Virtuous Leadership Program: a conversation with Bob Chapman, Chairman and CEO of Barry-Wehmiller

That's a good place to start because I think if we all embrace the principles of truly human leadership, we could begin to heal the poverty of dignity in the world. And business could not be just a force for economic value creation, but dramatic human value creation. And business, because we have people in our care for 40 hours a week, and the way we treat them impacts them dramatically. So, I thought your questions were very good and look forward to the dialogue.

Thank you. Thank you. Thank you.

The question I want to remind people, my background is an undergraduate degree in accounting, an MBA from Michigan, University of Michigan, and then I went to Price Waterhouse for a couple of years in public accounting, and then joined this struggling company my dad had bought into in 1969, six years before he passed away. So, to some extent, I want you to understand the background, because I saw my job from my education and from then entering the business world as organic growth, profitability, shareholder value. Okay, and I took what I had learned and began building a company with dramatic success from the internet and then dramatic decline, financial survival from October '83 to August of '84. And then marginal survival to '87 and then in 1987, sold off two-thirds of the company on the London Stock Exchange. And this journey of transformation was not a straight line. I had my mistakes. I had my successes, but that shaped the company we have today. I want to make sure you understand my mistakes. I learned more from my mistakes and challenges than I did my successes. And so, what it means to me again, it meant a lot to me to see the company start to grow in 1988 after the public offering. So, we spun off two-thirds on the London Stock Exchange. I was left again in 1988 with a $20 million company. And this is the point I want to make importantly. I sat down for nine months after that phenomenally successful public offering that amazed everybody. Harvard actually wrote a case study on it. But I said to myself, what did I learn? What did I learn from 1969 to 1987? So, as I look forward, I can capture my skills and play this game well. And so I had the vision of this company that was again $20 million in 1988 of getting to $100 million. But a key thing I was looking for was balance. Balance of products, markets, and services, because one of my challenges in my growth was concentration of customers and technology. And then once the market changes, we hurt people. So, I would say to you again, the first 30 years of my career were around transforming a historic business, giving it a future, starting to do acquisitions with no money, but the transformation started occurring in 1997, and what we were doing, we were doing well financially, but I had these series of revelations. And so my purpose went from creating economic value to creating human value and economic value in harmony. And if you could travel around the world with me and sit down from China to Serbia to India to Germany to France and hear what people say in our company of how it feels to be a part of a company that cares for them, you would all be in tears. The healing power of caring is profound. So, how do I feel? I would say to you I feel blessed that some higher power is using us to show the world the way he meant it to be where we create human and economic value in harmony, and we send people home each night knowing that who they are and what they do matters, and that puts a sense of joy in your heart that you cannot monetize. There's no amount of financial success that can compare to human dignity, a chance to change the world. We all know we live in a world that we're concerned with the conflict, the divisions. We could be, all of you on this call, we could be the source of healing in the world if we could embrace truly human leadership and send people home feeling valued. And so it is a profound sense of joy, and I would say to you, how do I feel? The peak of how I feel was captured when a Harvard professor, Derek Van Bever, had invited me to speak to his class on faith and leadership. He's a Harvard Divinity professor or Harvard MBA professor. Unbelievably talented and profound professor. And we went to talk about this class along the Charles River on the campus of Harvard. We chatted for about an hour and a half. As we walked back to the Charles Hotel, he looked at me in the eye and he said, 'Bob, you are a true modern-day prophet in the world.' I mean, from my background, I had to look up what a prophet is. And a prophet in this case is not a P&L statement. It is somebody who speaks the word of God. Can you imagine a compliment, unsolicited compliment, more powerful than you speak the word of God? Because that's the way I feel. There's no way from the background I explained to you that it makes sense that I'm on a journey we're going to talk about. So, it is a profound feeling of joy. It gives me hope that we can heal the brokenness of the world. And in the time we have on this earth, we can leave it better than we found it.

