Power arises from the collective recognition of our actions and loyalty is progressively consolidated in the face of consistency.
The division is simple, formal authority comes from power. The moral authority, of the loyalty of others to their leader, inspired by their integrity and consistency.
There are different ways of acquiring power, and many of them are not honest. But surely to the one who has the power, his people have the obligation to obey it. He who has the loyalty of his people is also obeyed, no doubt, but voluntarily, and he also redounds in power, but in that of influence, not that of imposition.
Setting an example of formal power is simple, the first thing that comes to my mind, political rulers. They have won the elections, presumably, cleanly and democratically (this is not the time to delve into an analysis of the electoral processes), but despite this, many commit a very serious fraud: they made deceptive publicity. They are not the product they sold. They never were, nor did they pretend to be. The advertising campaign, since it is no longer possible to name the exploitation, that is, very efficient, of all the media at its disposal, to promote the votes in favor (or rather, the promotion of widespread printing, with such a strong presence in the eyes and ears of the citizens, that the election is very likely to win), it was a campaign of lies, half-truths, "made-up", but above all,it was a campaign of false promises. And once in power, they cope with crises with temporary strategies, ineffective in the long term, while amassing immeasurable fortunes, and then quietly withdraw, leaving large debts behind their successor, debts that end up paying the citizens. Those rulers will never gain moral influence or loyalty from the informed citizen, much less respect. Because they are inconsistent, incongruous.much less respect. Because they are inconsistent, incongruous.much less respect. Because they are inconsistent, incongruous.
This bad example of political leaders is clear and affordable for everyone, unfortunately. Just as unfortunate is that this pattern of misuse of formal authority is found in the corporate arena quite often, no doubt.
How formal leaders without morals and true moral leaders behave in the same situations
A specific case: remember Scottish disposable tissues? At one time Scott Paper, owner of the Scottish brand, was the world's leading company in paper by-products such as tissues, napkins, towels and toilet paper. Kimberly Clark, a company in the same field, owner of the brand of disposable tissues Kleenex began to be a competition. Today the Kleenex brand has become a generic name in popular culture for a disposable tissue. No one says when you need to wipe your nose, or a tear, "Can I have a Scotissh?" (that no longer exist). Everyone asks for a Kleenex. Becoming synonymous with the product in the consumer's mind is the greatest success of a brand. Kimberly Clark ended up absorbing Scott Paper. This anecdote has a story behind which you have to learn.
Let's talk about the direction of Scott Paper.
How could a CEO finish a company with more than 100 years of operation?
It is true that Scott Paper already had problems, but the last CEO came to loot it for his personal benefit and thus liquidated it. Does it sound like a politician exploiting a country? He was a director of companies. And yes it was, but one without morals.
A few facts to understand the facts: Scott Paper was founded in l879, manufacturing paper bags and wrapping paper, and at the end of the century began to produce toilet paper as a supplier of almost two thousand commercial brands of this paper, with such demand that at the beginning of the new century they chose to launch their own brand, with an effective commercial strategy: sell few but essential products, at low cost and with great publicity. In 1902 Scott Paper bought the oldest paper brand in the United States, Waldorf. In 1907, it introduced disposable table napkins to the market, which became its star product. Thus began their long years of prosperous growth. In the 1920s, they invested heavily in technology, and this put them even further ahead. They were the vanguard.In the Great Depression of the 1930s, they were among the few companies that did not fire any employees; their sales did not drop either. In 1936 it merged with Mead Corporation to found Brunswick, the factory that would supply raw materials to both companies; This vigorous acquisition initiative continued; he was never afraid to buy more companies to continue growing; He went through both World Wars without problems; In the mid-50's, it introduced plastic wrap to the market and in the early 60's the sanitary napkin. over 80 years of success.
Then the competition began with Procter & Gamble, which entered the paper products market when it acquired Charmin Paper Mills (yes, that's where the hygienic Charmin comes from), with an aggressive advertising campaign in certain areas, in which it snatched percentage of sales Scott Paper. This competition encouraged other companies to try to do the same; In response, Scott introduced disposable paper gowns like those used in hospitals, whose plastic film attached to the paper was the start of disposable diapers.
However, Scott Paper abandoned the initial strategy that had given him success. Few essential products at low cost and highly publicized. He wanted to expand into the plastics industry after inventions that combined plastic and paper. Acquired Plastic Coating Corporation, supplier of Polaroid. A bad decision because Polaroid fell behind in the competition with Kodak. But Scott Paper was not discouraged and in 1967 he acquired another company, SD Warren, maker of notebooks and notebooks. Another bad decision, because the government cut the budget for public schools and the sale of notebooks fell. However, Scott Paper insisted and bought one more furniture company, straying further from its original strategy.
