The Economics of Higher Purpose

by Robert E Quinn

So what did Jimmy do? The Wall Street investor decided to pay the families of all the dead employees their salaries and bonuses through the end of the year. They would all receive what the dead partner earned in their very best year.

  Jimmy went further in clarifying his values and purpose. He asked his CFO if they could repeat the exercise for all of 2002. She said the firm could survive but that doing this would be inconsistent with their fiduciary responsibility to the surviving partners. So Jimmy informed the partners and made the offer that any partner who objected to the practice would be given the opportunity to cash out their ownership share at par. No one objected.

  Eventually, the company paid the salaries and benefits for three years. Jimmy said that he realized that in doing this, he was jeopardizing the financial viability of the firm, but he was committed to getting the partners’ capital back to their families. He says he believes, “It was what Herman Sandler [the founder] would have done,” and he was not worried about “conforming to the norm or managing to mediocrity.”

  Jimmy’s last sentence is important because we all conform to norms. In the conventional social setting, our conformity actually draws us toward mediocrity. In organizations it is natural for people to go through the motions. But when people clarify their own deepest values and purpose, their identity and destiny, they, like Jimmy Dunne, become more internally directed. Jimmy told us he was not worried about what was normal but about doing what was right. It was his growing commitment to moral excellence that led him to the “unheard of scenario.”

  Consequences

  Like other companies we have seen, the higher purpose of Sandler was not only to serve the customer in the best way possible but also to have a committed, energized, and trusting workforce that was treated like family. With this in mind, we asked Jimmy how his unusual actions were received.

  Jimmy told of widows who gathered in postcrisis therapy sessions. One widow said that many of the widows in her group were from other companies and were financially stretched. Then the story of the Sandler wives came out. The group expressed profound admiration for the values of the firm. Jimmy says that as he listened to the story, he discovered “what brand is,” and what it means to have the “Sandler way.” In other words, Jimmy was discovering the power of authentic purpose and collaborative culture. Having an authentic purpose and culture differentiates a firm and makes it attractive to those who deal with it.

  Both inside and outside the company Sandler was seen as different. Jimmy says, “Our status increased.” Inside, the people became increasingly loyal. Outside, support began to flow to the firm, and other companies began to follow the practices of Sandler. In the next few years, the company prospered financially and grew.

  Purpose and Practices

  Jimmy has become very conscious of the role of authentic purpose and positive culture in the organization. He says the CEO has to set an example of the purpose. He told of a conversation that occurred just before we arrived. A new employee made a mistake that cost the firm a substantial amount of money. Jimmy called him in, and in a respectful way he explored what happened and helped the person derive learning. He then sent the (relieved) employee on his way.

  Jimmy asked, “Do you think that is what I wanted to do? No. I wanted to chew him out.”

  Jimmy explained that he does not have the luxury of following his natural instincts. Every act he take seeps into the culture and creates expectations. He had to treat the employee well because the firm has purpose and values and Jimmy has to live them. If he does not live them, the purpose and values are seen as hypocritical, and everyone becomes cynical.

  In the hiring process, Sandler looks for people who are authentic. In describing the process, Jimmy provides a graphic image of who they do not hire: “The reason we’ve got all these people here is because of the painstaking effort we make to try and find the right people, and it is our unwillingness to accept any assholes. They can’t survive here.”

  Jimmy was referring to an ego-driven person. At Sandler, they look for and seek to retain people who are committed to the common good. Jimmy said, “People who are selfish or takers don’t last with us.” Sandler’s higher purpose has led to a culture that values the common good and gives rise to authentic relationships.

  Speaking of authentic communication, Jimmy has a rule: you can’t talk about someone critically unless that person is in the room. Jimmy explained that once an executive (let’s call him John) came to his office to complain about another executive (let’s call him Andrew). As John began to talk, Jimmy started dialing a number on his phone, and John asked him who he was calling. “Andrew, of course,” said Jimmy. John was shocked—why would you call him?

  Jimmy explained that he wanted Andrew to hear what John had to say about him so he could present his side of the story. John expressed his befuddlement: “I came to talk to you in confidence, Jimmy.”

  Jimmy said, “Oh, I see. So you only want to say these things about Andrew if he cannot hear them?”

  Jimmy explained to us that this rule has a profound effect. The company has to deal with very little backstabbing. When there is a conflict, people simply ask themselves: “What would Jimmy say if we took this to him?” In most cases, the matter does not actually come to Jimmy. People sort it out among themselves. The culture is one of openness, authenticity, and trust. It does not need to be micromanaged from the top.

  At the end of the interview, Jimmy’s assistant whispered something in his ear. Jimmy turned to us and said, “Oh, yes! We actually paid salaries and benefits [for the deceased employees] for 10 years. But I don’t talk about the last 7 because we could afford to do it then. It is easy to be generous when you can afford it.”

