Leaders Add Value by Serving Others
In a world where many political leaders enjoy their power and prestige and where CEOs of large corporations make astronomical incomes, work and live in luxury, and appear to be most concerned with what’s in it for them, Jim Sinegal is an oddity.
Sinegal is the cofounder and CEO of Costco, the fourth largest retailer in the United States and the ninth largest in the world. He doesn’t seem much interested in perks. He works in an unremarkable office comprised primarily of folding tables and chairs. If he invites someone to meet him at the corporate offices, he goes down to the lobby to meet his guest. He answers his own phone. And he takes a salary of only $350,000 a year, which puts him in the bottom 10 percent of CEOs of large corporations.
Sinegal’s path to corporate leadership wasn’t typical either. He didn’t attend an Ivy League school. He isn’t a lawyer or a CPA. As a teenager, he thought of becoming a doctor, but his high school grades were less than stellar. So he went off to community college and earned an associate’s degree. While he was attending San Diego State College (now University), he helped a friend unload mattresses at a new local retail store called Fed-Mart. That one day of work turned into a regular job. When he received a promotion, he discontinued his studies. He had found his career. In time, he had also found a mentor, Sol Price, Fed-Mart’s chairman. Under Price’s guidance, Sinegal rose to the post of executive vice president for merchandising. Sinegal later helped Price found Price Club and then went on to cofound Costco in 1983 with Jeffrey H. Brotman. The company’s growth was rapid. Costco purchased and merged with Price Club ten years later.
ADDING PROFITS BY ADDING VALUE
Retail experts give a lot of attention to Sinegal’s formula for success: offer a limited number of items, rely on high volume sales, keep costs as low as possible, and don’t spend money on advertising. But there is something that separates him from the competitors who employ similar strategies: the way he treats his employees. He believes in paying his employees well and offering them good benefit packages. Costco employees are paid an aver-age of 42 percent more than the company’s chief rival. And Costco employees pay a fraction of the national average for health care. Sinegal believes that if you pay people well, “You get good people and good productivity.”1 You also get employee loyalty. Costco has by far the lowest employee turnover rate in all of retailing.
But Sinegal’s leadership style of adding value doesn’t end with employee compensation. He goes out of his way to show Costco workers that he cares about them. He maintains an open-door policy with everyone. He wears an employee name tag, is on a first-name basis with everyone, and makes sure to visit every single Costco store at least once a year.
“No manager and no staff in any business feels very good if the boss is not interested enough to come and see them,” says Sinegal. And when he shows up, his people are always glad to seem him. “The employees know that I want to say hello to them, because I like them.”2
Sinegal once flew from Texas to the San Francisco area when he heard that a Costco executive was hospitalized for emergency surgery. It came as no surprise to the executive. It was consistent with the way Sinegal always leads.
LEADERSHIP LESSONS LEARNED EARLY
Sol Price, Sinegal’s one-time mentor, says, “Jim has done a very good job in balancing the interests of the shareholders, the employees, the customers, and the managers. Most companies tilt too much one way or another.” Many of the lessons Sinegal learned came from Price, who believed in treating people well and giving them credit. In a meeting at Fed-Mart, Sinegal noted that a manager was quick to take the credit and to place blame on others. But Price saw through him.
“To teach us all a lesson,” recalls Sinegal, “Sol used a weekly meeting to purposely raise hell about something that was wrong in one of the stores. I wondered why he did it. But when he saw that this manager let two of his employees take the blame, he fired him within a week.
“It’s improper for one person to take credit when it takes so many people to build a successful organization,” asserts Sinegal. “When you try to be top dog, you don’t create loyalty. If you can’t give credit (and take blame), you will drown in your inability to inspire.”3
The only real criticism of Sinegal comes from Wall Street. Analysts there believe that Sinegal is too kind and generous to his people. They would like to see him pay employees less and squeeze them more. But Sinegal wouldn’t think of it. He believes that if you treat the employees and customers right, profits will follow. “On Wall Street,” he observes, “they’re in the business of making money between now and next Thursday. I don’t say that with any bitterness, but we can’t take that view. We want to build a company that will still be here fifty and sixty years from now.”4
“It’s improper for one person to take credit when it takes so many people to build a successful organization.”
