The Goldman Sachs Foundation recently invited me to share some thoughts about leadership with a group of Chinese university students who had been named Goldman Sachs Young Leaders. As I prepared my remarks, I thought about the bosses, coaches, teachers and other people who had most inspired me in my life. Did they have common personality traits that made them great leaders? I thought about billionaires like Sergey Brin and Larry Page, the founders of Google, and Steve Jobs of Apple. Can we learn from them? Are they good leaders?
What is good leadership? Is it about making stock prices grow, year after year, as Jack Welch engineered at General Electric? Is it about creating a vision and a five-year growth plan? Those are all important, but they are not what true leadership is.
True leadership is about bettering the lives of the people around you. That is a simple idea, but far too few people follow it. Too many executives get caught up in making money at any price.
When you make any business decision, about training or compensating employees or dealing with clients or anything else, consider how that decision will make the lives of the people around you better. Do so during both good times and bad times, and you will make better decisions.
Look at Arthur Sulzberger Jr., chairman of the New York Times Co. and one of the most powerful men in the world, and his chief executive officer, Janet Robinson, and you can see how this cardinal rule works. They failed to follow it, and that will hurt the New York Times franchise for decades.
Sulzberger's pay more than doubled to $6 million last year, while The New York Times' and Boston Globe's staffs took 5% and 5.9% pay cuts. Many were laid off. Sulzberger and Robinson--she got a 31.9% pay increase to $6.3 million--said the business was in dire straits and might have to close down if people didn't band together and make sacrifices together. Faced with such a dire scenario, the workers made concessions. A few months later the chairman and the CEO took home those millions more than the year before. How do you think that affected employee morale?
One of the reasons we're told Sulzberger and Robinson got those pay increases was because they had been able to reduce costs. Huh? What a foolish statement. Do their public relations flaks think we're morons? Basically the bosses cut salaries, claiming huge losses, and then took a big chunk of the savings for themselves. (Granted, Times legal filings state that the pay cuts were kept out of the calculations of savings that determined how big their bonuses would be.) Do you imagine New York Times workers will make concessions the next time there's an economic downturn? Why should they, if they expect much of the money they sacrifice to be taken by their leaders, who are already millionaires?
Sulzberger and Robinson should have taken larger pay cuts for themselves than the rank and file took, and they should have given any extra money to the people below them to make their lives better. I am a firm believer that the boss should always feel any cuts first and lead by example and pain. That is how you build a loyal team that will look out for the needs of the company and everyone in it.
Boston's Beth Israel Deaconess Medical Center is an organization that gets it, from the janitor all the way up to the CEO. In 2009 the hospital's 12 medical department chiefs took pay cuts of around $27,000 each to save 10 jobs. The CEO, Paul Levy, took a pay cut too, and for a period he contributed $1 dollar for every $10 in donations the hospital received. Most heartwarming, the whole organization voted to take pay cuts or forgo salary increases to save as many jobs as possible. They also decided that those who made the lowest salaries--housekeepers, food service workers and mailroom assistants--would be exempt from the pay freeze. The result? Instead of laying off 600 people as originally planned, the hospital had to cut only 70, and it built a sense of camaraderie and goodwill that will last for decades. Would you rather work at Beth Israel or at The New York Times?
Aside from compensation, the cardinal rule that you should make the lives of the people around you better can also be used to implement customer service strategies. In response to my call to send in stories of truly inspirational people (in my piece "Life Lessons From A Street Vendor"), I received a gem from a reader named Brian Napoli. He wrote to me about Donald Evans, the now retired owner of a gas station in Medina, N.Y. Brian worked for for Don Evans during high school and college vacations, and decades later he remembers him as a great leader. In the worst rainy and snowy weather, Don would brave the elements to clear headlights and windshields to make sure his customers drove off safely. He didn't have to do that, and he didn't charge for it. He did it because he cared.
Not only was it the right thing to do, it created loyalty to someone who had to charge a few pennies a gallon more than his big competitors who had economies of scale on their side. Customers knew that Don Evans cared. They knew he had to charge more, but they were willing to go to him. Don's way of being a businessman is the right way. It is the way of true leaders.
Arthur Sulzberger is undoubtedly richer and more powerful than Don Evans or the custodians at Beth Israel who voted to preserve others' jobs rather than make more money themselves, but I would rather my son looked to Don or those custodians for advice than to the powerful and rich Sulzberger.
Shaun Rein is the founder and managing director of the China Market Research Group, a strategic market intelligence firm. He writes for Forbes on leadership, marketing and China. Follow him on Twitter @shaunrein.
Disclosure: disc: none