change in the organization’s culture. “It was like pushing a snowball uphill for two years,” he says. “There were a lot of dissenters because the concept was so foreign. People thought it wouldn’t work. They wanted to keep doing things the way we had always done them.”
President Steve Bouck says, “The managers were skeptical. They would say, ‘We’re running a lot of trucks and we’ve got a lot of work to do. If I tell an employee what to do, they’d just better do it.’ Helping managers adopt servant leadership required consistent, persistent communication and alignment of incentives.”
COO Darrell Chambliss adds, “Implementing servant leadership is hard. It requires continuous reinforcement. We still constantly talk about it and spend resources on it. Unless an organization is committed to doing that, servant leadership will become a dusty book on the shelf.”
Waste Connections did a number of things to change the culture and help managers embrace servant leadership. These were a few of the key initiatives:
• Introduce a vision, purpose, and values. “The introduction of our values and our vision of self-directed, empowered employees was a critical piece that helped shape the framework of our culture and leadership style,” says Bouck.
• Conduct servant leadership training. Initially, Mittelstaedt and senior leaders taught full-day servant leadership seminars for all managers. District manager training evolved from teaching how to manage a waste business to teaching how to be a servant leader—and from technical skills to soft skills.
After a period of time, Mittelstaedt hired a director of leadership development who developed and began teaching a series of seven servant leadership courses. The new director attended every meeting possible to discuss servant leadership, sent out weekly servant leadership emails to all managers, and talked about servant leadership at every opportunity.
Mittelstaedt says, “That took servant leadership to a whole new level. It gave servant leadership an identity in the company.”
• Distribute a servant leader newsletter. Managers who adopted servant leadership began to have successes. To inspire others, a newsletter was created as a medium to share success stories.
• Distribute a servant leadership survey. In 2007, a survey was distributed to all employees. The survey asked each employee to rate their supervisor on various servant leadership characteristics. The following year, a percentage of each manager’s bonus—for some, as much as 25 percent—was determined by survey results.
• Create a Servant Leader Playbook. At the 2007 annual managers’ meeting, Mittelstaedt announced that servant leadership is a lifestyle, not a program. To illustrate, he gave a diet analogy. He said, “There are thousands of diets out there. If you stick to one, you’ll lose weight. Many people lose weight but then gain it back and say, ‘I was on a diet but now I’m not.’ The people who keep the weight off start with a diet and it becomes a lifestyle. Healthy living becomes part of their DNA—who they are. We will give you the servant leadership diet. You need to decide if it will become your lifestyle.”
The “diet” Mittelstaedt suggested became known as the Servant Leader Playbook. The playbook translated the idea of servant leadership into actions any manager could take to become a better servant leader. This helped servant leadership gain even more traction in the company. Some of the plays in the playbook included:
• manage by walking around
• post the company’s vision, purpose, and values in your department
• meet with your team and discuss accountability for vision, purpose, and values
• reinforce the values (walk the talk)
• catch people doing something right
• allow time in every meeting for employees to give their manager a to-do list to hold the manager accountable
• coach every day.
• Create servant leadership awards. Each year, Waste Connections had recognized managers with awards like Manager of the Year or Most Improved EBITDA (earnings before interest, tax, depreciation, and amortization). But now the company wanted to recognize not only what the best managers did, but how they did what they did. So a Servant Leader of the Year award was created, recognizing the manager who best embodied servant leadership. It is the premier award—the “best picture” of the company’s Oscars.
• Get self-serving leaders off the bus. By 2008, servant leadership had gained momentum. About 90 percent of managers had adopted servant leadership and were achieving significant results. At that year’s annual managers’ meeting, Mittelstaedt made an announcement: servant leadership was no longer optional. It was the expected method of leadership throughout the company.
One of the company’s division vice presidents (DVPs) had been recognized two consecutive years at the annual managers’ meeting and seemed to build good relationships with his employees. He achieved impressive results and spoke like a servant leader when talking with senior leadership. Everyone thought he was a good servant leader—everyone but his employees. In their servant leader surveys, they described a very different manager—one who was egotistical and hypocritical.
When the DVP’s character came to light, Mittelstaedt and other executives had to make a crucial decision: Do we keep a manager who gets great results but is not a servant leader?