—JIM SINEGAL
Others outside the organization appreciate his approach to business. Nell Minow, an expert on corporate governance, remarked, “I would love to clone him. Of the 2,000 companies in our database, he has the single shortest CEO employment contract.” It’s less than a page long. “And [it’s] the only one which specifically says he can be—believe it or not—‘terminated for cause.’”5
When it comes down to it, Sinegal is more focused on adding value to people by serving them than on serving himself or making himself richer with an exorbitant salary. He lives by the Law of Addition. “I just think that if you’re going to try to run an organization that’s very cost-conscious, then you can’t have those disparities. Having an individual who is making 100 or 200 or 300 times more than the average person working on the floor is wrong.”6
Sinegal sums it up this way: “This is not altruistic. This is good business.” He could also say it’s good leadership!
DO MOTIVES MATTER?
Why should leaders lead? And when they do, what is their first responsibility? If you were to ask a lot of leaders, you might hear a variety of responses. You might hear that a leader’s job is to:
be in charge,
make the organization run smoothly,
make money for shareholders,
build a great company,
make us better than the competition, and
win.
Does a leader’s motive matter, or is it simply getting the job done that’s important? What’s the bottom line?
I didn’t give it much thought until the last ten years. I vividly remember teaching leadership to a group of government officials in a developing nation a few years ago and teaching that leaders add value by serving others. I could see that many of the audience members looked very uncomfortable as I talked about it. When I finished speaking and mentioned what I observed to one of my hosts, he said, “Yes, I’m sure they did look uncomfortable. What you have to realize is that probably more than half of those people killed someone to obtain their current position of power.” I’ve seen and heard a lot of things around the world, but I must admit I was shocked. In that moment, I realized that I could not take for granted why leaders lead and how they go about doing it.
DO THE MATH
Many people view leadership the same way they view success, hoping to go as far as they can, to climb the ladder, to achieve the highest position possible for their talent. But contrary to conventional thinking, I believe the bottom line in leadership isn’t how far we advance ourselves but how far we advance others. That is achieved by serving others and adding value to their lives.
The bottom line in leadership isn’t how far we advance ourselves but how far we advance others.
The interaction between every leader and follower is a relationship, and all relationships either add to or subtract from a person’s life. If you are a leader, then trust me, you are having either a positive or a negative impact on the people you lead. How can you tell? There is one critical question: Are you making things better for the people who follow you? That’s it. If you cannot answer with an unhesitant yes, and give some evidence that backs it up, then you may very well be a subtractor. Often subtractors don’t realize they are subtracting from others. I would say that 90 percent of all people who subtract from others do so unintentionally. They don’t recognize their negative impact on others. And when a leader is a subtractor and doesn’t change his ways, it’s only a matter of time before his impact on others goes from subtraction to division.
In contrast, 90 percent of all people who add value to others do so intentionally. Why do I say that? Because human beings are naturally selfish. I’m selfish. Being an adder requires me to get out of my comfort zone every day and think about adding value to others. But that’s what it takes to be a leader whom others want to follow. Do that long enough, and you not only add value to others—you begin to multiply it.
The people who make the greatest difference seem to understand this. If you think about some of the people who have won the Nobel Peace Prize, for example, Albert Schweitzer, Martin Luther King Jr., Mother Teresa, and Bishop Desmond Tutu, you see leaders who were less interested in their position and more interested in their positive impact on others. If you read their writings or, more important, study their lives, you notice that they wanted to make things better for others, to add value to people’s lives. They didn’t set out to receive the Nobel Prize; they desired to engage in noble service to their fellow human beings. A servant’s mind-set pervades their thinking. The 1952 prize winner, Albert Schweitzer, advised, “Seek always to do some good, somewhere. Every man has to seek in his own way to realize his true worth. You must give some time to your fellow man. For remember, you don’t live in a world all your own. Your brothers are here too.”
