Welcome to another episode of the Trusted Advisor podcast and video series, powered by the Retail Solutions Providers Association. Our goal on the podcast is to accelerate the success of today's and tomorrow's leaders in the retail IT industry. I'm Jim Rody back with you again. Thank you so much for joining us. Now, frequent listeners and viewers of our podcast know that throughout 2024 we've talked with leaders from both within and outside the RSPA member community about their leadership journeys and what they've learned along the way. Now this will be one of those ventures outside of our industry. Our guest who will join us in a moment is Bob Chapman, the chairman and CEO of Barry-Wehmiller, a $3.6 billion global capital equipment and engineering solutions company with more than 12,000 employees. Among Bob's accolades are being named CEO of the Year by the Society for Human Resource Management, known as SHRM. Bob's also been named the number three CEO in the world by Inc. magazine and a top 10 Social Capital CEO by International Business Times. He's grown Barry-Wehmiller from $20 million in revenue and a weak financial position to where it is today, and again at $3.6 billion, that's 180 times larger than when it was when he first took over. And he's done that through what he calls truly human leadership, a people-centric approach where team members feel valued, cared for, and integral to the company's purpose. Now I got to know Bob through his Wall Street Journal bestseller book 'Everybody Matters: The Extraordinary Power of Caring for Your People Like Family.' The part of this book that really resonated with me is a section called 'Beyond Self-Interest: An Ethical Foundation for Capitalism,' and that's going to be the focus of our conversation today. Now before we talk ethical capitalism, let's be capitalists and thank our sponsors who make the RSPA community and all its activities and this podcast possible. Do you like how I blended that right in there? Seamless transition. Our Platinum sponsor is BlueStar, our gold sponsors are Cocard, Epson, Heartland, and ScanSource. And also we want to remind you that registration is now open for Inspire 2025, the retail IT channel's premier leadership conference. RSP Inspire is set for January 26 through 29th in Curaçao. For more information visit rspa.org/inspire so you can experience networking nirvana. Last thing I'll say before we welcome Bob to the podcast: you know the power of the RSP community is sharing wisdom, sharing ideas, sharing insights. I wouldn't have come across Bob's book if it wasn't recommended to me by an RSP member, Jeremy Julian of CBF Northstar. He recommended 'Everybody Matters' and that led to this podcast today. So thank you Jeremy Julian for the assist on today's podcast. All right, I hope you enjoy our conversation today with Bob Chapman.
Bob, so great to have you. Welcome to the Trusted Advisor. Thanks for making time to talk with our members today. I appreciate this opportunity to share a message with your audience. Great. And so as I said at the outset, the focus today is going to be on ethical capitalism. And so one passage from your book really jumped out to me. And it says, 'Early capitalism was rooted in Judeo-Christian morality. Capitalism lost its ethical foundation and became strictly amoral, not immoral, making no reference to doing the right thing for the right reasons. Any sphere of human activity that touches other humans must have a moral ethical foundation, otherwise it drifts towards objectification and exploitation.' Now that approach is far different today from the attitude that most people hold, right? They say 'it's just business' as a justification for their actions. So can you expand on the concept for us that business has an ethical foundation?
Let me go back a second. I talk about this a lot. I had a chance to talk at Brown University to university presidents, and I went up to Harvard in advance and I said, 'What is the purpose of education in our country?' And they said, 'Well, the founding fathers felt we needed an informed citizenry to have a democracy.' I said okay. And I thought, you know, then Henry Ford came along in the industrial revolution, one of the pioneers in the industrial revolution, and he said to our universities, 'I need skills. I need accountants, I need engineers, I need marketing people, I need lawyers, and we'll pay them well and give them good benefits.' And so the industrial revolution was seen as an extremely positive evolution of capitalism, which created communities, better education, but really benefited society, and we've seen that all over the world. But as I looked at it, it forgot one key thing. It assumed that money would create happiness. That the economic benefits of a better paying job — not being starved, not crops, not animals, but people came off the farms in China and America into jobs where they were paid better with good benefits — that we would have the society we all dreamed of with economic prosperity, which would lead to human prosperity. But unfortunately, a century later we have the most prosperous economy driven by the industrial revolution, and we have the highest level of depression, anxiety, and suicide we've ever had. Why? Because we thought in this Judeo-Christian morality that success was related to money, wealth, and education. And education created success because the better your education, the better the job, the more money you'd make. And so it began with a false assumption that money would create happiness. And we attribute the benefit of the industrial revolution to the wealth created and the advancement of societies to more civilized societies. But when great pioneers like Henry Ford came along, they thought that paying people well with good benefits was the barter that they had with humanity that would benefit it. But Henry Ford did not say to our universities, 'As we gathered together in these larger and larger organizations, we need to make sure we have leaders who see people as their purpose.' Unfortunately, it was seen as money is the purpose to create economic wealth. So that's where it went wrong. We thought money would create happiness.