Mittelstaedt noted the manager had done very well managing the senior leaders’ perception of him. “But,” he said, “servant leadership isn’t about worrying up; it’s about worrying down. It’s not about what your boss thinks of you; it’s about what your people think of their boss.” Then he stated flatly: “If we have a cancer in our culture, we have to cut it out.”
They fired the DVP. Soon afterward, between fifteen and twenty other managers were either shared with the competition or demoted to an individual contributor position. This sent a clear message to everyone that servant leadership was not an option.
Sue Netherton, vice president of people training and development, explains, “We have to be willing to let people go who are not servant leaders, even if they get good results. Keeping them would be a reflection on our leadership—and would compromise our servant leadership culture.”
• Hire for character. Waste Connections also needed to elevate the employee candidate pool, so they changed their hiring practices. In the past, they had hired applicants with the desired competencies—skill and experience. They learned to hire less for competency and more for character—because, as Mittelstaedt would say, “You can’t train character.” Before they considered a candidate’s skill and experience, the recruiters asked questions to learn if a candidate’s personal values aligned with company values.
By the end of 2010, overall turnover had dropped from 40 percent to 17 percent. And of that, only 56 percent was voluntary, down from 80 percent. Waste Connections’ stock was outpacing all of their competitors as well as the S&P, and safety incident rates had dropped 40 percent.
Netherton describes the introduction of servant leadership to Waste Connections as “a defining moment that ultimately led to the success of the organization.”
“Servant leadership made Waste Connections a place where employees wanted to be instead of where they had to be,” says Bouck. “It was a better place to work, in a tough industry.”
Mittelstaedt says, “People hear we have a better company and a great culture, and it attracts better employees. We now find and keep the kind of employees we want to have.”
“Servant leadership defined the expectation of how we wanted the company run by those who run the company,” Chambliss says. “It taught supervisors it was okay to have friendly relationships with their employees. It taught us to communicate from the receiver’s point of view, not just the boss’s. It made us better members of our own families and better members of our communities.”
Mittelstaedt sums up the impact of servant leadership: “The whole idea of servant leadership is that it has a positive ripple effect. The way our leaders treat their employees becomes the employees’ vision of leadership. The employees then go out and coach little league teams, serve in their church or community, lead in their families, and leave an indelible servant leadership thumbprint. Their influence improves their families and communities and continues to ripple outward as others lead the way they have been led.”
In 2016, Waste Connections stock continued to outperform its competitors and the S&P. Safety incident rates were the lowest in the industry. Overall turnover continued to be low and voluntary turnover was lower than it had ever been.
In the summer of 2016, Waste Connections merged with a similar but slightly larger company in terms of employees. The two companies were in the same industry, used similar equipment, and had similar safety standards—but were achieving very different results. The other firm’s voluntary termination rate was 80 percent higher than that of Waste Connections, and their incident rate was four times higher. They had had thirty-one employee/third-party fatalities over the previous four years while Waste Connections had none. They were essentially in the same place Waste Connections had been ten years earlier.
If the companies were so similar, why such different results? A servant leader culture.
Dean DiValerio, an assistant regional vice president who joined Waste Connections in the merger, says, “As I look back at various waste companies I’ve worked for, I realize we all used the same trucks and got our employees from the same candidate pool. The true differentiator that has made Waste Connections so successful is servant leadership. It separates them from everyone else in the industry.”
After the merger, Waste Connections immediately introduced the incoming managers to servant leadership. More than forty classes were held for more than a thousand managers. The excitement about servant leadership was palpable.
Within nine months, their employee turnover had dropped 14 percentage points, their safety incidents had dropped more than 66 percent, and Waste Connections’ stock price had increased from $66 to $86 per share. Servant leadership gets results!
Mittelstaedt explains, “Servant leadership has become our DNA—the core of our company. It’s how we do things.”
As Waste Connections moves into the future, servant leadership will continue to be how they do what they do: foster real relationships as they achieve unparalleled results.
A learning and development professional with more than twenty-five years of experience, Rico Maranto’s passion is helping others embrace servant leadership so that they can become better servant leaders in their homes, communities, and workplaces. He holds an MS in organization leadership and HR management from Regis University.