Yes. You started off with a good introduction. The words we use affect the behavior we see. So, in English, we have managers, bosses, supervisors. And I say, I took management classes, got a management degree, and I got a job in management. So, what did I think I was supposed to do? I was supposed to manage people. And people came to me with issues because of my position, I would listen to the issue and tell them what to do, and they would do it, and I felt good. And then again, I always say, name anybody in your life that wants to be managed. Anybody. Name anybody in your life that can be managed. You cannot manage people. So, the word 'management' in this journey of mine is a broken word. It means the manipulation of others for your success. And so, we use the word 'leadership,' which is the stewardship of the lives you have the privilege of leading. So, we adopted this company in the infrastructure industry, concrete equipment. And I was invited to give a keynote speech at a conference, and the CEOs of the largest companies in that field wanted a private meeting with me afterwards. So, I was in a room with about 20 or 30 CEOs for a subsequent discussion. All of a sudden, I said to them, 'Why don't you introduce yourself to me and tell me how many people are in your span of care?' It just came out of me. It wasn't a conscious thought. And you should have seen them try to say the word 'span of care.' Head count, numbers, employees, but when you say 'span of care,' it changes the way you think. Not report to, not supervisor of. So, words matter. And so, we refer to people as labor. We refer to people on our plants as working on the floor. You know, the language of business is severely broken and leads to behavior that reflects that. We wouldn't refer to our children or our family as labor, would we? So, I would say to you, we need to create a human language because it affects the way we think. I could watch those CEOs the first time I did that, pause and think about 'I have 50,000 people in my span of care.' Not 'I employ,' not 'they're not.' So, this is an interesting story. I was speaking at the Air Force, where Top Gun, where they teach the top pilots in the world. And I said, because I know nothing about the military, 'How do you teach young men and women to kill people?' And they said, 'We don't. We teach them to take out targets that made mistakes.' They try to dehumanize the fact that we're going to drop bombs that are going to kill people. In business, we do the same thing. We dehumanize. We have layoffs and rightsizing and downsizing. We use words because we're destroying lives. Studies show that when you lay somebody off or fire somebody, we use the word 'firing' every day. You know where 'firing' came from? The French firing squad. Do you really want, would you want your child or yourself fired? It's an inhuman way to refer to what I call hard love, when you face an issue and you need to address it. It's like kids. So anyway, language is incredibly important and in our journey we're up to almost 150 adoptions. Again, words matter and one day I just felt the word 'acquisition' sounds like conquering companies. It just didn't feel good. And I said, because every time we adopt a company in France or Serbia or Germany, we're opening a church in that community. So I said we adopt companies. We adopt people. And so 'adoption' just reflects a more positive attitude. We're up to like 150 adoptions now around the world. And one of the things I want to make sure you all understand is what we're talking about here. I gave like 80 speeches around the world last year. United Nations twice. Airbus in Europe. What I just said to you, nobody at Harvard debates what I just said to you. Nobody. It's just so far from what they were taught and what we practice. It's like walking outside and seeing the moon. Yep, I see the moon, but I don't know how to get there. So going from management to leadership is a journey that nobody debates. They just have no idea how to go on that journey. And that's what we're trying to take all of you on, that journey that is incredibly healing. It will fill your heart with joy beyond your imagination.