Adding value to others through service doesn’t just benefit the people being served. It allows the leaders to experience the following:
Fulfillment in leading others
Leadership with the right motives
The ability to perform significant acts as leaders
The development of a leadership team
An attitude of service on a team
The best place for a leader isn’t always the top position. It isn’t the most prominent or powerful place. It’s the place where he or she can serve the best and add the most value to other people.
Albert Einstein, who was awarded the Nobel Prize for physics in 1921, asserted, “Only a life lived in the service of others is worth living.” Great leadership means great service. How do leaders serve their people? Jim Sinegal pays good wages and treats employees with respect. Martin Luther King Jr. marched for civil rights. Mother Teresa cared for the sick and established places where others could do the same. The specifics depend on the vision, the type of work, and the organization. But the intention is always the same—to add value. When you add value to people, you lift them up, help them advance, make them a part of something bigger than themselves, and assist them in becoming who they were made to be. Often their leader is the only person able to help them to do those things.
ADDING VALUE, CHANGING LIVES
I have developed four guidelines to help me add value to others. Three of them are fundamental and can be used by anyone desiring to practice the Law of Addition. The fourth is based on my faith. If that might offend you or you don’t have interest in that area, then simply skip it.
1.WE ADD VALUE TO OTHERS WHEN WE . . .
TRULY VALUE OTHERS
Darryl Hartley-Leonard, who retired as chairman of the board of Hyatt Hotels Corporation and is currently chairman and chief executive officer of Production Group International, says, “When a person moves into a position of authority, he or she gives up the right to abuse people.” I believe that is true. But that is only the beginning of good leadership. Effective leaders go beyond not harming others, and they intention-ally help others. To do that, they must value people and demonstrate that they care in such a way that their followers know it.
“When a person moves into a position of authority, he or she gives up the right to abuse people.”
—DARRYL HARTLEY-LEONARD
Dan Reiland, who was my right-hand man for many years, is an excellent leader and values people highly. But when he first came to work for me, he didn’t show it. One day when he was new on the job, I was chatting with some people in the lobby, and Dan came in, briefcase in hand. Dan walked right past all of us without saying a word and went straight down the hall toward his office. I was astounded. How could a leader walk right by a group of people he worked with and not even say hello to them? I quickly excused myself from the conversation I was having and followed Dan to his office.
“Dan,” I asked after greeting him, “how could you walk right past everybody like that?”
“I’ve got a lot of work to do today,” Dan answered, “and really want to get started.”
“Dan,” I said, “you just walked past your work. Never forget that Leadership is about people.” Dan cared about people and wanted to serve them as a leader. He just didn’t show it.
I’m told that in American Sign Language, the sign for serving is to hold the hands out in front with the palms up and to move them back and forth between the signer and the signee. And really, that is a good metaphor for the attitude that servant leaders should possess: they should be open, trusting, caring, offering their help, and willing to be vulnerable. Leaders who add value by serving believe in their people before their people believe in them and serve others before they are served.
2. WE ADD VALUE TO OTHERS WHEN WE . . .
MAKE OURSELVES MORE VALUABLE TO OTHERS
The whole idea of adding value to other people depends on the idea that you have something of value to add. You can’t give what you do not possess. What do you have to give others? Can you teach skills? Can you give opportunities? Can you give insight and perspective gained through experience? None of these things comes without a price.
If you have skills, you gained them through study and practice. If you have opportunities to give, you acquired them through hard work. If you possess wisdom, you gained it by intentionally evaluating the experiences you’ve had. The more intentional you have been in growing personally, the more you have to offer. The more you continue to pursue personal growth, the more you will continue to have to offer.