In 1969 Scott Paper recorded its highest level of sales, yet it was so much spending that the profit was only 12%.
Until then Scott Paper had a fairly conventional organizational structure, the CEO made all the decisions, with the retirement of its director, in that year, a new director was appointed, but also a president and vice president. In addition to instituting this triumvirate, the organization was restructured, making it decentralized, regional managers making decisions by area.
In one year they lost 200 million dollars and 18% of sales, lowering their profit to 9.5%.
A year later, Charmin toilet paper became the most popular.
Regional sales managers no longer respected the command line and disputed for power with the director and the president, destabilizing the company.
They then retrofitted their plants and built new ones, and upgraded them for the new anti-pollution laws. They spent 700 million.
In 1976, five years after Charmin took the lead, they introduced Cottonelle in response.
In the early 80's they updated their technology again with a cost of 1.6 billion dollars. He was starting to run out of money, so he sold shares.
A good CEO
In 1983 a new CEO came to Scott Paper: Phillip E. Lippincott, or rather, he was promoted to CEO, as he was already working there, with good results. Reduced operating costs, recycling the waste itself; increased sales and profits, and acquired the company to whom the shares had been sold, recovering them. He knew how to manage managers and their decisions, who professed great loyalty to him and were confident in their decisions. He was a great team worker, with a view to the common good. A more stable stage began, the company was recovering, mainly due to sales of Cottonelle and Viva kitchen towels. It expanded to Europe and recovered capital, selling $ 750 million there. He even bought from his European partners.
However, the owners insisted on the ambitious expansion policy that in the last decades had not worked anymore, and spent 250 of the millions earned on this program. Lippincott followed orders, loyal to the company, and continued his efforts, but retired in 1994 after Financial World magazine made an unflattering criticism of Scott Paper in 1993, the year he had the biggest loss in its history.
A terrible frown
In 1994 Al Dunlap was named President and CEO. He was known with the derogatory nickname "Al, La Sierra" for "cutting" the number of workers to reduce operating costs. He announced the layoff of 10,500 employees, proclaiming that he would save $ 400 million. It closed factories, reduced warehouses, and sold previously acquired companies. This increased profits to $ 200 million that year. Comparing Lippincott's best year, Lippincott achieved the same without firing anyone or selling anything, other than the products. He made an honest effort.
Dunlap was much more than dishonest; the firing of 41% of the workforce to improve the appearance of highly manipulated financial statements, to present himself to the Board of Directors as a very efficient executive, capable of generating wealth for them. In fact, to preserve his prestige, with a view to being hired by other companies in crisis, a business with which he made his fortune. He cleverly deceived the shareholders, the money he saved from them was paid by his losses to the dismissed employees, it was an unequal and unacceptable social cost, without any moral or ethical standards. But in the end they all ended up losing what it was about saving: Scott Paper. In 1995 Kimberly Clark "merged" with her, to great advantage and gain.
Dunlap's entire “uprising” of the business was a ploy to make Scott Paper attractive for sale, like when you paint a house front for sale when the collapsing walls haven't been repaired.
In the end, as Kimberly Clark's shares were greater than Scott Paper's, they absorbed his physical facilities and Scott Paper legally disappeared. It was absorbed without pain or glory, and Kimberly Klark gained dominance from its star brands, such as Cottonelle.
Dunlap took his juicy profit.
The height of impudence came when he made the following statement publicly, when asked about his management in Scott Paper, which he considered a success: "I deeply admire Rambo!" How he looks like me!
No comment.
This terrible example of CEO was in an unquestionable position of power, he was the formal authority chosen by the owners and administrative council of Scott Paper. But he was never a moral leader; it suffered from all the defects against which it has been warned.
-Lack of integrity.
-Opportunism.
-Placement of your personal interests over those of the common good of all the members of the company.
-For the foregoing, disdain for teamwork, as he never had the intention of seeking that common good.
-Total absence of commitment and loyalty.
-Egocentrism.
- In the end, he showed total inconsistency with his promises. A real fraud.