I would say most companies don't understand because it's so far outside the box they can't embrace it. But remember, as you started, a young man asked me about 22 years ago my greatest fear, and I said, and I had seen our church, we had a vibrant church. It fell apart when our rector left. I thought, if a church can fall apart just because the rector moves on to another church, what about our company? And I've seen this happen in many companies. Great leader, the company seems to be doing well, and the leader retires, and the company falls apart. And so, that fear, because again, I'm an eternal optimist, and so fear is not a word I even can spell, but he surfaced it. And so I said, 'Okay, what are we going to do? We've now surfaced the fear. We need to create disciples, and I hope all of you will join us to become a disciple.' How do religions survive over centuries? They articulate their beliefs, which we have in the guiding principles of leadership, and they have disciples who tell stories that bring those beliefs to life to allow us to live those and carry them forward for centuries. So, we started a university, which gets to your point. So, I sat down with the team and said, 'Okay, if we can't send our people back to a university to learn to care, to go from management to leadership, we're going to have to start our own university.' And this is within 24 hours, just this thought. And this relatively young team I had said, 'Well, what are we going to teach?' And I said, 'I don't know. What we need to teach people is how to live our guiding principles of leadership.' And so the team came up with three profound classes. And the first class is empathetic listening. And when they told me, 'Okay, Bob, we're going to design a three-day class on empathetic listening,' and I said, 'That's ridiculous. Why on earth do you... I know how to listen. You all know how to listen, right? You're listening to me right now.' Well, we had a very strong individual named David Vandermolen who said, 'Nope, we are going to teach it.' I said, 'Okay, that seems stupid to me to start a university and teach people to listen.' Second class is recognition and celebration. When Cynthia and I were raising six kids, and I'm sure some of you have kids, we wanted to be good parents, and we went to classes. And one of the things we learned, if you don't compliment your kids five times more than you suggest things they could do better, it is difficult for them to deal with it. Guess what? Adults are exactly the same way. I hear all the time in companies before we embraced this leadership, 'I got 10 things right and I never heard a word. I got one thing wrong and I got chewed out.' That is the culture in most companies. So we said, 'We are going to teach people how to look for the goodness in people and pause and say thank you in thoughtful ways.' Believe it or not, I told you about the listening, there is a skill to listening. It is not with your ears, it's with your soul. Your ears are just the channel through which it gets to your soul. But recognition and celebration is equally, there's a skill. It's called feelings, behavior, and impact. And if you saw our recognition event and the tears that come out of people's eyes, it's not just 'good job,' you know, it's not five years of service, here's a watch. Quite often the individuals' families are there. We do it in front of others. And so we have this cadence, this culture of looking for the goodness. Because we have people in our care for 40 hours a week and we want them to come feeling the goodness of others, and themselves. It's profound. And the third is called culture of service. Seizing the opportunity to serve others. I always thought it was about me and my success. But serving others says, I want to do my job well for others, for our customers, for my team members, because if I do my job well, they have a better future. So moving from a me-centric world, which we have, to a we-centric world is a journey and a class. Those three classes were eclectically created. We start teaching. And again, I told you that the listening class I thought was ridiculous. So I was in Minneapolis a few months later and a young lady, probably 30-ish, came up to me and said, 'Mr. Chapman, I just took your university class on listening.' I said, 'Great. What was it like?' I had no idea. And she said, 'It changed my life.' I said, 'We taught a class at work that changed your life?' She said, 'Yes, I now know how to raise my two-year-old daughter.' And she went through the specifics of how she had learned to listen to her daughter and deal with her daughter, which was profound. So, my heart exploded at that moment and I began traveling around the world. So, these three unique classes: listening to validate the worth of others, not to debate or judge; recognizing the goodness of others with the skills of recognition, it's a skill; and then culture of service, seizing the opportunity to serve others. Those three unique classes were what our team came up with as a way of taking people from management to leadership. That journey, that journey to the moon. The amazing thing that I want to make sure you understand, we were just trying it, it was all about the company internal, we were just trying to make sure we created disciples that would carry this forward. 95% of the feedback we got from our team members who took these classes, 95% was how it affected their marriage and their relationship with their children. Until that moment, it never occurred to me that the way I would run Barry-Wehmiller would impact people's marriages other than the compensation and the benefits, or their children. But this is around the world. This is not an American issue. From Southern Italy to Hamburg, Germany to everywhere in the world, because what we've learned to do is teach human skills. And it affects every part. And remember one of my big lessons I want to make sure you capture, the way you see people impacts the way you treat people. The lens through which you see people. If you see people as labor, as employees, you will treat them. You might be nice, but you will treat them that way. But when you see them as the revelation I had at the wedding, and you see them as somebody's precious child, knowing that the way you treat them will affect their health and the way they go and treat their spouse and kids, it creates a profound sense of responsibility as a leader. So, again, those three human skills we teach. And of course now we're saying, why do we need to teach these to adults? Why don't people have these skills? Because our education system is around academic skills to get a job to make money. And we are working, and we have pilots, elementary schools, and universities working with us now to bring these human skills into the journey of stewardship we have of students, so we don't have to fix adults anymore.