And logically, with better healthcare, with better standards of living, it would. But we didn't teach our business leaders to care. We taught them to use people to achieve financial success. And that has driven businesses in my entire career. That has driven business: organic growth, share price improvement, market share. And we again thought by paying people well with good benefits we had a good trade-off in society. And that's the problem. Nobody was taught to care about people. They were taught to care about creating financial wealth that they thought would create happiness. That was where the link failed.
Got it. Like almost the attitude of 'Hey, I'm paying them every two weeks, you know, and it's a good wage. I can use them and do whatever I want, like run them into the ground, and as long as they're getting that money for it, that's a fair trade.'
Yeah, so Jim, in my education, I have an accounting degree and an MBA from Michigan. I went to Price Waterhouse, then I've run a manufacturing company for several decades. The lens through which I saw people through my education and then my experience in the world: I saw people as functions, functions for my success. I needed them to be successful. I was a nice guy, we had a nice company, but I saw people and I introduced them as engineers, accountants, etc. And that's the way I was taught. And I was never taught that the way I would run Barry-Wehmiller would affect people's marriage, their health, and their relationship with their children. But when we began to realize that we needed to transform managers into leaders to truly care about people, and we started teaching at our university how to become a leader not a manager, 90 — this astounded me — 95% of the feedback we got is how to change their marriage and their relationship with their children. So I realized that business could be the most powerful force for good in the world if we had leaders who had the skills and courage to care. And the challenge is that when COVID was an issue, it was highly contagious. The good news about caring: it's even more contagious than COVID. What we have found — we did not know this — what we have found is when people feel cared for, it releases in them the capacity to care for others. It's hard to care for others when you don't feel cared for yourself.
And Tom Friedman nailed it, and to your audience I think it's a perfect way to see it. We don't more than a poverty of money in this world; we have a poverty of dignity. And when people don't feel cared for, they feel used. It creates a sense of humiliation. And when they feel humiliated, you'll see anger and unrest like you've never seen before. What are we seeing in our society in this prosperous economic society? So the industrial revolution forgot one thing: the human revolution. We needed to see people. I was interviewed by Washington University organizational development professors a few years ago, and after an hour and a half interview they said, 'You're the first CEO we have ever interviewed that never talked about your product.' And I paused a minute and I said, 'I've been talking about our product for the last hour and a half. It's our people. I won't go to my grave proud of the machinery we build. I'll go to my grave proud of the people who did that.' It caught them completely off guard because we define our focus on customers, our focus on profitability, and we take the people that we have the privilege of leading as functions for our organizational goals. And this is not — remember, I speak in every part of society. I see it in nonprofits, I see it in the military, I see it in government, I see it in healthcare, I see it in business. We don't have leaders. We have good Christian people with good intentions, but they were never taught to care. They were taught to use people to achieve and rewarded by using people to advance the purpose of the organization, not caring for people.