3.WE ADD VALUE TO OTHERS WHEN WE . . .
KNOW AND RELATE TO WHAT OTHERS VALUE
Management consultant Nancy K. Austin says that once when she looked under the bed in her room at one of her favorite hotels, she was surprised to find a card. It said, “Yes, we clean under here too!” Austin said, “I don’t remember the lobby, or the number of chandeliers, or how many square feet of marble they cobbled together to make our underfoot experience pleasant.” What she remembered was that card. The housekeeping staff had anticipated what was important to her and had served her well.
We think of that as good customer service, and when we are clients or guests, we expect to receive it. But as leaders, we don’t automatically expect to give it. But it is a key to effective leadership. As leaders, how do we know and relate to what our people value? We listen.
Inexperienced leaders are quick to lead before knowing anything about the people they intend to lead. But mature leaders listen, learn, and then lead. They listen to their people’s stories. They find out about their hopes and dreams. They become acquainted with their aspirations. And they pay attention to their emotions. From those things, they learn about their people. They discover what is valuable to them. And then they lead based upon what they’ve learned. When they do that, everybody wins—the organization, the leader, and the followers.
Inexperienced leaders are quick to lead before knowing anything about the people they intend to lead. But mature leaders listen, learn, and then lead.
4.WE ADD VALUE TO OTHERS WHEN WE . . .
DO THINGS THAT GOD VALUES
I already mentioned that you may want to skip this final point, but for me it’s a non-negotiable. I believe that God desires us not only to treat people with respect, but also to actively reach out to them and serve them. Scripture provides many examples and descriptions of how we should conduct our-selves, but here is my favorite, captured by Eugene Peterson’s The Message : When he finally arrives, blazing in beauty and all his angels with him, the Son of Man will take his place on his glorious throne. Then all the nations will be arranged before him and he will sort the people out, much as a shepherd sorts out sheep and goats, putting sheep to his right and goats to his left.
Then the King will say to those on his right, “Enter, you who are blessed by my Father! Take what’s coming to you in this kingdom. It’s been ready for you since the world’s foundation. And here’s why:
I was hungry and you fed me,
I was thirsty and you gave me a drink,
I was homeless and you gave me a room,
I was shivering and you gave me clothes,
I was sick and you stopped to visit,
I was in prison and you came to me.”
Then those “sheep” are going to say, “Master, what are you talking about? When did we ever see you hungry and feed you, thirsty and give you a drink? And when did we ever see you sick or in prison and come to you?” Then the King will say, “I’m telling the solemn truth: Whenever you did one of these things to someone overlooked or ignored, that was me—you did it to me.”7
That standard for my conduct influences everything I do, not just including my leadership, but especially my leadership. Because the more power I have, the greater my impact on others—for better or worse. And I always want to be someone who adds value to others, not takes it away.
IT’S NOT JUST ABOUT THE CHICKEN
When I moved my companies and my family to Atlanta in 1997, it wasn’t long before I received a call from Dan Cathy, the president of Chick-fil-A, the privately held national restaurant chain. He had a question for me: “John, how can we help you and your organization?”
I was surprised. How often does a company that’s bigger and stronger than you come seemingly out of the blue and offer a hand to help? But that’s what Dan did. He brought together two hundred top businesspeople from the Atlanta area and hosted a lunch where he introduced me and offered me a chance to speak to them for forty minutes. It gave me instant credibility that it would have taken me years to earn—if indeed I could have earned it at all without his help. He added tremendous value to me and my organization.
What I discovered as I got to know Dan, Truett Cathy (his father and founder of Chick-fil-A), and their entire organization is that an attitude of service pervades everything they do. And for that reason, along with their dedication to excellence, I have to say that Chick-fil-A is one of the companies that I most greatly admire and respect.