  People at the firm know that the purpose of the firm is authentic because it drives the decisions and behaviors of the CEO. The CEO is able to stay away from normal pressures of convenience and follow purpose to patterns of excellence. The firm does unusual things, like paying the families of dead employees, and it reaps unusual rewards in that its culture attracts resources that other, similar firms do not attract. Jimmy Dunne’s discovery and enactment of higher purpose was fully authentic.

  Summary

  In the standard principal–agent model, people are expected to pursue their self-interest. Communication is expected to preserve that self-interest and thus is interpreted as doing that. Contractual mechanisms are deployed to ensure the only dimension of authenticity the model recognizes—factual correctness. There is no role in the model for the second dimension of authenticity—emotional honesty. However, in reality, communication that has both dimensions of authenticity signals that the communicator is internally driven. To have an authentic higher purpose, leaders must become internally driven representatives of the purpose. They consequently sacrifice to align their behavior to the higher purpose, which induces employees to view the higher purpose as authentic and credible. In so doing, they disrupt the status quo. They connect with their employees and others emotionally and the higher purpose begins to seep into the culture. The third counterintuitive step in creating a purpose-driven organization is to communicate higher purpose with authenticity, to communicate from the soul; to recognize and meet the need for authenticity.

  Getting Started: Tools and Exercises

  Phase 1. Have your people read the chapter and ask them to pay special attention to the cases of Gerry Anderson and of Jimmy Dunn.

  Phase 2. Have them write answers to each of the following questions and then hold an open discussion.

  In terms of people and relationships, what is your definition of authenticity?

  When have you been impressed with an act of authenticity in your professional experience?

  What is your most important takeaway from the stories of Gerry Anderson and Jimmy Dunne?

  What strikes you about this statement: “Why don’t we change that? Let’s identify a purpose and a set of values, and live them with integrity”?

  What would be the first steps if we
as a group determined to become an organization of authentic, higher purpose?

  CHAPTER TEN

  STEP 4 Turn the Higher Purpose into a Constant Arbiter

  Once when we were conducting a program for executives from across the globe, two of the executives shared a problem with us. They said that their boss, the CEO, had fixed a retirement date in the distant future and that he had checked out and had been behaving in completely self-interested ways. The employees all recognized this. While the two executives did not express it that way, they felt that the principal–agent contract was violated. The CEO was not doing his part, and the employees reacted by withdrawing themselves. They came to work, but they did not bring their hearts. They worked only as hard as they were forced to work. The consequences were serious—an organization in decline.

  This is what happens in organizations that lack a higher purpose. Everyone becomes vulnerable to the consequences of self-interest. Normally it is not the CEO but midlevel managers and first-line employees who withdraw to conserve their energy and effort. When they withdraw, the organization takes the consequences. Others also become self-interested, and they do not bring their discretionary energy to their tasks. A key to transforming a social system in decay is for someone in some position to discover a higher purpose, articulate it with authenticity, and do so with a constancy that shapes the culture and inspires action.

  Conventional Assumptions

  Constancy of purpose complements the notion of authenticity. We make it a separate step because it is so important. Yet constancy is difficult to even imagine. The reason is that conventional managers are focused on task completion, so they find it hard to swallow that embracing higher purpose is the start of a never-ending journey rather than arrival at a destination. When we spoke with the CEO of a global professional services company about how to build a purpose-driven organization, his first question was “When will I be done building it?”

  His question reflects an assumption that is central to modern organizational culture. In a professional world, time is at a premium. When an employee reaches the managerial ranks, they are already addicted to action. They have a need for achievement that is linked to a checklist mentality. They desire a list of tasks to do, and they determine the quality of their day by how many items are checked off at the end of the day. They yearn for closure.

  We responded to the CEO’s question by telling a story about another CEO who had been trying for a year to transform his construction company. He showed us his change plan and asked our opinion about it. We told him he deserved an A-minus. He asked, “Why not an A?”

  After giving speeches for a year, he thought he was finished—but his people were just beginning to hear his message. He needed to keep clarifying the organization’s purpose, and he needed to use the purpose to inspire the people so they would embrace the purpose and make it the arbiter of all decisions. To do this, he needed to be constant, an unwavering symbol of the highest purpose and a regular source of inspiration. He needed to do this until he had a culture inspired and driven by the purpose. When we told him this, he sank back into his chair.

  An Unexpected Culture of Inspiration

  David Perkins is a four-star general in the US Army. While we were writing this book, he spoke to a packed auditorium at the Center for Positive Organizations. Across the globe, people make common assumptions about the military: It is a hierarchy. It uses authority to obtain the required effort. The audience showed up in large numbers because they were eager to know what a general could possibly say about creating a purpose-driven, positive organization.

