The Economics of Putting People First in Corporate Leadership, Part Two

By Jack Lannom

Economics Pt 2

In my previous post, I defined economics as the science of human choice, necessitated by the circumstances of limited means. What does “the science of human choice” have to do with putting people first? Simple: the connection is in the choices we make. And the People First philosophy encourages us to choose to seek the well-being of others before we seek our own.

 

Seeking the well-being of others is not an altruistic mindset reserved for moms and missionaries; it works in the business world as well. The New York Times recently profiled Dr. Adam Grant, who, at age 31, is the youngest tenured professor at the Wharton School . . . and also already the highest-rated.

Why was Grant profiled? His philosophy of giving of himself to others is attracting national attention. “Helpfulness is Grant’s credo,” The Times said, and went on to explain his philosophy this way: “The greatest untapped source of motivation, [Grant] argues, is a sense of service to others; focusing on the contribution of our work to other people’s lives has the potential to make us more productive than thinking about helping ourselves.”

This young academician is espousing the servant leader’s philosophy, that it is more blessed to give than to receive. And Adam Grant is not speaking only to colleagues in the ivory tower; his reputation for excellence extends well beyond the world of academia. The Times quoted Prasad Setty of Google as saying that he contacts Dr. Grant when “we are thinking about big problems we are trying to solve.”[1] What sets him apart? Adam Grant’s success is predicated on his preference to be a giver and not a taker.

The Harvard Business Review has taken notice. The prestigious management periodical recently published an article by Dr Grant, in which he argues, “Organizations have a strong interest in fostering giving behavior. A willingness to help others achieve their goals lies at the heart of effective collaboration, innovation, quality improvement, and service excellence.”

Grant buttressed his assertion with a study conducted by the University of Arizona, which found that “the link between employee giving and desirable business outcomes was surprisingly robust. Higher rates of giving were predictive of higher unit profitability, productivity, efficiency, and customer satisfaction, along with lower costs and turnover rates. When employees act like givers, they facilitate efficient problem solving and coordination and build cohesive, supportive cultures that appeal to customers, suppliers, and top talent alike.”[2]

I don’t know if Dr. Grant is aware of People First Leadership; I do know he is underscoring the acute importance of the economics of putting people first. Ancient wisdom literature exhorts us not to act out of selfish ambition or conceit, but to esteem others better than ourselves. We are to look out not only for our own interests, but also the interests of others. This is the philosophy Dr. Grant is espousing and it is the philosophy of People First.

And this philosophy of choosing to invest in the people on the front line of your business translates directly into a healthy bottom line. Wegmans, a privately owned supermarket chain that operates 79 stores in the Northeast, is another organization that has seized on the concept of servant leadership. “Our employees are our number one asset, period,” Kevin Stickles, Wegmans’ VP for human resources, told The Atlantic magazine. “The first question you ask is: ‘Is this the best thing for the employee?’ That’s a totally different model.”

“The Wegmans model is simple,” The Atlantic reports. “A happy, knowledgeable and superbly trained employee creates a better experience for customers. Extraordinary service builds tremendous loyalty.” [3] Clearly, Wegmans’ customers like the business model; the readers of Consumer Reports ranked Wegmans as their favorite grocery store chain.[4]

Customer loyalty translates into profitability. Wegmans did $6.2 billion dollars of business last year and generated higher average daily sales volumes than any of its competitors across the east coast. “When you think about employees first, the bottom line is better,” Kevin Stickles asserts.[5]

Operating in today’s uncertain economy, business leaders are forced to challenge their employees to generate more output with fewer resources. Ten years ago, we were all hustling to “Grow the business, grow the margins, expand!” Now it’s “Spend less, hire fewer, but do more!” The best way I know to enlist people in such a herculean task is to demonstrate that you care about them. As Adam Grant says, the greatest source for releasing untapped potential is service to others.

I’ll be posting Part Three in this series on Monday. We’ve seen how the philosophy of putting people first has worked for Southwest Airlines and Wegmans; but will it work in your business? Does putting people first mean that we simply forget about profits? I’ll give you a sneak preview here: Yes, it will work in your business; No, I’m not saying profits aren’t important! I hope you’ll be back to read and comment.

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[1] Susan Dominus, “Is Giving the Secret to Getting Ahead?” The New York Times, March 27, http://www.nytimes.com/2013/03/31/magazine/is-giving-the-secret-to-getting-ahead.html?pagewanted=all&_r=2& (Viewed 4/24/13)
[2] Adam Grant, “In the Company of Givers and Takers,” The Harvard Business Review, April 2013, http://hbr.org/2013/04/in-the-company-of-givers-and-takers/ar/1 (Viewed 4/24/2013)
[3] David Rohde, “The Anti-Walmart: The Secret Sauce of Wegmans Is People,” The Atlantic, March 23, 2012, http://www.theatlantic.com/business/archive/2012/03/the-anti-walmart-the-secret-sauce-of-wegmans-is-people/254994/ (Viewed 4/25/2013)
[4] Geoff Herbert, “Wegmans named best supermarket by Consumer Reports; Walmart one of the worst,” syracuse.com, April 3, 2012, http://www.syracuse.com/news/index.ssf/2012/04/wegmans_best_supermarket.html (Viewed 4/26/2013)
[5] Rohde, “The Anti-Walmart.”