In 2005 when I hosted Exchange, a weekend leadership growth experience for executives, I took the participants to Chick-fil-A’s headquarters south of Atlanta. Everyone got to see the company’s operations, meet Truett Cathy, and hear Dan Cathy speak about the organization. He shared many eye-opening comments that revealed their dedication to service and adding value to their employees and customers. For example, Dan was preparing that day to camp out with customers for the nineteenth time on the eve of a new restaurant opening. He said that he has gotten to know customers and their desires in a way he never could before he started that practice.
Dan also talked about the company’s desire to give “second-mile service.” Because Chick-fil-A is a privately held company and is much smaller than McDonald’s, KFC, and many of its other competitors, he believes the company will compete and win, not through strength, but through service. For that reason, the company is teaching etiquette to its employees, many of whom are teenagers. Dan joked, “There’s evidence that the words etiquette and fast food have never been mentioned in the same sentence before.”
But Dan’s approach to leadership became clear when he prepared to give every person at Exchange what he called a leadership relationship development tool. Dan said,
Now this is a nine-inch, 100 percent horsehair shoe brush. This is an industrial-strength shoe brush. It’s the best you can get from the Johnston and Murphy Shoe Company. I’m going to present all of these, one to each of you here. And, John, why don’t you come over here just for a moment. I made a commitment I’d never give one of these leadership relationship development tools to anybody without first showing you how to use it, so, John, step up here so they can see you here. And I’m going to challenge you to watch closely. This really has substance and real meaning when it’s practiced with people that you really know, that you really work with a lot. So if you’ll let me show you how this happens, I’ll tell you how it works.
Dan sat me down, kneeled at my feet, and began cleaning my shoes with the brush.
Now this works whether the person’s got tennis shoes, Nike, Reebok, it will work on any type of shoe, so don’t worry about what kind of shoes the per-son has on. You don’t say anything—that’s one of the real keys here. And you’re in no big hurry as you do this. Then [when you’re done] you give them a big hug.
At this point Dan stood up, gave me a big hug, and then turned to address the crowd once again:
I find that, in the right setting when you have enough time to do this and to really talk about this, this can have a powerful impact on people’s lives. I believe what this does is it “cleans out the closet” in our relationships with other people.8
Such a big part of good leadership is having no unresolved relational conflict with other people. Serving others who follow you really purifies your motives and helps you gain perspective. And it also brings to the surface any impure motives of followers. Anytime you can remove wrong agendas from a leadership relationship, you clear the way for fantastic achievement.
When Truett Cathy answered some questions at the end of our time with them, he quoted Ben Franklin as saying, “The handshake of the host affects the taste of the roast.” Another way to say it would be that the attitude of the leader affects the atmosphere of the office. If you desire to add value by serving others, you will become a better leader. And your people will achieve more, develop more loyalty, and have a better time getting things done than you ever thought possible. That is the power of the Law of Addition.
Applying
THE LAW OF ADDITION
To Your Life
1. Do you have a servant’s attitude when it comes to leadership? Don’t be too quick to say yes. Here’s how you can tell. In situations where you are required to serve others’ needs, how do you respond? Do you become impatient? Do you feel resentful? Do you believe that certain tasks are beneath your dignity or position? If you answer yes to any of those questions, then your attitude is not as good as it could be. Make it a practice to perform small acts of service for others without seeking credit or recognition for them. Continue until you no longer resent doing them.
2. What do the people closest to you value? Make a list of the most important people in your life—from home, work, church, hobbies, and so on. After making the list, write what each person values most. Then rate yourself on a scale of 1 (poorly) to 10 (excellently) on how well you relate to that person’s values. If you can’t articulate what someone values or you score lower than an 8 in relating to that person, spend more time with him or her to improve.
3. Make adding value part of your lifestyle. Begin with those closest to you. How could you add value to the people on your list related to what they value? Start doing it. Then do the same with all the people you lead. If there are only a few, add value individually. If you lead large numbers of people, you may have to think of ways to serve groups as well as individuals.