The Compassionate and Forgiving Organization
Doug Lennick and Fred Kiel
When it’s business as usual, acts of compassion are small or subtle in the great organizational scheme of things. But when a major crisis strikes, it is easy to see the difference between the truly compassionate organization and one that gives lip service to values. Aaron Feuerstein is the former president and CEO of Malden Mills, a company best known for producing the revolutionary fabric, Polartec. On a cold December night in 1995, a devastating fire tore through his factory in Lawrence, Massachusetts. In a time of corporate downsizing, many of his peers urged him to re-open operations overseas—a decision that would lead to the loss of 3,000 jobs at home. Shunning their advice, Aaron pledged instead to rebuild the mill at home—and to pay his employees during the three-month reconstruction. “I think it was a wise business decision, but that isn’t why I did it. I did it because it was the right thing to do,” says Feuerstein.
Malden Mills battled insurance companies and government officials not just to rebuild the plant, but also to spend the additional money necessary to build the safest textile plant possible and to take care of his employees while the new plant was under construction. By 1997, just two years later, he had proved to the doubters that it was the right thing to do. Malden Mills was recording $400 million in annual sales—more than it ever had before the fire. Although Feuerstein’s sometimes controversial decision-making led to financial problems and a bankruptcy filing, the company has recently emerged from bankruptcy intact.
Sometimes, though, despite a company’s best intentions, layoffs must be made for the good of the company—its customers, its shareholders, and its remaining employees. The way an organization handles layoffs says more about its corporate character than any other activity. It is a test of its ability to weave moral, social, and business values into an effective whole. Answering the call of compassion in isolation might tempt an organization to avoid a layoff at the cost of fiscal survival. But a moral organization that doesn’t attend to its bottom line won’t be around long enough to keep any of its workforce gainfully employed. So the task of a moral leader facing serious financial difficulties is not necessarily whether or not to reduce the size of the workforce, but how to do it in compassionate way that provides a soft landing for those affected and in a way which preserves key talent.
Not so long ago, Safeco was on the verge of extinction when Mike McGavick took the reins. The clock was ticking, so he had to move quickly, cutting the workforce by 10% while consolidating 15 major offices into 5. Although the relocations and layoffs were difficult, they did not blindside Safeco’s employees. Mike McGavick decreed that Safeco’s leaders would tell employees what they knew when they knew it. When it came to delivering bad news, Mike decided that was his job. So he showed up at every regional office that was closing and told employees what they could expect.
Allie Mysliwy describes McGavick’s visit to Indianapolis:
We needed a meeting place that could hold all of our Indianapolis employees, so we rented out the Scottish Rite Cathedral across the street. It was a dark, oppressive, and enormous place, which only intensified the foreboding of the gathering group. Mike took command of the stage. He was completely upfront. He explained the grave situation the company faced, how we had gotten to where we were, and what we were going to have to do to survive. He told them that a large number of them would lose their jobs. Some employees would be retained, but most would not. When he finished, the audience clapped. Even though the news was bad, Mike communicated in a way that allowed employees to make sense out of a really tough situation.
When jobs were eliminated soon after, reductions were made based on comparative performance. That may have been a blow to the egos of those who left, but it turned out to be a morale boost for remaining employees. Prior to McGavick’s arrival, Safeco had been a haven of entitlement. Employees’ number one complaint in their employee survey was the company’s tolerance for poor performance. Instead of rewarding longevity, Safeco decided to keep its strongest performers, thus solidifying the new performance-based culture it desperately needed to get back on track. According to Allie, those who were asked to leave were treated with compassion and respect. There were none of the all-too-common layoff scenarios in which notified employees are summarily escorted out of the building, with little or no severance or support. Safeco provided generous severance packages by industry standards, but also tried to individualize its severance offering to meet special needs of employees. Employees who left appreciated how Safeco had treated them. Employees who remained were proud of how Safeco treated their departing employees.