It's a distant and peripheral subject. In fact, it's gotten worse. The intensity in a competitive world to make money and create shareholder value, I would say in my 50-year career, it's gotten worse. And I've had for 50 years a spectacular outside board. I'm just blessed with some amazing board members who I admire and they loved our company. But when we discuss culture, it's a little bit like shifting to Chinese. They like it if... and it's nice, but how's your share price? How's your... Because the language of boards is governance and value creation. They have never been on a board that talked about culture or doing what we're doing. So, they like it. They don't really bring it up because it's kind of like I can't ask you a question in Chinese because I don't speak that language. So, again, I have a spectacular board, a diverse board, but this is the language that they don't speak. So, again, I'll give you an example. I was giving a speech at a major church in Dallas on the campus of SMU, a major university, as a favor to this executive. And a gentleman came up to me after the speech and said, 'Mr. Chairman, I'm Doug Parker, chairman of American Airlines.' He's chairman and CEO of American Airlines. He said, 'Bob, I thought my job was to build the world's biggest airline, which I did, until I just heard you speak. It never occurred to me to care for the 130,000 people of American Airlines.' This is a man of great values, incredible. But it was always about share price, market growth, etc. It was never about the 130,000. And he said, 'You have given me a whole new purpose in life.' And they began bringing our team members in to help them learn to care for their team members. And then he said, which is to your point, 'How should I handle my board?' And I said, 'Doug, very carefully, because they're not going to understand this. You've got to be extremely thoughtful in how you bring them along.' Eventually the board decided it was a strategic competitive advantage. They had to find some term they could describe this as, 'Well, it'll give us a competitive advantage because if we treat people nice, they'll treat our customers nice.' So, again, incredible gentleman. From all terms, incredibly successful, world's largest airline. In a church. Never occurred to him to care for the 130,000 people of American Airlines. That's the world we live in. I have never yet seen a board that embraces this, because it's a foreign language. This is not the language. When I give you a more recent example, I think it was Microsoft announced a couple years ago they're going to let 10,000 people go. 10,000 people, and it caught my attention. I looked it up on the internet and they have 200,000 people. So, I called a McKinsey partner that I know. I said, 'Is it required by law that Microsoft announce that they're going to hurt 10,000 people?' He said, 'Nope.' So, we had a long discussion. We agreed that most likely investment advisors, every public board has a group of investment advisors to give them guidance on how the market sees them so they can use that information. They were advised that there's a window of opportunity here in the market, because Intel was selling a lot of people, in the tech sector, letting people go. Give me about 10,000 people. You've got 200,000, you can give me 10,000 people, and we'll announce to the world that we're going to let them go and you'll see your share price go up. Now, the board not wanting to get sued, not wanting an activist investor, said... Do you think that board talked about the impact on those men and women, 10,000 people? Are they going to walk up to them and say, 'Sorry. I know we invited you to this company. I know you just bought a home. I know you're just about to have a baby, but you'll find another job and here's your severance'? It's inhuman the way we do that. That board, I guarantee you, did not discuss the impact on those 10,000 people. The psychological impact, because studies show it is a devastating blow to people, but we dehumanize it. 'Well, you've got to right-size, downsize, everybody's doing it.' Did they talk about the impact on the 190,000 that are still there? I guarantee they did not. This was economic advice. Take advantage of it and guess what the public did. The share price went up. It rewarded the board and the company for hurting 10,000 people. This is a term that I want you to remember. We learned in the last 10 years a term called Business Excellence Staffing Model, BESSM. It basically says, why don't you let natural attrition take you to a place of greater efficiency. So, Microsoft could have said, 'Let's use natural attrition. When Mary or Joe retire, let's brainstorm how to redesign the work and move towards an organizational structure that would be competitive and appropriate for our stock price, and natural attrition.' I know Bank of America went from 300,000 to 200,000 people and the chairman told me they did that with more or less without any layoffs. They did it with natural attrition. So using natural attrition, you don't ever have to go on a diet if you never gained weight. You don't need to have a layoff if you use natural attrition to always challenge. You're not dumping the work on somebody else. That is a powerful tool to never have to... When we have to do a layoff or rightsizing, that is our fault, our mistake. Not the people who are there. So we're hurting people. So in America right now there's a lot of layoffs going on as people struggle with hitting financial goals with inflation and competitive challenges. And we use people to make numbers work.