Yes, yeah. And I'll say, thank you for that. One thing that was very formative for me in my management leadership career: I used to work for a publishing company, had about a hundred employees, and they went to do their first ever training session for managers because I think a lot of the sales reps especially felt like they were being more manipulated than they actually had a partnership with their manager. We're supposed to start the training at 9:00 a.m. We're all waiting out in the hallway. The owner in there with the folks who were leading it, and he didn't start it for 20 minutes. Then finally we get in there and the owner starts off big and all caps written on the marker board: 'Actually Care.' And he said, 'All these things, these tactics, we're going to treat you, are just going to be tricks and manipulative tools if you don't actually care. It starts there. And if you don't actually care, don't be a manager, don't be a leader. That's not what we're looking for.' And boy did that really change the trajectory of how our managers worked with employees. And then you started seeing managers years later getting feedback, to your point, of 'Hey, he not only makes me a better salesperson, this manager makes me a better person, makes me a better husband, makes me a better father, a better teammate.' You're like, wow, that is so much more meaningful than 'Did we hit our Q2 numbers?' But it all roots back, and like I said, that's always burned into my brain: all caps 'Actually Care' up on that whiteboard.
That sounds like that's what you're saying. That's exactly what we're saying. But remember when Bernie Sanders was a possible presidential candidate in the Democratic party, he talked a lot about socialism, and surveys showed that young people were actually interested in socialism. And it was interesting to stand back and look at this disconnect between caring, because we have never learned to care. And so the CEO Round Table, America's top CEOs, some really wonderful gentlemen, good Christian, good family men, came out with a PR statement to defend free enterprise, and they said in this full page Wall Street Journal article, 'We need to think about more than just the shareholders.' That was the essence of the message. Now A, it's sad they needed to say that. And B, I know some of these gentlemen, they have no idea how to care. What we have learned is you cannot ask people to care. You can't ask people to speak Chinese or German. You have to teach them how. Caring is a skill, it's a language.
And so in our university, that's in hindsight what we unintentionally did. So again, you use the word manager. To me, that should be struck from the American language because the word manager means, in my view, the manipulation of others for your success. Leadership is the stewardship of the lives you have the privilege of leading. Dramatically different lens created by leadership. Again, we have bosses, supervisors, managers. Who wants to be? I always said I took a management class, got a management degree, and I got a job in management, and I thought my job was to manage people. Name anybody in your life you can manage. Name anybody in your life that wants to be managed. We need mentors, coaches, leaders, people who see people as their purpose. But I want to go back to your statement. Here we describe it as people, purpose, and performance. The first word is people. Our fundamental responsibility to the people we have the privilege of leading gives them a sense of safety, a sense of future so they can plan their lives, they can count on the organization to provide for their future. And then we've got a purpose that inspires them. We want to inspire people, not just manage people, because people will share their gifts with you when they feel inspired. And then performance: we've got to create value. If we don't create value, we put at risk our stewardship of the people whose lives we have. So if our investors lose confidence in us, we compromise our ability to be good stewards of people's lives. So it's again people, purpose, and performance. It starts with our focus on people around a purpose that inspires them, and we have to create value, human and economic value, to have the right to stay in existence as an organization.
I always say some people say it's about getting the right people on the bus. I say it's about building a safe bus, which is your business model, and having leaders who know how to drive that bus and know where they're going. And then anybody you invite on that bus is going to be fine because you built a safe bus and you have leaders who know how to drive it safely. So it's incredibly important both your business model, because if your business model fails, you're going to hurt people. And our goal, so again it's not just about caring for people. Part of the way you care for them is you provide income to educate and house your family. And part of business is you've got to have a business that gives people a chance to create value and feel safe and valued and go home at night. Again, nobody ever told me that the way I would run Barry-Wehmiller would affect people's health, people's marriage, and people's relationship with their children. But that is 95% of the feedback we get. And that is the power that any organization can be. As opposed to the organizational objectives, our people are our purpose. Making sure that those people in our care go home at night feeling valued. And we've got to have a good business model that creates value, and people need to relate to it. Does that make sense?
Absolutely. And it ties in the visual that I'll try to get managers out of my vernacular here, but that we would teach leaders: it's not that you're on the other side of the table working against the person. They have to feel like you are sitting on the same side of the table with them and you're figuring the issues out together to benefit the organization and to benefit them. It's not either/or, it's got to be for both. So I want to talk about one other passage in your book as well. You say it's imperative we reconnect markets and morals, and you said people and purpose ahead of profits is the first one, then the primacy of human flourishing overall, then the one I want you to expand on: it says morality ahead of money. And so I'm thinking that last point might give our audience some pause. People, you know, and all that stuff, but boy, morality ahead of money. Can you talk about how placing morality ahead of money has paid off for you, for your people, for your community?