In our high achieving business culture, self-recrimination is very common. We often find that our executives are far more critical of themselves (and less forgiving) than their bosses. One of the best ways a morally intelligent leader can show compassion is to challenge the executive about his or her excessive self-criticism. Of course, this implies that the leader has enough interpersonal skills and rapport with the subordinate to find out what their critical self-talk is all about. Yet, this challenge can be a superb way to embrace compassion and make it central to your organization. To the extent that an employee is spending his or her precious energy engaging in negative and self-critical inner dialogue, he or she is not giving it to the company in pursuit of the strategic plan!
The Forgiving Organization
Organizational forgiveness is an organization’s capacity to accept mistakes and failures among its workforce. Forgiveness is critical for two reasons. First, employees need to know that they have room to fail. If mistakes are invariably punished, the emotional climate of the organization will be unattractive to your best employees, who will go elsewhere in search of a more favorable work environment. Second, forgiveness is fundamental to innovation and growth. Innovation entails venturing into the unknown, where no formulas exist. Risks will be taken; mistakes will be made. Some things will work, and some things will fail. Organizations cannot pioneer new territory unless they accept that they will spend some time going around in circles or down dead-end paths.
When asked whether 3M’s reputation for innovation is legitimate, Ray Langer, a 3M project engineer, says, “Yes, it really is. We’re encouraged to try new things in our projects, and if they don’t work out, no one is punished. As a result, we have created many, many engineering processes that no one else in the world comes close to.”
Interestingly, the United States Marine Corps is an organization that has institutionalized forgiveness. “Most managers like to say they give their subordinates room to fail,” says David Freedman, author of Corps Business: The 30 Management Principles of the U. S. Marines (HarperBusiness, 2000). “[B]ut the Marines practice failure tolerance to a degree that would raise most managers’ hair. To a certain extent, they demand failure: a Marine who rarely fails is a Marine who isn’t pushing the envelope enough, goes the logic.”
A final incentive to practice forgiveness is that without a climate of risk tolerance, employees will be too intimidated to acknowledge mistakes or offer feedback, thus perpetuating problems that may be costing your company millions each year. When Safeco began to encourage employees to communicate about problems with senior management, senior management e-mail from employees went from a few contacts a month to 30 to 40 a day. Everyone, from Mike McGavick on down, takes feedback from employees very seriously. In the process of encouraging feedback, Safeco learned from its employees about long-standing process problems that they were finally in a position to correct. In the last several years, Safeco has saved millions annually thanks to information from its employees, information that they would never have felt safe enough to relay in the old environment.
While the most forgiving companies are often the best innovators, these companies also know how to set limits. If you want to increase forgiveness at your company, establish “curbs” for innovative behavior—for example, set out the percentage of work time team members can use to engage in innovative projects that are their own or their team’s creation or set budgetary limits, allowing employees to spend a certain percentage of their department’s budget on innovation. But then, if you wish to establish a truly forgiving company, make sure you celebrate this activity—not just the positive results. Honor your team members’ mistakes as learning episodes. Edison is quoted as saying something like, “I didn’t make any mistakes. I just tried ten thousand things that didn’t work;” if you want to build an organization of budding Edisons, celebrate the innovation process and the failures that come with it, not just the results.
Another way to encourage your organization to increase forgiveness is for you to establish a learning organization (rather than a punitive organization). Praise your team members for embracing the learning process. Allow mistakes to be forgiven and analyzed and not punished harshly.
But, as with all values, forgiveness cannot be practiced in isolation. Peter Georgescu of Young & Rubicam recalls a time when some young employees discovered racist jokes on the Internet and began passing them around. In all likelihood, they did not intend to offend anyone; they were just completely thoughtless. Georgescu struggled and worried over this. Anyone could make a mistake, he realized—but the company also had a policy of zero tolerance for such activity. People’s lives and self-respect were at stake. In a move that he judged to be not only best for his business, but also for the moral development of the two employees, he let them go. It was an action that won acclaim throughout the business community. By understanding the implications of each possible choice, Peter demonstrated moral intelligence. By taking the action he did, he demonstrated moral competence. As Peter showed, the leader who consistently puts both skills into practice creates resonance with those whom he or she leads.