Hey Angela, can I... I want to capture, after all your thoughtful notes, I spent two hours writing comments. I want to now to just read for all of you just about eight things I wrote down really quickly so we get it on the record, because I want to leave you with these thoughts. Number one is the way we lead our businesses impacts how those in our care go home and treat their families. The way we lead impacts the way people live. That is a profound learning I want you to have. And it's about people, purpose, and performance. It starts with our profound responsibility to the people in our organization around a purpose that inspires them, and then we've got to create value because if we don't create value, we are going to lose the confidence of our investors, and that causes us to hurt people. And the way we see people impacts the way we treat people. So, the lens, don't see people as functions, see them as somebody's precious child. And you cannot be a good steward of the people in your care unless you have a robust business model. It is not about getting the right people on the bus, it's about building a safe bus, which is your business model, and then having leaders who know how to drive that bus safely and know where they're going. And then everybody that gets on the bus is going to be in care. So, a profound responsibility of leadership is your business model so that you don't hurt the people. And so, again, what we've learned in the past 10 years is that that is a key. We measure how many people we can redesign the work. So, it's keeping your company healthy. The bad news about COVID, it was highly contagious. The good news about caring, it's even more contagious than COVID. When you embrace these practices, and you genuinely care for the people you lead, you will release in those people the capacity to care. We had no idea. But that is what we've learned. It releases their capacity to care. And it's contagious. And again, what you will experience... I was just up in our northern Wisconsin operation with Simon Sinek, and we captured video, we interviewed people. The stories, the healing power of leadership, the impact on future generations. The way you lead each of your companies is impacting marriages, children. We say, 'What's wrong with kids today?' I say, 'Where did they come from?' They came from our families where most likely family members came home from a job where they felt used with no dignity, and they didn't treat their spouse or their kids the way they should because they've been abused for 40 hours a week. And again, I interview people all over the world who joined us about their previous experience, and it is horrible. Because it's about numbers. We had an industrial revolution which was about economic value creation. We need a human revolution in harmony where we show that we care for people. All of you on this call, we are the most powerful force to transform the world that is clearly broken if we simply see the people in our care as somebody's precious child. We create a business model where they're safe. We validate their worth with these skills, and we could heal the brokenness we're all feeling and seeing in the world.

Yeah. Yeah. As you use 'adoption' and this orphanage, right?

I speak to CEOs all over the world—in business, hospitals, nonprofits, the military. We have the same issue everywhere. These are not bad people. They were taught and rewarded for achieving results, not for caring. We created a constitution of our culture called the Guiding Principles of Leadership, where the overriding theme is we measure success by the way we touch the lives of people. I would say to any organization considering this: look at my animated TED Talk, read the new book, and discuss whether you want to go on this journey. Do we believe this is the right thing to do for the people we have the privilege of leading? Then we can't ask people to do it—we've got to start teaching them the skills. I preach every day this North Star that guides us. We're on a journey to show that business could be a force for good if we know how to care for our people. The CEO Roundtable came out with a statement that we need to think about more than just shareholders. I know some of these gentlemen—they're wonderful family men, Christians. They just have no idea how to care when it comes to work, because you're not rewarded for that. You've got to believe in your heart this is the way to go. Our share price has gone up 12% compounded a year for 25 years. We've outperformed the best. Our business model is the engine, and our culture is the premium fuel that allows that engine to perform. If you have a flawed business model and try to do this and hurt people, it's going to compromise things. The foundation is: are our people safe in this business model? If so, how can we bring this premium fuel? You can't believe the talent that wants to join our company. People from major corporations say they're fed up with the quarterly focus, the inhumanity. Our adoptions are being dramatically impacted by our culture. You can't just say to a CEO, 'Do that.' Caring is a language you can learn, and we do that through the Leadership Institute. We took American Airlines, our food stores. We're in substantial dialogue with Unilever. The beauty of what I've shared is not an academic theory—it's what we're actually doing around the world in service and manufacturing businesses.

Yes.

And what age did you say?

A 40-year-old, okay. You ready for this? Write your eulogy. What do you want people to say when you leave this earth about the life you've lived? Sit down and write your eulogy. 99% of the people I talk to live life as a series of events. Very few people I meet live life with intention. Most people live life as a series of events that take them places. Once you write your eulogy, go make it true. How on earth do you know what to do with your life if you don't know where you're going? Live life with intention. My eulogy is that I touched as many lives as I could positively in the world, in a way that will live well beyond any of our times and will begin to heal this poverty of dignity and change the way we treat each other at work, at home, in our communities.

You said the word—you couldn't even say it without smiling, because that is what you need to say: span of care.

We're in the manufacturing business, but we are now working with university hospitals because we're trying to bring care to caregivers. In our medical society, doctors and nurses have high burnout rates because they don't feel cared for. We are trying to bring these skills into the medical field so the caregivers themselves feel cared for. We call it 'loved ones caring for loved ones.' Aren't the doctors and nurses just as important as the patient? Who is caring for them? Because the leaders of our hospitals honestly don't know how to care. It's worse than business. We have kindergarten through 12th-grade schools trying to bring this from age five to eighteen. Everybody loves it. We're working with universities now to change business education. You can't ask people to care—you have to teach them how to care.