  General Perkins began by declaring that every type of leadership gets results, including authority figures who are very negative. Toxic leaders and micromanagers, for example, get results. Often this is why they were promoted to their present levels. Their superiors believed, based on their past performance, that they would deliver in the new job. But those senior managers did not pause to investigate how these people achieved results. Leaders who are in the conventional perspective separate ends and means. They emphasize the ends, so they focus less on how the results were achieved.

  General Perkins said that it is not surprising that there are so many toxic leaders and micromanagers. Our culture emphasizes grade point averages, standard scores, and merit evaluations, and it teaches that “it is all about you.” In organizations, leaders are expected to get results, so it’s in the aspiring leader’s self-interest to focus on getting results more than on the means by which the results are achieved. In certain settings, particularly in large hierarchies that do repetitive work, toxic leaders and micromanagers are able to drive people and produce the specified outcomes. The problem is that we live in a world of change where even large hierarchies have to deal with new and unforeseen challenges.

  Today, every organization, including the military, has to be a learning organization, and such an organization has a need for inspired people who trust their leaders and do the right thing at the right time even when they know that their leader is not watching. In other words, they need people whose motivation is intrinsic, which often derives from embracing an authentic higher purpose that has been communicated with such constancy and clarity by the leaders that it has been internalized by all. Then the people are willing to bring their discretionary energy to work.

  Inspiration and Service

  General Perkins believes that you inspire people by serving them. When they are in need is when your service matters. He tries to respond immediately to cries for help. He told of being in a battle zone when a member of his senior staff complained because people were not following procedures. They were ignoring him and going directly to Perkins. The staff person implored Perkins to ask people to respect the hierarchy by sending people to him first.

  “They are not going to you first because they do not see you as valued added,” General Perkins replied. “You are not making a positive difference and serving them. If you were, they would seek you out.”

  This is an extraordinary account. If you were the direct report of the general, and he said these words to you, what would it tell you about your theory of leadership? How would you respond?

  Bullets and Inspiration

  General Perkins is serious about nurturing inspirational influence and creating a culture of higher purpose. He is actually engaged in creating a positive, purpose-driven organization. How do we know this?

  He told of removing hundreds of senior and midlevel officers who were known for being toxic leaders or for being micromanagers. He described meetings with people at every level and teaching the notion of inspirational leadership. He would even meet with drill sergeants.

  In explaining the need for inspirational leadership, he shared stories of people in battle, including people who were badly wounded and completely isolated. These people needed to make their own decisions, which required trust in their leaders, in their peers, and in their mission. They had to have been inspired by their leader before encountering a crisis. He said, “By the time a man has two bullets in him, and he is required to continue to make key decisions, if he has not already been inspired, it is too late.”

  Attentional Gravity

  As we’ve seen from the people featured in this book, from Shauri to Jimmy Dunne to Nick Craig, a person who embraces a higher purpose is transformed, and part of the transformation is that the person becomes a living symbol. They are the message. Everything they say and do is an authentic representation of what a person with a particular higher purpose would do. Others who watch the person recognize the common good and understand the highest purpose.

  General Perkins shared experiences of reuniting with people who had served under him years before. Often, they recalled their most meaningful experiences. They would say things like “I remember what you said and did 20 years ago when we were in trouble.”

  One man was recently promoted to command a battalion. He wrote and said, “When I was in your unit, I watched everything you did, and I wr
ote it down. When I got promoted, I went back and read it all. I am going to try to do what I saw you do.” This loyalty does not happen unless the leader constantly lives by and models the higher purpose and the people believe it is authentic.

  General Perkins said what so many leaders told us: A leader is the center of attentional gravity, and in tough times the focus is on the leader. Constancy matters. “People are keeping book on you. You must represent what right looks like.”

  Morality

  Notice the link between morality and inspiration. General Perkins is saying that leadership is about modeling the courage to do the right thing. When your conscience triumphs over fear, you represent what is right. When you constantly do what is right, even when it is hard to do, you inspire others.

  General Perkins, like Jimmy Dunne, said it takes a long time to build a positive culture. But in times of difficulty, you have your most impact. You show who you really are when you are under the greatest stress and everyone is watching. He said, “On our worst days is when we need to be most positive.”

  The Arbiter of All Decisions

  When a higher purpose is authentic and constant, it eventually becomes the driver and arbiter of all decisions, like the purpose of joyful banking at the Development Bank of Singapore. Every act then aligns and the organization transforms. This is hard to imagine.

  We were slated to explore the value of purpose and vision one evening after a company dinner. In the hours before dinner, all the managers met in small groups to do the unpleasant work of downsizing. When we went on, we asked how many of the small groups began their difficult work of downsizing by first examining the company’s purpose and values. The answer was none. The managers could not imagine why they should do such a thing. They had a real problem to solve, and the need to downsize had nothing to do with purpose or values.