Well, I don't want to use the word 'paid off' for me because that would imply that I did it for my benefit. I would say to you, and it's not that people are more important than profit. The way we express it is creating economic and human value in harmony. In harmony, not one at the expense of the other. And so I would say to you that again it depends upon how you look at it. I know a lot of wonderful people who in business don't know how to embrace their faith, their family values, and business. And I use the statement Simon Sinek and I say parenting and leadership is identical. What is parenting? The stewardship of these precious young lives that come into our family through birth, adoption, second marriage, that we all take incredibly seriously. What is leadership? The stewardship of these precious people who walk in our building every day, who simply want to know they matter. That is a view I never heard, I was never taught, I was never rewarded for, and I guarantee you boards don't talk about that because it's not the language of business. The language of business is numeric. And our goal is for business to be a — remember, we have people in our care for 40 hours a week. We will dramatically impact their health and the way they go home at night feeling about themselves. And when they go home at night feeling good about themselves, they're better spouses, they're better parents. And we could heal this poverty of dignity we're feeling in our country because we have managers and bosses and supervisors who use people to achieve organizational goals. That's where the immorality begins. It's not that these aren't good people. They were never taught, never rewarded, never advanced in their career because they were good stewards of people. They achieved results and they were promoted because they achieved results. Again, not bad people, but the foundation of the industrial revolution: we thought by creating better paying jobs with better benefits we were benefiting society. Nice. But how did you validate their worth? By the way we paid them? No. By the way you treated them.
Yes. When were unions formed in the very early days? Because we didn't know, we use people. 'I'll put on a hubcap every 15 seconds, now I want you to do it in 13 seconds,' and find an automation system. So it was never about human dignity or human worth. It was about economic. That's where the industrial revolution and business failed. It didn't see the potential to validate the worth of every individual for them to become who they're intended to be, whether that was whatever it was, but that they felt valued and they went home at night. And we could heal a lot of this brokenness we feel in the world.
No, thank you for that. And let me ask, I'll get to some of the things that our leaders in our organization have to deal with on a regular basis. So like talking to an employee who isn't performing up to expectations. What is the way to value them? Like what's the moral way to manage them through the process of what could be called 'get good or get gone'? What is the way to value them while at the same time you've got a business to run? It can't just be like 'Hey, you're a nice person, I value you, but you're not up to speed and we're not delivering the product.' What is the way to do that from your perspective, Bob?
Well, first of all, it's appalling to think 'get good or get gone.' Would you say that to your kids? No. Why would you say that to somebody else's kids? So let me start with that. That is an immoral way to treat people. So what you've asked is either the top one or two questions I get from whether it's a church group or a nonprofit or healthcare. And basically you're saying, 'What do you do about the people that don't get it?' And I say treat them like you would like your son or daughter treated if they didn't get it. They say, 'Well, that would be different.' I say, 'Why is it different? That's somebody's son you're talking to.' And the standard of care is treat people no less than you would want your son or daughter treated, or you to be treated. And in parenting, we're taught it's called hard love. Sometimes the best thing you can do with an individual who needs to hear the impact they're making on others and the need for improvement is consequences. We're taught in raising kids, consequences thoughtfully developed, the appropriate consequence is a way to help kids feel the implications of doing things wrong. So I would say to you that we just bring hard love, which means doing the right thing for the person. And sometimes when somebody is — and I don't like to use the word 'not performing to our expectations' because quite often, remember, most people don't feel valued. Remember, 65% of all people would give up a salary increase so they could fire their boss. So why would people perform in an environment where they're abused, not respected? As one person said, 'I got 10 things right and I never heard a word. I got one thing wrong and I got my ass.' So why would people share their gifts with you fully in an environment where they don't feel valued? And so I would say to you, is that person not performing because they're not capable, or is it because your leadership style does not inspire them to share their gifts with you? So it's a two-way street. It's not just looking at the people that don't perform, anymore than raising kids. How do we deal with kids that we know are not realizing the potential? We inspire them. But sometimes consequences are the right thing to do to help them realize the implication of their behavior. So my standard of care is treat them no less than you would want your son or daughter treated.