Let's compare the phrase of Dunlap, who surely would like to be nicknamed "Rambo, La Sierra", with this phrase of the CEO of Kimberly Clark, at that time, Darwin Smith, when questioned in an interview by Jim Collins, the why of the great success in all aspects of your company: «Because I am fortunate to have better collaborators than me». Humility, a virtue that is increasingly practiced among contemporary moral leaders, concerned with the development and learning of their staff. Imagine what a good leader is like, when his workers learn from his example to the degree that he himself considers that they exceed him. The Chinese proverb says: If the student does not exceed the teacher, neither the teacher nor the student are good. Everyone grows, the company grows. It is a win-win round business.
A brief sketch of Darwin Smith:
His family did not have the means to pay for his education, so he worked for it, being admitted on his own merits to the selective Harvard Law School, from which he graduated with honors, and began working at Kimberly Clark. In four years he was promoted to CEO. a year later, he was diagnosed with cancer with a life expectancy of one year, but he always refused to accept his eviction and fought against the disease, which he overcame, being considered a medical miracle. Darwin Smith was CEO of Kimberly Clark for twenty more years, with such results that the company's stock was five times more profitable than a worldwide sales monster, Coca Cola. And this leader sincerely believed that his employees were better than him.
Examples of moral authority
Since the great virtue of humility in moral leadership was brought up, we must set some very good examples of leaders, some with formal authority and others without it, but all with great moral authority who attracted loyalty, commitment, admiration, respect and a place in history.
- Nobel Peace Prize Mahatma Gandhi (Mahatma is not a name, but a word that means: «good soul»
- Proposed to the Nobel Peace Prize Pope Juan Pablo Segundo.
-Nobel Peace Prize, Mother Teresa of Calcutta (Calcutta, obviously not a surname, but as if it were, having lived in Calcutta, a naturalized Hindu, this place is proud to be linked to its name)
And of course, entrepreneurs must be included:
-Konosuke Matsushita.
Like Scott Paper in its day, the Matsushita company, of which it was founder and CEO, did not fire its employees in the Great Depression of 1929, when even the largest and most powerful companies around the world did. Instead, he created an ingenious strategy: Because he had to reduce his production, he converted part of his production force into a sales force, thus he ensured both production and sales, and he did not have to reduce any salary. This, coupled with his legendary good treatment of his employees, earned him their affection and loyalty unconditionally. He was a great administrator, based on a business philosophy created by himself, which consisted of a treaty and seven basic principles that his employees faithfully followed and adopted as their own. in 1945 he founded the Institute named Happiness, Peace and Prosperity,who puts into practice his humanistic philosophy, which he captured in his two books, "Thoughts about man" and "Qualities necessary for a manager."
How is humility useful in the work of a leader?
Knowing that the three core functions of all managerial action are:
-Diagnosis.
The diagnosis requires objectivity, circumspection and detachment from the ego, to see reality as it is.
-Decision.
The decision requires the development of other virtues such as generosity and risk taking. Both require humility.
-I send.
A humble leader does not seek to be followed by vanity, and the team recognizes him, they know that his gift of command is exercised to achieve common goals that will appeal to the general welfare. This makes them respect him and follow his mandate voluntarily. This is the moral authority.
These moral leaders embody the greatest virtue of a manager: the pursuit of the good of the entire group, and not personal glory and / or fortune. Why?
Because they have their priorities set differently than most.
Every decision of a moral leader is framed, according to his priority. at the following levels:
BE. What am I as a human being.
DO. What activities do I do?
TO HAVE. My material or immaterial possessions.
Ideally, all three levels should be in that order. First I am, then I do, and here a pause is pertinent, because it is important what is done and for what, doing can be aimed at filling the upper level, being, or at a lower level, having.
Does what I have help me to do (well)? What I do is to be (better)? Or what I do is to have (more)?
Human beings can serve others in many ways, as long as we have this disposition of service, which is in the field of DOING, we will not only help others, we will help ourselves to become better people, which is the competence of the BEING. Then the TENER comes in addition, whether they are material goods, economic security, recognition, prestige, etc. And best of all, it is no longer of great importance. BEING satisfies us more.
For example, a doctor gets his degree (have) to exercise, heal (do), not only for his fees, but for his vocation of service (being). The better you want to be, the better your professional practice will be, and the reward comes.
Following the opposite model is, although it is not believed, more difficult. If the priority is to have, but we do not know what to do, or we do it wrong, because we have not cultivated the being, we will not achieve it.
A single conclusion
If you can't look into the eyes of your people, forget about directing.
A single self-assessment question
How are your priorities arranged?
